Development of a balanced scorecard-based supplier collaborative performance index

Purpose: The purpose of this paper is to design and develop a balanced scorecard (BSC)-based index for quantifying the suitability of suppliers to mature to the next level of collaboration with the buyer company. Design/methodology/approach: A BSC-based decision framework was developed using factors and factor indicators affecting collaboration with the supplier, using exploratory research. The proposed decision framework was implemented as a real-world case study in an Indian manufacturing organisation by using the Analytic Hierarchy Process. An 11-step methodology was developed to quantify supplier suitability to mature to the next level of collaboration. This is referred to as the “supplier collaborative performance index” (SCPI). Findings: The proposed decision-making framework helps quantify the extent of collaboration with each supplier. It serves as an index by using the perspectives that are significant for the strategic performance of the buyer company, the factors that affect the collaboration and their specific factor indicators. The initial results of the implementation of the case study were found to be useful in judging supplier suitability in order to mature in their relationship. Practical implications: A comprehensive BSC-based framework for enhancing relationships with suppliers, SCPI will be instrumental in deciding, managing and improving the level of collaboration with suppliers in manufacturing companies, depending on priorities. Originality/value: This approach provides a single index to establish the supplier’s suitability to mature to the next level of collaboration with a buyer company. The higher the value of the Collaboration Index for a supplier, the better is the chance to move to the next level of maturity.