OEM Suppliers Research Articles

Impact of just‐in‐time inventory systems on OEM suppliers

PurposeTo analyze the impact of the adoption of just‐in‐time (JIT) production systems by different equipment manufacturers (OEMs) on the inventory profiles of their suppliers.Design/methodology/approachThe research is designed to examine five financial measures of inventory management performance over the years 1994‐2004. Three specific industry sectors where OEMs have adopted and implemented JIT principles are studied. These sectors include the automotive, electronics, and aircraft industries. A one factor analysis of variance is employed to the five hypotheses and Tukey's post‐hoc test is used to interpret statistical pairwise differences between level means.FindingsOverall, the research finds that OEM suppliers in the automotive, electronics, and aircraft sectors have shown mixed results in the impact JIT implementation has had on inventory performance measures.Research limitations/implicationsThe research focuses on three industrial sectors over approximately a ten year time frame that may limit its generalizability.Practical implicationsThe processes that influence the reduction in inventory levels may be in fact more complex and strategic in nature than an OEM adopting a JIT inventory policy. In general, strategic changes within the supplier organization would have to drive process improvements that lead to inventory reductions.Originality/valueThe paper provides focused research in an area that has received little attention in the current literature and is very topical to all academics and business professionals interested or involved in the area of JIT systems.

A METHODOLOGY FOR MODULAR DISCRETE EVENT SIMULATION OF MANUFACTURING SYSTEMS

A modular discrete event simulation methodology is presented. The methodology aims at separating the simulation expert from the actual model building through the use of parametric modules. Recent developments on automated manufacturing systems and discrete event simulation coincide to the methodology, especially for OEM suppliers of automation equipment.

Successful and sustainable business partnerships: How to select the right partners

In more and more industries it becomes true that value creating networks compete against each other with relatively stable relations between suppliers inside the network. Managers all over the world are searching for the most efficient and effective coordinative forms for their relations with OEM's or suppliers within such a value-creating networks. This paper gives a normative guideline to decide if or if not a partnership is the right coordinative form for OEM-supplier relations within a value-creating network. Based on the existing mainly positivistic research in this field, two aspects are highlighted as the main drivers for the suitability of a partnership as a well working governance mechanism for value-creating networks: (i) individualization vs. standardization of the delivered components combined with the potential of the end customers to identify quality differences or not and (ii) the possibilities to allocate the revenues made by the value-creating network on the several ‘partners’ within the network. All aspects were integrated in a decision model for managers to find out if partnership as the coordinative form is really the best choice in a given situation.

Cooperating for supply chain effectiveness: manufacturing strategy for Chinese OEMs

As the world economy has become increasingly integrated, Chinese manufacturers play the role of world factories in the global value networks for many industries. The study examines the role of Chinese OEMs in the global supply chain and how the OEMs can enhance supply chain effectiveness. There is no single best strategy for OEM suppliers. They can choose either to be dedicated OEM service providers or to build their own-brand products. Both can achieve high supply chain effectiveness. However, once the OEM strategy is chosen, the way to manage the supply chain should be different. Dedicated OEM suppliers should emphasise particularly manufacturing flexibility in pursuing supply chain performance. Product modularity has a possibly negative impact on supply chain performance. For both dedicated OEM suppliers and own-brand ones, goal congruence is essential for supply chain performance. Managerial implications for this study are also discussed.

Some developing trends in manufacturer-supplier relationships

An analysis of past developments in the relationship between "supplying" and "supplied" companies leads to the conclusion that "best-in-class" OEMs have initiated a new and more radical evolution of their supply chain. Their key long term objective is the creation of a truly integrated value-adding chain from raw materials to customer, devolving and decentralising investment risk, operational accountability and complexity management to a new hierarchy of managerially, financially and technically more competent suppliers. The competitive impact has been the emergence of extended organisations with distinctive skills in fast innovation, fast realisation and/or fast supply. This has given "time" a certain strategic credence as a measure of efficiency and effectiveness, whilst masking more radical and important organisational developments. The net effect has been an acceleration of the trend towards fewer, but more closely interlinked, direct suppliers and a further relegation of many to secondary or tertiary providers, competing on price/quality ratio alone. Surviving suppliers benefit from a shift of focus from piece-part cost to value-added contribution, increased volumes of bought-out materials and services, and greater contractual security. In Northern Europe at least, supplier requalification would seem well advanced. The present paper attempts to catalogue the needs and identify the critical success factors for future first tier direct OEM suppliers through a consideration of first-hand experience, specific case-studies and industrial sector surveys for mechanical and electro-mechanical enterprises. It is concluded that, to qualify, the new breed of first tier suppliers is obliged to choose whether to develop its technological abilities and "know-how", its manufacturing and assembly skills, or both. Failure to do so would imply relegation to "component supplier" competing on a "lowest cost" basis. The inherent dependency, trust and "open-book" dealing required calls for a difficult cultural shift for Western companies. At least one OEM, faced with strong negative reactions, is evaluating the economic and competitive disadvantage of abandoning a well-advanced supply chain integration strategy.