The Impact of Cycle Time on

Supplier Selection and Subsequent

Performance Outcomes

AUTHORS
INTRODUCTION
Alex Sharland Over the last decade, the supply function has begun
is an associateprofessor in the Andreas School ofBilsiness at Bany to establish itself as a strategic contributor, often driving
University' in Miami Shores, Florida. competitive advantage through improvements to cycle
times, quality, service, price, and total cost (Porter 1999).
Reham A. Eltantawy AS part of this evolutionary process, purchasers are com-
is a Ph.D. candidate in the Departnentof Marketing at FloridaState mitted to initiating and developing long-term business
relationships. These long-term relationships deliver added
University in Tallahassee,Florida.
value for buyers and suppliers in industrial markets
Larry C. Giunipero (Larson and Kulchitsky 1998). Previous research has
shown that companies can lower costs and achieve
is professor ofpurchasingand supply chain management atFlorida
greater effectiveness in their purchasing, logistics, and
State University in Tallahassee,Florida. production functions by developing long-term business
relationships (Li and Dant 1999). Hence, buyers should
be able to leverage strategic alliances and partnerships
with suppliers, set up brainstorming sessions and joint
Cycle time is among the emerging performance
workshops with the in-house technical function, and
criteria for purchasing and supply management. generate new ideas or creative solutions to specification
However, little empirical research has been conducted problems, to shortening cycle time, and to speeding up
for actually evaluating the impact of cycle time on the production process (Omare 2001).
strategic issues, such as long-term business relation- As indicated above, cycle time is among the emerging
ships and supplier selection and evaluation processes. performance criteria for purchasing and supply manage-
This study empirically tests the impact of cycle time ment. Cycle time derives its importance from the rapid
on supplier selection and on the pace of change and the need to keep suppliers' and final
SUMMARY effectiveness of long-term relation- customers' demands in balance while maintaining inven-
ships with suppliers, as reflected tories at reasonable levels. As an antidote to the plethora
in the commitment and trust developed. Findings of changes and complexities in the economic, global,
indicate that initial cycle time is not a significant technological, and regulatory enviromnents, cycle time
predictor of trust and commitment in the context offers considerable strategic promise. Thus, organizational
of supplier-buyer long-term relationships. However, changes that accelerate reductions in the cycle time of
developing and introducing products and enhance the
cycle time reduction along with consistently high
level of commitment and trust between suppliers and
quality were found to be significant predictors of customers are needed (Arena 2002). More recently, several
trust and commitment in long-term relationships. researchers have suggested that cycle time is a strategic
criterion when evaluating long-term business relation-
The Journalof Supply Chain
ships (Hrisak 1999; Sochocki and Kaminsky 1999). More
Management A Global specifically, previous research suggests that cycle time
Review of Purchasingand should be used as one criterion for making strategic rela-
Supply Copyright © August
2003, by the Institute for tionships and selecting suppliers.
Supply Management, Inc.' Hence, the purpose of the current study is to examine
the role of cycle time in supplier selection, supplier per-
formance, and its impact on subsequent long-term rela-
tionships. This study addresses briefly the cycle time

4 The founial of Supply Chain Management ISummer 2003

 The Impact of Cycle Time on SupplierSelection and Subsequent PerformanceOutcomes

literature, identifies the variables used in the empirical Cycle Time and Relationships
study, reports the results of the data analysis, and draws When purchasing moves to adopt closer relationships
conclusions and describes some managerial implications with suppliers, the view of the supplier-buyer interface
for the study. changes. Suppliers now are viewed as assets that provide
several value-added benefits such as quality, engineering
THEORETICAL BACKGROUND support, new product ideas, and service support (Anderson
Cycle Time and Katz 1998). This perspective considers the supplier as
Competition has forced many industries, once known being not only a source for low-cost material that can be
for their lengthy product development times, to become easily manipulated for price reductions, but also a way to
more sophisticated and to speed up product develop- complement and enhance the buying firm's core compe-
ment time (Milligan 1999). Industry analysts contend tencies (Larson and Kulchitsky 1998). Dell Computer is
that this trend has been partly fueled by an increasingly often cited as an example of a firm that has implemented
informed consumer base, where people are knowledge- this dose working arrangement with its suppliers. Suppliers
able about various products and options and often even are treated as extensions of Dell's operations and its
know what to request. Now, instead of developing and purchasing personnel are extensively involved in under-
producing something in three to five years, manufac- standing their suppliers' operations, products, and
turers are under pressure to produce and get it to market commodities (McWilliams and White 1999). Thus, these
much more quickly (Milligan 1999). Thus, cycle time is long-term business relationships deliver added value for
increasingly becoming a critical variable in many business buyers and suppliers in industrial markets (Hrisak 1999).
decisions (Stalk 1998; Stalk and Hout 1990; Meyer 1993). Additionally, Hendrick, Carter, and Siferd (1996)
The impact of time (in general) has also been discussed reported the results of a survey showing five dominant
in the marketing and purchasing literature (Handfield strategies used by purchasers to support time-based strate-
1993; Hendrick, Carter, and Siferd 1996; Inman 1992; gies. The five strategies that had been adopted by at least
Kumar and Sharman 1992; Dholiakia, Johnson, Della 75 percent of the sample were: (1) total quality/contin-
Britta, and Dholiakia 1993). Hendrick, Carter, and Siferd uous improvement; (2) on-time delivery measures; (3) the
(1996) suggested that from the late 1980s through the formation of partnerships; (4) a focus on reducing lead-
1990s, time was the main focus of many leading organi- time; and (5) early supplier involvement in the design
zations as a means to quality improvement. Handfield process. They concluded that endless opportunities existed
(1993) and Inman (1992) noted that from the customer's to squeeze time out of the process.
perspective, time is a critical factor in making purchasing Furthermore, business managers in New Zealand were
decisions and that customers devote time and effort to asked to identify significant value drivers for their busi-
reducing manufacturing cycle time, which accounts for nesses. They endorsed the view that cycle time is a key
nearly 50 percent of total cycle time. Traditionally, cycle driver in building shareholder value (Hrisak 1999).
time has been used as a variable in supplier selection deci- Information technology experts endorse that shorter
sions (1\4onczka, Trent, and Handfield 1998). In contrast, cycle times in e-business are essential, not only to a com-
overall time reduction is usually considered a perfor- pany's profits but also to a company's survival (Sochocki
mance criterion. Therefore, this study uses cycle time as a and Kaminsky 1999).
supplier selection criterion, and time reduction as an eval- Despite the fact that cycle time has been proposed con-
uation criterion of supplier performance. ceptually as an important variable in the purchasing
The above discussion confirms the importance of cycle process, there are few empirical studies examining the
time in helping firms to not only compete effectively but impact of time on sourcing. Handfield (1993), in a cross-
also attain a competitive advantage. This is mainly industry field study at 35 locations, argued that of all the
because the focus on cycle time translates into bottom- activities in the production cycle, supplier relationships
line profits. An example of the direct benefits that cycle are the most susceptible link (1993). He also stated that
time can provide is illustrated by Stalk and Hout (1990). there has been much research on the impact that Just-
They cited the case of Atlas Door Corporation, which is In-Time (GiT) systems have had on leadtimes. His results
the leading supplier of industrial overhead doors. Arias is indicated that purchasing could contribute to significant
able to fill its customer orders three times faster than the reductions in leadtime by working with suppliers on late
competition. The result is that the firm has grown three deliveries, quality defects, and in the early stages of the
times faster in revenue and five times faster in profits design process. While not addressing the issue of cycle
than other firms in its industry. In order to reduce total time in the initial selection process, Handfield does
cycle time effectively, organizations must reduce time observe that incoming product quality and on-time
everywhere in the value chain, particularly in the interac- delivery are two critical measures of supplier performance
tions with suppliers. In order to accomplish this, as well (Handfield 1993).
as other goals, purchasers are moving to adopt closer rela- Based on the above discussion, cycle time appears to be
tionships with key suppliers. a critical component of strategy that is an essential driver

The Journal of Supply Chain Management ISummer 2003 5

The Impact of Cyde Time on SupplierSelection and Subsequent PerforannceOutcomes

of shareholder value and a key tool for evaluating compet- Using these definitions and perspectives, it is possible to
itive posture. However, despite the raised profile of cycle say that a trustworthy buyer or supplier is one that displays
time, there is little empirical research that focused on actu- the following characteristics: does not act in a purely self-
ally evaluating the impact of cycle time on strategic issues, serving manner; accurately discloses relevant information
such as long-term business relationships and supplier when requested; does not change supply specifications,
selection and evaluation processes. Thus, the main pur- standards, or costs to take advantage of other parties; and
pose of this study is to empirically test and document the generally acts according to normally accepted ethical stan-
impact of cycle time on supplier selection and on the dards (Smeltzer 1997). Generally, trust is the expectation by
effectiveness of long-term relationships with the suppliers, one person, group, or firm of ethically justifiable behavior
as reflected in the commitment and trust developed and - that is, morally correct decisions and actions based
maintained in these relationships. upon ethical principles of analysis - on the part of the
other person, group, or finm in a joint endeavor or eco-
Supplier Selection and Trust and Commitment nomic exchange (Hosmer 1995).
One of the critical challenges faced by purchasing man- On the other hand, commitment in a business rela-
agers is the selection of strategic partners that Will furnish tionship has been defined as the adoption of a long-term
them with the necessary products, components, materials, orientation toward the relationship (Anderson and Weitz
and services in a timely and effective manner to help 1992). There is consensus in previous research that long-
maintain a competitive advantage. The supplier selection term business relationships are the only effective way of
process has undergone significant changes during the past conducting business, and that maintaining the effective-
20 years. These include increased quality guidelines, ness of these relationships requires enhanced levels of
improved computer communications, and increased tech- trust and commitment by both parties in order to be
nical capabilities (Weber, Current, and Benton 1991). effective. This is evidenced by recent empirical work that
Buyer-supplier relationships based solely on price are no tested these predictions and found that single sourcing
longer acceptable for suppliers of critical materials or for adds value and reduces cost (Larson and Kulchitsky 1998)
organizations that wish to practice the latest innovations and that greater value is created through relationships
in supply chain management Recent emphasis has also than through other mechanisms (Holm, Eriksson, and
been on other important strategic and operational factors Johanson 1999).
such as quality, delivery, and flexibility. Strategic relation-
Other researchers viewed trust, commitment, and sim-
ships also play a vital role for the long-term well-being of
ilar values like loyalty or truth-telling as examples of what
a supply chain (Sarkis and Talluri 2002). Purchasers are
an economist would call "externalities." They are goods;
increasingly realizing that progressive programs could
they are commodities; they have real practical value; they
only be realized with long-term conmmitment and trust
increase the efficiency of the system and enable you to
(Morgan 1998).
produce more goods or more of whatever values you
There is extensive literature that addresses trust and hold in high esteem. But they are not commodities for
commitment in buyer-supplier relationships. This study which trade on the open market is technically possible or
truncates the review of the trust and commitment litera- even meaningful (Smeltzer 1997).
ture in order to focus more on the major issues germane
to the current study. Since the early 1990s, relational con- THE RESEARCH MODEL
cepts such as trust and commitment have been the focus Cycle time has been proposed as a significant variable
of much research activity (e.g., Anderson and Narus 1990; in supplier selection and performance decisions and espe-
Morgan and Hunt 1994; Sharma and Sheth 1997; Day cially for those related to the development of long-term
1997; Ganesan 1994). Several researchers have made ten- business relationships. Trust and commitment are two
tative attempts to define trust. Generally, there are two principal requirements for successful long-term business
views on trust that can be found in the management and relationships. This is reflected in the theoretical model
sociology literature: (a) a business view based on confi- that is used in this study (see Figure 1). Based on previous
dence or risk in the predictability of one's expectations, literature, a model was developed, which addresses the
and (b) a view based on confidence in another's goodwill relationships among supplier selection, supplier opera-
(Smeltzer 1997). In the risk-based view of trust, parties tional performance issues, and the degree of trust and
hedge against uncertain states of nature, adverse selec- commitment in relationships. In the context of the cur-
tion, and ethical hazard through formal contractual rent study, supplier selection criteria are antecedents to
means such as guarantees, insurance mechanisms, and the evaluation of supplier performance, which in turn
laws. The second view of trust emphasizes faith in the precedes the evaluation of the level of trust and commit-
moral integrity of others' goodwill. Deyer and Chu (2000) ment in a relationship. This is based on the assumption
found that the determinants of trust are based upon (1) that trust and commitment are usually built up over a
an embeddedness (relationship-based) perspective, (2) a period of extended business dealings between parties.
process-based perspective, and (3) an economic (hostage- Hence, the purpose of the current study is to empirically
based) perspective.

6 The founial of Supply Chain Management I Summer 2003

 The Impact of Cycle rime an SupplierSeflecinand Subseqset Puiforamnc Outcomes

evaluate the role of cycle time in supplier selection, sup- Figure 1

plier performance, and long-term performance outcomes, A MODEL IDENTIFYING THE ROLE OF SUPPLIER SELECTION AND
such as trust and commitment. The following sections SUPPLIER PERFORMANCE IN DETERMINING RELATIONSHIP
describe the development of the study and the results of TRUST AND COMMITMENT
the data analysis.
SUPPLIER
RESEARCH METHODOLOGY SELECTION

The Sample
A list of members of the Institute for Supply
Management- (ISM) was used to conduct a mail survey.
ISM provided a full list of members in the SIC codes
of Fabricated Metal Products, Industrial Machinery &
Equipment, and Electronic & Other Equipment (codes 34,
35, and 36). Names and addresses were drawn randomly
from the list as potential participants in the study. A total
of 750 surveys and cover letters were sent, followed by a
card reminder some two weeks later. There were a total of
120 responses, yielding a response rate of 16 percent. Of
the total responses, 108 were complete and usable for the
analysis, for a final response rate of 14.4 percent. Statistical
tests of the late versus early respondents indicated
that non-response bias was not an issue in the study
(Armstrong and Overton 1977). These purchasers were
asked to select one important component item they pur-
chased repetitively from a supplier. All subsequent ques-
tions related to this important component.

Survey Instrument
Given the lack of empirical research focusing on the
role of cycle time in long-term relationship decisions,
this study is exploratory in nature; scale items on the Given their diversity, the items in the supplier selection
survey were generated specifically for the current study. section were not expected to load on one dimension.
The scales in Table I were developed through an iterative To verify this expectation, principal components factor
process using professionals and academics (two of each) analysis with varimax rotation was conducted. The items
familiar with the research questions. The questions were did not load on one dimension. The Cronbach's alpha
submitted for review and based upon feedback, changes for the five items that represented supplier selection was
(content and format) were made to improve each item. 0.3927. Therefore, the authors determined that the
The issue of face validity was established using this supplier selection items should be used as individual
indicators.
process. The researchers used the measurement approach
of a semantic differential scale because of its ease of use To verify the scales, the items on supplier performance
by respondents. were subjected to principal components factor analysis
Analyzing the impact of cycle time on relationship out- with varimax rotation. All of the items loaded on one
comes such as trust and commitment is an iterative dimension. The supplier performance scale was then sub-
process, whereby first the supplier is selected, then its per- jected to a reliability analysis (Carmines and Zoeller 1979),
formance is measured. Improved supplier performance and generated a coefficient alpha of 0.6457. The scales
leads to enhanced trust and greater commitment, which used to measure trust and commitment in the supplier-
buyer relationship were derived from previous research
in turn results in more enhanced performance. Therefore,
in terms of nomological validity the issue of causation in (Blois 1999; Morgan and Hunt 1994) and generated a
the context of validity can only be addressed by consid- coefficient alpha of 0.7227 and 0.7418, respectively.
ering that trust and commitment do not occur in a
Research Sample Characteristics
vacuum. That is, before a company trusts another, the
Table II provides a brief summary of the sample charac-
other must first demonstrate that it is worthy. Therefore,
teristics. The sample is drawn fairly evenly from SIC
performance at some level (cycle time) must precede trust
codes 34, 35, and 36 (27.7 percent, 40.7 percent, and
and commitment.
31.6 percent, respectively). Twenty-nine percent of the
A summary of the items used in the data analysis with respondents were managers and 71 percent held the
their respective means is presented in Table I. ,!-.,'.
The Journal of Supply Chain Management j Summer 2003
The Impact of Cyde Time on SupplierSelection and SubsequentPerformance Outcomes

Table I over 8 percent of the respondents indicated the pur-

chased component represented over 50 percent of the
RESEARCH VARIABLES - SCALE MEANS
final product cost. Thus, these were very critical compo-
Standard nent purchases for these firms.
Item* Mean Deviation The criticality of the commodity is illustrated by the
longer relationships purchasers maintained with the
SupplierSelection
suppliers of these important components. The most fre-
The cycle time required to produce this item quent length of the supply relationship was five years
was a major factor in source selection and rarely less than one year. Ninety-three percent of
(Cycle Time) 3.98 1.77 the sample reported that the length of the relationship
The proximity of the supplier was a major factor was 13 months or longer. Over 60 percent of the sample
in source selection (Proximity) 3.29 1.83 had maintained their relationship for over five years.
The supplier selection process used for this Since the component was a large part of the final selling
component specifically considered manufacturing
price, quality was very important. Twenty-five percent
quality (Manufacturing Quality) 5.63 1.20
of the sample rated quality at 99.5 percent or higher. For
In comparison to other suppliers, this company's 87 percent of the sample, quality was estimated to be
price is (Comparative Price: 7-point scale;
between 95 percent and higher. The average component
Much Higher-Much Lower) 3.62 1.07
inventory varied greatly, but most respondents (54 per-
This supplier of this component qualified cent) usually held from one to four weeks of supply.
without difficulty (Qualify) 5.34 1.30

Supplier Performance RESULTS

The data analysis first focuses on the anticipated rela-
This supplier continually tries to reduce the time tionship between the supplier selection and supplier per-
required to produce and deliver this product 4.57 1.51
formance process items and then proceeds to test the
The quality of the component from this supplier regression models with trust and commitment as depen-
generally exceeds our requirements 3.48 1.43 dent variables.
The materials used by the supplier to make this
component are of the highest quality 5.35 1.10 Supplier Selection and Supplier Performance
This supplier's manufacturing system consistently Figure 1 indicates that supplier selection (represented by
produces at the highest quality level 5.32 1.17 five items) is an antecedent to an evaluation of supplier
performance. The four items in the supplier performance
Trust section are summed and averaged in a scale that is used as
The level of trust in this supply relationship is a dependent variable in the regression analysis reported in
very high 5.54 1.40 Table III. The regression model for the five independent
Overall, we consider this supplier to be supplier selection variables was significant (F = 17.109;
trustworthy 5.49 1.71 p = 0.000) and the proportion of variance explained is
If a problem arises regarding the supply of this strong (R2 = 0.456). Further analysis indicates that the ease
component, we trust this supplier to consider of qualifying and manufacturing quality variables are sig-
our interests as well as their own 5.40 1.56 nificant predictors (t = 7.589; p = 0.000 and t = 2.444;
p = 0.016, respectively). Those suppliers that had the nec-
Commitment
essary quality mechanisms in place and qualified easily
The level of our commitment to this supply were at the top of the list. Comparative price was a strong
relationship is very high 5.63 1.33 but not significant (t = -1.927; p = 0.05 7) predictor of per-
We are committed to arranging future contracts formance. Mfeanwhile, cycle time was not a significant
with this supplier 5.25 1.72 predictor of the composite supplier performance variable.
* Unless otherwise noted, respondents used a 7-point Strongly Disagree (1) -
Strongly Agree (7) scale Trust
Table IV reports the results of the supplier selection and
supplier performance items on trust. The overall model is
statistically significant (F = 6.33; p = 0.000) and these
title of buyer or senior buyer. The cost of the important items explain over 27 percent of the variance in the com-
item as a percentage of the overall cost of the product posite trust item (R' = 0.273). Further testing indicates that
sold ranged from less than 1 percent to over 50 percent. of the six variables included as predictors, only the com-
The majority (54 percent) of respondents indicated the posite supplier performance variable is statistically signifi-
component represented 5-50 percent of the final product's cant. Cycle time alone is not a significant predictor of
sales price. The most frequent value of the component trust evaluations in a buyer-supplier relationship; however,
was 10 percent of overall final product cost. Meanwhile, cycle time is significant when combined with other items.

8 The Journal of Supply Chain Managenment I Summer 2003

 "TheImpact of cycle Time on SupplierSelection and Subsequent PerformanceOutcomes

Commitment Table II
The last regression model focuses on the level of com-
SAMPLE CHARACTERISTICS
mitment in the supplier-buyer relationship. The results
of regressing supplier selection and supplier performance
RESPONDENT POSITION
items on commitment are reported in Table V. The
Percentage
overall model is significant at the 0.05 level (F = 7.078;
p = 0.000) and these items explain nearly 30 percent of Manager 29%
the variance in the composite commitment item (R2 = Senior Buyer 37%
0.296). Further analysis indicates that of the predictor Buyer 34%
variables, only manufacturing quality and the composite
supplier performance variables are significant at the 0.05 SIC CODE
level (t = 2.763; p = 0.007 and t = 3.132; p = 0.003, respec- Frequency Percentage
tively). Cycle time was not a significant predictor in this Fabricated Metal Products (34) 30 27.7%
analysis. Industrial Goods (35) 44 40.7%

MANAGERIAL IMPLICATIONS Electronic & Electric Products (36) 34 31.6%

Managers need to be cognizant of four major issues RELATIONSHIP LENGTH
that can be taken from this study when purchasing crit- Period Frequency Percentage
ical high-dollar items. First, quality is still the primary
No Response 1 0.9%
driver of the initial sourcing decision and subsequent
evaluation of supplier performance. Second, when ana- 0-12 months 7 6.5%
lyzing supplier performance, the improvements gained 13-24 months 10 9.2%
by reducing cycle time are important. Third, supplier 25-36 months 10 9.2%
location is strongly correlated to reduced cycle times. 37-48 months 12 11.1%
Fourth, relationships that produce continual improve- 49-60 months 14 11.9%
ments in quality and reductions in cycle time are built
61+ months 55 61.2%
on trust and commitment.
It was very evident in this study that for a critical high- ITEM'S PERCENTAGE OF OVERALL PRODUCT COST
dollar component, quality was the deciding factor in the Category Frequency Percentage
initial selection decision. This was illustrated by the fact No Response 7 6.5%
that these suppliers qualified easily for the item that they Less than 1.0% 7 6.5%
were providing. They met the buyers' initial sourcing
1.0% - 5.0% 27 24.9%
requirements including plant visit requirements and had
a history of providing quality components. Once the sup- 5.1%- 10.0% 21 19.5%
plier was selected, performance was measured. Again, 10.1% - 20.0% 16 14.8%
these buyers were very pleased with the high quality 20.1%-50% 21 19.5%
of material that the supplier used in producing their 50.1%+ 9 8.3%
product(s). Further, they were very pleased with the com-
ITEM'S QUALITY LEVEL
ponent's consistency as manufactured by the supplier's
process. This finding is verified by a study of semicon- Category Frequency Percentage
ductor purchasers. When asked to indicate the most No Response 1 0.9%
important factors in selecting a semiconductor supplier, Less than 95% 13 12.0%
the top factor in the selection process was that the sup- 95% - 99% 35 32.4%
plier produces a high-quality product (Burge 1998).
99.1% - 99.5% 32 29.6%
Once the initial selection process is complete and a
Greater than 99.5% 27 25.0%
contract is awarded, the decision to keep the business
will be evaluated on a number of factors, including AVERAGE INVENTORY OF ITEM
cycle time reduction. While quality plays a greater role Category Frequency Percentage
in getting the contract, keeping it requires not only pro- No Response 1 0.9%
viding consistently good quality but also reducing the
0-5 Days 19 17.6%
total cycle time. As previously discussed in this research,
1-4 Weeks 58 53.7%
cycle time reduction along with quality are critical fac-
tors in supplier performance evaluation. Further, these 1-4 Months 26 24.0%
dimensions were significantly related to the levels of Greater than 4 Months 4 3.7%
trust and commitment that develop between the buyer
and the supplier.

The Journal of Supply Chain Management I Summer 2003 9

The Impact of Cyde 'rime on SupplierSelection andSubsequent Performance Outcomes

Table III Successful suppliers should begin to explore methods

to improve processes that reduce the amount of time of
REGRESSION ANALYSIS
SPERFORMANCE their production and delivery cycles. Certainly, one of
SUPPLIER SELECTION VARIABLES ON SUPPLIEF
the time reducers is the use of electronic linkages (such
as e-business software) between customers and suppliers.
Dependent Predictor
Variable Variable F-statistic Sig. of F R2 t,--statistic Sig. of t Electronic linkages allow for the faster flow of informa-
Supplier
tion between the marketer and the buying firm. Various
Performance 17.109 0.000 0.456 communication technologies are rapidly compressing
Cycle the time it takes to acquire, use, and distribute informa-
Time 1.384 0.169 tion needed to make decisions about inventories, pro-
Proximity -0.811 0.420 duction levels, and service demands.
Manufacturing A commonly held assumption by purchasers, that the
Quality 2.444 0.016 closer in geographic proximity the supplier, the lower
Comparative the cycle time, was supported in this study. Purchasers
Price -1.927 0.057 were asked to evaluate proximity when selecting a sup-
Ease of plier. Selecting nearby suppliers was strongly associated
Qualifying 7.589 0.000 with lower cycle times. This result would verify previous
research that production cycle time accounts for only
about 50 percent of total cycle time and that other fac-
tors such as transportation decisions and inventory
Table IV practices can have an important effect on cycle time.

REGRESSION ANALYSIS The level of trust and commitment with these key sup-
SUPPLIER SELECTION AND PERFORMANC E ON TRUST pliers was rated highly in this study. Purchasers consid-
ered suppliers of these key components to be trustworthy
Dependent Predictor and possessing a high level of trust. This extended into
Variable Variable F-statistic Sig. of F R2 t-statistic Sig. of t the feeling that the supplier would not act opportunisti-
Trust 6.334 0.000 0.273 cally and take advantage of the buyer but consider its
Cycle Time 1.384 0.169 interests if a problem arose on the item being purchased.
Proximity -1.248 0.215 This trusting relationship resulted in a commitment on
Manufacturing the part of both parties. There was a determination to
Quality 0.398 0.691 explore future contracts and expanded business opportu-
Ease of nities to produce an outcome that would be mutually
Qualifying 1.357 0.158 beneficial. This trusting and cooperative relationship
Comparative should lead to a commitment on the part of the parties
Price 0.374 0.709 to improve quality, reduce cycle times, and streamline
Supplier processes, resulting in more business for the supplier and
Performance 3.360 0.001 lower total costs for the purchaser.

LIMITATIONS
The data analysis suggests that supplier performance
Table V issues, such as time reduction, materials, and manufac-
turing quality, are correlated with the composite trust
REGRESSION ANALYSIS
4COMMITMENT and commitment variables. These results indicate that in
SUPPLIER SELECTION AND PERFORMANCE ON
long-term relationships, it is more important to continue
to reduce cycle time by working together. Hence, these
Dependent Predictor
Variable Variable F-statistic Sig. of F R
2
t-statistic Sig. of t variables should be included in the decision framework
and in future studies. However, the proportion of vari-
Commitment 7.078 0.000 0.296
0.375 0.709 ance explained by these variables is relatively low, cer-
Cycle Time
tainly less than 35 percent. Therefore, other variables,
Proximity such as a supplier's service performance, should be incor-
Manufacturing
Quality 2.763 0.001 porated into future analyses to help supply chain deci-
sion managers make better choices.
Ease of 0.595 0.553 The study focuses on a specific range of industries and
Qualifying
Comparative uses a small number of measures in the areas of supplier
Price 0.406 0.686 selection and supplier performance. Future studies could
Supplier verify the current findings in other areas of business
Performance 3.132 0.002 activity and other aspects of buyer-supplier activities

10 The Journalof Supply Chain Management I Summer 2003

 The Impact of Cycle Time on Supplier Selection and Subsequent Performance Outcomes

and relationships. Additionally, future research should this research indicate that cycle time is a focus for con-
address the limitations of common method variance, tinual improvement efforts in the context of a long-term
since surveys were used to collect data on all of the con- relationship.
structs used in this study. Respondents from a number
of different companies were surveyed, including pur- REFERENCES
Anderson, E. and B. Weitz. "The Use of Pledges to Build and
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with multiple responsibilities. While this study avoided MarketingResearch, (29), 1992, pp. 18-34.
collecting responses within the same organization, which Anderson, J. and J. Nams. "A Model of Distributor Firm and
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I
ISM Doctoral Dissertation Grant and
Senior Research Fellowship Programs
The Institute for Supply Managementf' congratulates the
following 2003 ISM grant recipients:
DoctoralDissertationGrants
Anne Parmigiani Tobias Schoenherr
University of Michigan Indiana University
"Concurrent Sourcing: When Do Firms Both "Strategic Bundling in B2B Procurement"
Make and Buy?" $10,000
$10,000

Senior Research Fellowship Grants

Anthony Ross M. Johnny Rungtusanatham
Michigan State University Arizona State University
"Real Options: Enhancing Strategic Flexibility and "Supply Chain Configurations, Product Designs
Value Creation in Supply Management Decisions" and Manufacturing Processes: Transforming to
$5,000 Build-to-Order"
$5,000

ISNV Forinore infornation on th e ISM DoctoralDissertationGrantand

[ Senior Research Fellowship Programs,see pages 13-14 of this issue.

12 The jounial of Supply Chain Managemnent I Summer 2003

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TITLE: The Impact of Cycle Time on Supplier Selection and

Subsequent Performance Outcomes
SOURCE: J Supply Chain Manage 39 no3 Summ 2003

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