A new way to evaluate Supplier Capability
April 4, 2012 Leave a comment
I just finished reading the article by Upson, Connelly, Ketchen, and Ranft entitled “Competitor Analysis and Foothold Moves” published in the Academy of Management Journal. (www.aomonline.org)
The authors identify the strategy employed by suppliers that establish a small capability in a market so that it can be recognized as a minor player. Once a major player announces a new product or service, this “foothold” supplier can then introduce a feature or features that can undermine the new release. Too often, organizations use standard vendor lists or rely on companies to self-register. The notion presented here is that the market assessment of suppliers is an aggressive endeavor and requires independent research and analysis.
Oftentimes, the procurement executive does not evaluate the minor players and focuses on the major players due to critical mass, installed base, and reputation. Using this strategy does have the disadvantage in that the “foothold” is not evaluated or given a chance to participate in a large procurement.
The lesson here is that a complete market analysis of potential suppliers include those that have established a foothold in the market and could be a great resource for market change, innovation, and competitive advantage.