The effect of supplier development initiatives on purchasing performance: A structural model

Abstract

Purpose - Supply chain management is an increasingly important organizational concern, and proper management of supplier relationships constitutes one essential element of supply chain success. However, there is little empirical research that has tested the effect of supplier development on performance. The main objective is to analyze the effect of supplier development practices with different levels of implementation complexity on the firm's purchasing performance. Design/methodology/approach - Three supplier development constructs were defined: basic supplier development, moderate supplier development, and advanced supplier development. Three structural models were hypothesized and tested using structural equation modeling through field research on a sample of 306 manufacturing companies in Spain. Findings - Identified important interrelationships among the various supplier development practices, basic, moderate, and advanced. Also indicated that the implementation of supplier development practices significantly contributes to the prediction of purchasing performance. Research limitations/implications - The use of a single key informant could be seen as a potential limitation of the study. The study was a cross-sectional and descriptive sample of the manufacturing industry at a given point in time. A more stringent test of the relationships between the different levels of supplier development and performance requires a longitudinal study, or field experiment. Practical implications - This study focused on supplier development practices and revealed how involving suppliers in supplier development activities is important and may help buyers to increase their purchasing performance. The findings from the structural analysis should provide practicing managers with insights on how these practices and their benefits are related in terms of purchasing performance, thus affecting their ability to make better sourcing decisions. Originality/value - Fills an important gap in the purchasing literature with respect to the area of supplier development. While there is much written about supplier development based on conceptual and case study research, this study is unique in that it is the first attempt to empirically model the relationships between different levels of supplier development and their impact on purchasing performance using a comprehensive set of practices. © Emerald Group Publishing Limited.