Choosing between single and multiple sourcing based on supplier default risk: A real options approach

The selection of a given purchasing strategy is a central activity in risky environments. Single sourcing, a powerful approach in a stable environment, can amplify a firm's exposure to risk (e.g., supplier's default) in the presence of uncertainty. Multiple sourcing, however, presents higher costs due to the management of more than one supplier. A correct evaluation from a risk management perspective is needed. This paper proposes the Real Options approach for valuing the probabilistic benefits of multiple sourcing in managing the supplier default risk (to be compared with the related higher costs). A computational model, based on the Monte Carlo simulation, was developed. The results show the (probabilistic) advantages of adopting the multiple sourcing strategy in risky environments for a specific case. The proposed sensitivity analysis is aimed at identifying the impact of the most important transactional parameters on the differential benefits of the two sourcing strategies. Thus, the model and its managerial implications represent a valid support for the decision-making process in the presence of uncertainty.     

Simulation decomposition for environmental sustainability: Enhanced decision-making in carbon footprint analysis

Environmental sustainability problems frequently require the need for decision-making in situations containing considerable uncertainty. Monte Carlo simulation methods have been used in a wide array of environmental planning settings to incorporate these uncertain features. Simulation-generated outputs are commonly displayed as probability distributions. Recently simulation decomposition (SD) has enhanced the visualization of the cause-effect relationships of multi-variable combinations of inputs on the corresponding simulated outputs. SD partitions sub-distributions of the Monte Carlo outputs by pre-classifying selected input variables into states, grouping combinations of these states into scenarios, and then collecting simulated outputs attributable to each multi-variable input scenario. Since it is a straightforward task to visually project the contribution of the subdivided scenarios onto the overall output, SD can illuminate previously unidentified connections between the multi-variable combinations of inputs on the outputs. SD is generalizable to any Monte Carlo method with negligible additional computational overhead and, therefore, can be readily extended into most environmental analyses that use simulation models. This study demonstrates the efficacy of SD for environmental sustainability decision-making on a carbon footprint analysis case for wooden pallets.     

Structural model for analysis of key performance indicators for sustainable manufacturer–supplier collaboration: A grey-decision-making trial and evaluation laboratory-based approach

With growing competition in the market and dire need for sustainability, it has become imperative for companies to build long-term relationship with their supply chain partners through sustainable collaboration. Among these, the supplier–manufacturer relationship is crucial for improved organizational, business and sustainable performance. Sustainable collaboration with suppliers involves crucial decision-making processes such as continuous supplier monitoring and supplier development. Hence, a critical challenge that a company faces is to identify the key performance indicators (KPIs) for assessing the performance of a supplier for sustainable collaboration. In this regard, this study focuses on identification of KPIs for an Indian home appliance company through exhaustive discussions involving multiple decision-makers. Further, a grey-based decision-making trial and evaluation laboratory (DEMATEL) model is proposed in the study for analysing the importance levels among the fifteen KPIs based on multiple stakeholder perspectives. The results of the grey structural model indicate seven KPIs as influencing KPIs and eight KPIs as influenced KPIs. The KPI ‘Information disclosure’ has been identified as the most influential KPI for the evaluation of suppliers for sustainable collaboration. The implications drawn from the result analysis model can provide meaningful insights to managers for identifying strategies towards strengthening the supplier–manufacturer relationship and achieving organizational and market competence.     

Individual modes and patterns of rational and intuitive decision-making by purchasing managers

This study extends the literature on decision modes in purchasing. While decision modes have traditionally been divided broadly into rational and intuitive processing modes (dual-process approach), following the tenet of recent psychology research, we further differentiate the latter into experience-based and emotional processing (multiple systems approach). Previous decision-making research has been inconsistent in its findings about the relationship between decision modes and performance. Using the purchasing manager's supplier selection decision process as our unit of analysis, we first investigate the relationship between individual decision modes and the financial and non-financial performance of the selected supplier. Hierarchical regression analyses indicate that rational processing is positively related to both financial and non-financial performance, while emotional processing is negatively related to financial performance, and the interaction of rational and emotional processing is positively related to both performance outcomes. Because recent cognitive psychology assumes that some combination of rationality and intuition is commonly used, we then apply a configuration approach and develop a taxonomy of decision-making modes surrounding supplier selection. Cluster analysis results show five decision-making patterns that are related to the performance of the selected supplier.     

The impact of stakeholder orientation on sustainability and cost prevalence in supplier selection decisions

The stakeholder approach has taken a prominent role in the discussion of sustainability measures at varying strategic levels and corporate functions. Literature on sustainability suggests that firms have to cope with enhanced pressure from different stakeholder groups regarding their upstream supply management practices. At the same time purchasing managers face the trade-off between sustainability and cost prevalence in selecting new suppliers. Thus, it is of major concern for companies in general and purchasing organizations in particular to know and understand how purchasing managers react to the influence of specific stakeholder groups when it comes to supplier selection decisions. Following this notion we formulate six sets of hypotheses linking the adoption of ethical business culture to the prevalence of sustainability and cost criteria in supplier selection decisions to be tested in a path analytical model.Based on the results of an empirical study conducted with purchasing managers from multi-national firms located in Germany, this paper makes two major contributions: first, it sheds light on direct effects of shareholder, public, and customer orientation on the evaluation of the outlined-trade off; second, it investigates the indirect effects by introducing the formalization of ethical culture as a mediating variable to assess the impact of the three kinds of shareholder orientation on the propensity to select suppliers based on their performance in terms of social and environmental criteria as well as cost performance.     

Assessment of alternative railway systems for sustainable transportation using an integrated IRN SWARA and IRN CoCoSo model

The long-term sustainability of the railway transportation system is determined by a set of criteria that must be considered. For this reason, multi-criteria decision-making (MCDM) techniques have been used because of their high possibility of providing complementary instruments with successful flexibility. Keeping this in mind, we developed a multi-criteria method to conduct an assessment of currently operational railway systems in West Africa for sustainable transportation based on the examination of key challenges affecting the railway system. This study presents the interval rough step-wise weight assessment ratio analysis-combined compromise solution (IR-SWARA-CoCoSo) model. We have adapted the model to group decision-making by incorporating a new technique for dealing with ambiguity and the utilization of interval rough numbers (IRNs). To evaluate the importance coefficients of criteria in the group decision-making procedure, a new interval rough SWARA method has been introduced as an improvement to handle the issues related to MCDM. For the evaluation of the railway transportation system for sustainable transportation, a novel interval rough CoCoSo method was used. According to the findings, information systems is the most critical challenge to the railway transportation system, while the railway system in Nigeria is the best among others. The results were validated in two stages of sensitivity analysis: a comparison with different interval rough approaches, and the calculation of Spearman's correlation coefficient and WS coefficient for all ranks in the comparative analysis.     

基于区间型不确定多属性决策的地下储气库设计方案优选

地下储气库的设计方案涉及因素多,必须对方案从整体上进行综合评价,建立正确的决策模型,从而客观合理确定优选方案。结合地下储气库设计方案优选的多属性、不确定性和群决策等特征,运用层次分析法赋予指标权重,并构建了地下储气库设计方案优选的区间型不确定多属性决策模型。实例表明,该方法切实可行,操作简便,为地下储气库设计方案优选提供了新的思路。     

Rational and intuitive decision-making in sourcing teams: Effects on decision outcomes

According to dual process theory, individual decision-making can be based on rational procedures and experience-based intuition, and the decision-making approach can influence decision outcomes. We investigate how the application of rational procedures and experience-based intuition affects the outcomes of supplier selection decisions taken by cross-functional sourcing teams. Specifically, we examine whether the selected supplier׳s cost and quality/delivery/innovativeness performance is higher when more team members use a highly rational and/or a highly experience-based decision-making approach. From data on 54 teams, we find that the use of rational procedures enhances cost performance. Conversely, when sourcing team members use their experience-based intuition, the decision is more likely to result in satisfactory supplier performance along all tested performance dimensions.     

灰色系统理论在大型基础设施决策中的应用研究

文章分析了影响大型基础设施决策的因素，通过对灰局势决策理论的研究建立了大型基础设施的决策模型。并进行了实证研究，提供了灰色系统理论在大型基础设施决策中的应用方法。     

基于群决策的供应商选择方法研究

针对供应链管理下的供应商选择问题,给出了一种多属性群决策方法。在采用主观赋权法确定专家权重和客观赋权法确定属性权重基础上,引入专家权重客观调整方法,使决策结果更合理。最后以算例说明该方法可行性和有效性。     

群体决策复合准则在供应商选择中的应用

供应商多属性的本质是供应商选择问题复杂性的主要原因之一,特别是属性为描述性质的模糊数时,有限理性的个体在决策制定过程中受到很大的局限。实际操作过程中,专家评分法运用广泛,在此基础上,文中将其与群决策理论相结合,首先指出了对供应商进行评价时常出现的平局问题,将群体决策复合准则引入到供应商选择过程中,然后建立模型,对其求解,最后结合算例,说明该方法的有效性。     

From Hot Cakes to Cold Feet: A Contingent Perspective on the Relationship between Market Uncertainty and Status Homophily in the Formation of Alliances

In this study, we reconsider the classical positive association between the level of market uncertainty and an organization's propensity to form ties with organizations of similar status. Although prior research argues that the greater the uncertainty, the higher the level of status homophily, we suggest that this relationship is contingent upon framing that affects positive or negative valence towards uncertainty. In an up market, organizations tend to frame uncertainty as upside risk, and thus will subsequently favour explorative uncertainty‐mitigation devices; whereas, in a down market, organizations primarily frame uncertainty as downward risk, and thus will rely on more conservative uncertainty‐mitigation mechanisms. We therefore predict that a greater number of status‐heterophilous ties will be formed in an up market than in a down market. We discuss the implications of our results for status theory and more broadly for research on strategic decision making under uncertainty.     

Managing supplier sustainability risks in a dynamically changing environment—Sustainable supplier management in the chemical industry

Varying definitions and interpretations of sustainability standards have become a major concern for purchasing and supply management (PSM). As the foremost interface to an increasingly global supply base, PSM plays an important role in the mitigation of sustainability-related risks. By conducting responsible purchasing and supplier management, the risk of corporate reputational damage to the buying firm, caused by supplier misconduct, can be avoided. However, resources for effective risk-mitigation are limited and the applicability of supply risk assessment and supplier assessment methods have not been evaluated for sustainability. In this paper, we explore how leading PSM functions identify, assess, and treat supplier sustainability risks and elaborate on the integration of sustainability risk management in supplier management processes. Based on the findings from a multiple case study in the chemical industry and by drawing on the dynamic capabilities view (DCV), we propose that mature and sustainable supplier management capabilities are a source of competitive advantage in terms of lower exposure to reputational risks and enhanced operational performance.     

Purchasing involvement in technologically uncertain new product development projects: Challenges and implications

This paper explores an emerging field of research within purchasing that concerns the changing role of purchasing when companies embark on technologically uncertain NPD projects. Where existing research has examined the role of purchasing in facilitating early supplier involvement in new product development, little research has been done to date on how purchasing's role might change when facing technologically uncertain NPD that require new capabilities and new technology. Based on an in-depth case study of a technologically uncertain NPD project in the passenger ship rescue equipment industry, the paper sheds light on how supplier involvement in NPD projects with a high degree of technological uncertainty impacts on a company's sourcing strategies and the challenges this poses for purchasing.Based on the case study findings, we propose a) that early purchasing involvement in technologically uncertain NPD projects requires a mature purchasing organization that possesses competences to interact effectively with R&D and b) that involving a new supplier from a different industry in NPD projects characterized by technological uncertainty requires a leap of faith from both innovating firm and supplier. The paper contributes to research in early supplier involvement in new product development, in particular the thin branch within this body of literature that now focuses on early purchasing involvement.     

基于模糊多属性群决策的供应商选择方法研究

本文从多个决策者参与决策的角度出发,在模糊和不确定环境下,运用模糊多属性群决策模型来研究供应商的选择问题。     

Variations of the Entrepreneurial City: Goals,roles and visions in Rotterdam's Kop van Zuid and the Glasgow Harbour Megaprojects

Both Rotterdam's Kop van Zuid and the Glasgow Harbour waterfront developments are examples of different forms of European urban entrepreneurial megaprojects. They are both situated on formerly vacant land in older industrial cities. In Rotterdam, the municipality has taken the initiative in planning and developing the megaproject, while in Glasgow, this task has been left to the private sector, with the City functioning as a facilitator. While urban entrepreneurialism and megaprojects have been discussed in academic literature for almost three decades, there are too few case studies which delve into the specific visions guiding these projects, the goals which they are meant to achieve and the positions which different actors play. The aim of this article is to analyze the relationship between these visions, goals and positions of actors in megaprojects and whether these relationships can explain how the different outcomes are produced. What we see is that in municipally‐led projects, entrepreneurial goals are more easily formed and implemented than when the public sector acts only as a facilitator to private developers. It will also argue that it is not only structural contexts which are important in determining the types of megaprojects which get built and the success which they achieve, but also the specific values, visions and goals that different stakeholders have.     

Exploring the circular economy paradigm: A natural resource-based view on supplier selection criteria

The paradigm of circular economy and the transfer of its principles to supply chain management has recently received much attention from researchers and practitioners. Limited natural resources, governmental legislation, and social responsibility for environmental preservation are the main factors for the development of circular supply chains. Especially in the automotive industry, critical materials are used to produce electric vehicles, reinforcing the importance of circularity for the industry. As the first stage of the supply chain, suppliers have a considerable influence on creating self-sufficient production systems, and in the automotive sector, a low level of vertical integration is important. Therefore, selecting suppliers is an enabler for circular supply chains, but this decision is a complex process due to multiple, partly conflicting criteria. To contribute to the knowledge in this research area, this study applies a fuzzy decision-making trial and evaluation laboratory approach for supplier selection in a circular supply chain in a case study of electric vehicles. First, a set of criteria for supplier selection in circular supply chains was identified based on a literature review and was systematically categorized based on the natural resource-based view. Afterward, the criteria were assessed and refined by experts with a strong procurement background in the automotive industry. Second, the experts were interviewed for value collection, and finally, the mutual influence of the criteria was determined. The results show that the most important criteria for circular supplier selection in electric vehicle supply chains are environmental standards, environmental-related certifications, resource consumption, and waste generation. Regarding the natural resource-based view, short-term focused criteria addressing the capability of pollution prevention have a higher importance compared to long-term criteria that drive sustainable development. In addition, this study classifies the criteria into the categories of causes and effects, discusses the prominence of the criteria, and presents a strategic map showing the mutual influences of the criteria. The results contribute to the theoretical and practical discussion on circular supply chains by identifying the key criteria for circular supplier selection and providing decision-making support for procurement managers.     

A Comprehensive Framework for Sustainable Project Portfolio Selection Based on Structural Equation Modeling

Project selection problems are inherently complex problems with multiple and often conflicting objectives. The complexity of project selection problems is due to the high number of projects from which a subset (portfolio) has to be chosen. Various analytical methods, ranging from the simple weighted sum to complex mathematical programming have been proposed to solving these problems. We propose an integrated approach for strategic and sustainable project portfolio selection, which is composed of two distinct but interrelated modules. In the first module, we use the strategic planning and sustainability concepts to select a set of promising projects. In the second module, we use a project portfolio selection procedure to choose among the promising projects identified in the first module. A structural equation model is used to analyze and explain the relationships among different factors in the proposed framework. More specifically, we investigate the effects of: (1) strategic level performance on sustainability, post‐implementation, and overall performance; (2) implementation performance on post‐implementation and overall performance; (3) portfolio selection performance on implementation and overall performance; and (4) post‐implementation performance on overall performance. A case study in investment banking is presented to demonstrate the applicability of the proposed model and exhibit the efficacy of the procedures and algorithms.     

Practice and promise of formal supplier selection: a study of four empirical cases

In this paper an experimental study of formal decision-making models for supplier selection is described. Attention is paid to all phases of the supplier selection process: the recognition of the need for a new supplier, the formulation of decision criteria, the qualification of suitable candidates and final selection. It appears from the experiments that formal decision models may prove to be useful in various ways throughout the whole supplier selection process and in different purchasing situations.