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Manufacturing technology and the supply chain
European Journal of Purchasing & Supply ManagementVol 2, No 1, pp. 31-38, 1996 Copyright © 1996 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0969-7012/96 $15.00 + 0.00
Pergamon 0969-7012(95)00014-3
Manufacturing technology and the supply chain Linking buyer-supplier relationships and advanced manufacturing technology H K Gules* and T F Burgess School o f Business and Economic Studies, University o f Leeds, Leeds LS2 9JT, UK
The literature on advanced manufacturing technology (AMT) implementation and buyer-supplier relationships is reviewed, and the links between the two factors are examined. These links are summarized and highlighted through a causal influence diagram. A major influence is focused on, namely that the adoption of AMT causes adopters to change their relationships with their parts suppliers to more collaborative forms. Empirical data drawn from a recent survey of the Turkish automotive industry demonstrate support for this major influence. Keywords: advanced manufacturing technology, buyer-supplier relationships, Turkish automotive industry
Manufacturing enterprises face increasingly severe competition in both domestic and international markets. To improve, or at least to maintain, their enterprises' competitive position, manufacturing managers have to continue to improve their operations. Research shows that activities such as the implementation of advanced manufacturing technology (AMT) result in only marginal improvements if they are not accompanied by initiatives that improve linkages within the whole supply chain. This paper aims to explore the importance of one particular aspect of supply chain links - the collaborative nature of buyer-supplier relationships - for the effective implementation and diffusion of AMT throughout the supply chain. The first section of this paper outlines the nature of AMT. Next the general environmental pressures leading to AMT adoption are described. Some initial comments are made to define the scope of the supply chains of interest in this paper. The nature of buyer-supplier relationships is then explored. The importance of collaborative relationships for the success of the buyer's implementation of AMT is covered. This is followed by a consideration of the impact of collaborative relationships on the diffusion *H. K. Gules is a Ph.D. student at the University of Leeds and is a Research Assistant at the University of Sekuk, Turkey.
of AMT from buyers to suppliers. A model is provided showing the main linkages between the adoption of AMT and the nature of buyer-supplier relationships. Early results from a research study on the Turkish automotive industry are then outlined in support of the proposed model, and some conclusions are drawn.
The nature of advanced manufacturing technology According to ACARD (1983, p 7): Advanced manufacturing technology (AMT) is regarded as any new technique, which, when adopted, is likely to require a change not only in manufacturing practice, but also in management systems and the manufacturing approach to the design and production engineering of the product. A wide definition of technology is appropriate for the focus of this paper. AMT is taken to include both the more usual 'hard' technologies, such as numerically controlled machine tools, and the more managerial, or 'softer', technologies, such as Just-in-Time. Lamming (unpublished interview, 1994) uses this division into hard and soft, and sees the hard technologies as emphasizing machines and computer systems, while soft technologies derive their strength from organizing principles. 31
H K Gules and T F Burgess
Increasing competition as a stimulus to AMT adoption A number of pressures are driving manufacturing companies to invest in AMT for cost-effective flexible manufacturing (Macbeth, 1987). A major influence forcing companies to manage their businesses in radically different ways is the changing competitive environment. Macbeth and Ferguson (1994, pp 13-18) summarize the new features exhibited by many markets as follows: • • • • • • •
increased quality and reliability in products; more choice in existing product ranges; more choice through new products; more customization; faster satisfaction of need; freedom to change late in the order cycle; increasing level of customer service.
As Williamson (1991) has stressed, consumers are now looking for simultaneous improvements in both product variety and lead times. Customized production has become more important than standardized production. This has shortened the life cycle of products, leading to higher costs because of frequent re-equipping of production lines. The cost of product change is high in mass production. This has reduced firms' profits when coinciding with the need to speed up product variety and improve quality. As seen in Figure 1, the increasing cost of model change for conventional technologies combined with the decline of the economic benefits of the change is known as Abernathy's dilemma (Abernathy, 1978). According to Gerwin and Kolodny (1992, p 15), AMT has some ability to overcome this dilemma. This is indicated in Figure 1 in a similar manner to that put forward by Tchijov (1992) for flexible manufacturing systems (FMS), one of the component technologies of AMT. AMT implementation is held to lead to flexibility in the production process, reductions in production
Costs and benefits of modelchange change of model Economic benefits model change Cost of model change (conventional technologies)
""
Cost of model change (advanced manufacturing
technologies)
Changes in model
Figure 1 Abernathy's dilemma 32
costs, and improvements in product quality (Yetis, 1990). As Macbeth (1987) has pointed out: The essential element for much of the new manufacturing is flexibility:flexibility to handle greater number of product types to introduce and phase out products, and to vary output volumes. No longer will the majority of companies be striving for economies of scale instead economies of scope. The programmability and accuracy of computerized systems such as FMS enable firms to produce customized products cost-effectively at the required quality level. The inflexibility of mass production and hard automation is one of the main reasons for the demand for the particular instance of AMT called computer integrated manufacturing (CIM) (Ayres, 1992, pp 1-2), which includes various aspects such as FMS and robotics. In general, the adoption of AMT enables firms to respond to consumer demands at the right place, at the right time and with the right amount.
AMT adoption as a result of technology push The previous section concentrated on the adoption of AMT resulting from demand-side, market-based pressures. Apart from demand pull the adoption of AMT is driven by the ongoing development of technology: that is, technology push. One particular factor that drives the adoption and implementation of many types of AMT is the developments in information technology that have led to technical advances in computeraided systems and allied equipment. This increasing functionality is accompanied by substantial price reductions, leading to more and more firms installing computer-aided systems.
Supply chain activities and AMT implementation AMT implementation lies at the intersection of two distinct supply chains. First, it involves a supply chain from the AMT suppliers to the purchasers of the technology. Second, AMT buyers embed the technology in their respective supply chains and hence influence their (parts) suppliers. Much of the early literature on AMT implementation focused on the first type of supply chain (Bessant, 1991; Zairi, 1992). By contrast, this paper concentrates on issues connected with the second type of embedded supply chain, and in particular centres on the issue of buyer-supplier relationships, which is examined next.
The nature of buyer-supplier relationships Buyer-supplier relationships are often characterized by reference to two major types: adversarial and collaborative (Lamming, 1986, 1989; Lyons et al, 1990; Cusumano and Takeshi, 1991; Helper, 1991a, 1991b;
Manufacturing technology and the supply chain Imrie and Morris, 1992; Morris and Imrie, 1992; Sako, 1992; Macbeth and Ferguson, 1994). The adversarial relationship is variously called exit, antagonistic, arm's length contractual relationship (ACR) or competitive. In contrast, the collaborative relationship is called voice, cooperative, obligational contractual relationship (OCR) or obligational. In general, the literature points to relationships evolving towards more collaborative forms. The emerging type of relationship is being driven strongly by the desire to emulate the Japanese approach, which favours a collaborative relationship primarily based on mutual benefit and trust. It is common in the literature to use the two terms collaborative relationship and Japanese-style partnership (JSP) interchangeably (Turner, 1992). Womack et al (1990, p 146), in examining the automotive industry, described the lean supply approach, and stated that suppliers are involved in the design of a car and they are not selected on the basis of bids, but on the basis of past relationship and mutual benefit rather than mutual suspicion. Although Womack et al's observations are based on the relationships in the automotive industry, there are a number of reasons for using this definition elsewhere. First of all, the automotive industry is a large and competitive industry, which has a strong influence on the whole of industry. Secondly, it is a dynamic industry where buyer-supplier relationships are the subject of scrutiny, and a great deal of effort has been deployed to change them. According to Imrie and Morris ( 1 9 9 2 ) t h e new supplier-buyer relationships, of which JSP is an example, are built on closer interfirm collaboration, improved quality assurance and flexible delivery times: In theory, the emergent model is... increasingly emphasizing factors other than price in determining the supply of goods of buyers. These include an ability of
suppliers to respond quickly to customer needs, consistency and quality of production, and flexible deliveries. The advantages and disadvantages of the new relationship are listed for buyers and suppliers in Tables I and 2 (Lyons et al, 1990). The consensus in the literature on the shift towards a more collaborative relationship is not matched by a consensus on the degree (or extent) of this change. While for some authors the new relationship is collaborative, others argue it can be best described as a new form of adversarial relationship, where customers demand from their suppliers (high) quality, frequent delivery and flexibility in addition to low prices. For example, Imrie and Morris (1992) argued that the new relationship still has adversarial, as well as collaborative, characteristics. This is evident when suppliers are told, as they often are, that they must provide the lowest price, the highest quality, and the best delivery if they are to receive a contract. Many buyers implement a general policy of paying for design and tooling, and keep the right to place business with the lowest-cost supplier. Imrie and Morris (1992), when drawing from the work of Wilson and Gorb (1983), observed that recent changes in buyer-supplier relationships are mainly dominated by quality and short-term cost minimization objectives, and have little to do with creating new efficient supply lines. Considerable costs result from identifying, investigating and evaluating suppliers, and either rejecting or accepting new suppliers. In this sense, reducing the number of suppliers to single sourcing can be seen as a pragmatic response by buyers to intensified competition and cost pressures (Morris and Imrie, 1992, p 46). It could be argued that collaborative relationships imply some balancing and sharing of power between the two parties. However, an important issue raised by Imrie and Morris (1992) is that the new relationship is primarily shaped by buyers, and has a top-down (hierarchical control) characteristic.
Table 1 Advantages and disadvantages for buyers
Table 2 Advantages and disadvantages for suppliers
Advantages
Disadvantages
Advantages
Disadvantages
Reduced manufacturing and labour costs Improved quality Reduced complexity and cost of assembly and buying Supply assurance Cooperative relationships with suppliers Contract predictability Fair pricing assurance (open books) Negotiated price reductions during contract life Avoidance of bad press caused by RIFs
Increased dependence on supplier New negotiating style Less supplier competition Increased managerial skills Reduced personnel mobility Increased communication and coordination costs Increased support for supplier New reward structures Loss of direct contract with secondary suppliers
Contract predictability Workforce and production more stable Increased R and D effectiveness Buyer allies supporting firm's status Buyer assistance Influence on buyer's future decision making Insider information on buying decisions Firm becomes gatekeeper for competitors' innovations Information about competition
Cost information shared (loss of proprietary information) Pressure to assume burden of all phases from design to warranty while improving quality and reducing costs Decreased autonomy Increased communication and coordination costs Reduced personnel mobility Potential pendulum reversal
Source: Lyons et al (1990).
Source: Lyons et al (1990). 33
H K Gules and T F Burgess
In summary, the general position in the literature is that there is a shift towards more collaborative buyer-supplier relationships. However, for some the new relationship is best described as a new adversarial relationship, as it still carries certain adversarial features. In essence, the changes are primarily driven by buyers' actions.
The above comments demonstrate that, for the buyer, improving buyer-supplier relationships is inextricably linked to the effective implementation of AMT, and to the overall competitiveness of the company (Lamming, 1986, 1989, 1992, 1993; Macbeth, 1986; Carlisle and Parker, 1991; Macbeth and Ferguson, 1994).
The impact of buyer-supplier relationships on buyer's implementation of AMT
The diffusion of AMT throughout the supply chain
Early activities related to strengthening a company's competitive position concentrated mainly on improving internal efficiency through AMT implementation. As Williamson (1991) pointed out, initiatives taken internally to increase flexibility come to nought if the required materials, components or other inputs cannot be obtained in the right varieties, colours and sizes at short notice by a company from its suppliers. As actions taken internally have only marginal effects, over time the need to enhance intra-company activities has been recognized, and an increasing number of manufacturing companies have turned to their suppliers (Lindberg and Trygg, 1991). According to Lamming (unpublished interview, 1994) the need to establish close relationships with suppliers has been experienced more with soft technology implementation, such as Just-in-Time (JIT) production and total quality management (TQM). Because of their systemic nature these technologies require the strong support of suppliers. Such modern techniques require a careful reassessment of the functioning of the whole value-adding process. A key element of that process is the relationship between the manufacturers and parts producers (Butcher, 1992, p 469). Good supplier-manufacturer relationships provide smoother and better material flows, and increase mutual ability to plan capacity and to respond to market fluctuations. Macbeth (1986, p 9) argued that as companies implement AMT (internal activity) and develop towards CIM, relationships with their suppliers exhibit changes. The adoption of new technologies and methods such as FMS requires changes in traditional relationships between companies (Asanuma, 1988, p 38; Schonberger, 1982). These changing buyer needs encompass changes in the product or service attributes that a buyer values, such as quality, quick delivery, reliability and technical assistance. These aspects determine the buyer's purchase criteria and are transmitted through their value chain. This, in turn, requires suppliers who can deliver under these new pressures. For example, suppliers are required who can change over quickly to new product programmes, or master new technologies to make or help design robust components (Burt, 1989; Ellram, 1991). As Chen and Small (1994) indicated, if a company wants to implement AMT successfully it should consider its likely impact on suppliers, and work towards closer relationships with them.
The pressures imposed by buyers on suppliers lead to the employment of AMT by suppliers. As buyers comprise the market environment for suppliers, the comments made earlier in the section 'Increasing competition as a stimulus to AMT adoption' also apply to suppliers and their adoption of AMT. The investment in AMT by suppliers depends on the established relationship between the buyer and the supplier (Lamming, 1986; Helper, 1991a; Carlisle and Parker, 1991). Lamming (1986) stated that in closer relationships suppliers are more likely to invest in technologies such as FMS and robots owing to the removal of shortterm danger. Helper (1991a) pointed out that a shift towards a voice relationship will affect the investment in new technologies. In such situations suppliers feel themselves more comfortable and able to invest in new technologies. Similarly Dyer and Ouchi (1993) argued that a long relationship between the buyer and supplier will make suppliers keener on investing in new technologies such as computer numerically controlled (CNC) machine tools, CAD/CAM systems, robotics and manufacturing cells. Matthyssens and Van den Bulte (1994) stated that one of the main disadvantages of an adversarial type of relationship is the difficulty for (exploited) suppliers to invest in new machinery and products owing to squeezed profit margins resulting from the buyers playing the suppliers off against each other. In summary, more collaborative buyer-supplier relationships can be taken to contribute positively to the diffusion of AMT throughout the supply chain.
34
Discussion This paper, so far, has visited the literature dealing mainly with interacting pairs of variables. In this section we combine these various relationships through a causal influence diagram (Figure 2) and examine support for the diagrammed influences. In Figure 2 the usual diagramming convention applies: that is, a change in the concept at the tail of the arrow causes a change in the concept at the arrow head. As with most influence diagrams, the intention is to portray the major influences between variables. What is offered is a selected view of a rich, complex situation, where many variables have reciprocal relationships through direct and indirect pathways. For
Manufacturing technology and the supply chain
Business competitiveness~ ((Buyer)
1
~ ~
( Sr u p~ p l i e r )( ) p I l e
Buyeradoptionof AMT
Figure
Businesscompetitiveness
Supplieradoptionof AMT
2 Influences between AMT adoption and buyer-supplier collaboration
clarity, although covered in the earlier review of the literature, omitted from Figure 2 are the major environmental pressures that drive: the change in buyer-supplier relationships, the erosion of firms' competitiveness and the adoption of AMT. In this diagram the buyer is accorded the dominant role of determining the buyer-supplier relationships, in keeping with the literature. The outer part of the figure forms a 'virtuous circle', where increased adoption of AMT drives up industry competitiveness and vice versa. The central part of this figure shows the main causal connections whereby the buyer's adoption of AMT increases the required extent of collaboration with suppliers, and this in turn increases the extent of the suppliers' adoption of AMT. Also indicated in the diagram is the impact that buyer-supplier relationships have on competitiveness through other factors. It could be argued that in focusing on the linkages between AMT and buyer-supplier relationships the diagram concentrates on causal paths of low importance. The earlier review of the literature should stand in response to such an argument. In addition, some early results drawn from a major piece of research are outlined next to support the approach delineated above. The research study, carried out in late 1994/early 1995, examined the supply chain of the Turkish automotive components industry. Although the automotive industry in Turkey does not have as long a history as it does in the USA or the UK, great strides have been taken in recent years to enhance the competitiveness of this important industrial sector. Major automotive manufacturers, such as Fiat, Renault, General Motors and Toyota, assemble vehicles in Turkey through joint ventures or under licence. Many parts are purchased from local suppliers, some of which are joint ventures between local firms
and major European manufacturers of automotive components. The research surveyed 83 Turkish firms, drawn from the automotive components supply chain, on the topics of AMT and buyer-supplier relationships. The selected firms were positioned at the top of the supply chain: 11 are vehicle assemblers and the remaining 72 supply components to assemblers. The surveyed firms were selected from industry-wide databases by purchasing department staff of a major vehicle assembler. Size, company age, market share and other criteria were used to select a representative sample of the industry. Most (54%) companies were medium-sized with between 50 and 199 employees, and had on average been trading for 20 years. A structured interview was carried out at each selected firm, and the data were recorded in questionnaire format. Table 3 shows the results of a question asking the respondents to rank those factors that had an effect on
Table
3 Factors affectingsupplier relationships
Overall position
Factor
Average rank
Standard deviation
1
Adoption of new manufacturing practices Increasing competitionin the market Changes in the technologyof products Economic factors Pressure from customers Government policies
2.71
1.33
2.95
1.55
3.23
1.63
3.28 3.84 4.99
1.43 1.71 1.59
2 3 4 5 6
Notes: n = 83. The ranking scale was from 1 (most important) to 6 (least important). Significancelevel <0.001 on one-wayANOVA.
35
H K Gules and T F Burgess the relationship with their suppliers. The top item is directly related to the adoption of new manufacturing practices, which includes, as a major element, the adoption of new technology. Item 3 (changes in product technology) also links to the issue of AMT implementation through the direct connection between product and process innovations (Utterback and Abernathy, 1975). In Table 4, the results are shown of asking the suppliers to rate the factors contributing to the success of AMT implementation. The top two factors are internal ones; using team working and top management involvement. The third- and fourth-ranked factors relate to supply chain relationships. The positioning of the respondents at the top of the supply chain allows them to highlight relationships with their customers (factor 3) and with their suppliers (factor 4) as important for successful AMT implementation. The results agree with the causal model of Figure 2 and the supporting literature cited earlier. Further evidence for the links in the model flows from other elements of the research. The sampled firms were questioned on their relationships with their suppliers using a modified form of the protocol developed by Sako (1992). This comprised 11 variables ranked on a scale of 1-3. These were added to form an overall measure of collaboration, where 11 represented an extreme adversarial relationship and 33 an extreme collaborative one. Respondents were questioned on the current situation and that prevailing five years ago. The change in buyer-supplier relationships over the preceding five years was statistically significant from an average of 15.3 to 20.7: that is, towards more collaboration. The extent of AMT adoption was measured for ten selected technologies on a five-point scale, similar to that used by Pike et al (1988). On the scale, 0 represented nil adoption while 4 represented a very high adoption level. Therefore overall AMT adoption could range from 0 to 40. As for buyer-supplier relationships,
Table 4 Factors contributing to the success of AMT implementation
Overall position 1 2 3 4 5 6 7 8 9 10
Factor
Average rating
Standard deviation
Using groups or team working Top management involvement Cooperative relationships with customers Cooperative relationships with parts suppliers Clear objectives established prior to AMT implementation Coordinated business and manufacturing strategies Having multiskilled workers Compatibility with existing systems Support of AMT suppliers Availability of external technical expertise
1.34 1.42 1.58
1.09 1.31 1.30
1.71
1.16
1.78
1.41
1.86
1.21
2.00 2.22
1.29 1.29
2.54 2.58
1.50 1.70
Notes: n = 83. Data are given on the rating scale from 1 (most important) to 7 (least important) (original scale inverted to be consistent with data in Table 3). Significance level <0.001 on one-way ANOVA.
respondents were asked for values for now and five years ago. Again, the change was statistically significant, moving from an average of 6.5 to 19.0. Based on the relationships embodied in Figure 2, the change in the measure for buyer-supplier relationship was regressed on the measure of change in AMT. Figure 3 shows the scatter diagram and regression line, while the results of the regression analysis are given in Table 5. The significant results of this regression are consistent with the view put forward of the connections between AMT implementation and collaborative buyer-supplier relationships. The change in AMT implementation 'explains' approximately a quarter of the change in buyer-supplier relationships during the period, and is therefore a major factor. The results
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Figure 3 Change in buyer-supplier relationship vs change in AMT adoption 36
Manufacturing technology and the supply chain Table 5 Regression of change in buyer-supplier relationship on
change in AMT adoption Variable
Coefficient
Standard error
Significance level
Change in AMT Constant
0.305 1.579
0.058 0.786
0.000 0.048
Note: R2 adjusted = 0.244.
show that other factors, which were not the focus of this research, must also have an important influence on buyer-supplier relationships. As indicated in the earlier review, the prevailing 'climate' in the European automotive industry is one where a move to more collaborative relationships is advocated as a useful end in its own right.
Concluding comments The literature review supplied evidence for a particular view of the links between the implementation of AMT and buyer-supplier relationships. In essence, the conclusion drawn from the literature is that the greater the extent of AMT implementation by a firm then the more collaborative the relationships should be with their suppliers. The empirical data derived from the recent survey of the Turkish automotive component supply industry are consistent with the connection advocated between the two variables. Firms ranked the adoption of manufacturing practices - a category that includes AMT implementation - as the major factor affecting relationships with suppliers. They also rated supplier relationships as an important contributor to the success of AMT implementation. Over the last five years these companies have collaborated more with their suppliers and have increased the extent of AMT implementation. For individual firms the extent of the changes in the two variables are linked positively and significantly: that is, the greater the increase in AMT implementation then the more collaborative relationships have become with their suppliers. The earlier sections of this paper explored many of the reasons advanced in the literature for this connection. A particular theme is that as organizations become more technologically sophisticated then the constructed supply chains become more 'fragile'. In such finely honed, closely coupled systems the 'costs' of switching from existing suppliers increase substantially. The conclusions above generate certain implications for the purchasing functions of manufacturing organizations. In the past, purchasing has too often been viewed as an adjunct or 'Cinderella' function in comparison with more centrally regarded functions such as production. This paper demonstrates that modifications to core aspects (production technology) have important consequences for both the company
and its suppliers. Corporate management need to recognize the increasingly central role that purchasing occupies in attaining improved business competitiveness through such changes. Conversely, purchasing personnel will have to accept the challenges and responsibilities that flow from this changed regime. More and more they will need to look both inwards to the technological characteristics of their organization (current and projected), and outwards to their suppliers' capabilities (current and potential). Purchasing staff are the gatekeepers in the growing interplay between the organization and its suppliers.
Acknowledgements We should like to thank the following from Otokar AS for their valuable assistance in arranging the interviews for this research: Kudret Onen (General Director), Ahmet Haciyunus (Purchasing Manager), Bekir Ugurlu, Nimet Sunnetci and Nilgun Topal-Balci (Purchasing Staff). Thanks also go to Peter York and Terry Hasewell of Land Rover UK for their comments and assistance in making contact with Otokar AS. We also acknowledge the generosity of the University of Selcuk, Konya, Turkey in funding the research studies of Hasan Gules. Finally we should like to register our appreciation to the reviewers and editor of the journal for their helpful comments on an earlier version of the paper.
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H K Gules and T F Burgess Gerwin, D and Kolodny, H (1992) Management of Advanced Manufacturing Technology: Strategy, Organization and Innovation John Wiley & Sons, Chichester Helper, S (1991a) 'How much has really changed between US auto makers and their suppliers?' Sloan Management Review (Summer) 15-28 Helper, S (1991b) 'Strategy and irreversibility in supplier relations: the case of the US automobile industry' Business History Review 65 (Winter) 781-824 Imrie, R and Morris, J (1992) 'A review of recent changes in buyer-supplier relations' Omega, International Journal of Management Science 20 (5/6) 641-652 Lamming, R (1986) 'For better or worse: technical change and buyer-supplier relationships' International Journal of Operations and Production Management 6 (5) 20-29 Lamming, R (1989) 'The causes and effects of structural change in the European automotive components industry' International Motor Vehicle Program, MIT Lamming, R (1992) 'Supplier strategies in the automotive industry: developments towards lean production' unpublished PhD dissertation, University of Sussex Lamming, R (1993) Beyond Partnership: Strategies for Innovation and Lean Supply Prentice-Hall, London Lindberg, P and Trygg, L (1991) 'Manufacturing strategy in the value system' International Journal of Operations and Production Management 11 (3) 52-62 Lyons, T F, Krachenberg, A R and Henk, J W (1990) 'Mixed motive marriages: what's next for buyer-supplier relations?' Sloan Management Review (Spring) 29-36 Macbeth, D K (1986) 'Managing suppliers in an AMT environment: research into aspects of the new manufacturing' Working Paper Series No 6, Management Studies, University of Glasgow Macbeth, D K (1987) 'Supplier management in support of JIT activity: a research agenda' International Journal of Operations and Production Management 7 (4) 53-63
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Macbeth, D K and Ferguson, N (1994) Partnership Sourcing, an Integrated Supply Chain Management Approach Financial Times, Pitman Publishing, London Matthyssens, P and Van den Bulte, C (1994) 'Getting closer and nicer partnerships in the supply chain' Long Range Planning 27 (1) 72-83 Morris, J and Imrie, R (1992) Transforming Buyer-Supplier Relations: Japanese Style Industrial Practices in a Western Context Macmillan, London Pike, R, Sharp, J and Price, D (1988) 'AMT investment in the larger UK firm' International Journal of Operations and Production Management 9 (2) 13-26 Sako, M (1992) Prices, Quality and Trust, Inter-Firm Relations in Britain and Japan Cambridge University Press, Cambridge Schonberger, R J (1982) Japanese Manufacturing Techniques, Nine Hidden Lessons in Simplicity The Free Press, New York Tchijov, I (1992) 'The diffusion of flexible manufacturing systems' in Ayres, R U, Haywood, W and Tchijov, I (eds) CompUter Integrated Manufacturing Chapman & Hall, London, Vol III, 197-248 Turner, I D (1992) 'Supplier relations and competitive advantage' Manager Update 3 (3) 1-8 Utterback, J M and Abernathy, W J 0_975) 'A dynamic model of product and process innovation' Omega, International Journal of Management Science 3 (6) 639-656 Williamson, P (1991) 'Supplier strategy and customer responsiveness: managing the links' Business Strategy Review (Summer) 75-90 Wilson, P and Gorb, P (1983) 'How large and small firms can grow together' Long Range Planning 16 (2) 19-27 Womack, J P, Jones, D T and Roos, D (1990) The Machine That Changed The World Rawson Associates, New York Yetis, N (1990) CIM'le Imalat Prosessinin Otomatik Yonetimi (Automated Controlling of the Manufacturing Process by using CIM) Sistem Bilgisayar Kulturu Dergisi Zairi, M (1992) Management of Advanced Manufacturing Technology Sigma Press, Wilmslow
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Manufacturing technology and the supply chain Linking buyer-supplier relationships and advanced manufacturing technology H K Gules* and T F Burgess School o f Business and Economic Studies, University o f Leeds, Leeds LS2 9JT, UK
The literature on advanced manufacturing technology (AMT) implementation and buyer-supplier relationships is reviewed, and the links between the two factors are examined. These links are summarized and highlighted through a causal influence diagram. A major influence is focused on, namely that the adoption of AMT causes adopters to change their relationships with their parts suppliers to more collaborative forms. Empirical data drawn from a recent survey of the Turkish automotive industry demonstrate support for this major influence. Keywords: advanced manufacturing technology, buyer-supplier relationships, Turkish automotive industry
Manufacturing enterprises face increasingly severe competition in both domestic and international markets. To improve, or at least to maintain, their enterprises' competitive position, manufacturing managers have to continue to improve their operations. Research shows that activities such as the implementation of advanced manufacturing technology (AMT) result in only marginal improvements if they are not accompanied by initiatives that improve linkages within the whole supply chain. This paper aims to explore the importance of one particular aspect of supply chain links - the collaborative nature of buyer-supplier relationships - for the effective implementation and diffusion of AMT throughout the supply chain. The first section of this paper outlines the nature of AMT. Next the general environmental pressures leading to AMT adoption are described. Some initial comments are made to define the scope of the supply chains of interest in this paper. The nature of buyer-supplier relationships is then explored. The importance of collaborative relationships for the success of the buyer's implementation of AMT is covered. This is followed by a consideration of the impact of collaborative relationships on the diffusion *H. K. Gules is a Ph.D. student at the University of Leeds and is a Research Assistant at the University of Sekuk, Turkey.
of AMT from buyers to suppliers. A model is provided showing the main linkages between the adoption of AMT and the nature of buyer-supplier relationships. Early results from a research study on the Turkish automotive industry are then outlined in support of the proposed model, and some conclusions are drawn.
The nature of advanced manufacturing technology According to ACARD (1983, p 7): Advanced manufacturing technology (AMT) is regarded as any new technique, which, when adopted, is likely to require a change not only in manufacturing practice, but also in management systems and the manufacturing approach to the design and production engineering of the product. A wide definition of technology is appropriate for the focus of this paper. AMT is taken to include both the more usual 'hard' technologies, such as numerically controlled machine tools, and the more managerial, or 'softer', technologies, such as Just-in-Time. Lamming (unpublished interview, 1994) uses this division into hard and soft, and sees the hard technologies as emphasizing machines and computer systems, while soft technologies derive their strength from organizing principles. 31
H K Gules and T F Burgess
Increasing competition as a stimulus to AMT adoption A number of pressures are driving manufacturing companies to invest in AMT for cost-effective flexible manufacturing (Macbeth, 1987). A major influence forcing companies to manage their businesses in radically different ways is the changing competitive environment. Macbeth and Ferguson (1994, pp 13-18) summarize the new features exhibited by many markets as follows: • • • • • • •
increased quality and reliability in products; more choice in existing product ranges; more choice through new products; more customization; faster satisfaction of need; freedom to change late in the order cycle; increasing level of customer service.
As Williamson (1991) has stressed, consumers are now looking for simultaneous improvements in both product variety and lead times. Customized production has become more important than standardized production. This has shortened the life cycle of products, leading to higher costs because of frequent re-equipping of production lines. The cost of product change is high in mass production. This has reduced firms' profits when coinciding with the need to speed up product variety and improve quality. As seen in Figure 1, the increasing cost of model change for conventional technologies combined with the decline of the economic benefits of the change is known as Abernathy's dilemma (Abernathy, 1978). According to Gerwin and Kolodny (1992, p 15), AMT has some ability to overcome this dilemma. This is indicated in Figure 1 in a similar manner to that put forward by Tchijov (1992) for flexible manufacturing systems (FMS), one of the component technologies of AMT. AMT implementation is held to lead to flexibility in the production process, reductions in production
Costs and benefits of modelchange change of model Economic benefits model change Cost of model change (conventional technologies)
""
Cost of model change (advanced manufacturing
technologies)
Changes in model
Figure 1 Abernathy's dilemma 32
costs, and improvements in product quality (Yetis, 1990). As Macbeth (1987) has pointed out: The essential element for much of the new manufacturing is flexibility:flexibility to handle greater number of product types to introduce and phase out products, and to vary output volumes. No longer will the majority of companies be striving for economies of scale instead economies of scope. The programmability and accuracy of computerized systems such as FMS enable firms to produce customized products cost-effectively at the required quality level. The inflexibility of mass production and hard automation is one of the main reasons for the demand for the particular instance of AMT called computer integrated manufacturing (CIM) (Ayres, 1992, pp 1-2), which includes various aspects such as FMS and robotics. In general, the adoption of AMT enables firms to respond to consumer demands at the right place, at the right time and with the right amount.
AMT adoption as a result of technology push The previous section concentrated on the adoption of AMT resulting from demand-side, market-based pressures. Apart from demand pull the adoption of AMT is driven by the ongoing development of technology: that is, technology push. One particular factor that drives the adoption and implementation of many types of AMT is the developments in information technology that have led to technical advances in computeraided systems and allied equipment. This increasing functionality is accompanied by substantial price reductions, leading to more and more firms installing computer-aided systems.
Supply chain activities and AMT implementation AMT implementation lies at the intersection of two distinct supply chains. First, it involves a supply chain from the AMT suppliers to the purchasers of the technology. Second, AMT buyers embed the technology in their respective supply chains and hence influence their (parts) suppliers. Much of the early literature on AMT implementation focused on the first type of supply chain (Bessant, 1991; Zairi, 1992). By contrast, this paper concentrates on issues connected with the second type of embedded supply chain, and in particular centres on the issue of buyer-supplier relationships, which is examined next.
The nature of buyer-supplier relationships Buyer-supplier relationships are often characterized by reference to two major types: adversarial and collaborative (Lamming, 1986, 1989; Lyons et al, 1990; Cusumano and Takeshi, 1991; Helper, 1991a, 1991b;
Manufacturing technology and the supply chain Imrie and Morris, 1992; Morris and Imrie, 1992; Sako, 1992; Macbeth and Ferguson, 1994). The adversarial relationship is variously called exit, antagonistic, arm's length contractual relationship (ACR) or competitive. In contrast, the collaborative relationship is called voice, cooperative, obligational contractual relationship (OCR) or obligational. In general, the literature points to relationships evolving towards more collaborative forms. The emerging type of relationship is being driven strongly by the desire to emulate the Japanese approach, which favours a collaborative relationship primarily based on mutual benefit and trust. It is common in the literature to use the two terms collaborative relationship and Japanese-style partnership (JSP) interchangeably (Turner, 1992). Womack et al (1990, p 146), in examining the automotive industry, described the lean supply approach, and stated that suppliers are involved in the design of a car and they are not selected on the basis of bids, but on the basis of past relationship and mutual benefit rather than mutual suspicion. Although Womack et al's observations are based on the relationships in the automotive industry, there are a number of reasons for using this definition elsewhere. First of all, the automotive industry is a large and competitive industry, which has a strong influence on the whole of industry. Secondly, it is a dynamic industry where buyer-supplier relationships are the subject of scrutiny, and a great deal of effort has been deployed to change them. According to Imrie and Morris ( 1 9 9 2 ) t h e new supplier-buyer relationships, of which JSP is an example, are built on closer interfirm collaboration, improved quality assurance and flexible delivery times: In theory, the emergent model is... increasingly emphasizing factors other than price in determining the supply of goods of buyers. These include an ability of
suppliers to respond quickly to customer needs, consistency and quality of production, and flexible deliveries. The advantages and disadvantages of the new relationship are listed for buyers and suppliers in Tables I and 2 (Lyons et al, 1990). The consensus in the literature on the shift towards a more collaborative relationship is not matched by a consensus on the degree (or extent) of this change. While for some authors the new relationship is collaborative, others argue it can be best described as a new form of adversarial relationship, where customers demand from their suppliers (high) quality, frequent delivery and flexibility in addition to low prices. For example, Imrie and Morris (1992) argued that the new relationship still has adversarial, as well as collaborative, characteristics. This is evident when suppliers are told, as they often are, that they must provide the lowest price, the highest quality, and the best delivery if they are to receive a contract. Many buyers implement a general policy of paying for design and tooling, and keep the right to place business with the lowest-cost supplier. Imrie and Morris (1992), when drawing from the work of Wilson and Gorb (1983), observed that recent changes in buyer-supplier relationships are mainly dominated by quality and short-term cost minimization objectives, and have little to do with creating new efficient supply lines. Considerable costs result from identifying, investigating and evaluating suppliers, and either rejecting or accepting new suppliers. In this sense, reducing the number of suppliers to single sourcing can be seen as a pragmatic response by buyers to intensified competition and cost pressures (Morris and Imrie, 1992, p 46). It could be argued that collaborative relationships imply some balancing and sharing of power between the two parties. However, an important issue raised by Imrie and Morris (1992) is that the new relationship is primarily shaped by buyers, and has a top-down (hierarchical control) characteristic.
Table 1 Advantages and disadvantages for buyers
Table 2 Advantages and disadvantages for suppliers
Advantages
Disadvantages
Advantages
Disadvantages
Reduced manufacturing and labour costs Improved quality Reduced complexity and cost of assembly and buying Supply assurance Cooperative relationships with suppliers Contract predictability Fair pricing assurance (open books) Negotiated price reductions during contract life Avoidance of bad press caused by RIFs
Increased dependence on supplier New negotiating style Less supplier competition Increased managerial skills Reduced personnel mobility Increased communication and coordination costs Increased support for supplier New reward structures Loss of direct contract with secondary suppliers
Contract predictability Workforce and production more stable Increased R and D effectiveness Buyer allies supporting firm's status Buyer assistance Influence on buyer's future decision making Insider information on buying decisions Firm becomes gatekeeper for competitors' innovations Information about competition
Cost information shared (loss of proprietary information) Pressure to assume burden of all phases from design to warranty while improving quality and reducing costs Decreased autonomy Increased communication and coordination costs Reduced personnel mobility Potential pendulum reversal
Source: Lyons et al (1990).
Source: Lyons et al (1990). 33
H K Gules and T F Burgess
In summary, the general position in the literature is that there is a shift towards more collaborative buyer-supplier relationships. However, for some the new relationship is best described as a new adversarial relationship, as it still carries certain adversarial features. In essence, the changes are primarily driven by buyers' actions.
The above comments demonstrate that, for the buyer, improving buyer-supplier relationships is inextricably linked to the effective implementation of AMT, and to the overall competitiveness of the company (Lamming, 1986, 1989, 1992, 1993; Macbeth, 1986; Carlisle and Parker, 1991; Macbeth and Ferguson, 1994).
The impact of buyer-supplier relationships on buyer's implementation of AMT
The diffusion of AMT throughout the supply chain
Early activities related to strengthening a company's competitive position concentrated mainly on improving internal efficiency through AMT implementation. As Williamson (1991) pointed out, initiatives taken internally to increase flexibility come to nought if the required materials, components or other inputs cannot be obtained in the right varieties, colours and sizes at short notice by a company from its suppliers. As actions taken internally have only marginal effects, over time the need to enhance intra-company activities has been recognized, and an increasing number of manufacturing companies have turned to their suppliers (Lindberg and Trygg, 1991). According to Lamming (unpublished interview, 1994) the need to establish close relationships with suppliers has been experienced more with soft technology implementation, such as Just-in-Time (JIT) production and total quality management (TQM). Because of their systemic nature these technologies require the strong support of suppliers. Such modern techniques require a careful reassessment of the functioning of the whole value-adding process. A key element of that process is the relationship between the manufacturers and parts producers (Butcher, 1992, p 469). Good supplier-manufacturer relationships provide smoother and better material flows, and increase mutual ability to plan capacity and to respond to market fluctuations. Macbeth (1986, p 9) argued that as companies implement AMT (internal activity) and develop towards CIM, relationships with their suppliers exhibit changes. The adoption of new technologies and methods such as FMS requires changes in traditional relationships between companies (Asanuma, 1988, p 38; Schonberger, 1982). These changing buyer needs encompass changes in the product or service attributes that a buyer values, such as quality, quick delivery, reliability and technical assistance. These aspects determine the buyer's purchase criteria and are transmitted through their value chain. This, in turn, requires suppliers who can deliver under these new pressures. For example, suppliers are required who can change over quickly to new product programmes, or master new technologies to make or help design robust components (Burt, 1989; Ellram, 1991). As Chen and Small (1994) indicated, if a company wants to implement AMT successfully it should consider its likely impact on suppliers, and work towards closer relationships with them.
The pressures imposed by buyers on suppliers lead to the employment of AMT by suppliers. As buyers comprise the market environment for suppliers, the comments made earlier in the section 'Increasing competition as a stimulus to AMT adoption' also apply to suppliers and their adoption of AMT. The investment in AMT by suppliers depends on the established relationship between the buyer and the supplier (Lamming, 1986; Helper, 1991a; Carlisle and Parker, 1991). Lamming (1986) stated that in closer relationships suppliers are more likely to invest in technologies such as FMS and robots owing to the removal of shortterm danger. Helper (1991a) pointed out that a shift towards a voice relationship will affect the investment in new technologies. In such situations suppliers feel themselves more comfortable and able to invest in new technologies. Similarly Dyer and Ouchi (1993) argued that a long relationship between the buyer and supplier will make suppliers keener on investing in new technologies such as computer numerically controlled (CNC) machine tools, CAD/CAM systems, robotics and manufacturing cells. Matthyssens and Van den Bulte (1994) stated that one of the main disadvantages of an adversarial type of relationship is the difficulty for (exploited) suppliers to invest in new machinery and products owing to squeezed profit margins resulting from the buyers playing the suppliers off against each other. In summary, more collaborative buyer-supplier relationships can be taken to contribute positively to the diffusion of AMT throughout the supply chain.
34
Discussion This paper, so far, has visited the literature dealing mainly with interacting pairs of variables. In this section we combine these various relationships through a causal influence diagram (Figure 2) and examine support for the diagrammed influences. In Figure 2 the usual diagramming convention applies: that is, a change in the concept at the tail of the arrow causes a change in the concept at the arrow head. As with most influence diagrams, the intention is to portray the major influences between variables. What is offered is a selected view of a rich, complex situation, where many variables have reciprocal relationships through direct and indirect pathways. For
Manufacturing technology and the supply chain
Business competitiveness~ ((Buyer)
1
~ ~
( Sr u p~ p l i e r )( ) p I l e
Buyeradoptionof AMT
Figure
Businesscompetitiveness
Supplieradoptionof AMT
2 Influences between AMT adoption and buyer-supplier collaboration
clarity, although covered in the earlier review of the literature, omitted from Figure 2 are the major environmental pressures that drive: the change in buyer-supplier relationships, the erosion of firms' competitiveness and the adoption of AMT. In this diagram the buyer is accorded the dominant role of determining the buyer-supplier relationships, in keeping with the literature. The outer part of the figure forms a 'virtuous circle', where increased adoption of AMT drives up industry competitiveness and vice versa. The central part of this figure shows the main causal connections whereby the buyer's adoption of AMT increases the required extent of collaboration with suppliers, and this in turn increases the extent of the suppliers' adoption of AMT. Also indicated in the diagram is the impact that buyer-supplier relationships have on competitiveness through other factors. It could be argued that in focusing on the linkages between AMT and buyer-supplier relationships the diagram concentrates on causal paths of low importance. The earlier review of the literature should stand in response to such an argument. In addition, some early results drawn from a major piece of research are outlined next to support the approach delineated above. The research study, carried out in late 1994/early 1995, examined the supply chain of the Turkish automotive components industry. Although the automotive industry in Turkey does not have as long a history as it does in the USA or the UK, great strides have been taken in recent years to enhance the competitiveness of this important industrial sector. Major automotive manufacturers, such as Fiat, Renault, General Motors and Toyota, assemble vehicles in Turkey through joint ventures or under licence. Many parts are purchased from local suppliers, some of which are joint ventures between local firms
and major European manufacturers of automotive components. The research surveyed 83 Turkish firms, drawn from the automotive components supply chain, on the topics of AMT and buyer-supplier relationships. The selected firms were positioned at the top of the supply chain: 11 are vehicle assemblers and the remaining 72 supply components to assemblers. The surveyed firms were selected from industry-wide databases by purchasing department staff of a major vehicle assembler. Size, company age, market share and other criteria were used to select a representative sample of the industry. Most (54%) companies were medium-sized with between 50 and 199 employees, and had on average been trading for 20 years. A structured interview was carried out at each selected firm, and the data were recorded in questionnaire format. Table 3 shows the results of a question asking the respondents to rank those factors that had an effect on
Table
3 Factors affectingsupplier relationships
Overall position
Factor
Average rank
Standard deviation
1
Adoption of new manufacturing practices Increasing competitionin the market Changes in the technologyof products Economic factors Pressure from customers Government policies
2.71
1.33
2.95
1.55
3.23
1.63
3.28 3.84 4.99
1.43 1.71 1.59
2 3 4 5 6
Notes: n = 83. The ranking scale was from 1 (most important) to 6 (least important). Significancelevel <0.001 on one-wayANOVA.
35
H K Gules and T F Burgess the relationship with their suppliers. The top item is directly related to the adoption of new manufacturing practices, which includes, as a major element, the adoption of new technology. Item 3 (changes in product technology) also links to the issue of AMT implementation through the direct connection between product and process innovations (Utterback and Abernathy, 1975). In Table 4, the results are shown of asking the suppliers to rate the factors contributing to the success of AMT implementation. The top two factors are internal ones; using team working and top management involvement. The third- and fourth-ranked factors relate to supply chain relationships. The positioning of the respondents at the top of the supply chain allows them to highlight relationships with their customers (factor 3) and with their suppliers (factor 4) as important for successful AMT implementation. The results agree with the causal model of Figure 2 and the supporting literature cited earlier. Further evidence for the links in the model flows from other elements of the research. The sampled firms were questioned on their relationships with their suppliers using a modified form of the protocol developed by Sako (1992). This comprised 11 variables ranked on a scale of 1-3. These were added to form an overall measure of collaboration, where 11 represented an extreme adversarial relationship and 33 an extreme collaborative one. Respondents were questioned on the current situation and that prevailing five years ago. The change in buyer-supplier relationships over the preceding five years was statistically significant from an average of 15.3 to 20.7: that is, towards more collaboration. The extent of AMT adoption was measured for ten selected technologies on a five-point scale, similar to that used by Pike et al (1988). On the scale, 0 represented nil adoption while 4 represented a very high adoption level. Therefore overall AMT adoption could range from 0 to 40. As for buyer-supplier relationships,
Table 4 Factors contributing to the success of AMT implementation
Overall position 1 2 3 4 5 6 7 8 9 10
Factor
Average rating
Standard deviation
Using groups or team working Top management involvement Cooperative relationships with customers Cooperative relationships with parts suppliers Clear objectives established prior to AMT implementation Coordinated business and manufacturing strategies Having multiskilled workers Compatibility with existing systems Support of AMT suppliers Availability of external technical expertise
1.34 1.42 1.58
1.09 1.31 1.30
1.71
1.16
1.78
1.41
1.86
1.21
2.00 2.22
1.29 1.29
2.54 2.58
1.50 1.70
Notes: n = 83. Data are given on the rating scale from 1 (most important) to 7 (least important) (original scale inverted to be consistent with data in Table 3). Significance level <0.001 on one-way ANOVA.
respondents were asked for values for now and five years ago. Again, the change was statistically significant, moving from an average of 6.5 to 19.0. Based on the relationships embodied in Figure 2, the change in the measure for buyer-supplier relationship was regressed on the measure of change in AMT. Figure 3 shows the scatter diagram and regression line, while the results of the regression analysis are given in Table 5. The significant results of this regression are consistent with the view put forward of the connections between AMT implementation and collaborative buyer-supplier relationships. The change in AMT implementation 'explains' approximately a quarter of the change in buyer-supplier relationships during the period, and is therefore a major factor. The results
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Figure 3 Change in buyer-supplier relationship vs change in AMT adoption 36
Manufacturing technology and the supply chain Table 5 Regression of change in buyer-supplier relationship on
change in AMT adoption Variable
Coefficient
Standard error
Significance level
Change in AMT Constant
0.305 1.579
0.058 0.786
0.000 0.048
Note: R2 adjusted = 0.244.
show that other factors, which were not the focus of this research, must also have an important influence on buyer-supplier relationships. As indicated in the earlier review, the prevailing 'climate' in the European automotive industry is one where a move to more collaborative relationships is advocated as a useful end in its own right.
Concluding comments The literature review supplied evidence for a particular view of the links between the implementation of AMT and buyer-supplier relationships. In essence, the conclusion drawn from the literature is that the greater the extent of AMT implementation by a firm then the more collaborative the relationships should be with their suppliers. The empirical data derived from the recent survey of the Turkish automotive component supply industry are consistent with the connection advocated between the two variables. Firms ranked the adoption of manufacturing practices - a category that includes AMT implementation - as the major factor affecting relationships with suppliers. They also rated supplier relationships as an important contributor to the success of AMT implementation. Over the last five years these companies have collaborated more with their suppliers and have increased the extent of AMT implementation. For individual firms the extent of the changes in the two variables are linked positively and significantly: that is, the greater the increase in AMT implementation then the more collaborative relationships have become with their suppliers. The earlier sections of this paper explored many of the reasons advanced in the literature for this connection. A particular theme is that as organizations become more technologically sophisticated then the constructed supply chains become more 'fragile'. In such finely honed, closely coupled systems the 'costs' of switching from existing suppliers increase substantially. The conclusions above generate certain implications for the purchasing functions of manufacturing organizations. In the past, purchasing has too often been viewed as an adjunct or 'Cinderella' function in comparison with more centrally regarded functions such as production. This paper demonstrates that modifications to core aspects (production technology) have important consequences for both the company
and its suppliers. Corporate management need to recognize the increasingly central role that purchasing occupies in attaining improved business competitiveness through such changes. Conversely, purchasing personnel will have to accept the challenges and responsibilities that flow from this changed regime. More and more they will need to look both inwards to the technological characteristics of their organization (current and projected), and outwards to their suppliers' capabilities (current and potential). Purchasing staff are the gatekeepers in the growing interplay between the organization and its suppliers.
Acknowledgements We should like to thank the following from Otokar AS for their valuable assistance in arranging the interviews for this research: Kudret Onen (General Director), Ahmet Haciyunus (Purchasing Manager), Bekir Ugurlu, Nimet Sunnetci and Nilgun Topal-Balci (Purchasing Staff). Thanks also go to Peter York and Terry Hasewell of Land Rover UK for their comments and assistance in making contact with Otokar AS. We also acknowledge the generosity of the University of Selcuk, Konya, Turkey in funding the research studies of Hasan Gules. Finally we should like to register our appreciation to the reviewers and editor of the journal for their helpful comments on an earlier version of the paper.
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