Managing the Supply Base through Supply Base Reduction and Supplier Development - A case study in the maritime industry
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Knowledge within the area of supply base management is highly relevant and a critical issue for many firms, as value creation to a large extent often happens with the suppliers. In order to stay competitive in a market characterized by fierce global competition, the potential of suppliers should be fully exploited. Supply base reduction and supplier development are an important part of this field of study, and facilitates better utilization of suppliers in order to improve the overall performance in the supply chain. The thesis uses findings from Kongsberg Maritime Subsea in Horten during a period where the company has increased their focus towards their suppliers and supply base management, and the company has utilized the implementation of supply base reduction and supplier development. The main purpose of this study is to investigate how a company can manage processes related to supply base reduction and supplier development. In order to give a holistic perspective of supplier development, both buyers and suppliers perspective are represented in the research. Using Kongsberg Maritime Subsea in Horten and four of the company´s Norwegian suppliers as unit of analysis, a qualitative and exploratory investigation was conducted. The empirical results show that there are differing opinions about performing a supply base reduction among employees. The process is viewed as a strategic move in order to reduce cost and enable closer relationships with suppliers, or as a process that can potentially hurt the organization. The concern is that valuable suppliers might be taken out of the company´s supply base. The study highlights the importance of having a common purpose and understanding of the process. Reaching consensus and having an objective perspective on suppliers is considered as crucial in order for a successful process. The findings also suggest that a procedure on termination of relationships with suppliers and a plan with specific goals should be made prior to implementation of process. Supplier development is initiated with the purpose to improve the overall performance of both the buying company and its suppliers, and from this be able to reduce cost. Both buyer and suppliers point out the importance of cooperation, trust and communication in order to succeed with supplier development. Even though, the findings suggest that suppliers require more cooperation from buying company in terms of more information sharing and earlier involvement, where forecasting is highlighted as the most important factor. This is perceived by the suppliers as necessary in order to reach the company´s overall goal of the supplier development efforts; improve processes in order to reduce cost. Key issues are communication as a result of limited resources and capacity in buyer s organization. The research also emphasizes the importance of buyer to show commitment to the process and attention to suppliers. This serves as an important motivation for suppliers, and is important in order to fully utilize the benefits supplier development can give. Despite the importance of supply base reduction emphasized in literature, the literature concerning supply base reduction processes has been recognized as scarce. This research can contribute to this area by giving an increased understanding of what factors are emphasized in a supply base reduction in terms of drivers, approach to the process and success factors. The supplier development literature is extensive, but the focus is primarily from the buyers perspective of supplier development. This research intends to contribute in terms of presenting both buyers and suppliers perspective regarding supplier development efforts initiated by the buying firm, this in order to provide a holistic perspective of supplier development.