Managing Services Supply Chains: The Relationship between Supplier Relations and Supply Chain Performance

Supply chain management has increasingly been recognized as a key driver of overall operational and financial performance. However, empirical studies in this area have been conducted primarily in manufacturing and/or at the SBU or firm level. It is unclear whether the results of these studies generalize to services and/or intra-firm processes. Thus, in this study we focus specifically on supplier relations in financial services processes and empirically examine the relationship between supplier relations and supply chain performance using a unique database with a sample of 108 financial services processes. Our results show that, after controlling for supplier efficiency and responsiveness, use of information technology, electronic information-sharing, and supplier type (including both internal and external suppliers), better supplier relations are associated with satisfaction with overall supplier performance. However, the “partnering” components of the relationship (i.e., cooperation and long-term commitment) are correlated with satisfaction with overall supplier performance, while the “operational” components of the relationship (i.e., high degree of coordination, information-sharing, and feedback) are not. We discuss the implications of these results for supply chain management in financial services and then conclude with the limitations of our study.