Communication strategies and supplier performance evaluations in an industrial supply chain

Supplier development programs are implemented in an attempt to improve supplier performance. One type of supplier development program is the buying firm's communication of the supplier evaluation. Previous research on supplier evaluations has been studied from the buying firm's perspective. However, there has been only limited research from the industrial supplier's perspective.; To better understand the impact of the buying firm's evaluation on the supplier, an empirical study using a cross-sectional survey was performed. Structural equation modeling was used to consider the impact of three communication strategies on the supplier. The three communication strategies were: formality, feedback, and indirect influence, such as education, training and site visits.; Responses from top business executives at 139 first-tier automotive suppliers, representing a 25 percent response rate, suggest that the suppliers are receptive to the buying firm's communication of the evaluation. Indirect influence, formal channels of communication, and feedback positively influence the supplier's perceptions of the buyer-supplier relationship. The buyer-seller relationship was composed of two first-order factors: the buying firm's commitment and cooperation. The strength of the buyer-supplier relationship was found to positively influence the supplier's commitment to the buying firm. A high level of supplier's commitment was found to positively influence the supplier's operational performance. Communication strategy and the buyer-seller relationship were not found to directly influence the supplier's performance.; The results of this research explain why supplier development programs are successful with some suppliers, but not with others. The supplier must be committed to the buying firm. The supplier development program is a catalyst for strengthening the buyer-supplier relationship and the supplier's commitment. Effective communication of the supplier development program includes a formal structure, feedback opportunities, and an indirect influence strategy, such as through education, training and site visits.