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Article: Supplier Quality Management: Investment, Inspection, and Incentives
Title | Supplier Quality Management: Investment, Inspection, and Incentives |
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Authors | |
Keywords | Buyer direct investment Incentives Inspection Quality Supplier management |
Issue Date | 2017 |
Publisher | Wiley-Blackwell Publishing, Inc.. The Journal's web site is located at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1937-5956 |
Citation | Production and Operations Management, 2017, v. 27 n. 2, p. 304-322 How to Cite? |
Abstract | Buyers can manage product quality sourced from suppliers in three ways: they can improve the quality incoming from suppliers directly by investing in suppliers to improve a process/product, they can improve the incoming quality indirectly by incentivizing supplier quality-improvement efforts, and/or they can control the quality outgoing to subsequent processes by inspecting incoming units. In this study, we study a buyer's use of these three instruments—investment, incentives, and inspection—to manage the sourced quality. To do so, we consider a general relationship between the buyer's direct investment effort and supplier's quality-improvement effort, allowing them to be complementary, substitutable, or additive in their quality-improvement effects. For situations in which the buyer and the supplier decide their efforts simultaneously with contractible internal-failure events, we identify three types of strategies: the investment-based strategy (focusing on the buyer's investment effort) for strongly substitutable efforts, the inspection-based strategy (focusing on inspection) for strongly complementary efforts, and the integrative strategy (emphasizing all three instruments) for additive efforts. If buyer-investment commitment is possible, then the inspection-based strategy in which both parties defect in their efforts will be replaced by a collaboration-based strategy in which both parties exert high efforts to improve quality. Contracting upon external failures (in addition to internal failures) does not change this strategy pattern; however, when combined with buyer-effort commitment, such a contract achieves the first-best result. |
Persistent Identifier | http://hdl.handle.net/10722/258998 |
ISSN | 2023 Impact Factor: 4.8 2023 SCImago Journal Rankings: 3.035 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Lee, H | - |
dc.contributor.author | Li, C | - |
dc.date.accessioned | 2018-09-03T03:59:50Z | - |
dc.date.available | 2018-09-03T03:59:50Z | - |
dc.date.issued | 2017 | - |
dc.identifier.citation | Production and Operations Management, 2017, v. 27 n. 2, p. 304-322 | - |
dc.identifier.issn | 1059-1478 | - |
dc.identifier.uri | http://hdl.handle.net/10722/258998 | - |
dc.description.abstract | Buyers can manage product quality sourced from suppliers in three ways: they can improve the quality incoming from suppliers directly by investing in suppliers to improve a process/product, they can improve the incoming quality indirectly by incentivizing supplier quality-improvement efforts, and/or they can control the quality outgoing to subsequent processes by inspecting incoming units. In this study, we study a buyer's use of these three instruments—investment, incentives, and inspection—to manage the sourced quality. To do so, we consider a general relationship between the buyer's direct investment effort and supplier's quality-improvement effort, allowing them to be complementary, substitutable, or additive in their quality-improvement effects. For situations in which the buyer and the supplier decide their efforts simultaneously with contractible internal-failure events, we identify three types of strategies: the investment-based strategy (focusing on the buyer's investment effort) for strongly substitutable efforts, the inspection-based strategy (focusing on inspection) for strongly complementary efforts, and the integrative strategy (emphasizing all three instruments) for additive efforts. If buyer-investment commitment is possible, then the inspection-based strategy in which both parties defect in their efforts will be replaced by a collaboration-based strategy in which both parties exert high efforts to improve quality. Contracting upon external failures (in addition to internal failures) does not change this strategy pattern; however, when combined with buyer-effort commitment, such a contract achieves the first-best result. | - |
dc.language | eng | - |
dc.publisher | Wiley-Blackwell Publishing, Inc.. The Journal's web site is located at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1937-5956 | - |
dc.relation.ispartof | Production and Operations Management | - |
dc.subject | Buyer direct investment | - |
dc.subject | Incentives | - |
dc.subject | Inspection | - |
dc.subject | Quality | - |
dc.subject | Supplier management | - |
dc.title | Supplier Quality Management: Investment, Inspection, and Incentives | - |
dc.type | Article | - |
dc.identifier.email | Lee, H: hhlee@hku.hk | - |
dc.identifier.authority | Lee, H=rp01556 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1111/poms.12802 | - |
dc.identifier.scopus | eid_2-s2.0-85033677956 | - |
dc.identifier.hkuros | 289121 | - |
dc.identifier.volume | 27 | - |
dc.identifier.issue | 2 | - |
dc.identifier.spage | 304 | - |
dc.identifier.epage | 322 | - |
dc.identifier.isi | WOS:000425034100007 | - |
dc.publisher.place | United States | - |
dc.identifier.issnl | 1059-1478 | - |