Supply Chain Management: Identifying Innovative Suppliers

Supply Chain Management: Identifying Innovative Suppliers

António Moreira, Ana Carolina Soares de Carvalho
DOI: 10.4018/978-1-4666-8216-0.ch022
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The main purpose of this chapter is to develop an exploratory proposal for identifying innovative suppliers, creating knowledge in an area not very deeply explored. Based on a literature revision based on the innovative supplier identification and management, the study suggests that innovative suppliers are highly specialized and technically competent companies, located nearby their customers and take part on their client's improvement program. Based on the literature revision, a framework analyzing client-supplier relationships throughout the supply chain is proposed. The framework uses the strategic alignment concept between clients and suppliers. Finally, 61 questions were developed to identify the innovative suppliers.
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Innovative Suppliers

The word innovation means renovation, newness. It has a dynamic meaning, related to something that did not exist. In business, the term innovation is related to the object of change, and it can be associated to something new to the world or new to the firm (Schiele, 2006). The innovation theme has been widely explored and analyzed according to many perspectives, and it has been indistinctly associated to products, services, values and characteristics (Moreira, 2011). The OECD, conscientious of this situation, and of the problems related to it, published the Oslo Manual (OECD, 1997) where they explain some of the conceptual aspects on the many types of innovation. Although there are many typologies associated to it, Moreira (2011) presents a multifaceted characterization of innovation, following a traditional perspective at product, process and organizational level.

Key Terms in this Chapter

Business Relationships: Business relationships involve a formal approach to understanding, defining, and supporting business-based relationships among firms. These types of relationships involve the share of knowledge, skills, competences, technologies in such a way that the activity of one business partner complements the activity of the other party. Normally, these relationships are based on a long-term perspective and involve trust and commitment among the parties involved.

Supply Chain Management (SCM): Although in general terms it involves the management of goods, normally it includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin/manufacturing to end customers. It is very important as it involves the provision of products and services. It might involve a complex competitive infrastructure, complex logistics and the synchronization of the demand and supply. It involves the integration of different organizational areas as operations, logistics, procurement and strategy.

Sourcing Innovation: As sourcing involves the procurement process of continuously improving purchasing activities of an organization, sourcing innovation encompasses all institutional activities aimed at procuring innovative, added value activities in order to complement the organization’s competences and activities.

Strategic Alignment: Innovation is certainly an important characteristic for firms to achieve competitive advantage. However, for supplier-client relationship throughout the value chain thrive, both the supplier and the client need to be strategically aligned, i.e., they need to be tuned on what information they share, what types of joint products they develop, what responsibilities they share, how they manage continuous improvement, how they define inter-organizational activities, how they deploy cross-functional teams, joint-problem solving and how joint planning teams are generated and managed.

Trust: The belief that in an existing relationship an actor will act and behave in the benefit of both parties.

Commitment: Investment and effort spent in order to continue on a relationship.

Innovative Suppliers: An innovative supplier is the result of working collaboratively with suppliers in order to generate profitable value-added activities. It stems from the fact that as companies can rely on a cadre of value-added, competence enhancing suppliers in what pertains to generating innovation, firms can reshuffle their internal capabilities improving differentiation while reducing costs.

Supplier-Client Relationships: These relationships involve the trust and commitment between suppliers and their clients in the value chain. They are also known as vertical relationships. These relationships are based on the dynamic complementarities throughout the value chain in which an antagonistic perspective between the client and the supplier is abandoned in favor of a more pro-active, value-generating perspective.

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