JIMMA UNIVERSITY

College of Business and Economics

Department of Management

MA of Logistics and Supply Chain Management

Course: Fundamentals of Logistics and Supply chain Management

Assignment # 2, Article review

Reviewer: Gada Nagari

Submitted to: Mesfin Mekonnen (BA; MBA; Ph.D. scholar)

January 2021

Jimma, Ethiopia
Crook, T. and Combs, J., 2006, ‘Sources and consequences of bargaining power in
supply chains’, Journal of Operations Management, 25(2), pp.546-555.

Introduction

In the article Crook, T. and Combs J. tries to discuss the Sources and consequences
of bargaining power in supply chains by theory drawn from resource dependence
theory

The objective of this study was:

 To describe the performance implications of bargaining power use for both
strong and weak chain member,
 Clarify the role of bargaining power and its influence over the
creation and distribution of gains from SCM,
 Knowing who has power and when it is likely to be used should aid in
negotiations as well as help build realistic expectations about the potential
benefits of SCM participation
The researcher also tries to forward the situation in which stronger firms
forbear use of bargaining power when exercising it
might create conflict that would threaten the chain’s
ability to coordinate. And key implication is that the benefits of SCM vary
according to how bargaining power is used.
Brief Summary

The study has tried to reveal Sources and consequences of bargaining power in
supply chains and contribute to the literature by: predicting when stronger firms
use their power; describing the performance implications of bargaining power use
for both strong and weak members. And also, describe pooled, sequential, and
reciprocal task interdependence. Supply chain profits can be thought of as having
two major components: the sum of individual members’ profits, plus; some added
profits generated by effective SCM. Authors forwarded their idea as increase in
the firm’s dependence on the chain wherein the relative need to acquire resources
shapes each member’s power.
Overall, supply chain members offering high magnitude or critical resources who
participate in highly concentrated industries are stronger. Weaker members, on the
other hand, lack such resources. Whereas it is an important first step to understand
how resources shape dependencies and hence bargaining power, it raises the
question of when and to what degree stronger members use their power. Generally
the authors argue that as appropriate use of bargaining power help both the
stronger and weaker firms alike improve their performance over the long run.

Discussions and Result

The main objective was to predict the use of bargaining power in supply chains
and draw a more realistic picture of SCM benefits for most members and to
describe the benefits, when they exist, of SCM for both stronger and weaker
members. Authors argue the following:

 Firms that furnish important resources where control is concentrated have

the most bargaining power and thus appropriate a disproportionate share of
the chain’s total value created.
 Weaker firms can build switching costs and concomitant bargaining power
over time.
 The stronger firms attempt to maintain stability in anticipation of bargaining
power shifts.
 The stronger firms for bear their use of bargaining power to attain the type
of coordination needed for a given type of task interdependence.

Contributions

The following benefits are raised by the authors:

 The conceptual difference between value creation and bargaining power

 How the benefits of SCM shift
 The relationship between available gains from SCM and task
interdependence
Foundation

The article mostly built up on ‘Resource-based view’, a model that sees resources
as key to superior firm performance. It assists companies to develop agility,
adaptability, and alignment regarding SCM.

The resources of heterogeneity, allocation, independence, use, and imitability

standout in the creation of separate capabilities to increase business performance

Synthesizing with Class Materials

As we have finished learning fundamentals of logistics and supply chain

management this study mostly related with what we have learned in class. Such as
supply chain integration and Customer relationship management.

General Critique

 Abstract Has no brief introduction, methodology, objective; result,

discussion and conclusion are included in it. The research was
poorly abstracted/summarized
 Introduction: authors tried to forward brief introduction to Sources and
consequences of bargaining power in supply chains
 The result and discussion part a little bit difficult to understand for that
reader out of the profession.

Issues (listed by the author)

For the future researcher the authors’ forwarded recommendation as dealing with
further exploration of the relationship between task interdependence and available
gains from SCM might be beneficial.

Additional Reference

Baron, O., Berman, O. and Wu, D. (2016), “Bargaining within the supply chain
and its implications in an industry”, Decision Sciences, Vol. 47 No. 2, pp. 193-218.

I prefer the article to in order to understand bargaining in supply chain and its
implication