Strategic outsourcing for competing OEMs that face cost reduction opportunities

Gilbert, Stephen M.; Xia, Yusen; Yu, Gang

doi:10.1080/07408170600854644

Cited by 99 publications

(82 citation statements)

References 17 publications

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“…Gupta (2008) extends this work to the case where there is knowledge spillover between the competitors. Gilbert et al (2006) show that outsourcing to an external supplier mitigates the price competition between two manufacturers because it signals a credible commitment to not aggressively reduce costs. Gilbert and Cvsa (2003) consider whether a supplier should commit to a wholesale price before demand uncertainty is resolved in a setting with a downstream manufacturer that invests in cost reduction.…”

Section: Literature Reviewmentioning

confidence: 99%

Dynamic Cost Reduction Through Process Improvement in Assembly Networks

2009

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We consider a decentralized assembly system in which a buyer purchases components from several first-tier suppliers. We examine the dynamics of suppliers' investments in cost-reduction initiatives over the life cycle of a product under different procurement approaches. We model the suppliers' investment decisions under cost-contingent contracts, with wholesale prices determined on the basis of the prevailing component costs, as a dynamic game in closed-loop strategies. We show that there always exists an equilibrium in which the suppliers' investments are synchronized, that is, in each period either all suppliers invest in process improvement or no supplier does. We also consider target-price contracts, under which the assembler announces the rate of component cost reduction to be achieved over the product's life cycle at the beginning of the contractual relationship. We show that target-price contracts lead to higher investment levels and profits if the rates are properly specified. In general, the equilibrium investments of the suppliers are lower than those under centralized control. The buyer can eliminate this inefficiency by subsidizing a certain fraction of the costs of investments. We extend the model to a setting with two competing assemblers and knowledge spillover at the suppliers. We find that the level of inefficiency under decentralized control decreases with increased competition and spillover rate.assembly systems, process improvement, dynamic games, procurement, supplier management

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Section: Literature Reviewmentioning

confidence: 99%

Dynamic Cost Reduction Through Process Improvement in Assembly Networks

2009

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“…Both Harhoff [11] and Gilbert and Cvsa [8] examine issues related to how a manufacturer can stimulate either cost reducing or demand enhancing investments from its downstream channel partners. More recently, Gilbert, Xia, and Yu [9] investigate a model in which two competing OEMs can mitigate mutually destructive cost competition by outsourcing to a common supplier. Our work is closely related to these papers because we look specifically at how the opportunity to invest at one level of the supply chain affects other dimensions of channel operations.…”

Section: Related Literaturementioning

confidence: 99%

The strategic effects of a merger upon supplier interactions

Gilbert

Xia

2006

Naval Research Logistics

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Abstract:We consider how a merger between two naturally differentiated dealers affects their interactions with a common supplier and identify conditions under which the merger can increase or decrease the combined net worth of the two firms. Among other things, we find that the attractiveness of merging depends upon the extent to which end demand can be stimulated by either an upstream supplier or the dealers. Specifically, the greater the supplier's ability to invest in stimulating end demand, the more likely it is that the naturally differentiated firms will be better off operating independently than merging. On the other hand, if the greatest opportunities for stimulating demand are through the service that is provided by the dealers, then merging their operations will be more attractive.

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“…There are lots of representative literatures. Gilbert et al (2006) assumed that the manufacturer and the supplier both have the opportunity to save cost. They analyzed two competitive manufacturers outsourcing strategy and studied on longitudinal control channels for the supply chain competition led to the manufacturer's choice strategy.…”

Section: Competition Between Enterprisesmentioning

confidence: 99%

A Literature Review on Supply Chain Contracts Selection and Coordination under Competing Multi Manufacturers

Liu¹,

Xu²,

Xu³

2015

IJBM

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The paper based on the supply chain which under competing multi manufacturers as the research object, reviews the research of supply chain contracts selection and coordination. By reviewing the relevant, summarizes the various methods of supply chain competition, supply chain contracts and supply chain coordination. The results have guiding significance for supply chain coordination under competing multi manufacturers and improvement of supply chains performance. The paper also researches the direction of future development in this domain. The future of multiple manufacturers under the competition of supply chain contract selection and coordination problems research will further according to the practical problems, using the game theory, optimization theory, the theory of system simulation method, building a decision model and method system, to promote the development of the theory of supply chain management, and to guide the practice of supply chain management has important practical value.

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Strategic outsourcing for competing OEMs that face cost reduction opportunities

Cited by 99 publications

References 17 publications

Dynamic Cost Reduction Through Process Improvement in Assembly Networks

Dynamic Cost Reduction Through Process Improvement in Assembly Networks

The strategic effects of a merger upon supplier interactions

A Literature Review on Supply Chain Contracts Selection and Coordination under Competing Multi Manufacturers

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