Manufacturer-supplier Relationships Research Articles

Unpacking the cultural impacts on long-term manufacturer-supplier relationships in the Arab Middle East region: the moderating role of trust

The specific objectives of this study are two-fold: (i) to examine the impact of cultural facets of the Arab Middle East region on long-term manufacturer-supplier relationships (LTR) and (ii) to uncover the ways trust functions as a moderator (facilitating or hindering) of the relationships. Prior research examining manufacturer-supplier relationships has largely focused on cross-country and macro-regional inter-firm relationships in Western cultural contexts, while research on the national cultural effects on LTR in non-Western cultural contexts is sparse. We test the effect of six Arab cultural values: Ta’arof (meeting someone, تعارف), Wasta (who you know, واسطة), Wa’ad (promise, وعد), HifzMa’aWajh (saving face, حفظ ماء الوجه), Qada-Qadar (fatalism, القضاء والقدر), and Shura (consultative, شورى). Data from 302 matched manufacturer-supplier dyads in the Jordanian manufacturing sector are used to analyse the hypothesised relationships through a partial least square structural equation modelling (PLS-SEM) and multi-group (PLS-MGA) analysis. Our study supports the general consensus of the need to consider cultural and trust issues in building LTR. The PLS path estimates provides support for all hypotheses except for the impact of ta’arof (meeting someone تعارف-) on LTR. The PLS-MGA moderation analysis shows that the moderating role of theqa (i.e. trustثقة-) on LTR varies between different cultural norms and between manufacturers and suppliers. The findings contribute to the increasing shift of focus towards macro-organisational research and beyond Western-derived cross-cultural paradigm to account for context-specific cultural effects of developing societies on LTR.

Streamlining Operations: The Impact of Effective Supplier-Manufacturer Relationships

Supply Chain Management (SCM) plays a crucial role for firms striving to maintain competitiveness amidst numerous competitors. In the contemporary business landscape, firms enhance their competitiveness by efficiently relying on their supply chain Moreover, an effective and efficient supply chain has become a vital and valuable means for staying vigilant in the evolving and competitive global business environment, contributing to overall organizational performance improvement. The term "supplier-manufacturer partnership" refers to the relationship established when a manufacturer and supplier mutually agree to collaborate based on a specific contract. This research study is quantitative in nature with population in the vicinity of Rawalpindi & Islamabad working either as manufacturer of goods or are providing the services or in the service business. Simple random sampling technique has been utilized in cross-sectional time horizon. SPSS version 22.0 was used as statistical software to carry out the analysis. The findings suggest that a stronger partnership correlates with improved supply chain performance. Furthermore, the statistical tests conducted in this research underscored the significance of business value addition, communication and trust as the most influential factors contributing to enhanced supply chain performance and overall profitability. The study also unveiled that the partnership strongly affects information flow. Moreover, when information is effectively managed, and its quality is enhanced, it fosters strong partner relations, ultimately leading to improved supply chain effectiveness and heightened performance.

Unpacking Cultural Impacts on Long-Term Manufacturer-Supplier Relationships in the Arab Middle East

Unpacking Cultural Impacts on Long-Term Manufacturer-Supplier Relationships in the Arab Middle East

Supply chain resilience strategies and their impact on sustainability: an investigation from the automobile sector

Purpose The purpose of this study is to propose a framework comprising supply chain (SC) resilience strategies to handle low-frequency high impact disruptive events. This study also evaluates the impact of SC resilience strategies’ implementation on the triple bottom line of SC sustainability. Design/methodology/approach A hybrid three-phased method is proposed to meet the research objectives of this study. In the first phase, this study uses the Delphi technique to select SC resilience strategies and SC sustainability dimensions. In the second phase, the best–worst method is used to assess the relative weights of resilience strategies. Finally, in the third stage, summative Likert scoring is used to understand the impact of SC resilience strategies on the SC sustainability triple bottom line. Findings The outcomes reveal that firms give due importance to inter-organizational relationships and supplier nearness for supply continuity. In the sustainability context, the obtained scores proved that resilience strategies have the maximum impact on economic sustainability, followed by environmental sustainability. Research limitations/implications To the best of the authors’ knowledge, this is the first study that examines aspects of SC resilience strategies and quantifies their impact on the triple bottom line of SC sustainability. This study is specific to the automobile sector; sectoral diversity may expose similarities and dissimilarities in the approach. Practical implications The outcome establishes that supplier–manufacturer relationships need to be strengthened further to tackle any future uncertainties. Besides, supplier location decisions may also be revisited. The strategies proposed will aid SC managers to make informed decisions to prepare for uncertain events. Originality/value In the face of uncertain events, often SCs trade-off sustainability in pursuit of resilience. It manifests that resilience is a prerequisite for SC sustainability. While planning SCs, organizations often choose either sustainability or resilience. Thus, this study acknowledges the need to develop effective SC resilience strategies that are in harmony with the sustainability agenda.

The effects of a manufacturer's actions on supplier performance: Insights from a contingent expectancy theory-based model

Manufacturing firms deploy two actions to enhance supplier performance: (i) they provide rewards, i.e., incentives, and (ii) they provide resources, i.e., investment. In this study, we ask why each of these actions is effective and when it is more (or less) effective. Drawing from expectancy theory, we argue that incentives are effective in enhancing supplier performance because they increase supplier instrumentality, while investment is effective in enhancing supplier performance because it increases supplier expectancy. Having identified two types of technological change—dynamism and diversity—we draw from contingency theory to argue that incentives are less effective when technological dynamism is high, and that they are more effective when technological diversity is high. Conversely, we argue that investment is more effective when technological dynamism is high, and that it is less effective when technological diversity is high. We develop a moderated mediation model in which supplier instrumentality and supplier expectancy mediate the impacts of incentives and investment, respectively, on supplier performance, with technological dynamism and technological diversity serving as moderators of these mediated pathways. The results from a matched dyadic survey of 202 supplier–manufacturer relationships provide support for our moderated mediation model.

Effect of social capital and transaction cost on multifaceted opportunism in manufacturer-supplier relationship

PurposeA successful relationship between manufacturer and supplier is vital for the pursuit of mutual benefits, which can be affected by one of the partners’ opportunistic behavior, causing disequilibrium in the existing relationship. The extant research has mainly focused on opportunism as a single phenomenon rather than the detectable strong form and unnoticeable weak form of opportunistic behavior in an exchange relationship that affects the relational outcomes in various ways. This study aims to contribute toward explaining the effect of economic and social forces on a strong and a weak form of opportunism and, in turn, its impact on relational outcomes in manufacturer-supplier relationships.Design/methodology/approachA sample of 361 manufacturers was drawn randomly using a sampling frame from the western part of India. The authors used covariance-based structural equation modeling to support the proposed model empirically. The authors examined the effect of social capital and transaction cost dimensions on different forms of a supplier’s opportunism.FindingsAll three dimensions of social capital have a different impact on both the forms of a supplier’s opportunism in the relationship. The authors found that social capital moderates the relationship between transaction-specific investments on a weak form of opportunism, while social capital is more valuable in curbing opportunism due to the effect of environmental uncertainty and behavioral uncertainty. The authors found that the supplier’s weak form of opportunism than the strong form has a more amplifying effect on governance costs.Originality/valueThis research contributes in three different ways. First, it inquires about the direct effect of transaction cost dimensions and social capital dimensions on a supplier’s multifaceted opportunism (strong form and weak form) in the manufacturer-supplier relationship. Second, it investigates the moderating effect of social capital on the relationship between transaction cost dimensions and forms of supplier opportunism. Third, the weak form of a supplier’s opportunism affects more significantly than the strong form of opportunism on governance costs.

The “Semiconductor Crisis” as a Result of the COVID-19 Pandemic and Impacts on the Automotive Industry and Its Supply Chains

In the first half of 2020, the coronavirus pandemic led to a drastic slump in the automotive industry, which was replaced by a surprisingly rapid growth in demand in the fall of 2020, and consequently led to the current shortages in microelectronic products. The prospect of an equally rapid economic recovery in the automotive industry is still threatened by supply bottlenecks for raw materials and key components, foremost for semiconductors. The so-called ‘semiconductor crises’ show exemplarily the overlapping of short-term supply chain disruptions with long-term structural features of the semiconductor industry. The combination of both is preventing that the supply situation in the automotive industry will improve quickly. First in this paper, the reasons for and respective effects of the crisis on the automotive industry are investigated by a quantitative market analysis. Second, specific strategic measures and options of automotive Original Equipment Manufacturers (OEM) and suppliers in Germany to cope with the situation and increase resilience in future supply chains are described by the means of qualitative expert interviews. By that, the paper helps in understanding the actual situation in the automotive industry, on the one hand, and contributes to the field of strategic supply chain and risk management with a focus on practical implications on the other hand. The results aim to support political stakeholders as well as small and medium sized enterprises to prepare themselves for future developments in the automotive market and changes in manufacturer–supplier relationships due to the transformation to new powertrain technologies and digitization.

An integrated framework for sustainable supplier development through supplier evaluation based on sustainability indicators

The chemical industry has growing importance in sustainability because of the potential adverse effects on the environment. Also, stakeholders emphasize many social issues besides environmental protection for the chemical industry. Relying on a solid supplier base has become the main prerequisite for chemical manufacturers to achieve environmental targets and fulfill stakeholders' expectations while remaining competitive. This study develops the Integrated Sustainable Supplier Evaluation & Development Framework (ISSED-F) to support chemical manufacturers with managing supplier relationships according to the economic, environmental, and social facets of sustainability. Although the literature is rife with evaluation models aiming to fulfill the supplier selection tasks, these models mostly ignore the developmental role of supplier evaluation. To remedy this gap, ISSED-F adopts a deductive and holistic approach from setting the criteria to setting the measurement structure, evaluating the suppliers, and developing the suppliers. Materiality analysis, Analytic Network Process (ANP), Preference Ranking Organization Method for Enrichment Evaluation (PROMETHEE), and cluster analysis are the fundamental methods that constitute the ISSED-F structure. A case study presents the use of the ISSED-F in a transnational chemical manufacturer's supplier relationship management (SRM) process. The case company evaluates 69 suppliers and assigns development strategies to the relevant performance segments within the implementation. The successful implementation of ISSED-F shows that it can be a roadmap for chemical manufacturers to adopt sustainability practices and ensure continuous development in their supply chains.

Comparing relationship of quality-satisfaction models: effects of B2B value co-creation

PurposeThis paper addresses both conceptual and empirical value co-creation and relationship quality in a triadic approach for a B2B industrial context by 1) reviewing the relationship quality concept when social and economic satisfaction are addressed separately and 2) testing alternative models of relationship quality and economic satisfaction when value co-creation is introduced.Design/methodology/approachTwo alternative models are developed where relationship quality is conceptualized as a higher-order multi-dimensional construct with three sub-factors: trust, commitment and social satisfaction. Data on the B2B relationship were collected from 77 partaking firms in the Spanish Furniture Market Observatory business panel, covering the manufacturer-retailer and manufacturer-supplier relationships for control and comparison purposes.FindingsUsing PLS-SEM, results reflect that social and economic satisfaction act differently in the B2B relationship. The effect of relationship quality on economic satisfaction is greater when value co-creation is introduced as a mediating variable, although this mediation is partial. Moreover, the mediating effect is greater in the manufacturer-supplier relationship than in the manufacturer-retailer one.Originality/valueThe paper reduces the conceptual gap between value exchanges in B2C and B2B contexts. It also introduces a less-common triadic approach along the supply chain for B2B industrial relationships. Evidence is provided on the importance of social satisfaction as an affective dimension of relationship quality and on the mediating role of value co-creation between relationship quality and economic satisfaction.

Structural model for analysis of key performance indicators for sustainable manufacturer–supplier collaboration: A grey‐decision‐making trial and evaluation laboratory‐based approach

AbstractWith growing competition in the market and dire need for sustainability, it has become imperative for companies to build long‐term relationship with their supply chain partners through sustainable collaboration. Among these, the supplier–manufacturer relationship is crucial for improved organizational, business and sustainable performance. Sustainable collaboration with suppliers involves crucial decision‐making processes such as continuous supplier monitoring and supplier development. Hence, a critical challenge that a company faces is to identify the key performance indicators (KPIs) for assessing the performance of a supplier for sustainable collaboration. In this regard, this study focuses on identification of KPIs for an Indian home appliance company through exhaustive discussions involving multiple decision‐makers. Further, a grey‐based decision‐making trial and evaluation laboratory (DEMATEL) model is proposed in the study for analysing the importance levels among the fifteen KPIs based on multiple stakeholder perspectives. The results of the grey structural model indicate seven KPIs as influencing KPIs and eight KPIs as influenced KPIs. The KPI ‘Information disclosure’ has been identified as the most influential KPI for the evaluation of suppliers for sustainable collaboration. The implications drawn from the result analysis model can provide meaningful insights to managers for identifying strategies towards strengthening the supplier–manufacturer relationship and achieving organizational and market competence.

Joint Sustainability Development in a Supply Chain

ABSTRACTIntense media scrutiny and public backlash stimulate consumers to be conscientious about sustainability issues from the supply chain (SC) perspective. Accordingly, our focus in this article is on joint sustainability issues in a manufacturer–supplier relationship under a contract that possibly shares sustainability‐related costs, when there exists a supplier's potentially deficient sustainability effort. We find that the manufacturer may prefer indirect (i.e., paying a higher component price to its supplier) rather than direct support (i.e., increasing subsidies for a supplier's sustainability expenditures) when consumers are sensitive to the supplier's sustainability. We further find that as consumers' sensitivity to the supplier's sustainability increases, an uncoordinated SC will gradually approach the coordinated SC. This occurs because the increased sensitivity encourages greater cooperation among SC members. Our findings will help establish a better understanding of the joint sustainability development issues in an SC.

Impact of financial risk on supply chains: a manufacturer-supplier relational perspective

This study aims to analyse the manufacturer-supplier relational perspective under the influence of exogenous financial risk. Following corporate finance theory, a multi-objective decision model for supplier selection and order allocation is developed to maximise the total profit of the manufacturer, and minimise the implicit equity stake and financial risk faced by selected suppliers. A two-echelon supply chain is explored under the influence of foreign exchange risk, default risk, market risk and price fluctuation risk, and solved using an NSGA-III algorithm. Three case scenarios are analysed to explore the influence of a set of financial risk on the manufacturer-supplier relationship and the behaviour of suppliers concerning risk profile, both in the short and long-term horizon. The results are analysed from both the manufacturer as well as supplier perspective, and the optimal conditions are discussed under the cascading risk circumstances. The study provides multiple insights into the impact of financial risk on supply chain relationship and will be valuable for dealing with similar uncertain economic environment. The research is likely to be of benefit beyond supply chain managers, like investors and financial risk managers in making informed decisions. The need to focus on systemic risk in supply chains is evident from the study.

The impact of organisational conflict on green supplier integration: the moderating role of governance mechanism

ABSTRACT Although green supplier integration is vital, our understanding of how to govern the conflict in this supplier-manufacturer relationship is still limited. This study explores the impacts of three types of organisational conflict (relationship conflict, task conflict and process conflict) on green supplier integration and the moderating roles of two types of governance mechanisms (i.e. contract control and relational norms). Using survey data collected from 206 Chinese manufacturers, we examine the hypotheses. Our findings indicate that relationship conflict, task conflict and process conflict all have negative impacts on green supplier integration. Furthermore, contract control weakens the negative impact of process conflict on green supplier integration, while relational norms alleviate the negative impacts of relationship conflict and process conflict on green supplier integration. This research provides novel insights for better understanding the organisational conflict governance mechanism in green supplier integration in China.

Joint Sustainability Development in a Supply Chain

Intense media scrutiny and public backlash stimulate consumers to be conscientious about sustainability issues from the supply chain (SC) perspective. Accordingly, our focus in this article is on joint sustainability issues in a manufacturer-supplier relationship under a contract that possibly shares sustainability-related costs, when there exists a supplier's potentially deficient sustainability effort. We found that the manufacturer may prefer indirect (i.e., paying a higher component price to its supplier) rather than direct support (i.e., increasing its share of a supplier's sustainability expenditures) when consumers are sensitive to the supplier’s sustainability. We further found that as consumers’ sensitivity to the supplier’s sustainability increases, an uncoordinated SC will gradually approach the coordinated SC. We concluded that this happens because the increased sensitivity encourages greater cooperation among SC members. Our findings will help establish a better understanding of the joint sustainability development issue in an SC.

Effects of institutional pressures on the governance of food safety in emerging food supply chains: a case of Lebanese food processors

Food safety has become a major development challenge and a key influence on the strategic behavior of food companies. The study seeks to analyze the effect of perceived institutional pressures on the governance of food safety and the effect this may have on food safety performance in emerging food supply chains. The research develops a conceptual framework that links perceived institutional pressures, degree of food manufacturer-supplier relationships, food safety practices, and food safety output. The hypothesized relationships were tested in the Middle Eastern context, where food safety concerns are rising. Accordingly, a survey was carried out to collect data from food quality/safety managers representing 94 food processors across Lebanon. The study finds that perceived institutional pressures have a direct and strong effect on the degree of integration in the agro-food supply chain (i.e., in terms of long-term relationships, strategic information sharing, information technology connection, and logistic integration), and such an integration, in turn, increases the intensity of food safety practices and food safety performance. However, in the absence of strong manufacturer-supplier relationships, perceived institutional pressures do not lead to improved food safety performance. The study suggests that long-term food manufacturer-supplier relationship is necessary if agro-food chain actors are to respond to established regulatory demands, industry practices, and social norms.

Asymmetric information in subcontracting decisions: the effects of the first mover advantage

Purpose of the paper: The article analyses, in an adverse selection set-up, the effects of the first mover advantage in subcontracting decision between a manufacturer and a supplier in the situation of asymmetric information. Methodology: The study proposes a game theory model to analyze a supply chain consisting of a single risk-neutral supplier and a single risk-neutral manufacturer facing a contract definition problem. Results: The model suggests the strategies to obtain a more convenient arrangement for the manufacturer both in screening and signaling framework. Research limitations: The empirical examination with real-life data needs to be expanded and performed in a cross-sector context. Practical implications: The model helps the manufacturer in designing the appropriate arrangement for subcontracting relations and extracting hidden information from the suppliers. Originality of the paper: Our approach provides a comprehensive quantitative analysis of the effects of the first mover advantage in manufacturer-supplier relationships.

Investigating variations in the deep-sea sourcing strategies of car manufacturers: Two case studies of parts consolidation centers in Japan

This paper investigates how two Japanese car manufacturers organize their shipments of auto-parts from suppliers located in Japan to their overseas assembly plants. It reveals that, in addition to the well-known differences such as specific manufacturer-supplier relationships or production strategies, the organization of logistics itself constitutes a basis for persistent variations. Car manufacturers operating at a global scale are facing uncertainties in matching supply and demand, thus increasingly requiring flexibility. This flexibility is notably achieved through varying combinations of local and distant sourcing to respond to changes in market conditions, currency exchange rates, and so on. To limit the costs of distant sourcing, car manufacturers use parts consolidation centers, which are cross-docking facilities where parts are sorted and packed in sea containers depending on their final destination. Findings show that, beyond its generic purpose, the parts consolidation centers play different roles within the logistics organization of the two focal firms. In one case, they are highly integrated within the global production system; in the other, they are simply used as transfer points. These different models of utilization of parts consolidation centers imply significantly different relationships with parts’ suppliers, and point to wider differences in the overall logistics systems.

The mediating effect of satisfaction on trust-commitment and relational outcomes in manufacturer–supplier relationship

PurposeThis study aims to investigate the effect of commitment and trust on satisfaction and sequential effect of satisfaction on relational outcomes (i.e. performance and governance cost) in a manufacturer–supplier relationship. Authors of this paper explore the relationship quality parameters such as trust, commitment and satisfaction and its effect on improving the performance and reducing the governance cost between the partners, as well as the effect of relationship duration on the antecedents and relational outcomes.Design/methodology/approachBased on the conceptual framework developed by authors, hypotheses were formulated, to test the effect of trust and commitment to performance and governance cost through the mediating effect of satisfaction in the manufacturer–supplier relationship. Data were collected from 196 manufacturers from the western part of India, through a structured questionnaire, and collected quantitative data were analyzed through structural equation modeling.FindingsThe analysis of the sample of 196 manufacturers suggests a positive relationship between satisfaction and commitment and between satisfaction and trust. The study suggests that increased satisfaction lowers governance cost as well as suggests a positive relationship between satisfaction and performance in a manufacturer–supplier relationship. As a relationship grows in an early stage, relationship performance improves, and as the relationship matures, the relationship performance diminishes.Practical implicationsFindings suggest that managers in business and industrial markets shall focus on commitment in the relationship rather than just trust that leads to satisfaction. It also suggests that a higher level of satisfaction enhances the performance and reduces the governance cost in a manufacturer–supplier relationship.Originality/valueThis research makes four contributions: first, it enquires the direct impact of trust and commitment to a manufacturer’s satisfaction; second, it investigates the indirect impact of trust on a manufacturer’s satisfaction through commitment in the relationship; third, it investigates the mediating satisfaction between trust-commitment and relationship outcomes (relationship performance and governance cost); fourth, the research shows the impact of relationship duration regarding the relational outcomes and the dimensions of relationship quality into a short-term and long-term relationship. It also uniquely suggests that the presence of commitment has a catalytic effect on satisfaction. Research offers managerial implication to increase the performance and to reduce the governance cost in the relationship.

Leveraging supply chain orientation for global supplier responsiveness

PurposeThe purpose of this paper is to utilize middle-range theorizing to examine whether a US manufacturer can leverage supply chain orientation (SCO) to garner responsiveness from a global supplier. To capture the interplay of macro-level institutional environments, the authors examine the moderating effect of institutional distance on the SCO–supplier responsiveness relationship.Design/methodology/approachPrimary survey data collected from US manufacturers are utilized to measure SCO and supplier responsiveness. Two secondary data sets (EIU and GLOBE) capture formal and informal distance at the institutional level and are used to test the moderating effect of institutional distance.FindingsThe research finds that SCO can facilitate global supplier responsiveness. A post hoc exploratory analysis reveals a three-way interaction, where the SCO–supplier responsiveness relationship is strengthened when formal and informal institutions are either very similar or very different.Research limitations/implicationsThe research offers a more nuanced understanding of manufacturer–supplier relationships in global supply chains by demonstrating how country-level (macro) characteristics can influence firm-level (micro) supply chain phenomena. It extends research on SCO by illustrating how institutional distance interacts with a manufacturer’s ability to leverage SCO to enable supplier responsiveness.Practical implicationsManufacturers should increase their attentiveness to institutional distance. When both formal and informal distances are different (i.e. high distance), SCO can create a powerful lever to improve global supplier responsiveness. Likewise, when formal and informal institutions are similar (i.e. low distance), SCO reinforces joint efforts and collaboration to create additive benefits, whereby suppliers are incentivized to be responsive to unexpected environmental changes.Originality/valueThis research addresses the growing call for more empirical studies that examine how country-level institutions influence firm-level phenomena. It also utilizes secondary data to serve as a proxy for formal and informal institutional distance.

The Influence of Intellectual Property Rights on Poaching in Manufacturing Outsourcing

Manufacturers are often placing their intellectual property (IP) at risk by outsourcing to suppliers in countries with weak IP rights. Thus, understanding how to safeguard their IP from poaching, which is a supplier's unauthorized use of a buyer's proprietary information, is of critical practical importance for manufacturers that outsource to suppliers in countries with weak IP rights. To investigate this phenomenon, we use dyadic data from globally dispersed manufacturer–supplier relationships to examine how the IP rights of a supplier's location affects poaching and how IP rights influence the effectiveness of two transactional characteristics—supplier idiosyncratic investments and media‐rich communication—on poaching. We examine these two transaction characteristics because they are representative of two forms of safeguards which create self‐enforcing agreements that do not require legal enforcement—economic and relational. We find that the strength of IP rights not only has a direct effect on poaching, but it also influences the relationships for both transaction characteristics. Intriguingly, when IP rights are weak, we find that not only are supplier idiosyncratic investments less effective in reducing poaching, but increases in these investments are associated with an increase in poaching. This finding illustrates that the strength of IP rights is a determinant of the degree to which supplier idiosyncratic investments are transaction specific. For suppliers in countries with weak IP rights, media‐rich communication is found to be more effective in reducing poaching. This finding illustrates the importance of manufacturers’ boundary spanners in building relationships with suppliers in countries with weak IP rights.