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Calculating the total value of supplier innovation

Author

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  • Stefan Winter
  • Rainer Lasch
  • Jatinder N.D. Gupta

Abstract

Supplier innovation can contribute to a company's success, not only through cost savings, but also through revenue improvements by means of a higher chargeable price or the attraction of more customers. Although the demonstration of the measurable benefits (cost and revenue effects) from supplier innovation has been suggested in the literature, no approach to determine the total value of a supplier innovation is available. For this purpose, total cost approaches and price setting approaches were examined to design the evaluation components within our proposed total value of suppler innovation approach. We demonstrate how cost effects can be identified by total cost analysis and revenue effects by means of a conjoint analysis and a choice simulator. The developed approach and its description serve as a practical procedure to assess the monetary profitability of supplier innovation and support managers in their decision making efforts. A case example about a smart phone manufacturer demonstrates the applicability of our proposed total value of suppler innovation approach.

Suggested Citation

  • Stefan Winter & Rainer Lasch & Jatinder N.D. Gupta, 2015. "Calculating the total value of supplier innovation," International Journal of Management and Decision Making, Inderscience Enterprises Ltd, vol. 14(2), pages 130-153.
    • Handle: RePEc:ids:ijmdma:v:14:y:2015:i:2:p:130-153
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    Cited by:

    1. Lee, In & Shin, Yong Jae, 2018. "Fintech: Ecosystem, business models, investment decisions, and challenges," Business Horizons, Elsevier, vol. 61(1), pages 35-46.
    2. Greco, Marco & Locatelli, Giorgio & Lisi, Stefano, 2017. "Open innovation in the power & energy sector: Bringing together government policies, companies’ interests, and academic essence," Energy Policy, Elsevier, vol. 104(C), pages 316-324.

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