A study of the purchasing management system with respect to total quality management

One of the key elements of a total quality management (TQM) policy is the assurance of an adequate supply of materials and components. The objective of this paper is twofold. Firstly, it analyses the relationship between different purchasing system variables and supplier quality assurance practices. Secondly, it explores both the connections between supplier quality assurance practices and other quality assurance practices used for internal processes, and examines the relationship of such practices with supply operational results. Different hypotheses are tested using data obtained from a sample of 152 Spanish automotive component suppliers. This data show clear evidence of the importance of product, supplier and company characteristics and highlights the importance of a company-wide commitment to the application of quality assurance principles.     

基于改进TOPSIS法的供应商选择模型研究

为有效地帮助企业快速找到合适的供应商合作伙伴,采用直觉模糊集、评分函数等方法对TOPSIS评估法进行优化,并以此为基础建立了一种供应商选择模型。首先,采集和评估供应商的产品质量、产品价格、产品交货的可靠性、供应位置、财务情况、库存水平、劳资关系、发展能力和技术能力等相关信息,由专家给出主观评估信息,汇总为综合属性值;然后,通过直觉模糊熵确定各评估指标的权重;最后,综合考虑供应商选择决策过程中的多个目标和标准,应用改进TOPSIS法的对供应商进行分类选择。结果显示,基于改进TOPSIS法的供应商选择模型能够较准确地反映出各供应商的真实水平和对企业的潜在价值,可以有效地解决不确定条件下对供应商的选择问题,提高了供应商选择结果的可靠性。改进后的模型简便易行,具有良好的稳定性,对于合理制定企业供应商选择标准以及进一步优化决策模型具有一定的借鉴意义。     

Negative default dependence in supplier networks

The financial defaults of suppliers in a supplier network are significant risks and causes of uncertainty for buying firms. Hitherto, it has been largely neglected that default probabilities of suppliers in supplier networks are not independent of each other. We aim to overcome this shortcoming by studying negative supplier default dependencies: situations where a surviving supplier may benefit from the default of another supplier, resulting in a lower default probability. We use empirical data from the automotive supplier industry and copula functions, a method of representing joint distribution functions with particular marginals, to capture the default dependency between automotive suppliers and simulate various scenarios with negative default dependency. We also conduct a comparative static analysis illustrating the significant impact of negative default dependence. Our findings should spur managers to analyze their supplier networks with respect to default dependencies, and to take this phenomenon into consideration when making sourcing decisions.     

Competitive pricing decisions in a two-echelon supply chain with horizontal and vertical competition

This study investigates the pricing decisions in a non-cooperative supply chain that consists of two retailers and one common supplier. The retailers order from the common supplier and compete in the same market. We analyze six power structures that characterize exclusively horizontal competition between the retailers and vertical competition between the supplier and the retailers, leading to different sequences of moves among the chain members. We derive the analytical forms of the equilibrium quantities under each power structure and explore the effect of retail substitutability on the equilibrium quantities among all power structures. We further investigate the performances of the game models as compared with the integrated model.     

Modelling quality in replacement and inspection maintenance

Heterogeneity in component and maintenance quality is considered in the context of age-based inspection and replacement for a single component system. A three-state component failure model is assumed, with a defective state preceding the failed state. Heterogeneity in maintenance intervention is modelled by supposing that inspections may induce the defective state. Component heterogeneity is modelled by supposing that the population of components comprises a mixture of the weak and strong, and that the mixing proportion and cost of components vary between suppliers. Within this framework, the impact, on system reliability and cost, of switching component or maintenance supplier is determined. Broadly, our finding is that one is much more inclined to switch supplier in order to obtain higher quality maintenance than to obtain higher quality components. A gas pressure control valve is used to illustrate our ideas.     

Recreating and extending Japanese automobile buyer'supplier links in north America

We compare buyer'supplier links established by pairs of Japanese-owned automobile assemblers and component manufacturers operating in Japan and in North America during 1989-90. Eight assemblers and more than 170 Japanese component manufacturers had established North American manufacturing facilities. In total, Japanese automobile assembly organizations operating in North America had recreated about a quarter of their Japanese supply links. The suppliers that set up North American facilities had recreated almost 60 percent of their links with traditional buyers and formed more than 16 percent of the possible extension links with new assembler partners. We identify several economic and organizational factors that influence whether an existing buyer'supplier link will be recreated in a new location and whether firms that do not have a buyer'supplier relationship at home will form an extension link in the new location. We find that the presence of a long-term buyer'supplier relationship, buyer and supplier entry timing to the new location, the joint venture status of the buyer, supplier size, and the breadth of a supplier's sales base in the home market influence the likelihood that links will be recreated and extension links will be formed.     

Risky Business or Competitive Power? Supplier Involvement in Japanese Product Design

Notwithstanding the alleged risks of outsourcing design work, leading manufacturers in the Japanese automotive industry collaborate closely with their key suppliers. Despite widespread recognition of the effectiveness of these close-knit supplier networks, however, little research exists on the factors that affect the purchase of design work from suppliers. S. Nazli Wasti and Jeffrey K. Liker fill this gap by exploring the factors that affect Japanese automotive firms' purchase of design work from their component suppliers. Using data from a survey of 122 Japanese automotive component suppliers, their study addresses two key questions. First, what factors lead Japanese buyers to involve some suppliers heavily in design while giving others relatively little control over design decisions? And second, does the Japanese practice of involving suppliers in design offer performance benefits? The study focuses on first-tier suppliers of parts, assemblies, and complete subsystems (e.g., audio, fuel and emissions, heating and air conditioning). The study does not include suppliers of raw materials and chemicals, assembly and processing equipment, indirect materials, tooling and dies, computers and software, or engineering and business consulting services. The study breaks down the broad concept of supplier involvement in design work into three measurable elements: the extent to which the supplier influences decision-making during the early stages of product development; the amount of control the buyer retains over the design; and the frequency of design-related communication between the buyer and the supplier. Factors that have a positive effect on the level of supplier involvement among the companies studied include technological uncertainty of the component and the supplier's in-house technical capabilities. For companies in the study, the level of competition in the supplier market has a negative effect on the degree of supplier involvement in design. The responses indicate that supplier involvement offers performance benefits for both the supplier and the buyer. For the supplier firms studied, increased involvement in the design process permits greater focus on design for manufacturability (DFM). And of course, supplier-generated design improvements clearly benefit the buyers, allowing these firms to capitalize on the experience and the insight that their suppliers have regarding the parts that they supply.     

Suppliers capability and price analysis chart

To remain competitive in customer-oriented economics, the major parties in the supply chain should be integrated and managed effectively to respond to customer needs. Thus, the efficiency of the entire supply chain is a main concern, and is determined by the members of that supply chain. Partner selection thus becomes one of the key steps in supply chain construction. Given buyer–supplier information asymmetry, obtaining complete information from suppliers is difficult, since some supplier attributes cannot be definitely and quantitatively measured. This study establishes a suppliers capability and price analysis chart (SCPAC) focused on the case where the specification limits are symmetric about the target for evaluating supplier performance which applies the process incapability index C_pp introduced by Greenwich and Jahr-Schaffrath (International Journal of Quality & Reliability Management 12 (1995) 58) to measure supplier quality performance and the price index I_p is proposed here to display the difference between budget and component price. Practitioners can instantly and visually obtain information based on the locations of suppliers and price indices on SCPAC. SCPAC also provides clear directions for quality improvement, such as process accuracy and precision. SCPAC thus is an effective and efficient method for evaluating suppliers, which can simplify supplier evaluation, facilitate their effective visual selection, and provide insights into the process situation of suppliers who can become technological innovation partners.     

The component procurement problem for the loss-averse manufacturer with spot purchase

This paper studies the purchasing behaviour of a loss-averse engineer-to-order manufacturer, who purchases a key component for his final product from a supplier under a single-wholesale-price contract with spot purchase opportunities, where both the product demand and the component spot price are uncertain. Through newsvendor type of models, we analyze several key issues, including the effects of the manufacturer's loss aversion, and the effects of demand and spot price uncertainties on the manufacturer's decision behaviour. We find that the purchasing behaviour of the loss-averse manufacturer differs from those of the risk-neutral and risk-averse ones. Specifically, we identify some sufficient conditions under which the loss-averse manufacturer may purchase a larger order quantity in advance when demand becomes more uncertain or when the price becomes more uncertain. We also discuss the two-wholesale-price contract and show that fixing the emergency supply price may lead to a smaller order quantity.     

Comparing the resource‐based and relational views: knowledge transfer and spillover in vertical alliances

We compare resource‐based and relational perspectives to examine competitive advantages within the context of vertical learning alliances. Previous research has shown that through such alliances suppliers acquire knowledge to forge new capabilities and attain performance improvements. We ask whether such improvements are exclusive to the learning partnership, or are available in other average partnerships of this supplier. We posit that the extent to which such performance improvements are partnership exclusive depends on whether the newly forged capabilities lie entirely within the supplier firm's boundaries, or at the learning dyad level. As such, we untie two forms of performance improvements arising from learning dyads. While the resource‐based view helps explain the performance gains learning suppliers deploy across average partners, the relational view reveals the additional performance edge that remains exclusive to the learning partnership. Based on empirical evidence from a survey of 253 suppliers to the equipment industry, we find that partnership exclusive performance (i.e., ‘relational performance’), the true source of learning dyads' competitive advantage, is a function of suppliers acquiring know‐how within the dyad, developing dyad‐specific assets and capabilities, and structuring buyer‐supplier relational governance mechanisms. We discuss implications for research and practice. Copyright © 2008 John Wiley & Sons, Ltd.     

Improving Supplier New Product Development Performance: The Role of Supplier Development

Suppliers play an increasingly central role in helping firms achieve their new product development (NPD) goals. The literature implicitly assumes that suppliers are able to meet or exceed the quality standards and technological expectations of the firm, and yet, in practice, suppliers often lack the technological capabilities needed to undertake collaborative NPD. In such situations, a firm may choose to intervene and actively develop the supplier's technological and product development capabilities. We develop a theoretical framework that conceptualizes supplier development activities within interorganizational NPD projects as part of a bilateral knowledge‐sharing process: design recommendations, technical specifications, and new technology flow from supplier to the firm, and in turn, the firm can implement supplier development activities to upgrade the supplier's technological capabilities. Antecedents (supplier responsibility, skills similarity, single sourcing strategy) and consequences of supplier development activities (on supplier, product, and project performance) are examined using a sample of 153 interorganizational NPD projects within UK manufacturers. We find broad support for our hypotheses. In particular, we show that the relational rents (in the form of improved product and project performance) attained from supplier development activities in new product development are not achieved directly, but rather indirectly, via improvements in the supplier's creative and technological capabilities. Our results emphasize the importance of adopting a strategic view of the potential returns available from investing in the NPD capabilities of key suppliers, and provide clues about underlying reasons for the suboptimal experiences of many companies' collaborative NPD projects.     

A two-stage model for the design of supply chain networks

This research aims to develop an analytical model of the supplier selection process in designing a supply chain network. The constraints on the capacity of each potential supplier are considered in the process. The assumed objective of the supply chain is to minimize the level of customer dissatisfaction, which is evaluated by two performance criteria: (i) price and (ii) delivery lead time. The overall model operates at two levels of decision-making: the operational level and the chain level. The operational level concerns decisions related to optimizing the manufacturing and logistical activities of each potential supplier in order to meet the customer's requirements. At the chain level, all the bids from potential suppliers are evaluated and the final configuration of the supply chain is determined. The structure of the chain depends on the product specifications and on the customer's order size. An optimal solution in terms of the models for the two levels can be obtained by using a mixed-integer programming technique.     

Supplier segmentation using fuzzy logic

Supplier segmentation means that the suppliers of a specific firm are categorized on the basis of their similarities. This supply-side business-to-business (B2B) segmentation is of special importance to companies with many suppliers. Supplier segmentation yields a manageable number of segments, each of which requires a separate strategy. Standard supplier segmentation methods have serious shortcomings, for instance because they fail to make a proper connection between supplier segmentation and other supplier-related activities such as supplier selection and development. Moreover, these standard methods typically use a limited number of segmentation criteria and different sets of criteria are suggested for each method. It is unclear for practitioners how to choose a particular method. The purpose of this paper is to form a practical tool for supplier segmentation taking into account all suggested segmentation criteria. The principal result of this paper is the design of a rule-based method to segment the suppliers of a firm based on two overarching dimensions: supplier capabilities and supplier willingness. The method is applied to a real-world situation to show how the results can be used in practice. A general sensitivity analysis procedure for fuzzy rule-based systems is proposed and then implemented, to identify the most important supplier capabilities and willingness criteria and to formulate better supplier development strategies. A major conclusion of the paper is that the fuzzy logic approach to supplier segmentation is simple to apply in practice, yet considers all available segmentation criteria and their inherent fuzziness in a way that is easily adaptable to a specific industrial context.     

The double‐edged effect of knowledge acquisition: How contracts safeguard pre‐existing resources

Research summary : Acquiring knowledge on a partner's pre‐existing resources plays an important yet ambiguous role in collaborative relationships. We formally model how contracts trade off productive and destructive uses of knowledge in a buyer‐supplier relationship. We show that, when the buyer's pre‐existing resources are vulnerable to the revelation of sensitive knowledge, the supplier overinvests in knowledge acquisition as it expects to use the knowledge as a threat in price negotiations. A non‐renegotiable closed‐price contract prevents such overinvestment and reduces the supplier's ability to expropriate the buyer ex post. Our results extend to the cases of renegotiable closed‐price contracts, repeated interactions between a buyer and a supplier, and the use of nondisclosure policies. We draw theoretical, empirical, and managerial implications from our model. Managerial summary : This study yields new insights regarding the use of contract design in protecting pre‐existing, nonrelationship specific assets in buyer‐supplier arrangements. Anecdotal examples illustrate the “dark side” of these arrangements where opportunistic suppliers exploit knowledge of buyers' pre‐existing resources to seek rent and appropriate value. When a supplier is likely to act harmfully, a closed‐price contract that specifies the price of the supplier's component upfront may reduce the supplier's incentives to overinvest in acquiring and exploiting knowledge of the buyer's pre‐existing resources. As such, when a buyer's pre‐existing resources are highly valuable, and thus more vulnerable to use by the supplier outside of the arrangement, a non‐renegotiable closed‐price contract is more efficient. Additionally, limited disclosure policies and informal agreements based on repeated interactions complement indirect governance via price contracts. Copyright © 2015 John Wiley & Sons, Ltd.     

Gaining from vertical partnerships: knowledge transfer,relationship duration,and supplier performance improvement in the U.S. and Japanese automotive industries

We study sources of operational performance improvement in supplier partnerships. We argue that supplier performance will benefit most where time‐bound relational assets have developed between a buyer and supplier and the firms exploit the resulting communication efficiency by transferring productive knowledge. We examine the effects of two forms of knowledge exchange together with the prior duration of the buyer–supplier relationship. We find similar interaction patterns in two survey samples of Japanese and U.S. automotive suppliers. The effect of ordinary technical exchanges on supplier performance improvement does not vary with relationship duration. The effect of higher‐level technology transfer, however, grows more positive as relationship duration increases. Other results show relevant contrasts consistent with heterogeneous sourcing behavior between the two countries. The findings highlight the role of relational assets and show that it is important to distinguish between simple techniques and higher‐level technological capabilities when studying interfirm relationships. This research extends the literatures on knowledge transfer, buyer–supplier partnerships, and the performance dynamics of interfirm and intrafirm relationships in general. Copyright © 2002 John Wiley & Sons, Ltd.     

The relationship between supplier management and firm's operational performance: A multi-dimensional perspective

This paper presents an empirical study on the multidimensional relationships between supplier management practices and firm operational performance. Specifically, we focus on three supplier management practices, namely strategic long-term relationship, supplier assessment, and logistics integration, and test their effects on four operations performance measures, namely quality, delivery, flexibility, and cost. We use data collected from 232 manufacturing firms in Australia to conduct the study. Ten hypotheses were tested simultaneously using Structural Equation Modeling (SEM) technique. The results show that different supplier management practices have different unique effects on different operations performance measures. Supplier assessment has a positive relationship with quality performance. Both strategic long-term relationship and logistics integration have positive relationships with delivery, flexibility, and cost performance. From a theoretical perspective, this study demonstrates the relative contributions of different kinds of resources (i.e., supplier management practices in our case) to different performance measures. Our research findings provide practical insights for managers to understand the effectiveness, as well as the limitations, of different supplier management practices in enhancing different operations performance measures of firms.     

The multiple levels of trust when selecting suppliers – Insights from an automobile manufacturer

In this study, we aim to develop a framework for the concept of trust prior to forming relationships when selecting suppliers. Entering a relationship with a supplier for an extended period requires a certain level of trust in different facets (such as interpersonal relationships, continuous supply, and compatibilities). In situations in which suppliers need to enter into relationships characterized by high uncertainties, such as sourcing for high technology, trust becomes even more important. The question raised is how this ex-ante trust is defined and used during the supplier selection, when the buyer decides to enter into a relationship with a potential supplier. The phenomenon is studied in the automobile industry, which is experiencing a higher level of dependency on suppliers for sensitive, and at times strategic, components. A single case of a major auto manufacturer is studied using 36 interviews. Our findings show that when selecting the supplier with which to enter a relationship, trust manifests itself on multiple levels: interpersonal, organizational, interorganizational, and network. Contrary to some previous suggestions in the literature, we found interrelationships across these levels.     

Creating shared views of customers: Individuals as sense-makers in multinational companies

Global suppliers' relationships with their global customers tend to be complex, as each consists of multiple geographical, technological and functional units. For a supplier to manage these customer relationships, some shared views of each relationship are likely to be needed for consistency of activities. This creates a need within supplier MNCs to make sense of customers. This research focuses on sense-making by individuals in supplier MNCs. It considers individuals acting in the sense-making process a means of creating shared views. A qualitative process research strategy is utilized to uncover this process. As a result, this research recognizes four mechanisms, defined as individual-level behavioral patterns, for creating shared supplier views of the customer: defining, linking, triggering and creating. Furthermore, the study defines the triggers that cause individuals increasingly to share similar or dissimilar views of the customer. These triggers are recognized at different levels of management: within the MNC (i.e., internal cooperation, shared projects, limited customer contacts), at the customer-relationship level (i.e., previous cooperation with the customer) and at the network level (i.e., involvement of third parties).     

A Model of Supplier Integration into New Product Development*

In many industries, firms are looking for ways to cut concept‐to‐customer development time, to improve quality, and to reduce the cost of new products. One approach shown to be successful in Japanese organizations involves the integration of material suppliers early in the new product development cycle. This involvement may range from simple consultation with suppliers on design ideas to making suppliers fully responsible for the design of components or systems they will supply. While prior research shows the benefit of using this approach, execution remains a problem. The processes for identifying and integrating suppliers into the new product development (NPD) process in North American organizations are not understood well. This problem is compounded by the fact that design team members often are reluctant to listen to the technology and cost ideas made by suppliers in new product development efforts. We suggest a model of the key activities required for successful supplier integration into NPD projects, based on case studies with 17 Japanese and American manufacturing organizations. The model is validated using data from a survey of purchasing executives in global corporations with at least one successful and one unsuccessful supplier integration experience. The results suggest that (1) increased knowledge of a supplier is more likely to result in greater information sharing and involvement of the supplier in the product development process; (2) sharing of technology information results in higher levels of supplier involvement and improved outcomes; (3) supplier involvement on teams generally results in a higher achievement of NPD team goals; (4) in cases when technology uncertainty is present, suppliers and buyers are more likely to share information on NPD teams; and (5) the problems associated with technology uncertainty can be mitigated by greater use of technology sharing and direct supplier participation on new product development teams. A supplier's participation as a true member of a new product development team seems to result in the highest level of benefits, especially in cases when a technology is in its formative stages.     

A DEA estimation of a lower bound for firms’ allocative efficiency without information on price data

In this paper, we estimate a lower bound for the sum of firms’ allocative efficiencies in the absence of information on prices. For this purpose, we only estimate technical efficiency at both the firm and the industry level using a directional distance function and choosing a relevant direction. Our result relies on the decomposition of overall inefficiency into technical and allocative inefficiency at both the firm and the industry level. The convexity of a technology induces a transfer from both total technical inefficiency and part of allocative inefficiency at the firm level to technical inefficiency solely at the industry level. The remaining firms’ allocative inefficiency could be counted at the industry level. Hence, the difference between technical inefficiencies at both levels can be interpreted as a lower bound for the sum of allocative inefficiency in the industry. We show how to implement this bound in a DEA framework.