The threat to core competence posed by developing closer supply chain relationships

Abstract

Supply bases have been rationalised and now fewer “preferred” suppliers are in direct contact with customers, who demand more personal attention and greater responsiveness from them. In developing closer supplier relationships, the exchange of proprietary information becomes more likely and also the potential loss of core competences. This paper assesses the applicability to UK aerospace companies of supplier models by Cox and Kraljic that link relationship types to core competence. During the research a method of procurement was uncovered in which the customer placed a team of engineers to work with competing suppliers to develop their bids. In doing so, the customer absorbed technical knowledge from the supplier. The customer's objective was to obtain acceptable technical offers from both suppliers. This method delivered best value to the customer, but may be in breach of competition law.

Keywords:

• Supplier relationship
• Core competence
• Procurement
• Cost

Acknowledgements

The authors would like to thank the Agile Construction Initiative and IMRC in the School of Management, University of Bath, for supporting the preparation of this work. We would like to acknowledge the support given by Warwick Manufacturing Group at the University of Warwick and the UK Lean Aerospace Initiative. In addition, the authors would like to thank Joe Miemczyk, Elmer Bakker and Thomas Johnsen from the IMRC, University of Bath School of Management, for their help and contributions to discussion.