The Structure Conundrum in Supply Chain Management

Abstract

Supply Chain Management leading to concepts such as lean enterprise is much in vogue today fuelled by the adoption of strategies and partnership practices used so successfully by the Japanese companies. As part of this change, product owners are outsourcing more value through both components and systems which has effectively meant redistributing competencies. This change is concurrent with the initiative to reduce the number of suppliers. The Japanese perfected their SCM strategies and practices within their compatible supply chain structure or keiretsus. The structures emerging in the western automotive supply chains (the paper is based on research on European automotive industry) are different in many key characteristics from the keiretsus. Secondly, they appear to be emerging in an ad‐hoc rather than a planned manner. This poses a critical question for western buyers ‐ is supply chain structure critical for superior performance and if yes, then which type of structure(s) provides the most benefits while maintaining or enhancing product uniqueness?