This video presents an overview of a research study on Nexus suppliers and how business analytics can improve their management. The study, funded by CAPS Research, developed a Nexus Supplier Index (NSI) to identify and categorize these critical suppliers, often invisible to the buying firm, within a supply network.
This Nexus supplier index research was funded by CAPS Research, a nonprofit organization in joint affiliation with Arizona State University and the institute for Supply Management. It was inspired by the theoretical Concepts developed by Yan at all, published in the Journal of Supply Chain management. Our research team from the WP Carey School of Business at Arizona State University includes Ben sha, Michael shei, and Tom shoy, who is also executive director at CAPS research. We wanted a deeper understanding of critical suppliers, referred to as Nexus suppliers and how to best leverage them through Supply Chain management. NEX suppliers play a key role because of their structural position within the supply network and often aren't visible to the buying firm. So we develop the nex's supplier index, NSI, as a single unified measure to help identify, categorize, and better manage Nexus suppliers in a buying firm supply network. Nexus suppliers are unlike strategic suppliers and that physically they can be several tiers removed from the buying firm and may not even have direct contact with that firm. By understanding how to identify them firms can better manage and mitigate the associated Nexus supplier risks like materials flow disruption while taking advantage of potential benefits like Innovation and Emerging Market information. It is important to understand how the level to which a supplier is embedded in the network might influence both its own and the buying firm's performance. Companies with a better understanding of structural embeddedness of Nexus suppliers are likely to perform better than those that do not. NSI is a mathematical model of well-defined network centrality measures to determine criticality like degree, betweenness, and igen Vector. It is important to take into account multiple factors to truly capture the overall criticality of the supply ER. The NSA model produces a score between zero and one where a higher number indicates higher criticality and consideration as a potential Nexus supplier. Nexus suppliers can be categorized into three types: operational, monopolistic, and informational. Each type carries varying degrees of criticality, interdependence, and information asymmetry, all of which would have managerial implications for the buying firm. To test the model we computed NSI scores for all suppliers within Honda Motor Company supply network by first Computing supplier scores, sorting them, identifying Nexus suppliers and finally categorizing them to construct the multi-tier supply network according to the Honda managers. What we proposed is a different way of thinking about the supply network beyond the traditional risk approach and possibly toward a better detection of business opportunity. NSI gives Honda new ideas of other companies to partner with and to look beyond the tier one level suppliers. It can potentially help a company Drive its supply chain to not just manage risks like natural disasters but also to identify certain suppliers as nuggets and build close Partnerships with more information sharing. NSI is intended to complement what companies like Honda are already doing and other large companies can use the index similarly to their benefit. Several lessons can be learned from the theory of Nexus suppliers. First, buying firms performance is strongly tied to Nexus supplier positions within the network and the Strategic information they are able to provide the firm. Second, the Nexa supplier is critical because of the ways it is embedded in the network and if it does not have the best internal capabilities and it may be easily overlooked by the focal firm. Lastly, Nexus suppliers are identified in the interfirm extended supply network and managers should consider supplier relationships not only in their immediate Supply base but also with firms outside that particular supply network and other related Industries. This study and many more are available to all CAPS Research member companies. For membership eligibility or for more information about this study please visit us at capsresearch.org.
