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The Sourcing Hub and Upstream Supplier Networks

Author

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  • Anupam Agrawal

    (College of Business, University of Illinois at Urbana–Champaign, Champaign, Illinois 61820)

  • Luk N. Van Wassenhove

    (Technology and Operations Management, INSEAD, 77305 Fontainebleau, France)

  • Arnoud De Meyer

    (Singapore Management University, Singapore 188065)

Abstract

In this paper, we explore how firms can better manage their sourcing by developing relationships not only with their suppliers but also with their suppliers' suppliers. We detail an empirical case study explaining how the firm developed relationships with its suppliers and raw material suppliers via a collaborative center, the sourcing hub. We then analytically model the scenarios encountered in our empirical work and examine two facets of upstream sourcing under uncertain demand scenarios: (a) firms can supply raw material directly to their suppliers, and this may be beneficial for the firm and its suppliers; and (b) firms can bring their suppliers together at the sourcing hub, and the resulting cooperation between suppliers is beneficial for the suppliers and the raw material suppliers. Overall, our work explores the market and economic conditions under which active management of upstream sourcing can add value to supply chains.

Suggested Citation

  • Anupam Agrawal & Luk N. Van Wassenhove & Arnoud De Meyer, 2014. "The Sourcing Hub and Upstream Supplier Networks," Manufacturing & Service Operations Management, INFORMS, vol. 16(2), pages 238-250, May.
    • Handle: RePEc:inm:ormsom:v:16:y:2014:i:2:p:238-250
    DOI: 10.1287/msom.2013.0461
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