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Int. J. Procurement Management, Vol. 6, No. 1, 2013
Supplier development: current status of empirical

research
Eric Sucky*
Faculty of Social Sciences,
Economics and Business Administration,
Chair of Operations Management and Business Logistics,
University of Bamberg,
Feldkirchenstrae 21, 96052 Bamberg, Germany
E-mail: eric.sucky@uni-bamberg.de
*Corresponding author
Sebastian M. Durst
Roland Berger Strategy Consultants,
Competence Center Operations Strategy,
Lffelstr. 46, 70597 Stuttgart, Germany
E-mail: sebastian_durst@de.rolandberger.com
Abstract: Based on a detailed review of 40 survey-based publications, this
paper outlines the status of research into supplier development and identifies
gaps requiring further investigation. We show that past studies have analysed
various aspects of supplier development using different methodologies and
theoretical approaches but that there remain significant gaps in the literature.
With regard to content, gaps include the link between targets set and results
achieved, the economic viability of direct supplier development, the way in
which costs and benefits are shared between customers and suppliers and the
impact of framing conditions. With regard to the theoretical foundation of
supplier development, the validation of theories other than the transaction cost
theory should be considered. Whereas articles published up to 2000 tended to
use simpler descriptive and inferential statistical methods, structural equation
models have predominated in the recent past. Methodological shortcomings
include the lack of dyadic surveys and long-term studies, geographic
imbalances and the dominance of focused analyses of specific industries.
Keywords: supplier development; supplier management
survey-based research; literature review.
procurement;
Reference to this paper should be made as follows: Sucky, E. and Durst, S.M.
(2013) Supplier development: current status of empirical research, Int. J.
Procurement Management, Vol. 6, No. 1, pp.92127.
Biographical notes: Eric Sucky is a Full Professor at the Faculty of Social
Sciences, Economics and Business Administration at the University of
Bamberg. He received his PhD from the School of Economics and Business
Administration at the Goethe-University Frankfurt, Germany. Winner of the
dissertation awards from the German Society of Operations Research as well as
from the Chamber of Commerce in Frankfurt, Germany. From 2004 to 2007, he
was an Assistant Professor at the Goethe-University in Frankfurt. Since 2007,
he is a Professor of Operations Management and Business Logistics at the
Copyright 2013 Inderscience Enterprises Ltd.
Supplier development
93
University of Bamberg, Germany. His research interests are supply chain

coordination, supply contracts, master planning in supply chains, and supplier
selection.
Sebastian M. Durst is a Project Manager at Roland Berger. He focuses on
purchasing and supply chain management. He holds a Dipl.-Kfm./EMBSc from
the University of Bamberg/Edinburgh. He received his PhD from the Faculty of
Social Sciences, Economics and Business Administration at the University of
Bamberg. He is a winner of the dissertation award from the German
Association Materials Management, Purchasing and Logistics. In 2005, he
joined Roland Bergers Operations Strategy Competence Center.
Introduction
One of the most significant paradigm shifts of modern business management is that
companies no longer compete as autonomous enterprises but rather within supply chains
(Lambert, 2008). Related to that, the roles of suppliers have changed significantly
from simple suppliers to strategic partners (Kwon et al., 2010), and buyer-supplier
relationships have evolved from competitive to cooperative relationships (Sanchez
Loppacher et al., 2011). Consequently, supplier relationship management has become a
relevant management activity (Lintukangas, 2011), and supplier improvement is a top
priority for leading organisations (Carr et al., 2008).
Suppliers play a pivotal role in almost all companies operations, but what if a buying
firm encounters shortcomings in the performance and/or capabilities of its supplier? In
such cases, the buying firm can (Krause et al., 2000):
1
switch to another supplier, i.e., seek alternative sources of supply and purchase from
a supplier that is more capable and/or performs better
develop the supplier, i.e., invest human and/or financial resources to increase the
performance and/or capabilities of the supplier
integrate vertically, i.e., manufacture the component in-house
choose a combination of the above three options.
This paper focuses on the current status of empirical research with regard to the second
option, supplier development. Supplier development can broadly be defined as any
effort of a buying firm with its supplier(s) to increase the performance and/or capabilities
of the supplier and meet the buying firms short-term and/or long-term supply needs
(Krause and Ellram, 1997a). In practice, supplier development is gaining importance. A
survey of 200 Chief Procurement Officers shows that improving supplier development is
a top priority for the best-performing organisations [Carr et al. (2008), citing Checketts
and Bartolini (2006)]. In addition, the recent economic crisis has underlined the need for
strong supply chain partners and stable relationships as opposed to strategies that squeeze
suppliers, risk their bankruptcy and thus potentially harm the entire supply network.
Supplier development is also gaining interest within academia, as revealed by a
growing number of publications on this subject. A comprehensive literature review
described in greater detail below reveals a total of 40 publications on supplier
94
E. Sucky and S.M. Durst
development that base their findings on large-scale surveys (referred to hereafter as

survey-based publications for the sake of simplicity). This focus on survey-based
publications was designed to include only findings that have been validated based on a
large empirical basis (the average number of responses per publication is above 200, with
the number ranging from 27 to 512; for details, see Table 1).
As Figure 1 shows, the yearly number of survey-based publications on supplier
development has increased sharply since the mid-1990s. Accordingly, it has become
necessary to organise the current empirical knowledge in a systematic way, reflect on it
and chart a course for further investigation.
Figure 1 Number of survey-based publications on supplier development, by publication date
14
9
5
3
1
Thru 1989 1990-1994 1995-1999 2000-2004 2005-2009 2010-2012

The aim of this paper is to summarise the current status of survey-based research on
supplier development up to end of the year 2011 and derive suggestions for future
research. Accordingly, the 40 identified survey-based publications on supplier
development are analysed in light of the following questions:1
What survey-based findings on supplier development have been gained up to now?
Which focus areas in terms of content issues, methodology and theory are prevalent?
What gaps in survey-based research into supplier development can be identified?
A qualitative approach rather than a metastudy approach was chosen as the

methodology for this study. Whereas metastudies focus on estimating the scale of effects,
this paper concentrates on identifying the content issues, theories and methods on which
the analysed publications focus. Moreover, this paper aims to provide as comprehensive a
view as possible of survey-based studies on supplier development. By contrast,
metastudies are often less than comprehensive, as certain works must be excluded for
lack of sufficiently large samples or complete data. From a methodological point of view,
the current paper conducts a literature review comprising the following steps (Cooper and
Hedges, 1994):
1
Problem formulation: In this phase, the research questions are formulated, delimited
and refined. The result was described above.
Literature collection: Literature relevant to the formulated questions is researched in

this phase. To this end, we systematically analysed the following journals and their
predecessors:
a
b
c
d
e
f
g
h
i
j
k
95
Decision Sciences
The International Journal of Logistics Management
The International Journal of Logistics: Research and Applications
The International Journal of Physical Distribution and Logistics Management
The Journal of Business Logistics
The International Journal of Operations and Production Management
The Journal of Operations Management
The Journal of Purchasing and Supply Management
Supply Chain Management: An International Journal
The Journal of Supply Chain Management
The International Journal of Procurement Management.
This systematic analysis was complemented by database searches (ScienceDirect,

EBSCO and Emerald were used as databases), queries in search engines (Scopus and
Google Scholar were used as search engines), and searches by the snowball method
based on the bibliographies of the identified literature. As extensive as this search for
relevant literature was, we lay no claim to completeness.
3
Literature analysis: The purpose of this phase is to examine the relevance of the
collected literature and arrange it in a systematic order. Therefore, each article was
screened, and relevant ones were included in this study. An abstract was then
prepared for each article, summarising the content, theories tested and methodology
applied.
Interpretation and summary: In this phase, the findings of phase 3 were assessed in
light of the formulated questions and later documented.
The article is structured as follows. This introductory section describes the motivation,
the objectives and the structure of this article. Section 2 goes on to explain the empirical
basis, conceptual foundation and methodological background underpinning the review. It
thus briefly provides an overview of the supplier development literature, comments on
the status quo of metaresearch and sketches the frame of reference for the study. In
Section 3, the survey-based findings on supplier development are outlined systematically.
For each element of the frame of reference, a summary of the findings is provided. In
addition, the findings of each publication are reproduced in a table. The reason for this
structure is twofold. First, this structure makes it possible to satisfy both the requirements
of readers who are interested in a quick overview (and thus should focus on the text
alone) and those readers who want to examine in greater depth the findings of the
individual authors (and thus are referred to the additional tables). Second, because the
understanding and interpretation of supplier development have changed over time, this
article attempts to provide an overview of the common ground and at the same time
reflect the heterogeneity of interpretations and understanding of supplier development by
citing individual authors findings. Although great care has been taken to correctly
replicate each publications empirical findings, we apologise for potential
misinterpretations. Section 4 identifies gaps in research on content, theoretical and
methodological issues. The outcomes are summarised in Section 5.
96
Supplier development literature, metaresearch and frame of reference
The first scientific publication on supplier development is usually attributed to Leenders

(1966).2 After this study, however, the subject was not examined again until the late
1980s/early 1990s, primarily fuelled by research on quality management. Wagner and
Boutellier (2003) refers to this period as a first wave and identify a second wave from
1995 through 2003, this time a result of the considerable popularity of research on
relationship and supplier management. We are currently in this second wave, with
survey-based publications increasingly using more sophisticated methods to tackle more
complex relationships (see Section 3). In total, the work of many researchers has resulted
in 40 survey-based publications on supplier development (see Table 1).
Table 1
Survey-based publications on supplier development
Source: author(s)
and year of
publication
Empirical basis: number

of questionnaires
returned compared to
number of
questionnaires sent out
(including the resulting
response rate)
Industry:
industry in
which the
survey
companies
operate
Country:
Perspective:
country in
information about
which the which side(s) of the
research has customer-supplier
been
dyad has/have been
conducted
surveyed
Li et al. (2012)
142 of 450 (31.5%)
Electronics
industry
Hong Kong
Customer
Wagner (2011)
60 out of 251 (24%)
Across
industries
Europe
Customer
Humphreys et al.
(2011)
142 of 450 (31.5%)
Electronics
industry
China
Customers
Wagner (2010)
60 out of 251 (24%)
Across
industries
Europe
Customer
Ghijsen et al.
(2010)
47 out of 190 (23%)
Automotive
industry
Germany
Supplier
Lee et al. (2009)
175 out of 758 (23%)
Electronics
industry
Hong Kong
Customer
Snchez-Rodrguez
(2009)
306 out of 1,200 (26%)
Across
industries
Spain
Customer
Wagner and Krause

(2009)
65 out of 251 (26%)
Across
industries
Europe
Customer
Blonska et al.
(2008)
185 out of 254 (73%)
Across
industries
Unclear
Supplier
166 out of 1,000 (17%),

part of a larger study
Across
industries
USA
Customer
Carr et al. (2008)

Oh and Rhee
(2008)
Carr and Kaynak
(2007)
94 out of 231 (41%)

223 out of 1,000 (22%)
Automotive South Korea

industry
Across
industries
USA
Supplier
Customer
Table 1
97
Survey-based publications on supplier development (continued)
Source: author(s)
and year of
publication

of questionnaires
number of
questionnaires sent out
(including the resulting
response rate)
Krause et al. (2007) 374 (25%) out of 1,500.

(an additional
75 supplier
questionnaires are
mentioned. However,
findings from these
interviews are not
provided)
Industry:
Country:
Perspective:
industry in
country in
information about
which the
survey
companies
been
dyad has/have been
operate
conducted
surveyed
Across
industries
USA
Customer
Li et al. (2007)
142 out of 450 (32%)
Electronics
industry
Hong Kong
Customer
Modi and Mabert

(2007)
114 out of 1,900 (6%)
Across
industries
USA
Customer
Wagner (2006a)
60 out of 251 (24%)
Across
industries
Germany,
Austria,
Switzerland
Customer
Wagner (2006b)
173 out of 691 (25%),

additional case studies
Across
industries
Germany,
Austria, and
Switzerland
Customer
Snchez-Rodrguez
et al. (2005)
306 out of 1,200 (26%)
Across
industries
Spain
Customer
Wagner (2005)
60 out of 251 (24%)
Across
industries
Germany,
Austria, and
Switzerland
Customer
Helper and Kiehl

(2004)
27 out of N/W,
additional case study
Across
industries
USA
Supplier
Humphreys et al.
(2004)
142 out of 450 (32%)
Electronics
industry
Hong Kong
Customer
Wen-Li et al.
(2003)
142 out of 450 (32%)
Electronics
industry
Hong Kong
Customer
Krause and
Scannell (2002)
512 out of 1,504 (34%)
Across
industries
USA
Customer
Quayle (2002)
240 out of 400 (60%)
Across
industries
UK
Surveyed as
customer and
supplier
52 out of 87 (60%)
Electronics
industry
Italy
Customer
Forker and
Stannack (2000)
384 out of 769 (50%),

customer-supplier pairs
with two customers
Across
industries
USA
Dyadic
Handfield et al.
(2000)
84 out of 200 (42%),

study series, additional
case studies
Across
industries
Primarily
USA
Customer
De Toni and
Nassimbeni (2000)
98
Table 1

Survey-based publications on supplier development (continued)
Source: author(s)
and year of
publication

of questionnaires
number of questionnaires
sent out (including the
resulting response rate)
Industry:
industry in
which the
survey
companies
operate
Country:
Perspective:
country in
information about
been
dyad has/have been
conducted
surveyed
Krause et al. (2000) 322 out of 1,504 (21%)
Across
industries
USA
Customer
Forker et al. (1999)
181 out of 421 (43%)
Electronics
industry
USA
Dyadic
527 out of 1,504 (35%)
Across
industries
USA
Customer
Krause et al. (1999)
N/A (47%)
Across
industries
USA
Supplier
84 out of 210 (40%),

benchmarking circle
Across
industries
Primarily
USA
Customer
New and Burnes

(1998)
53 out of N/A, analysis

of 223 initiatives
Across
industries
UK
Surveyed as
customer and
supplier
Krause (1997)
527 out of 1,504 (35%)
Across
industries
USA
Customer
Krause and Ellram

(1997a)
93 out of 350 (27%), part

of a larger study
Across
industries
USA
Customer
Krause and Ellram

(1997b)
527 out of 1,504 (35%)
Across
industries
USA
Customer
Monczka et al.
(1993)
Approximately 200 out

of N/A, additional
interviews
Across
industries
USA
Customer
Watts and Hahn

(1993)
81 out of 500 (16%)
Across
industries
USA
Customer
Lascelles and Dale

(1989, 1990)
300 out of N/A,

additional interviews
Automotive
industry
UK
Supplier
Krause (1999)
With regard to the status of metaresearch on supplier development, we know of only two
publications that address the state of research into supplier development. Wagner and
Boutellier (2003) provide a systematic and comprehensive overview of the course of
scientific discussion on supplier development up to 2003 in addition to identifying key
concepts and empirical findings. Batson (2008) presents a more practically oriented
overview based on a narrow selection of literature. In addition, several papers have
explored the state of research on the relationship between customers and suppliers (for
example, Terpend et al., 2008). Owing to the considerably broader focus of these papers,
however, they either address research into supplier development only as a peripheral
issue or do not address it at all. The same is true of papers on the state of research on
supply chain management (Giunipero et al., 2008).
Unlike the above-cited publications, the present study concentrates explicitly on
survey-based publications on supplier development. Accordingly, its content is sharply
focused. At the same time, it provides a systematic analysis of theoretical and
99
methodological aspects in addition to an investigation of content issues. Finally, the

present study is more up to date. This characteristic is critical, as the number of
survey-based publications into supplier development has risen by more than 50% since
Wagner and Boutellier published their review in 2003. In addition, the focus of recent
publications has shifted in terms of both content and methodological issues.
The literature on supplier development proposes different frames of reference
[examples include Carr et al. (2008), Li et al. (2007), and Modi and Mabert (2007)]
depending on the underlying interpretation of the term and the focus of the given study.
However, none of these proposals covers all the elements and interdependencies that, in
our view, are relevant to supplier development. For this reason, we developed the frame
of reference depicted in Figure 2 on the basis of the supplier development literature
displayed in Table 1.
Figure 2 Frame of reference for the study
In a second step, the frame of reference was tested and adjusted in two workshops
involving 12 university staff members and purchasing/supplier management
representatives from the automotive and engineered products industry. According to
Wagner (2006b), these two industries may be seen as leading/advanced with regard to
supplier development. In a third step, the framework was validated in several interviews
with purchasing heads from various industries.
The key elements and fundamental interdependencies within this frame of reference
are defined as follows: the frame conditions are the key factors that characterise the
general business environment, relational conditions between customer and supplier as
well as company-specific parameters. Examples of frame conditions include
technological uncertainties or the intensity of competition, the distribution of power or
knowledge between a buyer and supplier and a companys size or resources available for
supplier development. These frame conditions affect the customers supplier
development activities both the nature of the activities undertaken and the intensity
with which they are pursued. Supplier development activities can be classified as direct
or indirect (see Section 3 for further details). Supplier development has a direct impact on
the supplier. For instance, process improvements may reduce lead times and/or cut costs.
Success factors such as effective communication between customer and supplier
100
influence the impact supplier development has on the supplier. Improvements to the
supplier in turn impact the customer, for example in the form of lower prices for the
supplied goods or shorter lead times. One key factor of influence in this context is how
the outcomes of supplier development activities are shared between customer and
supplier.
In its entirety, the above frame of reference makes it possible to systematically map
the findings from the analysed publications. It thus lends a solid structure to the content
evaluation provided in the next section.
Findings of survey-based research into supplier development
3.1 Supplier development

As with other scientific terminology, the literature uses no consistent conceptualisation of
supplier development. However, it is possible to distinguish three main aspects of
supplier development (Wagner and Boutellier, 2003):
1
Nature of the supplier (new suppliers versus existing suppliers): Supplier

development may refer to the creation of new purchasing sources. In this case, the
literature on the subject commonly speaks of reverse marketing (Krause and
Ellram, 1997a) or the narrow perspective (Hahn et al., 1990). Alternatively,
supplier development activities may focus on existing suppliers, i.e., on performance
improvements in terms of time, quality and cost or improvements in suppliers
capabilities. In such a case, the literature refers to a broader perspective (Hahn
et al., 1990).
Motivation of the customer (reactive versus proactive approaches): Supplier

development activities may be initiated in response to a specific and (usually) urgent
problem with the supplier. Quality problems leading to delays in the customers
production are one example. The extant literature describes this type of supplier
development as reactive (Krause et al., 1998). However, where supplier
development takes a planned, forward-looking and systematic approach, this type is
deemed to be strategic (Krause et al., 1998).
Role of the customer (indirect versus direct supplier development): When the
customer adopts a passive role in supplier development e.g., by merely setting
improvement targets for the supplier without becoming involved in the actual
improvement activities this is referred to as indirect supplier development
(Monczka et al., 1993). In other cases, customers play an active role, contributing
their own personnel or financial resources to the effort. In such cases, the literature
on the subject speaks of direct supplier development (Monczka et al., 1993)
borrowing from transaction cost theory of transaction-specific investments in the
supplier by the buying firm (Krause, 1999) or of externalised supplier
development activities (Krause et al., 2000). Examples include activities such as
training for the suppliers staff, providing advice to suppliers, temporary on-site
support and financial commitments within the framework of joint investment
projects.
101
Given the many aspects of supplier development, it is not surprising that no consistent
understanding exists in the literature. By contrast, several articles develop their own
nomenclature. For instance, some authors expand their definition of transaction-specific
supplier development to include increasing performance targets for suppliers (e.g.,
Humphreys et al., 2004), an activity most authors assign to indirect supplier development.
To shed some empirical light on the understanding of supplier development, this study
analyses supplier development activities listed in the questionnaires attached to most
publications. Table 2 provides an overview, categorising the activities by the frequency
with which they are used and differentiating between indirect and direct supplier
development (human/financial resources) activities.
Table 2
Frequency with which supplier development activities are used in questionnaires
Type of
supplier
development
Frequency (percentage of publications that list the activity in their questionnaire)
Indirect
Direct
(human
resources)
Direct
(financial
resources)
Often (> 30%)
Sometimes (10% to 30%)
Supplier
evaluation/feedback
Increase of objectives
for suppliers
Supplier awards
Certification of
suppliers
Provision of incentives
(e.g., current/future
business)
Occasionally (< 10%)
Communication of
the customers
strategic objectives
Supplier days
Quality as criterion
for supplier selection
Supplier audits
Precise specifications
Involvement of the
supplier in the
customers product
development process
Involvement of the
customer in the
suppliers product
development process
Support of the
supplier during
market entry
Creation/increase of
competitive
pressure on
suppliers
Training of supplier
staff
Supplier visits
Transfer of staff to
the supplier
Technical support
for the supplier
Joint process
optimisation
Invitation of the
supplier to the
customers premises
Providing consulting
services to the supplier
Dedicated supplier
development team
Financial support of
the supplier, e.g.,
joint investments
Financing of tools, etc.
Investment in the
supplier company
There are also differences in how supplier development activities are classified.
Notwithstanding these differences, a general tendency to classify supplier development
activities based on the level of activity of the customer is discernible. The distinction
between direct and indirect activities is a simple example of this principle. Other criteria
used to distinguish between supplier development activities include the nature of the
resources contributed by the customer (human versus financial resources), the
circumstances within which the activities are conducted (on an ad hoc or systematic
basis) and the strategic orientation (reactive or proactive). Table 3 summarises
empirically supported proposals for segmenting supplier development activities.
102
Table 3

Empirical findings as criteria for the segmentation of supplier development activities
Source
Wagner and
Krause (2009)
Li et al. (2007)
Empirical basis;
country; industry;
perspective
65 out of 251 (26%);
Europe (countries not
clear); cross-industry;
buyer perspective
142 out of 450 (32%);

Hong Kong; electronics
industry; buyer
perspective
Wagner
(2006b)
173 out of 691 (25%),

additional case studies;
Germany, Austria,
Switzerland;
cross-industry; buyer
perspective
Krause et al.
(1998)
84 out of 210 (40%),

benchmarking network;
primarily USA;
perspective
Krause (1997)
Main findings
Three factors are extracted from various supplier
development activities:
Supplier evaluation and feedback
Knowledge transfer
Employee exchange (including training)
Four types of supplier development can be

differentiated:
Asset specificity, e.g., training
Joint action, e.g., eliminating non-value activities
Performance expectation, e.g., increasing supplier

performance goals
Trust, e.g., confidence in the information

provided by the supplier
Two dimensions of direct supplier development

(human and capital support) and four dimensions of
indirect supplier development (ad hoc as well as
formal supplier evaluation, evaluation system and
communication) have been identified.
Two approaches towards supplier development have
been identified:
Strategic (systematic with regard to the

identification of critical commodities/suppliers,
market-oriented, long-term)
Reactive (motivated by supplier

non-performance, problem-focused, short-term)
527 out of 1,504 (35%); Supplier development activities can be differentiated

USA; cross-industry;
according to the level of the buying firms
buyer perspective
commitment:
Enforced competition, e.g., use of two or three

suppliers
Incentives, e.g., promise of future benefits
Direct involvement, e.g., site visits
Currently, comprehensive supplier development has a relatively small footprint in

corporate practice, although Watts and Hahn claimed more than 15 years ago that
supplier development programmes are more prevalent and less novel than is generally
believed (Watts and Hahn, 1993). In their cross-industry study, 63% of the US
companies surveyed claimed to operate a supplier development programme, although it
must be noted that supplier development only appears to be widespread when questions
103
about supplier development programmes are vague [compare also the findings of Quayle
(2002)]. However, when company representatives are asked about specific activities,
supplier development is generally reported to be far less widespread (Table 4). The
corporate sector appears reluctant to engage in direct supplier development in particular.
In addition, when the need arises to invest capital in addition to human resources, most
companies commitment appears to be non-existent. In Krause and Scannells study, for
example, manufacturing companies scored an average of 4.57 (and service providers
4.80) when asked about the activity Investment in the suppliers operation. This score
was on a scale from 1 always to 5 never (Krause and Scannell, 2002).
Supplier development is more prevalent in some industries than in others. In
particular, the automotive industry is often cited as a pioneer, as documented in numerous
case studies (for example, Sako, 2004; Rogers et al., 2007). Similarly, the engineered
products sector is seen to exhibit an above-average commitment to active supplier
development. By contrast, companies in the process and primary industries or retailing
tend to exhibit below-average activity. Unfortunately, the empirical base in this area is
very thin, as only two authors have so far conducted dedicated industry comparison
studies [Quayle (2002), for companies with fewer than 200 employees and Wagner,
(2006b)].
Table 4
Empirical findings regarding the prevalence of supplier development in practice
Source
Empirical basis; country;

industry; perspective
Main findings
Oh and Rhee (2008) 94 out of 231 (41%);

South Korean; automotive
industry; supplier
perspective
Compared to other types of

manufacturer-supplier collaboration such as
collaborative communication or
collaboration in new car development,
supplier development, comprising mostly
direct supplier development activities, such
as supplier visits, is the least used
instrument.
Wagner (2006b)
173 out of 691 (25%),

Germany, Austria,
Switzerland; cross-industry;
buyer perspective
In general, companies are very hesitant to

commit resources to direct supplier
development. Indirect supplier development
is undertaken more intensively.
306 out of 1,200 (26%);

Spain; cross-industry; buyer
perspective
Basic supplier development practices, such

as the reporting of supplier evaluation
results to suppliers, are most widely
implemented, followed by moderate
practices such as plant visits. Advanced
supplier development activities, such as
training to suppliers, are not very common.
Snchez-Rodrguez
et al. (2005)
With regard to direct supplier development,

automotive, metal, construction and
machinery companies rank above average in
terms of both human and capital support.
Companies from primary industries such as
oil refining rank below average.
104
Table 4

(continued)
Source
Quayle (2002)

240 out of 400 (60%); UK;
cross-industry/companies
< 200 employees; surveyed
as buyers and suppliers
Main findings
Overall, 52% of the companies reported
operating a supplier development
programme. However, percentages vary
significantly across industries. For instance,
80% to 90% of packaging and distribution,
food and service/utility companies
answered affirmatively, whereas only 10%
to 30% of construction, chemicals and
pharmaceuticals and high tech companies
did so.
On the opposite end, only approximately
30% of the companies reported being
involved in supplier development
programmes of their customers.
Krause and Scannell 512 out of 1.504 (34%);

(2002)
USA; cross-industry; buyer
perspective
Supplier development varies per company

type and strategy:
Product-based companies use especially
supplier assessment, followed by supplier
incentives, direct involvement and
competitive pressure
Service-based companies use supplier
development to a lesser degree. Exception is
the competitive pressure strategy, e.g., the
use of 2 or 3 suppliers
Forker and
Stannack (2000)
384 out of 769 (50%),

production material
suppliers of two companies;
USA; cross-industry; dyadic
Suppliers and buyers perceptions of the

buyers extent of use of supplier
development diverge with regard to several
practices. For instance, buyers were more
inclined to believe in the utility of their
supplier rating system, whereas suppliers
ranked the clarity of the customers
specifications more highly (similar:
Forker et al., 1999)
84 out of 210 (40%),

benchmarking network;
primarily USA;
perspective
Average levels of implementation range low

for the various assessed supplier
development activities (between somewhat
implemented and hardly implemented at
all).
Krause (1997)
527 out of 1,504 (35%);

perspective
The average levels of usage vary by

supplier development activity. For instance,
buyers provide their suppliers often with
feedback on evaluation results but hardly
ever invest in a suppliers operation.
Table 4
105

(continued)
Source
Main findings
Monczka et al.
(1993)
Almost 200 business units

(total sample not clear),
perspective
Companies increasingly use supplier

performance goals (in 1989, 60% of the
companies pursued this activity; by 1992,
83% did), conduct education and training
programmes (42% in 1989, 63% in 1992) or
provide technology (29% in 1989, 52% in
1992). Other supplier development
activities such as providing support
personnel, equipment or capital are
pursued to a lesser extent, but overall,
implementation levels are rising. However,
companies allocate only limited to
moderate resources to supplier
development, providing usually not even
one tenth of a percent of their purchasing
volume.
Watts and Hahn

(1993)
81 out of 500 (16%); USA;

perspective
Supplier development programmes are

more prevalent and less novel than is
generally believed: 63% of the sample
companies have some sort of supplier
development programme, 51% have one as
a permanent unit. However, 57% have their
programme for 4 years, 64% engage only
10 people and only 10% claim to be
committed to a broad perspective of
supplier development.
Some authors have investigated the relationships that exist between different types of
supplier development. The general opinion is that the various supplier development
activities can be combined with each other. As Snchez-Rodrguez et al. (2005) stated:
Thus, the results suggest that implementing one construct does not negatively
impact another construct. For example, sourcing from a limited number of
suppliers, providing suppliers with feedback on their performance,
standardizing parts and components, and qualifying suppliers did not adversely
affect moderate supplier development practices, such as rewarding and
recognizing suppliers performance improvements, visiting suppliers to assess
their facilities, and collaborating with suppliers in materials improvement.
These findings fit with the process-based understanding of supplier development [for
example, see the process described by Hartley and Jones (1997)]. In most process
proposals, indirect supplier development activities, such as formal supplier evaluation,
lay the foundation for direct supplier development to identify suppliers and issues that are
worth developing. However, Wagner (2005) argues that indirect supplier development
activities (such as setting improvement targets) are incompatible with direct supplier
development, which is based on cooperation, trust and commitment. In his view,
companies ought to choose between either direct or indirect supplier development.
106
Table 5

Empirical findings regarding the relationships between supplier development
activities
Source
Empirical basis;
country; industry;
perspective
Main findings
Carr et al. (2008)
There is a positive relationship between supplier

166 out of 1,000
training and supplier involvement in product
(17%), part of a
larger study; USA; development and redesign.
cross-industry;
buyer perspective
Modi and Mabert

(2007)
114 out of 1,900

(6%); USA;
cross-industry;
buyer perspective
The supplier development strategies evaluation and

certification as well as future business incentives
positively relate to operational knowledge transfer
activities such as training and education programmes
or site visits. The hypothesised negative relationship
between competitive pressure and operational
knowledge transfer activities was not found to be
significant.
Wagner (2006b)
173 out of 691

(25%), additional
case studies;
Germany, Austria,
Switzerland;
cross-industry;
buyer perspective
Several indirect supplier development activities

(formal evaluation, evaluation system and
communication, with the exception of ad hoc
evaluation) are closely linked with direct supplier
development activities (both human and capital
support).
Snchez-Rodrguez
et al. (2005)
306 out of 1,200

(26%); Spain;
cross-industry;
buyer perspective
The three differentiated levels of supplier

development basic, moderate and advanced are
positively correlated with each other. This also
means that implementing one of the practices does
not negatively affect others.
Wagner (2005)
60 out of 251
(24%); Germany,
Austria,
Switzerland;
cross-industry;
buyer perspective
In combination, direct and indirect supplier

development activities were found to have a negative
effect on supplier capability improvement as well as
on product and delivery performance improvement.
(Taken individually, direct supplier development had
a positive impact on supplier capabilities, indirect
supplier development on the suppliers product and
delivery performance.)
322 out of 1,504

(21%); USA;
cross-industries;
buyer perspective
Supplier assessment and supplier incentives are key

enablers of supplier development based on direct
involvement (e.g., via site visits). A similar
relationship involving competitive pressure was not
found to be significant.
3.2 Impact on supplier and customer

Following the structure outline in the frame of reference, the impact of supplier
development on the supplier (as opposed to the customer) is examined first. Three areas
of impact can be identified:
107
the suppliers performance, e.g., improvements in quality, cost, lead times, service
and reliability
the suppliers capabilities, e.g., the enhancement of methodological knowledge in

production (lean manufacturing, Six Sigma, kaizen, etc.)
the supplier-customer relationship, e.g., in the sense of a better working climate

between customer and supplier.
These areas are by no means of equal importance. Several studies provide empirical
evidence that customers attach greater importance to (short-term) improvements in a
suppliers performance than to (long-term) improvements in the suppliers capabilities
(Quayle, 2002; Krause and Scannell, 2002; Watts and Hahn, 1993).
Re. 1
Essentially, the vast majority of empirical studies agree that supplier development has a
positive impact on suppliers performance. However, Wagner finds no positive
correlation between direct supplier development and suppliers performance (Wagner,
2005; Wagner, 2006a). He also finds that combinations of indirect and direct supplier
development actually have a negative impact on suppliers performance (Wagner, 2005).
In addition, a number of authors note that, although the outcomes of supplier
development are viewed positively, there is still room for improvement [see, for example,
Watts and Hahn (1993)].
Re. 2
There is currently only one study that explicitly examines the relationship between
supplier development and improvements in the capabilities of suppliers, even though
several authors refer to the issue (for example, Krause and Scannell, 2002). The study in
question identifies a positive correlation between direct supplier development and the
capabilities of suppliers (Wagner, 2005).
Re. 3
Few studies investigate the link between supplier development and the customer-supplier
relationship. Those that do so mostly confirm a positive correlation (for example,
Humphreys et al., 2004). However, the results of Blonska et al. (2008) indicate that
supplier development has no direct influence on supplier adaptation or a suppliers
preference for the buyer investing in its development. Wagner (2006a) sees no positive
correlation between direct supplier development and the relationship between customers
and suppliers.
All in all, the impact of supplier development on suppliers can be regarded as positive
(for details, see Table 6). Activities are usually focused on improving suppliers
performance as opposed to boosting their capabilities. However, it must be noted that
most of the studies reflect the customers standpoint. In other words, the views of
suppliers themselves did not flow into these studies. Drawing on a case study, Rogers
et al. (2007) report that supplier development activities such as joint workshops were
often given the credit for identifying problems or solutions even in cases where the
problems had already been known and, in some cases, had already been resolved.
108
Table 6

Empirical findings regarding the impact of supplier development on the supplier
Source

Main findings
Li et al. (2012)
142 of 450 (31.5%);

electronics industry;
Hong Kong; buyer
perspective
Transaction-specific supplier development

contributes significantly to predicting
improvements in supplier performance and the
buyer-supplier relationship.
Humphreys et al.
(2011)
142 of 450 (31.5%);

electronics industry;
China; buyer perspective
Direct supplier development contributes

significantly to predicting improvements in
supplier performance.
Ghijsen et al.
(2010)
47 out of 190 (23%);

Germany; automotive
industry; supplier
perspective
Supplier development has a positive impact on

supplier satisfaction and commitment.
Blonska et al.
(2008)
185 out of 254 (73%);

country and industry not
clear; supplier perspective
Supplier development has a positive effect on

the relational embeddedness of the supplier.
However, an influence of supplier development
on supplier adaptation or a preference for the
buyer investing in developing the supplier was
not confirmed.
Carr et al. (2008)
166 out of 1,000 (17%),

part of a larger study;
perspective
Supplier training and supplier involvement in

product development and redesign both
positively impact on a suppliers operational
performance (in terms of product quality,
delivery time and cost control).
Modi and Mabert 114 out of 1,900 (6%);

Operational knowledge transfer activities such
USA; cross-industry; buyer as training and education programmes or site
(2007)
visits are positively related to supplier
perspective
performance (e.g., in terms of quality, cost and
time) as well as collaborative communication
(e.g., the timely and regular exchange of
information). Collaborative communication
itself also positively affects supplier
performance.
Wagner (2006a)
60 out of 251 (24%);

Germany, Austria,
Switzerland;
perspective
Indirect supplier development (e.g., via setting

improvement targets) has a positive impact both
on supplier product and delivery performance
and on the buyer-supplier relationship. These
relationships were not supported in the case of
direct supplier development activities (e.g., via
transferring employees).
Wagner (2005)
60 out of 251 (24%);

Germany, Austria,
Switzerland;
perspective
Direct supplier development has a positive

effect on supplier capability improvement and
indirect supplier development on supplier
product and delivery performance. However,
direct supplier development does not appear to
upgrade the suppliers product and delivery
performance. In combination, direct and indirect
supplier development activities were found to
have a negative effect on both supplier
capability and product/delivery performance
improvement.
Table 6
109
Empirical findings regarding the impact of supplier development on the supplier

(continued)
Source

Main findings
Humphreys et al.
(2004)
142 out of 450 (32%);

Transaction-specific supplier development (e.g.,
increasing supplier performance goals or joint
industry; buyer perspective actions) contributes significantly to predicting
improvements in supplier performance and the
buyer-supplier relationship.
Krause et al.
(1999)
89 out of 210 (42%); USA;

cross-industry; supplier
perspective (minority
suppliers)
Participants of the analysed minority supplier

development programme were generally neutral
about the effect of their customers programme
on their companys performance and viability.
Note: A minority supplier (in general: minority
business enterprise) is a company which is at
least 51% owned and operated by an US citizen
belonging to a minority, e.g., African-American.
Krause and
Ellram (1997b)
527 out of 1,504 (35%);

Not all companies are equally successful in
USA; cross-industry; buyer supplier development. However, those
exceeding expectations experienced superior
perspective
supplier performance improvements with regard
to incoming defects and percentage of orders
received complete.
Monczka et al.
(1993)
~ 200 (exact sample not

clear), additional case
studies; USA;
perspective
Watts and Hahn

(1993)
81 out of 500 (16%); USA; Overall, supplier development appears to

improve supplier performance but not yet to the
level desired by the buyers. The areas in which
perspective
major improvements occurred through supplier
development are consistent with the
participants key programme objectives,
especially supplier quality improvement.
Overall, the results of supplier development are

positive, but there remains room for
improvement. Supplier development has a
positive impact on supplier performance (in
terms of quality, delivery, lead time and cost).
Although supplier development has many and varied effects on customers, it is again
possible to distinguish three main areas of impact:
1
The customers operating performance, e.g., improvements in time, quality or cost.
The customers overall business performance, e.g., higher revenues or greater

responsiveness to changes in the marketplace.
The customer-supplier relationship, e.g., in the sense of a better working climate

between customer and supplier.
Re. 1
Changes (improvements) in the customers operating performance are by far the most
frequently investigated effect of supplier development. On the whole, the majority of
110
studies identify a positive correlation. This is an extremely important insight, as it is

ultimately this positive correlation that justifies companies investment in supplier
development. One exception is the paper published by Li et al. (2007), who note a
negative correlation between greater expectations on the part of customers (as a result of
prescribed targets and supplier awards) and customers own operating performance.
Re. 2
Only a handful of authors explore the relationship between supplier development and
overall business performance. Humphreys et al. (2004), for example, identify a positive
correlation between transaction-specific supplier development and competitive
advantages on the part of the customer (e.g., in the form of higher revenues). From our
point of view, supplier development is an important aspect of systematic supplier
management but is ultimately only one link in the chain. We thus find it difficult to
envisage an unambiguous causal link to overall business performance, even if such a link
is statistically measurable.
Re. 3
The empirical insights gained here correspond to those already summarised above.
A review of the empirical findings yields three major findings. First, most studies
examine the direct relationship between supplier development activities and the impact
on the customer. In other words, they deviate from the interdependency assumed by the
frame of reference (see Figure 2), i.e., an indirect correlation via the effects on the
supplier. Second, although they measure impact, the studies do not query companies
objectives. The lack of any improvement in costs, for instance, does not necessarily
indicate that supplier development has failed. Activities may simply have focused
exclusively on improving quality. Third, no study questions whether supplier
development in general and direct supplier development in particular actually pay off.
However, it is important to juxtapose benefits such as lower purchasing costs for input
parts and, say, the cost of supplier development.
Table 7
Empirical findings regarding the impact of supplier development on the customer
Source
Empirical basis;
country; industry;
perspective
Main empirical findings
Li et al. (2012)
142 of 450
(31.5%);
electronics
industry;
Hong Kong;
buyer perspective
Transaction-specific supplier development has a

positive impact on the buyer-supplier relationship.
Buyers that have closer collaborative relationships
with suppliers may strengthen their competitive
advantage.
Snchez-Rodrguez
(2009)
306 out of 1,200

(26%); Spain;
cross-industry;
buyer perspective
Supplier development has a positive impact on the

buyers purchasing performance (e.g., regarding cost
and quality of materials or internal customer
satisfaction). In addition, there is some support that
supplier development mediates the relationship
between strategic purchasing and purchasing
performance.
Table 7
111

(continued)
Source
Empirical basis;
country; industry;
perspective
Wagner and Krause

(2009)
65 out of 251
(26%); Europe
(countries not
clear);
cross-industry;
buyer perspective
Supplier development via tacit knowledge transfer has

a positive effect on the buying firms goal of
improving a suppliers product/delivery performance
and capabilities. The exchange of employees mediates
this relationship. A similar relationship for supplier
development via supplier evaluation and feedback was
not confirmed.
374 out of 1,500

(25%) buyers as
well as 75
suppliers; USA;
cross-industry;
customer
perspective
Direct supplier development has a positive effect on

the buyers performance in terms of quality, delivery
and manufacturing flexibility, but not in terms of cost
and total cost. For other activities that can be regarded
as indirect supplier development, such as information
sharing or supplier performance evaluation, no such
relationships were supported.
Li et al. (2007)
142 out of 450

(32%);
Hong Kong;
electronics
manufacturers;
customer
perspective
Joint actions such as the elimination of non-value

activities enhance the operational effectiveness of the
buyer. Asset-specific investments such as training
contribute to improve the buyers market
responsiveness. Conversely, increasing supplier
performance goals or recognising the suppliers
progress was found to negatively impact the buyers
operational effectiveness.
Carr and Kaynak

(2007)
223 out of 1,000

(22%); USA;
cross-industry;
buyer perspective
Supplier development support, e.g., via providing

technical expertise is directly related to the customer
firms product quality improvement. However, a
similar relationship with the buyers financial
performance is not supported.
Wagner (2006a)
60 out of 251
(24%); Germany,
Austria,
Switzerland;
cross-industry;
buyer perspective
Improving the buyer-supplier relationship through

(indirect) supplier development can represent
powerful support for both the customers cost
leadership and differentiation strategy. Similar
relationships improving the suppliers product and
delivery performance through supplier development
was not supported.
Wagner (2005)
60 out of 251
(24%); Germany,
Austria,
Switzerland;
cross-industry;
buyer perspective
Supplier capabilities improved through supplier

development proved to be a powerful support for both
the customer firms differentiation and cost leadership
strategy. Improving the suppliers product and
delivery performance through supplier development,
however, appears to only back up a cost leadership
strategy.
Snchez-Rodrguez
et al. (2005)
306 out of 1,200

(26%); Spain;
cross-industry;
buyer perspective
Analysed separately, all three types of supplier

development practices (basic, moderate, advanced)
were found to positively impact the buyers
purchasing performance. Analysed jointly, basic
supplier development practices, such as informing the
suppliers on their performance, were found to account
for most of the variance.
112
Table 7

(continued)
Source
Empirical basis;
country; industry;
perspective
Humphreys et al.
(2004)
142 out of 450

(32%);
Hong Kong;
electronic
manufacturer;
buyer perspective
Transaction-specific supplier development (e.g.,

increasing supplier performance goals or joint actions)
significantly contributes to predicting buyer
competitive advantage improvements.
Wen-Li et al. (2003)
142 out of 450

(32%);
Hong Kong;
electronic
manufacturer;
buyer perspective
Direct supplier development significantly contributes

to predicting purchasing performance (measured both
in terms of an improvement of the supplier
performance as well as the buying firms competitive
advantage).
Krause and Scannell

(2002)
512 out of 1,504

(34%); USA;
cross-industry;
buyer perspective
Overall, both product- and service-based companies

indicated a general satisfaction with their supplier
development efforts (i.e., they agreed to improve
product/service quality, rework and scrap,
product/service costs, the amount of production
downtime or time for problem solving).
De Toni and
Nassimbeni (2000)
52 out of 87
(60%); Italy;
electronics and
machinery plants;
buyer perspective
Better-performing plants tend to use supplier

development practices, such as formalised vendor
rating/ranking procedures, organisational integration
devices or supplier assistance and training, more
intensively than traditional plants.
Forker and Stannack

(2000)
384 out of 769

(50%), production
material suppliers
of two
companies; USA;
cross-industry;
dyadic
Overall, satisfaction with the buyer-supplier

relationship was found to be at reasonable levels.
However, the shared understanding between the buyer
and supplier was found to be greater for the
competitive relationship than for the cooperative
relationship, where the suppliers were found to be
happier.
322 out of 1,504

(21%); USA;
cross-industry;
buyer perspective
Supplier development based on direct involvement

(e.g., via site visits) directly and positively affects the
customer firms performance improvement, whereas
supplier development based on supplier assessment
and incentives has an indirect positive impact. For
competitive pressure, however, no significant
(direct/indirect) relationship was found.
84 out of 210
(40%), part of a
larger study;
primarily USA;
cross-industry;
buyer perspective
Companies that apply a strategic approach towards

supplier development receive a higher level of
resource deployment from their suppliers than
companies that use a reactive approach.
113
3.3 Factors that influence supplier development

3.3.1 Frame conditions
In contrast to the success factors analysed in the following subchapter, empirical
investigations of frame conditions have so far played a minor role in survey-based
literature. In many cases, these factors come into play merely as control variables and are
seldom the focus of a study. The frame conditions that have been empirically tested to
date can be split into three categories:
1
Business conditions, such as technological uncertainties [though Oh and Rhee

(2008), see no impact here], the pace of technological change [for which Krause
(1999), sees no impact] and the intensity of competition in the customers market
(which, in the view of Krause, 1999, has a positive, indirect impact on supplier
development).
Relational conditions, such as the duration of the customer-supplier relationship

(for which no study has yet proven a correlation) and the distribution of
power/dependency between customer and supplier. Although the importance of the
latter point is frequently emphasised in the literature, it has only recently received
empirical attention in the context of supplier development (Carr et al., 2008; Krause
et al., 2007).
Company-specific conditions, such as the size of the customer company [Watts

and Hahn (1993), indicate that large companies are more likely to run supplier
development programmes] and the capabilities of the supplier [Oh and Rhee (2008),
contend that the ability of tier-1 suppliers to develop tier-2 suppliers and respond
flexibly has a positive impact on OEMs direct supplier development activities].
Table 8
Empirical findings regarding the frame conditions surrounding supplier development
Source

Main findings
Lee et al.
(2009)
175 out of 758 (23%);

Hong Kong; electronic
manufacturers; buyer
perspective
Technology change, strategic purchasing and

specific investments in suppliers have a positive
impact on supplier alliances (supplier development is
considered a major element of supplier alliances). A
similar relationship for market uncertainty was not
confirmed.
Carr et al.
(2008)
166 out of 1,000 (17%),

buyer perspective
There is a positive relationship between the

suppliers dependence on a buyer and both supplier
training and the suppliers involvement in product
development and redesign.
Oh and Rhee
(2008)
94 out of 231 (41%);

South Korean;
automotive suppliers;
supplier perspective
The tier 1 suppliers flexibility and its capability to

develop/coordinate tier 2 suppliers positively
influence supplier development by the OEM. Other
supplier capabilities had no such impact. In addition,
technological uncertainty had no moderating effect.
114
Table 8

(continued)
Source

Main findings
Krause et al.
(2007)
374 out of 1,500 (25%);

customer perspective
Both buyer and supplier dependence were found to

be important in explaining buyer performance
achievements in terms of cost and total cost (but not
in terms of quality, delivery and manufacturing
flexibility). A similar relationship for the length of
the buyer-supplier relationship was not supported.
Wagner
(2006a)
60 out of 251 (24%);

Germany, Austria,
Switzerland;
perspective
The control variable supplier share of the customer

firms purchasing volume was not found to have an
impact on the relationships between supplier
development activities, supplier
relationship/performance improvement or the
buyers competitive advantage.
Helper and
Kiehl (2004)
27 (total sample not

clear), additional case
study; USA;
cross-industry; supplier
perspective
The substitution of buyer-driven supplier

development by market-based mechanisms (e.g.,
external consultants or employees recruited from
outside firms) has several implications: fewer firms
undertake transformation efforts to improve, e.g.,
their manufacturing performance, they are likely to
start later with it and they are more focused on
short-term results.
De Toni and
Nassimbeni
(2000)
52 out of 87 (60%); Italy;

electronics and
machinery plants; buyer
perspective
Operational JIT purchasing practices that allow the

creation of a link between buyer-supplier operations
are correlated with supplier development activities.
For instance, establishing a logistic link (e.g., via
an integrated production planning) correlates with
supplier assistance initiatives (e.g., technical or
managerial assistance).
Krause et al.
(1999)
89 out of 210 (42%);

(minority suppliers)
On average, small suppliers (sales USD < 10 m)

felt that their customers Minority Supplier
Development programme has helped them less
compared to their larger counterparts. The length of
the relationship was not found to have a significant
impact. See the note on minority suppliers in
Table 6.
Krause (1999)
527 out of 1,504 (35%);

buyer perspective
The level of competition in the buying firms market

and the importance of purchased inputs to the buying
firm have an effect on the buying firms strategic
perspective towards suppliers and, indirectly, the
buying firms propensity to engage in supplier
development. A similar relationship for the rate of
technological change is not supported.
Krause and
Ellram
(1997b)
527 out of 1,504 (35%);

buyer perspective
There are no significant differences between

customer firms where supplier development efforts
exceeded expectations and the remaining firms in
terms of the percentage of supplier output bought or
buyer-supplier relationship length.
Table 8
115

(continued)
Source

Main findings
Krause and
Ellram
(1997a)
93 out of 350 (27%); part Purchasing a relatively large percentage of the

of a larger study; USA;
suppliers output is critical for supplier development.
perspective
Watts and
Hahn (1993)
81 out of 500 (16%);

buyer perspective
A total of 5 out of 11 demographic items were found

to positively correlate with the use of supplier
development, namely annual gross sales, the number
of total employees, the number of purchasing
employees, and regular and formal supplier
evaluation. For other items, such as the ratio of
purchase dollars to sales dollars, no significant
relationship was found.
Lascelles and
Dale (1989,
1990)

clear), additional
observations and
interviews; UK;
automotive supplier;
Lack of purchasing power is a commonly reported

reason for the lack of success in improving supplier
quality performance.
To summarise, it is fair to say that frame conditions have yet to receive adequate attention
in empirical research into supplier development. The importance of the distribution of
power and mutual dependencies in particular is emphasised by many authors but has so
far received too little attention. Other conditions that specifically affect supplier
development or individual supplier development activities have to date been studied
scarcely or not at all. For instance, the fact that customers themselves often possess little
or no relevant methodological expertise could help explain why many customers are very
reluctant to engage in certain supplier development activities (such as the provision of
training).
3.3.2 Success factors

A review of the articles reveals that nearly 30 different success factors have been
identified in the various surveys (see Table 9). This large number highlights two main
points: research into success factors plays an important part in supplier development, and
the extant literature does not agree on which success factors are truly crucial.
Nevertheless, taking the frequency with which certain success factors are validated and
confirmed as an indicator, four success factors can be highlighted:
Effective communication: Several studies attest to the positive influence of effective

communication on results from supplier development. Krause and Ellram (1997b),
for example, outline the drivers of effective communication. In their view,
communication must be fast, frequent and informal. It must also include confidential
information and must take place via several points of contact between the companies
concerned. Carr and Kaynak (2007) beg to differ, failing to identify any positive
correlation between the exchange of information between customers and suppliers on
the one hand and supplier development on the other.
116
An attitude of partnership: This factor is also confirmed by a number of studies.

Factors such as win-win philosophies, shared values and mutual trust can also be
subsumed under this concept (for example, Li et al., 2007; Quayle, 2002).
Mutual commitment: Several studies identify this success factor with reference both
to the customer (for example, Krause et al., 2007) and to the supplier (for example,
Handfield et al., 2000). However, commitment as a success factor can also be
interpreted as a result of other success factors. For instance, the right incentives
offered by the customer could drive a suppliers commitment.
Top management support: As is the case for many other initiatives, top management
support is critical to the success of supplier development (Krause, 1999). Humphreys
et al. (2004) cannot confirm this view, however.
Other success factors include the following: the involvement of relevant customer
functions; a proactive approach by both customer and supplier; the setting of strategic
goals by both the customer and the supplier; continual improvement; harmonised
organisational cultures; credibility on the part of the customer; tight management by
purchasing; and clear specifications. It should further be noted that some studies link
these success factors to the existence or intensity of supplier development, while others
correlate them with the success of supplier development activities.
Table 9
Empirical findings regarding success factors for and obstacles to supplier

development
Source
Empirical basis;
country; industry;
perspective
Main findings
Snchez-Rodrguez 306 out of 1,200 (26%);

(2009)
Spain; cross-industry;
buyer perspective
Strategic purchasing, i.e., a strategic orientation

within a companys purchasing department, is
positively related to supplier development.
Krause et al.
(2007)
374 out of 1,500 (25%)

customer perspective
Buyer commitment and shared values have a

positive impact on the buyers performance in
terms of quality, delivery, manufacturing
flexibility, cost and total cost.
Li et al. (2007)
142 out of 450 (32%);

manufacturers; customer
perspective
Trust, e.g., confidence in the information

provided by the supplier, was found to positively
impact the operational effectiveness (in terms of
product cost and quality) of the buyer.
Carr and Kaynak

(2007)
223 out of 1,000 (22%);

buyer perspective
Information sharing within the buying firm

(i.e., between different functions) is positively
correlated with the buyers supplier development
support. A similar relationship with regard to
information sharing between buyer and supplier
was not supported.
Table 9
117

development (continued)
Source
Humphreys et al.
(2004)
Empirical basis;
country; industry;
perspective
Main findings
142 out of 450 (32%);

manufacturer; buyer
perspective
Several infrastructure factors of supplier

development (supplier strategic objectives, trust
and effective communication) are positively
related to buyer-supplier performance
improvement. For other factors (e.g., buyer
strategic goals, top-management support,
long-term commitment), such a relationship is
not supported).
Wen-Li et al. (2003) 142 out of 450 (32%);

manufacturer; buyer
perspective
Elements of supplier development such as the

buyers long-term strategic goals, effective
communication, partnership strategy or
top-management support are positively
correlated with purchasing performance
(measured both in terms of an improvement of
the supplier performance and in terms of the
buying firms competitive advantage).
Moreover, a suppliers strategic objective is a
significant predictor of purchasing performance.
Quayle (2002)
240 out of 400 (60%);

UK; cross-industry/
companies < 200
employees; surveyed as
buyers and suppliers
Proactive customers and suppliers, commitment

to long-term relationships, a win-win philosophy
and continuous improvement are regarded as key
elements of supplier development. Conversely,
the integration of key functions, long-term
commitment and a structured framework for
determining cost, price and profit are regarded as
less important.
Handfield et al.
(2000)
84 out of 200 (42%),

part of a larger study,
primarily USA;
perspective
Six pitfalls in supplier development are divided

into three categories:
Supplier-specific pitfalls:
1 lack of supplier commitment
2 insufficient supplier resources
Buyer-specific pitfalls:
3 lack of buyer commitment
Buyer-supplier interface pitfalls:
4 lack of trust
5 poor alignment of organisational cultures
6 insufficient inducements to the supplier
Krause (1999)
527 out of 1,504 (35%); Both the buyers perception of supplier

commitment and the inter-firm communication
effort have a significant positive effect on
buyer perspective
supplier development activities. A similar
relationship with regard to the buying firms
expectation of relationship continuity is not
supported.
118
Table 9

development (continued)
Empirical basis;
country; industry;
perspective
Source
Main findings
Krause and Ellram

(1997b)
527 out of 1,504 (35%); Companies that characterise their supplier

development results as exceeding their
expectations communicate more closely with
buyer perspective
their suppliers (e.g., more frequently/informally
and involving many inter-firm contacts) and are
more active with regard to several supplier
development activities (e.g., formal evaluation or
site visits).
Krause and Ellram

(1997a)
93 out of 350 (27%);

buyer perspective
Effective two-way communication, top

management involvement, cross-functional
teams and purchasing a relatively large
percentage of the suppliers output are critical to
supplier development. For other factors, such as
a long-term perspective or an emphasis on other
factors than price, no such relationship was
found.
Lascelles and Dale

(1989, 1990)

clear), additional
observations and
interviews; UK;
automotive supplier;
The following factors can act as a barrier to

supplier development: poor communication and
feedback, supplier complacency, misguided
supplier improvement objectives, the lack of
credibility of customers and misconceptions
regarding purchasing power.
3.3.3 Sharing of benefits

The literature has discussed the issue of how costs and benefits are distributed in
interorganisational relationships from a variety of angles. In the context of the paper
industry and its process technology suppliers, Fink et al. (2007), for instance, have shown
that customers improve their cost position by cultivating closer relationships with their
suppliers but do not pass these benefits on to their suppliers. This makes it all the more
astonishing that only a single empirical study has as yet examined how the fruits of
supplier development are distributed between customers and suppliers (New and Burnes,
1998). The study concludes that in cases where activities primarily require changes by
and within the supplier, the costs tend to be borne by the supplier, whereas any resultant
gains or savings tend to mainly benefit the customers (New and Burnes, 1998).
3.4 Theoretical and methodological considerations

3.4.1 Theories used
The scientific literature has established a number of theories that can help explain the
reasons for and the nature of interorganisational cooperation. Examples include
the transaction cost theory (for example, Williamson, 1975; Williamson, 1985), the
resource-based theory (for example, Wernerfelt, 1984; Wernerfelt, 1995), the
resource dependence theory (for example, Pfeffer and Salancik, 1978), or various
knowledge-based theories (for example, Conner and Prahalad, 1996). In general, the
119
analysed publications base their empirically tested hypotheses on the literature research,
although some also draw on their own preliminary studies based on expert interviews or
case studies. Approximately 30% of the papers reviewed present hypotheses within the
framework of a single theory. In contrast, two thirds of the papers restrict themselves to
the literature on supplier development and related fields to substantiate their hypotheses.
This fact reveals the first shortcoming: the papers examined feature insufficient
theoretical substantiation.
Of publications testing scientific theories, 20% focus on the transaction cost theory.
Fewer than 10% use the resource-based theory. Other theories are referred to by only a
few isolated papers. Bearing in mind the many scientific theories existing today, this
illustrates the second shortcoming: a lack of diversity in the scientific theories used.
Nevertheless, more recent publications indicate that this might be changing. Modi and
Mabert (2007), for example, distil their construct on operational knowledge transfer
activities from the knowledge-based view. Similarly, Krause et al. (2007) explicitly
base their hypotheses on the social capital theory in the hope of providing stimulus to
other researchers:
Compared to the transaction cost economics perspective that prevails in the
extant supply chain literature, social capital offers an opportunity for increased
understanding of the complexities of supply chain relationships. We hope other
researchers will further investigate the social dimensions of these
relationships.
3.4.2 Methodologies used

All the articles examined are based primarily on surveys, as this was a key selection
criterion for the present study. In some cases, the quantitative findings of the surveys are
supplemented by qualitative insights extracted from interviews with experts and/or case
studies (see the brief descriptions of the empirical basis in Table 1). The number of
respondents to the surveys ranged from 27 (Helper and Kiehl, 2004) to 527 (Krause and
Ellram, 1997b). The response rate fluctuated between 6% (Modi and Mabert, 2007) and
60% [Quayle (2002), as well as De Toni and Nassimbeni (2000)]. Of the articles, 71%
focus on analysing a specific customer-supplier relationship. Apart from these statistics,
six methodological points appear to be worth separate consideration: geographic focus,
industry focus, different viewpoints (customer/supplier/dyadic), long-term versus
short-term analysis, data survey methods, and statistical methods.
First, the 40 studies analysed focus essentially on the Anglo-American region. A total
of 51% of the publications conducted their surveys in the USA, 11% in Britain. Only
14% of the papers are based on studies conducted in Asia (South Korea and Hong Kong).
The remaining 23% focus on Western European countries (Germany, Austria,
Switzerland, Italy and Spain). It follows that, in the survey-based literature on supplier
development, regions such as Eastern Europe, but also Western Europe and Asia, are
underrepresented relative to their global economic significance. More importantly, there
are studies that compare results across countries or regions.
Second, 77% of the studies are cross-industry studies. Some of them even examine
manufacturing companies and service providers together. However, we regard this
approach as a problematic generalisation as, for instance, a survey from Krause and
Scannell (2002) identifies differences in the supplier development objectives and
activities of manufacturing companies and service providers. Two publications present
120
cross-industry comparisons (Quayle, 2002; Wagner, 2006b) and, in so doing, reveal some
very pronounced differences between industries.
Third, 71% of the articles explore the subject of supplier development from
the customers perspective. Only 17% represent the suppliers viewpoint. A total of
6% address respondents in their role as both customers and suppliers. Overall, only 6%
[i.e., two publications: Forker et al. (1999), and Forker and Stannack (2000)] adopt a
dyadic approach by questioning matched pairs of customers and suppliers. This is all the
more astonishing given that the outlook sections in a large proportion of the studies
bemoan the lack of a dyadic perspective as one of the major limitations on their own
work. However, a dyadic approach significantly increases the complexity and cost of a
survey. The costs and benefits must therefore be weighed carefully in each individual
case.
Fourth, of all the studies examined, only one (Monczka et al., 1993) is a long-term
study based on data from a long-term survey running from 1989 to 1992, a Delphi study
from 1988 to 1989 and 24 case studies covering the period 1988 to 1989. Nevertheless,
Monczka et al. (1993) admit that, owing to these heterogeneous data resources, their
article is not part of a rigorous statistical study (Monczka and Trent, 1991). A
methodological gap thus exists with regard to long-term studies.
Fifth, all of the studies examined are based on surveys, the majority of which
involved posing questions to purchasing managers. Because the collated data are thus
based on the perception and self-assessment of the respondents, a wide range of
distortions cannot be precluded [an overview is provided by Podsakoff et al. (2003).
Finally, the statistical methods used to analyse the survey data comprise structural
equation modelling (29% of the analysed publications), regression analysis (20%),
significance tests such as the t-test (17%) and other inferential statistical methods (14%).
The remaining 20% of the publications rely exclusively on descriptive measures such as
the mean value or standard deviation. A historical trend is clearly discernible: articles
published up to 2,000 tended to use simpler descriptive and inferential statistical
methods. However, since 2000, methods involving more complex multivariate statistics
have been used with greater frequency. Structural equation models currently dominate
with a share of more than 50% in the publications published since 2005. This is not
surprising, as this powerful method has recently shaped empirical business research in
general.
Gaps in survey-based research
Based on the analysis of the findings from survey-based research into supplier
development outlined in Section 3, this section seeks to provide an overview on main
research gaps. Building on this, Section 5 outlines future research directions including
hypotheses that could be used for future empirical research.
Regarding the contents covered by survey-based literature on supplier development
(please refer to Section 3.1, Section 3.2, and Section 3.3 of this paper), three main gaps
can be identified. First, there is as yet little research on the question of which frame
conditions are relevant for supplier development and how they influence the success of
supplier development activities. If at all, frame conditions to supplier development are
considered on the basis of control variables in the statistical models applied and receive
limited attention in the articles. However, one can expect that frame conditions, such as
121
the power balance between buyer and supplier or the know-how and thus ability of a
buyer to develop a supplier, are crucial factors that impact the success of supplier
development. In addition, especially for practitioners, it is crucial to identify the most
compatible frame conditions for each type of supplier development. Therefore, the frame
conditions of supplier development related to the business environment, the relationship
between the buyer and supplier or the buyer and suppliers joint company itself offer a
broad area for further empirical research.
Second, despite significant empirical findings with regard to the positive impact of
supplier development, the question remains unanswered whether supplier development
pays for itself in light of cost/benefit considerations. The reason is that no publication the
authors are aware of explicitly considers the trade-off between the costs incurred by both
supplier and customer to conduct supplier development and the benefits reaped from
supplier development activities. The answer to this question is particularly important for
companies that are considering engaging in direct supplier development activities, as
establishing and continuously executing such activities typically requires significant
effort.
Third, the question remains unanswered how the benefits realised by supplier
development activities are split between customers and suppliers and what the
consequences are. This is also a highly relevant question for practitioners, as it might
provide guidance on how to design a supplier development programme that provides
sufficient incentive to suppliers to become and remain actively involved and at the same
time results in maximum benefits for the buyer that has initiated and drives the supplier
development programme.
As shown in sub-Section 3.4, there also exist gaps in theory. For instance, most
publications lack a theoretical foundation, as they do not derive their hypotheses on the
basis of scientific theories that can be used to explain inter-organisational behaviour. For
this reason, survey-based literature on supplier development contributes little to the
validation of scientific theories. This is especially true, as the few survey-based
publications on supplier development that refer to scientific theories to substantiate their
hypotheses typically use the transaction cost theory. However, as there is no single one
management theory,3 this represents a gap to be addressed by future research.
Finally, there exist methodological gaps, although most of them are neither new nor
unique to research into supplier development. First, most surveys do not differentiate
between industries, although there are strong indications that there might be differences
relevant for supplier development [see the findings of Quayle (2002), and Wagner
(2006b)]. Consequently, there is a lack of analyses of individual industries as well as
cross-industry comparisons. The same is true for cross-country and regional comparisons.
Second, there is a lack of long-term studies, which may provide better insights into cause
and effect chains as well as the evolution of supplier development programmes. Third,
one might argue that the fact that survey data has up to now been compiled exclusively
on the basis of subjective questionnaires poses a gap that should be filled by using other
techniques (compare, for instance, the survey technique used by Stolle (2008), who used
independent interviews to rate a companys supply management practices). Fourth, most
studies to date focus on the buyers perspective. Dyadic studies including both the buyer
and the supplier not only provide more robust findings but also may reveal interesting
additional insights in case there are differences between the buyers and suppliers
perceptions. Finally, the multiplicity and heterogeneity of the constructs used in the
analysed publications indicate that there is a lack of established constructs. This is
122
regrettable, as a full re-validation of constructs could deliver more robust empirical

results and also permit direct comparisons.
Future research directions
Based on the three content-related research gaps outlined in Section 4, this section
summarises potential directions including hypotheses to guide future survey-based
research into supplier development. It goes without saying that it is also recommended to
keep the outlined theoretical and methodological limitations and gaps of current research
in mind to make a difference in this regard as well.
First, framing conditions for supplier development and their impact on the success of
supplier development should be further investigated. For instance, the distribution of
power between the buyer and the supplier can be expected to have an impact on supplier
development. When a buyer is more powerful than the supplier, indirect supplier
development activities, such as target setting, or direct supplier development activities,
such as joint process improvement, should be more effective. A key reason is that a
dependent supplier will strive to secure current and future business with his buyer by
trying to reach set targets or to implement defined process improvement actions more
readily. Conversely, when a supplier is more powerful, it might be less likely that this
supplier will accept feedback or improvement suggestions from his buyer. Therefore,
both indirect and direct supplier development activities may work better with more
dependent suppliers.
Another relevant frame condition could be the distribution of methodological
knowledge relevant for supplier development. For instance, when the suppliers
know-how is higher, indirect supplier development i.e., providing feedback but leaving
it up to the supplier to improve may work more effectively. A key reason for this
phenomenon is that the supplier is capable of systematically defining measures for
implementing the received feedback. Meanwhile, if the buyer has more capabilities than
the supplier, direct supplier development should work more effectively, as the buyer can
leverage its know-how, e.g., in joint process improvement activities.
A second research direction could be the trade-off between the cost of and
benefit from supplier development. Supplier development, especially direct supplier
development, incurs costs on both the buyer and supplier side. On the buyer side, these
costs may include, for instance, man-hours put into joint improvement projects, travelling
costs due to supplier visits, cost for training to enable own staff to apply methodology
such as value stream mapping, the cost for external consultants to moderate the supplier
development or the cost of implementing changes resulting from actions the buyer has
agreed to performing. On the supplier side, costs typically include man-hours required for
joint improvement projects and for implementing the agreed-upon changes. As current
research primarily concentrates on investigating the effects of supplier development, a
more detailed analysis of the cost/benefit trade-offs may be useful. Such an analysis
could result in more specific recommendations regarding the use of the different types of
supplier development based on return on investment considerations. For instance, are the
higher costs typically associated with direct supplier development justified by even
higher benefits?
A third research direction linked to the one above revolves around the question of
how cost and benefits are distributed between the buyer and the supplier. One could
123
assume that each party bears its own cost and that these costs tend to be more on the
supplier side, as the supplier might be more affected by changes to be implemented due
to supplier development. For instance, joint process improvements tend to concentrate on
the production and supply chain of the supplier, with buyer typically only affected at the
interface. On the benefit side, one could expect either a fair distribution based on a
partnership approach or a distribution that favours the buyer, as he is the one who
initiates and drives the supplier development. In this context, it could also be helpful to
differentiate between direct and indirect benefits from supplier development. Direct
benefits are, for instance, material cost reductions due to changes in the supply part
specifications that enable the supplier to use a less expensive material. Indirect benefits
may result from the supplier applying lessons learned from the supplier development to
his other customers as well. For instance, measures to increase the efficiency of the
suppliers production process could also be applied to production lines serving other
customers. In such cases, the buyer might ask for a 100% share of direct benefits but
allow the supplier to transfer the knowledge gained to his other customers.
Conclusions
This paper has shed light on the current status of survey-based research into supplier
development. It shows that supplier development is receiving greater attention in the
scientific literature. 70% of the 40 survey-based publications have been published since
2000. In terms of content, various aspects of supplier development have already been
empirically analysed, covering many aspects of the developed frame of reference.
From a managerial point of view, it must be particularly noted that the majority of the
papers published find a positive correlation between supplier development and the
customers operating performance. The same is true for the suppliers performance.
Success factors gained through supplier development that have been confirmed by
several studies include effective communication, a pro-partnership attitude, mutual
commitment and top management support.
However, the key lesson learned from this article is that despite the increasing
number of publications, significant gaps continue to exist in survey-based research on
supplier development. These gaps provide direction for future research. They include the
impact of frame conditions on supplier development, the economic viability of supplier
development and, in particular, direct supplier development as well as the distribution of
costs and benefits between customers and suppliers. The theoretical foundations for most
of the studies must be described as inadequate, although a positive trend one leading to
the validation of theories other than the transaction cost theory has recently been
observed. Whereas articles published up to the year 2000 tended to use simpler
descriptive and inferential statistical methods, structural equation models have
predominated in the recent past. From a methodological standpoint, research on supplier
development lacks dyadic surveys, long-term studies and in-depth analyses of specific
industries as well as industry comparisons. In addition, most research has been conducted
in the Anglo-American world and relies exclusively on empirical data from subjective
surveys. In conclusion, there are several aspects of supplier development that require
further investigation or alternative theoretical and methodological approaches.
Limitations of this article include the following. First, it has to be noted that we
focused exclusively on survey-based publications on supplier development. Other
124
empirical publications, such as case studies, have been excluded. Second, we cannot lay
claim to completeness with regard to the listed survey-based publications on supplier
development, although we exerted significant effort into identifying them. Finally, a
qualitative approach rather than a metastudy was chosen as methodology for this study.
This, for instance, does not allow the estimation of the scale of effects across various
empirical studies. Nevertheless, we hope that with this article, we have provided stimulus
and direction for future research into the exciting and important field of supplier
development.
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Notes
1
2
3
It must be noted that some studies were used as the basis for more than one publication. One
survey in particular supplied the data for six papers (see Krause, 1997; Krause and Ellram,
1997b; Krause, 1999; Krause et al., 2000; Krause and Scannell, 2001; Krause and Scannell,
2002). However, the individual publications still served as the unit of analysis for this study,
as the content and, in some cases, the methodology vary even for articles based on the same
empirical data.
Krause et al. (2007), however, note that Seltzer (1928), has already documented the practice of
supplier development for the Ford Automobile Company.
For instance, Koontz (1961, 1980) coined the term of the management theory jungle to
reflect the pluralism and heterogeneity of management theories.

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Int. J. Procurement Management, Vol. 6, No. 1, 2013

Supplier development: current status of empirical

University of Bamberg, Germany. His research interests are supply chain

integrate vertically, i.e., manufacture the component in-house

choose a combination of the above three options.

E. Sucky and S.M. Durst

development that base their findings on large-scale surveys (referred to hereafter as

Thru 1989 1990-1994 1995-1999 2000-2004 2005-2009 2010-2012

What survey-based findings on supplier development have been gained up to now?

What gaps in survey-based research into supplier development can be identified?

A qualitative approach rather than a metastudy approach was chosen as the

Literature collection: Literature relevant to the formulated questions is researched in

This systematic analysis was complemented by database searches (ScienceDirect,

E. Sucky and S.M. Durst

Supplier development literature, metaresearch and frame of reference

The first scientific publication on supplier development is usually attributed to Leenders

Survey-based publications on supplier development

Empirical basis: number

142 of 450 (31.5%)

60 out of 251 (24%)

142 of 450 (31.5%)

60 out of 251 (24%)

47 out of 190 (23%)

Lee et al. (2009)

175 out of 758 (23%)

306 out of 1,200 (26%)

Wagner and Krause

65 out of 251 (26%)

185 out of 254 (73%)

166 out of 1,000 (17%),

Carr et al. (2008)

94 out of 231 (41%)

Automotive South Korea

Survey-based publications on supplier development (continued)

Empirical basis: number

Krause et al. (2007) 374 (25%) out of 1,500.

142 out of 450 (32%)

Modi and Mabert

114 out of 1,900 (6%)

60 out of 251 (24%)

173 out of 691 (25%),

306 out of 1,200 (26%)

60 out of 251 (24%)

Helper and Kiehl

142 out of 450 (32%)

142 out of 450 (32%)

512 out of 1,504 (34%)

240 out of 400 (60%)

384 out of 769 (50%),

84 out of 200 (42%),

E. Sucky and S.M. Durst

Empirical basis: number

Krause et al. (2000) 322 out of 1,504 (21%)

Forker et al. (1999)

181 out of 421 (43%)

527 out of 1,504 (35%)

Krause et al. (1999)

Krause et al. (1998)

84 out of 210 (40%),

New and Burnes

53 out of N/A, analysis