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

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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.

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[Blair, Cynthia Wallin] Brigham Young Univ, Global Supply Chain Management, Marriott Sch Business, Provo, UT 84602 USA

[Rungtusanatham, Manus] York Univ, Supply Chain Management, Schulich Sch Business, N York, ON, Canada

[Rabinovich, Elliot] Arizona State Univ

[Hwang, Yuhchang] China Europe Int Business Sch, Accounting, Shanghai, Peoples R China

[Money, Richard Bruce] Brigham Young Univ, Provo, UT 84602 USA


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Source

Journal of Business Logistics

ISSN:0735-3766

Year:2020

Issue:2

Volume:41

Page:111-128

ESI Discipline:ECONOMICS & BUSINESS;

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