Managing Value in Supply Chain - Case Studies on the Sourcing Hub Concept

In this paper we examine the sourcing experiences of four firms in four different countries in the automotive industry and identify the raw material sourcing knowledge‐related parameters with appropriate theoretical explanations.

Synthesizing the findings from these case studies, we propose the concept of the sourcing hub, a collaborative center involving the firm, its suppliers and raw material suppliers as the principal mechanism for capturing and deploying the raw material sourcing knowledge for managing value in upstream sourcing.

Introduction
Outsourcing can improve the flexibility to respond to changes in demand and technology (and thus spur innovation), and may also help in avoiding inefficiencies in coordination and design[1, 2].

However, for products and components in which raw material is a large part of the cost, there may be value for a buyer in managing the upstream raw material (RM)
supply chain of the component/ product differently from the manufacturing part of the component.

We examine this issue by detailing the sourcing practices of four automotive firms in four different countries. We focus on the complex supply network upstream of a
buyer, comprising of its direct suppliers and raw material suppliers, and how managing RM complexity within this network can be valuable.

We studied four firms: DMV in Germany, TMV in India, TDV in South Korea (these three firms are automotive OEMs), and BKI in France (BKI is automotive brakes supplier)i. The four firms in our sample are from four different countries and present a unique opportunity to study the automotive supply chains.