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Sourcing complexity factors on contractual relationship: Chinese suppliers’ perspective

Subramanian, Nachiappan; Abdulrahman, Muhammad D.; Rahman, Shams

Authors

Nachiappan Subramanian

Muhammad D. Abdulrahman

Shams Rahman



Abstract

To reduce cost and gain competitive advantage, original equipment manufacturers (OEMs) around the world have continued their aggressive sourcing from China. However, sourcing in China has never been a straightforward process and OEMs face both tangible and intangible sourcing complexities with significant negative impact on both expected positive benefits and their contractual relationships with the Chinese suppliers. We developed sourcing complexity model using comprehensive literature review and multiple case studies in various industries to understand the suppliers’ views on sourcing complexity in China. We employed Analytic hierarchy process technique to prioritise identified complexity factors and to derive managerial insights. Our results indicate that tangible complexity factors highly influence the Chinese suppliers’ contractual relationship with OEM’s. Number of suppliers available to OEM’s to procure a component is identified as a primary dominating tangible factor, while differentiation in technical capabilities and operational practices between OEMs and suppliers represents the second biggest issue for Chinese suppliers in establishing contractual relationship with OEM’s.

Journal Article Type Article
Journal Production and Manufacturing Research
Electronic ISSN 2169-3277
Publisher Taylor & Francis Open
Peer Reviewed Peer Reviewed
Volume 2
Issue 1
APA6 Citation Subramanian, N., Abdulrahman, M. D., & Rahman, S. (in press). Sourcing complexity factors on contractual relationship: Chinese suppliers’ perspective. Production and Manufacturing Research, 2(1), https://doi.org/10.1080/21693277.2014.949361
DOI https://doi.org/10.1080/21693277.2014.949361
Keywords complexity; contractual relationship; sourcing complexity; suppliers; China
Publisher URL http://www.tandfonline.com/doi/abs/10.1080/21693277.2014.949361
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0
Additional Information Sourcing complexity factors on contractual relationship: Chinese suppliers’ perspective Nachiappan Subramanian, Muhammad D. Abdulrahman & Shams Rahman Production & Manufacturing Research Vol. 2 , Iss. 1,2014

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0



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