The power of alternative suppliers in the automotive industry
- The number of alternative suppliers is widely considered to be the most important source of power in supply chains. It is common knowledge that a buying company benefits from an increasing number of suppliers until a marginalization effect occurs. Consequently, a cost-benefit optimum must exist but has not been analyzed in a sufficiently differentiated manner in the literature. Particularly, research has not taken the variety of product groups, which is reflected by the degree of innovation, into account. Using a two-way analysis of variance, this study identifies the cost-benefit optimum for the number of suppliers and analyzes the moderating role of the degree of innovation. The analysis is based on real automotive business-to-business negotiation data. The results reveal that a cost-benefit optimum is reached at a number of three suppliers at the most. Furthermore, the impact of the number of suppliers is higher for innovative products than for more functional products. Purchasing managers can use the findings to determine theThe number of alternative suppliers is widely considered to be the most important source of power in supply chains. It is common knowledge that a buying company benefits from an increasing number of suppliers until a marginalization effect occurs. Consequently, a cost-benefit optimum must exist but has not been analyzed in a sufficiently differentiated manner in the literature. Particularly, research has not taken the variety of product groups, which is reflected by the degree of innovation, into account. Using a two-way analysis of variance, this study identifies the cost-benefit optimum for the number of suppliers and analyzes the moderating role of the degree of innovation. The analysis is based on real automotive business-to-business negotiation data. The results reveal that a cost-benefit optimum is reached at a number of three suppliers at the most. Furthermore, the impact of the number of suppliers is higher for innovative products than for more functional products. Purchasing managers can use the findings to determine the optimal size of their supplier choice set.…
Author details: | Benjamin HebischORCiDGND, Andreas WildGND, Uta HerbstORCiDGND |
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DOI: | https://doi.org/10.1016/j.indmarman.2021.12.017 |
ISSN: | 0019-8501 |
ISSN: | 1873-2062 |
Title of parent work (English): | Industrial marketing management : the international journal for industrial and high-tech firms |
Subtitle (English): | a matter of innovation? |
Publisher: | Elsevier |
Place of publishing: | New York |
Publication type: | Article |
Language: | English |
Date of first publication: | 2022/04/01 |
Publication year: | 2022 |
Release date: | 2023/03/27 |
Tag: | Automotive industry; Number of alternatives; Purchasing performance; Supply chain relationship |
Volume: | 102 |
Number of pages: | 11 |
First page: | 1 |
Last Page: | 11 |
Organizational units: | Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften |
DDC classification: | 6 Technik, Medizin, angewandte Wissenschaften / 65 Management, Öffentlichkeitsarbeit / 650 Management und unterstützende Tätigkeiten |
Peer review: | Referiert |