Antecedents and Consequences of Supplier Performance Evaluation Efficacy
Abstract
Supplier performance evaluation (SPE) is “the process of evaluating, measuring, and monitoring supplier performance and suppliers’ business processes and practices for the purposes of reducing costs, mitigating risk, and driving continuous improvement” (Gordon, 2008, p. 4). Numerous weaknesses associated with industrial buyers’ collection and use of SPE information (a.k.a., past performance information) have been documented in the for-profit and not-for-profit sectors (GAO, 2014; Gordon, 2008; Hald and Ellegaard, 2011; Purdy and Safayeni, 2000). These weaknesses call into question the effectiveness – heretofore referred to as efficacy – of SPEs. Neither the factors affecting SPE efficacy (i.e., its antecedents) nor the effects of SPE efficacy (i.e., consequences) on suppliers have been empirically explored. Despite the fallibility of SPE schemes, there are no known studies that explore the accuracy of SPEs, nor are there studies examining whether and how inaccurate SPEs affect suppliers – specifically, their performance. The purpose of this research, therefore, is to identify the factors affecting SPE efficacy, then to examine how SPE efficacy, in turn, affects supplier outcomes such as performance and buyer-supplier relationship quality. Based on the findings, the research will unveil contributions to theory, implications for practitioners, and will provide directions for future research. Research Benefits and Public Purpose: This research offers tremendous value to the public. First, the scope of the study encompasses federal government acquisition; it is not constrained to the Department of Defense (DoD). Second, while the context of the study is federal government acquisition, due to the commonality of sourcing processes between the for-profit and not-for-profit sectors (Hawkins, 2011), the results generalize to state and local government sourcing and to business-to-business sourcing. More accurate SPEs will help reduce transaction costs to buying organizations, supported requiring activities, and suppliers. Improved SPEs can also help prevent adverse selection, thereby enabling buying organizations to benefit from contracted goods and services with a reduced risk of overpaying due to non-performance and poor performance from suppliers. Furthermore, preventing adverse selection increases fairness and opportunity to commercial firms that can perform satisfactorily in the cases in which they are displaced by poorly performing firms. Industrial buyers in the for-profit sector can benefit by adapting their supplier management practices to account for the findings of this study. The DoD and the federal government at large could also reap the aforementioned benefits based on general knowledge derived from this research; however providing a direct benefit to the DoD is not the purpose of this research. Furthermore, substantial involvement by the DoD in the research is not necessary.
Document Details
- Document Type
- DoD Grant Award
- Publication Date
- Mar 09, 2016
- Source ID
- N002441510057
Entities
People
- Timothy Hawkins
Organizations
- Office of the Secretary of Defense
- Western Kentucky University