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Supplier Integration in Category Management: A case study of the situational impact on relationship performance and interdependence
Linköping University, Department of Management and Engineering, Industrial Economics. Linköping University, Faculty of Science & Engineering.
2015 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Supplier integration in category management means that a supplier takes part in the activities that are traditionally performed by retailers. These activities are the selection of which products to sell, decisions on how to price and market the products, and making sure that the products are delivered to the stores in a timely manner. Depending on the situation, an integration of suppliers in these activities can be more or less suitable.

As more research is needed to understand when supplier integration in category management is suitable, the purpose of this thesis is to describe and analyze how situational factors affect the relationship consequences of supplier integration in category management. Specifically, the relationship consequences are expressed in terms of relationship performance and interdependence between the firms.

The study builds on empirical data about British and Swedish builders’ merchants and their suppliers, with a particular focus on timber suppliers. Data has mainly been collected through participative observations and interviews.

Five situational factors that improve the relationship performance of supplier integration in category management are identified: large retailer firms, supplier product knowledge, homogeneity of market demands for the supplier’s products, mutual trust and a shared view on customer value between the supplier and retailer. Three situational factors are identified that affect the interdependence between the retailer and the supplier when supplier integration in category management is implemented: supplier product knowledge, whether the supplier or the retailer initiates the integration and whether coercive or non-coercive power has to be used in the implementation.

This thesis contributes to retail literature by highlighting the need to include situational factors in the analysis of supplier integration, clarifying which activities are comprised by category management and suggesting a theoretical foundation based on the resource-based view and the transaction cost framework to analyse relationship performance in retailer-supplier dyads. When making decisions on integration, managers of retailers and their suppliers are advised to consider the fit with their overall strategy, the fit with the surrounding situation and the effects both in terms of interdependence and relationship performance.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2015. , 118 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1705
Keyword [en]
Supplier integration, category management, interorganizational relationships, retail
National Category
Business Administration
Identifiers
URN: urn:nbn:se:liu:diva-121511DOI: 10.3384/diss.diva-121511ISBN: 978-91-7685-943-8 (print)OAI: oai:DiVA.org:liu-121511DiVA: diva2:856037
Public defence
2015-11-06, A1, A-huset, Campus Valla, Linköping, 13:15 (English)
Opponent
Supervisors
Available from: 2015-09-23 Created: 2015-09-23 Last updated: 2015-11-19Bibliographically approved
List of papers
1. The dynamic effects of power in buyer-seller relations – the process of gaining and using power to increase share of profitability
Open this publication in new window or tab >>The dynamic effects of power in buyer-seller relations – the process of gaining and using power to increase share of profitability
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This conceptual study contributes with an understanding of the dynamic effects of power in buyer-seller relations and how power can be used to increase share of profitability from a buyer-seller relation. It is concluded that coercive and non-coervice power bases can be used for fundamentally different purposes, but at the same time they are closely related to each other. Non-coercive power is used for achieving changes which are unresisted by the influencee, meaning that the change is welcomed by the influenced actor. As no resistance is overcome the influencer is not losing any power – it is only redistributed to other power sources. A change caused by a non-coercive power base may therefore create a coercive power base for the influencer. A coercive power base is used for achieving resisted changes, meaning that the change is unwanted by the other actor. One type of resisted change is a change in how value is shared. With this reasoning, it is concluded that an increased share of profitability is achieved through exerting power from a coercive power base. This power base can have appeared from changes caused by exertions of non-coercive power bases. By understanding the mechanisms behind how power can be used, managers are aided in their decision making and analyses of negotiating situations.

Keyword
Proactive range management, business model, retail, ARA model
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-95560 (URN)
Available from: 2013-07-08 Created: 2013-07-08 Last updated: 2015-09-23Bibliographically approved
2. Power in distribution channels: Supplier assortment strategy for balancing power
Open this publication in new window or tab >>Power in distribution channels: Supplier assortment strategy for balancing power
2016 (English)In: Industrial Marketing Management, ISSN 0019-8501, E-ISSN 1873-2062, Vol. 54, 176-187 p.Article in journal (Refereed) Published
Abstract [en]

This paper focuses on the move from buyer dominance toward interdependence between buyers and suppliers in a distribution channel. The paper introduces a case study collected through in-depth interviews and participative observations. It examines the relationships between a timber supplier and its customers in the builders’ merchants sector. We stress the relevance of considering actions intended to change the power balance, rather than focusing only on trust. The power balance in a dyadic relationship is dynamic, and power positions need to be constantly re-evaluated. An important power resource is information asymmetry, manifested in the supplier’s information about: products, regional and local demand, and the usage of the products. For practitioners, we highlight the possibility of exerting a non-coercive power resource, such as information asymmetry, in order to increase the relative power. Furthermore, being open about the power position between a buyer and a seller can foster a more efficient collaboration.

Place, publisher, year, edition, pages
Elsevier, 2016
Keyword
Power, Distribution channels, Information asymmetry, Resource dependence, Supplier–retailer relationships, Assortment, Power regimes
National Category
Other Mechanical Engineering Business Administration
Identifiers
urn:nbn:se:liu:diva-121505 (URN)10.1016/j.indmarman.2015.07.007 (DOI)000375165800017 ()
Available from: 2015-09-23 Created: 2015-09-23 Last updated: 2017-12-01Bibliographically approved
3. Supplier integration in the assortment management of builders’ merchants
Open this publication in new window or tab >>Supplier integration in the assortment management of builders’ merchants
2015 (English)In: International Journal of Retail & Distribution Management, ISSN 0959-0552, E-ISSN 1758-6690, Vol. 43, no 7, 634-651 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – The purpose of this paper is to explore supplier integration in the assortment management of builders’ merchants (BMs) by identifying potential factors enabling supplier integration and potential factors mediating the success of supplier integration.

Design/methodology/approach – A qualitative case study method was used, in which interviews and participative observations were conducted with a timber supplier and BMs in the UK.

Findings – The likelihood that a supplier and a retailer will implement supplier integration is positively affected by the retailer’s format as a large chain with several product categories represented in its stores and the retailer’s trust in the supplier. Effectiveness and efficiency of supplier integration is mediated by the number of different retail formats represented by the retailers, the ability of the supplier to determine cost drivers in its operations and a homogeneous market, meaning that local circumstances have limited effect on demand.

Research limitations/implications – The findings are exploratory and further testing of the propositions, using a wider empirical sample, is required. The paper extends theories relating to resource complementarity and suggests that a resource complementarity framework can be applied in relationships other than alliances.

Practical implications – This paper suggests when incorporation of supplier resources is possible to implement and when it is likely to succeed.

Originality/value – This paper uses a contingency perspective to explore supplier integration and targets individual buyer-supplier relationships. It uses a dyadic perspective and considers how supplier integration affects the dyad, rather than only the buyer.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2015
Keyword
Supplier integration; resource dependence; resource-based view; supplier-retailer relationships; builders’ merchants; assortment
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-121506 (URN)10.1108/IJRDM-03-2014-0029 (DOI)
Available from: 2015-09-23 Created: 2015-09-23 Last updated: 2017-12-01Bibliographically approved
4. Resource alignment in the category management of builders’ merchants
Open this publication in new window or tab >>Resource alignment in the category management of builders’ merchants
2016 (English)In: International Review of Retail Distribution & Consumer Research, ISSN 0959-3969, E-ISSN 1466-4402, Vol. 26, no 1, 55-74 p.Article in journal (Refereed) Published
Abstract [en]

Previous retailer-supplier research reports both positive and negative collaboration outcomes. Resource alignment, or how collaborating actors’ resources affect each other, is a concept that has been brought forward to explain when collaboration increases performance. As the category management of builders’ merchants involves actors with different sets of resources, the resource alignment framework can be used to better understand the outcomes of collaboration in category management. The aim of this paper is to explore resource alignment among actors involved in the category management of builders’ merchants. The paper is based on interviews with top managers in Swedish builders’ merchants. Complementary and supplementary resources held by the involved actors are identified for four  distinguished category management activities. Resources needed to further improve the business are also identified. Three propositions are formulated, explaining how supplementary and complementary resources are interrelated and how the situation influences the need for supplementary resources. The description of resource alignment supports retailers and their suppliers concerning how to assign roles and responsibilities in category management activities. While the retailers themselves are often well equipped to manage pricing and inventory management, the supplier can support assortment and marketing management.

Place, publisher, year, edition, pages
Taylor & Francis, 2016
Keyword
resource alignment, retailer supplier collaboration, category management, builders’ merchants
National Category
Business Administration
Identifiers
urn:nbn:se:liu:diva-121507 (URN)10.1080/09593969.2015.1120681 (DOI)
Available from: 2015-09-23 Created: 2015-09-23 Last updated: 2017-12-01Bibliographically approved
5. Open Book Accounting with Fixed Returns in an Outsourcing Implementation
Open this publication in new window or tab >>Open Book Accounting with Fixed Returns in an Outsourcing Implementation
2015 (English)Manuscript (preprint) (Other academic)
Abstract [en]

Purpose – The purpose of this paper is to explore open book accounting with fixed returns in the context of an outsourcing implementation. We look to identify circumstances in which open book accounting with fixed returns takes place, how failures can be avoided and what kinds of benefits can be achieved by the accounting method.

Design/methodology/approach – This paper is based on a case study involving a builders’ merchant in a wood manufacturer in the UK. The builders’ merchant has recently outsourced part of its production to the wood manufacturer, using open book accounting with fixed returns. Interviews have been conducted with multiple people from both parties in the agreement.

Findings – It was found that open book accounting with fixed returns can exist despite low initial competence trust, and that only one party has to see a benefit of using open book accounting. Failures in the implementation of open book accounting may be avoided by promoting understanding of the agreement among the people involved, and by making thorough calculations of the supplier’s costs. The benefits of open book accounting with fixed returns identified in this paper are cost savings, closer cooperation and interorganizational learning, lock-in effects, and decreased supplier risk.

Originality/Value – This paper provides the first study of open book accounting where the parties have agreed to fix the returns of the supplier and where the agreement was made as a result of an outsourcing decision. It adds to the developing literature on open book accounting, in particular, and on interorganizational cost management, in general.

Keyword
Open book accounting, outsourcing, inter-organizational cost management
National Category
Business Administration
Identifiers
urn:nbn:se:liu:diva-121509 (URN)
Available from: 2015-09-23 Created: 2015-09-23 Last updated: 2015-09-23Bibliographically approved

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