Academic journal article Journal of Management Information and Decision Sciences

The Case for Measuring Supplier Satisfaction

Academic journal article Journal of Management Information and Decision Sciences

The Case for Measuring Supplier Satisfaction

Article excerpt

ABSTRACT

Many organizations struggle in their efforts to establish supplier partnerships, and many such partnerships fail to live up to their potential. This paper examines why partnerships do not deliver the hoped for results, and proposes supplier satisfaction surveys as a possible remedy to this situation. Drawing upon empirical studies in the supply chain management literature, the paper establishes that (i) successful partnerships require trust to develop between organizations; (ii) such trust requires open, two-way communication; and (iii) despite the recognition of the importance of communication, a significant and persistent perception gap exists between buyers and suppliers within many such partnerships. The cause of this perception gap is then traced to a communication imbalance between buyers and suppliers. While buyers generally communicate expectations and provide feedback to suppliers, there is little evidence that expectations and feedback flow the other direction (i.e., from suppliers to buyers). The paper makes the case that buyers can use supplier satisfaction surveys to correct this imbalance and eliminate the perception gap impeding the development of effective buyer-supplier partnerships.

INTRODUCTION

Supply chain management theory and practice has evolved over the last twenty years from a focus on transaction processes based on arms-length agreements with suppliers to a focus on collaborative processes based on mutual trust and information sharing (Ghosal & Moran, 1996; Hoyt & Huq, 2000). Organizations are increasingly trying to work much more closely with their suppliers to try to optimize the performance of their supply chain, and many of these organizations now describe their relationship with their suppliers as partnerships. Research indicates that when well executed, these collaborative, partnership-like relationships with suppliers can lead to improved firm performance (Tracey & Vonderembse, 2000; Jones et al., 1997; Liedtka, 1996; Handfield & Nichols, 1999).

For these types of collaborative partnerships to be successful, however, buying organizations must implement fairly radical changes to their own organizational processes and structures to support them (Liedtka, 1996; Mariotti, 1999). Further, the processes and methods needed to really achieve such partnerships are still being developed, understood and refined. As a result, many organizations struggle in their effort to implement partnerships (Mariotti, 1999; Spekman et al., 1998). Many buyer-supplier partnerships do not live up to their potential, and many are not true "partnerships" in any real sense of that term.

Saying one has partnerships with their suppliers is quite easy, but actually transforming one's approach to how one works with and manages their suppliers to achieve real partnerships with one's suppliers is significantly more complex. As Spekman et al. (1998) characterize it, most organizations that claim to have partnerships with their suppliers have simply achieved some level of cooperation whereby the firms "exchange bits of essential information and engage some suppliers/customers in longer-term contracts" (p. 55). True partnerships, however, are built on a foundation of trust and commitment that goes well beyond mere cooperation. Partners collaborate with each other to develop shared goals and to integrate their processes into their major customers' processes. Such firms recognize and act on the fact that their long-term success is dependent on their weakest supply chain partner. Many companies, however, never reach this stage of true partnership and collaboration (Spekman et al., 1998).

This paper proposes a means to help move organizations toward true partnerships with their suppliers--supplier satisfaction measurement. It proposes that buyers need to think of their suppliers more like they think about their customers, and only when this occurs will organizations really begin to view their suppliers more like partners and less like traditional suppliers. …

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