Sole sourcing,competitive sourcing,parallel sourcing: Mechanisms for supplier performance

Quality management practitioners in the USA such as W. Edwards Deming, strongly advocate the Japanese model of supplier relationships-recommending substantial specific investment in a single supplier for improved co-ordination and higher quality. But the strategy literature and conventional wisdom favor multiple sourcing, suggesting that a high level of specific investment in a sole source will lead to problems with supplier performance. Using agency theory, we construct a model to evaluate the tradeoff between the costs to set up and coordinate with suppliers and the incentive for performance provided by competition. We find that the validity of Deming's Point Four, that sole sourcing is more profitable than competitive sourcing, depends on parameters such as profit sensitivity to supplier performance.     

Supplier relationship portfolio management: A social exchange perspective

Despite the importance of relationship portfolios, it's unclear how a buying firm's differential investment in its suppliers affects the distribution of its supplier relationships and the supplier-provided benefits that result. Drawing from social exchange theory (SET), we assess the sequential linkages among supply management practices, supplier relationship sets that vary in closeness, and relational benefits. Empirically, we adopt a multi-methodological approach that combines abductive case-based and deductive survey-based research. In our case-based approach, interview responses from 34 professionals within a global Tier 1 automotive manufacturer (MFGR) and four of its suppliers, open-ended survey responses from 56 buyers and 86 engineers within MFGR, documentary evidence, and direct observations facilitate the operationalization of supply management practices and relationship closeness constructs. The survey-based study integrates case-based findings and uses response data from sales managers within 292 suppliers to MFGR and matched supplier performance data from MFGR to test a theoretical model of social exchange. In a multi-step process, we apply cluster analysis, multinomial logistic regression, ANOVA, and multiple regression to this aggregated dataset to (1) identify three distinct sets of supplier relationships that are distributed along a relationship closeness continuum, (2) show how specific supply management practices affect the composition of supplier relationship sets that comprise a buying firm's portfolio, and (3) demonstrate how supplier-provided benefits differ across supplier relationship sets. Our results validate the utility of SET as applied to supplier portfolio management and provide insights into buyers' actions that drive closer relationships, minimize risk, and maximize benefits across a supplier portfolio.     

A pragmatic decision model for inventory management with heterogeneous suppliers

For enterprises, it is imperative that the trade-off between the cost of inventory and risk implications is managed in the most efficient manner. To explore this, we use the common example of a wholesaler operating in an environment where suppliers demonstrate heterogeneous reliability. The wholesaler has partial orders with dual suppliers and uses lateral transshipments. While supplier reliability is a key concern in inventory management, reliable suppliers are more expensive and investment in strategic approaches that improve supplier performance carries a high cost. Here we consider the operational strategy of dual sourcing with reliable and unreliable suppliers and model the total inventory cost where the likely scenario lead-time of the unreliable suppliers extends beyond the scheduling period. We then develop a Customized Integer Programming Optimization Model to determine the optimum size of partial orders with multiple suppliers. In addition to the objective of total cost optimization, this study takes into account the volatility of the cost associated with the uncertainty of an inventory system.     

One crisis,different paths to supply resilience: The case of ventilator procurement for the COVID-19 pandemic

This research explores supply resilience through an equifinality lens to establish how buying organizations impacted differently by the same extreme event can strategize and all successfully secure supply. We conduct case study research and use secondary data to investigate how three European governments sourced for ventilators during the first wave of COVID-19. The pandemic had an unprecedented impact on the ventilator market. It disrupted already limited supply and triggered a demand surge. We find multiple paths to supply resilience contingent on redundant capacity and local sourcing options at the pandemic's onset. Low redundancy combined with limited local sourcing options is associated with more diverse strategies and flexibility. The most notable strategy is spurring supplier innovation by fostering collaboration among actors in disparate industries. High redundancy combined with multiple local sourcing options is associated with more focused strategies and agility. One (counter-intuitive) strategy is the rationalization of the supply base.     

Low cost country sourcing and its effects on the total cost of ownership structure for a medical devices manufacturer

In this paper, we describe a total cost of ownership (TCO) method as an activity-based costing (ABC) application along the value chain to measure and analyse the costs of international sourcing activities. We further describe the method's implementation for a manufacturer of high-tech medical devices. For this case study, we analyse the effects of shifting purchasing volume from traditional procurement market suppliers to low cost country suppliers on the cost structure of purchasing projects. We find that particularly costs at component and supplier level gain importance over traditionally dominating unit level costs. Furthermore, we identify low cost country sourcing as a decision with extensive impact on value chain entities other than purchasing. Finally, a considerable part of costs in low cost country sourcing accrue at the beginning of a purchasing project due to problems stemming from unsatisfactory initial quality, language barriers and intercultural communication.     

Assessing supply chain risks with the analytic hierarchy process: Providing decision support for the offshoring decision by a US manufacturing company

This paper reports the process used by a US manufacturing company to assess supply chain risks within the context of an offshore sourcing decision. The case study company was faced with the objective of finding a new supplier for two of its major product lines. Five alternatives were considered: (1) sourcing finished goods from Mexico; (2) sourcing finished goods from China; (3) sourcing parts from China and assembly in the US; (4) sourcing parts from China, assembly in a Maquiladora in Mexico with investment; and (5) sourcing parts from China, assembly in a Maquiladora in Mexico with no investment in the venture. To find the best solution, action research methodology was combined with the application of the analytic hierarchy process (AHP). Through iterative and structured discussions, 17 risk factors were identified, which were subsequently grouped into main and sub objectives. AHP was then used to evaluate the importance of each risk factor, and to determine the best alternative. This study makes several contributions to the field of purchasing and supply management. First, it provides a comprehensive framework of empirically derived risk factors to be considered in an international sourcing context. Second, it shows how AHP can be used to assess these risk factors and alternatives as part of the framework to facilitate and support the final offshoring decision. And third, it illustrates the successful application of the approach by a US manufacturing company. As such, this paper contributes to the research streams of offshoring and risk management in purchasing and supply, as well as to decision-making under uncertainty and AHP. In addition, it serves as a practical methodology for firms in similar situations.     

供应不确定下基于Supply-hub的供应商选择和库存协同决策

针对由供应商、Supply-hub和制造商组成的三级供应链的多产品供应商选择和库存协同问题,考虑供应商存在延迟交付风险、供应数量约束,以供应链运作成本最小为目标,构建整数规划模型。分析结果表明:在一定的条件下,总存在最优的供应商选择方案和库存策略;当供应商的延迟交付概率增加,供应链期望成本上涨;当供应商供应数量无限制时,减少最优订货批量可以弱化供应不确定性增加造成的影响;当供应商选择方案不变,订货提前期增加,供应链的运作成本以及最优订货批量不变;一种零部件提前期的变化不影响其他零部件的供应商选择和库存策略。     

The shadow costs of repos and bank liability structure

Making use of a structural model that allows for optimal liquidity management, we study the role that repos play in a bank׳s financing structure. In our model the bank׳s assets consist of illiquid loans and liquid reserves and are financed by a combination of repos, long-term debt, deposits and equity. Repos are a cheap source of funding, but they are subject to an exogenous rollover risk. We show that the use of repos inflicts two types of indirect (“shadow”) costs on the bank׳s shareholders: first, it induces the bank to maintain higher liquid reserves in order to alleviate the additional default risk; second, it adds to the cost of long-term debt financing. These shadow costs limit the bank׳s appetite for cheap but unstable repo funding. This effect is, however, weakened under poor returns on risky assets, access to deposit funding and the depositor preference rule. We also analyze the impact of a liquidity coverage ratio, payout restrictions and a leverage ratio on the bank׳s financing choices and show that all these tools are able to curb the bank׳s reliance on repos.     

Rational and intuitive decision-making in sourcing teams: Effects on decision outcomes

According to dual process theory, individual decision-making can be based on rational procedures and experience-based intuition, and the decision-making approach can influence decision outcomes. We investigate how the application of rational procedures and experience-based intuition affects the outcomes of supplier selection decisions taken by cross-functional sourcing teams. Specifically, we examine whether the selected supplier׳s cost and quality/delivery/innovativeness performance is higher when more team members use a highly rational and/or a highly experience-based decision-making approach. From data on 54 teams, we find that the use of rational procedures enhances cost performance. Conversely, when sourcing team members use their experience-based intuition, the decision is more likely to result in satisfactory supplier performance along all tested performance dimensions.     

政府和快递包装供应商在绿色技术创新中的演化博弈分析

建立政府和快递包装供应商之间的演化博弈模型,分析两者在绿色技术创新中的演化稳定策略,对参数赋值后用Matlab进行数值仿真。结果表明:政府监管时获得的社会收益及监管成本是影响其行为的关键因素;快递包装供应商进行绿色技术创新的增量收益和增量成本是影响其策略的关键因素,加大政府监管和补贴可以促进快递包装供应商进行绿色技术创新,但政府补贴并非越多越好。最后,从加强政府监管、促进快递包装供应商绿色技术创新动力等方面提出建议。     

考虑责任违规中断的负责任采购博弈

随着全球供应链的发展,供应商过程违规越来越成为供应中断的常见原因。为改善过程合规性,很多跨国公司已经在全球范围内,尤其是发展中国家实施负责任采购。针对供应商-采购方过程行为建模内生化责任违规中断风险,构建采购方和风险供应商之间的Stackelberg博弈模型,研究订货比例、成本结构等对决策产生的影响。通过比较静态分析发现,在责任违规中断风险下,即使跨国公司的订单占比较小,风险供应商也有动力不断提高合规水平直至完全合规。这说明跨国公司可通过游说当地政府提高对过程违规行为的监管和惩罚,以此激励风险供应商提高合规努力。     

Supplier development and cost management in Southeast Asia—Results from a field study

This paper is about supplier development when international companies have production sites in Southeast Asia and look for opportunities to switch from international suppliers to local suppliers. We conducted a field study involving site visits to companies in Thailand and Vietnam, and interviews at corporate supply chain departments. Some key observations are: cost management was a dominant motive for taking local supplier development initiatives. Furthermore, local sourcing and local supplier development were important for international companies to improve access to local customer markets. Firms deliberately assessed whether a particular supplier would likely be able to improve sufficiently to warrant investing in supplier development, which typically involved a combination of initiatives, requiring the international firm to take considerable efforts. Local sourcing strategies and priorities for supplier development initiatives tended to focus on items with low supply risk and low volume. These findings are discussed based on transaction cost economics, and we suggest that firms use several ways to reduce the risk of transaction-specific investments in supplier development initiatives.     

Supply management and family business: A review and call for research

Family-owned enterprises dominate global business, generating 70–90% of the world's gross domestic product. Existing management research has validated that family businesses often behave differently than non-family businesses, primarily by focusing on idiosyncratic non-economic goals that are not typically assessed in traditional business research. Extant supply management literature has yet to investigate the influences of family business, thus overlooking a potential significant source of variation in our research as well as limiting our managerial relevance. The objective of this paper is to introduce supply management scholars to family business, including its prominence and unique characteristics. Applying socioemotional wealth as a theoretical lens, we develop a research agenda from existing supply management and family business literature by offering propositions for future research where family business influences may permeate contemporary supply management topics including strategic supply management, sourcing strategy, supplier relationships, sustainability, risk, and e-procurement. In doing so, we provide an initial foundation for supply management scholars to both incorporate family business effects into research and launch new research streams. This is one of the first papers to our knowledge that introduces the field of family business to supply management scholars.     

基于供应商合作的采购总拥有成本控制研究

随着经济全球化的发展和竞争的加剧,战略采购和企业间的合作成为了企业采购和运作的重要策略。总拥有成本（TCO）是有效分析和选择供应商的重要方法,通过降低TCO,能够更好的降低企业的综合运作成本,提升企业的收入和竞争力,有利于企业找到TCO更低的供应商,这些供应商和企业形成战略合作伙伴关系,促进双方成本的降低和利润的增加。     

Default estimation,correlated defaults,and expert information

Capital allocation decisions are made on the basis of an assessment of creditworthiness. Default is a rare event for most segments of a bank's portfolio and data information can be minimal. Inference about default rates is essential for efficient capital allocation, for risk management and for compliance with the requirements of the Basel II rules on capital standards for banks. Expert information is crucial in inference about defaults. A Bayesian approach is proposed and illustrated using prior distributions assessed from industry experts. A maximum entropy approach is used to represent expert information. The binomial model, most common in applications, is extended to allow correlated defaults yet remain consistent with Basel II. The application shows that probabilistic information can be elicited from experts and econometric methods can be useful even when data information is sparse. Copyright © 2009 John Wiley & Sons, Ltd.     

Supplier incentives and resource constraints under uncertainty

Procurement in environments of cost uncertainty and asymmetric information require special arrangements such as the linear incentive contract. Usually the buyer is motivated to make investments that can relieve temporary supplier resource constraints during the procurement. Special problems arise, however, due to interactions between investments in suppliers and the risk-incentive trade-off achieved by the incentive contract. A cost signaling model is proposed to overcome these problems, where a supplier offers an equity share in the profit from the incentive contract to the buyer in return for a priori investment. The equity share signals the supplier's private cost information, and forms the basis for the buyer's investment decision. Under equilibrium the buyer can expect to recover the entire amount provided to the supplier through his or her share of the profit.     

Sustainable Supplier Selection in Megaprojects: Grey Ordinal Priority Approach

Due to mounting environmental and social challenges, supplier selection has become one of the most critical tasks of project-oriented organizations. Because supplier selection can affect the long-term success and profitability of the organizations and their projects, directly, embracing sustainability can add value in the equation. Considering sustainability measures can positively guide project managers in making better decisions for the projects in the long term. Therefore, the current study attempts to provide a conceptual model for selecting the best supplier based on a sustainability framework in megaprojects. Meanwhile, decision-making methods can be employed as a proper tool to find the best supplier. Ordinal priority approach (OPA) is a recent development in multiple criteria decision making (MCDM), while it has many benefits compared with other methods like analytic hierarchy process (AHP) and technique for order of preference by similarity to ideal solution (TOPSIS). However, this method cannot consider multiple ranks during the decision-making process, and using an uncertainty approach feels strongly. Grey systems theory (GST) can consider uncertainties with no need for large sample or proposing membership function. Hence, the current study employed the GST to consider multiple ranks for criteria and alternatives in the OPA method. This is the first time that a sustainable supplier selection framework has been presented for megaprojects with the aid of the Grey OPA (OPA-G) method. Finally, a case study has been examined to evaluate the performance of the proposed approach. The results show that the proposed approach can be used in real-world situations and it has acceptable performance under uncertainty conditions.     

Providing Managerial Accounting Information in the Presence of a Supplier

Abstract

This paper identifies a novel effect which is crucial for the design of a management accounting information system. In contrast to prior literature, we explicitly model the firm's relationship to a supplier. We show that in addition to the previously identified trade-off – benefits of more information versus indirect or direct (agency) costs of information acquisition – another effect occurs: the input price effect. This effect influences the optimal design of the management accounting information system and changes the regimes where information acquisition is optimal for the principal. Also, in case of endogenous input prices we demonstrate that – perhaps surprisingly – paying an information rent to the agent can be beneficial because it works as a commitment towards an over-charging supplier to exploit the input price effect.     

The moderating effects of supplier portfolio characteristics on the competitive performance impacts of supplier-facing process capabilities

We draw on the interorganizational relationship management literature to examine how contextual characteristics of the supplier portfolio (portfolio concentration, relationship length, and supplier substitutability) moderate the impacts of process alignment and partnering flexibility – two of a firm's key supplier-facing process capabilities to manage supplier relationships – on a product line's competitive performance. Our analysis of survey data on a firm's supplier portfolio for a major product line indicates that the impacts of process alignment and partnering flexibility on competitive performance are moderated by the three supplier portfolio characteristics. Specifically, while concentrated relationship portfolios, long-term relationships, and supplier substitutability amplify the positive effect of process alignment on competitive performance, concentrated relationship portfolios and long-term relationships attenuate the competitive benefits that firms derive from partnering flexibility. While long-term relationships and concentrated supplier portfolios enhance the competitive benefits of process alignment, operations managers also need to recognize the detrimental effects of these supplier portfolio characteristics on the competitive benefits of partnering flexibility.     

Do external diversity practices boost focal firm performance? The case of supplier diversity

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.