Consumer product contents information from the 1st tier supplier : Obstacles to 1st tier supplier compliance to product contents information requirements and useful supply chain management practices to ensure supplier compliance

Abstract:

Purpose: The purpose of this thesis is to identify the obstacles against supplier compliance, which focal companies encounter within the upstream supply chain when attempting to collect the requested product contents information. Based on this problem, the objective is to identify the most useful supply chain management practices to ensure supplier compliance.Method: The theoretical framework contains the Principal-Agent theory and Responsible Supply Chain Management. The empirical findings are derived through semi-structured interviews that were conducted with three Swedish corporations operating in China and one Swedish-Chinese consulting firm.Results: The two main-obstacles to supplier compliance were firstly found to consist of lacking supplier understanding of the product contents information requirements (PCIR). These obstacles prevented the supplier from understanding the risk at hand and what behaviour that triggered the risk. The second main-obstacles were found to be the prevalence of different opposing interests, which could all be traced back to the reluctance to assume an increase in costs, and could induce the supplier to pursue that interest rather than the interest to comply to the PCIR. With these obstacles in mind, the main objective of the focal company’s supply chain management practices should preferably be to create risk in relation to the PCIR, ensure supplier understanding and pay attention to the opposing interests. The most useful type of supply chain management practice for fulfilling these objectives were the use of incentives, preferably in combination with sanctions, to create risk. Training was considered most useful for ensuring supplier understanding, although a combination of training, personal communication and written documents is potentially interesting. Regarding the opposing interests, accommodating practices were found most useful rather than attempt to persuade the supplier to give up the interest.