Journal of Supply Chain Management

The Supply Chain: The Weak Link for Some Preferred Suppliers? Members Only Content

More than ever before, the supply chain presents a significant challenge to firms that must develop a logistics system to help enhance product flow throughout their distribution channels. Of the various types of suppliers, those described as preferred should normally be in the best position to respond to the strategic aspirations of large order-givers. Given the growing importance ascribed to supply chain management and supplier characterization in the literature, this article proposes to examine the actual contribution of various types of suppliers to supply chain integration. Following an empirical study focusing on a large multinational firm and its regular first-tier suppliers, a detailed statistical analysis was conducted. Cluster analysis revealed the extent of a suppliers' logistics contributions. Overall, the findings suggest three types of contributions, and show that the intensity of a supplier's contribution has little to do with its status as a preferred supplier, depending instead on the sophistication of a supplier's logistics system. The system is characterized by a significant increase in the role of logistics in a firm's structures, through formalization of an organization, reinforcement of communication and information quality and the use of leading-edge technology. The authors conclude that it may be tempting for a large order-giver simply to expect supply chain performance from its preferred suppliers, rather than adding this characteristic to the others used as a basis for granting preferred status to some of its suppliers.

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