Investigating the Role of Open Costing in the Buyer-Supplier Relationship: Implications for Global Apparel Supply Chain Management

Research in supply chain management focused on the buyer-supplier relationship (BSR) indicates that costing practices can impact relationship quality and performance. Yet, few studies have examined how the supplier's costing methods affect the BSR. To address this gap, this study investigates the role of open costing in the BSR within the apparel supply chain. Open costing is a popular costing practice in which a supplier compiles an itemized list of costs rather than a fixed price. To examine the extent to which open costing is practiced as part of BSRs, interviews were conducted with 30 professionals operating as suppliers in China and Bangladesh. A thematic analysis of the interview data identified several factors important to open costing and the BSR, including Mutual Trust, Fairness, Flexibility, Efficiency, and Sustainability. Findings shed light on the mechanism and practice of open costing within the BSR, and specifically from the perspective of suppliers.