Supply chain disruptions and sourcing strategies

Julia Cajal-Grossi, Davide Del Prete and Rocco Macchiavello

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Supply chain disruptions have recently been at the center of both academic and policy debates. After reviewing some of the emerging literature on supply chain disruptions, we discuss the role of buyers' sourcing strategies in mediating responses to such shocks. We focus on two dimensions of a buyer's sourcing strategy: relationality (the extent to which the buyer concentrates its sourcing in a few core suppliers) and just-in-time. On the one hand, theoretical models of sourcing suggest that these are complementary practices and their adoption should be positively correlated in the data. On the other hand, the two dimensions have opposing implications for supply-chain resilience to shocks. We borrow an empirical proxy for a buyer's relationality from Cajal-Grossi et al. (2023) and introduce a new proxy for a buyer's adoption of just-in-time inventory systems. Using data from the apparel global value chain we compute the two proxies and present three results: (a) the variation in both relationality and just-in-time is mostly explained by across-buyer variation, rather than product or country variation, (b) consistent with the theoretical analysis in Taylor and Wiggins (1997), relationality and just-in-time are highly correlated with each other across buyers, (c) at the onset of the global Covid-19 pandemic, buyers' overall sourced values declined relatively less for relational buyers but not for buyers with just-in-time inventory systems.

Keywords: just-in-time; relational sourcing; sourcing systems; supply chain (search for similar items in EconPapers)
JEL-codes: J50 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2023-09-01
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Citations: View citations in EconPapers (1)

Published in International Journal of Industrial Organization, 1, September, 2023, 90. ISSN: 0167-7187

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Journal Article: Supply chain disruptions and sourcing strategies (2023)
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