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Determinants of supply chain structure

By Julian Laurence Coleman

Abstract

This dissertation is a contribution to the study of manufacturing subcontracting, with\ud particular reference to the European Automotive industrial sector. It takes as its central\ud theme, the structure of supply chains - the way in which value addition is split amongst\ud members of the chain. The thesis addresses a central question: What factors determine\ud optimum structure and practice in modem-day industrial supply chains? This devolves\ud into a number of derivative questions to which various parts of the study are addressed.\ud With reference to 24 case study supply chains the investigation first tests whether\ud existing theory can fully explain the changing structures. From the results of these tests a\ud new model is postulated and then further work is carried out to validate the model. It was\ud found that the concentration in existing theory on primarily dyadic relationships meant\ud that when taken alone, current theory was insufficient to explain the changes in supply\ud chain structure in the European automotive industry in the mid to late 1990s. It is felt that\ud the work is novel in that it addresses the whole supply chain, and demonstrates the clear\ud link between the physical structure and other determining success factors. Two methods\ud for recording and systematically comparing both the structure and management practices\ud in supply chains were developed - termed 'Fixed Reference Benchmark' and\ud 'Hierarchical Structure Mapping'. These two models were tested, and used in the\ud comparison of 24 European automotive supply chains. The results of this analysis\ud showed the dominant factors that most heavily influenced the structure of supply chains\ud in the European Automotive Industry to be: Criticality of component (which in turn\ud affects the acceptability of risk), the level, and pace of development of technology for the\ud component or system of the supply chain (which is strongly linked to bargaining power),\ud the desire to reduce the complexity of logistics (which is also linked to acceptability of\ud risk), the desire to reduce the cost of demand fluctuations, and the capital intensity of the\ud production process. \ud It is felt that this study of supply chain structures is valuable in its contribution to new\ud knowledge on three levels. At a theoretical level, it analyses the current theory, exposing\ud gaps and anomalies. At an empirical level it presents contemporary data that in some\ud parts simply substantiates and in others adds to the current theory. On a practical level it\ud aims to present a picture which is of use to practitioners making decisions on the future of\ud individual supply chains

Topics: HD
OAI identifier: oai:wrap.warwick.ac.uk:4232

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  1. (goto name="Progress_in_mutual_development")
  2. (goto name="Progressinmutual development")
  3. (ii) role clarity 65.0 22 point of first involvement(concept)
  4. (ii) role clarity 70.0 23 point of first
  5. (ii) role clarity 95.0 16 point of first involvement(concept)
  6. 0 (ii) role clarity 85.0 point of first
  7. 0 percentage of suppliers turnover 30% Phantom benchmark model BMW - door No. Element Aspect process Variable Rating sub. total
  8. 0 Rm(4)= sub-assembly (number of customers using the resource) 1 -5-1 3 Rrn(5)= final assembly (number of customers using the resource) 1
  9. 1 Side impact Restraint System 1 total 43 phantom benchmark model Variables No. Variable Description Unit Value I a= number of customers contributing to 80% of Suppliers sales
  10. 1001 Phantom Benchmark Model Component-to-component interfaces
  11. 4211 phantom benchmark model Turnover breakdown by customer No. Customer %I cum.
  12. 43 phantom benchmark model Variables No . Variable Description Unit Value I (X= number of customers contributing to 80% of Suppliers sales
  13. 4O ( o= p ercentage of suppliers turnover
  14. 5-- maximum lead time component or system designed by the Supplier Yr.
  15. 50 -D&Ddeleg. Nature of component split: critical: efficiency of work-sharing(meshing rating) 35 (goto name="efficiency_of worksharing") point of first involvement(pre-concept)
  16. 5LRd(6)= product development (number of customers using the resource) manufacturing engineering (number of customers using the resource) total number of customers of relevant plant 11
  17. 8-- maximum lead time component or system designed by the Supplier Yr.
  18. 9 F t otal number of customers of relevant plant 14
  19. 9 total number of customers of relevant plant 11 -- ý4 F ý-percentage of suppliers turnover 1 30%1 phantom Benchmark Model Turnover breakdown by customer No. Customer % Cum.
  20. a b c a b ab C d ab ab Yes No ab C C C d d de abcd FWSQUBUY.
  21. A commercial executive of your company last called on this supplier? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months
  22. A representative of this supplier last called at abCde your premises? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months FWSQUBUY.
  23. a-- number of significant sub-components dictated by
  24. a-- number of significant sub-components dictated by VM I
  25. a= number of significant sub-components dictated by VM
  26. Are there any differences in delivery agreement with this supplier, as against a similar supplier in your own country?
  27. Are you conscious of any trading culture abcde differences when dealing with this supplier any if so, do these relate to (a) expectations of settlement dates? (b) expectations of information? (c) attitude to schedules (d) reaction times (e) other(specify)
  28. As a principle do you believe that Yes No "Co-makership" i. e. the shared responsibility, capital and inventiveness, for creating and supplying your products is a viable strategy?
  29. At what stage of the development process was ab first contact with the supplier(for the supply FWSQLn3UY. DOC Page
  30. (1993). Beyond Partnership: Strategies for Innovation and Lean Supply,
  31. Did this supplier contribute to the design of the component? (a) not at all (b) with minor modifications (c) with significant design input (d) 100% supplier designed
  32. Does the difference in VAT rates and VAT procedures affect your cash flow when trading with this supplier? (a) adversely Yes No Yes No Yes No abcde abc abc de Yes No ab FWSQUBUY.
  33. Does the documentation of this component Yes No show adequate use by the supplier of FMEA or other appropriate analytical techniques?
  34. Does your current sourcing activity change abcd this proportion? (a) towards more global sourcing (b) towards more EC sourcing (c) towards more local sourcing (d) no discernible effect FWSQLn3UY.
  35. Does your relationship with this supplier abC extend to sharing with them your commodity strategy for this component? (a) not at all (b) only where it specifically affects sourcing agreements (c) open book
  36. duration of model life Yr.
  37. (1990). e Core Competence of the Corporation, "
  38. en sys O-p (gotoname='Tinks of commerciaý ýyýk!
  39. Extent of information ( goto name="Extent of information sharing")
  40. Extent of information (gold nameýTxtent of information sharing")
  41. Extent of information (goto name="Extent of information sharing")
  42. Extent of information (goto name="Extent of information sharing") 25 20 sharing
  43. Extent of information (goto name="Extentof information sharing") 50 40 sharing
  44. Extent of information (gotoname="Extentof information snaring") 100 80 sharing
  45. facilities (number of customers using the resource)
  46. facilities (number of customers using the resource) 14
  47. facilities (number of customers using the resource) 3
  48. facilities (number of customers using the resource) i
  49. (1994). From Lean Production to Lean Enterprise, "
  50. g to name="Progress in
  51. Have you ever considered requiring this supplier to set up manufacturing facilities in your own country?
  52. Have you ever discussed the problem of language with this supplier?
  53. Have you required this supplier to maintain stocks in your own country?
  54. How are you addressing the issue of achieving world class performance of this link?
  55. How do you exchange engineering drawings and/or modifications to these? (a) hard copy by post/courier (b) electronic medium by post/courier (c)EDI
  56. How important was the relative value of
  57. How many suppliers supply this part number?
  58. How was the price for this component negotiated? (a) target price set by you (b) target range set by you (c) competitive tender bids set by suppliers
  59. I L_Ll8j Phantom Benchmark Model Variables No. Variable Description Unit Value I a= number of customers contributing to 80% of Suppliers sales
  60. I n/a LLLIJ Phantom benchmark Model Turnover breakdown by customer No. Customer %I cum.
  61. ic= Supplier involvement period (supplier commitment point to volume production)
  62. If any of Q. 48 above applies, which if any abcde would be the most significant factor in preferring an EC supplier to a non-EC supplier
  63. If yes to either Q. 38 or 39, does your policy towards this supplier differ from that towards comparable suppliers from your own nationality?
  64. If yes to Q. 32, in what context? (a) you wished him to improve competence in your language (b) you or he attributed a failure to language (c) you were agreeing a glossary of terms (d) other(specify) abc Yes No Yes No DK Yes No abcd
  65. If yes to Q. 81, does this include the following stages in product development and productive stages? (a) initial concept design (b) pre-volume launch support (c) post-volume problem solving
  66. If yes to Q. 83, are these legally binding Yes No agreements based on a formal mechanism?
  67. If you could change some aspect of this supplies performance, behaviour or attitude what would it be?
  68. If you place other business with this supplier is it (a) other models of this component? (b) other types of this component?
  69. In operating with this supplier has his remoteness from your plant caused difficulties which are important enough for you to consider alternatives?
  70. In operating with this supplier, has his remoteness from your plant ever caused interruption of supply? (a) several times (b) more than once (c) once (d) no
  71. In your view what are the main barriers which remain to be overcome to make this particular link in your supply chain as effective as any other link in the world?
  72. Inner panel I/ I v total= phantom benchmark model MB - Door No . Element Aspect process Variable Rating sub. total
  73. Inner panel total= 41 Phantom benchmark Model Peugeot - Door No. Element Aspect process Variable Rating sub. total
  74. interfaces managed externally to the VM
  75. interfaces managed externally to the VM (NB.
  76. Interior trim panel complete
  77. Interior trim panel complete 1
  78. Is open book costing a significant factor in sourcing with suppliers? (a) crucial (b) an important consideration (c) a marginal influence (d) not a serious factor abcde abcd abcd
  79. Is the price (a) factory gate?
  80. Is the price fixed in (a) your currency? (b) his currency?
  81. Is the supplier interface by (i) each individual function or (ii) a unified team? If (ii), which function in Q. 92 takes the lead?
  82. Is there any difference for this component between makers of your own nation, as against this particular maker, which changes your assessment of this viability? Is so what?
  83. Is your contract with this supplier limited to this part number? Yes No FWSQUBUY.
  84. l (gotoname="Links of commercial systerns")
  85. l( gotoname="Links of cornmercial systems")
  86. ly- w 0 z mý rY m May 95 attachnicnt I
  87. manufacturing (1 7.0 (goto name="supply_points for complete door")
  88. manufacturing 0 12.0 (goto name="supply_poinls_for_complete_ door")
  89. manufacturing 0- 16.0 (gotc, name="supply_points forcomplete door")
  90. manufacturing 0- 16.0 (goto name="suppiy_points_for complete door")
  91. manufacturing 0- 16.0 (gotona me="supply_ points -for-complete door")
  92. manufacturing 0- 16.0 (gotonarne="supply_pointstor complete (ioor)
  93. material processing (number of customers using the resource) -i5 Rm(3)= component manufacture (number of customers using the resource)
  94. maximum lead time component or system designed by the Supplier Yr.
  95. maximum value component or system produced by the Supplier Ecu 102.0
  96. maximum value component or system produced by the Supplier Ecu 150.0
  97. maximum value component or system produced by the Supplier Ecu 53.7
  98. minimum lead time component or system designed by the Supplier Yr.
  99. minimum lead time component or system designed by the Supplier Yr. i-O
  100. minimum value component or system produced by the Supplier
  101. n-- Supplier involvement period (supplier commitment point to volume production)
  102. n/a L_L83J phantom Benchmark Model Variables No. Variable Description Unit Value
  103. n/a L2LJj-l phantom benchmark model Turnover breakdown by customer No. Customer % Cum.
  104. n/a Phantom benchmark model Turnover breakdown by customer No. Customer % Cum.
  105. Nature of Component split: critical: efficiency of work-sharing(meshing rating) 15 (goto name="efficiency of work sharing") point of first involvement(pre-concept)
  106. Nature of Component split: critical: efficiency of work-sharing(meshing rating) 20 (goto name="effciency_of_work sharing") point of first involvement(pre-concept)
  107. Nature of Component split: critical: efficiency of work-sharing(meshing rating) 20 (goto name="efficiency0work sharing") point of first involvement(pre-concept)
  108. Nature of Component split: critical: efficiency of work-sharing(meshing rating) 35 (goto name="efficiencyof work_ sharing") point of first involvement(pre-concept)
  109. Nature of Component split: critical: efficiency of work-sharing(meshing rating) 5 (goto name="efficiency_of worksharing") point of first involvement(pre-concept)
  110. Nominal Contract 1.0 Length percentage of model-life
  111. Nominal Contract 4.0 Length percentage of model-life 7.0 29 Certainty of Business Retention data not available 57
  112. Nominal Contract 7.0 Length percentage of model-life 7.0 50 Certainty of Business Retention data not available 100
  113. non-critical: amount of delegation 1) 95,0 32 efficacy of delegation: (i)
  114. non-critical: amount of delegation 100.0 33 efficacy of delegation: (I) sub-supply 0.0
  115. non-critical: amount of delegation 11 35.0 12 efficacy of delegation: (i) sub-supply 1.0
  116. non-critical: amount of delegation 25.0 81 efficacy of delegation: (i)
  117. non-critical: amount of delegation 35.0 12 efficacy of delegation: (i) sub-supply 1.0
  118. non-critical: amount of delegation 55.0 18 efficacy of delegation: (i) sub-supply 1.0
  119. Not including routine schedules, statements or invoices, the last written communication with this supplier was? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months
  120. number of significant constituent components in the assembly 17
  121. number of significant sub-components dictated by
  122. O= number of direct external suppliers for the complete assembly 12
  123. O= number of direct external suppliers for the complete assembly 16
  124. O= number of direct external suppliers for the complete assembly 7
  125. o=_ I percentage of supplier's turnover 25% Phantom Benchmark Model Turnover breakdown by customer No. Customer % Cum.
  126. of customers contributing to 80% of Suppliers sales
  127. of significant constituent components in the assembly 17
  128. Of your company's bought-in material can you 0EB say approximately the proportions which are V sourced, respectively Own country /other EC / Beyond EC (a) Value C (b) Component part numbers
  129. One of your engineering executives last called on this supplier? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months
  130. (1995). Page 91 131 Bertodo, Roland, -fhe kole of )pliers in Implementing a Strategic Vision, "
  131. phantom Benchmark Model Co rn po nent-to-com pone nt interfaces
  132. phantom benchmark model Component-to-component interfaces
  133. Please indicate which systems of exchanging data exist between your companies (a) hard copy by post or courier (b) fax (c) electronic medium(tape, disk etc. ) by post or courier (d) electronic mail box (e)
  134. project lead time (concept to volume production)
  135. project lead time (pre-concept to volume production)
  136. Pý Supplier share of development
  137. q/= duration of model life
  138. ql= duration of model life
  139. Rd 6)= manufacturing engineering (number of customers using the resource) 14
  140. Rd(3)= prototype manufacture (number of customers using the resource)
  141. Rd(3)= prototype manufacture (number of customers using the resource) 14
  142. Rd(3)= prototype manufacture (number of customers using the resource) 8
  143. Rd(3)= prototype manufacture (number of customers using the resource) II
  144. Rd(4)= t esting (number of customers using the resource) 14
  145. Rd(4)= testing (number of customers using the resource)
  146. Rd(4)= testing (number of customers using the resource) 14
  147. Rd(4)= testing (number of customers using the resource) 8
  148. Rd(5)= product development (number of customers using the resource)
  149. Rd(5)= product development (number of customers using the resource) 1 d(6)= manufacturing engineering (number of customers using the resource) 4 I total number of customers of relevant plant 8
  150. Rd(5)= product development (number of customers using the resource) 14
  151. Rd(6)= manufacturing engineering (number of customers using the resource)
  152. Rd(6)= manufacturing engineering (number of customers using the resource) 14
  153. Rd(l)= advanced R&D (number customers using the resource)
  154. Rd(l)= advanced R&D (number of customers using the resource)
  155. Rd(l)= advanced R&D (number of customers using the resource) 14
  156. Rd(l)= advanced R&D (number of customers using the resource) 8
  157. Rd(l)= advanced R&D (number of customers using the resource) ill
  158. (1995). Re-positioning the Supplier: An SME Perspective, " accepted for publication, International journal of Production Planning and Control, Special Issue on Supply Chain Management,
  159. Rm(2)= material processing (number of customers using the resource)
  160. Rm(2)= material processing (number of customers using the resource) '
  161. Rm(2)= material processing (number of customers using the resource) 11 T9 Rm(3)= component manufacture (number of customers using the resource)
  162. Rm(2)= material processing (number of customers using the resource) 8 Rm(3)= component manufacture (number of customers using the resource) 8 To- Rm(4)= sub-assembly (number of customers using the resource) 1
  163. Rm(3)= component manufacture (number of customers using the resource) 14
  164. Rm(4)= sub-assembly (number of customers using the resource)
  165. Rm(5)= final assembly (number of customers using the resource) -72 Rm(6)= despatch (number of customers using the resource)
  166. Rm(5)= final assembly (number of customers using the resource) 1 _T2 Rm(6)= despatch (number of customers using the resource) 8
  167. Rm(6)= despatch (number of customers using the resource) 14 F Rd(l)= advanced R&D (number of customers using the resource) 14
  168. Rm(l)= in-bound logistics (number of customers using the resource)
  169. Rm(l)= in-bound logistics (number of customers using the resource) 14
  170. Rm(l)= in-bound logistics (number of customers using the resource) 8
  171. Rrn(2)= material processing (number of customers using the resource) 14
  172. Rrn(5)= final assembly (number of customers using the resource) Rm(6)= despatch (number of customers using the resource)
  173. share of development
  174. share of development %
  175. Side Impact Restraint System total = 43 1 Phantom benchmark model Variables No. Variable Description Uni t Value I a-- number of customers contributing to 80% of Suppliers sales
  176. Side Impact Restraint System total 43 C om pone nt-to-com ponent interfaces managed externally to the VM
  177. Side Impact Restraint System total z 43 1 Phantom benchmark Model Variables No . Variable Description Unit Value I a= number of customers contributing to 80% of Suppliers sales
  178. Since operating with this supplier, has it been found that difference in language causes any problems? (a)significant miscarriage of important information (b) noticeable delays/re-transmission (c) no effect at all
  179. Since the sourcing decision was made, has currency fluctuation caused a re-appraisal of similar sourcing decisions in the future? (a) positively Yes (b) very probably (c) possibly (d) No
  180. Specificity of Resource Allocation manufacturing Rm= 36 26 (gotoname="Manufacturing process specificity") development
  181. Supplier involvement period (supplier commitment point to volume production)
  182. (1993). Supply iain Re-engineering for Improved Venclorfailer Performance, " Annual Conference oceedings, Oak Brook, IL: Council of gistics Management,
  183. T-- total number of significant sub-components
  184. T= total number of significant sub-components
  185. the 1993 single market conditions improved the ease of trading with this supplier in your view?
  186. The last formal progress meeting with this supplier was? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months
  187. The last monitoring report on this supplier in abcde your possession is dated: (a) within the last month (b) I to 3 months ago (c) 3 to 6 months ago (d) 6 to 12 months ago (e) more than 12 months ago
  188. The last time anything this supplier provided abcde was sent back or had to be re-worked was? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months
  189. The last time this supplier reminded you that payment was overdue was? (a) within the last week abcde abcde abcde abcde abcde abcde FWSQUBUY.
  190. The last time this supplier suggested some abcde improvement/amendment to the product was? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months
  191. The last time you disputed an invoice from this supplier was? (a) within the last week (b) within the last month (c) within the last 3 months (d) within the last 6 months (e) longer ago than 6 months
  192. this supplier any arrangements in place to teach his key staff your language? (DK = Don't Know)
  193. this supplier suggested an improved use abcde of material(i. e. change of specification or method of economy)? (a) during the last 3 months (b) during the last year (c) during the last 2 years (d) long ago (e) never
  194. Tiered s/b Dedication 6.0 19 Demarcation fý-
  195. To initiate the development of the component at the suppliers, were your specifications (a) functional (b) detailed (c) fully detailed (d) other
  196. To what extent are your long term marketing and/or manufacturing strategies shared with this suppliers? (a) not at all (b) formally presented (c) open book
  197. To what extent does this suppliers share their cd long term business plans and strategies? a) not at all (b) formally presented (c) open book FWSQUBUY.
  198. to what extent is your commodity strategy linked to your company's long term marketing/manufacturing strategies? (a) not at all (b) not directly (c) influenced by (d) heavily affected how is it linked?
  199. total number of customers of relevant plant 14 ýO 0 F percentage of suppliers turnover 15% phantom Benchmark Model Renault - Door No. Element Aspect process Variable Rating sub. total
  200. total number of significant sub-components
  201. total number of significant sub-components In
  202. total number of significant sub-components in component 1
  203. total possible interfaces (NB.
  204. U= role clarity
  205. VM project lead time (concept to volume production)
  206. VM project lead time (pre-concept to volume production)
  207. W= duration of model life Yr. 7.0 _ 27 Rm(l)= in-bound logistics (number of customers using the resource)
  208. W= duration of model life Yr. 7.0 -77 Rrn(l)= in-bound logistics (number of customers using the resource)
  209. Was the interaction between you and the supplier during negotiations for this abc Yes No i ii I ii i ii Yes No abc abcd abc FWSQUBUY.
  210. Were the difficulties in Q. 36 (a) time consumed in visits? (b) cost of visiting? (c) difficulties of transport? abcd Yes No abc FWSQUBUY.
  211. What is the duration of the contract with this supplier? (a) open ended (b) to the end of the life of this model (c) one year (d) more than one year(specify)
  212. What is your benchmark?
  213. What proportion of your total take of this part is made by this supplier? (a) <30% (b) 30-60% (b) 60<100% (d)
  214. What was the main drive in selecting this supplier(quality capability being a &quot;given&quot;) (a) previous satisfactory relationship (b) some design/process advantage (c) available capacity (d) promptness of response (e)
  215. When negotiating price do you and the supplier allow exchange rates to influence the deal? For example have you ever quoted exchange rates as a reason for price reduction? Has this supplier ever pleaded exchange rates as a reason for price adjustment?
  216. When the sourcing decision was made, did the difference in language between the companies have an effect? (a) a significant retarder (b) a marginal inconvenience (c) no effect whatsoever abc ab Yes No abc Yes No Yes No Yes No abc d FWSQUBUY.
  217. When you last agreed a component design abCd with this supplier what was the delay before they had the manufacturing capability available? (a) less than 2 weeks (b) less than a month (c) 1-3 months (d) more than 3 months
  218. When you select a supplier, does his proximity abc to your plant influence your decision? (a) heavily (b) marginally (c) not at all
  219. Which of the following functions has an ongoing scheduling/ordering/improving responsibilities relating to this component? (a) Purchasing (b) Logistics (c) Design/Development (d) Manufacturing
  220. Would you describe your relationship with this supplier by any of the following words? (a) partnership (b) preferred supplier (c) established supplier (d) None of the above
  221. Would you use this supplier again?
  222. X-- nominal contract length
  223. X= interfaces managed externally to the VM (NB.
  224. X= nominal contract length
  225. X= nominal contract length Yr.
  226. you believe that a fixed exchange rate or single currency would materially affect your sourcing decisions?
  227. you buy currency forward?
  228. you find this company capable of and willing to design vehicle systems comprising more than one component? abcdef abCd abcd i ii a b c d a b c d a b c d Yes No FWSQUBUY-DOC
  229. you operate a plan to use third party Yes No accreditation, such as IS09000 through an approved agency, as a method of assessing supplier quality?
  230. you operate a rate of exchange/currency abc Yes No FWSQLJ13UY.
  231. you receive guest engineer support on this Yes No product?
  232. you see any of the following as difficulties in creating the delivery arrangements you desire with suppliers in other EC countries? (a) distance (b) communication methods (c) organisational culture (d)language (e) differences in trading contracts
  233. your company any arrangements in place to teach key staff the language of this supplier?
  234. your organisation learned any useful abc lessons? (a) directly from this supplier (b) as a result of trading with this supplier (c) not in the context of this supplier

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