Suppliers in collaboration : the impact on the strategies of the individual firm

Abstract: The general purpose of this thesis is to describe and analyse how collaboration in supplier network influence the individual supplier. The focus is the influence on the supplier's strategic development and how it influences the customer relationship. The empirical data in the study is seven cases, which includes the supplier network Trä 50, five of the participating companies, and their common customer Ikea.The collaborating companies are SME in the furniture manufacturing industry, primarily active on the Swedish furniture market dominated by furniture retailers such as Ikea, Em and Mio. The suppliers are in a weak position and collaboration is often argued as a way to change the situation. During the past decade, large amounts of money have been spent by the EU and the Swedish government to encourage and support collaboration projects, in the furniture manufacturing industry and also in other industries. However, argumentation for collaboration is seldom underpinned with data on the actual outcome for the individual participating company. Therefore is the benefit from collaboration for the individual company central in this thesis.The research questions are based on the view that there is three elements that can influence each other when suppliers collaborate: the supplier, the customer and the supplier network. All influences between these elements are studied in this thesis to understand the collaboration's total influence on the individual supplier. To achieve this was the development of the five suppliers studied, the customer's purchasing strategy and the supplier network's activities.Trä 50 was a collaboration project, founded to reduce the lead-time by 50 percent for the participating companies. The participating companies had high goals and saw collaboration as an opportunity. It was especially exchange of experience and knowledge that attracted them. Trä 50 turned out to become much more than one project. Bonus agreements in purchasing, study tours abroad, a market oriented project, and study visits at each other's companies were some of the activities in Trä 50 during the approximately ten active years. The participants consider Trä 50 as a successful collaboration.Ikea was not a member of Trä 50, but the company was involved in the founding of Trä 50 and different representatives from lkea were often invited to seminars and discussions. Partnerships between Ikea and the individual suppliers were for instance discussed.One conclusion of this study is that collaboration can have significant influence on the individual company, but also not any influence at all. The result depends on factors such as the company's involvement in the activities, the management's attitude to and goals with the collaboration and the fultilment of the goals.All the participating companies did not reach the goal 50 per cent reduction of the leadtimes, but they did improve the production processes, and increased the production capacity. The over aU result from Trä 50 for the participants were improved knowledge development, and personal development for the managers. An additional contact channel to the customer was established through the network. Business negotiations were still held on the single company level, and knowledge development on the network level - a kind of Meta relation to the customer emerged. The knowledge development led among other things to a "fine-tuning" of the companies strategies. The collaboration led to few new customer, but larger volumes at Ikea.The reasons for the success of Trä 50 were many, but some are more noticeable. A friendly and trusting atmosphere emerged among the representatives from the companies. They also worked hard on the projects though, to stay competitive among each other. Furthermore, the companies' had similar problems and the relation to Ikea. The large customer meant many possibilities, but its power was also a threat. The suppliers shared a love-hate feeling toward the customer. The active part that Ikea did take in the collaboration by attending meetings, seminars, and discuss issues such as partnership was another reason to the success.The individual company's relation to the customer Ikea was also influenced. The companies got a broader net of contacts at Ikea. The collaboration made them more visible at the customer, and this led to an improved position for the supplier and the customer-supplier ties were strengthened.