Competition suppliers

Jin, M., and Wu, D. Coordinating Supplier Competition via Auctions, Working paper, Lehigh University, 2004. http //www.lehigh.edu/ sdwl/ jinl.pdf, downloaded July 2012. 

The Impact of Supplier Competition— The Wholesale Price Auction... 

Thus, supplier competition to obtain the order results in lower buyer prices than in a monopolistic supplier supply chain. The lower wholesale price increases buyer profits and decreases supplier profits. 

The results discussed in this section surest the need to adjust the type of auction to extract the benefit of supplier competition as well as compensate for the decentralized supply chain. 

Competitiveness of the purchasing function involves measures such as cost, delivery performance, innovation, inventory levels, and so on. In the presence of supplier competition, buyers can use auctions as a filtering mechanism to improve performance. Solving the agency problem effectively is a key issue when managing suppliers. 

While an auction typically serves as a price-determination mechanism, Jin and Wu (2001a) show that it also could serve as a coordination mechanism for the supply chain. Analyzing different auction schemes under both complete and asymmetric information assumptions in a two-supplier one-buyer framework, they demonstrate that different forms of auction and market mechanisms change the nature of supplier competition, thus the buyer-supplier interaction. In a wholesale price auction, the buyer announces the quantity Q and the two suppliers bid wholesale prices to maximize expected profits. In a catalog auc-... 

Babich, V. 2005. Vulnerable options in supply chains Effects of supplier competition. Naval Research Logistics. 53(7) 656-673. 

The strategic importance is shown through the classiflcation of different purchasing items. These are, as already explained previously in this chapter, four different items -namely, strategic, leverage, bottleneck and noncritical items— as derived from the Kraljic matrix. The risks connected to these items can be derived from this model. Variables that impact these risks are availability, number of suppliers, competitive advantage, make-or-buy opportunities, storage risks and substitution possibihties (Kraljic 1983 Park et al. 2010). 

Although the first two materials discussed in this chapter, the polyphenylenes and poly-p-xylylenes, have remained in the exotic category, most of the other materials have become important engineering materials. In many cases the basic patents have recently expired, leading to several manufacturers now producing a polymer where a few years ago there was only one supplier. Whilst such competition has led in some cases to overcapacity, it has also led to the introduction of new improved variants and materials more able to compete with older established plastics materials. 

The requirements of the automotive industry are more demanding than some other industries. Automotive products have to be safe, reliable, and maintainable, protect the occupants, and have minimal impact on the environment in their manufacture, use, and disposal. The automotive sector is a very competitive market and as a consequence costs have to be optimized. There is little margin for excessive variation, as variation causes waste and waste costs money and time. Therefore several methods have evolved to reduce variation. Among them are SPC, FMEA, MSA, and many other techniques The automotive industry believes that the more their suppliers adopt such variation reduction techniques the more likely it will be that the resultant product will be brought to the market more quickly and its production process be more efficient. 

The standard requires that goals and plans cover short-term and longer term and be based on analysis of competitive products and on benchmarking inside and outside the automotive industry and the supplier s commodity. 

In this competitive environment, product design may well be carried out during the tendering phase and yet ISO/TS 16949 does not require all aspects of the tendering phase to be performed under controlled conditions. However, customers need confidence that the supplier s tender was produced under controlled conditions. That is, there is more to the words in the tender than mere promises - the facts have been checked and validated any proposed solution to the requirements will if implemented actually satisfy all the accepted requirements. 

The supplier does not need to own research and development facilities and may subcontract conceptual or complex design work to design studios. Clearly customers in the automotive sector are seeking new solutions to engineering problems and in order to capture the competitive edge, innovation is paramount. 

The third transition procedure defines the rules under which competitive suppliers of electricity can compete for end users. There are two polar models that are often debated for power market organization the direct access (or bilateral contracts) regime, and the Poolco regime. Under direct access, consumers enter into direct contracts with competitive suppliers of electricity, and competitive providers of electricity enter into contracts with, and pay an access fee to, the local (regulated) distribution company for the use of local power lines. 

In restructured electric markets, the vertical electric monopoly vill no longer be the sole provider of electricity. The generation, transmission, distribution, and customer service functions will be separated. The upstream generation function will be competitive, allowing new, any power producer to produce and sell electricityin any service territoi"y. The transmission and distribution functions will continue to be regulated, but will be required to allow access to power suppliers and marketers. This separation or unbundling of the industi"y is necessai"y to provide nondiscrimina-tory access for all suppliers of electricity. Customers will have their choice of electric suppliers. 

The electricity mdustiy is m the midst of a transition from a vertically integrated and regulated monopoly to an entity in a competitive market where retail customers choose the suppliers of their electricity. The change started in 1978, when the Public Utility Regulatoiy Act (PURPA) made it possible for nonutility power generators to enter the wholesale market. 

With the opening of the transmission network to all resource suppliers, many marketing entities entered the game in the mid-1990s. Many of these marketers are subsidiaries of already established gas suppliers. Some have been created solely for the electric industry. Still others have been formed from the utilities themselves. All of these etitities arc competition-motivated. Facility planning and reliability issues, while important to their business, are left to other organizations. 

Electronic marketplace/E-commerce In addition to the many databases available and person-to-person contacts, E-commerce in plastics has been conducted through suppliers web sites or the dot-commerce independent web sites that link material buyers with sellers in transactions or auction formats. During the year 2000 five plastic producers/suppliers and various elastomer producers/suppliers created a new and important business model of a joint-venture web site. It provides multiple companies to join forces to do business. This is a strategy some observers call competition and others regard as just another form of selling in. an electronic format. Regardless of how it is perceived, the model will help propel e-commerce into the mainstream of processor procurement due to the size and wealth of the companies involved. The plastic model example is the largest online business-to-business site todate. 

There is wide variation in the activity, specificity, compatibility, and mode of action of the many individual raw material organics used in product formulations. The quality of some raw materials, and ultimately supplier formulations, may be suspect. Not all competitive polymers or formulated products provide equal performance for an equivalent price. 

Local suppliers of hardware and electronic parts often offer many items useful in the laboratory at very competitive prices. 

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