Supply Chain Strategies in an era of natural resource scarcity
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Supply chain strategies in an era of natural resource scarcity
Dimitra Kalaitzi1, Aristides Matopoulos1, Michael Bourlakis2, Wendy Tate3
1Aston Logistics & Systems Institute, School of Engineering & Applied Science, Aston University, Birmingham, UK
2School of Management, University of Cranfield, Cranfield, UK
3Department of Marketing and Supply Chain Management, University of Tennessee, Knoxville, Tennessee, USA
Purpose – The primary objective of this research is to explore the implications of natural resource scarcity for companies’ supply chain strategies.
Design/methodology/approach – Drawing on resource dependence theory, a conceptual model is developed and validated through the means of exploratory research. The empirical work includes the assessment of qualitative data collected via 22 interviews representing 6 large multinational companies from the manufacturing sector.
Findings – When the resources are scarce and vitally important, companies use buffering strategies. Buffering and bridging strategies are preferred when there are a few alternative suppliers for the specific resource and when there is limited access to scarce natural resources.
Research limitations/implications – The research focuses on large multinational manufacturing companies so results may not be generalised to other sectors and to small and medium-sized firms. Future research needs to examine the implications of natural resource scarcity for organisational performance.
Practical implications – This research provides direction to manufacturing companies for adopting the best supply chain strategy to cope with natural resource scarcity.
Originality/value – This paper adds to the body of knowledge by providing new data and empirical insights into the issue of natural resource scarcity in supply chains. The resource dependence theory has not been previously employed in this context. Past studies are mainly conceptual and, thus, the value of this paper comes from using a qualitative approach on gaining in-depth insights into supply chain-related natural resource scarcity strategies and its antecedents.
Keywords Natural Resource Scarcity, Risk Management, Supply Chain Strategy, Qualitative Data Analysis, Case Studies.
Paper type Research paper
Many firms are dependent on their environment for the supply of natural resources,
but these resources are becoming increasingly scarce and costly (Cetinkaya, 2011). The term
scarcity refers to an observed shortage of natural resources, and a perceived dependency on
natural resources due to their global depletion (Passenier and Lak, 2009). The global demand
for materials has increased in recent decades. For example, between 1980 and 2009, global
domestic material consumption had increased by 94% up to 67.8 billion tons and it is
forecasted to rise (Giljum et al., 2014). Resource depletion or scarcity may be related to
economic or physical scarcity, but also to political issues. For instance, China’s dominance of
the rare earth elements (REEs) market and also the implementation of tax and export quotas,
affects the availability, continuous supply and prices.
Concerns regarding the potential shortage of those resources have been reflected on
the EU’s Raw Materials Initiative, as well as in a number of U.S. legislative efforts to address
the rare earth supply (H.R. 761, the National Strategic and Critical Minerals Production Act
of 2013, the Critical Minerals Policy Act of 2013-S. 1600). Despite the steady decline in the
price for commodities such as metals and minerals, among other things, natural resource
scarcity (NRS) remains an important concern and a real risk for both companies and society
(Mekonnen and Hoekstra, 2016; Veldkamp et al., 2016).
Several studies (e.g. PwC, 2011; KPMG, 2012) have shown that companies consider
the issue of NRS; however, they have not yet implemented any comprehensive strategies to
address the associated issues. Research in the field of supply chain management (SCM) has
focused on green strategies and sustainability (e.g. Abdul-Rashid et al., 2017; Piercy and
Rich, 2015; Seuring and Müller, 2008; Pagell and Wu, 2009), but it has not touched upon
issues related to NRS or to the dependence of companies on specific natural resources.
There is a lack of research and empirical evidence of the appropriate strategies to
mitigate the risk of NRS (Bell et al., 2012). A recent systematic literature review by
Matopoulos et al. (2015) highlighted a need for further research on understanding the
implications of resource scarcity for supply chain relationships and also its impact on supply
chain configurations. The aim of this paper is to increase knowledge regarding the influence
of NRS on companies’ supply chain strategies. The questions guiding this research are:
RQ1. What are the contingent factors that determine the dependence level of manufacturing firms on specific scarce natural resources? RQ2. What are the supply chain strategies that manufacturing firms can employ to overcome or minimise dependence on scarce natural resources?
Drawing upon Resource Dependence Theory (RDT), a conceptual framework is
proposed to address the implications of the dependence that derives from NRS on supply
chain strategies of manufacturing firms. Despite the fact that RDT is a leading theory for
understanding organisation-environmental relationships, it is not explored and tested in ways
that consider NRS (Stock, 2006; Drees and Heugens, 2013). This is also reflected in recent
calls for research which make use of resource theories (Bell et al., 2012; Esper and Crook,
2014). RDT helps to improve the understanding of how supply chains adapt to uncertainty
caused by NRS and how they manage resource flows and interdependencies using buffering
or/and bridging strategies. The research context is product-based, large multinational
manufacturing firms which are more likely to be affected by materials’ uncertainty than service
firms (Brouthers et al., 2002).
The next section incorporates a literature review highlighting existing research on
NRS and RDT that provides a useful foundation for development of the conceptual
framework. The research design and explanation of how data were collected and analysed are
then discussed. The section following the methodology develops the framework and the
research propositions based on the empirical findings and RDT. The paper concludes by
pointing out theoretical and managerial implications as well as further research opportunities.
2. Literature review and theoretical background
Christopher (2016) noted several major trends impacting contemporary supply chains
including the globalisation of markets, outsourcing, the reduction of the supplier base, shorter
product and technology life cycles, fewer and larger production and distribution sites,
volatility of trading environment and vulnerability of supply chains leading to disruption.
Several authors including Christopher and Peck (2004), Gualandris and Kalchschmidt (2013),
Peck (2005), Sheffi (2005), Svensson (2002), Vlachos et al. (2012), Wagner and Bode
(2006), and Waters (2011) focused on supply chain vulnerability. In addition, Peck (2005)
explored the sources and drivers of supply chain vulnerability while Stecke and Kumar
(2009) proposed several strategies to mitigate the vulnerability of a supply chain. Other
authors analysed the issue of uncertainty and risk in supply chains in general (Simangunsong
et al., 2012) and specifically in relation to NRS (Bell et al., 2013).
NRS concerns were first expressed in the mid-1980s under the concept of
sustainability or sustainable development (Krautkraemer, 2005). There has been a growing
interest in sustainable supply chains for over a decade and this field is now becoming more
mainstream (Fabbe-Costes et al., 2014; Sarkis et al., 2010). Many authors have defined
sustainable SCM (e.g. Srivastava, 2007), developed frameworks of sustainable SCM (e.g.
Carter and Rogers, 2008) and explored this area from different SCM perspectives such as the
influence of power on sustainability practices (Touboulic et al., 2014). These studies have
also highlighted the need for securing sustainable sources of key raw materials to secure
business continuity and the subsequent cost- and reputation-related challenges.
Natural resources are defined by the World Trade Report (2010, p. 46) as “stocks of
materials that exist in the natural environment that are both scarce and economically useful in
production or consumption, either in their raw state or after a minimal amount of processing”.
Some resources such as water, land, crops, timber, and fisheries etc. can be renewable and
other resources such as minerals, metals, organic resources are non-renewable meaning that
once depleted they will not be available for future use (Mildner et al., 2011). For this
manuscript, the terms resource(s) and natural resource(s) are used interchangeably with an
emphasis on REEs, water and energy1.
During the past few years, a series of events including the export restrictions by China
in 2011 drove up prices of REEs. However, this was temporary and since 2013 the prices of
REEs have declined. Overall, industry and governments are concerned about price
fluctuations and the smooth supply of these raw materials due to various measures taken by
the Chinese govemerment to limit REE production (Pavel et al., 2017). Water is another
important natural resource for nearly all industries including automotive, beverage, chemical,
electronics and metal mining (Chernock, 2013). Water scarcity poses a higher risk to
businesses than oil (Morrison et al., 2009) and this risk is expected to increase in many
regions due to population growth, climate change, urbanisation and changing lifestyles
(Jefferies et al., 2012). For example, a Coca Cola plant in Plachimada which is located in
southern India was shut down due to water scarcity (Tercek and Adams, 2013).
Similarly, there is competition over energy resources (Sovacool, 2009) that impacts
on energy intensive sectors such as aluminium, chemicals and food (Zero Waste Scotland,
2011). In this context, manufacturing companies have to be able to manage their
dependencies and to consider them during the formulation of their supply chain strategies to
minimise the negative effects of potential distruption (Bode et al., 2011). NRS can put supply
chains at risk if managers fail to address the serious issues that are introduced (Bell et al.,
2013). For example, the automotive industry faces indirect effects considering the rising
prices of natural resources as a car consists of steel, non-ferrous metals, polymers, rubber and
1 Energy refers to the primary energy sources such as crude oil, natural gas (non-renewable sources) and solar energy, wind energy, biomass resources (renewable sources).
glass (European Commission, 2011). Dyer (1996) also found that automotive firms are
dependent on specialised supplier networks.
Despite the fact that bauxite or aluminium ore are abundant, aluminium production is
highly sensitive to energy prices and legislation (Circular Economy Task Force, 2013). For
example, Vedanta was forced by an Indian court to stop mining to feed an alumina refinery in
the Indian state of Orissa due to environmental regulations and social forces. Local
environmentalists and activists legally stopped mining bauxite as it was violating the Indian
Forest Conversation act and the Dongria community who are a small number of indigenous
people (Peoples and Bailey, 2012). Recently, China’s “Air Pollution Control” regulation
formally came into effect and it will force aluminium smelters to reduce output which will
lead to price fluctuations (Home, 2017).
Subsequently, there have been some efforts in the past to identify the implications of
NRS on manufacturing supply chains (Alonso et al., 2008; Alonso et al., 2009; Alonso, 2010;
Alonso et al., 2012; Autry et al., 2013; Bell et al., 2012, Bell et al., 2013; George et al., 2015;
Lapko et al., 2016); nevertheless, there is still a need for further research. One of the main
limitations of the research conducted to date is that it is conceptual and not empirically tested
and for a richer understanding and validation, empirical research is needed. This argument is
supported by Bell et al. (2012) who highlighted the need for industry case studies to
recognise and implement creative supply chain strategies to altering natural resource
In addition, the selection of appropriate strategies for the use of different natural
resources and the inherent natural resource depletion is limited in current research. Scholars
focus mainly on recycling (Alonso et al., 2008; Alonso et al., 2009; Bell et al., 2013) as a
mitigation strategy of natural resources such as platinum, or cobalt (e.g. Alonso et al., 2009).
However, the degree of dependence on various scarce natural resources has a number of
causes and thus companies may need to adapt and utilise different strategies.
Overall, research in this domain is not grounded in theory with the exception of
research by Bell et al. (2013) who propose an empirically testable model based on the
resource advantage (R-A) theory. This is a key limitation in SCM research which has been
highlighted by many researchers (Flint et al., 2005; Kovács and Spens, 2005; Mollenkopf et
al., 2010). RDT is chosen for this research, because the topic considers scarce natural
resources which may be of strategic importance and, subsequently, they are usually owned by
countries and companies trying to control them (Waters and Rinsler, 2014). RDT was
developed by Pfeffer and Salancik in 1978; it considers resources as crucial in order for
companies to implement a business strategy and generate a competitive advantage.
Previous studies (e.g. Carr et al., 2008; Kähkönen et al., 2015) applied the lens of
RDT in the field of SCM to investigate collaboration and bargaining power in times of
uncertainty but without focusing on specific resources and without considering the inherent
uncertainty arising from NRS. According to RDT, organisations are not self-sufficient and
embeddedness in a network of relationships is a response to the uncertainty involved in a
relationship and the resource dependence (Pfeffer and Salancik, 1978). The degree of
dependency emanates from three contingent factors (Cannon and Perreault, 1999; Pfeffer and
Salancik, 2003; Caniëls and Gelderman, 2007): a) the importance of the resource such as the
degree to which a purchased resource is critical to manufacture other parts, components, or
end-products, b) supplier substitutability such as the availability of alternative suppliers that
supply the resource and the relevant switching costs and, c) the discretion over the resource
that can be determined by the ownership of the resource.
RDT suggests that these three factors lead to either buffering and/or bridging
strategies. According to Leonardi (2013), buffering strategies are used to redefine goals to
minimise resource dependencies on other firms and reduce the uncertainty of obtaining
important resources; hence, buffering strategies can be employed in connection with many
operational challenges including those related to inventory. Bridging strategies can reduce the
chances of resource shortage by strengthening the links and building bridges between the
firm and other organisations including, for example, the collaboration between firms or even
acquisitions. Buffering and bridging activities are not mutually exclusive. An organisation
may increase its safety stock of a strategic natural resource following a buffering strategy
and, simultaneously, it could establish collaboration with a supplier of this scarce natural
resource following a bridging strategy (Bode et al., 2011).
3. Methodology and research design
3.1 Research approach
Due to the exploratory nature of this research, a case study methodology was selected.
Case study is the most suitable methodology where the goal is to refine a less theorised area
of knowledge, based on empirical observations (e.g. Eisenhardt, 1989; Ketokivi and Choi,
2014; Walker et al., 2015). Theory elaboration was used because this research focuses on a
contemporary phenomenon, i.e. extending the understanding of the implications of NRS on
manufacturing companies. Theory elaboration is based on the interplay between theory and
the empirical data from case studies that enhance theoretical insights (Ketokivi and Choi,
2014). The combination of RDT, relevant literature and empirical data provide a sufficient
basis for building a conceptual framework and formulating propositions.
A multiple-case study method and replication logic were adopted to help discover
similar or contrasting results with regards to the contingent NRS factors and the respective
supply chain strategies. The case studies are guided by relatively open research questions but
not by a priori propositions.
3.2 Case study data collection and analysis
The theoretical constructs explored in this study were related to a focal manufacturing
firm. The case selection was driven by the research questions, and a purposeful selection
procedure was conducted. Merriam (1998, p. 61) notes that: “Purposive sampling is based on
the assumption that one wants to understand as much as possible, and thus the sample is
selected deliberately in a way that most can be learned”. The case studies were selected based
on theoretical sampling and not on random sampling (Eisenhardt, 1989) and the case study
companies were selected on the basis of their overall ability to provide information on the
subject. More specifically, the companies were selected considering that they make use of
REEs (water or energy natural resources) and they are actively trying to manage their
dependencies which, in turn, informs the formulation of their supply chain strategies. The
selection was also influenced by the practical feasibility of getting access to case study
companies, i.e. willingness of managers to participate in the research and their availability for
We attended relevant industry conferences and we gathered the delegate lists to
identify appropriate managers ; one of those was the conference organised by the Aluminium
Federation in the UK. Business cards were collected and networking arrangements took place
during these conferences. LinkedIn, a professional networking site, was also used to find
cases. Managers working in manufacturing companies possessing knowledge within the
purchasing, sustainability, supply chain and logistics were approached. A search was also
conducted for relevant groups on LinkedIn in order to target these professionals. Access was
gained to relevant groups in LinkedIn including Manufacturing UK, Beer Industry Members,
Chartered Institute of Purchasing and Supply (CIPS). An email or a personal LinkedIn
message was sent to relevant managers currently employed in the automotive and aluminium
industry asking them to participate in an interview.
The result of this search was the inclusion of data from 6 cases representing large2
multinational companies (two original equipment manufacturers [OEMs], one manufacturer
of automotive Body-in-White products and services, one manufacturer of seats, and two
manufacturers of aluminium). We need to clarify that we did not consider SMEs in our work
primarily because these companies do not widely adopt and develop sustainable and resource
efficient supply chain practices due to the time, resources or information required (see for
example, Bourlakis et al., 2014). RDT also supports that larger organisations utilise more
resources that can help them to avoid dependence. According to Pfeffer and Salancik (1978,
p. 131), size “provides organizations with additional control over their environments and
enhances their likelihood of survival”. In general, large companies follow a set of global
standards and principles in their production facilities in relation to environmental policy and
NRS dimensions to accommodate pressures from external stakeholders and to manage global
risks successfully (Christmann, 2004). The specific unit of analysis for this research is the
firm that uses scarce natural resources for semi-finished or final products as our goal was to
explore manufacturer perceptions of NRS implications. Tables 1 and 2 provide details for the
industry, the number and profiles of interviews per company.
Data was collected through qualitative, semi-structured in-depth interviews (22 in
total) which is the most widely used across all qualitative methods as it gives insights into
2 The European Commission considers SMEs as companies with less than 250 persons employed and an annual turnover of up to €50 million, or a balance sheet total of no more than €43 million (European Commission, 2005).
how respondents see their world (Easterby-Smith et al., 2004). A list of pre-defined, open-
ended questions was developed (see Appendix A). The interview questionnaire was pre-
tested with two academic experts and one practitioner with relevant experience to ensure
content validity and some changes were made regarding the adoption of “more business”
language and the definition of some of the concepts. The same research protocol applied to
all respondents in order to ensure transparency and repeatability of research. Participants
were encouraged to provide extensive and developmental answers to expose attitudes or
obtain facts (Saunders et al., 2003). In addition, interviews with experts from the aluminium
industry and a consultant with expertise in REEs were conducted to validate some of the
managers’ responses in the automotive and aluminium industry.
The interviews were conducted face to face in the UK manufacturing plants of the
case companies except one which was conducted in the head office in Norway via telephone.
The decision for conducting the interviews in the UK was due to the geographical proximity
of the researchers and the potential to secure access to the organisations involved. Also, many
automotive and aluminium manufacturers have a major presence in the UK making the
manufacturing plants a good proxy for their global operations. The time for each interview
ranged from 30 minutes to 1 hour. All interviews were voice recorded and transcribed except
one (i.e. AutoCo_1).
The interviews were anonymised and then imported to NVivo for analysis. QSR
NVivo software version 10 was used for the qualitative analysis as it is an effective computer
software for coding data (Garza-Reyes, 2015). Coding was done independently by one
researcher from the team of authors, and verified by the other authors to maintain rigor, to
reduce interpretive bias and increase the reliability of findings in this process (Berg, 1998).
When disagreements took place relative to the coding, the data were revisited and the authors
were engaged “in mutual discussions for arriving at consensual interpretations” (Gioia et al.,
2013,p. 22). The transcriptions were read several times in order for the researchers to
understand and become familiar with the data.
The content components which include the elements that were analysed and coded,
were the sentences in the transcript files. As part of within-case analysis, each case was
individually analysed. The interview transcripts were analysed in waves and a code was
assigned to a phrase giving evidence towards answering the research questions. Then, a
cross-case content analysis was employed to compare and contrast the responses and to
understand the commonalities and differences in patterns for strategies utilised for various
natural resources and to reach generalisations across the six cases (Miles and Huberman,
The data were systematically analysed and iteratively coded (see Appendix B)
following three coding stages (Gioia et al., 2013). Open coding was used initially to identify
and to categorise the data as well as to generate the first-order concepts. This was followed
by axial coding where first-order themes were connected with second-order themes and
selective coding where the aggregate dimension was chosen to be the core category and all
other second-order themes were related to that category (Corbin and Strauss 2008; Corley
and Gioia, 2004). The second order themes and aggregate dimensions were derived from
theory while the first order themes were added during the process of analysis which captured
broad themes such as the price of the natural resource.
To ensure objectivity, validity, and reliability of the content analysis, pre-defined
categories were developed based on the theoretical framework (Spens and Kovács, 2006).
The use of NVivo 10 facilitated the coding process by recording the codes and led to
effective data management, organisation and analysis (Kuckartz, 2014). Through the analysis
of the three coding stages, certain patterns were revealed, the coding bias was minimised and
credible interpretations of data were made (Barratt et al., 2011; Yin, 2003).
Secondary data such as companies’ sustainability reports and information on
sustainability strategies were collected and used to find new information or to verify the
information provided by key informants. This is an acceptable practice in SCM as
managers/respondents do not always know specific details including key performance
indicators (Cuthberson and Piotrowicz, 2008; Calantone and Vickery, 2010). These
techniques allowed for triangulation of the interview data providing reliability and internal
validity of research findings (Yin, 2003).
4. Empirical Findings
This section begins with an overview of the results from the within-case analysis for
the 6 case studies and in the following section, the themes that emerged from the cross-case
content analysis are presented. The implications of the natural resource dependence level on
supply chain strategies are then discussed along with the derived research propositions.
4.1 Within case analysis
AutoCo_1: Interviewees suggested that the price of the natural resource, the number
of suppliers, switching costs, legislation and geopolitical risk are the key dependence factors.
The case revealed that the importance of natural resources including a high price leads
primarily to buffering supply chain strategies such as substitution. For instance, the company
tries to reduce the dependence on petroleum oil (and thus reduce the carbon footprint) by
using renewable resources such as soy-based polyurethane foams for automotive
applications. Regarding bridging strategies, AutoCo_1 has primarily single source supplier
contracts that last about twelve years .
For example, AutoCo_1 closely collaborates with the wiring connector supplier. The
supplier located its plant close to the automotive company so that AutoCo_1 can be involved
in the design of the part. For water utilities, energy and recycling of the materials, short-term
contracts are used with suppliers. Apart from the issue of accessibility to REEs, AutoCo_1 is
also concerned about conflict minerals and, therefore, it is working closely with suppliers
globally that provide parts and it requires from them to support this effort.
AutoCo_2: This company recently started to apply some strategies for minimising the
use of resources. The main reasons for following these strategies are the price of the
resources, the number of suppliers and legislation. By working closely with its customers,
AutoCo_2 reduced the usage of aluminium. Specifically, it collaborated with an aluminium
supplier in an attempt to increase its recycling and, therefore, this specific supplier provides
AutoCo_2 with aluminium that has a higher content of recyclable material. A new technology
was also introduced to replace welding which, in turn, reduced energy consumption by not
using heat. Welding uses a lot of energy, but recently many motors and parts are utilising low
energy pumps and heating equipment. In the coming years the company is considering taking
a closer look at water as a resource.
AutoCo_3: According to the interviewees, the price of the natural resources,
quantities of the natural resource, the number of suppliers and switching costs, the
geopolitical risk, and legislation are the main factors that create dependence on resources.
AutoCo_3 increased the quantities of recycled aluminium in order to reduce energy usage
and to reduce CO2 emissions by creating a closed loop system and by collaborating closely
with its aluminium supplier. It is also trying to find new types of natural fibres such as sugar
and to replace plastic that is oil based. AutoCo_3 consumes a lot of water in the painting
shops and a few plants recycle water from the paint shop and reuse it in their manufacturing
The company is trying to use renewable sources more extensively including biofuels.
Advanced combustion technology will be used in one of its plants that would burn waste
wood in order to fulfil most of the site’s electricity needs. AutoCo_3’s managers recognise
that it is not an easy process to find alternative suppliers as there are costs and specific
requirements regarding material standards; so it mainly follows relational mechanisms.
Concerning accessibility, the practice of relocating its existing plants is not considered as a
possible strategy. However, for its future plants, AutoCo_3 is planning to manufacture cars in
Saudi Arabia because of the huge quantity of aluminium that exists in this country and it is
also considering building a factory in Brazil to have access to the massive amounts of copper
non-ferrous metals and petrochemicals. AutoCo_3 is starting to recognise the limitations in
the availability of specific materials to its product, e.g. lithium batteries where materials are
provided by China and Russia; therefore, AutoCo_3 is getting slightly concerned for the
inherent challenges to obtain access to those materials.
AutoCo_4: As in the previous cases, cost was identified as one of the most important
factors as well as the quantity of the natural resource, switching costs and legislation. There
are two paint lines that are using a great amount of water so the water in these processes is
being recycled. Another strategy followed by this company is the recycling of scrap metals or
plastics. Chairs are being manufactured from recycled or recyclable materials too. Regarding
bridging strategies, the company pursues long term agreements with its key suppliers and
most of the other purchases are managed by a nomination and purchasing order. AutoCo_4
has also signed a contract with a waste management company for resources such as metal,
AlumCo_5: There are four main factors that were identified as the most important
ones leading this aluminium company to specific strategies including the price of the natural
resource, the number of suppliers, social forces and geopolitical risk. The high value of
aluminium scrap leads the company to investing in improving productivity (increase re-
melting capacity) in existing cast houses but also they build new ones. Scrap is sent to
external cast houses to re-melt if there is an issue from a logistical point of view. In some
plants in Europe, AlumCo_5 has installed solar panels in order to use more renewable
resources and to use less energy. In India, the company has buffers of energy such as electric
generators to support its business continuity.
Water is used mostly in the phases of rolling, extrusion, anodising and painting but it
is not a significant amount. Water reservoirs are utilised and rain water is part of the solution
to reduce the implications of water scarcity. Energy is highly regulated and, in most
countries, there is only one supplier that can offer this natural resource; the same applies to
water, however, the company is usually having shorter term contracts with water suppliers.
AlumCo_5 tries to use hydropower from Norway, Siberia and Iceland and Canada but it is
currently dependent on suppliers from the Middle East. Relocation from China to Europe is
not possible either considering that the European energy market is highly regulated and
making it costly to produce aluminium in Europe.
AlumCo_6: The price of energy, the large quantities of aluminium, switching costs
and legislation are the main contingency factors that the company considers. The main
strategy followed by the company is the recycling of scrap aluminium. It has built a recycling
processing facility for scrap cans and other aluminium waste produced into sheet and rolls
and this leads to an effective closed-loop system supported by established collaborations with
its customers. Renewable and nuclear energy represent 30% and 23% respectively of its total
electricity consumption . One of its plants in America has its own hydroelectric facilities to
Apart from utilising new energy resources, AlumCo_6 tries to produce existing
equipment more efficiently. In its UK factories, the lighting system has been upgraded to
LEDs and two older compressors have been replaced with energy efficient ones. Changes
have also been made in melting and producing processes. For example, the furnace burner
technology was upgraded and burners were replaced. Another example is that standard
efficiency motors were changed with high-efficiency models. Regarding water scarcity, water
use in the casting of ingots after re-melting recycled materials has been optimised and
monitors have been installed in order to control the water usage in the cooling operations.
Water usage is reduced by repairing leaking water pipes, installing temperature monitoring in
order to control cooling operations. Water is reused and recycled, for example, through
cooling towers in one of its UK factories.
4.2 Cross-case content analysis
As noted in Section 3, the use of NVivo 10 facilitated the coding process resulting in
fifteen categories examined below. Before discussing the implications of the dependence
level on supply chain NRS strategies further, it is important to have a clearer picture of the
overall factors that define the dependence level and the strategies that companies follow to
respond to it. Seven key factors emerged from the interview transcripts that define natural
resource dependence level. Some of these factors, which are highlighted in bold below, are
related to the “discretion over the scarce natural resource” and it is worth stressing that these
have not been identified in previous research:
i. the price of the natural resource (AutoCo_1, AutoCo_2, AutoCo_3, AutoCo_4,
ii. the quantity of natural resource (AutoCo_4, AlumCo_6),
iii. the availability of alternative suppliers for the natural resource (AutoCo_1,
AutoCo_2, AutoCo_3, AlumCo_5),
iv. the switching costs associated with switching suppliers that provide the natural
resource (AutoCo_3, AutoCo_4, AlumCo_6),
v. legislation (AutoCo_1, AutoCo_2, AutoCo_3, AutoCo_4, AlumCo_6),
vi. geopolitical risk (AutoCo_1, AutoCo_3, AlumCo_5), and
vii. social forces (AlumCo_5) that can hinder the ownership of the natural resource,
the ability to access and use the natural resource.
Several supply chain strategies were utilised to minimise the resource dependence
level for the 6 companies. More specifically, firms follow buffering strategies such as
dependency reduction or bridging strategies such as dependency restructuring (Green and
Welsh, 1988). Based on the empirical data, 8 supply chain NRS primary strategies emerged
(themes are highlighted in bold) that have not been identified previously in the NRS literature
and in previous research related to RDT in SCM. The buffering strategies refer to product
and process (re-)configuration including new technologies to minimise the usage of
resources in the product, the use of substitution and recycling as well as supply chain
(re-)configuration covering safety stock and plant relocation. Whereas, the bridging
strategies entail long-term contracts that establish supply and price over an extended period.
These include transactional mechanisms as well as partnerships and joint ventures,
relational mechanisms or even vertical integration. There are also hierarchy mechanisms
“in which, for example, a producer buys out a supplier and gains control of the critical
resource” (Jaffee, 2010, p.8). Common patterns in the case studies were assessed and the
literature and theoretical justification of RDT were used to formulate the conceptual
framework. The research propositions derived from the data and the literature are provided
in the following sections.
4.3 Importance of the scarce natural resource and supply chain NRS strategies
Resource importance is the key determinant of buffering strategies as found in the
prior literature (Meznar and Nigh, 1995). The interviewees supported that the price of the
scarce natural resource and the quantities of a given resource lead companies mainly to
buffering strategies. This is primarily through product and process (re-)configuration such as
recycling, new technologies and substitution to reduce the importance of natural resources
such as water, energy and aluminium.
Product designers are motivated to minimise the use of certain natural resources by
substituting them with other natural resources or by using recycled materials (Lin and Lin,
2003). Companies introduce improved products or processes to minimise or overcome the
usage of scarce natural resources. The introduction of new technologies is a common strategy
to minimise resources such as water and energy. For instance, in AutoCo_1, the Purchasing
Manager states: “We changed the cooling system and we will move from metal-halide to LED
lighting in order to reduce annual energy consumption”. Moreover, “We moved to dry paint
overspray system that uses more paint but less water”. Companies in the brewing industry
are using large quantities of water. For example, Miller Coors, (a joint venture of SABMiller
PLC), installed cameras inside one of the process vessels in its brewery in California to cut
off the water supply as large amounts of water were used for beer production (Wales, 2013).
Substitution is also followed by companies and most of them including AutoCo_2 and
AlumCo_6 try to use alternative sources of energy such as wind turbines and solar energy.
AutoCo_1 tries to minimise the dependence on petroleum oil by using renewable resources
such as soy-based polyurethane foams or a tropical plant, to reinforce plastic and to substitute
the oil-based resin in the plastic. Companies that cannot find substitutes often alter the
structure or inputs by using strategies such as recycling, inventories and minimising the
resource usage (e.g. AutoCo_1, AlumCo_6).
AlumCo_5 has initiated a closed loop programme for old aluminium light poles
including fittings and cabling with a few Norwegian cities. “So instead of buying new metal,
we are trying to recycle and reuse scrap” (Director of Global Strategic Sourcing). AutoCo_4
has also initiated a program with its aluminium supplier who is responsible to take back the
scrap that is produced through the stamping processes. “We have a system where any scrap
metal aluminium and steel is segregated and sent back to suppliers for recycling” says the
Sustainability Manager. Safety stock as strategy is used for certain resources such as water
but it is not preferred for metals and REEs due to price volatility and because it ties up cash
unnecessarily (e.g. AutoCo_1, AutoCo_3, AutoCo_4 ). AutoCo_4 Sustainability Manager
states that “we consume a lot of water especially in the painting shops and few of our plants
stores the rainwater for reuse in our manufacturing processes”.
Therefore, when the resource is critical, companies try to make it less important by
utilising buffering strategies; they are used to minimise the importance of the valued resource
and, thus, the level of resource dependence by altering or minimising the resources used for
production (Bode et al., 2011; Scott, 2003). Buffering strategies entail the use of flexible
production processes, product designs and safety stocks or a higher level of inventory (Bode
et al., 2011) and they are often employed when a firm face uncertainties that hinder the
production processes (Carlile et al., 2013).
The findings revealed that when the natural resource is important the companies do
not follow bridging strategies. When there is an uncertainty and high dependence on the
supply of a critical natural resource that threatens an organisation to continue functioning,
companies minimise or avoid these resources rather than developing a relationship with the
supplier of this resource (Pfeffer and Salancik, 1978). This is also supported by other studies
such as the one by Meznar and Nigh (1995) who found that the importance of resource is
negatively associated with public affairs bridging. This leads to the development of the
P1a: The importance of scarce natural resource is positively related to the adoption of
P1b: The importance of scarce natural resource is negatively related to the adoption
of bridging strategies.
4.4 Supplier substitutability of scarce natural resource and supply chain NRS strategies
When companies do not have many suppliers or the switching costs are high and
therefore, there is low supplier substitutability, bridging strategies are preferred. In the
automotive sector, the Purchasing Manager of AutoCo_1 states that: “our supplier base is
reduced and we usually use single-sourcing” while another Purchasing Manager of
AutoCo_1 notes that they: “usually have long term contracts up to 5 years”. AutoCo_2 has
identified the limited number of suppliers as a key contingent factor that leads to relational
mechanisms and their Logistics Manager mentions: “It’s limited where you can go and buy”;
thus, companies tend to collaborate or have long term relationships for several years.
Collaboration has become a new mantra to address the issue of volatility that derives
from NRS (Bell et al., 2013; Lapko et al., 2014). Johnson et al. (2011) state that scarcity
results in individuals and communities being willing to participate in alliances in order to
escape resource imbalances. Based on the findings, there is a strategic partnership of
AutoCo_1 and a supplier of wiring connectors where they jointly discuss challenges and
work together while both firms are involved early in the design of the part implying the use
of buffering strategies. The Vice President (VP) of Strategic Sourcing of AlumCo_5 also
stressed that in the aluminium production: “there are not really many alternatives…most of
our metal is coming from the long-term strategic partner”.
Apart from the number of suppliers, switching costs are important too. The
Sustainability Manager of the AutoCo_4 highlighted that: “it’s not an easy process, we have
to go through various steps including a lot of verification tests to ensure safety, you need to
make sure that a new supplier or a different supplier is able to meet all company’s
requirements”. AutoCo_2 collaborates with the nominated supplier of aluminium on closing
the loop by recycling their own process scrap: “So what will happen is that our scrap will be
sent to the nominated supplier and then the scrap goes back to a melting cast, once melted,
the aluminium is cast and rolled and finally delivered to us (Purchasing Manager).” Previous
studies show that there is a positive relationship between buyer dependence and the choice of
bridging strategies (Bode et al., 2011; Su et al., 2014; Wu et al., 2004); however, they did not
specify the type of buyer-supplier relationships.
Reverse logistics could change supply chain (re-)configuration i.e. buffering strategies
in which a company must determine the collection/acquisition centers, inspection/sorting
centers, disposal facilities etc. (Ene and Ozturk, 2014). Managers from AutoCo_1, AutoCo_3
and AlumCo_6 have discussions with managers from their suppliers to implement systems
that will enable them to have access to end of life vehicles which means access to valuable
resources such as aluminium and gold. However, recycling of rare earth metals that also
demands less energy than primary mining activities is not used as a mechanism to secure
those resources from companies because of inefficient collection systems, technological
issues and lack of incentives. This is supported by Lapko et al. (2016) who noted that
recycling of rare earth metals is not feasible or relevant for business.
All cases show that for water and energy suppliers, transactional mechanisms are
adopted. Water and energy supply is not substitutable and suppliers have monopoly control
on those natural resources needed by manufacturing companies. The Purchasing and
Logistics Director of AutoCo_2 company states that: “Consumable contracts for water, gas,
power will be reviewed normally under 2-3 years fixed contracts for the utilities dependant
upon the best deal we can get and later we will check the open market and maybe change the
supplier”. The Plant Manager of AlumCo_6 also notes that: “Where we have
interdependencies we work closely with our strategic partners”.
Thus, when few suppliers sell resources, supplier concentration increases and
uncertainty increases as the dependence on fewer suppliers that control most resources is
increased and bridging strategies are used (Pfeffer and Salancik, 2003). Contrary to what has
been suggested by previous studies, this work revealed a positive relationship between
substitutability of suppliers and product and process (re-) configuration as part of a buffering
strategy. This insightful finding stresses that companies collaborate with a few key suppliers
that are involved in the product development at an earlier stage. This is also supported by
other studies (Demeter et al., 2006).
There is also considerable uncertainty in relation to firm size. Smaller firms may be
more inclined to develop formal types of collaborative activities to gain better access to
critical resources (Guo and Acar, 2005). Large firms, on the other hand, have sufficient
resources, and can “alter their contexts in a significant fashion” (Pfeffer and Salancik, 1978,
pp. 267) and by controlling important resources, these firms could engage in more buffering
activities (Meznar and Nigh, 1995). Hence, it is proposed:
P2a: Supplier substitutability is negatively related to the adoption of buffering
P2b: Supplier substitutability is negatively related to the adoption of bridging
4.5 Discretion over scarce natural resource and supply chain NRS strategies
Discretion over natural resources can be determined by the ability to access, use, and
own the scarce natural resource. During the empirical exploration it is found that discretion
can be hindered by government regulations, social forces and geopolitical risk. The key
findings of the cases suggest that if the accessibility is disrupted for a given natural resource,
companies are following a combination of buffering and bridging strategies namely
recycling, substitution or close collaboration.
In all six case studies, participants revealed that environmental legislation and
geopolitical risks are key drivers for manufacturing companies to follow the practices of
product, process and supply chain (re-)configuration. Due to energy pricing and carbon
taxation, Europe has become less interesting for companies to smelt and cast aluminium.
European Emission Trading Scheme (EU ETS) can lead to company relocation. This scheme
allocates a certain amount of carbon to use and companies from the aluminium industry are
less likely to invest in Europe, they will probably move to China or India. This is supported
by the UK Environmental Manager of AutoCo_4 who notes: “there is a government
legislation that is called ESOS where if a company is bigger than 250 employees, it must
have a plan in place at the end of the year to reduce energy consumption within the
Big aluminium factories such as the Anglesey aluminium plant have shut down
because of environmental legislation (Merlin-Jones, 2012). “A Brazilian plant was shut down
five years ago due to high energy usage and we still have concerns over the energy and water
usage so we try to minimise the water use in the casting of ingots after re-melting recycled
materials; monitors have also been installed in order to control the water usage in the
cooling operations” (Plant Manager of AlumCo_6). “If you look at the aluminium industry
the most efficient smelting capacity is being built where there is access to cheap power, in
places like Scandinavia or Canada where there is hydroelectricity or places like the Middle
East where oil is cheap” (Vice President of Strategic Sourcing, AlumCo_5).
AutoCo_3 realises the geopolitical risk of metals and REEs so the firm has created “a
closed loop system where basically aluminium is coming from the production line”
(Sustainability Manager). AutoCo_1 utilises a different buffering strategy for metals as the
Purchasing Manager notes: “Specifically we try to use the minimum of a scarce natural
resource such as gold … and we mix it with other resources that are not considered to be
RDT considers partnerships as the means to gain access to resources from the
environment and to manage environmental uncertainty that is a high control strategy
(Sherman, 2007). Companies are starting to collaborate or vertically integrate with their
suppliers through mergers and acquisitions to gain access to scarce and critical resources for
their survival. This is further illustrated by taking into account the fact that Toyota has
secured lithium supply for battery packs through a joint venture with a lithium Australian
mining company called Orocobre (Orocobre Limited, 2010). Toyota also collaborates with
Indian Rare Earth in Orissa, Vinacomin in Vietnam and Sojitz in Japan (George et al., 2015).
According to Pfeffer and Salancik (1978), the first option to get more discretion over
resources is possession, which can be achieved by vertical integration. AlumCo_5 acquired
an aluminium casting plant in The Dalles (Oregon, USA).
Bridging is used to obtain discretion over scarce natural resources. Bridging, as
defined previously, entails long-term contracts that establish supply and price over an
extended period, and/or partnerships and joint ventures (Jaffee, 2010). Moreover, buffering
strategies are utilised namely for product and processs (re-)configuration and supply chain
(re-) configuration. Product and processes (re-)configuration is practised by companies to
reduce natural resource usage (Delmas and Pekovic, 2013). Firms need to understand the
benefits they would gain if they concentrate on their product and processes (re-)configuration
simultaneously with the supply chain (re-)configuration decisions (Fine, 1998).
Concerning supply chain (re-)configuration, safety stock is a common buffering
strategy that is followed in order to minimise dependence on resources (Bode et al., 2011; Su
et al., 2014). Facility location decisions need to be considered too. As far as NRS is
concerned, it may force companies to design their networks based on proximity of scarce
natural resources or to relocate factories in other regions to access scarce natural resources.
Based on the above, it is proposed:
P3a: Discretion over scarce natural resource is negatively related to the adoption
of buffering strategies.
P3b: Discretion over scarce natural resource is negatively related to the adoption
of bridging strategies.
The conceptual framework in Figure 1 is composed of the above six propositions and
it is divided into two parts: the first part identifies the natural resource dependence level. The
second part deals with the supply chain-related strategies that companies may adopt to
minimise the natural resource dependence level.
The research applies this type of cross-case analysis to validate the framework and
show the effect of each second-order theme of the natural resource dependence level on
supply chain NRS strategies as an aggregate dimension. In Table 3, the cross-case matrix is
shown illustrating the strategies companies follow to respond to the dependence level in
connection with the scarcity of natural resources. Table 4 illustrates the causality of the
propositions developed for the association between natural resource dependence level and
supply chain NRS strategies.
5 Conclusions and implications
This research set out to answer the following questions: why and how do
manufacturing companies respond to the growing competition for scarce natural resources?
This research develops and empirically tests an RDT-based conceptual framework that aims
to understand the NRS implications for SCM. In relation to the first question, the seven
factors that determine the level of dependence on the natural resource were identified: price
of natural resource, quantity of natural resource, availability of alternative suppliers, social
forces, legislation, switching costs and geopolitical risk.
In terms of the second question, this work contributes to extant literature by showing
that the importance of a resource will lead to buffering strategies. When the number of
suppliers is limited and when companies face difficulties in owning, accessing, or using
scarce natural resources, buffering strategies and bridging strategies are adopted.
5.2 Research implications
This research contributes to the current literature in multiple ways. First, it employs a
RDT lens with the aim of gaining an in-depth understanding via theoretical elaboration and
exploration of natural resource dependencies and associated supply chain strategies in the
manufacturing sector. This is one of the first research studies that applies an RDT perspective
in this context. Previous studies do not include an empirically grounded theoretical
conceptual framework except Bell et al. (2013).
Most papers do not take into consideration the contingent factors that can change the
natural resource dependence level and thus the adoption of supply chain strategies for
managing dependencies (Esper and Crook, 2014). Prior studies (Paulraj and Chen, 2007; Ellis
et al., 2010) focused on a few resource dependence constructs such as limited number of
suppliers and, overall, there is a lack of attention to natural resource issues (George et al.,
Regarding the second contigent factor of supplier substitutability, the findings are
partially in line with RDT theory and previous studies (e.g. Bode et al., 2011; Meznar and
Nigh, 1995; Su et al., 2014). It is supported that low substitutability of suppliers is the key
driver of bridging strategies while our findings indicate that buffering strategies are used as
well. This shows that bridging strategies alone are not an effective approach as they do not
remove the basic source of vulnerability. RDT was further examined in the context of NRS
by determining all important types of contingency factors namely the price of the natural
resource, quantity of natural resource, availability of alternative suppliers for the natural
resource, switching costs associated with switching suppliers providing the natural resource,
legislation, geopolitical risk, and social forces that can hinder the ownership of the natural
resource and the ability to access and use the natural resource.
This research also draws attention to the strategies available for managing the issue of
NRS, establishing possible credible links between natural resource dependence level and
supply chain strategies. Past studies (Bode et al., 2011; Bell et al., 2012; Bell et al., 2013;
Mishra et al., 2016; Ro et al., 2016) identified several strategies, but have either treated them
in isolation or have fallen short in identifying when to employ each strategy. RDT was further
elaborated in the context of NRS by developing a set of supply chain strategies to minimise
the natural resource dependence level.
Third, this research is one of the first empirical studies addressing NRS and their
impact on manufacturing supply chains. The manufacturing sector is a resource intensive
sector as resources account for at least 40% of the manufacturer’s cost but one that has not
received attention on how resources might affect the operational challenges for risk
management (EEF, 2014). The empirical evidence collected in different manufacturing sub-
sectors indicates that the conceptual framework can be applied to other sectors as well.
5.3 Managerial and Policy implications
This research offers a systemic perspective towards multiple natural resources
providing a useful framework, as a starting point for manufacturing firms, that want to
determine a successful supply chain strategy for overcoming NRS. Supply chain and
purchasing managers need to evaluate the implications of NRS risk and, when appropriate,
mitigate this risk using specific strategies. This research increases managerial understanding
of the advantages and disadvantages of those strategies. Another practical implication is the
early involvement in the product design process that was highlighted by AutoCo_1 and the
supplier of wiring connectors. This can ensure that important issues such as regulation, cost
and resource or suppliers’ availability are considered by product designers early enough
informing their decisions regarding the usage of specific resources.
The cases highlight a lack of transparency for certain materials in the automotive
industry such as REE as their suppliers do not transfer information beyond first-tier suppliers.
Managers could perhaps facilitate information exchanges by not only identifying and
quantifying the respective benefits, but by also including these in their existing reward
Different antecedents such as legislation affect the appropriateness of various
strategies. Buffering strategies are used as a defense strategy to alter and overcome the given
contingent factor and to minimise resource usage and the purchasing cost. Managers should
gather information and collaborate closely with suppliers in order to find where scarce natural
resources appear in their products and operations. This is in line with Matopoulos et al.
(2015) who suggested the “resource awareness” requirements of supply chains. This study
shows that when it comes to resource scarcity implications, suppliers could be playing a more
proactive role influencing the smooth functioning of the supply chain.
Regarding policy implications, there seems to be an effort to set standards on how to
deal with the scarcity risks for some resources (see for example, EU’s Raw Materials
Initiative, National Strategic and Critical Minerals Production Act of 2013, H.R. 761). This
perhaps reflects policy makers’ worries about the impact of resource scarcity on their
country’s growth and the ability of manufacturing companies to compete in global markets.
However, these initiatives are still quite abstract lacking a more concrete set of actions and
It also appears that legislation sets different targets for different natural resources. For
example, the end-of-life vehicle directive led automotive companies to recycling of materials
in vehicles, however there is no legislation that incentivises companies to recycle water.
Some legislation prevents companies from applying other legislation. There is no concrete
directive that substantially influences and gives incentives to manufacturing companies to
design product for easy reuse or recycling.
Overall, this research provides a unique framework with more consistent strategies
that can assist policy makers in assessing scarcity issues, thus informing their decisions.
Policy makers could use the empirical findings of the study for better understanding and
managing the challenges of a resource constrained world. They must be more aware of the
available supply chain NRS strategies and its antecedents in order to provide concrete targets
and indicators to manufacturing companies for improving the efficiency of resource usage.
For example, recycling can enable a more resource efficient economy giving countries or
continents such as Europe, a competitive advantage and minimise its dependency on foreign
sources. Recycling opportunities are not used to their full potential.
The United Nations Environment Program (2011) study found that less than 1% of
REEs are recycled. Low recycling rates mean a missed economic opportunity, for example,
non-recycling of copper means an annual loss of $52 billion (MacAurthur, 2012). Scarcity
issues must be integrated into policies and policy makers have to monitor how this is
5.4 Limitations and future research
The relatively varied set of cases suggests a possibility for some generalisation of our
findings to all manufacturing industries. However, the case method has limitations in terms of
external validity; hence, further quantitative testing of the conceptual model and of the
propositions developed is recommended. This research focuses on large multinational
companies. Based on RDT, size is one important organisational factor that has implications
on firms’ behaviour in response to changes in market environments. Smaller companies are
not explored in this study and future research would be beneficial to identify similarities and
differences between large and small companies and the preferred strategies in relation to firm
Future research needs to examine response strategies more closely especially their
impact on organisational performance. For example, relational mechanisms may lead to an
increase of a buyer’s dependence on the supplier, but others such as hierarchy mechanisms
might not. In this research, the information that is transferred in the buyer–supplier
relationship was not addressed. Future research could determine the relationship between the
content of the exchanged information and the risk of NRS. Finally, this paper focuses mainly
on non-renewable resources such as REEs and energy but also on water which is a renewable
resource. The findings may not be transferable to other natural resources such as timber and
to other industries such as, inter alia, the chemical and electronics industry. To get a broader
picture of the NRS, other natural resources and industries should be analysed, and general
conclusion should be made about their overall scarcity impact on manufacturing companies.
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Table 1: Profile of companies in the case studies
Industry Number of Employees (approximately)
Interviewees / Key Informants
AutoCo_1 Automotive: One of the largest US multinational OEMs.
181,000 £94 billion 2 Senior Purchasing Managers
AutoCo_2 Automotive: UK manufacturer of automotive Body- in-White products and services.
650 £66 million Logistics Manager, Purchasing Manager, Purchasing and Logistics Director
AutoCo_3 Automotive: UK multinational OEM. 30,000 £19 billion Sustainability Manager, Supply Chain Manager, Purchasing Corporate Social Responsibility Manager, Product Environment Manager, Product Stewardship Manager, Materials Engineer, Group Leader in Sustainable aluminium Strategies, Materials Engineering Manager
AutoCo_4 Automotive: UK multinational seat manufacturer for a variety of applications.
300 £66 million Purchasing Director, Environmental Manager, Logistics Manager
AlumCo_5 Aluminium: Norwegian multinational manufacturer of extruded aluminium
23,500 £2.5 billion Director of Global Strategic Sourcing , Vice President of Corporate Social Responsibility Manager, Vice President of Strategic Sourcing
AlumCo_6 Aluminium: US multinational manufacturer of industrial aluminium
11,000 £7 billion Environmental Manager , Plant Manager, Senior Purchasing Manager
Table 2: Natural resources related to each company
Natural Resources Examined
Energy ,Water, Rare Earth Elements, aluminium
AutoCo_1, AutoCo_2, AutoCo_3
Energy ,Water, aluminium AutoCo_4, AlumCo_5, AlumCo_6
Table 3: Buffering and Bridging Supply Chain NRS Strategies across the 6 Cases
Aggregate dimension Second-order themes (First-order themes) Auto Co_1
Buffering Strategies Product and Process (re-)configuration Recycling
Water Aluminium Energy Substitution
New technologies to minimise the usage of resources
Energy Water Aluminium REEs
Supply chain (re-)configuration Close loop supply chain (water, aluminium and REEs) Safety stock
Bridging Strategies Transactional Mechanisms Water Energy
Relational Mechanisms Aluminium
Hierarchy Mechanisms Aluminium
Table 4: Representative Quotations for the Impact of Natural Resource Dependence Level on Supply Chain NRS Strategies
Representative quotations Causality Company Proposition Support
“ Aluminium is an expensive material, the more we can recycle it the better we will be from a cost base”
“Aluminium is obviously high value scrap no one really recycle steel scrap”
Purchasing importance leads to recycling.
P1a (Importance of the scarce natural resource and buffering strategies)
“We are going to manufacture cars in Saudi Arabia. The driver for that is because the Saudis have a huge quantity of aluminium bauxite”
Criticality leads to supply chain (re-)configuration .
“By working closely with our top customers, we have minimised the usage of aluminium…So when you first design a blank it might be the sise of this piece paper but once you try to make a part out of it you may decide it doesn’t need to be actually this big …so before you go into full
production you make the blank smaller”
The low number of alternative suppliers leads to product and process (re-)configuration .
AutoCo_2 P2a (Supplier substitutability and
“ “We have identified the largest suppliers the strategic suppliers and most of our metals come from the long term strategic suppliers”
“So if we change the supplier, the testing has to be redone. So we can’t just switch. “so “We have with our production suppliers … few long term agreements”
The low number of alternative suppliers leads to relational mechanisms.
AlumCo_5 AutoCo_4 AutoCo_1
P2b (Supplier substitutability and
“You have to prove to the government that you are proactively reducing your impact on the environment.” Thus they have “a process for low energy lighting across the factory and the
“We also comply with the EU ETS European Emission Trading Scheme so we are allocated an amount of carbon that we can use, obviously natural gas”
Legislation leads to new technologies and substitution.
P3a (Discretion of the scarce natural
resource and buffering strategies)
“In the future there are likely to be severe restrictions and this not only depends on the acquisition mining availability but also it depends on political objectives. We are starting recognise the issue … where the materials coming from, is from China, Russia so these
countries are politically sensitive areas on specific materials “so “Create a close loop system (by close collaborating with our aluminium supplier) where basically aluminium is coming
from the production line”
Geopolitical risk leads to: -Supply chain (re-)configuration (recycling)
(Discretion of the scarce natural resource and bridging
Figure 1: The Conceptual Framework and Propositions
Appendix A The interview guide
General Respondent Information • Please describe what do you do in your job?
• How long have you been working for [your company]?
Natural Resource Dependence Level and Supply chain NRS strategies
• What do you see as the main pressures and reasons to manage the issue of natural resource
scarcity effectively in your firm that could affect your supply chain and product portfolio?
• Are those pressures mentioned above being matched with appropriate remedial measures?
• Please concentrate on a recent natural resource scarcity issue (during the last five years), can you
describe the main reason(s) of the scarcity? how your production and operation have been
adjusted to this change?
• What types of supply contract do you generally have with your suppliers that provide you with
scarce natural resources?
Outcomes • What more can you do to handle the issue of natural resource scarcity? Are you planning to do
any of these?
Appendix B Within-case and cross-case analysis approach
The transcripts were examined for each case to identify first-order codes and to be
illustrated with simple descriptive phrases or quotes related to the research questions. Upon
concluding this first stage of analysis, a detailed case narrative was written that describes the
supply chain NRS strategies employed or new strategies being introduced, and its antecedents
i.e. the natural resource dependence level. Specifically for the AutoCo_1 transcripts, the first-
order codes derived included the price of the natural resource, the number of suppliers and
legislation (see Table below, second column).
The second stage aimed at linking themes to contexts, to consequences, to patterns of
interaction and to causes (Corbin and Strauss, 2008). The first-order themes that share similar
meanings were compared with the literature and clustered into higher-order themes, i.e. the
second-order themes. For example, legislation is a factor that hinders the discretion over the
scarce natural resource (see Table B1 below, second column). Finally, all first and second
level code categories were interatively re-categorised to higher level categories. At this point,
the analysis was organised around two main axes: natural resource dependence level and
supply chain NRS strategies. The aggregate dimension in Table B1 below (fourth column) is
natural resource dependence level. The process was applied for the supply chain NRS
strategies of AutoCo_1 and was followed for all 6 cases.
Table B1: Themes and Quotations for the Natural Resource Dependence Level dimension (AutoCo_1)
“The reason that led us to take some specific strategies was cost….By referring to cost we mean price of raw materials.” (Purchasing Manager B)
“If you are missing a nut that you need to make a car that box of thousand hypo nuts loses you thousand dollars that has overhead profit costing 10 million dollars. So that box of nuts is worth ten million dollars if you don’t have them when you need them.”
Price of the natural resource
(Purchasing Manager A)
“We don’t have many suppliers.” (Purchasing Manager B)
“Usually we have a single source supplier” (Purchasing Manager A)
Number of suppliers
of the scarce
“There is a legal responsibility to recycle cars.” (Purchasing Manager B) “The legislation drives car makers” (Purchasing Manager A)
Legislation Discretion over
The themes continued to emerge until a clear understanding of the relationships
among categories was made and until additional interview transcripts and analyses failed to
show new relationships. At the end, 20 first-order themes resulted and were grouped into 8
second-order themes developed deductively based on theory; further categorisation of these
second-order themes resulted in the identification of 3 aggregated dimensions:
1) Natural resource dependence level (second-order themes: importance of the scarce
natural resource, supplier substitutability of the scarce natural resource, discretion
over the scarce natural resource).
2) Buffering strategies (second-order themes: product and process(re-) configuration,
supply chain (re-) configuration) and,
3) Bridging strategies (second-order themes: relational mechanisms, transactional
mechanisms, hierarchy mechanisms).
The two figures below depict the major themes and their relationships (see Figures B1
and B2). The identified themes provide a basis for building a data structure which is a pivotal
step as data can be configured into a sensible visual aid and “it also provides a graphic
representation of the progression from raw data to terms and themes in conducting the
analyses — a key component of demonstrating rigor in qualitative research” (Gioia et al.,
2013, p.20). By integrating the themes and dimensions, the relationships among the emergent
concepts become apparent. The relationships between the secord order themes of the three
aggregate dimensions relationships (see Figures B1 and B2) and their consequences are
explored in more depth in the sub-sections 4.2, 4.3 and 4.4. More importantly, each of these
Figures has contributed to the subsequent formation of Figure 1.
Figure B1: Data structure of Natural Resource Dependence Level
Figure B2: Data structure of Buffering and Bridging Supply Chain NRS Strategies
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