When becoming aware of a sub-supplier being below expected performance levels (e.g. by reviewing audits), companies need reliable, efficient approaches on how to best establish corrective action. Dealing with sub-suppliers causes challenges that are profoundly different from those usually experienced in direct buyer-supplier relationships. Most importantly, companies lack a contract on their indirect business relationship with the sub-supplier, lack clear responsibility in their own organization, lack a contact person at the sub-supplier, or are confronted with a vast number of potential sub-suppliers. As a result, companies frequently decide not to respond with own action to identified issues on sub-supplier levels, instead asking their direct suppliers to handle the issue with mixed results. How companies can professionally engage with sub-suppliers to achieve their aspired performance levels is the goal of this project.

Sub-supplier management is a relatively new field in supply chain management, referring to a buying organization’s strategies and practices to change sub-supplier behavior toward a desired end. Identifying and monitoring performance of sub-suppliers creates higher benefits if detected deviations are addressed by corrective action. Such corrective action can be imposed in different ways: e.g. directly or indirectly, coercively or collaboratively. Clear business processes rise the level of professionalism and success.

This project addresses these issues and asks “How can a buying company professionally interact with sub-suppliers?” and “How can a buying company safeguard its specific investments into a sub-supplier?” The project aims to develop a hands-on tried-and-tested management framework to derive the most appropriate approach to interact with a specific sub-supplier and a portfolio of detailed business processes for professionalized sub-supplier management. Field experiments allow validating the usefulness of the developed approaches and processes.