Supplier development: communication approaches, activities and goals

Abstract

Operations managers rely on the purchasing function to obtain production inputs from suppliers and to ensure supplier performance. The link between supplier development activities performed by buying firms with their suppliers, in terms of operational outcomes and impact on competitive advantage for the buying firm has been well documented. However, a buying firm should, prior to setting up a supplier development program and investing in supplier development activities, establish goals it wants to achieve and determine how to achieve these goals. Until now, supplier development goals in general and their relationship with supplier development activities have received little research attention. The results from this empirical study suggest that the relationship between the goal to improve a supplier's capabilities and knowledge transfer from the buyer to the supplier firm is moderated by the degree of human interaction. Buying firms pursuing the strategy to improve supplier capabilities rely more intensively on training and co-location of buyer and supplier employees to leverage the knowledge transfer to the supplier firm.