Supplier integration—Finding an optimal configuration

TLDR

Interest in supplier integration has risen recently, with many organizations supporting such initiatives. The study defines supplier integration as a bundle of internal and external practices, hypothesizing that specific configurations can drive performance and that an optimal integration level exists. Using a cross‑section of over 300 U.S. manufacturing firms, the authors test for an optimal integration level and explore its developmental conditions.

Abstract

Abstract There has been increased interest in supplier integration in recent years, much of it supporting such initiatives in organizations. We operationalize supplier integration as a bundle of practices that include a set of “internal” and “external” practices. We hypothesize that such practices in specific configurations can be as important a source of performance differentials as the adoption of individual practices themselves. We theorize the existence of a level of integration that results in optimal performance. The paper uses data from a cross‐section of more than 300 US manufacturing companies to test the notion of an optimal level of supplier integration, and examine the conditions surrounding its development. The results provide empirical support for the concept of an optimal set of supplier integration practices. We show that deviations from the optimal profile are associated with performance deterioration, and that indiscriminate and continued investments in integration may not yield commensurate improvements in performance.