On the benefits and risks of focused commitment to suppliers

• Published in: International journal of production research Vol. 44; no. 20; pp. 4223 - 4240
• Main Authors: Swink, M., Zsidisin, G.
• Format: Journal Article
• Language: English
• Published: London Taylor & Francis Group 15.10.2006; Washington, DC Taylor & Francis; Taylor & Francis LLC
• Subjects: Applied sciences; Buyer-supplier relationships; Commitments; Competitive advantage; Exact sciences and technology; Firm modelling; Focused committment strategy; Inventory control, production control. Distribution; Manufacturers; Operational research and scientific management; Operational research. Management science; Strategic management; Studies; Supply management; Tradeoff analysis; Vendor supplier relations; United States > US; Profitability; Labour costs; Knowledge base; Long term; Buyer-supplier relationships; Purchasing; Transaction cost; Supplier customer relationship; Firm management; Supply management; Purchases; Focused committment strategy; Investment

This paper discusses the merits of purchasing firms of pursuing a focused commitment strategy (FCS) with suppliers. An FCS involves committing long-term investments with a limited number of suppliers to achieve superior performance. Drawing upon transaction cost theory, agency theory and the knowled...