Autor: Pan Theo Grosse-Ruyken

Automotive manufacturers increasingly use the concept of supplier integration. However, the concept often is attached with an increased dependency of the buyer towards his suppliers, which generates self-induced monopolies. The inherent erosion of efficient market mechanisms, combined with an increased supplier power due to consolidation processes, can lead for the manufacturer to a disfavoring profit redistribution. Recurring controversy in current buyer-supplier relationships show that pie sharing approaches need to be adopted to the concepts of supplier integration.

Today’s supply chains are characterized by strong linkages between buying and supplying firms in product development as well as production. This results in mutual dependencies and strongly interrelated product, capital and information flows. Improvement potential still exists in the optimization of supply chain finance across the supply chain partners as processes, taxes and cost of capital improvements across the supply chain generate significant savings and lead to competitive advantages. Cooperative supply chain finance approaches - e.g. debt financing support for suppliers - can turn indispensable suppliers to strategic supply chain partners. The identification of strategic suppliers and the selection of an appropriate supply chain finance strategy can be evaluated using the presented supply chain finance matrix. Furthermore, this article provides insights on how supply chain finance can be used to improve holistically the supply chain activities.

Excessive or inefficient inventory management leads to tied-up capital which reduces a firm’s liquid assets. Days Inventory Outstanding (DIO) - measuring the duration of capital being tied-up in inventory - remained almost unchanged during the past decade. Results of our study indicate that firms where supply chain management is represented in the top management achieve on average a DIO reduction of 4.5 days compared to other firms in the same industry. This amounts to a cash release of 92.7 million US-Dollars which equals 8.7 % of the firms’ inventory and 1 % of the firms’ turnover. Furthermore, it helps firms to outperform their peers in average by a five percentage points higher Return on Capital Employed (ROCE).

Logistics has changed extensively in recent decades. Initially characterized by the classical functional structuring procurement - production - distribution, the task of logistics in our days is to integrate value chains into global networks. In future, logistics challenges will proceed even faster. Logisticians from science and practice estimate that the next 10 years will bring as many changes as the past 50 years. To keep pace with this dynamic change the knowledge about future developments and trends that will shape the logistics of tomorrow is key to success. From our perspective, four global core developments will significantly influence the planning, coordination and proceeding of product flows in the future: supply chain risk, technology, environment and geopolitical orientation and change of social structures. These developments open up opportunities for logistics but include also major challenges.

The motivation of employees is an essential requirement for operational efficiency, the quality of the production process and the effectiveness of the work force. Therefore the primary objective for a company’s success should be the achievement of a high degree of employment motivation and satis-faction. Nevertheless, a high motivation of employees is not a matter of course. Therefore, we empirically investigate the status quo of employee orientation and motivation of the workforce aiming to identify potential improvements with regard to a better employee orientation. The results are surprising: The majority of employees are dissatisfied with the work tasks, the leadership of the supervisors or the working atmosphere in the company. The consequence: Lower works force motivation and a poor quality of employee performance, even though in the service industries employees are key for delivering quality and results.

Sourcing flexibility, i.e., the capability of a company’s procurement processes to respond rapidly to changing supply requirements is one of the building blocks of supply chain agility. In today’s decentralized supply chains, companies increasingly depend on their suppliers for value creation. Hence, understanding the causes and consequences of sourcing flexibility is critical. Based on a survey of 336 companies from Europe and the U.S., we show that sourcing flexibility is curvilinearly (U-shaped) related to supply chain performance. Companies with either low or high levels of sourcing flexibility exhibit high supply chain performance, whereas medium levels of sourcing flexibility reduce a company’s supply chain performance by up to 30%. That is, the “stuck in the middle” phenomenon, which is frequently observed in areas of strategy and organization, is evident in procurement decisions as well.

An optimized working capital aims to activate tied capital, capital which is frozen in account receivables and payables as well as in inventories. Often the ability to deliver anytime is a top priority for firms so that the tied capital is not optimized which increases the potential of bankruptcy in economic recessions. The potential to release tied capital can only be mastered by a tight company-wide collaboration, including the finance purchasing, production, sales and accounting department. Furthermore a holistic approach taking the whole supply chain into consideration must be realized to achieve a superior working capital performance. We show how firms can benefit from an optimal working capital in order to turn their supply chains into gold veins.

In the tire replacement business, customers increasingly recognize and use e-Commerce as a sales and distribution channel. A survey of the ETH Zurich indicates that up to now tire producers hardly operate online platforms - even though the future growth potential of online distribution is substantial. The tire producers should react quickly and with a thought-through approach to the challenges of online trading in order to take advantage of this distribution channel. An intensive cooperation with local tire assemblers is decisive for making the online distribution channel work, because customers still require a professional tire fitting.