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2018 | OriginalPaper | Buchkapitel

Risk Allocation, Supplier Development and Product Innovation in Automotive Supply Chains: A Study of Nissan Europe

verfasst von : Arnaldo Camuffo

Erschienen in: Innovation and Supply Chain Management

Verlag: Springer International Publishing

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Abstract

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.

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Vorheriges Kapitel National Culture as an Antecedent for Information Sharing in Supply Chains: A Study of Manufacturing Companies in OECD Countries

Nächstes Kapitel Does Supply Chain Innovation Pay Off?

For proof, see Kawasaki and McMillan (1987, pp. 330–332). Using Holmstrom and Milgrom’s (1987) theorem about the linearity of the optimal contract in end-of-period accumulated production costs, they solve a dynamic principal-agent problem as if it were a static problem, with the only additional restriction that the principal’s payment function is linear.

For each buyer-supplier contract/relation it would be necessary to identify revenues and direct design and production costs. However, especially in small and medium companies such as the analyzed suppliers (although this also applies to larger firms), cost accounting is not carried out for different contract/relations, not even with regard to direct design and manufacturing costs. Furthermore, all indirect manufacturing costs, as well as most sales and administrative expenses, are shared across products, customers and contracts. None of the analyzed firms (whether buyers or suppliers) allocate these costs to obtain a ‘full contract/relation’ cost figure. However, we argue that, even if indirect and general costs were allocated to each contract/relation on a conventional basis (e.g., contract revenues) following standard cost accounting techniques, this would not provide a fair picture of the costs and profits of each contract/relation. Therefore, an assessment of contract/relation specific profits and costs on the basis of state-of-the-art cost accounting techniques would not be reliable.

Following Asanuma and Kikutani (1992, p. 15), we used the number of employees, not total net sales, to measure suppliers’ size. Indeed, risk aversion has to be constant and not depend on profit (or, indirectly, on variables correlated to profit such as total net sales).

It could be argued that only large suppliers can afford investment in technology and to develop valuable know-how. We checked our data for collinearity and found no statistical correlation between the supplier’s size (proxy for risk aversion) and the supplier’s technological capability (proxy for moral hazard).

In the case of suppliers selling more than one component, we picked the one that was the most technologically complex.

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Titel: Risk Allocation, Supplier Development and Product Innovation in Automotive Supply Chains: A Study of Nissan Europe
verfasst von: Arnaldo Camuffo
Verlag: Springer International Publishing
Buch: Innovation and Supply Chain Management
Print ISBN: 978-3-319-74303-5

Electronic ISBN: 978-3-319-74304-2

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-3-319-74304-2_10