Complexity of Supply Chains : A Case Study of Purchasing Activities and Relationships

• Main Authors: Hanebrant, Magnus, Kinderbäck, Emil
• Format: Others
• Language: English
• Published: Internationella Handelshögskolan, Högskolan i Jönköping, IHH, Marketing and Logistics 2013
• Subjects: Supply Chain Complexity Purchasing Procurement Relationship Network Management Customer Supplier Supplies Framework Competition Competitive forces K5N Marketing
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-21487

Executive Summary In the complex world of today with customers as well as suppliers scattered around the world the inevitable outcome is complexity. Going back to the early days of industrialism companies to a large extent owned the whole chain from supplies to sales of the final products. An example is Ford, the company controlled almost the entire chain, they even established their own rubber plantation. During the last decades companies have switched to a more intense focus on their core competences leaving supporting services, raw material and components to others. Again, the manufacturing industry, using Ford as an example, uses sub-suppliers for components and material. Partly this is because today there is a far broader variety in what is produced according to customer’s different demands. Earlier people simply bought a car but today people have varying needs as well as a desire to express themselves by choosing model, color, rims et cetera. Today these companies are to a larger extent characterized as devel-opers-designers-assemblers. The choice was to investigate FläktWoods Jönköping, a Swedish company, part of FläktWoods Group. The company has been producing climate control equipment since 1918 as is considered as one of the world leaders in its line of business. Some of this company’s customer and product categories have been investigated together with relevant competition and relationships. An investigation regarding some of FläktWoods supplier categories and the related issues competition and relationships has also been performed. This has been done in order to understand how these matters are connected and affect each other as well as develop guidelines to handle these matters. In-terviews with different managers in the company have been conducted and the results were compared to related scientific literature. By studying FläktWoods certain patterns of internal as well as external relationships were found. It became clear that with an increased customer perceived complexity of products sold as well as complexity of components purchased by FläktWoods the importance and complexity of internal as well as external relationships increased. Also, with less competi-tion relationships also increased in importance. The outcome of these patterns is a framework structured in a number of steps that helps in forming these relationships by considering the nature of the products, components and competition. This can be seen as a tool for FläktWoods and potentially for other manufac-turing companies when forming different relationships.