Risk allocation, supplier development and product innovation in automotive supply chains: a study of Nissan Europe

As new technologies and globalization change the vertical contracting structure of the auto industry, risk allocation in OEM-supplier relationships remain critical to ensure innovation and competitiveness. Developing previous, agency theory based research on the levels and the determinants of risk sharing, this study of Nissan Europe’s supply chain shows that the OEM absorbs more risk (a) the greater the supplier’s environmental uncertainty, (b) the more risk averse the supplier, and (c) the less severe the supplier’s moral hazard. The study also shows that Nissan, though still absorbing risk from their suppliers to a nonnegligible degree, has moved to a more market-based approach to supplier selection and development as a consequence of technological change, the industry globalization and the merger with Renault

Servitization by sector and manufacturers' operational departments: Lessons learned

This concluding chapter summarises the previous chapters by focussing on two questions: (1) Can sector-specific environments explain differences in servitization by sector? (2) What dependencies affect the adaptation of manufacturers' operational departments to servitization? Juxtaposing the findings from the sector chapters suggests that manufacturers in sectors that are shocked by radical innovations in physical products, that serve markets with an oligopolistic customer structure and that have acquired superior knowledge in applying their own products are more likely to change their business models towards offering advanced services. In addition to the ratio of the installed base to annual sales, these three aspects have proved to be relevant for adopting servitization strategies. As the results presented in the departmental chapters indicate, mutual dependencies exist among the various decisions involved in adapting manufacturers' capabilities, processes and structures to servitized business models. Accounting practices, procurement and supplier relationships, research and development, human resource management and - first and foremost -the competitive strategies of manufacturers must be reshaped simultaneously. This final chapter concludes with a discussion of possible future trends regarding servitization in manufacturing industries