This master’s thesis study aims to find the success factors for supplier development in a multinational company. More specifically, this study focuses on supplier delivery performance development as well as the role of buyer-supplier relationships in supplier development. The theoretical background of this study presents supplier development, first focusing on the benefits, critical success factors and challenges in supplier development and also provides an overview of the different supplier development activities, classified based on the buyer company’s involvement level in those activities. The theoretical background also provides insight on supplier performance measurement, in order to gain understanding on how and based on what theories supplier performance is being measured.

The empirical study is conducted via a qualitative single case study of a Finnish multinational company, the case supplier being a Finnish supplier, having a complex supply chain including both European and Chinese 2nd tier suppliers in its supplier portfolio. The data for this study is collected via interviews, participant observations and both secondary and primary data collected from the buyer company’s database. The data is collected from one year time period.

The results of this study indicate that there is significant importance on the manner of communicating and monitoring the supplier’s performance in order to succeed in a supplier development program. Factors such as frequency of performance measurement, the transparency and the openness of communication directly impact on the buyer-supplier relationship and the mutual collaboration. Moreover, the involvement of the byer company’s all stakeholders into the discussions of the supplier’s performance plays a critical role in order to avoid misinterpretations and failure of the supplier development program. Additionally, the importance of buyer company’s efforts to support the development and considering supplier development as a way to achieve continuous improvement rather than finding quick-fix solutions, drive the supplier development to success.

Future research should focus more on the buyer’s involvement efforts in supplier development. The concept where both buyer and supplier develop their capabilities and practices, and the extent to which those activities support each other, would be investigated further. Finally, what should be studied in the future is the importance of information sharing within the buyer company, especially between the operational and managerial level, when developing suppliers.