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The purpose of this paper is to investigate the behavioral tendencies of supply managers when they are faced with uncertainty in making multi-tier sourcing decisions.
Abstract
Purpose
The purpose of this paper is to investigate the behavioral tendencies of supply managers when they are faced with uncertainty in making multi-tier sourcing decisions.
Design/methodology/approach
This paper uses the literature on multi-tier supply chains and behavioral decision making to develop a theoretical framework for examining factors influencing a supply manager’s decision to retain control over sourcing in the multi-tier context. An experimental vignette methodology is used to gather data from 259 supply managers.
Findings
Results suggest that supply managers choose to exert less multi-tier control when they have high levels of interpersonal trust in the tier-1 supplier’s sales representative. This effect is accentuated by a high level of familiarity with potential lower-tier suppliers. Under high levels of familiarity with potential lower-tier suppliers, supply managers will exert greater levels of multi-tier sourcing control as the behavioral uncertainty of the tier-1 supplier increases.
Practical implications
Buying firms can enhance their understanding of supply managers’ multi-tier sourcing decision making and the potential biases associated with it. Suggestions for a more effective use of multi-tier sourcing are provided in the Discussion section.
Originality/value
Multi-tier sourcing is an increasingly important area of research, and this paper is the first to examine individual supply managers’ behavioral decision making in the multi-tier context. This paper also contributes to the outsourcing literature by investigating behavioral factors influencing the outsourcing of sourcing activities.
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Avinash Dinkarrao Bagul and Indrajit Mukherjee
Multiple stages of procurement for a product in a supply chain (SC) altogether form a “multi-Tier” supply network. The purpose of this paper is to develop and verify a systematic…
Abstract
Purpose
Multiple stages of procurement for a product in a supply chain (SC) altogether form a “multi-Tier” supply network. The purpose of this paper is to develop and verify a systematic solution approach to ascertain the realistic cost advantage of a coordinated centralized sourcing strategy as compared to an isolated decentralized sourcing strategy for a multi-tier supply network under demand uncertainty.
Design/methodology/approach
The proposed systematic solution approach consists of seven steps to compare and contrast the cost advantage of a centralized coordinated sourcing strategy over a decentralized stage-wise sourcing strategy for a multi-tier supply network. A real-life automotive industry case analysis of two distinct products provides sufficient empirical evidence on the expected cost advantage of centralized coordinated sourcing strategy under demand uncertainty.
Findings
The case analysis affirms the practicability of the proposed seven-step solution approach to determine the realistic cost advantage of coordinated sourcing.
Research limitations/implications
The scope of this research is restricted to a single product and two-tier supply network analysis. This research work also considers a restrictive assumption of negligible coordination cost.
Practical implications
The suitability of the proposed solution approach is verified using real-life case examples. This research provides theoretical insights and factual evidence to SC practitioners, so as to adopt a centralized sourcing strategy in a varied manufacturing environment.
Originality/value
There is no evidence of a systematic step-by-step solution approach to determine the cost advantage of a coordinated sourcing strategy over an isolated decentralized sourcing strategy for a multi-tier supply network under demand uncertainty.
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Chris Ellegaard, Ulla Normann and Nina Lidegaard
The purpose of this paper is to create knowledge on the intuitive global sourcing process applied by small and medium-sized enterprise (SME) managers.
Abstract
Purpose
The purpose of this paper is to create knowledge on the intuitive global sourcing process applied by small and medium-sized enterprise (SME) managers.
Design/methodology/approach
This study reports on qualitative inquiries with experienced sourcing managers from 10 SMEs in the textile industry. The study follows a three-step semi-structured interviewing process, allowing us to gradually unveil the detailed nature of the intuitive supplier selection process.
Findings
Nine of the 10 SMEs rely on a highly intuitive supplier selections process, where one supplier at a time is gradually taken into the exchange while testing the supplier’s behavior. The process consists of an early heuristics sub-process, which gradually switches over to a more advanced intuiting behavioral pattern-matching process.
Practical implications
Most OM/SCM research has treated global sourcing and supplier selection as a highly rational, analytical and deliberate optimization problem. This study uncovers a completely different, and frequently successful, intuitive process, which could inspire managers in companies of all sizes, faced with high uncertainty about global supplier selection decisions.
Originality/value
Intuition has recently been adopted in the global sourcing literature. However, this study is the first to offer detailed insights into a predominantly intuitive global sourcing process, specifically as it is managed by SMEs.
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V.G. Venkatesh, Abraham Zhang, Eric Deakins and Venkatesh Mani
Tragic incidents such as the Rana Plaza building collapse call into question the value and effectiveness of supplier codes of conduct (SCC) used in multi-tier supply chains. This…
Abstract
Purpose
Tragic incidents such as the Rana Plaza building collapse call into question the value and effectiveness of supplier codes of conduct (SCC) used in multi-tier supply chains. This paper aims to investigate the barriers to sub-supplier compliance and the drivers from the perspective of suppliers that adopt a double agency role by complying with buyer-imposed SCC while managing sub-supplier compliance on behalf of the buyer.
Design/methodology/approach
This research adopts a sequential, mixed-methods approach. The qualitative phase develops a conceptual model with the aid of the extant the literature and semi-structured interviews with 24 senior manufacturing professionals. The quantitative phase then uses a hierarchical regression analysis to test the conceptual model using survey data from 159 apparel suppliers based in India.
Findings
The findings reveal that sub-supplier compliance is positively impacted by effective buyer–supplier governance and by the focal supplier having a strategic partnership with the sub-supplier. Conversely, price pressure on sub-suppliers adversely impacts their compliance, while institutional pressure on them to comply is generally ineffective.
Research limitations/implications
The context of the study is limited to the garment industry in India.
Practical implications
To improve SCC compliance rates, buyers and focal suppliers should actively develop strategic partnerships with selected upstream supply chain actors; should set a reasonable price across the supply chain; and, should include specific sub-supplier compliance requirements within the supply contract. The findings also suggest the need to develop social sustainability protocols that are cognisant of regional contexts.
Originality/value
The absence of prior research on SCC implementation by sub-suppliers, this study represents a pioneering empirical study into such multi-tier sourcing arrangements. It provides strong support that sub-supplier governance arrangements differ from those typically found in the focal supplier layer. It also provides empirical evidence of the critical factors that encourage sub-supplier compliance within the apparel industry of a regionally developing economy.
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Avinash Bagul and Indrajit Mukherjee
This paper attempts to address three key objectives. The primary aim is to enhance sourcing strategy for a centralized and coordinated multitier multiple suppliers networks with…
Abstract
Purpose
This paper attempts to address three key objectives. The primary aim is to enhance sourcing strategy for a centralized and coordinated multitier multiple suppliers networks with uncertain demand and supplier failure risks. The second objective is to enumerate all possible practical supplier(s) failure scenarios and quantify expected loss of demand cost. Finally, the work illustrates statistical experimentation to identify “influential” variables that can significantly impact the expected supply network and loss costs.
Design/methodology/approach
A seven-step solution framework is proposed to derive an optimal sourcing strategy for the specific network configuration with varied supplier failure scenarios. Five distinct models are formulated to address all possible scenarios of supplier failure events. Mixed-integer nonlinear programming technique is used to derive expected supply network cost and loss cost. The solution framework is verified using a real-life case.
Findings
A cross-case analysis indicates that an increase in suppliers' failure risk (SFR) probabilities or customer demand rate increases the expected loss of demand costs for a multitier supply network. Besides, an increase in unit component prices increases the expected supply network cost.
Research limitations/implications
A two-tier automotive supply network for a single product is considered for all case studies.
Practical implications
The enhanced strategy can facilitate practitioners enumerate different supply network failure scenarios and implement the best solution.
Originality/value
There is no evidence of earlier research to derive optimal sourcing strategy for a centralized, coordinated multitier multiple supplier's network, considering demand uncertainties and SFR.
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Thomas E. Johnsen, Ole Stegmann Mikkelsen and Chee Yew Wong
The purpose of this paper is to explore the challenges facing companies that operate within complex supply networks and the strategies they use to manage such complex supply…
Abstract
Purpose
The purpose of this paper is to explore the challenges facing companies that operate within complex supply networks and the strategies they use to manage such complex supply networks.
Design/methodology/approach
The paper uses mixed methods by combining in-depth case studies with an executive forum with those of senior industry stakeholders. The two in-depth supply network case studies were carried out through multiple interviews with focal (or ‘developer’) firms that supply energy through offshore wind power and key suppliers such as wind turbine manufacturers.
Findings
The findings show the challenges the offshore wind power industry faces because of complex supply networks, including attempts by several actors to exert their power and control. Despite the networks facing similar complexities and challenges, two distinctly different strategies for orchestrating and governing supply networks are uncovered: one strategy resembles an interventionist strategy, while the other is based on delegation.
Research limitations/implications
Based on the findings, the authors identify and develop a classification of complex supply network divided into intervention and delegation strategies, thereby adding to existing research on ways to manage complex supply networks.
Practical implications
The authors identify strategies for focal firms for managing in complex supply networks, based on control and intervention or coordination and delegation.
Originality/value
Existing research on supply network strategies has largely focused on non-complex contexts. This paper draws from complex adaptive systems and organisational behaviour perspectives to contribute original insights into supply network strategies in complex supply networks.
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Juri Matinheikki, Katie Kenny, Katri Kauppi, Erik van Raaij and Alistair Brandon-Jones
Despite the unparalleled importance of value within healthcare, value-based models remain underutilised in the procurement of medical devices. Research is needed to understand…
Abstract
Purpose
Despite the unparalleled importance of value within healthcare, value-based models remain underutilised in the procurement of medical devices. Research is needed to understand what factors incentivise standard, low-priced device purchasing as opposed to value-adding devices with potentially higher overall health outcomes. Framed in agency theory, we examine the conditions under which different actors involved in purchasing decisions select premium-priced, value-adding medical devices over low-priced, standard medical devices.
Design/methodology/approach
We conducted 2 × 2 × 2 between-subjects scenario-based vignette experiments on three UK-based online samples of managers (n = 599), medical professionals (n = 279) and purchasing managers (n = 449) with subjects randomly assigned to three treatments: (1) cost-saving incentives, (2) risk-sharing contracts and (3) stronger (versus weaker) clinical evidence.
Findings
Our analysis demonstrates the harmful effects of intra-organisational cost-saving incentives on value-based purchasing (VBP) adoption; the positive impact of inter-organisational risk-sharing contracts, especially when medical professionals are involved in decision-making; and the challenge of leveraging clinical evidence to support value claims.
Research limitations/implications
Our results demonstrate the need to align incentives in a context with multiple intra- and inter-organisational agency relationships at play, as well as the difficulty of reducing information asymmetry when information is not easily interpretable to all decision-makers. Overall, the intra-organisational agency factors strongly influenced the choices for the inter-organisational agency relationship.
Originality/value
We contribute to VBP in healthcare by examining the role of intra- and inter-organisational agency relationships and incentives concerning VBP (non-) adoption. We also examine how the impact of such mechanisms differs between medical and purchasing (management) professionals.
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Shokouh Razaghi and Sajjad Shokouhyar
This study aims to show that management with big data analytics capability can achieve more advantages of the global sourcing process. Furthermore, this study using its conceptual…
Abstract
Purpose
This study aims to show that management with big data analytics capability can achieve more advantages of the global sourcing process. Furthermore, this study using its conceptual attitude model aims to show that big data analytics management capability leads to an increase in firm performance by the mediating role of integration.
Design/methodology/approach
Using an online questionnaire, 158 managers from 13 Iranian companies taking advantage of the global sourcing process were surveyed. The validity of the hypotheses was evaluated using partial least squares based on structural equation modeling (PLS method).
Findings
The results of the study showed that big data analytics management capability has a positive impact on global sourcing and firm performance directly, and by the mediating role of integration.
Originality/value
Previous studies have carefully addressed the role of big data and big data analytics in firms. However, this is among a few studies addressing the role of big data analytics capability, especially management capability, in improving firms’ performance. The results of this study shed light on the fact that how global sourcing takes the best advantage of big data analytics management capability for better accomplishment of organizations’ duties. The results of this study also disclose how big data analytics management capability helps organizations with their performance and bring benefits to their units.
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Mohd Helmi Ali, Yuanzhu Zhan, Syed Shah Alam, Ying Kei Tse and Kim Hua Tan
The purpose of this paper is to establish a conceptual model adopted from a strategy-structure-performance paradigm for investigating the fit between the supply chain integration…
Abstract
Purpose
The purpose of this paper is to establish a conceptual model adopted from a strategy-structure-performance paradigm for investigating the fit between the supply chain integration and halal food supply chain integrity and the impact of halal food supply chain integrity on firms’ performance in a Malaysian context.
Design/methodology/approach
This study comprises a sample of a halal manufacturing firm in Malaysia. A cross-sectional research design was used in this study. Data were gathered based on mailed and personally administered questionnaires. SmartPLS was used to analyse the 254 valid responses.
Findings
The research findings indicate that internal integration and strategy have positive impact on halal food supply chain integrity. The study results confirmed that customer integration and supplier integration contributes to halal food supply chain integrity. It also finds that halal food supply chain integrity has a significantly positive impact.
Research limitations/implications
The results suggested that a strategic collaboration with the supplier pivoted around the quality and integrity of the raw materials should be undertaken.
Practical implications
The results from this study supports that the managers should adopt all halal food supply chain integrity components to achieve a superior performance. Even though some of the components did not yield significant results in terms of their relationships with firms’ performance, these dimensions were generally related to the standardised industry requirements, such as certifications.
Originality/value
The findings are original and unique and are based on established theories from the literature on supply chain management practices. The research findings are useful to academics and policymakers interested in fostering a halal supply chain in Malaysia.
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