Understanding Directed Sourcing in Triadic Supply Networks
- Firms experience that an increasingly complex supply base is a costly investment. In order
to keep specialized suppliers but to reduce the effort of managing it, OEMs contract
second-tier firms and direct them to first-tier suppliers. We conduct four embedded case
studies in the international automotive industry to record types and possible motivations
of directed sourcing. Our findings show that directed sourcing triads may be set up to
achieve operational efficiencies but also for strategic reasons such as to gain access to
foreign markets. This research contributes to literature on triadic supply chains in general
and network buyer-supplier relationships specifically.