1989-02-01

Integrated Sourcing: issues of Dependency, Reliance, and Innovation 890233

The popular image of the Japanese model of supplier relations emphasizes the role of trust. Reliance is a better description of the key attribute of the relationship. The manufacturers and suppliers dependency upon each other fosters reliance, and many other positive aspects of these relations. But it also produces a power imbalance in the relationship, and that is a source of many of the relationship's positive outcomes. It is unclear whether Japanese style relationships hinder or facilitate effective innovation, although they appear likely to facilitate diffusion, perhaps especially in process developments. However, the very different business conditions facing today's U.S. auto industry from those that faced Japan in the 1950s and 1960s mitigate against our successful adoption of the entire model. U.S. efforts should perhaps focus more on adapting relevant elements of the Japanese model rather than adopting the full model as we understand it.

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