Eventi del

24 2014 12:45 - 14:00
Via Roentgen, 1  4th floor room E4.SR01

Advisory versus Delegation: Which Type of Lead Supplier Arrangements is Worth the Trouble?

Ahmed Timoumi,  Koc University

Retailers typically carry thousands of products across hundreds of categories. They
often lack the resources to properly manage each and every category offered in the store.
As a result, some retailers may choose to leverage the resources and capabilities of a
lead supplier to help them manage some selected categories. A variety of lead supplier
arrangements can be observed in the retailing industry. They range from advisory arrangements
to delegation arrangements. In this paper, we focus on which and when lead
supplier arrangement is worth the retailer’s trouble. We developed a model based approach
to examine how the degree of retailer’s knowledge about a category moderates the
type of lead supplier arrangement that will benefit the retailer. This paper shows that i)
when the retailer knows that one of the brands is always more sensitive to category management,
advisory is not worth the trouble and only delegation could help the retailer.
Interestingly, we find that the retailer chooses to delegate the category management decision
to a lead supplier only if it expects this supplier to behave opportunistically; ii)
when the retailer does not know which brand is more sensitive to category management
and the difference in sensitivity across brands is always small enough, only advisory could
be worth the trouble; iii) otherwise, both advisory and delegation are equally worth the
trouble.