Re-examining the structure of supplier stratification matrix: a focus on differential value and relationship

Abstract

This paper explores current empirical practice in supplier stratification management, focusing on how suppliers are stratified and how to manage these supplier segments differentially by using common evaluation criteria. Using information gathered through interviews of senior managers of supplier relationship management from 15 companies and extensive literature search, this paper proposes a new framework on supplier stratification that addresses the weakness in existing stratification conceptualisation. A survey was also conducted to evaluate the relative importance placed on different evaluation criteria when evaluating different supplier segments. Factor analysis reveals that all these evaluation criteria are indeed determined by two factors: purchasing value and relationship. Our analyses further show that, for purchasing value: strategic suppliers have the highest value, followed in decreasing order by custom, collaborative, and finally commodity suppliers. For relationship: strategic suppliers are distinctly the most important segment, followed by collaborative and custom suppliers, and finally commodity suppliers.