Managing Critical Spare Parts within a Buyer–Supplier Dyad: Buyer Preferences for Ownership and Placement

Cynthia Wallin Blair, Manus Rungtusanatham, Elliot Rabinovich, Yuhchang Hwang, Richard Bruce Money

Research output: Contribution to journalArticle

Abstract

Despite the criticality and expense of spare parts, many firms lack a coherent strategy for ensuring needed supply of spare parts. Moreover, scientific research regarding a comprehensive spare parts strategy is sparse in comparison with direct material. Our research identifies and tests three literature-based, theoretically anchored attributes that influence a buyer's preference for inventory ownership and inventory placement when managing the stock of a critical spare part. Our findings indicate that item specificity and item supply uncertainty are useful in predicting a buyer's preference for managing the inventory of a critical spare part. Furthermore, we find that buyers have (1) a strong preference for consignment-based inventory management approaches, (2) a bias against inventory speculation despite its use in practice and analytical models, and (3) a strong preference for inventory postponement when the level of supply uncertainty is low.

Original languageEnglish (US)
JournalJournal of Business Logistics
DOIs
StateAccepted/In press - Jan 1 2020

Keywords

  • consignment
  • customization
  • experimental design
  • scenario-based role-playing experiment
  • spare parts
  • specificity
  • uncertainty

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Management Science and Operations Research

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