Manufacturer power over suppliers: scale development and validation

Abstract

PurposeThis research empirically builds a manufacturing firm's power construct that can be used to assess the changes suppliers are willing to make in their operations decision areas, such as quality systems, product management, process management, material management systems and information systems. This approach has not been empirically explored in the operations and supply chain management literature. This research fills this gap with the new power definition method.Design/methodology/approachThis research conducted a two-stage scale development and validation process for a manufacturing firm's power over suppliers. A survey study collected 201 responses from the US manufacturing firms. The research used confirmatory factor analysis (CFA) to assess the validity and reliability of this construct.FindingsThe results confirmed the validity and reliability of a manufacturing firm's power over suppliers as a second-order variable, with five first-order constructs reflecting power in areas of quality, product, process, material and information systems.Practical implicationsManufacturing firms can use this instrument to assess the strengths and weaknesses of their power over suppliers in each decision area. From the results, companies can develop a power-competitiveness grid to guide their power enhancement efforts based on the competitive advantage being prioritized. Similarly, a resource-power grid can assist the manager in deciding whether to invest in a resource that benefits a particular power dimension.Originality/valueThis research contributes to supply chain power literature by taking a unique approach to defining a manufacturer's power regarding its suppliers' decision areas. This power structure opens the possibility to explore the relationship between a firm's resource, power and firm performance. As buyer–supplier power relationship building is increasingly important in the supply chain, knowing the parameters of the power relationship can help the manufacturing firm align its strategic focus to the areas that can be supported by the supply chain.