Determinants of supply chain structure

Abstract

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