Abstract
Supplier relationship management and supplier development initiatives assume a fundamental role in enterprise supply chain management. An important aspect of effective supplier relationship management is the role of trust. This paper seeks to understand whether supplier relationship management or supplier development initiative should be emphasized as a firm strives to achieve superior supplier performance. The analysis and discussion draws upon sourcing strategy literature and is based on empirical survey-data of mid to upper level managers with responsibility for supply management initiatives in their respective organizations in Denmark and in the USA. It examines the interrelationships among “relational norms”, “trust”, “supplier development initiatives” and ensuing “supplier performance”. The data analysis shows that firms must emphasize relation and trust building activities before investing in supplier development initiative. Supplier perception audits must be routinely performed to gauge the level of trust and strength of relational norms.
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Appendix
Appendix
Sourcing strategy questionnaire
Please answer the following brief questionnaire on the souring strategy for a major item and the key supplier of the item in your firm.
Evaluate the following measures with respect to the item using the seven-point scale given below:
Buying firm’s investment in the major supplier | Level |
Transaction specific investment (in machine, training etc.) | 0 1–2–3–4–5–6–7 |
Financial assistance to supplier | 0 1–2–3–4–5–6–7 |
Technical assistance to supplier | 0 1–2–3–4–5–6–7 |
Training in quality/other operational aspects to supplier | 0 1–2–3–4–5–6–7 |
Incentives/awards to supplier | 0 1–2–3–4–5–6–7 |
Relational norms | |
Transaction specific investment by the supplier | 0 1–2–3–4–5–6–7 |
Usage of long-term contractual arrangement | 0 1–2–3–4–5–6–7 |
Top management’s commitment to relationship development | 0 1–2–3–4–5–6–7 |
Procurement manager’s concern for supplier earning a fair profit | 0 1–2–3–4–5–6–7 |
Joint problem solving with the supplier | 0 1–2–3–4–5–6–7 |
Formal procedures for supplier evaluation and feedback | 0 1–2–3–4–5–6–7 |
Cost/demand information sharing with the supplier | 0 1–2–3–4–5–6–7 |
Supplier performance | |
Degree of trust between the major supplier and buyer organization | 0 1–2–3–4–5–6–7 |
Cost reduction performance without compromising on quality or service | 0 1–2–3–4–5–6–7 |
Responsiveness to schedule changes without cost or time penalties | 0 1–2–3–4–5–6–7 |
Responsiveness to volume changes without cost or time penalties | 0 1–2–3–4–5–6–7 |
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Narasimhan, R., Mahapatra, S. & Arlbjørn, J.S. Impact of relational norms, supplier development and trust on supplier performance. Oper Manag Res 1, 24–30 (2008). https://doi.org/10.1007/s12063-008-0004-0
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DOI: https://doi.org/10.1007/s12063-008-0004-0