Supplier Segmentation in The Automotive Industry - Goran Svensson

International Journal of Physical Distribution & Logistics Management
Supplier segmentation in the automotive industry: A dyadic approach of a managerial

model
Göran Svensson,
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IJPDLM
34,1 Supplier segmentation in the
automotive industry
12
A dyadic approach of a managerial model
Göran Svensson
School of Management and Economics, Växjö University, Växjö, Sweden
Keywords Suppliers, Vendors, Selection, Sourcing, Channel relations, Corporate strategy
Abstract The competitive business environment in the automotive industry has forced vehicle
manufacturers (VMs) to improve their relationship strategies towards their suppliers. VMs have
implemented supplier segmentation in order to optimise current business activities and existing
resource allocations. Supplier selection criteria have also become crucial in order to achieve an
appropriate evaluation of suppliers. Models of supplier segmentation and supplier selection criteria
underpin theoretically this research. Empirical illustrations of supplier segmentation based on the
perspectives of a VM and its suppliers are presented. The principal contributions of this study are
the various models therein. One of the models consists of two dimensions: the supplier’s
commitment to a VM; and the commodity’s importance to a VM. In extension, another model of
dynamic relationship strategies is introduced. It consists of four relationship strategies towards
suppliers in the automotive industry, such as family, business partner, friendly, and transactional.
Furthermore, a four-phase process for the analysis, selection, and managerial decision of a
dynamic relationship strategy towards suppliers in the automotive industry is outlined.
Introduction and research objective

The competitive marketplace in many industries has forced companies to
improve current business activities and existing resource allocations to sustain
their turnover, to defend their market share, to maintain their profitability, and
to conserve other key measures of the company’s well-being. The corporate
resource allocation has become an essential issue in this process. The
restructuring and re-engineering of companies’ business processes are ongoing
evolutions and a reality in many industries. They have become necessities for
survival.
Vehicle manufacturers (VMs) in the automotive industry have restructured
and re-engineered their business processes on several occasions during the last
century. These changes have been implemented upstream towards suppliers
and downstream towards customers. The topic of this research is limited to
upstream considerations towards first-tier suppliers. This research is also
restricted to VMs’ relationship strategies towards suppliers in terms of supplier
segmentation.
International Journal of Physical
Supplier segmentation is one fundamental business activity to improve the
Distribution & Logistics Management outcome of a company’s efforts to maintain and enhance its position in the
Vol. 34 No. 1, 2004
pp. 12-38
q Emerald Group Publishing Limited
0960-0035
The authors wishes to acknowledge the Centre of Industrial Competitiveness (CIC), Växjö
DOI 10.1108/09600030410515664 University, Sweden for its support.
marketplace, as well as customer segmentation, market targeting, and Supplier
positioning (i.e. strategic marketing). The pioneering work of Kraljic (1983) is segmentation
often considered as a breakthrough in the purchasing area in developing a
model of supplier segmentation. In literature, models of supplier segmentation
have been widely explored ever since (e.g. Masella and Rangone, 2000; van
Weele, 2000; Svensson, 2000; Kaufman et al., 2000; Bensaou, 1999; Ford, 1998;
Dyer et al., 1998; Olsen and Ellram, 1997; Lambert et al., 1996; Donaldson, 1996;
13
Rao and Wang, 1995).
A closely related area, which has become an integral part of supplier
segmentation, is the research efforts dedicated to identify suitable supplier
selection criteria. These criteria are the fundament for creating prosperous
buyer-supplier relationships, and in extension, supplier segmentation.
Dickson’s (1966) seminal work on supplier selection criteria is still used as a
point of reference in literature. Supplier selection criteria have been widely

explored ever since (e.g. Park and Krishnan, 2001; Tracey and Tan, 2001;
Weber et al., 2000; Liu et al., 2000; Jayaraman et al., 1999; Motwani et al., 1999;
Vokurka et al., 1996; Weber, 1996; Min, 1994; Mandal and Deshmukh, 1994; Min
and Galle, 1991; Weber et al., 1991; Thompson, 1990; Soukup, 1987; Gregory,
1986; Ellram, 1987; Timmerman, 1986; Abratt, 1986; Dempsey, 1978; Lehmann
and O’Shaughnessy, 1974; Wind et al., 1968).
Accordingly, the topic of this research is limited to the framework of
supplier segmentation, although supplier selection criteria are part of the
underlying framework. The objective of this research is to describe an
empirical model of a VM’s supplier segmentation. The objective is also to
provide theoretical and managerial implications surrounding the VMs’ supplier
segmentation in the automotive industry. Supplier segmentation in the
automotive industry is usually based on a dyadic approach between a VM and
its suppliers. The VM’s awareness about the supplier’s approach is essential. In
addition, a VM’s knowledge about the business environment is crucial to select
an appropriate relationship strategy towards suppliers in the automotive
industry. Furthermore, the criteria of the supplier-VM relationship are
important. This research also provides an empirical illustration of supplier
segmentation in the automotive industry based on a VM and its most
important suppliers, and discusses some theoretical and managerial
implications.
Theoretical framework – supplier segmentation

A VM’s supplier segmentation could be based on various generic criteria, for
example, the type of supplier, the type of logistics flow, and the type of
relationship. Research in the field across industries has generated different
criteria to facilitate the process of corporate supplier segmentation. There are a
number models of supplier segmentation all of which use different dimensions
of classification (e.g. Masella and Rangone, 2000; van Weele, 2000; Svensson,
IJPDLM 2000; Kaufman et al., 2000; Bensaou, 1999; Ford, 1998; Dyer et al., 1998; Olsen
34,1 and Ellram, 1997; Lambert et al., 1996; Donaldson, 1996; Rao and Wang, 1995;
Kraljic, 1983). In this paragraph, some of these models of supplier segmentation
are briefly described. The identification of different supplier segmentation
dimensions is a consequence of industry specific criteria, such as the business
environment in the marketplace and the relationship criteria involved in the
14 supplier-buyer relationships.
Masella and Rangone (2000) propose four different supplier segmentation
systems depending on the time frame (i.e. short-term versus long-term) and on
the content (i.e. logistic versus strategic) of the co-operative customer/supplier
relationships. It is an analytic hierarchy process framework, different sets of
measures, deriving from a non-conventional model of the supplier, based on the
dynamic system and on the resource-based approach. Nydick and Hill (1992)
and Narasimhan (1983) also apply the analytic hierarchy process to the
supplier dilemma. van Weele (2000) describes a portfolio of different strategies
to be used in supplier segmentation based on two dimensions, namely:
(1) supplier’s impacts on financial results; and
(2) supply risk.
Four strategies are identified:
(1) partnership – strategic suppliers (i.e. market leaders, specific know-how,
and balance of power may differ among buyers-suppliers);
(2) competitive bidding – leverage suppliers (i.e. many competitors,
commodity products, and a buyer dominated segment);
(3) securing continuity of supply – bottleneck suppliers (i.e. technology
leaders, few – if any – alternative suppliers); and
(4) systems contracting – routine suppliers (i.e. large supply, many suppliers
with dependent position, and a reduction in the number of suppliers).
Svensson (2000) develops a model that could be used for supplier segmentation.
This model consists of three principal components, namely: source of
disturbance, category of disturbance, and type of logistics flow. The type of
logistics flow considers the complexity, inventory buffers, materials and
components, and may be used in supplier segmentation. This component
identifies three levels of logistics flows, namely an A-flow, a B-flow and a
C-flow. In particular, these logistics flows provide a fundament for supplier
segmentation in the automotive industry. Kaufman et al. (2000) develop a
strategic supplier typology explaining the differences in the composition and
performance of various types of suppliers. Two dimensions are used, namely
technology and collaboration. By dividing these two dimensions into high and
low categories, four supplier categories are identified:
(1) commodity supplier;
(2) collaboration specialist;
(3) technology specialist; and Supplier
(4) problem-solving supplier. segmentation
Bensaou (1999) discusses a typology for segmentation of supplier relationships.
The typology is based on two dimensions, namely the buyer’s specific
investments and the supplier’s specific investments. These two dimensions of
classification result into four categories as follows: 15
(1) market exchange;
(2) captive buyer;
(3) captive supplier; and
(4) strategic partnership.
Ford (1998) refers to an empirical model (by Nike) that segments the suppliers
into three categories based on competitive advantage, namely:
(1) developed partners (i.e. locally subcontracted materials and components;
(2) developing sources (i.e. components, materials and sub-assemblies from
developed partners); and
(3) volume producers (i.e. internally developed materials and components).
Dyer et al. (1998) explore strategic supplier segmentation. This research
suggests that suppliers should be segmented into two primary groups: one
group of suppliers that provide necessary, but non-strategic inputs; and
another group that provides strategic inputs. Strategic inputs refer to
high-value inputs that are related to the purchasing firm’s core competence and
may be useful in differentiating the buying firm’s product in the marketplace.
Olsen and Ellram (1997) introduce a matrix based on two dimensions to
categorise supplier relationships. Four categories of purchases are revealed as
follows:
(1) non-critical;
(2) bottleneck;
(3) leverage; and
(4) strategic.
The action plan is to strengthen the relationship, to improve the supplier
attractiveness and the performance of the relationship, and to reduce the
resources allocated to the relationship. Lambert et al. (1996) discuss different
types of relationships that range from arm’s lengths relationships (i.e. either
one-time exchanges or multiple transactions) through three types of
partnerships and joint ventures, and even to vertical integration of two
companies. Donaldson (1996) describes a relationship ladder consisting of three
levels. At level one, the relationship is personal, i.e. usually but not exclusively,
between the salesperson and the purchasing executive. At level two, the
IJPDLM relationship develops as a result of competence and performance by both
34,1 parties, particularly the supplier. At level three, the relationship is more
strategic and involves joint co-operation. The relationship is extended through
the levels and the complexity increases too. Rao and Wang (1995) evaluate
alternative segmentation strategies in the buying of standard industrial
products. The study attempts to examine the relationship between traditional
16 segmentation (i.e. a prior approach in which the segmentation variables and
their categories are decided before the data are collected) and benefit
segmentation (i.e. a posterior in which segments are determined by a cluster
analysis on a set of relevant variables). Kraljic (1983) uses two dimensions of
classification to develop a portfolio model of suppliers. The model consists on
the one hand of the importance of purchasing, and on the other hand of the
complexity of the supply market. The two dimensions are divided into high
and low resulting in four categories of materials and components, namely:

(1) non-critical items;
(2) leverage items;
(3) bottleneck items; and
(4) strategic items.
The action plan consists of exploiting, balancing or diversifing the situation.
Theoretical framework – supplier selection criteria

A VM’s supplier-relationships could be based on various supplier selection
criteria. Research in the field across industries has generated a wide range of
supplier selection criteria to facilitate the procedure of the corporate supplier
decision process. There are a number supplier selection criteria all of which use
different criteria to select and evaluate suppliers (e.g. Park and Krishnan, 2001;
Tracey and Tan, 2001; Weber et al., 2000; Liu et al., 2000; Jayaraman et al., 1999;
Motwani et al., 1999; Vokurka et al., 1996; Weber, 1996; Min, 1994; Mandal and
Deshmukh, 1994; Min and Galle, 1991; Weber et al., 1991; Thompson, 1990;
Soukup, 1987; Gregory, 1986; Ellram, 1987; Timmerman, 1986; Abratt, 1986;
Dempsey, 1978; Lehmann and O’Shaughnessy, 1974; Wind et al., 1968; Dickson,
1966).
Park and Krishnan (2001) examine the supplier selection practices among
small business executives and use three models, such as rational/normative,
external control, and strategic choice. Tracey and Tan (2001) employ
confirmatory factor analysis and path analysis to examine empirically the
relationships among supplier selection criteria (i.e. quality, delivery reliability,
product performance, and unit price), supplier involvement on design teams
and in continuous improvement programmes, dimensions of customer
satisfaction (i.e. competitive pricing, product quality, product variety, and
delivery service) and overall firm performance. Weber et al. (2000) present an
approach for evaluating the number of vendors to employ in a procurement
situation using multi-objective programming (MOP) and data envelopment Supplier
analysis (DEA). Their approach advocates developing vendor-order quantity segmentation
solutions using MOP and then evaluating the efficiency of these vendors on
multiple criteria using DEA. Liu et al. (2000) use DEA to evaluate supplier
selection based on multi-criteria. A model for supplier selection is presented to
evaluate the overall performance of suppliers, and then a case study
demonstrates supplier performance evaluation for supplier selection and
17
performance improvement.
Jayaraman et al. (1999) apply an approach of multiple sourcing policy to
ensure the reliability of manufacturer’s supply stream. Given the economic
importance and inherent complexity associated with the supplier selection
problem, a mixed integer programming approach is proposed to solve the
supplier selection problem, one that decides the set of suppliers and the order
quantity allocations among them. Motwani et al. (1999) develop a model for
sourcing and purchasing in an international setting. In particular, the model
emphasises a reduction in the uncertainty of quality from developing countries.
Vokurka et al. (1996) use a prototype expert system, which contains decision
programs based on decision attributes divided into two main groups, namely
quality product and commodity product. Weber (1996) demonstrates the use of
DEA as a tool for measuring the performance of vendors on multiple criteria
and for use in vendor negotiations. The study shows how the application of the
DEA-technique can provide savings in monetary and other measurable items,
such as price, quality, and delivery. An examination has been made of the total
cost of ownership (TCO), which is a purchasing tool and philosophy aimed at
understanding the true cost of buying particular goods or services from a
particular supplier. The conclusion is that TCO is a way to improving supplier
selection and evaluation. Min (1994) argues that effective international supplier
selection must deal with a host of quantitative and qualitative factors that are
in conflict with one another. These multiple criteria and uncertain decision
environments may be managed by a multiple attribute utility theory. Supplier
selection in an international context is complicated and risky, depending as it
does on such factors as trade barriers, cultural differences, and ethical
standards. Mandal and Deshmukh (1994) applied interpretive structural
modelling and used almost a dozen vendor selection criteria for the Indian
environment. This research is based on a method that considers qualitative and
quantitative variables using interpretive structural modelling. Weber et al.
(1991) reviewed the literature for vendor selection criteria and methods. Their
survey identified various methods such as linear programming, mixed integer
programming and other quantitative approaches. Thompson (1990) develops a
vendor profile analysis to rate suppliers in an uncertain environment on a
number of weighted factors through a simulation technique.
Soukup (1987) uses a vendor performance matrix method, considering
uncertainty in selecting a supplier that evaluates the supplier’s performance
IJPDLM under various unforeseen scenarios by estimating the probable deviations from
34,1 the original purchase plan. Ellram (1987) identifies a number of issues as
important in selecting suppliers, such as financial issues, organisational culture
and strategy issues, tehcnology issues, and other factors (e.g. business
references, supplier’s customer base). Gregory (1986) applies a matrix method
that evaluates suppliers based on weighted scores obtained from a set of
18 pre-determined benchmarks. Timmerman (1986) introduces a weighted-total
method, which quantifies the factors with relevant weights and then rates
potential suppliers based on these weighted factors. Different attributes have
been revealed affecting the supplier selection decision (e.g. Dempsey, 1978; Min
and Galle, 1991). Abratt (1986) explores nine supplier selection criteria in South
Africa and their relative importance (e.g. technical service, product reliability,
after-sales support, reputation, and ease of maintenance). Similarly, Lehmann
and O’Shaughnessy (1974) examine 17 supplier selection criteria in the USA

and UK (e.g. delivery, price, flexibility, reputation and technical specifications.
Wind et al. (1968) also investigate the relative importance of ten supplier
selection criteria in the USA (e.g. quality/price ratio, delivery, technical ability,
information and market services, reputation) Dickson (1966) revealed almost
dozen of quantitative and qualitative vendor selection criteria, e.g. net price,
repair service, geographic location, financial position, production facilities,
technical capability and performance history.
Triangular research approach

This research applied methodological triangulation (e.g. Campbell and Fiske,
1959; Webb et al., 1966; Jick, 1979). Denzin (1978, p. 291) defines triangulation
as “. . . the combination of methodologies in the study of the same phenomena
. . .”. In particular, this research applied sequential triangulation. Creswell
(1994) writes that in sequential triangulation the researcher conducts two
phases of the project, with the results of the first phase essential for planning
the next phase. The first questions of phase one are completed before the
questions of phase two are raised. This research has been divided into two
separate, but interconnected, methodological and empirical phases. The first
phase applied qualitative methods to describe a generic model of supplier
segmentation at a VM, while the second phase applied quantitative methods to
explore the criteria of the described generic model of supplier segmentation
between a VM and its suppliers from the first phase. The use of triangulation
attempts to strengthen the empirical findings in each phase, and also their
pertaining conclusions.
Methodology
Part one of this study is based on research in the automotive industry and a
series of interviews with a small group leading executives at a European VM.
The identity of the VM is anonymous due to the need for confidentiality. The
selection of executives was based on judgmental sampling. Part two of this Supplier
study was performed as a non-sponsored and unsolicited mail survey directed segmentation
to a VM and its most important national and international suppliers.
Subsequently, a dyadic approach was applied. The selection procedure of
appropriate suppliers, and suitable respondents at the suppliers, was made by
one leading executive, and rectified by another, at the VM. One representative
at each supplier was contacted in order to match a corresponding executive at 19
the VM (i.e. the dyad).
The population consisted of 70 suppliers and the corresponding executive at
the VM. The executives responsible for the supplier selection of the survey also
selected the appropriate purchase managers in charge of the supplier at the VM.
In total, 46 purchase managers participated in the survey. Consequently, some of
the executives at the VM filled in more than one questionnaire. This procedure
was necessary to match the VM’s questionnaire with the suppliers’ questionnaire.
Two matched questionnaires were developed, i.e. one each considering the VM’s
and the suppliers’ perspectives of the relationship. A questionnaire was sent to
each of the executives selected in the survey. The selected executives at the
supplier were mainly the production manager or logistics manager. At the VM,
the purchase manager in charge of the supplier was selected. Each respondent at
the suppliers and each respondent at the VM was initially contacted by phone in
order to confirm their appropriateness to respond to the questionnaire, and
eventually to promote the importance of the survey.
Accordingly, a substantial amount of work was performed in the preparation,
implementation, control and conclusion of the mail survey. For example, each
respondent was briefly introduced to the research project to stimulate his or her
interest and willingness to participate in the survey. In addition, a brief telephone
interview was performed with each of them (approximately 5 minutes) in order to
gain some idea of each executive’s empirical context and to judge their suitability
to participate in the survey. Those executives who initially did not answer the
questionnaire were contacted again by telephone in order to stimulate their
interest to fill in the required answers. The close attention to this part of the
research led to the achievement of a high response rate. In fact, 88.6 per cent (62
out of 70) of the purchase managers at the VM filled in their designated
questionnaires, and 94.3 per cent (66 out of 70) of the executives at the suppliers
filled in their designated questionnaires.
A minor analysis of non-response bias was performed in order to clarify the
reason why a few of the respondents did not answer. The principal reasons
why they did not participate in the survey were either that they were too
occupied at the time of the research or simply that they were not interested in
participating.
Part one – an empirical model of supplier segmentation

Based on a qualitative case study at a VM in the automotive industry the
empirical outcome generated a generic model of supplier segmentation that is
IJPDLM introduced in Figure 1. The segments were revealed and are based on the VM’s
34,1 managerial segmentation strategy applied towards suppliers. The model
consists of two dimensions that underpin a VM’s relationship strategy towards
suppliers, namely:
(1) the supplier’s commitment to VM; and
20 (2) the commodity’s importance to VM.
Each dimension is divided into two categories referring to a high or low degree
of the supplier’s commitment, and a high or low degree of the commodity’s
importance, to the VM.
The generic model of supplier segmentation consists of four principal
relationship strategies emphasising the supplier’s commitment, and the
commodity’s importance, to a VM. Each relationship strategy has its own

characteristics and expectations from a VM’s point of view in terms of supplier
selection criteria:
(1) A transactional relationship strategy signifies that the VM invests
limited resources in this specific supplier relationship. The supplier
delivers only single and simple components to the VM. This relationship
strategy is characterised by low mutual commitment, alternative
supplier choices available, and often price-driven transactions.
(2) A friendly relationship strategy signifies that the VM continues to foster
a strong relationship in this specific supplier relationship. The supplier
is considered as a partner to VM. This relationship strategy is
characterised by the supplier being dedicated to the VM, in fact often
dependent on the VM, while the supplier is not so innovative.
(3) A business partner relationship strategy signifies that the VM maintains
a high level of competition between this supplier and others. The
supplier is one of the larger ones that delivers to the VM. This
relationship strategy is characterised by the fact that the supplier is
usually a market leader, significant buying amounts are involved, and
the supplier has a range of product offerings.
Figure 1.
A generic model of
supplier segmentation
(4) A family relationship strategy signifies that the VM invests resources in Supplier
this specific supplier relationship and also develops strong corporate segmentation
partnership with this supplier. The supplier is one of the principle ones
to the VM. This relationship strategy is characterised by commitment to
mutual success between the VM and the supplier, strategic for
technology advancement, critical to the VM’s cost success, and
important to the brand of the VM. 21
Part two – an empirical illustration

A selection of univariate and bivariate statistical techniques are used to
describe and analyse the collected data based on the criteria of the generic
model of supplier segmentation described in Figure 1. A VM’s and its suppliers’
dyadic perceptions are measured and evaluated. The outcome of the statistical
techniques is briefly illustrated in the following paragraphs (e.g. Norusis, 1993).
Univariate statistics
The univariate statistics for each item of the four relationship strategies is
shown in Table I. A variety of items based on the relationship strategies have
been applied in order to test the stability and randomness of the collected
answers. Seven-interval Likert scales were used. The anchor points of the used
scales are “Strongly agree” (i.e. corresponding to a value of seven) to “Strongly
disagree” (i.e. corresponding to a value of one). Note that the items have been
translated from Swedish into English. The following abbreviations are used to
illustrate the outcome of each variable in the mentioned table: N ¼ number of
observations and Mn ¼ mean.
A total of 18 items were used in each questionnaire (see Table I) in order to
measure the VM and its suppliers’ dyadic perceptions of the relationship
criteria identified in the generic model of supplier segmentation in Figure 1.
Initially, the items were structured according to the four pre-specified
dimensions namely: family relationship strategy (i.e. items 1-6), business
partner relationship strategy (i.e. items 7-10), friendly relationship strategy (i.e.
items 11-14), and transactional relationship strategy (i.e. items 15-18). Two
additional items were used in each questionnaire to measure the importance of
the relationship (i.e. item 19), and the degree of cooperation in the relationship
(i.e. item 20), studied. These two items confirm that the selected supplier
relationships are important to the VM, as well as to the suppliers.
The overall interpretation of the univariate statistics in Table I indicates that
there is a rather mixed outcome of the relationship critieria of the generic model
of supplier segmentation between the VM and its suppliers. Some of the
relationship criteria in the different relationship strategies are well-pronounced
in the studied relationships, while others are less pronounced. In particular, the
criteria of transactional relationship strategy in the studied relationships are
weak. This might be explained by the fact that both the VM and its suppliers
22
34,1
Table I.
IJPDLM
its suppliers’
perceptions of
the items used to
relationship criteria
measure the VM’s and
Univariate statistics of
Questionnaire items – suppliers and VM
VM N Mn Supplier N Mn
1) We invest substantial resources (e.g. time, money, 62 5.11 1) This VM invests substantial resources (e.g. time, 66 4.83
contacts, and meetings) in the relationship with money, contacts, and meetings) in the relationship
this supplier with our company.
2) We strive to maintain a strong partnership with 62 5.42 2) This VM strives to maintain a strong partnership 66 5.23
this supplier with our company.
3) This supplier and ourselves are deeply committed 61 5.25 3) This VM and our company are deeply committed 66 5.53
to each other to achieve the best outcome to each other to achieve the best outcome
4) This supplier has a great strategic importance for 62 3.65 4) Our company has a great strategic importance for 66 4.17
our technological development this VM’s technological development
5) This supplier is important to our future 62 4.03 5) Our company is important to this VM’s future 65 4.20
profitability profitability
6) This supplier is very important to our brand 62 3.08 6) Our company is very important to the VM’s brand 66 3.97
7) We strive to develop a strong relationship with 62 5.24 7) This VM strives to develop a strong relationship 66 4.98
this supplier with our company
8) This supplier is deeply committed in this 61 5.39 8) Our company is deeply committed in the 66 5.65
relationship with us relationship with this VM
9) This supplier is strongly dependent on us 61 5.31 9) Our company is strongly dependent on this VM 65 5.49
10) This supplier is not innovative (e.g. does not 62 3.19 10) Our company is not innovative (e.g. does not 63 2.65
present his own proposals) present his own proposals)
11) We strive to ensure that this supplier’s 59 5.10 11) This VM strives to ensure that our company’s 66 5.46
technology should be equal to comparative technology should be equal to comparative
suppliers suppliers
12) This supplier is a technological market leader in 60 4.25 12) Our company is a technological market leader in 66 5.64
his field of components/material for us its field of components/material to this VM
(continued)
Questionnaire items – suppliers and VM

VM N Mn Supplier N Mn
13) We make substantial purchases from this 61 4.67 13) This VM makes substantial purchases from our 66 5.18
supplier company
14) This supplier has a wide range of different 61 4.69 14) Our company has a wide range of different 66 5.33
products products
15) We invest very limited resources in the 61 3.08 15) This VM invests very limited resources in the 66 3.32
relationship with this supplier relationship with our company
16) This supplier and ourselves are not very 61 2.26 16) This VM and ourselves are not very committed to 66 2.20
committed to each other each other
17) We can easily replace this supplier with other 17) This VM can easily replace our company with 66 2.86
comparative suppliers 62 3.19 other comparative suppliers
18) Our relationship with this supplier is mainly 62 3.48 18) This VM’s relationship with us is mainly based on 66 3.03
based on their price offer our company’s price offer
19) To what degree does this supplier deliver a 57 4.88 19) How important is this VM as a customer to your 65 6.29
critical component to you? (1 ¼ Not at all critical; company’s overall business? (1 ¼ Not at all
7 ¼ Very critical) important; 7 ¼ Very important)
20) To what extent does your company co-operate 60 5.63 20) To what extent does company co-operate with 64 5.94
with this supplier? (1 ¼ No co-operation at all; this VM? (1 ¼ No co-operation at all; 7 ¼ Very
7 ¼ Very extensive co-operation) extensive co-operation)
segmentation
Supplier
Table I.
23
IJPDLM judged the studied relationships to be important to them. Furthermore, both
34,1 perceive that the degree of co-operation is extensive between them.
Dyadic perceptions of the VM and its suppliers

The comparisons, i.e. differences and associations, between the VM and its
24 suppliers are analysed in this paragraph. The differences are tested by the aid
of three different statistical bivariate tests of differences (e.g. Norusis, 1993).
One parametric test is applied, namely Paired Samples T-test. In addition, two
non-parametric tests are applied as a complement, namely Sign test and
Wilcoxon matched pairs signed-ranks test. The associations are tested by the
aid of three different statistical bivariate correlation tests (e.g. Norusis, 1993).
One parametric test is applied, namely Pearson correlation coefficient. In
addition, two non-parametric tests are applied as a complement, namely

Spearman rank correlation coefficient and Kendall rank correlation coefficient.
A combination of parametric and non-parametric techniques has been used,
since the Likert scales employed may sometimes be interpreted as only ordinal.
The parametric techniques require at least interval scales, while the used
non-parametric techniques require only ordinal scales. Furthermore, a selection
of parametric and non-parametric tests has been combined and used to test the
overall stability and randomness of the performed statistical outcomes of the
bivariate analyses. Therefore, the non-parametric techniques are used to
reinforce and support the use of parametric tests in this research. The following
abbreviations are used in the Tables II-V:
.
Correlation (the direction of an association: (+) positive/(2) negative) – C
.
Kendall rank correlation coefficient – K.
.
Pearson correlation coefficient – P.
.
Paired Samples T-test – P1.
.
Spearman rank correlation coefficient – S.
.
Sign Test – S1.
.
Wilcoxon matched pairs signed-ranks test – W.
The four groups of relationship criteria of the relationship strategies are used to
categorise the bivariate analyses performed to test the potential differences and
associations between the dyadic perceptions between the VM and its suppliers.
Correlations and differences are illustrated in the Tables II-V. The bivariate
analyses of items are based on approximately 60 complete pairs of the VM’s
and its suppliers’ questionnaires. Note that one asterisk (i.e. *) is used to
indicate a significance level of 5 percent or less in terms of differences or
associations between variables, while two asterisks (i.e. **) are used to indicate
a significance level of 1 percent or less.
The overall interpretation of the statistical outcomes of the items of the
family relationship strategy (see Table VI) indicates that there few significant
differences between the dyadic perceptions of the VM and its suppliers. The Supplier
VM’s suppliers overestimate their own value in terms of strategic importance segmentation
to the VM’s technological development and their impact on the VM’s brand.
There is in part a significant association between the VM and its suppliers.
Neither overestimate the importance of the relationship’s impact on the VM’s
future profitability and the suppliers’ impact on the VM’s brand. In conclusion, 25
there are, in part, significant differences and associations between the VM and
its suppliers in terms of the relationship criteria of the family relationship
strategy.
business partner relationship strategy (see Table II) indicates that there are no
significant differences between the dyadic perceptions of the VM and its
suppliers, except that its suppliers perceive a stronger commitment than the
Business partner relationship strategy

VM versus Suppliers Differences Correlations Table II.
VM Supplier The differences and
Item (mean) Item (mean) P1 W S1 P K S C correlations between the
dyadic perceptions of
7) 5.24 7) 4.98 0.263* 0.168 0.210 + the VM and its suppliers
8) 5.39 8) 5.65 * * 0.078 0.070 0.086 + for the items of business
9) 5.31 9) 5.49 0.394** 0.313** 0.384** + partner relationship
10) 3.19 10) 2.65 * * * 0.026 2 0.010 2 0.015 strategy
Friendly relationship strategy

VM versus Suppliers Differences Correlations
VM Supplier Table III.
Item (mean) Item (mean) P1 W S1 P K S C The differences and
correlations between the
11) 5.10 11) 5.46 2 0.344* 20.273* 20.349* 2 dyadic perceptions of
12) 4.25 12) 5.64 ** ** ** 0.152 0.096 0.116 + the VM and its suppliers
13) 4.67 13) 5.18 * * 0.286* 0.286** 0.371** + for the items of friendly
14) 4.69 14) 5.33 * * * 0.062 0.050 0.064 + relationship strategy
Transactional relationship strategy

VM versus suppliers Differences Correlations Table IV.
VM Supplier The differences and
Item (mean) Item (mean) P1 W S1 P K S C correlations between the
dyadic perceptions of
15) 3.08 15) 3.32 0.014 0.044 0.062 + the VM and its suppliers
16) 2.26 16) 2.20 0.294* 0.170 0.199 + for the items
17) 3.19 17) 2.86 0.249 0.231* 0.284* + transactional
18) 3.48 18) 3.03 -0.036 -0.028 -0.034 - relationship strategy
IJPDLM
Relationship importance versus relationship strategy items
34,1 VM 19) 20) Supplier 19) 20)
1) 0.212 0.538** 1) 0.594** 0.586**

2) 0.260* 0.646** 2) 0.481** 0.653**
3) 0.200 0.667** 3) 0.538** 0.764**
26 4) 0.202 0.412** 4) 0.654** 0.493**
5) 0.192 0.354** 5) 0.573** 0.426**
6) 0.120 0.312** 6) 0.522** 0.281*
7) 0.236 0.581** 7) 0.504** 0.617**
8) 0.371** 0.623** 8) 0.402** 0.669**
9) 0.706** 0.427** 9) 0.116 0.397**
10) 0.002 2 0.077 10) 20.377** 20.302*
11) 0.186 0.243 11) 0.266* 0.107
12) 0.014 0.215 12) 0.520** 0.460**

13) 0.484** 0.469** 13) 0.501** 0.563**
14) 20.175 2 0.130 14) 0.292** 0.365**
Table V. 15) 20.120 2 0.400** 15) 20.471** 20.516**
The correlations 16) 20.296* 2 0.558** 16) 20.527** 20.691**
between relationship 17) 20.033 2 0.140 17) 20.407** 20.238
importance and 18) 20.012 2 0.233 18) 20.449** 20.523**
relationship strategy 19) 0.569** 19) 0.373**
items 20) 0.569** 20) 0.373**
Family relationship strategy

VM versus suppliers Differences Correlations
VM Supplier
Item (mean) Item (mean) P1 W S1 P K S C
Table VI.
The differences and 1) 5.11 1) 4.83 0.258 0.182 0.238 +
correlations between the 2) 5.42 2) 5.23 0.261 0.149 0.187 +
dyadic perceptions of 3) 5.25 3) 5.53 0.145 0.155 0.185 +
the VM and its suppliers 4) 3.65 4) 4.17 * * 0.220 0.185 0.213 +
for the items of family 5) 4.03 5) 4.20 0.324* 0.271* 0.358** +
relationship strategy 6) 3.08 6) 3.97 ** ** ** 0.287* 0.232* 0.313* +
VM, and that the suppliers perceive themselves as more innovative than the
perception of VM. Likewise, there is no significant association between the VM
and its suppliers, except that both strive to develop a strong relationship
between them, and that there is a strong dependence between them. In
conclusion, there are, in part, significant differences and associations between
the VM and its suppliers in terms of the relationship criteria of the business
partner relationship strategy.
friendly relationship strategy (see Table V) indicates that there are major
significant differences between the dyadic perceptions of the VM and its
suppliers. For example, the VM perceives that suppliers have a smaller range of Supplier
products to offer, that the purchase volume is less than the suppliers see it, and segmentation
that the VM does not perceive the suppliers to be market leaders to the same
extent. There is a minor significant association between the VM and its
suppliers. The suppliers strive to a larger extent to be comparable with other
comparative suppliers, and both perceive the exchange in the relationship as
substantial. In conclusion, there are, generally, significant differences and 27
associations between the VM and its suppliers in terms of the relationship
criteria of the friendly relationship strategy.
transactional relationship strategy (see Table IV) indicates that there are no
significant differences between the dyadic perceptions of the VM and its suppliers.
There is a minor significant association between the VM and its suppliers. Both
perceive that they are committed to each other, and that the suppliers are not
easily replaced. In conclusion, there are significant differences, but only in part
significant associations, between the VM and its suppliers in terms of the
relationship criteria of the transactional relationship strategy.
Based on the statistical outcomes in Tables III-VI, it is fair to conclude that
there are differences between the dyadic perceptions of the VM and its
suppliers in terms of the relationship criteria of their relationship strategies.
Furthermore, these dyadic perceptions are not mutual, which may indicate the
importance of maintaining closer information exchanges in these business
relationships, if only to avoid misinterpretations.
Correlations between relationship importance and relationship strategy

relationship criteria and the importance of the relationship to the VM and the
suppliers (see Table V) indicates that there are significant associations. On the
one hand, the supplier may not necessarily be that important to the VM, since
the VM does not always perceive that the suppliers’ components are critical. On
the other hand, the VM is an important customer for the suppliers. The VM’s
efforts of cooperation with its suppliers are less pronounced in the transactional
and friendly relationship strategies. Generally, the suppliers’ efforts of
cooperation with the VM are strongly pronounced in all the relationship
strategies.
Cross-tabulations of a VM’s and its suppliers’ perceptions of relationship

importance
The seven-interval items of the generic model of supplier segmentation (i.e.
items 19 and 20) reflecting the VM’s and its suppliers’ perception of the
relationship importance have been divided into two categories to cross-tabulate
the empirical outcome. The breaking points have been determined by a
judgmental decision procedure. The values of the items between 1 and 4 were
coded as low, while the values of the items between 5 and 7 were coded as high.
IJPDLM Other breaking points could have been used (such as quartiles), but based on
34,1 the data collected the breaking points were judged appropriate in conducting
this research. Accordingly, a re-coding of the Likert-scales into two main
categories (i.e. high and low) was used in order to apply the generic model of
supplier segmentation in the automotive industry introduced in Figure 1.
The cross-tabulation (see Figure 2) confirms the previous findings that the
28 studied relationships are important to both the VM and its suppliers (i.e. the
numbers shown before the brackets). However, the suppliers perceive the
relationships to be more important than does the VM. Among the studied
between the VM and its most important suppliers the family relationship
strategy is dominating. It is followed by the friendly relationship strategy. This
empirical outcome is in part confirmed and reinforced considering the VM’s
and its suppliers’ degree of perceived co-operation in the studied relationship

(i.e. the numbers shown within brackets). The degree of perceived co-operation
is high in almost most all of the studied relationships. In conclusion, on the one
hand the generic model of supplier segmentation shows that the studied VM’s
relationship strategies towards its most important suppliers tend to be family
and friendly relationship strategies. On the other hand, the transactional and
business partner relationship strategies are not part of this VM’s supplier
segmentation considering a dyadic approach based on the perceptions of the
studied relationships between the VM’s and its most important suppliers’.
Theoretical and managerial implications

The generic model of supplier segmentation (see Figure 1) may be used to
classify a focal VM’s various relationship strategies towards its suppliers. It
may be used for teaching and training purposes, as well as to position and
compare the outcome of other replicating studies of supplier segmentation in
the automotive industry. The generic model of supplier segmentation is dyadic,
since it considers both the supplier’s commitment to a VM and the commodity’s
importance to a VM. The generic model of supplier segmentation may be
Figure 2.
An empirical illustration
of the generic model of
supplier segmentation
positioned into wider theoretical and managerial contexts. In this paragraph Supplier
some of these theoretical and managerial implications are discussed. segmentation
There are three generic categories of dependencies (Svensson, 2002) between
buyers and sellers in the marketplace of interest for the generic model of
supplier segmentation, namely: time-dependence, functional-dependence, and
relationship-dependence. The relevance of time-dependence is motivated by the
fact that time issues have become increasingly important in the management of
29
recent marketing channels in different industries that emphasise leanness
(Lambert et al., 1998). For example, the automotive industry is influenced by
just-in-time principles (Sugimore et al., 1977; Toyoda, 1987). Time dependence
may be divided into time compression and order response on one hand, and
agility, the ability to change direction, on the other. There is also a
functional-dependence between companies (Bucklin, 1966; Alderson, 1954;

Stigler, 1951). Functional dependence refers to where companies’ business
activities are specialised and complement each other in channels or networks.
There is a relationship-dependence between companies’ business activities
(Håkansson and Snehota, 1995; Morgan and Hunt, 1994; Grönroos, 1990;
Bucklin, 1966; Alderson, 1954; Stigler, 1951). Relationship-dependence refers to
business activities being dependent on the interaction process between
companies in marketing channels. These generic dependencies create a
dynamic business environment on a micro level. They influence and may be
incorporated into the context of the generic model of supplier segmentation in
Figure 1.
Svensson (2000) identifies three types of logistics flows in terms of their
complexity, inventory buffers, materials and components, namely an A-flow, a
B-flow and a C-flow. The logistics flows are of interest in the context of the
model of supplier segmentation. The A-flow of components and materials is a
logistic flow that contains deliveries from so-called sequence suppliers. A
sequence supplier delivers sets of components in a pre-specified order, where
each order is based on a unique order of an ultimate consumer (or sometimes a
car dealer who buys on speculation). Thus, these deliveries consist of a set of
components that are pre-assembled at the time needed. There is also a short
inventory buffer of a minimum of 30 minutes between VM’s assembly line and
the sequence supplier. The sequence supplier is often located at the nearby
sub-contractor park a few kilometres from VM’s assembly plant. The A-flow
consists of deliveries such as: set of engines and gear box-units, set of seats,
complete panel of instruments, set of floor carpets, and set of wheels. Note that
these sets of components are delivered in different layouts and in a specific
pre-defined order to the assembly line at VM. The B-flow of components and
materials is a logistic flow that contains deliveries of more or less expensive
components that are not kept in large inventory. This flow has a minimum
inventory buffer of 24 hours at the VM. It is also dependent on the car ordered
by the ultimate consumer, for example, car model, ordered equipment, and
IJPDLM other additional accessories. The B-flow may contain electronic components,
34,1 IT-technology and other parts of a significant value. The C-flow of components
and materials is a logistic flow that contains relatively cheap components and
materials that are kept in stock. This flow has an inventory buffer of a week or
more, due to the fact that it is not influenced by variations in customer
preferences to a great extent. For example, a C-flow consists of screws and
30 other basic and simple components. These three logistics flows influence and
may be incorporated into the generic model of supplier segmentation in
Figure 1.
The network model (Håkansson, 1987; Håkansson and Snehota, 1995)
consists of three components, such as actors, activities and resources. This
model contributes to the overall context of the generic model of supplier
segmentation. Actors may be a company, a group of companies, an individual,

or a group of individuals. Activities are different business functions performed
in the business environment. Resources are the tangible and intangible assets
for actors to perform business activities. This means that the actors consume
the resources when the activities are performed. These components are
interdependent, which means that as one change the others are affected to some
extent. These three components influence and may be incorporated into the
context of the generic model of supplier segmentation in Figure 1.
Based on the previous theoretical frameworks and proposed incorporations
into the context of the generic model of supplier segmentation in Figure 1, a
model of dynamic relationship strategies towards suppliers is introduced in
Figure 3. The model becomes dynamic since its various components are
interdependent with the dimensions of supplier segmentation and the
relationship strategies towards suppliers. This means that a change in one of
the components may have an impact on the others, and vice versa. The model
considers the generic dependencies between business activities, the type of
logistics flow, and the components of the network model in the business
environment. This model suggests that a family dynamic relationship strategy
focuses on A-flows that are characterised by a logistics flow that contains
deliveries from so-called sequence suppliers who deliver sets of components in
a pre-specified order, where each order is due to a unique order of an ultimate
consumer. The impact of the generic dependencies on the actors, activities, and
resources is palpably based on high levels of dependencies between them. A
transactional dynamic relationship strategy focuses on C-flows that are
characterised by a logistics flow that contains relatively cheap components and
materials that are kept in stock. This flow is not influenced to any great extent
by variations in customer preferences. The generic dependencies on the actors,
activities, and resources have a relatively weak influence, i.e. the level of
dependencies is low. The friendly and business partner dynamic relationship
strategies focus on B-flows that are characterised by a logistics flow that
contains deliveries of more or less expensive components that are not kept in
Supplier
segmentation
31
Figure 3.
A model of dynamic
relationship strategies
(towards suppliers in the
automotive industry)
large inventory. It is dependent on the car ordered by the ultimate consumer.

The generic dependencies on the actors, activities, and resources in the B-flow
are relatively strong. The dynamics in these logistics flows vary. In summary,
the dynamics of A-flows are more intense in relation to the dynamics of
B-flows, where the dynamics of C-flows’ are the least intense.
A managerial process for the analysis, selection, and managerial decision of
a dynamic relationship strategy towards suppliers in the automotive industry
is introduced in Figure 4. The process consists of four phases as follows:
(1) Phase one – analysis of business environment. This phase consists of two
principal dimensions in the business environment. Each dimension
consists of three components. Three of the components are derived from
the network model, namely actors, activities, and resources. These
components are mutually dependent on each other in the business
environment. The other three components are derived from the generic
dependencies in the business environment, such as time-dependence,
functional-dependence, and relationship-dependence. The components of
the network model are interdependent with the generic dependencies.
Accordingly, the dependence between the actors, activities, and
resources in the network model is affected by the current time-,
IJPDLM
34,1
32
Figure 4.
A four-step process for
the analysis, selection,
and managerial decision
of a dynamic relationship
strategy (towards
suppliers in the
automotive industry)
functional-, and relationship-dependencies that exist between them.

Taken all together, these components create a complex business
environment. Phase two should not proceed until this phase is properly
terminated.
(2) Phase two – analysis of relationship criteria. This phase consists of two
principal dimensions of relationship criteria. One of the dimensions
consists of three components, the other of two. One dimension refers to
types of logistics flows. Three components are derived from the logistics
flows, namely an A-flow, a B-flow, and a C-flow. These logistics flows Supplier
are dependent on the other dimension that refers to supplier’s segmentation
commitment, and commodity importance, to a VM. Depending on the
mutual outcome of these components an appropriate logistics flow is
chosen. When phase one and two are mutually consistent, phase three
should follow.
33
(3) Phase three – selection of relationship strategy. This phase contains the
selection of a relationship strategy. It should be adapted to the analyses
of the business environment and relationship criteria. The relationship
strategies are labelled: family, business partner, friendly, and
transactional. Depending on the business environment and the
relationship criteria of phases one and two a relationship strategy is
selected for final examination in the next and final phase.

(4) Phase four – managerial decision of relationship strategy. Once phases
one, two, and three have been thoroughly explored and elaborated (i.e. a
proper analysis of the business environment, an adequate analysis of the
relationship criteria, and a suitable selection of the relationship strategy,
have been made) then the managerial decision for implementation and
control is ready to proceed to finalise the dynamic relationship strategy
process. The managerial decision of implementation is a step forward in
the process, while the control refers to the management’s continuous
evaluation of the previous phases of the process.
The model of dynamic relationship strategies provides the scholar and the
practitioner with a framework for the analysis of supplier segmentation in the
automotive industry. The scholar may use the model to position supplier
segmentation into a theoretical context, while the practitioner may use it to
explore the potentials and obstacles of supplier segmentation in the
marketplace. The four-step process for the analysis, selection, and
managerial decision of a dynamic relationship strategy may also be used by
practitioners to manage supplier relationships in the marketplace. Generally, it
provides a framework of supplier segmentation. In particular, it provides
generic guidelines to support the managerial decision of a dynamic relationship
strategy towards suppliers in the automotive industry.
Lessons learned
The empirical findings of this research indicated both high and low importance
of suppliers’ commodities to the VM. The empirical findings also indicated the
suppliers’ high commitment to the VM. This knowledge should be taken into
consideration in the VM’s strategic agenda of supplier segmentation, e.g. in
terms of the lessons learned and implications such as considering the
relationship criteria, the environmental determinants and the contingency
planning (see Table VII).
IJPDLM
Lessons learned Implications
34,1
VM Relationship criteria
Both high and low For example, high importance of the commodity: commitment to
importance of suppliers’ mutual success between the VM and the supplier, strategic for
commodities technology advancement, critical to the VM’s cost success,
34 important to the VM’s brand
For example, low importance of the commodity: the supplier is
dedicated, the supplier often dependent on the VM, the supplier is
not so innovative
Environmental determinants
For example, upstream time-, functional- and
relationship-dependencies on actors, activities and resources in the
business environment, and the type of logistics flow from the
supplier such as: A-flow, B-flow and C-flow

Contingency planning
For example, a high degree of co-operation with the most
important suppliers
Suppliers Relationship criteria
High commitment to VM For example, high commitment of the supplier to the VM:
commitment to mutual success between the VM and the supplier,
strategic for technology advancement, critical to the VM’s cost
success, and important to the brand of the VM
Environmental determinants
For example, downstream time-, functional- and
relationship-dependencies on actors, activities and resources in the
business environment, and the type of logistics flow to the VM
Table VII. such as: A-flow, B-flow and C-flow
Implications based on Contingency planning
the lessons learned For example, a high degree of co-operation with the VM
The lessons learned from a VM’s point of view in this research are that the
importance of suppliers’ commodities is both high and low (see Table VII).
These lesson learned in terms of a VM’s relationship strategy towards its most
important suppliers is affected by upstream environmental determinants, such
as time-, functional- and relationship-dependencies on actors, activities and
resources in the business environment (see Table VII). Another crucial
determinant is the type of logistics flow from the supplier such as: A-flow,
B-flow and C-flow. On the one hand, a situation of high importance of the
supplier’s commodity to the VM is characterized by the commitment to mutual
success between the VM and the supplier, strategic for technology
advancement, critical to the VM’s cost success, and important to the VM’s
brand. On the other hand, a situation of low importance of the supplier’s
commodity to the VM is characterized by: the supplier being dedicated to the
VM, the supplier often being dependent on the VM and the supplier not being
so innovative. Therefore, the VM has to consider the degree of co-operation
required towards the most important suppliers in the contingency planning of Supplier
these supplier relationships. segmentation
The lesson learned from the suppliers’ point of view in this research are that
the commitment of suppliers’ to the VM is high (see Table VII). The lesson
learned in this research in terms of suppliers’ relationships to a VM is affected
by downstream environmental determinants, such as time-, functional- and
relationship-dependencies on actors, activities and resources in the business.
35
Another crucial determinant is the type of logistics flow to the VM such as:
A-flow, B-flow and C-flow. For example, the relationship should preferably be
characterized by the commitment to mutual success between the VM and the
supplier, strategic for technology advancement, critical to the VM’s cost
success, and important to the brand of the VM. Therefore, each supplier has to
consider the degree of co-operation required with the VM in the contingency
planning of the relationship.
Conclusions and suggestions for further research

This research has contributed to a generic model of supplier segmentation in
the automotive industry. Furthermore, this research has contributed to another
model, and a process, for dynamic relationship strategies towards suppliers in
the automotive industry. These contributions are based on one VM and its
most important suppliers, and have been summarised into some lessons
learned. Consequently, a dyadic approach to the VM-supplier relationship has
been applied. It has been shown that these contributions have theoretical and
managerial implications. The theoretical implications position the supplier
segmentation in a wider theoretical context, while the managerial implications
consist of generic guidelines to underpin the managerial decision process of
supplier segmentation. This research has indicated the importance of a
thorough analysis in the marketplace before the managerial decision of
supplier segmentation is made. Supplier segmentation should be
market-oriented (i.e. upstream) in the same way as when companies take
decisions about customer segmentation (i.e. downstream). Generally, supplier
segmentation should be a strategic decision and based on current and future
market potentials and obstacles. This research also presents insights for selling
firms in their efforts to segment, and meet the segmentation, of their customer
base in marketing, sales, and distribution (e.g. in terms of relationships,
integration, prioritisation for investments and innovation).
The use of one VM and its most important suppliers in the automotive
industry implies that the outcome of this research may not be generalised
beyond the studied VM. Probably the introduced models may be generalised
beyond the studied VM in the automotive industry, since other VMs have to
confront more or less the same business environments and relationship criteria.
Therefore, the empirical setting of supplier segmentation has to be further
explored. These research limitations provide suggestions for further research
IJPDLM into the field of supplier segmentation. The implications at this stage of
34,1 research are limited to one VM in the automotive industry, but further research
may be dedicated to explore the validity, reliability, and generality of this
research’s contributions in other VMs or industries.
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Supplier segmentation in the automotive industry: A dyadic approach of a managerial

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Introduction and research objective

point of reference in literature. Supplier selection criteria have been widely

Theoretical framework – supplier segmentation

and low resulting in four categories of materials and components, namely:

Theoretical framework – supplier selection criteria

and O’Shaughnessy (1974) examine 17 supplier selection criteria in the USA

Triangular research approach

Part one – an empirical model of supplier segmentation

commodity’s importance, to a VM. Each relationship strategy has its own

Part two – an empirical illustration

Questionnaire items – suppliers and VM

Dyadic perceptions of the VM and its suppliers

addition, two non-parametric tests are applied as a complement, namely

Business partner relationship strategy

Friendly relationship strategy

Transactional relationship strategy

1) 0.212 0.538** 1) 0.594** 0.586**

12) 0.014 0.215 12) 0.520** 0.460**

Family relationship strategy

Correlations between relationship importance and relationship strategy

Cross-tabulations of a VM’s and its suppliers’ perceptions of relationship

and its suppliers’ degree of perceived co-operation in the studied relationship

Theoretical and managerial implications

functional-dependence between companies (Bucklin, 1966; Alderson, 1954;

segmentation. Actors may be a company, a group of companies, an individual,

large inventory. It is dependent on the car ordered by the ultimate consumer.

functional-, and relationship-dependencies that exist between them.

selected for final examination in the next and final phase.

supplier such as: A-flow, B-flow and C-flow

planning of the relationship.

Conclusions and suggestions for further research

Bucklin, L.P. (1966), A Theory of Distribution Channel Structure, University of California,

Modelling (ISM)”, International Journal of Operations & Production Management, Vol. 14

1. AkhavanPeyman, Peyman Akhavan, ShahabipourAli, Ali Shahabipour, HosnaviReza, Reza Hosnavi.

International Journal 24:2, 359-383. [Abstract] [Full Text] [PDF]

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1) 0.212 0.538 1) 0.594 0.586**

12) 0.014 0.215 12) 0.520 0.460