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As competition motivates firms to exploit their core competencies, outsourcing takes on greater significance. Increased reliance on supplier capabilities and technologies, however, increases the impact that supplier selection and assessment can have on the buying firm and in particular, its performance. While prior studies of supply management provide considerable evidence of the criteria used by firms to select and assess suppliers, they provide little insight into the relationships between selection and assessment and the buying firm's performance. This research describes an empirical study of attitudes towards supplier selection and assessment of American and European companies and their impact on business performance. Results illustrate that while both American and European managers consider objective selection and assessment criteria such as cost and price to be more important than subjective criteria such as supplier commitment, it is the more subjective criteria that have a greater impact on firm performance. Moreover, while for American companies there are strong relationships between attitudes towards supply management and performance, similar relationships do not appear to hold for European companies.
V.R. Kannan, K.C. Tan, ‘Attitudes of U.S. and European Managers to Supplier Selection and Assessment and Implications for Business Performance’, Benchmarking, 10 (5), 2003