The Impact of Digital Technologies on IT Sourcing Strategies in the German Automotive Industry

For decades, the German automotive industry has benefitted from a process of IT-enabled transformation with the ongoing deployment of state-of-the-art IT. Despite the high relevance of IT for innovation and process efficiency, the industry has outsourced up to 80% of the IT budget to external IT providers as IT has generally not been seen as a core competence. In recent years, the phenomenon of digital transformation has emerged, along with the consequent disruptive impacts associated with digital technology deployment. One area of significance in the corporate environment is the current and potential impact of digital transformation on future IT sourcing strategies. Through an analysis of existing literature and a series of in-depth interviews with industry experts, the chapter examines how and why the German automotive industry is reviewing IT sourcing strategies in response to the anticipated implications of digital transformation. A change in the ratio between outsourcing and insourcing has a significant impact on in-house employment and third-party business operations.

Dynamic sourcing strategies for supply disruptions under consumer stockpiling

This paper considers a make-to-order system where production gets disrupted due to a random supply failure. To avoid potential stock-out risk and responding price increase during disruption, customers might decide to stockpile extra units for future consumption. We investigate the contingent sourcing strategy for the manufacturer to cope with the disruption. To this end, we first discuss the optimal post-disruption stockpiling decision for customers. In view of expected disruption duration, price rise, and inventory holding cost, three types of stockpiling behavior are analytically provided for the customers: non-stockpiling, gradual stockpiling, and instantaneous stockpiling. Next, a model is formulated to optimize the joint decision of contingent sourcing time and quantity, with the objective of maximizing profit expectation. Finally, by conducting numerical analysis, we generate further insights into the role of relative factors and provide specific managerial suggestions on how to adapt dynamic contingent sourcing strategies to alleviate different disruptions, under different market environments and customer behaviors.

The fringe or national brand manufacturer? An analysis of private label sourcing strategy

Purpose Private labels (PLs) have flowed into a wide range of categories and continue to expand especially in the mass channel. This paper aims to investigate the optimal PL sourcing strategy for a retailer and the impact of different sourcing strategies on the interaction between the upstream national brand (NB) manufacturer and the downstream retailer in a dyadic supply chain. Design/methodology/approach The authors develop a game-theoretic model that allows for vertical differentiation, where a retailer may choose between two types of PL sourcing strategies, i.e. fringe and NB manufacturer sourcing (NBMS). Under fringe manufacturer sourcing, the procurement cost is low but the PL recognition is also low. There exists a group of loyal consumers who only choose the NB. Under NBMS, the procurement cost is high but the loyal consumers may switch between two products. The channel members engage in a three-stage sequential game and the authors analyze the subgame perfect equilibrium by comparing the retailer’s best profits in the two subgames, i.e. fringe and NBMS. Findings The model shows that the retailer inclines to source from the NB manufacturer if the size of the loyal consumer group is relatively large, which provides a rationale for the existence of NBMS. It is also shown that the NB quality plays a positive role on NBMS. As the NB quality becomes higher, the retailer is more likely to procure the PL from the NB manufacturer instead of the fringe manufacturer. In addition, both channel members can be better off and more consumer surplus is provided by expanding the market under NBMS. Overall, sourcing from the NB manufacturer may improve channel profit, consumer welfare and social welfare. Originality/value The research contributes to explaining why the practice of sourcing PLs from NB manufacturers is widely adopted by retailers and can help retailers to make appropriate PL sourcing strategies under various circumstances.

A New Approach to Quantifying Raw Material Selectivity in the African Acheulean: Perspectives from Angola and South Africa

In southern Africa, the use of gravel outcrops has been recorded at a range of Earlier Stone Age sites, and this raises questions about the diversity of raw material sourcing practices adopted by hominins. To assess the existence of sourcing strategies, this study details a new morphometric analysis method that investigates the influence of pebble and cobble shape at two Acheulean case-study sites: Dungo IV (Benguela Province, Angola) and Penhill Farm (Eastern Cape Province, South Africa). Since these assemblages present frequent pebble and cobble artefacts, we investigate these to identify raw material blank properties to then establish whether these properties were intentionally selected for. To do so, we analyse each archaeological sample separately via a technological and morphometrical approach and then compare them with geological samples obtained during fieldwork survey. Overall, these two case studies provide some illustration of variable selection strategies within the southern African coastal plain.

Production Support in the Arctic: a Strategic Approach

The Arctic reserves of hydrocarbons play an important geostrategic and economic role for many states, whose energy security will rely on this region in the nearest decades. The development of hydrocarbon deposits in extreme conditions requires unique scientific and industrial solutions, as well as new sourcing strategies for attracting vehicles that can operate at low temperatures. Mineral production in the Polar regions is a complex technological, transport, and logistical task. As a result, each industrial production project needs a highly efficient and complex system of supporting projects, which involve naval aviation, marine fleet, integrated support bases, etc. In addition to solving technical problems, this production support system should comply with the highest standards of environmental and industrial safety, generating no adverse impact on the sensitive ecosystem of the Russian Arctic and adjacent marine territories.

The Nutritious Supply Chain: Optimizing Humanitarian Food Assistance

The World Food Programme (WFP) is the largest humanitarian agency fighting hunger worldwide, reaching approximately 90 million people with food assistance across 80 countries each year. To deal with the operational complexities inherent in its mandate, WFP has been developing tools to assist its decision makers with integrating supply chain decisions across departments and functional areas. This paper describes a mixed integer linear programming model that simultaneously optimizes the food basket to be delivered, the sourcing plan, the delivery plan, and the transfer modality of a long-term recovery operation for each month in a predefined time horizon. By connecting traditional supply chain elements to nutritional objectives, we are able to make significant breakthroughs in the operational excellence of WFP’s most complex operations. We show three examples of how the optimization model is used to support operations: (1) to reduce the operational costs in Iraq by 12% without compromising the nutritional value supplied, (2) to manage the scaling-up of the Yemen operation from three to six million beneficiaries, and (3) to identify sourcing strategies during the El Niño drought of 2016.

Recovering Global Supply Chains from Sourcing Interruptions: The Role of Sourcing Strategy

Problem definition: Fast recovery from sourcing interruptions is a key objective for global supply chains and for business continuity professionals. In this paper, we study the impact of different supply chain strategies—supplier diversification and the use of long-term relationships—on the ability of a supply chain to recover from sourcing interruptions. Academic/practical relevance: Improving supply chains’ recovery ability has been an important focus area for both practitioners and academics. Collectively, available anecdotal evidence and theoretical analyses provide ambiguous recommendations driven by competing effects of different sourcing strategies. Our paper provides the first rigorous and large-scale empirical evidence relating the use of different supply chain strategies to the ability of a supply chain to recover from supply interruptions. Methodology: We develop a compound estimator of a supply chain’s recovery rate that can be constructed using limited available data (only the time series of firms’ actual sourcing behavior). Using more than two and half million import manifests, we extract firms’ maritime sourcing transactions and use this data to estimate recovery rates of different firm-category supply chains of publicly traded U.S. firms. Results: We find that supplier diversification is associated with slower recovery from sourcing interruptions, whereas the use of long-term relationships is associated with faster recovery. A one standard deviation decrease in the former is associated with a 16% faster recovery, and a like increase in the latter is associated with a 20% faster recovery. Managerial implications: Our paper brings important empirical evidence to the hitherto theoretical debate on the impact of sourcing strategies on faster recovery in supply chains. We therefore provide actionable advice on supply chain design for faster recovery.