Development of a supplier satisfaction index model

Purpose – The purpose of this study is to develop a scale and model to measure suppliers' satisfaction index (SSI) in buyer‐suppliers relationships. Design/methodology/approach – Based on the literature review and opinion of the suppliers, this paper first explores the factors that influence suppliers' satisfaction (SS). Subsequently a questionnaire is designed based on these factors and survey was conducted among 300 suppliers' organizations. Partial least square (PLS) approach is used to validate the model and investigate the relationships of factors or constructs with SS. Finally, the authors compute the extent of SSI using analytical hierarchy process (AHP). Findings – The results indicate that purchase policy, payment policy, coordination policy and corporate image of the buying firm have positive impact on SS. The purchase policy and corporate image have strong impact on SS compared to other factors. The computed value of SSI in this study is 65.25 on the scale of 1‐100. Research limitations/implications – The data used in this study are collected only from the suppliers of an Indian PSU. The proposed method can also be used by other industries for measuring the value of SS. In the future, one can carry out a study by measuring the satisfaction of both parties simultaneously. Moreover, generalizability of the findings to other industries or other countries is open to scrutiny. Originality/value – This paper develops a new scale to measure SS and explores the relationships of different factors with SS and among each other. Finally, a method is proposed to compute the current level of SSI.