Sourcing Decisions Research Articles

Lithium from clay: Assessing the environmental impacts of extraction

The burgeoning electric vehicle (EV) sector in the United States (US) is expected to drive up the demand for lithium, a critical element for EV batteries. Lithium-rich clays in the Nevada desert emerge as a prospective US-based domestic source. This study employs Life Cycle Assessment (LCA) to examine the environmental aspects of extracting lithium from this source. Among the two evaluated routes, acid leaching was more energy-efficient (35 MJ/kg LCE (Lithium Carbonate Equivalent) than roasting (200 MJ/kg LCE), based on pilot plant data. When compared to conventional methods like spodumene-based extraction, acid leaching shows reductions across almost every category, with notable decreases in high-magnitude impacts like Global Warming (48 %), Freshwater Ecotoxicity (15 %), and Smog (69 %). Water consumption is the only category that increases, rising by 79 %. Insights from this study on upstream impacts of lithium from clay could help inform sourcing decisions downstream, in the battery and EV sector.

Strategic supply and transportation planning of a supply chain for agricultural biomass to hydrogen and syngas

Strategic supply and transportation planning of agricultural biomass to hydrogen and syngas supply chain with inter-fuel and inter-biomass substitution was studied in this paper. The sourcing and transportation decision was modeled, according to bi-level optimization, where suppliers competed on supply capacity by maximizing their profits at minimum transportation and holding cost. Considering supply chain superstructure, dual biomass suppliers were modeled to supply a biofuel producer who produced two different types of biofuels. The supply planning was combined with transportation planning to minimize total supply chain costs. The results showed that the model was capable of finding optimum purchase and selling prices and production capacity, by maximizing inter-fuel and inter-biomass substitutability. Another key finding was that the proposed model was capable of finding optimum order allocation to both biomass suppliers in such a way that there was an equal profit distribution between suppliers and biofuel producers.

Strategic sourcing decisions: A Swiss bank responding to the dynamics of the core banking system market

This case examines strategic challenges encountered by Berner Kantonalbank (BEKB), a prominent regional Swiss bank. The bank adapts its sourcing decisions related to its core banking system amidst the evolving landscape of the core banking software market. The narrative unfolds against unfulfilled strategic goals in a changing IT industry, revealing the complexities and decisions that shape BEKB’s approach to core banking system sourcing. In 2010, BEKB outsourced its core banking solution to Hewlett Packard (HP). This encompassed the transfer of all employees of its former subsidiary, RTC. RTC had formerly developed and operated BEKB’s core banking solution. The strategic move to outsource aimed to leverage HP’s capabilities for cost-effective core banking system operations. BEKB anticipated enhanced core banking system capabilities at a reduced cost, while HP sought to establish itself in the core banking software market. However, instead of expanding BEKB’s core banking system customer base, clients increasingly migrated to other providers. The evolving circumstances placed BEKB and HP in a mutual dependency, reaching a critical juncture when the bank decided to terminate the contract, which yielded a spectrum of strategic options. The decision taken endured for a few years. Subsequently, another strategic reevaluation was necessary. This case delves into the intricate interplay between sourcing decision and IT software product dynamics, offering perspectives from client and vendor. It sheds fresh light on strategic sourcing decision-making within the evolving landscape of an increasingly complex IT services environment.

Knowledge tensions and decision-making challenges in open innovation: Standardization as a de-biasing mechanism

Complexities in external knowledge evaluation present significant “limits” to open innovation (OI), challenging decision making in the processes of searching, accessing, and using external knowledge for recombination, which are central to the OI paradigm. Grounded in the theory of attitudes, this study investigates the role of standardization in preventing the negative behavioral influence of “not invented here” (NIH) and “not-shared-here” (NSH) attitudes on knowledge search and sourcing decisions by debiasing decisional paths associated with reluctance to adopt OI. Using hurdle model estimations on 600 small-and medium-sized enterprises, the results of the study reveal that NIH and NSH attitudes are the origin of decision-making biases at different stages of OI implementation, where external knowledge is the focus of evaluation. Proactive standardization efforts are shown to be effective in countering the impact of NIH and NSH attitudes on knowledge sourcing decisions and on the intensity of knowledge sourcing, typically leading to bounded search, inward decisions, and anticipated termination of projects. This study provides insights into the influence of standardization efforts specifically addressing challenges related to the evaluation of external knowledge, where the likelihood of failure is higher and associated costs are significant.

Sourcing from risky reverse channels: Insights on pricing and resilience strategies in sustainable supply chains

This study examines the resilience and sustainability of supply chains amid global disruptions, with a particular focus on the essential role of reverse logistics. Through a game-theoretic approach, we explore manufacturer decisions to source from either reliable but expensive raw materials or cost-effective yet riskier recycled or recyclable materials from the reverse logistics channel. Our analysis outlines three primary sourcing strategies: sourcing exclusively from suppliers (SS), sourcing solely through retailer reverse channel (RS), and a balanced dual sourcing (DS) approach. Our findings reveal the economic viability that recycling outsourcing is influenced by market demand and disruption risks. Notably, in scenarios of constrained market potential, the cost advantage of using recycled materials from less reliable reverse logistics channels surpasses the risks associated with supply chain disruptions, suggesting a complex cost-benefit landscape amidst supply uncertainties. Moreover, the stability of suppliers emerges as a pivotal factor in strategic sourcing decisions, underscoring the need to consider both economic efficiencies and supply reliability. The study also evaluates the dynamic competition between manufacturers and retailers, shedding light on how strategic adjustments driven by sustainability and resilience goals can enhance profitability and sustainability. It was found that despite the threat of disruptions, manufacturers benefit more from engaging with risky reverse channels under specific conditions, underscoring the nuanced decision-making required in uncertain supply scenarios. This research advances sustainable supply chain management by highlighting strategic complexities and the need for understanding economic efficiencies and supply stability, offering insights for navigating disruptions and fostering resilient, sustainable supply chains.

Environment found to explain the largest variance in physical and compositional traits in malting barley grain.

Starch is the most abundant constituent (dry weight) in the barley endosperm, followed by protein. Variability of compositional and potentially related physical traits due to genotype and environment can have important implications for the malting and brewing industry. This was the first study to assess the effects of genotype, environment, and their interaction (G × E) on endosperm texture, protein content, and starch traits corresponding to granule size, gelatinization, content, and composition, using a multi-environment variety trial in California, USA. Overall, environment explained the largest variance for all traits (ranging from 23.2% to 76.5%), except the endosperm texture traits wherein the G × E term explained the largest variance (45.0-86.5%). Our unique method to quantify the proportion of fine and coarse milled barley particles using laser diffraction showed a binomial distribution of endosperm texture. The number of small starch granules varied significantly (P-value < 0.05) across genotypes and environments. We observed negative correlations between total protein content and each of enthalpy (-0.70), total starch content (-0.54), and difference between offset and onset gelatinization temperature (-0.52). Furthermore, amylose to amylopectin ratio was positively correlated to volume of small starch granules (0.36). Our findings indicate that environment played a larger role in influencing the majority of starch-related physical and compositional traits. In contrast, variance in endosperm texture was largely explained by G × E. Maltsters would benefit from accounting for environmental contributions in addition to solely genotype when making sourcing decisions, especially with regards to total protein, total starch, enthalpy, and difference between offset and onset gelatinization temperature. © 2024 Society of Chemical Industry.

Digital sourcing: A discussion of agential, semiotic, infrastructural, combinatorial, and economic shifts

For over four decades, a rich body of information systems (IS) sourcing research has examined topics concerning sourcing decisions, governing relationships and performance in various contexts (e.g., outsourcing, multisourcing and offshoring). The last few years have witnessed a significant change in some of the key assumptions in this literature. Organizations and their sourcing practices have been undergoing significant shifts in the digital era, involving not only human but also technology agency (e.g., artificial intelligence), malleable digital assets that can be flexibly recombined (e.g., in platform ecosystems and low-code development), and digital technology that attenuates bounded rationality (e.g., generative artificial intelligence). Such fundamental changes call for the re-examination of such past assumptions in the IS sourcing literature. In this editorial, we discuss the implications of these agential, semiotic, infrastructural, combinatorial, and economic shifts for digital sourcing, that is, research and practice of IS sourcing in the digital era.

Make Vs Buy Analysis In Automobile Industries

The make vs buy analysis is a critical decision-making process that organizations undertake to determine the most efficient and cost-effective approach to procuring goods or services essential to their operations. This explores the intricate interplay between cost, quality, and lead time in shaping sourcing decisions, delving into the multifaceted considerations and complexities involved in the decision-making process. Through a comprehensive examination of cost factors, quality considerations, and lead time dynamics, this study aims to provide actionable insights and practical recommendations for organizations navigating the complexities of strategic sourcing. By adopting a holistic approach to cost analysis, prioritizing quality assurance, and leveraging advanced planning and forecasting techniques, organizations can optimize their supply chain efficiency, enhance their agility in responding to market demands, and drive sustainable growth in an ever-evolving business landscape. This abstract encapsulates the key findings and insights from the thesis, offering a roadmap for organizations seeking to make informed decisions and achieve strategic alignment in their sourcing strategies. Key Words: Cost Analysis, Fixed Costs, Variable Costs, Quality Control, Lead Time, Scalability, Supplier Reliability, Flexibility, Risk Assessment.

Theorizing the governance of direct and indirect transactions in multi‐tier supply chains

AbstractAn outsourcing decision does not equate to the outsourcing of a sourcing decision. Many indirect transactions with lower tier suppliers are embedded in transactions with first‐tier suppliers. Building on the identification of a transaction as the fundamental unit of analysis, this study proposes that transactions comprise bundles of intertwined direct transactions at the firm level and indirect transactions at the supply chain level. These indirect transactions require separate but not independent sourcing decisions. Using a buyer's decision to control or delegate the governance of indirect transactions for an externally sourced product, this study demonstrates that disaggregating the transaction advances theory by extending the range of outcomes, refining the calculus of the make‐or‐buy decision, and providing a coherent theoretical framework for multi‐tier supply chain management. This study considers the theoretical, managerial, and societal implications across various contingencies involving inter‐firm relationships.

Retraction notice: Improving supplier performance and strategic sourcing decisions by integrating jobshop scheduling, inventory management and agile new product development

Retraction notice: Improving supplier performance and strategic sourcing decisions by integrating jobshop scheduling, inventory management and agile new product development

Profound changes in global sourcing? The country of origin theory and its effects on sourcing decisions

PurposeThis study aims to examine decision factors for global sourcing, differentiated into transcontinental and continental sourcing to obtain insight into locational aspects of sourcing decisions and global trends. This study analyzed various country perceptions to reveal their influence on sourcing decisions. The country of origin (COO) theory explains why certain country perceptions and images influence purchasing experts in their selection of suppliers.Design/methodology/approachThis study used a two-study approach. In Study 1, the authors conducted discrete choice card experiments with 71 purchasing experts located in Europe and the USA to examine the importance of essential decision factors for global sourcing. Given the clear evidence that location is a factor in sourcing decisions, in Study 2 the authors investigated purchasers’ perceptions and images of countries, adding country ranking experiments on various perceived characteristics such as quality, price and technology.FindingsStudy 1 provides evidence that the purchasers’ personal relationship with the supplier plays a decisive role in the supplier selection process. While product quality and location impact sourcing decisions, the attraction of the buying company and cultural barriers are less significant. Interestingly, however, these factors seem as important as price to respondents. This implies that a strong relationship with suppliers and good quality products are essential aspects of a reliable and robust supply chain in the post-COVID-19 era. Examining the locational aspect in detail, Study 2 linked the choice card experiments with country ranking experiments. In this study, the authors found that purchasing experts consider that transcontinental countries such as Japan and China offer significant advantages in terms of price and technology. China has enhanced its quality, which is recognizable in the country ranking experiments. Therefore, decisions on global sourcing are not just based on such high-impact factors as price and availability; country perceptions are also influential. Additionally, the significance of the locational aspect could be linked to certain country images of transcontinental suppliers, as the COO theory describes.Originality/valueThe new approach divides global sourcing into transcontinental and European sourcing to evaluate special decision factors and link these factors to the locational aspect of sourcing decisions. To deepen the clear evidence for the locational aspect and investigate the possible influence of country perceptions, the authors applied the COO theory. This approach enabled authors to show the strong influence of country perception on purchasing departments, which is represented by the locational effect. Hence, the success of transcontinental countries relies not only on factors such as their availability but also on the purchasers’ positive perceptions of these countries in terms of technology and price.

Mitigating risky sourcing with a responsible supplier in a competitive environment: the implication of product line design and sourcing diversification

We consider the sourcing decisions of two competing firms with a potential responsibility violation risk from a supplier. There are two consumer segments in the market: socially and nonsocially conscious consumers. When a responsibility violation occurs, the socially conscious consumers will not purchase from any firm who sources from the risky supplier. To avoid this potential demand loss, the two firms can consider sourcing from a responsible but more expensive supplier. We develop game theoretical models to investigate the firms’ optimal sourcing strategies and examine the effects of product line design and sourcing diversification on firms’ incentives to source responsibly. Our study shows that when each firm adopts a single sourcing strategy, as the suppliers’ cost difference increases, both of their sourcing choices deviate from the responsible supplier to the risky supplier. Moreover, we find that when the firm sourcing responsibly can determine whether to extend the product line to offer responsible and conventional products, product line design improves both firms’ profits and induces them to source responsibly. Finally, we find that when each firm can choose between a single and a dual sourcing strategy, sourcing diversification can be potentially detrimental for both firms and prevent them from sourcing responsibly.

Sourcing Decisions With Time-Varying Emergency Order Costs and Production Disruption During Environmental Enforcement Campaigns

This study investigates a retailer's sourcing decisions from two different suppliers (i.e., compliant and substandard suppliers) during environmental enforcement campaigns. The compliant supplier spends more on environmental protection and will supply products stably at a higher price, whereas the substandard supplier is cheaper but less environmentally friendly. Due to environmental issues, the substandard supplier is at risk of production disruption, which makes the supplier partially deliver the order with the quantity related to the disruption time. When the disruption occurs, an emergency ordering opportunity is provided at a cost that increases with the disruption time. We derive optimal order quantities and threshold conditions regarding supplier selection. If the order cost of the substandard supplier (or compliant supplier) is relatively small (or large), the compliant supplier will always be abandoned regardless of the increasing rate of the emergency order cost. Otherwise, the compliant supplier will be selected only if the increasing rate is large. The impacts of loss aversion are also investigated. Loss aversion will inhibit the retailer's willingness to place an emergency order and may increase the retailer's preference for the substandard supplier rather than the compliant supplier. Numerical experiments are conducted based on the sourcing problem of the company Mengniu.

An integrated decision-making process for sustainable supplier selection and order allocation in the automotive industry

A sustainable supplier selection problem can be concisely defined as a classical supplier selection problem that incorporates environmental and social criteria to select and monitor suppliers’ performances, creating the sustainable supplier selection and order allocation (SSS&OA) problem. Finding the optimal order allocation to suppliers in the automotive industry is crucial as it can significantly improve the social, environmental, and economic performance of the whole supply chain. Therefore, this research aims to find an optimal order allocation plan for suppliers using an augmented ε-constraint optimization method in the automotive industry while considering all three dimensions of sustainability. Using a previously established comprehensive framework, this paper has adapted the solution approach of an existing bi-objective order allocation model that was used to make sourcing decisions. The results showed a higher total value of sustainable purchasing is achieved by the augmented ε-constraint optimization method compared to the traditional max-min method.

Covid-19 and the South African pharmaceutical supply chain

This research aimed to identify the key drivers of the pharmaceutical supply chain during the COVID-19 pandemic disruption, focusing on the South African pharmaceutical industry. The study aimed to unveil the dynamic strategies and challenges experienced during the pandemic and suggest recommendations for resilient supply chain operations. The study drew on established supply chain management theories and integrated them with the unique and novel circumstances of the COVID-19 pandemic. It mainly referred to theories regarding pricing, strategic sourcing, ICT usage, product availability, and logistics management contextualised within the pharmaceutical industry. An exploratory research approach was adopted to uncover the five overarching themes that function as pharmaceutical supply chain drivers during the COVID-19 pandemic. Semi-structured interviews were used to acquire the primary data with industry supply chain professionals, supplemented with secondary data from industry reports and relevant literature. The findings revealed that the pricing of medications, strategic sourcing decisions, information and communication technology, the availability of pharmaceutical products, and logistics management played critical roles in the pharmaceutical industry's supply chain during the COVID-19 pandemic. Disruptions caused by the COVID-19 pandemic led to challenges such as price hikes, supply shortages, and logistical complications. The study provides crucial insights into managing supply chain disruptions amid a global health crisis. Implementing dynamic pricing mechanisms, developing resilient sourcing strategies, using ICT effectively, improving inventory management, and enhancing logistics management are recommended for robust supply chain operations. The findings contribute to academia by enriching the existing body of knowledge and offering practical solutions for industry supply chain professionals. The research is original and timely, offering a unique perspective on the South African pharmaceutical industry's supply chain during an unprecedented global health crisis. The results are valuable for academia and industry, shedding light on the adaptive strategies, challenges encountered, and lessons learned from navigating the pharmaceutical supply chain during the COVID-19 pandemic.

National or third-party manufacturer? Sourcing strategy of a dominant platform: Signaling game's perspective

The dominant online platforms (e.g., Amazon and JD) in practice have adopted a strategy of introducing their own store brands as a means to engage in competition with national brands inside consumer markets. However, whether to source store brands from national or third-party manufacturers is still a dilemma for platforms. This paper investigates the online platform's optimal sourcing decision for the store brand when the platform possesses private information about the degree of consumer acceptance of the store brand. This paper develops a signaling game in which the better-informed dominant-platform may reveal its private information through profit margins and highlight the signaling effect of price on the sourcing strategy. Due to the signaling cost, we find that asymmetric information has the potential to inhibit the platform from cooperating with the national manufacturer to produce the store brand. Furthermore, the existence of information asymmetry reduces the profit of the platform with superior information, while simultaneously boosting the profit of the less-informed national manufacturer. Interestingly, our findings reveal that under an asymmetric information setting, a higher level of information asymmetry might negatively impact the platform, which contrasts with the situation when information is symmetric. Consequently, the platform gains more advantages by cooperating with a third-party manufacturer with a moderate level of information asymmetry.

Uncertainty of supply chains: Risk and ambiguity

AbstractMotivated by the recently experienced systemic shocks (the COVID‐19 pandemic and the full‐fledged Russia's war of aggression against Ukraine)—that have created new forms of uncertainties to our supplies—this paper explores the supply chain robustness under risk aversion and ambiguity aversion. We aim to understand the potential consequences of deeply uncertain systemic events on the supply chain resilience and how does the information precision affect individual agents' choices and the chain‐level preparedness to aggregate shocks. Augmenting a parsimonious supply chain model with uncertainty, we analyse the relationship between the upstream sourcing decisions and the supply chain survival probability. Both risk‐averse and ambiguity‐averse individually‐optimising agents' upstream sourcing paths are efficient but can become vulnerable to aggregate shocks. In contrast, a chain‐level coordination of downstream firm sourcing decisions can qualitatively improve the robustness of the entire supply chain compared to the individual decision‐making baseline. Such a robust decision making ensures that in the presence of an aggregate shock—independently of its realisation—part of upstream suppliers will survive and the final goods' supply will be ensured even under the most demanding circumstances. Our results also indicate that an input source diversification extracts a cost in foregone efficiency.

Building construction supply chain resilience under supply and demand uncertainties

This paper presents a multi-product, multi-period construction supply chain model, accounting for supplier capacity and material demand uncertainties. Robust optimisation is adopted to address model uncertainties. Research questions proposed are focused on: i). back-up sourcing and backordering decisions' sensitivity to associated cost factors, and ii). effects of the supply chain inventory system on the overall cost and risk management. The answers to these questions provide valuable insights for enhancing the resilience of construction supply chains and are informative for general contractors. Firstly, the back-up sourcing decision is the most sensitive to back-up suppliers' unit material price and unit transportation fees. Secondly, back-up sourcing and backordering primarily address the supply-side risk. Lastly, while inventory holding can be costly, it effectively mitigates the financial uncertainties resulting from varying project demand. These findings highlight the need for extensive quantitative modelling research on other resilient strategies in the context of construction supply chains.

Analysis of global brands’ green procurement strategy: Co-opetitive local sourcing vs. overseas sourcing under delivery disruption

Recently, black swan events, such as the Covid-19 pandemic and the Russia-Ukraine war, have caused disruptions for the local brand with overseas procurement (BOP) who traditionally purchase remanufactured components globally. This induces the BOP to find a local alternative supplier, although the remanufactured components without supply disruption can be of high price, and the local supplier has a self-branded business. In this paper, we consider a BOP's strategic sourcing decisions from a local supplier with self-branded end products (LSP) who sells remanufactured components. We focus on the BOP's incentives toward such a “co-opetitive” relationship and the LSP's willingness to sell remanufactured components to the BOP. We find that having two suppliers may induce a component price war but the component price will not become too low when the probability of overseas supply disruption is high. Interestingly, we find that the BOP will allocate a low proportion of component purchasing orders to the LSP when it faces a high probability of overseas supply disruption. In contrast, the LSP has the incentive to sell remanufactured components to the BOP when the probability of overseas supply disruption is in a moderate range. If the BOP's remanufactured component quality requirement is high, or the probability of overseas supply disruption is low, the LSP might even have a profit loss when selling components to the BOP.

The impact of the Brexit referendum on UK’s value-added exports: A structural decomposition

This article uses for the first time inter-country input–output data and a structural decomposition method to assess the impact of the 2016 Brexit referendum on the United Kingdom’s value-added exports. We find that final demand explains less than 30% of the 6.9-point decline in the UK’s value-added exports in 2016 (with a market share loss that offset the positive impact of global demand), whereas more than 70% was due to extraordinary changes in input sourcing decisions of the rest of the world. This means that the UK’s value-added exports were structurally affected by the weakening of the linkage effects of providing inputs to the rest of the world, especially to the EU. This article paves the way for further analyses of the structural effects of Brexit and other trade and industrial policies that alter the international allocation of inputs.