An interaction approach to global sourcing: A case study of IKEA

This study explores the process of global sourcing through a case of the Swedish furnishing retailer IKEA from an interaction perspective. With a point of departure in the streams of existing research on global sourcing and the internationalization process of firms through networks, a research question is proposed concerning supply network interactions as an influence in the global sourcing process. The study uses an in-depth qualitative case study methodology, focusing on IKEA and its development of a supply network for the PAX wardrobe system during the years 2003–2009. The findings draw on 29 interviews in Sweden and China, ranging from interviews with the supply management function of IKEA to interviews with Swedish and Chinese suppliers and sub-suppliers. The findings show that the global sourcing process is influenced by interactions and network effects between supply network actors. In particular, we find that relationships between suppliers were identified and set up by IKEA, but cascaded into deeper interactions amongst suppliers at different supply network tiers. Our study contributes to global sourcing research in indicating the importance of interaction amongst supply network actors, showing how the global sourcing strategy of one actor may significantly influence the sourcing strategies of other actors. Global sourcing decisions therefore need to be understood and coordinated across global supply networks.     

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.     

Design for procurement: What procurement driven design initiatives result in environmental and economic performance improvement?

This study examines the role of procurement professionals in new product design. Specifically, it evaluates which factors play an important role in driving design for procurement (DFP) environmental and economic results. The factors early supplier involvement, standardization, lead time reduction, environmental sourcing, supply base maintenance, and core competence focused sourcing are regressed on diverse DFP performance outcomes. Data were collected via survey for a series of procurement focused items capturing the activities and characteristics for new product design and performance. Several major findings were supported through the analysis that enhance academic and managerial knowledge. Standardization positively impacted economic performance measures that focused on new product development and operational outcomes. Supply based maintenance was the strongest DFP initiative driving operational performance. Environmental sourcing positively affected all environmental performance measures, but was not related to economic performance.     

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.     

Sustainable procurement: Building legitimacy in the supply network

The challenges introduced by sustainable development deeply affect purchasing and supply management practices and therefore foster a change in the firm's supply network. After a literature review on supply network management, sustainable sourcing and legitimacy, this paper presents the results of an in-depth case study of a gardening distributor which adopted a sustainable strategy. The analysis illustrates how the firm conquers its legitimacy in sustainable development through the evolution of its supply network. The paper highlights three types of legitimacy – product legitimacy, corporate legitimacy and cause legitimacy – and reveals the different roles of business and non-business actors in the firm's extended sustainable supply network.     

Managing the global supply base through purchasing portfolio management

‘How to source globally’ has become a critical strategic decision for companies competing on a global basis. Despite an increased focus on global sourcing and supply chain management, little is known about the challenges and solutions surrounding such sourcing practices. Extant literature points at the critical importance of developing and sharing knowledge in multinational companies (MNCs). However, little work has been undertaken to examine the organizational mechanisms used by MNC headquarters for knowledge leveraging across subsidiaries, especially in the area of purchasing and supply management. Based on an in-depth case study, focusing on a chemical company, the actual buying systems for managing the global supply base are explored. Kraljic's purchasing portfolio approach appears useful, both for developing effective purchasing strategies as well as for managing a global supply base.     

Low power,high ambitions: New ventures developing their first supply chains

This paper investigates sourcing decisions for new ventures. Sourcing decisions are especially problematic for start-ups because they lack resources, knowledge and legitimacy to evaluate and interact with suppliers. We develop and apply a framework that connects global sourcing, relationship development and attractiveness. Further, we investigate how new ventures develop their first supply chains by conducting an exploratory multiple case study of six Norwegian start-ups. Based on our findings, we develop three propositions regarding how start-ups mediate their lack of attractiveness through pre-sales and by choosing shorter supply chains and smaller suppliers. The implications for practice include emphasizing the importance of developing a business relationship with the supplier in parallel with making sourcing decisions. This study is a novel contribution to an underexplored topic, and we conclude by proposing a research agenda for future explorations of start-ups and supply chain development.     

Analyzing the sourcing literature: Over two decades of research

Sourcing is an essential component of purchasing and supply chain management and has been extensively studied by academic researchers. A comprehensive scholarly literature review of sourcing was undertaken to provide guidance for future scholars through an in-depth review of past research. A total of twenty journals were selected, and 520 articles addressing sourcing topics were identified from 1995 to the present. The review process identified seven major sourcing categories within the literature. These included: strategic and relational, transactional/tactical, sourcing tools, global, sustainability, services, and new product development. Each of the seven sourcing categories is separately discussed by focusing on main themes, theories and methods. Findings indicated that strategic and transactional categories received the most attention from researchers. The area of sustainable sourcing has increased the most dramatically, while sourcing tools proved the most stable over the four time periods studied. Over 120 different theories were used to explain sourcing actions, with transaction cost economics being the most prominent. Surveys and quantitative modeling were the two most widely utilized research methods. Finally, conclusions to our findings are presented.     

Economic factors affecting water supply resilience to disasters

Water supply systems need to be resilient enough to provide people and critical users with reliable water following a disaster. Previous research has shown that four main factors dictate system robustness and rapidity of recovery following a disaster: vulnerability, social capital, organisational capacity, and economic capital. This paper identifies the economic factors affecting water supply resilience. Relevant factors and indicators were gathered through a comprehensive literature review and verified through a series of interviews with water supply, resilience, and social scientists and economists. Economic capacity and quick access to finance were found to be the main economic factors influencing the resilience of water supply systems. Quick access to finance is most important in the early stages following a disaster for response and restoration, but its importance declines over time. In contrast, the economic capacity of the disaster struck area as well as the water sector play a vital role in the subsequent reconstruction phase rather than in the response and restoration period. Indicators for these factors were tested for the case of the February 2011 earthquake in Christchurch, New Zealand.     

How supply chain architecture and product architecture impact firm performance: An empirical examination

In order to enhance performance, manufacturing firms are building various capabilities and utilizing supply chain networks that are geographically dispersed around the globe. This study examines how decisions related to supply chain architecture and product architecture influence organizational competitiveness. Building on the co-specialization perspective, we evaluate the performance implications of product modularity and supply chain agility. While, product modularity constitutes a product configuration related to sourcing and assembling of products, supply chain agility is a supply chain configuration related to velocity (sensing, comprehending, and responding) and visibility (supplier network, internal operations, and external environment). Both the product and supply chain architectural decisions can impact performance, individually and in conjunction with each other. We empirically test the hypothesized relationships using data collected from 103 manufacturing firms. Results show that supply chain agility and product modularity directly enhance responsiveness and enable organizations to reduce cost. Furthermore, supply chain agility partially mediates the relationship between product modularity and both responsiveness and cost reduction. We elaborate on the key contributions of this study for both research and practice, discuss limitations, and also offer various avenues for further research.     

电子化市场交易模式的拓展研究

随着IT发展形成的电子化市场的主要优势就是电子化交易。但由于受交易专用性和产品描述复杂性的影响,自发形成的完全开放式的电子市场交易模式的可行域受到很大限制。本文归纳分析了这些非技术因素,在此基础之上提出了开放式电子市场、专用电子市场和电子化供应链相结合的未来电子化市场交易的新复合模式,拓展了电子化交易可行域的范围。     

Future changes in sourcing patterns: 2025 outlook for the Swedish textile industry

This study analyzes ongoing changes in sourcing patterns in offshoring and reshoring, and the reasons thereof. It is based on a survey of expectations regarding changing sourcing patterns from now to 2025 in a sample of 119 Swedish buyers of textiles and apparels. The research approach supplements previous studies primarily focusing on contemporary and historical changes. The most important findings related to the dynamics of sourcing patterns are: (i) increasing sourcing in Europe, and (ii) decreasing sourcing in China, partly substituted by expansion in Bangladesh and other low-cost Asian countries. Increasing sourcing from Europe stems from ambitions to enhance supply chain responsiveness through nearshoring in relation to customers. The changes within Asia represent another pattern: low cost-seeking companies plan to turn to countries with lower costs than China. This pattern illustrates extended offshoring through far-shoring. Consequently, the study shows that both nearshoring and far-shoring represent important sourcing approaches. The resulting patterns show considerable variety owing to diversity in contextual conditions. Social, environmental, and political factors are expected to become increasingly important for future sourcing decisions. Of the firm-internal factors, capabilities related to flexibility and responsiveness are assumed to have the most significant impact. The study shows how these factors in combination with other capabilities, firm size, product assortment, and attitudes to geographical proximity drive various sourcing patterns.     

Global sourcing and quality recalls: An empirical study of outsourcing-supplier concentration-product recalls linkages

This study investigates how supply chain sourcing strategies are associated with product quality recalls. In particular, the research examines how make-or-buy decisions (i.e., outsourcing), the use of foreign suppliers (i.e., offshore outsourcing), the relocation of production to offshore markets (i.e., offshoring), and decisions to consolidate supply bases (i.e., the use of few vs. myriad suppliers) are related to product recalls. Product recalls are serious quality failures in supply chains with significant, negative impacts on firm performance. Product recalls are frequently connected to the globalization of supply chains. Globalization has, at times, promoted inconsistency in quality control and standards, leading to quality problems and failures. Data across multiple industries, with widely reported recalls, have been collected and analyzed using regression techniques. Our findings indicate that offshore outsourcing has a greater impact on recalls than offshoring without outsourcing; outsourcing domestically has the least influence. Outsourcing to a smaller supplier base may lead to fewer recalls at low levels of outsourcing. However, it may exacerbate the impact of outsourcing on recalls at high levels of outsourcing.     

A model for planning locations of temporary distribution facilities for emergency response

We propose a network flow model for dynamic selection of temporary distribution facilities and allocation of resources for emergency response planning. The model analyzes the transfer of excess resources between temporary facilities operating in different time periods in order to reduce deprivation. Numerical analysis shows that the location of temporary facilities is determined by the demand and supply points. This work contributes to the emergency response planning that requires a quick response for the supply of relief materials immediately after a disaster hits a particular area.     

Notes and debate paper: Should merchandising and sourcing be worlds apart? The opportunity for more integrated strategic sourcing research

Whereas retailers are some of the biggest buyers that have some of the highest percentages of external spend as a share of revenue, they are not typically included in strategic sourcing research. Strategic sourcing research originated with a focus on supplies for manufacturing. But the strategic sourcing of merchandise by retailers is not as commonly studied. Merchandise sourcing is often approached very differently from manufacturing sourcing and often different teams of buyers with different roles and responsibilities are involved. Leveraging author industry experience and interviews with strategic sourcing executives in manufacturing and merchandise sourcing this notes and debate paper compares strategic sourcing across these domains and identifies fruitful research opportunities for developing a more comprehensive supply chain approach to strategic sourcing research.     

供应链风险源分析

本文从风险源可控与否的角度对供应链风险因素进行了重新分类,将自然灾害、全球化、产品区域垄断性加强、通信和信息技术的瓶颈问题、各国各地政策和法律差异、政治和经济的干预、消费者偏好的复杂多变等归纳为企业不可控的风险因素;将外包、短暂生命周期、供应商管理库存、企业经营和管理中的技术依赖以及依赖少数几个供应商归纳为企业可控风险因素,并对各风险因素进行了详细分析。     

The R&D knowledge base in city-agglomerations and knowledge searching in product innovative SMEs

ABSTRACT

This paper looks at the relation between the R&D knowledge base of city-agglomerations and knowledge sourcing in product innovative small and medium-sized enterprises (SMEs). The small open Belgian economy is used as a test case. The characteristics of the city-agglomeration’s R&D knowledge are posited to be instrumental for SMEs’ reliance on particular sources of information for innovation. The R&D knowledge base is studied as a multidimensional concept consisting of R&D capacity, R&D specialization and R&D diversification. A representative sample of product innovative SMEs drawn from two waves of the Community Innovation Survey between 2008 and 2012 reveals that a strong R&D capacity at city-agglomeration level favours private external information sources for innovation, but has no influence on the likelihood to rely on public sources for innovation. Accordance between specialization of the private R&D knowledge base and the SME’s activities positively influences the use of clients as information sources for innovation, whereas under these circumstances supplier responsiveness turns out to be less frequently solicited for. A more diversified private R&D environment reduces the reliance on universities and public research organizations as information sources for innovation. A public R&D knowledge base specialized in natural sciences or engineering favours information sources from universities.     

The effectiveness of socially sustainable sourcing mechanisms: Assessing the prospects of a new form of joint regulation

The traditional mechanisms for improving and protecting labour standards in advanced economies are failing. In Britain, the effectiveness of collective bargaining has diminished substantially over the past quarter century. Legally enforceable minimum labour standards have been an inadequate substitute. A new form of ‘joint regulation’ is emerging that may be better attuned to the contemporary structure of product market competition. It involves employers and unions coordinating action on labour standards across the supply chains of firms that contribute to the production of a particular good or service. This article explores the circumstances in which these ‘socially sustainable sourcing’ mechanisms develop and examines their impact on labour standards, by means of two case studies.     

An empirical examination of strategic sourcing dominant logic: Strategic sourcing centricity

Recently, much of the thought in strategic sourcing, i.e., dominant logic, has shifted away from the exchange of tangible goods and toward the exchange of intangibles, specialized skills and knowledge, and processes. This study refers to strategic sourcing dominant logic as strategic sourcing centricity (SSC) and describes it as a sourcing management′s mindset based on learning, performance, planning, and relational orientations and manifests itself in the implementation of SS to meet supply management objectives and satisfy stakeholder requirements. Building on insights on intangibility derived from resource-based theory (RBV), the study proposes and empirically tests strategic sourcing centricity (SSC). The authors test the operational measures of SSC dimensions and its impact on performance on a sample of 174 supply management executives. The results indicate strong support for the theorized framework. Managerial implications and future research agenda are provided.     

The effect of the Rana Plaza disaster on shareholder wealth of retailers: Implications for sourcing strategies and supply chain governance

Supply chain and reputational risks are often assumed to motivate firms to source production in developed, high-cost countries rather than developing, low-cost countries. To examine this assumption, we provide evidence from the collapse of the Rana Plaza building on April 24, 2013, which with its 1133 fatalities and 2438 injuries is seen as one of the worst industrial accidents in history. Do markets reactive negatively enough to such events to motivate firms to shift their sourcing strategy? We analyze the stock market reaction to the Rana Plaza disaster in the Bangladeshi ready-made garment industry to address this question. Our analysis is based on a sample of 39 publicly traded global apparel retailers with significant garment sourcing in Bangladesh. Stock market reaction to retailers on the day of the Rana Plaza disaster is negative, but its magnitude and significance dissipate by the following day. We find no evidence of significant stock market reaction during the 11 trading days (approximately two weeks in calendar time) following the disaster. Retailers responded to the disaster by developing two different agreements to improve factory and worker safety in Bangladesh – the Accord on Fire and Building Safety in Bangladesh (AFBSB), and the Alliance for Bangladesh Worker Safety (ABWS). We find no evidence of significant stock market reaction to the announcements of the AFBSB and the ABWS. The insignificant negative economic impact from the Rana Plaza disaster suggests that retailers have little economic incentive to move sourcing out of Bangladesh or other low-cost countries so as to reduce the risk of being involved in such events. We discuss the implications of our results for retailers, non-governmental organizations (NGOs), garment factory owners in Bangladesh, the Bangladeshi government, and academic researchers.