Dual-sourcing and technology cooperation strategies for developing competitive supplier in complex product systems

Abstract This study aims to identify the strategies for developing competitive suppliers for a weak main manufacturer in a complex product systems (CoPS) supply chain. Several crucial characteristics in the competition of CoPS are considered when stakeholders exhibit differential ability. Dual-sourcing and a jointed strategy have been proposed to facilitate supplier development and technology cooperation. Multi-stage games are developed to explore the optimal strategies based on a benchmark model. The optimal decisions and a computational analysis are presented to examine the effect of supplier development. The results show that dual-sourcing and technology licensing contracts have a significant effect on improving indigenous technology capability in the short term. However, a dual-sourcing strategy with a jointed contract is the most efficient supplier development strategy and technology cooperation in the long term. The powerful or the collaborative supplier would be a first-tier supplier for the weak main manufacturer, depending on different parameters such as the technology transfer ability of the collaborative supplier and contract items. Overall, the impact of key parameters on the optimal strategies are considerably different.