Performance Control in Buyer-Supplier-Relationships — The Design and Use of Formal Management Control Systems

Abstract

Supplier selection and supplier development are important activities of companies for establishing effective and reliable sources for materials and components. A large number of studies provide decision support for supplier selection but a lack of planning tools is observed for supplier development. This paper provides a combined approach for selecting suppliers and for scheduling development projects in a multi-period time horizon. The purpose of development projects is to adapt the production capacities of suppliers to demand forecasts and to lower variable procurement cost. The planning problem is described through a mathematical model. Decision support techniques are presented where rolling-horizon planning and simulation are used for capturing the dynamics of markets and the probabilistic outcome of development activities. The approach is capable of adapting supplier capacity for growing markets and declining markets as is required when demand changes with the life-cycle stage of a product. Experiments show that the methods discover profitable supplier bases and deliver effective project schedules for supplier development.