Assessing Suppliers for Complex Products from the Perspective of Power

Liu, Yan; Eckert, Claudia M. and Earl, Christopher (2020). Assessing Suppliers for Complex Products from the Perspective of Power. IEEE Transactions on Engineering Management (Early Access).

DOI: https://doi.org/10.1109/TEM.2020.2988056

Abstract

Innovation steps in complex products often go hand in hand with the selection of suppliers. The suppliers are involved in the development of innovative elements of products, supplementing the capabilities of companies. Strategic relationships are established with these suppliers, where the companies need them to be flexible and willing to adapt to changing demands. Flexibility is usually evaluated against a variety of indicators. However, a high score on flexibility does not guarantee cooperative suppliers. Companies also require power to get a supplier to be flexible. They need suppliers who are malleable to their changing needs that are an inevitable part of design processes. The empirical study at a leading European engine company reported in this paper shows that the relative power between companies and suppliers influences the responsiveness of suppliers to requests. This paper analyses malleability as a combination of flexibility and relative power. It unpacks power and flexibility into sets of measurable indicators and proposes a tool which assesses both the relative power between buyer and supplier and the supplier’s flexibility, to provide a malleability index, which indicates to what extent a supplier is suitable to work with.

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