Linking supplier development to supplier segmentation using Best Worst Method

The strategic supplier-related activity of supplier segmentation focuses on the evaluation of suppliers, identifying different approaches, identifying the most suitable criteria and proper methods to segment the suppliers. The main aim of the evaluation of suppliers is to form different groups from the selected suppliers to create different supplier management strategies for segments involved. Supplier development is another strategic supplier-related activity designed to upgrade the performance level of suppliers in order to create and maintain a network of competent suppliers, which has a major influence on the competitive advantages of a buying company. To allocate scarce resources more efficiently, we should design different supplier development strategies for different supplier segments. This is where we actually use the evaluation for suppliers. This paper proposes an integrative approach that includes capabilities and willingness as two dimensions for evaluating and subsequently segmenting suppliers. The results of that segmentation are then used as the main basis for supplier development. The integrative approach proposed in this paper is of significant importance, as it helps companies apportion their managerial resources more efficiently. We use a new multi-criteria decision-making method called Best Worst Method (BWM) to segment suppliers. A supplier development conceptual model is proposed to develop the suppliers in the different segments. The proposed framework is further applied to a medium-sized high-tech company as input to validate the model. © 2015 Elsevier Ltd. All rights reserved.