Supplier evaluations: communication strategies to improve supplier performance

As firms increasingly emphasize cooperative relationships with critical suppliers, executives of buyer firms are using supplier evaluations to ensure that their performance objectives are met. Supplier evaluations, one type of supplier development program (SDP), are an attempt to meet current and future business needs by improving supplier performance and capabilities. The purpose of this study was to determine how suppliers perceive the buying firm's supplier evaluation communication process and its impact on suppliers' performance. Three communication strategies (indirect influence strategy, formality and feedback) were tested separately and one in unison (collaborative). Using structural equation modeling (SEM) and data collected from 139 first-tier North American automotive suppliers, the results of this research have shown that, contrary to the SDP literature from the buying firm's perspective, the supplier's perceptions of the buying firm's communication does not directly influence suppliers' performance. Specifically, the supplier evaluation communication process does not ensure improved supplier performance unless the supplier is committed to the buying firm. Buying firms can influence the supplier's commitment through increased efforts of cooperation and commitment. The results also indicate that when a buying firm utilizes collaborative communication, the supplier perceives a positive influence on the buyer Supplier relationship. (C) 2004 Elsevier B.V. All rights reserved.