Supplier base management in Indian automotive industry: development of theoretical framework and related case

Abstract

Supply chains have become an integral part of the modern day manufacturing. Businesses win and loose on the strength of their supply chain networks. In fact in some of the markets competition is not between firms but between supply networks. In that context a need arises to look at supply chain as an organization and thus application of organization design, structure and culture can be related with the supply network. To relate to the real life situation we have decided to study this on the Indian automotive industry. A sample case let was developed to test the framework and theory developed by us which will be later developed as within case analysis and cross case analyses. Organization design has three distinct dimensions in the form of formalization, centralization and complexity. In terms of supply base structure we have dyads, chains and network. An attempt has been made to relate the three dimensions with different structure of the supply base with special focus on formalization in dyadic relationship, centralization in supply chain and complexity in supply network. A model framework from supplier base relationship was also used to explain the different dimension of organizational design in supplier base structure. Relationship framework tries to explain how in different situation organizations behave differently and how it affects the dimensions of design in supply network structure. For example if the relationship exists in low certainty and high dependency zone clearly there is a need for very high degree of formalization as formal contracts and documents will reduce the risk of high uncertainty . Also if an organization is able to correctly figure out its relationship status it can try to reconfigure its position in supply network structure and design so as to derive maximum value and reduce its risk. We also tried to look into two very important constructs of power and trust which has been repeatedly mentioned in all inter organizational framework. Cleary trust and power affect structure and dimension of supply network design though their measurement is difficult. However during one of our case let development we found suitable evidence to relate them to the various dimension of supply network design and their effect on them was highly observed.