Managing interdependencies in supplier networks

Building and managing a supplier base has been referred to in the literature as a key aspect of supplier management. Scholars have proposed a number of models aimed at enhancing the effectiveness of supplier network management, mainly based on a portfolio approach. In the IMP tradition of research, those models are often criticized as they ignore the interdependencies between the different existing dyadic relationships of a focal buyer company and its suppliers. Such interdependencies are the main focus of this paper, which has four objectives: (1) To analyze the types of relationships linking suppliers, (2) to understand the factors and dynamics underlying the creation and management of these relationships (3) to uncover existing links between buyer-supplier and supplier-supplier relationships, and (4) to clarify how different configurations of supplier relationship interactions impact on the performance of the actors involved. The paper discusses two empirical case studies, using the supplier networks of two focal buyer companies. We find that supplier interdependencies are mainly a by-product of the buyer-supplier dyads. Furthermore, the nature and dynamics of these dyads are a strong determinant of the scope and frequency of supplier connections and the corresponding effects on performance.     

The impact of supplier development on buyer competitive advantage: A path analytic model

As manufacturing firms increasingly realize that supplier performance is crucial to their establishing and maintaining competitive advantage, supplier development has been a subject of considerable research in supply chain management. We develop and test a path model to explore how supplier development practices affect buyer-supplier performance from the buying firm's perspective in the context of Hong Kong's electronics industry. The results show that top management, supplier evaluation, and supplier strategic objectives are significant determinants of transaction-specific supplier development, and that buyers that have closer collaborative relationships with suppliers may strengthen their competitive advantage.     

Exploring the impact of a supplier portal on the buyer-supplier relationship. The case of Ferrari Auto

This article concentrates on the relationship between companies and their suppliers with a specific focus on the impact that information and communication technologies (ICTs) have on industrial (business to business) purchasing processes. After reviewing the extant literature, we classify the potential impact of ICTs on the buyer-supplier interactions into three main categories, i.e. impact on buyer-supplier relationship, impact on purchase process efficiency and impact on logistics process performance. Whilst scholars generally agree on the impact ICTs may have on buyer-supplier exchanges, they have not investigated concurrently all of these three impacts to understand their comparative relevance and the context in which this comparative relevance may change. In order to redress this gap in the literature our research study focuses on a particular form of ICT solution - supplier portals - and takes a supplier (rather than buyer) perspective. We explore empirical evidence from a single customer-multiple supplier case study, that of the Ferrari Auto supplier portal. Our study leads us to contend that suppliers view such portals as offering far more significant benefits to their relationship with customers than to the improvements in purchase process efficiency or to the performance of buyer-supplier logistics processes. We conclude with a short discussion of the main managerial implications and suggestions for future research.     

Supplier segmentation using fuzzy logic

Supplier segmentation means that the suppliers of a specific firm are categorized on the basis of their similarities. This supply-side business-to-business (B2B) segmentation is of special importance to companies with many suppliers. Supplier segmentation yields a manageable number of segments, each of which requires a separate strategy. Standard supplier segmentation methods have serious shortcomings, for instance because they fail to make a proper connection between supplier segmentation and other supplier-related activities such as supplier selection and development. Moreover, these standard methods typically use a limited number of segmentation criteria and different sets of criteria are suggested for each method. It is unclear for practitioners how to choose a particular method. The purpose of this paper is to form a practical tool for supplier segmentation taking into account all suggested segmentation criteria. The principal result of this paper is the design of a rule-based method to segment the suppliers of a firm based on two overarching dimensions: supplier capabilities and supplier willingness. The method is applied to a real-world situation to show how the results can be used in practice. A general sensitivity analysis procedure for fuzzy rule-based systems is proposed and then implemented, to identify the most important supplier capabilities and willingness criteria and to formulate better supplier development strategies. A major conclusion of the paper is that the fuzzy logic approach to supplier segmentation is simple to apply in practice, yet considers all available segmentation criteria and their inherent fuzziness in a way that is easily adaptable to a specific industrial context.     

Decomposing the effect of supplier development on relationship benefits: The role of relational capital

Buyers invest considerably in developing their suppliers, yet the performance effects of such investments are not universal. Drawing on social capital theory, this research investigates whether the relationship between supplier development and relationship benefits may be facilitated by the generation of relational capital. The authors examine mediating and moderating roles of relational capital in the relationship between two aspects of supplier development (capability development, supplier governance) and two dimensions of relationship benefits (supplier benefits, buyer benefits), using survey data collected from 185 suppliers of a large manufacturing firm. Investment in supplier development does not automatically result in benefits for the supplier or reciprocated benefits for the buyer. Rather, relational capital “bridges” supplier development and relationship benefits. Without relational capital, benefits from capability development do not accrue, and the impact of a supplier governance regime can be even detrimental. In conditions of high relational capital, capability development results in lower perceived buyer benefits. The results can help managers ensure that the benefits from their supplier development efforts fully materialize.     

The effect of supplier's market orientation on manufacturer's trust

Recent studies show that manufacturing firms can select suppliers according to suppliers' market-oriented behaviors. Based on market orientation literature and research on inter-firm relationships, a model is developed to examine the impact of supplier's market orientation on manufacturer's trust. The framework is tested using Structural Equation Modeling and the data are from dyadic manufacturer and supplier relationships in U.S. firms. The results show that supplier's market orientation is significantly related to manufacturer's trust, which affects the manufacturer's long-term orientation toward the supplier. Discussions and implications for managers are presented at the end of the article.     

基于最小期望损失的供应链供货违约等级识别模型

本文全面研究了引起供应链供货违约的各种原因,从供应商自身因素、客户需求、双方信息集成以及供货渠道中的意外义素4个维度构建了一套供应链供货违约二级指标体系,用先进的模式识别技术定量解决了供货违约严重程度识别的问题。先用主成分分析法降低了指标维度,接着用多维正态分布分类模型衡量了每种违约等级发生的后验概率,最后在合理构造损失矩阵的基础计算出每种决策产生的期望风险,并依此做出违约等级的识别决策。通过实例计算表明该方法是可行的,识别结果具有一定的客观性。     

The impact of buyer–supplier relationships on supplier innovativeness: An empirical study in cross-border supply networks

Drawing on organizational learning and the relational view of the firm, this study seeks to understand the factors that drive supplier innovativeness in the context of cross-border supply relationships. To address this research objective, a survey included 189 parts and components manufacturers (suppliers) in Turkey; hierarchical regression analysis is used to test the hypotheses. The findings demonstrate that interfirm knowledge sharing routines, relation-specific investments, and governance mechanisms may promote supplier innovativeness by expanding the supplier's knowledge resources and encouraging it to invest in innovative activities. In addition, this research emphasizes differentiating effects of the supplier's tier position for the impacts of buyer assistance and cooperative tie. As such, this study contributes to the purchasing and supply management literature by empirically showing how buyer–supplier relationships, particularly in cross-border supply networks, affect supplier innovativeness.     

Evaluating the bases of supplier segmentation: A review and taxonomy

A taxonomy of segmentation bases is presented which builds a multi-disciplinary approach to the categorization of suppliers. Supplier segmentation, from a purchasing perspective, still appears to be in the early stages of providing a coherent strategic intent behind supplier assessment. Whilst fragmentary in nature, current portfolio models are grouped into two principal taxonomic constructs of power and dependence and relational factors. In particular, the prevalent use of transaction cost economics (TCE) in portfolio modelling provides a foundation for purchasers to appraise risks from supplier opportunism. We augment existing approaches with reference to inter-organisational theory and the resource-based view to show different modes of inter-firm value creation that act as constituents of a strategic intent for segmentation. Our resulting taxonomy draws together a holistic view of supplier segmentation covering supply market conditions, product/service characteristics, supplier characteristics, buyer characteristics, and buyer-supplier relational factors.     

Configuring and managing strategic supplier portfolios

Acknowledging that not all supplier relationships can nor should be close partnerships, this article explores the development of strategic supplier portfolios. The strategic portfolio perspective considers risks, trade-offs, and interdependencies between the firm's array of supplier relationships. Based on over 50 interviews with managers and archival data from 12 multinational companies, a strategic supplier portfolio management framework is developed. The authors explore processes that firms use to plan, implement, and monitor strategic supplier portfolios. This research indicates that by assembling superior supplier bases, developing suppliers and integrating them into product development and manufacturing, strategic supplier portfolios contribute to competitive advantage.     

Supplier traits for better customer firm innovation performance

Previous research on embedded ties with suppliers in an innovation context has ignored the need for customer firms to assess and select suppliers on the basis of market orientation strategies and relationship marketing attributes. To address this void, this study investigates the effects of suppliers' downstream customer orientation and supplier-customer homophily (i.e., similarity of the supplier and the customer) on the customers' innovation performance. Data pertaining to new product development projects with contributions from supplier firms was collected on both sides of the supplier-customer dyad. The analysis shows that downstream customer orientation and supplier-customer homophily have a significant impact on the customer firms' new product efficiency (i.e., project cost and project speed) and new product effectiveness (i.e., innovativeness), which in turn positively influence new product performance in terms of profitability, market share, and growth.     

A decision method for supplier selection in multi-service outsourcing

Although supplier selection in multi-service outsourcing is a very important decision problem, research concerning this issue is still relatively scarce. This paper proposes a decision method for selecting a pool of suppliers for the provision of different service process/product elements. It pioneers the use of collaborative utility between partner firms for supplier selection. A multi-objective model is built to select desired suppliers. This model is proved to be NP-hard, so we develop a multi-objective algorithm based on Tabu search for solving it. We then use an example to show the applicability of the proposed model and algorithm. Extensive computational experiments are also conducted to further test the performance of the proposed algorithm.     

Reconfiguring supplier relationships between local and global: History matters

Small and medium-sized companies are increasingly facing international markets as part of their processes of growth and development. A great deal of literature deals with different patterns of growth and international development that are specific to SMEs with respect to large companies. Fewer studies have been conducted on the reconfiguration of company supplier relationships involved in these processes. This paper focuses on the role played by the consolidated set of company supplier relationships when the firm faces some critical stages in its process of development, i.e., growth from small to mid-sized and the implementation of new ventures abroad accessing new business relationships with international suppliers. A multiple and longitudinal case study shows how the local set of supplier relationships of four mid-sized Italian mechanical companies acting in industrial districts has played an important role in shaping the emerging set of supplier relationships and addressing companies' actions in their growth and internationalization processes.     

Risky Business or Competitive Power? Supplier Involvement in Japanese Product Design

Notwithstanding the alleged risks of outsourcing design work, leading manufacturers in the Japanese automotive industry collaborate closely with their key suppliers. Despite widespread recognition of the effectiveness of these close-knit supplier networks, however, little research exists on the factors that affect the purchase of design work from suppliers. S. Nazli Wasti and Jeffrey K. Liker fill this gap by exploring the factors that affect Japanese automotive firms' purchase of design work from their component suppliers. Using data from a survey of 122 Japanese automotive component suppliers, their study addresses two key questions. First, what factors lead Japanese buyers to involve some suppliers heavily in design while giving others relatively little control over design decisions? And second, does the Japanese practice of involving suppliers in design offer performance benefits? The study focuses on first-tier suppliers of parts, assemblies, and complete subsystems (e.g., audio, fuel and emissions, heating and air conditioning). The study does not include suppliers of raw materials and chemicals, assembly and processing equipment, indirect materials, tooling and dies, computers and software, or engineering and business consulting services. The study breaks down the broad concept of supplier involvement in design work into three measurable elements: the extent to which the supplier influences decision-making during the early stages of product development; the amount of control the buyer retains over the design; and the frequency of design-related communication between the buyer and the supplier. Factors that have a positive effect on the level of supplier involvement among the companies studied include technological uncertainty of the component and the supplier's in-house technical capabilities. For companies in the study, the level of competition in the supplier market has a negative effect on the degree of supplier involvement in design. The responses indicate that supplier involvement offers performance benefits for both the supplier and the buyer. For the supplier firms studied, increased involvement in the design process permits greater focus on design for manufacturability (DFM). And of course, supplier-generated design improvements clearly benefit the buyers, allowing these firms to capitalize on the experience and the insight that their suppliers have regarding the parts that they supply.     

Strategic relationships between boundary-spanning functions: Aligning customer relationship management with supplier relationship management

This review focuses on the potential impact of enhanced strategic relationships between the boundary-spanning functions in supplier organizations. Specifically, the concern is with alignment between the organizational groups managing: marketing, sales and strategic account management; purchasing and supply strategy; and, collaborations and external partnerships. The topic is framed by the organizational evolution being driven by market change, and the search for superior innovation capabilities and business agility. These changes bring new challenges in cross-boundary integration and managing complex market networks. The logic is that strategic external relationships (with customers, supplier and partners) should be mirrored in strategic internal relationships (between the functions with lead responsibilities for managing relationships with customers, supplier and partners). Approaches to enhancing this capability include process management, internal partnering strategies and internal marketing activities. The discussion identifies a number of implications for practice and new research directions.     

Value for value—The dynamics of supplier value in collaborative new product development

Suppliers are recognized as an important source of innovation. Research into supplier involvement in new product development has shown that benefits can potentially be reaped by customers. However, a relatively unexplored precondition is the willingness of suppliers to invest in their customers’ innovative efforts. In this exploratory, theory-extending research, we investigate the value that a supplier can experience from being involved in high tech firms’ new product development. We find that value comes in three forms for suppliers: (1) financial payment for sales volumes and product development services, (2) technological knowledge and product designs, and the (3) reputation of doing business with leading-edge firms Additionally, we place this in a dynamic, long-term perspective, and find indications for a positive or negative feedback effect, depending on the emphasis the buyer puts on collaborative innovation with the supplier and the extent to which suppliers can use competences, knowledge and reputation resulting from the collaboration in subsequent business development activities. The positive effect results in added value for both parties in the dyad, and the negative effect leads to the opposite.     

Customer attractiveness,supplier satisfaction and preferred customer status: Introduction,definitions and an overarching framework

Industrial markets are frequently characterized by an oligopolistic market structure. As a result, suppliers may become highly selective with respect to decisions that involve collaborating with certain customers. Buying firms must therefore be more attractive than their rivals to obtain opportunities to collaborate with these selective suppliers. This apparently counterintuitive inversion of the classical marketing approach (that is, relationships that involve buyers competing for suppliers rather than the other way round) constitutes the foundation of the special issue that is introduced in this paper. In this paper, we present key terms and propose a model of preferred customership that uses a social exchange perspective to link customer attractiveness, supplier satisfaction and preferred customer status. The papers that contribute to this special issue are introduced within the context of this framework. Finally, this paper concludes with suggestions for future research directions.     

A two-stage model for the design of supply chain networks

This research aims to develop an analytical model of the supplier selection process in designing a supply chain network. The constraints on the capacity of each potential supplier are considered in the process. The assumed objective of the supply chain is to minimize the level of customer dissatisfaction, which is evaluated by two performance criteria: (i) price and (ii) delivery lead time. The overall model operates at two levels of decision-making: the operational level and the chain level. The operational level concerns decisions related to optimizing the manufacturing and logistical activities of each potential supplier in order to meet the customer's requirements. At the chain level, all the bids from potential suppliers are evaluated and the final configuration of the supply chain is determined. The structure of the chain depends on the product specifications and on the customer's order size. An optimal solution in terms of the models for the two levels can be obtained by using a mixed-integer programming technique.     

Involving suppliers in product development: Insights from R&D directors and project managers

While there is increasing evidence that involving suppliers in new product development (NPD) is important, and for many firms even inevitable, there is also evidence that not all such efforts are successful. Firms aiming at implementing this strategy effectively have to pay close attention to several contingency factors on the organizational level and properly manage supplier involvement on the project level. The exploratory case study research underlying this article explores key issues to be considered when involving suppliers in NPD and the counter measures they can take. Our research shows that companies differentiate between so-called “know-how” and “capacity” projects, and that they manage them differently. Furthermore, this research shows that firms outside the automotive and high-tech manufacturing industries are likely to intensify supplier involvement in the future.