An investigation of supplier development through segmentation in sustainability dimensions

Supplier segmentation is a strategic activity that evaluates suppliers, identifies different approaches, and identifies the most proper criteria to establish various segments. The main purpose is to form different supplier groups to adopt appropriate strategies for each group. Supplier development is another strategic activity designed to promote suppliers’ functions to create and maintain a network of competent suppliers that significantly affects a producer’s competitive advantage. To allocate scarce resources more efficiently, it is necessary to design some strategies to develop the suppliers for their different segments. This research has employed the sustainability approach that includes economic, environmental, and social dimensions to evaluate and then segment the suppliers. In the next step, the results of this segmentation have been utilized as a basis for supplier development. The sustainability approach is significant since it guarantees companies' short- and long-term interest by reducing expenditures and absorbing stakeholders who respect environmental and social values. To date, the sustainability approach has been used little for segmentation purposes. Using our supplier segmentation, the purchasing company was able to determine the economic, environmental, and social potential of its suppliers. As a result, the company can apply the appropriate development strategies that we proposed for each segment of its supplier base. We have employed an Interval Best–Worst Method and a Simple Additive Weighting in the grey environment to segment the suppliers and proposed a conceptual model to develop the suppliers in different segments (The proposed framework has been applied to a manufacturing company).