Investigating The Motivation And Challenges Of Supplier Development In The Upstream Oil And Gas Industry Aberdeen, UK.
- March 23, 2022
- Posted by: rsispostadmin
- Categories: IJRISS, Social Science
International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue II, February 2022 | ISSN 2454–6186
Olufolakemi Afrogha
Bowen University Iwo, Nigeria
ABSTRACT
The principal purpose of this research was to investigate motivations and challenges of supplier development in the UK upstream oil and gas industry. The need for developing suppliers is indisputable owing to the frequency of disruption in organisations in recent times and the need to gain competitive advantage. The upstream oil and gas industry in Aberdeen is considered because of its enormous involvement in offshore operations. The data sourced through interviews were qualitatively analysed to achieve the research objectives. The findings of the research reveal that very few organisations in the oil and gas industry lay emphasis on supplier development as suppliers are assumed to be competent. Also, a high level of senior management support, increase in communication, suppliers’ willingness to be developed, improved information flow across the supplier chain, increased trust and coordinated strategy for implementing supplier development initiatives is necessary to be able to implement supplier development. This has been noted from research findings and interviews of personnel involved in the supply chain of organisations in the upstream oil and gas industry Aberdeen, UK.
Keywords: Supply chain, Supplier, selection, development
1. Introduction
The millennium business environment is characterised by increasing competition and uncertainty which has shifted competition from being predominantly inter-firm based to supply chain based. As a result, organisations need to re-organise their business operations to gain competitive advantage. Such re-organisation is centred on the supply chain (Ketchen & Hult 2007) with a focus on supplier development. According to Bai and Sarkins (2011), there is an increased consensus amongst practitioners on the relevance of supplier development in organisations operating in a competitive business environment. Although, there are various ways companies can improve operations, supplier development has proven to be an effective way to improve organisations operations across the supply chain. Besides reducing cost, effective supplier development adds value to organizations by improving lead time, product quality, process cycle time and reduces cost ((Benton, Prahinski & Fan, 2020).
In this regard, Wagner (2006) stated that supplier development has become important for attaining competitive advantage in many industries and improving organisation’s performance throughout the supply chain. Similarly, Arroyo-Lopez, Holmen and Boer (2012) stated that supplier development helps to improve firms’ product quality and flexibility, cut costs and shorten lead time. Supplier development was a response to one third of project failures in the 90s where companies decided to cut down direct suppliers and maintain cooperative relationships with the remaining, resulting in suppliers’ underperformance. Supplier development is “any effort of a buying firm with a supplier to increase the suppliers’ performance and/or capabilities to meet the buying firm’s short and/or long-term supply needs.” (Krause & Ellram 1997 p. 39). Maloni and Beaton (2000) noted that it involves the ability of a buying firm to influence the intentions and the ability of its suppliers. Arroyo-Lopez et al. (2012) stated that supplier development requires the buyer and supplier to commit maximum effort to achieve improved performance.
However, despite its advantages and potential contribution, Wagner (2006) noted that many organisations are without express strategies on how to develop their suppliers as they consider it non beneficial and a waste of resources. Thus, the success of supplier development is not a foregone conclusion. In addition, very few industries seem to be achieving the desired level of success in supplier development (Carr & Kaynak 2007). This raises questions on the motivation and challenges organizations encounter in supplier development, if there is any. Thus this research is focused on finding out from personnel involved in the supply chain of upstream oil and gas companies the motivations and challenges of supplier development.
