Supplier Development for Different Supplier Segments

In order to standout from competition in the global market, companies must rely on competent suppliers. The supplier development program is designed to create and maintain a network of competent suppliers, which has a major influence on the competitive advantages of a buying company. The existing literatures on supplier development all adopt “one-size-fit-all” strategies. However, to allocate scarce resources more efficiently suppliers need to be strategically segmented and improved by tailored strategies. Moreover, a strong and close supplier-buyer relationship, to a great extent depending on supplier willingness, also plays a key role for buying companies to achieve lead position in the market. However, the existing literatures usually only focus on supplier capabilities development while neglect supplier willingness improvement. To address these practical problems, this research proposes a strategic method that considers capabilities and willingness as two dimensions for segmenting and developing suppliers and links supplier development to supplier segmentation to achieve an effective and efficient supplier development. In the proposed methodology, Analytic Hierarchy Process (AHP), fuzzy Analytic Hierarchy Process (AHP) using fuzzy preference programming (FPP) and Best-Worst Multi-Criteria Decision-Making Method are utilized to solve the Multi-Criteria Decision Making (MCDM) problem of supplier evaluation. A supplier development conceptual model is proposed to develop suppliers in different segments. The proposed framework is further applied in a real world case with experience from a mid-size high tech company as input to validate the model.