Early Supplier Involvement, Cost Reduction and Performance of Manufacturing Firms: The Role of Firm Size

Supplier involvement occurs at different stages in the production process, from the design phase through the procurement phase, supplier phase to the manufacturing phase. This study examined how early supplier involvement in each phase of the production process influences cost reduction objectives and firm performance and whether firm size matters in this arrangement. A sample of 80 respondents, comprising firm owners, managers, executive board members, chief finance officers, procurement directors, marketing managers and production managers of both small and large manufacturing firms, was selected. Inferential statistical data analysis was employed, using LISREL 8.5. The study found that cost reduction strategy mediates the relationship between the procurement phase and manufacturing phase of ESI and firm performance, while firm size moderates the relationships between all the dimensions of ESI and cost reduction at the design phase.