Supplier Development Practices: Product‐ and Service‐Based Industry Comparisons

Abstract

SUMMARYSupplier development has become a viable supply chain management practice across industries as firms continue to focus on their core competencies and outsource a significant percentage of the costs of goods sold. Supplier development practices used by buying firms include formal supplier assessment and feedback, supplier incentives, competitive pressure, and direct involvement improving performance through activities such as training and investment. Although it is apparent that such strategies and processes are used to some extent across industries, it is unclear if there are differences in supplier development approaches between product‐ and service‐based firms. The findings indicate that service firms tend to rely on the competitive pressure of market forces to instigate supplier performance to a greater extent than product‐based firms and that productbased firms tend to use assessment, incentives, and direct involvement to a greater extent than service firms.