Tier Suppliers Research Articles

Assessing the German Act on Corporate Due Diligence Obligations in Supply Chains: a perspective from the smallholder cocoa farmer

This research examines the potential outputs, outcomes, and impacts of the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) on the smallholder cocoa farmers in West Africa. The study primarily relies on a literature review and an impact pathway to conduct a systematic analysis to identify the potential effects of the LkSG on smallholder cocoa farmers. The findings indicate that some, but not all of the risks addressed by the LkSG align with those faced by smallholder cocoa farmers and their families. Additionally, the research also reveals weaknesses, particularly in managing environmental risks, which the LkSG does not adequately cover. Our findings show that in the short- and medium-term, the LkSG has no potential effects on smallholder cocoa farmers. Furthermore, the potential positive impacts of the law on smallholder cocoa farmers will take a long time to realize, as the LkSG considers primarily tier-1 suppliers. Companies in Germany might reassess their supply chains to strive for an LkSG-risk-free supply chain, which could in the long term have sustained impacts on smallholder cocoa farmers. However, we recommend a comprehensive risk analysis of the cocoa supply chain to enhance the human rights of cocoa farmers.

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.

Investigating social sustainability practices in global supply networks: A fuzzy-set qualitative comparative analysis

Given the paucity of research that examines the impact of Social Sustainability Practices (SSP) on performance outcomes, this study investigates the adoption and influence of these practices on firms' and suppliers’ overall performance, whilst also considering the level of complexity of operational environments of global supply networks. A Fuzzy-sets Qualitative Comparative Analysis (FsQCA) approach is adopted, based on eight primary case studies within the food, chemical and textile sectors, with data collected through semi-structured interviews conducted with representatives from each company.The research identified four key categories of SSP: informative, control, collaborative, and supply network redesign practices. The findings offer empirical support for the notion that SSP adoption yields improved performance outcomes for both the firm and its suppliers. These positive effects encompass enhanced firm profitability, increased supplier efficiency, and heightened supplier innovativeness. Nevertheless, the research uncovered that the relationship between adopting SSP and their impact on performance is not always straightforward. In certain instances, a combination of these practices may be necessary to achieve the desired performance level.In addition, a prudent consideration of the operational complexity present in global supply networks is crucial for informed decision-making pertaining to the selection and adoption of the most appropriate SSP. Driving profits in complex operational environments requires integrating both informative and collaborative practices, whilst tight control is necessary to improve supplier efficiency, regardless of the extent of complexity. Collaboration also emerged as a core factor of success in enhancing supplier innovation regarding social sustainability. Decision makers should also collaborate with external entities, particularly Non-Governmental-Organisations (NGOs) and industry associations/peers, to educate suppliers, thus creating an auspicious environment where suppliers are accountable for their own sustainability performance. This research carries significant practical implications. Managers should evaluate diverse combinations of SSP to confront global sustainability challenges through the utilization of customized strategies that can yield enhanced performance results. Expanding sustainability beyond primary suppliers can often be challenging in a global supply networks, given a firm's limited oversight, transparent knowledge and control over lower tier suppliers. Consequently, managers should seek to strengthen controls and oversight within the manageable segments of the supply network, all the while facilitating self-adaptation within the extended supply network with the adoption of informative and collaborative practices that extend reach, homogeneity, and improve overall governance.

Model‐based analysis and specification of functional requirements and tests for complex automotive systems

AbstractThe specification of requirements and tests are crucial activities in automotive development projects. However, due to the increasing complexity of automotive systems, practitioners fail to specify requirements and tests for distributed and evolving systems with complex interactions when following traditional development processes. To address this research gap, we propose a technique that starts with the early identification of validation concerns from a stakeholder perspective, which we use to systematically design tests that drive a scenario‐based modeling and analysis of system requirements. To ensure complete and consistent requirements and test specifications in a form that is required in automotive development projects, we develop a Model‐Based Systems Engineering (MBSE) methodology. This methodology supports system architects and test designers in the collaborative application of our technique and in maintaining a central system model, in order to automatically derive the required specifications. We evaluate our methodology by applying it at KOSTAL (Tier1 supplier) and within student projects as part of the masters program Embedded Systems Engineering. Our study corroborates that our methodology is applicable and improves existing requirements and test specification processes by supporting the integrated and stakeholder‐focused modeling of product and validation systems, where the early definition of stakeholder and validation concerns fosters a problem‐oriented, iterative and test‐driven requirements modeling.

Disruption Risk Analysis of Substitutable Dual Product Supply Chain: A System Dynamics Framework

Uncertain events such as earthquakes, epidemics, and wars have increased the risk of supply chain disruption. Due to the needs of carbon reduction policies and environmental protection, a large number of enterprises have started to produce both traditional and green products. Studying the issue of supply chain disruption for such enterprises has significant practical significance. We have developed a system dynamics model for a substitutable dual product supply chain with two levels of supply sources. Through simulation analysis, we found that (1) supply chain disruption can cause fluctuations in the manufacturer’s inventory, and disruptions from second tier suppliers have a higher impact on the manufacturer’s inventory than that from primary suppliers. In addition, the disruption of traditional products will cause consumers to flow to the green product market, resulting in a sudden increase in order for green products and components in a short period of time, causing a delayed impact on the inventory of suppliers and manufacturers of green products. (2) The disruption of upstream suppliers in traditional products causes the highest profit losses for all traditional product suppliers, while the disruption of downstream suppliers in green products causes the highest profit losses for the manufacturer and all green product suppliers. (3) From the perspective of the service level, compared to other components, the disruption of critical components in traditional products poses the highest risk of out of stock in the supply chain, while the risk of out-of-stock in the intermediate component of green product is the smallest. (4) Common sense may suggest that the more the suppliers disrupt, the higher the damage of the supply chain. However, due to the ripple effect, this article finds that from the perspectives of profit, inventory, and service level, multisupplier disruption is not necessarily inferior to single supplier disruption.

Review of Electrical and Electronic Architectures for Autonomous Vehicles: Topologies, Networking and Simulators

With the rapid development of autonomous vehicles, more and more functions and computing requirements have led to the continuous centralization in the topology of electrical and electronic (E/E) architectures. While certain Tier1 suppliers, such as BOSCH, have previously proposed a serial roadmap for E/E architecture development, implemented since 2015 with significant contributions to the automotive industry, lingering misconceptions and queries persist in actual engineering processes. Notably, there are concerns regarding the perspective of zone-oriented E/E architectures, characterized by zonal concentration, as successors to domain-oriented E/E architectures, known for functional concentration. Addressing these misconceptions and queries, this study introduces a novel parallel roadmap for E/E architecture development, concurrently evaluating domain-oriented and zone-oriented schemes. Furthermore, the study explores hybrid E/E architectures, amalgamating features from both paradigms. To align with the evolution of E/E architectures, networking technologies must adapt correspondingly. The networking mechanisms pivotal in E/E architecture design are comprehensively discussed. Additionally, the study delves into modeling and verification tools pertinent to E/E architecture topologies. In conclusion, the paper outlines existing challenges and unresolved queries in this domain.

The role of visibility in supply chain resiliency: Applying the Nexus supplier index to unveil hidden critical suppliers in deep supply networks

Problem definitionOf the many factors affecting supply chain resiliency, visibility can have a profound effect on critical decisions for improving the readiness, response, and recovery from supply chain disruptions. The visibility of tier-1 suppliers gives only a narrow view of the entire picture. Methodology/resultsThis work expands on applying the Nexus Supplier Index [1] using a data-driven approach that deviates from the traditional analysis. It relies on the network topology, leveraging graph centralities. Data collection started with 40 focal companies representing 24 industries, 14 clusters, different sectors, and sizes, generating $1.7 T in revenue and 2.3 M jobs. We collected ∼16,000 data points covering upstream and downstream supply chains, the most extensive application of the NSI reported in the literature. We calculated different node centralities for the focal companies and all companies in their supply networks to increase supply chain visibility to key worldwide companies. We propose improvements for identifying hidden critical suppliers (HCS) within the network that, when combined, provide visibility of depths up to 11 tiers. Managerial implicationsThis work illustrates the results of a partnership between academia with governmental and non-governmental agencies in a data-driven approach to identify critical suppliers hidden in a US state's leading manufacturers' supply network. From this work, 43 companies were identified as hidden critical suppliers in an initial analysis, of which 35 had no presence in the analyzed state (82%). All of them were contacted for possible future economic development endeavors. It is also important to mention that 15 of the 43 critical suppliers were in semiconductor-related industries (35%). This data was collected in the fall of 2020, before the worldwide semiconductor shortage, illustrating the potential to identify industries with greater supply chain resiliency risk.

Product Recalls and Supply Base Innovation

Problem definition: Suppliers are increasingly involved in innovation activities that contribute to a firm’s product quality and introduce risks to firms’ quality control, leading to quality failures and recalls. This quality trade-off suggests the possibility of a nonlinear relationship between supplier innovation and product recalls, which is the focus of this research. Recall literature focuses on firms’ internal drivers of recalls, whereas anecdotal evidence increasingly points to the role of external drivers, such as suppliers. We contribute to the literature by examining supplier innovation as an external driver leading to recalls via quality and risk spillovers. Methodology/results: We collect and assemble a unique panel data set of consumer product recalls from firms and their supply bases (i.e., first tier suppliers). We estimate econometric models to examine the nonlinear relationship between supply base innovation, measured by research and development (R&D) intensity of the supply bases, and the likelihood of product recalls. We find a quadratic (i.e., U-shaped) relationship between the probability of recalls and supply base R&D intensity. We also find that this nonlinear relationship is critically related to three specific sources of risk: radicalness of supplier innovation, technological distance between firms and their suppliers, and complexity of supply base. Managerial implications: Our findings suggest that firms should be mindful of the quality trade-offs in encouraging supplier innovation to reduce product recalls. Further, to minimize recall risks, firms should better evaluate and manage the risks associated with external supplier knowledge that is novel and different and closely work with global suppliers to reduce coordination challenges in knowledge transfer and integration. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2023.1213 .

Multi-Objective Optimization for Safety-Related Available E/E Architectures Scoping Highly Automated Driving Vehicles

Megatrends such as Highly Automated Driving (HAD) (SAE ≥ Level 3), electrification, and connectivity are reshaping the automotive industry. Together with the new technologies, the business models will also evolve, opening up new possibilities and new fields of competition. To cope with the ongoing advances, new Electric/Electronic (E/E) architecture patterns are emerging in the sector, distributing the vehicle functions across several processing devices and enhancing the connectivity between them via Ethernet-based networks. Upcoming systems will demand Safety-Related Availability (SaRA) requirements in mixed-critical E/E architectures that challenge the concept of freedom from interference defined in ISO 26262. This work explores the concepts of SaRA system development according to ISO 26262, building a framework based on model-based systems engineering to evaluate feasible next-generation automotive E/E architecture designs with a multi-objective analysis. Additionally, we propose a pattern template for SaRA systems to automate the architecture synthesis. To illustrate the framework created, we evaluate a set of automotive E/E architectures synthesized to support mixed-critical vehicle features, including SaRA SAE Level-3 functions, considering the communication networks’ performance as well as hardware and safety-related development costs. This work presents a methodology for original equipment manufacturers and Tier-1 suppliers that enables them to make the trade-offs arising in the design of E/E architectures based on quantified information.

Contextual factors on Toyota Way and Agile Manufacturing: an empirical investigation

This research aims to examine the differences across selected contextual factors on the Toyota Way (TW), agile manufacturing (AM) and their sub-elements. These factors include firm size, nationality of firms, production approaches, IATF 16949 - an international quality management certification in the automotive industry, supplier tiers in supply chains, export levels, and import levels. A survey instrument was developed based on literature, then verified by experts and statistical techniques. ANOVA and independent samples t-test were used to explore the differences across contextual factors of 216 automotive part manufacturers on TW, AM, and their elements. It revealed that there were significant differences across firm size, nationality of firms, and export levels on overall TW, AM and most sub-elements. Insignificant differences across production approaches and IATF 16949 on overall TW, AM and their sub-elements were found. Firms with different contextual factors require different levels of TW, AM and sub-elements. Managers should apply TW and AM elements at suitable levels in accordance with their organizational contexts.This is one of the first studies to empirically investigate the differences across the contextual factors on TW, AM and sub-elements in the same paper from a socio-technical perspective. This study can be used as a basis for further research on integrative practices between lean and agile (leagile) manufacturing.

The configuration and evolution of Korean automotive supply network: an empirical study based on k-core network analysis

This study identified the hierarchical structure of the k-core network and examined how it changed over time by structurally analyzing the Korean automotive supply network. The k-core method is a useful subgroup analysis for identifying key nodes through a pruning process in a large and complex network such as the automotive industry. We used the information of 234 automotive parts suppliers listed in the “Automotive Industry Guide”. The supply network is divided into four subgroups, where at the center is the 4-core group with key nodes, surrounded by the next key group of the 3-core group. Around the 3-core group is the 2-core group, and at the periphery of the network is the 1-core group. Unlike in the traditional supply chain structure, all core groups include 1st, 2nd, and 3rd tier suppliers. In addition, it is confirmed that the k-core structure has a complementary relationship with the tier structure and degree centrality, and considering the three together, the key node could be identified in the network. Finally, an analysis of the evolution of the network revealed that most new suppliers entered the 1-core group, and those in the top k-core group had a higher remaining ratio. The significance of this study is 1) by presenting k-core, a new method to analyze the network structure, 2) confirming the structure and evolution of the actual supply network from a macroscopic perspective, and 3) identifying key suppliers that can directly or indirectly affect the company's performance.

Vertical and horizontal diffusion of labour standards in global supply chains: working hours practices of tier-1 and tier-2 textiles and garment suppliers

This paper explores the diffusion of working hours standards beyond tier-1 suppliers in the garment supply chain. It compares working hours designs and rationales of tier-1 and tier-2 garment suppliers in Jordan and garment and textiles suppliers in Egypt. Building on the idea of crossvergence, the paper extends previous insights on explanatory factors that are rooted in the supply chain and captures global, local, and firm-level rationales. The analysis followed a flexible pattern matching logic and draws on a qualitative multiple-case study encompassing 30 owner-manager interviews, 13 expert interviews, and multiple documents and field observations. Convergence to global standards was found to be higher in tier-1 compared with tier-2 garment firms and differed between the garment and the textiles industry. The study showed that labour standard demands of global buyers dissolve along the supply chain, while the price and lead time squeeze persists or increases. How suppliers navigate the antagonism of labour standard and procurement demands depends upon local level factors and firm resources. A framework of human, intellectual, physical, and financial resources was developed to capture structural differences between higher- and lower-tier suppliers. The findings underscore the need for new procurement strategies of global buyers and tier-1 suppliers, and further investments in multi-stakeholder initiatives that monitor sub-suppliers, support resource development, and address systemic barriers to labour standard compliance.

What drives the economic performance of suppliers in global value chains/global production networks – tier, ownership, size, specialization, or region?

ABSTRACT The paper investigates the economic performance of Czech electro-engineering companies in relation to their tier, ownership, size, level of specialization, and host region in order to scrutinize one of the key assumptions about functional upgrading, namely that lead firms and higher tier suppliers capture more value than lower tier suppliers. This issue has fundamental policy implications, as global value chain (GVC)/global production network (GPN) policy recommendations revolve mainly around two paradigms: to ‘plug-in’ into GVC/GPN and to ‘move-up the chain’, meaning to upgrade functionally. The paper contributes to the GVC/GPN literature by scrutinizing the underinvestigated electro-engineering industry, accounting for variegated levels of specialization of particular companies in the industry, combining sectoral and regional perspectives (i.e. the modes of strategic coupling), and providing disaggregated data for individual companies instead of values aggregated by tiers. The results show large variation in the economic performance of individual companies, yet ownership and tier are the key factors driving economic results. Companies operating outside the production networks performed strongly in terms of profitability, while maintaining the same level of wages as other domestic companies in the electro-engineering industry. Thus, the authors conclude that ‘plug-in’ imperative should be carefully considered within specific industrial and regional contexts.

Resilient agility under the practice-based view

Researchers must understand how agile and resilient practices work together as ‘resilient agility’ in impacting performance and seek empirical support. In this research, a conceptual model of ‘resilient agility’ is proposed using three constructs of operational practices—‘agile-only’, ‘resilient-only’, and ‘shared’ practices –and four constructs of performance: ‘cost’, ‘delivery’, ‘flexibility’, and ‘time to recovery’. The practice bundles are then linked to appropriate performance objectives using the literature and the practice-based view. Finally, the conceptual model was tested using data from a survey of Tier-1 suppliers to auto manufacturers in Iran. Confirmatory factor analysis (CFA) was used for the measurement model and structural equation modelling (SEM) for the structural model to link agility and resilience to performance. The SEM results showed several significant links in the structural model, suggesting how agility and resilience work together to achieve desired performance objectives. Researchers will find this research helpful in building mid-range theory tying practices associated with resilient agility to operational performance.

Partnerships promote innovation in food supply chains

Partnerships promote innovation in food supply chains

The role of a leading company and different tier suppliers in the automotive chain using the example of Volkswagen

The role of a leading company and different tier suppliers in the automotive chain using the example of Volkswagen

A trust transitivity model of small and medium-sized manufacturing enterprises under blockchain-based supply chain finance

Small and medium-sized manufacturing enterprises (SMMEs) have been facing the financing contradiction of “strong demand” and “weak trust” for a long time, and financing constraints are closely related to the production efficiency of manufacturing enterprises. Therefore, how to solve the financing problem has become one of the most concerned issues for the development of SMMEs. After years of development, supply chain finance (SCF) has become an important way of financing for SMMEs. Under the traditional supply chain finance system, Tier 1-supplier in the manufacturing industry chain can make use of the high credit of core enterprises for financing, but the high credit of core enterprises cannot be transmitted to Tier 2 to Tier N-suppliers in the long tail market. In recent years, the innovative development of supply chain finance driven by blockchain technology has played a positive role in overcoming the lack of trust and has spawned a multi-level supply chain finance system. In this context, the paper proposes to establish a trust transitivity model based on the electronic payment voucher (EPV) issued by the blockchain, using the intuitionistic fuzzy set theory, and comprehensively consider direct trust and indirect trust. In trust aggregation, the dynamic weight allocation strategy is introduced to play the role of incentive and punishment for SMMEs. This study aims to provide a new idea for the trust evaluation of SMMEs by building a trust transitivity model, so as to give full play to the value-added and transmission effect of the manufacturing industry chain, and relieve the financing difficulties for SMMEs. Finally, the study further verified the rationality of the model through the analysis of numerical examples.

Probability-based Vendor Selection Model for the Hungarian Automotive Supply Network

The aim of this paper is to investigate the structure of the Hungarian automotive supply network and provide a possible solution that mathematically describes the connections between the interested parties. In the study an approximate model is introduced to determine the links between hubs (car manufacturers), nodes (Tier1 suppliers) and edges, combining probability random graph and scale free network theory. During the simulation some main drivers were applied for selection purposes, such as location, turnover, product profile. As a result of the study a potential tool has been designed to support decision-making.

After a crisis: Operational restart and contingency planning in manufacturing

As the COVID-19 pandemic closed manufacturing plants and disrupted supply chains in early 2020, we looked at how original equipment manufacturers (OEM) and tiers in the automotive industry responded, pivoted and restarted. Contingency plans and restart tasks took centre stage, sometimes coming up short. We found that many downstream tier suppliers lacked contingency plans altogether for managing operational disruptions of the magnitude we faced during the pandemic. We developed the operational restart readiness checklist (ORR checklist) with a focus on contingency planning in the automotive industry. It served as the basis for our work as we developed a survey of restart and recovery activities, created a presentation and webinar and drafted an eBook on the impact and root causes of supply chain disruptions. We identified the resources needed to return to operational stability amid restart challenges. Our ORR checklist offers manufacturers a framework for improving contingency planning. This paper describes our findings and recommendations on operational restart and recovery, and the need for automation and technology.

Spatial patterns and time-accessibility of supplier network of the automotive industry in Slovakia

The article deals with the spatial pattern of the supply network of the automotive industry according to the time-accessibility to four car assembly plants in Slovakia. Empirical results are anchored in the spatial concept of integrated periphery and theoretical framework of the nested structure. We obtained the data after a personal meeting with the General Secretary of the Association of the Automotive Industry in Slovakia. The database contains a list of 313 suppliers of different levels. We assume that with increasing distance from automobile assembly plants and decreasing level of the supply network, the geographical concentration of the supply network will become lower. Our results confirm the assumption that tier-1 suppliers are located closer to assembly plants with higher geographical concentration compared to bottom suppliers‘ levels. On the other hand, these spatial patterns change when we consider a regional production system of the automotive industry that reaches beyond the national territory scale (e.g., KIA) or a launch of a new car assembly plant (JLR) arriving into a developed environment with an existing network of suppliers.