info
abstract
Article history:
Received 26 October 2009
Received in revised form 5 November 2010
Accepted 10 November 2010 Available
online 18 November 2010
Keywords:
Supply networks
Supply chain management
Second-tier suppliers
Social network analysis
Network structure
Structural analysis
Network indices
Department of Management, Marketing, and Logistics, College of Business Administration, Georgia Southern University, Statesboro, GA 30460, United States b Department
of Supply Chain Management, W. P. Carey School of Business, Arizona State University, Tempe, AZ 85287, United States
1.
Pengenalan
2. Literature review
2.1. Supply networks
Supply networks consist of inter-connected firms that engage in
procurement, use, and transformation of raw materials to provide goods
and services (Lamming et al., 2000; Harland et al., 2001). The relatively
recent incorporation of the term network into supply chain
management research represents a pressing need to view supply chains as
a network for firms to gain improved performance, operational
efficiencies, and ultimately sustainable competitiveness (Corbett et al.,
1999; Dyer and Nobeoka, 2000; Kotabe et al., 2002). Therefore, it is
increasingly important to analyze the network structure of supply
relationships.
195
196
197
same set of nodes, can have different network structures and, therefore,
different logics and implications (Borgatti and Li, 2009).
198
Table 1
Node-level centrality metrics and their implications for supply networks.
Materials flow
Contractual
relationship
Network type
Indegree
centrality
Supply load
Integrator
Outdegree
centrality
Demand load
Allocator
Betweenness
centrality
Operational
criticality
Pivot
Degree
centrality
Influential scope
Closeness
centrality
Informational
independence
Betweenness
centrality
Relational
mediation
Centrality
constructs
Supply network
Rolea
a
System integration
Design/development
Architectural
innovation
Process/manufacturing
Quality management
Component innovation
Out-bound logistics
To facilitate or control the flows of
Risk management
supply across the whole network
In- and out-bound
logistics
Cross-functional integ.
Description
CD
g 1.
Contract management
SRM/CRM with the
Information acquisition
Strategic alignment
with OEM
Information processing
Strategic alignment
with OEM
Key capabilities
199
1
In-degree centrality and out-degree centrality
indicate the size of the adjacent upstream tier and
downstream tier, respectively. A high in-degree or outdegree can capture transactional intensity or related
risks for a firm (Powell et al., 1996). In a materials flow
network, in-degree centrality for a firm can reflect the
degree of difficulty faced by the firm when managing
the incoming material flows. In other words, this metric
measures the firms operational load coming from the
upstream suppliers. A firm with high indegree centrality
may serve the role of an integrator, as they are tasked
with organizing and incorporating a range of parts from
various suppliers to maintain the overall integrity of the
product or service (Parker and Anderson, 2002; Violino
and Caldwell, 1998). Such members in a supply
network are instrumental and vital in carrying out the
architectural or technical changes in the current product
(Henderson and Clark, 1990; Iansiti, 2000).
Out-degree centrality relates to the firms level of
difficulty in managing the needs of customers. The
more direct customers there are in downstream, the
more challenging it is for the firm to ensure on-time
delivery, cost-effective
inventory, and
order
management for their customers. The number of direct
customers is thus positively associated with the
operational
load
relatedtodemandintegrationandresourceallocation(Frohli
chand Westbrook, 2002). In a materials flow supply
network, a firm with high out-degree centrality tends to
be a common supplier to multiple downstream firms.
Such supplier can economize and capitalize on its own
internal resources as it aggregates demands from a
range of customers (Nobeoka, 1996). Further, this firm
is more likely than others to gain access to proprietary
assets or information of its customer firms. This firm is
in the best position to allocate or channel production or
technical information to others in the network
(Cassiman and Veugelers, 2002).
where
(ni,nj) is the total distance between n i and
all other nodes. At a maximum, the index equals (g
1)1, which happens when the node is adjacent to all
other nodes. When all the other nodes are not reachable
from the node in question, the index reaches its
minimum value of zero. The index can be normalized
by multiplying CC(ni) by g 1. The value then ranges
between 0 and 1 regardless of network size
(Beauchamp, 1965). In this study, the normalized index
is converted to a 0100 scale.
Nodes with high closeness need not much rely on
others for relaying information or initiating
communications (Bavelas, 1950; Beauchamp, 1965;
Leavitt, 1951). This metric, in a supply network
context, thus can represent the extent to which a firm
can act autonomously and navigate freely across the
network
to
access
resourcesinatimelymanner.Suchafirmhascomparativelys
horter supply chains, both upstream and downstream.
Shorter chains translate into less distortion of
information and better ability to access reliable
information (e.g., demand forecasts, supply disruption)
in a timelier manner (Lee et al., 1997; Chen et al.,
2000). Such accessibility to high-quality information
increases the firms capability to match supply and
demand (Cachon and Fisher, 2000), resulting in less
inventory and lower operational costs (Lee et al., 2000).
3.2.1.3. Betweenness centrality in supply network.
Betweenness centrality appears under both types of
networks. A firm can lie between a pair of non-adjacent
firms either along their materials flow or contractual
relationship. The intermediary will have different
effects on the firms it links, whether directionally or
non-directionally. Measuring betweenness centrality
begins with an assumption that a connection between
two nodes, nj and nk, follows their geodesics. Therefore,
betweenness centrality can be expressed as (Freeman,
1977):
g
j
k
(
n
i
)
CB(ni) =
g
j
k
j
<
k
CB (ni) =
(CB(gni) 2)/2] 100.
[(g
1)
200
Table 2
Network-level metrics and their implications for supply networks.
Network type
Network-level
metrics
Materials flow
Contractual
relationship
Centralization
Complexity
Centralization
Complexity
CD
.
Given g nodes in the network, the denominator
reduces
to
(g
1)(g
2).ThevalueofCD
reachesthemaximumvalueof1when one node is
connected with all other g 1 nodes, and the others
interact only with this node. Its minimum value of 0
occurs when all degree centrality values are equal.
In supply networks, centralization can refer to how
much power or control the core firms exercise over
other network members (Choi and Hong, 2002). In
this study, besides centralization based on degree,
two other centralization
a
Performance implications
High level of controllability in production
planning
Low level of operational effectiveness at the
network-level (i.e., more time taken to reach
a decision and take actions on issues at a
local level)
Low level of operational efficiency at the
network level (i.e., longer lead time from the
most upstream to the final assembler or more
parts for the same product function)
201
202
203
Centralization
Complexity
Product type
Honda Accord
Acura CL/TL
204
205
206
207
Table 4
List of key firms based on materials flow network.
Supply load1
Demand loadb
Operational criticalityc
Acura
DCX
a
Firms with in-degree>10. b
Firms with out-degree>6. c Firms
d
with
betweenness>1.0.
Centrality score.
Table 5
List of key firms based on contractual relationship network.
Influential scopea
Informational independenceb
Relational mediationc
Accord
Acura
DCX
a
Fi
r
m
s
w
it
h
d
e
gr
ee
>
1
5.
Centralization (in-degree)
0.567
0.556
Centralization (out-degree)
0.106
0.056
Centralization (betweenness)
0.128
0.029
Fi
r
m
s
w
it
h
cl
os
e
n
es
s
>
4
0.
c
Firms with betweenness>10.
19
23
Core density
0.067
0.059
0.006
0.000
0.064
0.043
Periphery density
0.000
0.000
3
4
0.
6
4
1
0.
0
0
1
0.
0
3
8
4
0.
2
5
0
0.
0
0
0
0.
2
5
0
0.
0
0
0
Table 6
Network-level results for materials flowa supply networks.
Network measures
Average in-degree
Average out-degree
4.630
Table 7
Network-level
networks.
results
for
contractual
relationship a supply
Network measures
Product type
Accord
Average betweenness
0.809
28
Acura
34
DCX
27
0.074
Average degree
7.407
Average closeness
35.716
Average betweenness
7.407
Centralization (degree)
0.479
Centralization (closeness)
0.459
Centralization (betweenness)
0.748
17
Core density
0.125
208
0.066who
Table 8
Key indicators for network complexity.
CTP or PTC density
Network size
( firms)
Periphery density
0.048
0.179
Materials flow network
Network
0.036
density
Core size
0.000
Core
density
Accord 28 0.046 19 0.067 0.006 0.064 0.074 17 0.125 0.036 0.048 Acura 34 0.037 23 0.059 0.000 0.043 0.066 6 0.467 0.000 0.179
DCX
27
0.037
4
0.250
0.000
0.250
0.074
6. Interpretation of results
In this section, we recapitulate the SNA results
shown in Tables 48 with reference to the supply
network constructs developed in this study (see
Tables 1 and 2). We provide network dynamics
implications of the node-level results first and then
those of the network-level results. A summary of
the SNA results at the node- and network-level is
shown, respectively, in Tables 9 and 10.
6.1. Node-level implications
6.1.1. Key firms in the materials flow supply
networks
Table 4 compares groups of firms across
supply load, demand load, and operational
criticality (see Table 1 for definitions). CVT, a
first-tier supplier in Accord supply network,
appears highly central, showing the highest scores
on all three columns. In other words, CVT
assumes the most operational burden on both the
supply side and demand side. This firm is tasked
with integrating multiple parts into a product,
which also means the firm can make the most of
its resources by pooling customer demands and
the related risks. CVT is also the pivotal player in
the movement of materials. Without this firm, the
entire supply chain would be disrupted. In
contrast, we observe that another top-tier supplier
of Accord, JFC, is not as central. Its centrality
scores are markedly lower than those of CVT, and
there are other second- (i.e., C&C, Emhart, and
Yamamoru) and third-tier suppliers (i.e., Fitzerald)
Core size
Core
density
0.667
Periphery
density
0.000
PTC density
0.333
209
Clearly,JFCismoreisolatedinthecontractualrelation
shipnetwork.
For Acura supply network, Intek appears yet
again as most central, while Honda emerges as
central also. Thus, Intek looks like most
influential in the contractual relation network and
none could bypass Intek to connect with Honda.
The network position allows Intek to take control
of information and communication flows. One
supplier for Acura that appears in Table 5 but did
not in Table 4 is HFI. HFI is a lone third-tier
supplier that SNA picked up as being a key firm
under Informational Independence. This is largely
because
T
a
b
l
e
Accord
Acura
CVT, a 1st-tier suppliers, is most central, and assumes the most operational burden on
both supply and demand sides
HFI and C&C, two 2nd-tier suppliers, need to handle high degrees of supply load and
demand load, respectively
Two 2nd-tier suppliers (Emhart and Yamamoru), and one 3rd-tier (Fitzerald) are also
central as a go-between along the materials flow
Intek, the sole 1st-tier supplier, is most central under both supply load and operational
criticality
HFI, a 3rd-tier supplier, emerges as key under managerial independence due to its ties with
other key suppliers
Two 2nd-tier suppliers, Arkay and Select Industries, rank consistently high on all three
centrality metrics
Textron, the sole 1st-tier supplier, and Leon, a 2nd-tier supplier, are most central under
both supply load and operational criticality
Textron and Leon are two most central on every centrality metrics
9
N
o
d
e
l
e
v
e
l
o
v
e
r
v
i
e
w
.
Acura
DCX
Relatively high centralization across all three types, and substantial lead on average
betweenness score
Much higher indegree centralization than the other two types
Little reciprocity between the core and peripheral firms (much higher PTC density than
CTP density)
Peripheral firms engage solely in supplying to core firms
Largest discrepancy between PTC and CPT density among three SNs
concentratedonasmallnumberoffirms.Asexpected,thes
efirmsin the core group are tightly knit, as evidenced
by a high core density. Such simple structure can
provide high operational efficiency at the networklevel (e.g., shorter lead time from upstream suppliers
to the final assembler); however, if multiple issues
were to happen simultaneously they could overwhelm
the few central players and could require much more
time for resolution.
6.2.2. Characteristics of contractual relationship
supply networks
The density for Accord is much higher in Table 7
than it was in Table 6. This is because contracts can
jump across several tiers. As expected, the same thing
happens for Acura and DCX as well. In terms of
centrality metrics, Accords supply network shows
relatively low average closeness but high average
betweenness scores. Such a structure may be less
responsive or more susceptible to supply disruptions.
It would possibly take more time channeling
information and there is a higher chance that
information becomes distorted on its way along the
chains as more firms get involved in transferring it.
Therefore, such structure is likely to be less robust or
less effective when it comes to coping with supply
disruptions. By the same token, the structure would
provide greater complexity at the network level for
Accord, as also evidenced by Accords relatively
large core group size (see Table 7). Further, it has
relatively high periphery density, which further
indicates that the network is complex because there
are more interactions going on even among peripheral
members. Still, more contacts among members at the
local level might facilitate identifying, if any, supply
issues occurring locally.
210
211
7. Discussion
7.1. Comparisons between SNA results and C&H
study
7.1.1. Overlapping and divergent results
One of the main findings of C&H was the
three OEMs varying degrees of centralized
control over their supply networks. The SNA
results confirm this. In particular, the final
assemblers practice of directed sourcing is
captured in the contractual relationship network
structure. For instance, the high values in Hondas
various centralities and overall density in the
contractual relationship network, compared to
those in the materials flow network, is clearly
attributable to the added links that represent
Hondas directed sourcing practice involving its
second- and third-tier suppliers. Another finding
shared by both studies is the relational salience of
those tertiary-level suppliers in the network that
are sourced directly by OEMs. All of such
suppliers (e.g., Emhart for Accord and Iwata Bolt
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