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Contribution of Supplier Management to Company Value Development

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  • Gerhard Lechner

    (University of West Hungary, Hungary)

Abstract

Increasing the value of the company is one of the main tasks of the management in order to survive in the market in the long term. Due in part to the very high proportion of Value Added outside of the company itself among suppliers, especially in the case of manufacturing companies, the development of the Company Value is strongly influenced by these. Suppliers are increasingly involved in processes of their customers or even take over processes by themselves. As a result, Supplier Management by purchasing departments is important. From this, the costbenefit ratio of Supplier Management activities is of great importance because the individual functions within the company compete for investments. For this purpose, the main tasks and the Profit Contribution of purchase activities are examined. Furthermore, the type and general significance of the Value Added provided by the suppliers is analyzed and the motivation for the cooperation is shown. Last but not least, the critical Success Factors of Supplier Management are examined and the reasons that make Supplier Management more difficult are determined as well. The result is that Supplier Management can contribute to the value of the company if purchasing is able to agree cost improvements with suppliers. Therefore, purchasing has to show the improved cost positions which can be realized via direct cost improvements and in addition via improved supplier performance which goes beyond direct cost reductions.

Suggested Citation

  • Gerhard Lechner, 2019. "Contribution of Supplier Management to Company Value Development," Eurasian Journal of Business and Management, Eurasian Publications, vol. 7(2), pages 38-48.
    • Handle: RePEc:ejn:ejbmjr:v:7:y:2019:i:2:p:38-48
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    References listed on IDEAS

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    1. Roodhooft, Filip & Konings, Jozef, 1997. "Vendor selection and evaluation an Activity Based Costing approach," European Journal of Operational Research, Elsevier, vol. 96(1), pages 97-102, January.
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