Developing grape expectations: A dyadic examination of the effectiveness of supplier development relationships in the South Island wine industry.

Abstract

Organisations must generate synergies in their supply chain that result in sustainable competitive advantages. Supplier development is one strategy than can help businesses accomplish this. Literature on supplier development has typically examined only the buying organisation's perspective of these relationships, with research generally conducted in the context of large organisations. While these efforts provide a broad framework to understand supplier development, they lack the salient details of how this strategy is applied in a New Zealand setting. This research addresses this deficiency in the current body of literature. It examines the incidence and effectiveness of supplier development strategies and incorporates both stakeholders' perspectives. A dyadic, multi-method study was undertaken, examining the dynamics of this strategy in the New Zealand wine industry. Five South Island winery case studies were completed and statistical analysis conducted on survey data collected from a random sample of 150 grape growers in this region. Comparing these parties' results indicate that six of the ten critical elements identified in the literature apply in this industry. Both parties view these efforts as a form of investment, with the dividends being quality of outputs, and forging long-term relations that assured either fruit supply or markets. Two of the notable differences from the literature were the lack of importance placed on utilising cross-functional buying teams and the percentage of suppliers' annual sales being a determining factor for supplier development efforts. Contrary to the literature, the management of these two elements exhibited a results orientated, reactive approach, whilst the remaining elements portray process orientated, strategic characteristics. For this industry at least, it was also found that supplier development efforts must be mutually beneficial and participants preferred to have the relationships managed in a personalised manner. Wineries and growers concur that effective supplier development is fundamental for them achieving a sustainable competitive advantage, enabling them to continue competing successfully in the global wine market.