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

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 litera...

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Bibliographic Details
Published in:Journal of business logistics 2020-06, Vol.41 (2), p.111-128
Main Authors: Wallin Blair, Cynthia, Rungtusanatham, Manus, Rabinovich, Elliot, Hwang, Yuhchang, Money, Richard Bruce
Format: Article
Language:English
Subjects:
consignment
customization
experimental design
Inventory
Ownership
Preferences
scenario‐based role‐playing experiment
spare parts
specificity
uncertainty
Vendor supplier relations
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Summary: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.
ISSN:0735-3766
2158-1592
DOI:10.1111/jbl.12243