Application of Transaction Cost Economics to Capabilities-based Acquisition: Exploring Single Service vs. Joint Service Programs and Single Systems vs. System-of-Systems

Proceedings Paper (for Acquisition Research Program)The US Department of Defense (DoD) is in the process of radical transformation'' to a national security strategy predicated on joint Service purchases and complex System-of-Systems (SoS) capabilities. This paper contributes to a broader study that eventually needs to be conducted to evaluate the benefits and costs of increased reliance on joint Service SoS programs.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

SUPPLY CHAIN RISK MANAGEMENT IN AUTOMOTIVE INDUSTRY

The automotive industry is one of the world\u27s most important economic sectors in terms of revenue and employment. The automotive supply chain is complex owing to the large number of parts in an automobile, the multiple layers of suppliers to supply those parts, and the coordination of materials, information, and financial flows across the supply chain. Many uncertainties and different natural and man-made disasters have repeatedly stricken and disrupted automotive manufacturers and their supply chains. Managing supply chain risk in a complex environment is always a challenge for the automotive industry. This research first provides a comprehensive literature review of the existing research work on the supply chain risk identification and management, considering, but not limited to, the characteristics of the automotive supply chain, since the literature focusing on automotive supply chain risk management (ASCRM) is limited. The review provides a summary and a classification for the underlying supply chain risk resources in the automotive industry; and state-of-the-art research in the area is discussed, with an emphasis on the quantitative methods and mathematical models currently used. The future research topics in ASCRM are identified. Then two mathematical models are developed in this research, concentrating on supply chain risk management in the automotive industry. The first model is for optimizing manufacturer cooperation in supply chains. OEMs often invest a large amount of money in supplier development to improve suppliers’ capabilities and performance. Allocating the investment optimally among multiple suppliers to minimize risks while maintaining an acceptable level of return becomes a critical issue for manufacturers. This research develops a new non-linear investment return mathematical model for supplier development, which is more applicable in reality. The solutions of this new model can assist supply chain management in deciding investment at different levels in addition to making “yes or no” decisions. The new model is validated and verified using numerical examples. The second model is the optimal contract for new product development with the risk consideration in the automotive industry. More specifically, we investigated how to decide the supplier’s capacity and the manufacturer’s order in the supply contract in order to reduce the risks and maximize their profits when the demand of the new product is highly uncertain. Based on the newsvendor model and Stackelberg game theory, a single period two-stage supply chain model for a product development contract, consisting of a supplier and a manufacturer, is developed. A practical back induction algorithm is conducted to get subgame perfect optimal solutions for the contract model. Extensive model analyses are accomplished for various situations with theoretical results leading to conditions of solution optimality. The model is then applied to a uniform distribution for uncertain demands. Based on a real automotive supply chain case, the numerical experiments and sensitivity analyses are conducted to study the behavior and performance of the proposed model, from which some interesting managerial insights were provided. The proposed solutions provide an effective tool for making the supplier-manufacturer contracts when manufacturers face high uncertain demand. We believe that the quantitative models and solutions studied in this research have great potentials to be applied in automotive and other industries in developing the efficient supply chains involving advanced and emerging technologies

Blockchain for supply chain traceability and anticounterfeiting: the oracles’ enabling role

Blockchain and physical oracles in the Collectible Industry. Supply chain fairness and bargaining power in agriculture supply chain: the blockchain effect. Unlocking the Blockchain Potentials through Oracles: Empirical Evidences on Supply Chain Challenges and Performance

Contribution of offset to defence industrialisation in Indonesia

Offset is compensation given to a buyer country for an arms sale. Initially perceived as ‘necessary evil’ in an imperfect defence market, it now serves dual purposes: a marketing strategy for defence industry and a procurement policy for buyer country to generate add on benefits from arms import. Offsets proliferate, and so are stricter mandatory government policies. Still evaluation of offset has been difficult, mostly done in a country-based setting using anecdotal evidence that result in mixed findings. Following the issuance of mandatory offset policy in Indonesia through Law on Defence Industry in 2012, evaluation of past and current offset practice have become not only relevant but also critical to provide policy feedback. This dissertation provides an empirical examination on how offset has been understood and practised in Indonesia, and its contribution to defence industrialisation. The timeframe chosen is 1988-2014, when countertrade has been used to support the lifecycle of strategic industries: development (1988-1998), survival (1999-2009), and revitalisation (2010-2014). This study derives its validity and reliability from triangulation, comprising secondary data, survey, and case study. Three variables are analysed: technology development through ‘strategic industries’, defence offset, and defence industrialisation. Technology development focuses on how technology policy centred on a strategic industries paradigm and ladder of production to initiate industrialisation push. Defence offset discusses the conceptual and practical aspects of offset in Indonesia, including strategic objectives, regulation and institution frameworksin the defence procurement context, and offset life cycle and financing. Defence industrialisation discusses the impact of offset through employment, skill enhancement, transfer of technology, export promotion, domestic supply chain creation, and R&D. Field works were conducted in three firms representing different industrial sectors: PT DI (aerospace), PT Pal (shipbuilding), and PT Pindad (landsystem). Research findings indicate that, first, offset practice has mostly taken place on an ad hoc basis, with no clear reference to strategic objectives, as well as long-term management and financing- that mirror deficiencies in defence procurement. Second, as result of the deficiencies, offset results have been varied from one firm to another, across the different industrial sectors of aerospace, maritime, as well as ammunition and land system. While offset has a positive impact on skill enhancement and technology transfer, it seldom translates into new employment, supply chain creation, export, or R&D. This study generates the following recommendations. First, Indonesia needs to strengthen the management of offset through pre-offset planning and preparing practical guidelines for offset stakeholders in parallel with human resources to support the programme. This means identification of offset potential in procurement (convergence of long term technology policy and long term defence procurement plan), estimation of offset premium cost, allowing participation of industry in the early stage of the offset cycle, as well as devising methods of evaluating offset. Second, Indonesia needs to formulate strategic objectives for offset that relate closely to the dual purposes of defence modernisation and industry revitalisation. Third, Indonesia must strengthen the technology absorptive capability in industry in order to sustain the benefit of offset