Lean supply and price-based global sourcing — the interconnection

Just-in-time delivery, design for manufacturing, and early supplier involvement based on frequent and close interactions between buyers and suppliers are some of the basic conditions of lean supply in the automotive industry. Many of these conditions appear to be difficult to achieve in global purchasing. This is because global purchasing has mostly been seen as a means of putting price pressures on suppliers. The aim of this paper is to highlight the interconnection between global purchasing and lean supply. A strategic project “live or die” was chosen within a major global auto original equipment manufacturer (OEM) located in North America. To get as complete a picture as possible of the context and causal conditions, and to be able to make coherent benchmarks with objectives, global purchasing was followed across one major project rather than across different ones. The data was collected through interviews both in the OEM and in six suppliers and validated by triangulation and internal seminars. The analysis was done by screening data into some of the conditions identified in lean supply, which were observed to be the most relevant in the case company. We found that lean supply is affected negatively by global purchasing based on price and thus, price-based global purchasing should not be used for sourcing complex components that require early supplier involvement and intensive engineering collaboration between OEMs and suppliers. Instead, it could be proactively used in the sourcing of less complex modules and simple components.     

The Moderating Role of Strategic Integration in Performance Improvement Through Purchasing Social Responsibility in Thailand

This research aims to understand the performance of purchasing social responsibility (PSR) through moderating effect of purchasing strategic integration. The results show that PSR directly influences purchasing performance, while the relationship between PSR and purchasing performance is partially mediated by organizational learning. Moreover, strategic integration negatively moderates the relationship between PSR and purchasing performance. This study suggests that the adoption of PSR affects the operations of both buyers and suppliers in a supply chain that further encourage organizational learning and increases purchasing efficiency. The results also show that organizations may realize this effect of PSR practices but may focus on other purchasing practices, which affects purchasing performance. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd.     

Multimarket Contact and the Use of Power in Buyer–Supplier Relationships

Buyers and suppliers often have multiple business relationships with each other across different geographical and product markets, forming a potentially complex web of connections. What happens between the firms in one geographical or product market may influence their interactions in others. Prior research in strategic management has found that similar multimarket contact in horizontal relationships between competitors has important consequences for the firms’ use of market power. However, the consequences of multimarket contact in vertical buyer–supplier relationships remain unexplored. Building on resource‐advantage theory, this study proposes that multimarket contact between buyers and suppliers is linked to their respective propensity to use three types of mediated power in their relationships (i.e., reward, coercion, and legal legitimate) and that the effects of multimarket contact differ between buyers and suppliers. A vignette study with 143 purchasing managers and 137 business‐to‐business sales managers tests the developed hypotheses. The findings show that a higher level of multimarket contact encourages suppliers to use legal legitimate power to a greater extent and encourages buyers to use reward power to a greater extent but legal legitimate power to a lesser extent.     

Purchasing consortia as symbiotic relationships: developing the concept of “consortium sourcing”

The focus on external relationships in purchasing has been primarily on strong vertical relationships with major suppliers. Until now, horizontal cooperation with other buyers seems not to have been a major area of interest for industry. In this paper, “consortium sourcing” is introduced as a supply management concept combining symbiotic horizontal relationships and strategic understanding to gain competitive advantage. Therefore, we examine the state of the art in consortium research both in the Anglo-Saxon countries and in Germany.     

Strategic alliances in emerging Latin America: a view from Brazilian,Chilean, and Mexican companies

Brazil, Chile, and Mexico constitute the leading newly industrialized countries (NICs) of Latin America. It is within these markets that the world expects significant economic gains over the next decade. Local companies in these countries are allying with foreign companies to enhance their competitive positions, yet little is understood about such interfirm collaboration with partners from these Latin American countries. Our study examines the strategic objectives of these Latin American companies, partnership structures, and their satisfaction in collaborating with companies from developed countries. Although existing studies have historically examined the dyad of strategic alliances from a perspective of developed countries (e.g., the U.S.), our study explores the issue from a perspective of companies in emerging Latin American economies.     

“Do frogs jump as a result of privatisation?” Impact of privatisation on buyer–supplier relationships

As the cornerstone of the Conservative Government between 1979 and 1996, privatisation has undoubtedly had an enormous impact on the UK economy. On the whole, privatised companies have improved their performance in an ever increasing competitive environment by focusing on, among other things, a drive to reduce costs through bought-out goods and services. Research into Japanese companies, meanwhile, has highlighted the key role that supplier relationships play in their success. It has stressed the advantages of co-operative over adversarial relationships with suppliers, and evidence shows that an increasing number of Western companies are adopting this practice. This has raised the profile of purchasing in these companies with a change towards `better practice’ and improved management of the supplier base. From this new research a model of Feature and Construct Evaluation and Aggregation (FCEA) has been developed, in the search for a link to support the proposition that privatisation has an influence on purchasing strategies concerning supplier relationships. The research has shown that only a very limited link exists. Whilst Purchasing as an activity has increased in its importance and control, it has not become strategic. Purchasing strategies have not evolved or supported the business strategy as a result of privatisation, nor does privatisation encourage the development of purchasing strategies towards closer relationships with suppliers. This is compounded by the EC Directives that reflect an `open tender’ model of procurement, particularly evident in the emphasis on formal competitive tendering procedures and maintaining an `arms-length’ relationship with suppliers.     

THE RELATIONSHIP BETWEEN PURCHASING AND SUPPLY MANAGEMENT'S PERCEIVED VALUE AND PARTICIPATION IN STRATEGIC SUPPLIER COST MANAGEMENT ACTIVITIES

As firms have placed more emphasis on their core competencies and outsourced production and services to suppliers, effective cost management of purchases has become a critical factor in achieving corporate success. The Purchasing and Supply Management (PSM) function is generally responsible for obtaining goods and services from outside suppliers. Techniques such as total cost of ownership, supplier cost structure analysis, and target costing have become important tools for PSM to manage inbound supply costs. Results of a survey indicate that the perceptions of PSM by peer functions and top management, in terms of PSM's importance and accountability, are related to implementing the strategic cost management activities of total cost of ownership, supplier cost structure analysis, and target costing.     

Information Sharing in Global Supply Chain Alliances

The post–WWII economic expansion of economies such as Japan, South Korea, Hong Kong, Taiwan, Singapore, and more recently China and India was enabled to a significant degree by the increasingly complex, global supply chain networks of large Original Equipment manufacturers (OEMs) in the United States, European Union, and Japan. By linking buyers and suppliers across countries and industries, supply chain management (SCM) practices have a large impact on the economic fortunes of companies and countries throughout the world. Nowhere has the effect of this mutual interdependence been felt more strongly than between the U.S. companies and the Asia-Pacific market. Although the benefits of SCM are well documented, some evidence suggests that the reality of SCM implementation can create additional pressures for suppliers. We identify key problem areas experienced by suppliers and their link to the type of information shared by buying firms. The problem area experienced by most suppliers relates to issues of dependence in the alliance. Mere information sharing is insufficient for a successful alliance, and more information can be associated with a number of problems. For example, lack of information sharing can be associated with a supplier's perception of the buyer expecting excessive support. However, greater information sharing can be associated with a supplier's perception of the buyer passing on an excessive burden. Sharing of financial information is perceived as intrusive and controlling. These apparent contradictions uncover the complexity of the supply chain alliance. The moderating factors appear to be open communication and joint sharing of problem solving procedures—factors identified by suppliers that define a world-class buyer.     

Cause mapping of simple and complex marketing strategies

Business-to-business relationships between original equipment manufacturing (OEM) suppliers and customers (brand name buyers) are an often studied issue; however, theoretical and empirical studies seldom focus solely on the suppliers' perspective. This paper examines OEM suppliers' perspectives and reports on the phenomenon of some suppliers choosing single customers while others focus on multiple customers to achieve the adaptive selling as their profit making that cause the parsimonious and complex customer strategies through the empirical studies. The study also uses mental models to analyze two specific cases of OEM suppliers within Taiwan's shoe industry in relation to what kinds of environmental changes that successful managers apply to their parsimonious and complex customer strategies. Mental models are used to map the evolution of these two OEM suppliers' customer strategies, along with their culture, competitive advantages, cooperation relationships, and environment. The study explores these five core propositions to show suppliers to employ different approach to customer strategies, and map the evolution of strategic development of Taiwan shoes companies from the 1970s through to the present day.     

A Relationship Governance Perspective of Organizational Buyers' Supplier Choice Decisions

Although the transaction cost analysis (TCA) has long been used by marketing and management scholars to study organizational buyers' make-or-buy decisions, it sheds limited light on their choice behavior beyond the make-or-buy trade-off. In the meantime, many organizational purchase decisions are structured around which independent supplier to buy from, rather than a typical make-or-buy decision. This study extends existing research on TCA by applying this theoretical framework to explore why organizational buyers make purchases from among independent suppliers. The article posits that (1) two forms of relationship governance—buyer trust and market (i.e., the relative dependence between the buyer and supplier)—help explain the differences in buyer decision-making uncertainty involving independent suppliers, which further influences the buyers' propensity to purchase; and that (2) trust further influences the buyers' propensity to purchase due to its effect on customer perceived value. The empirical study based on organizational purchasing decisions lends support to the predictions of the relationship governance theory.     

Do Suppliers Applaud Corporate Social Performance?

The influence of corporate social performance (CSP) on stakeholders is one of the focal issues in corporate social responsibility (CSR) research. Using data of listed companies in China, this paper examines whether CSR behavior in the form of charitable donations garners a positive reaction from suppliers. Results derived from both level and change model regressions show that superior CSP makes it easier for a firm to obtain trade credit from suppliers, although the effect is significant only in non-state-owned enterprises (non-SOEs). The results are robust to various measures of CSP and endogeneity tests. The results support the strategic philanthropy view and apply stakeholder theory in supply chain, that strategic CSR can help firms to attract suppliers and consolidate cooperative relationships with them, which in turn benefits the firms in terms of more trade credit financing from suppliers. This paper also shows that state-owned enterprises and non-SOEs have different CSR intentions and use CSR to achieve strategic goals in different ways. The conclusions drawn from this study provide practical guidance on CSR strategy, suggesting that CSR activities can help a firm in transition economies to enhance its corporate image, establish and consolidate the good relationship with suppliers, and obtain economic benefits or achieve long-term business objectives.     

A MODEL FOR LOGISTICS MANAGEMENT IN A POST‐SOVIET CENTRAL ASIAN TRANSITIONAL ECONOMY

The research presented explores the logistics management of European and North American manufacturing companies operating in the unique environment of the post‐Soviet Central Asian transitional economy of Kazakhstan. Combining three alternating phases of quantitative and qualitative analysis, the research identifies the challenges logistics managers face in their efforts to distribute their companies' products into and within Kazakhstan. Then, using cross‐case analysis on a series of eleven case studies of European and North American manufacturing companies operating in Kazakhstan, the article concludes with a grounded theoretical model of logistics management for European and North American companies in Kazakhstan. The model highlights the unexpectedly divergent paths taken by companies from two different industry categories.     

The role of purchasing in countertrade

This paper examines countertrade with a particular emphasis on the involvement of UK companies. A review of the literature shows that whilst international trade organisations adopt a negative attitude to countertrade, which creates difficulties for research into the subject, substantial benefits may be obtained by both parties to countertrade deals. The results of empirical research show that UK companies involved in countertrade play a largely reactive role, which mirrors the approach of UK government agencies. It is argued that purchasing can play a significant role in proactive countertrade through identifying appropriate sources, effective negotiation and disposal of goods to existing suppliers.     

Purchasing power

The concept of power in commercial exchange relationships is defined in terms of changes in purchasing and product specifications. A distinction is drawn between actual and potential purchasing power. The relationship between the interdependent nature of buyer-supplier relations, the attractiveness and availability of the resources offered by both suppliers and buyers, and the factors affecting the ability of buyers to convert potential into actual power, are explored.     

Quality Dimensions in E-Commerce Software Tools: An Empirical Analysis of North American and Japanese Markets

Are customers in different countries alike in their preferences for similar software products? In this article, we examine the relative importance of 5 dimensions of product quality across customers from North America and Japan. Based on data collected from over 400 customers of a representative sample of electronic- (e-) commerce software products, we tested the relative importance of these quality dimensions for differences across samples from North America and Japan. We use Bayesian analysis for analyzing the average influence of each attribute on the overall customer satisfaction as well as the variability of each attribute across the two samples. Our findings indicate that the importance of quality attributes is significantly different in North American and Japanese samples. We find that although usability dominates other attributes in North American data, Japanese customers place emphasis on functionality and capability of software products. Our results provide managerial implications for the designers of global software applications, especially in the domain of e-commerce.     

The Salmon-Agreement Between Norway and the European Union—A Welfare Economic Analysis

The relationship between tariff policy and anti-dumping use is empirically examined. Using a panel dataset of 56 countries over the period of 1995–2007, the effects of tariff liberalization on anti-dumping use are found to vary across world regions. For European countries, as well as developed North American and Latin American countries, a lower tariff rate appears to induce more use of anti-dumping measures, which emerge as a protection tool among trade liberalization regimes. In contrast, a reduction in a tariff rate leads to lower anti-dumping use in developing North American and Latin American countries and in developed Asian, African, and Middle Eastern countries. In terms of initiating anti-dumping action, developed countries are likely to be more sensitive than developing countries to tariff policy change in most regions of the world.     

Unintended Consequences: How Suppliers Compensate for Price Concessions and the Role of Organizational Justice in Buyer‐Supplier Relations

“You get what you pay for” is one of life's lessons that predominates in purchasing decisions individuals make in their personal lives. The results of this study suggest this lesson should also prevail among management when price‐related purchasing decisions in businesses are being made. An evaluation of over 1,700 purchasing instances across seven years of a longitudinal panel data set collected from Tier 1 production suppliers to the six major North American automotive Original Equipment Manufacturers (OEMs), Chrysler, Ford, General Motors, Honda, Nissan, and Toyota, found that suppliers compensate for price concessions and price reduction pressure from the OEM in the year following the concession, by reducing product quality, service support, and R&D expenditures associated with goods provided to the OEM. This industry is particularly relevant because it is highly adversarial, yet at the same time reliant on interdependence. The results show that supplier price concessions granted to an OEM led to compensatory supplier behaviors of reduced quality and R&D expenditures toward that OEM. Further, the results suggest that the organizational justice dimensions of distributive justice, procedural justice, interpersonal justice, and informational justice can ameliorate negative supplier compensatory activities. A buyer–supplier relational environment that engenders organizational justice tactics such as open and honest communication with suppliers provides suppliers the expectation of an acceptable return on business over the long term, provides help to suppliers to reduce costs, and builds supplier trust of the OEM had generally positive effects on quality, service, and R&D expenditures. From a management perspective, these results indicate there is a very real risk versus reward issue associated with pressuring suppliers for price reductions.     

Outranking methods in support of supplier selection

Initial purchasing decisions such as make-or-buy decisions and supplier selection are decisions of strategic importance to companies. The nature of these decisions usually is complex and unstructured. Management Science techniques might be helpful tools for this kind of decision making problems. So far, however, the application of outranking methods in purchasing decisions has not been suggested in purchasing or operations research literature. In this paper we show by means of a supplier selection example, that an outranking approach may be very well suited as a decision-making tool for initial purchasing decisions.     

Supplier price concessions: A longitudinal empirical study

The competitive nature of today’s business-to-business markets requires companies to continually look for ways to reduce costs; one of the easiest of which is to demand price reductions from suppliers. In this research, price reduction demands and the corresponding concessions given by 238 suppliers to the six major North American Automotive original equipment manufacturers during 2001–2007 are analyzed utilizing a simultaneous equation model. The three stage least squares estimates indicate that suppliers are willing to give higher price concessions when buyers align specific interfacing characteristics and processes with their suppliers so that the suppliers perceive greater opportunities for future business and profit. These results provide, for the first time, an understanding of the dynamic nature of the impact of buyer–supplier relational components on supplier price concessions.