The relationship between supplier management and firm's operational performance: A multi-dimensional perspective

Daniel Indarto Prajogo, Mesbahuddin Chowdhury, Andy C L Yeung, Tai Chiu Edwin Cheng

Research output: Contribution to journalArticleResearchpeer-review

131 Citations (Scopus)


This paper presents an empirical study on the multidimensional relationships between supplier management practices and firm operational performance. Specifically, we focus on three supplier management practices, namely strategic long-term relationship, supplier assessment, and logistics integration, and test their effects on four operations performance measures, namely quality, delivery, flexibility, and cost. We use data collected from 232 manufacturing firms in Australia to conduct the study. Ten hypotheses were tested simultaneously using Structural Equation Modeling (SEM) technique. The results show that different supplier management practices have different unique effects on different operations performance measures. Supplier assessment has a positive relationship with quality performance. Both strategic long-term relationship and logistics integration have positive relationships with delivery, flexibility, and cost performance. From a theoretical perspective, this study demonstrates the relative contributions of different kinds of resources (i.e., supplier management practices in our case) to different performance measures. Our research findings provide practical insights for managers to understand the effectiveness, as well as the limitations, of different supplier management practices in enhancing different operations performance measures of firms.
Original languageEnglish
Pages (from-to)123 - 130
Number of pages8
JournalInternational Journal of Production Economics
Issue number1
Publication statusPublished - 2012

Cite this