Supplier development initiatives and their impact on the consistency of project performance

Abstract

Many empirical studies exploring the impact of supply chain management on performance metrics have been undertaken in the manufacturing and retail sectors, espousing the positive outcomes attainable. Owing to a range of industry characteristics, some have questioned the effectiveness of such initiatives in the construction sector, and it has been noted that there is a lack of longitudinal empirical data in this setting. Exploiting a unique performance dataset gathered from a global construction company’s archival records (1990–2013), the following question is addressed: ‘what is the impact of supplier development initiatives on key performance indicators (KPIs) in a construction supply chain?’. Mobilizing established frameworks on relationship types and supplier development initiatives, suppliers are organized into relational categories, including ‘strategic partners’, ‘preferred’ and ‘approved’ suppliers. A combination of descriptive statistics, ANOVA and Levene’s tests was used to analyse the data. The findings report a significant difference between the volatility of performance between different groups. The higher the level of partnership in the relational category, the more consistency there will be in performance. Suppliers in the approved category perform less well on the ‘closeout’ KPI, suggesting a need for initiatives with this category to help raise performance on closeout issues.

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