The International Journal of Logistics ManagementSupplier choice criteria and the security aware food purchasing managerDoug Voss

Article information:To cite this document:Doug Voss , (2013),"Supplier choice criteria and the security aware food purchasing manager", TheInternational Journal of Logistics Management, Vol. 24 Iss 3 pp. 380 - 406Permanent link to this document:http://dx.doi.org/10.1108/IJLM-03-2013-0029

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Supplier choice criteria and thesecurity aware food purchasing

managerDoug Voss

Department of Marketing and Management, University of Central Arkansas,Conway, Arkansas, USA

Abstract

Purpose The purpose of this paper is to explore the differences in preferred supplier choice criteriabetween food purchasing agents who focus on supplier security and those that do not. Specifically,this research determines the relationship between purchasing agents supplier security preferencesand their preferences for product quality, delivery reliability, price, and supplier location. The influenceof international sourcing on demand for increased supplier security is also explored.Design/methodology/approach Choice-based conjoint analysis with hierarchical Bayes (HB)estimation and t-tests are used to assess and compare the utility food purchasing managers derivefrom different supplier attributes.Findings Purchasing managers that place a higher priority on security when choosing supplierswere willing to pay suppliers a higher price and receive lower levels of delivery reliability in return forhigher security but placed less emphasis on suppliers product quality. Firms that source internationallydo not have a significantly greater preference for advanced supplier security. However, purchasingmanagers that value supplier security were more likely to source internationally, potentially indicatingthat security allows for global sourcing by mitigating the increased vulnerability inherent to sourcingabroad.Research limitations/implications This research was limited by its focus on the food industryand a relatively small sample size.Practical implications This work illustrated that food purchasing managers can be segmented bythe emphasis they place on security. Food industry managers will find results useful in formulatingtheir future service offerings with respect to security and other supplier choice criteria.Originality/value This is one of few works investigating security as a supplier choice criterion andutilizing HB estimation of choice-based conjoint data.

Keywords Purchasing, Supply chain security, Supplier choice criteria, Food industry

Paper type Research paper

IntroductionSupply chain security has received increased attention in the academic literature(Belzer and Swan, 2011; Autry and Bobbit, 2008; Williams et al., 2008, 2009a, b; Sheuet al., 2006; Voss et al., 2006, 2009; Voss et al., 2009; Whipple et al., 2009; Kolluru andMeredith, 2001; Czinkota et al., 2010; Manuj and Mentzer, 2008a, b; Wagner and Bode,2008; Blackhurst et al., 2008; Reade, 2009), which is not surprising given theimportance industry places on security. Executives believe supply chain security is astrategic concern and a method of brand protection (Voss et al., 2006). Further, 69

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0957-4093.htm

Received 5 March 2013Revised 5 March 2013Accepted 20 May 2013

The International Journal of LogisticsManagementVol. 24 No. 3, 2013pp. 380-406r Emerald Group Publishing Limited0957-4093DOI 10.1108/IJLM-03-2013-0029

This research was supported by the US Department of Homeland Security (Grant numberN-00014-04-1-0659), through a grant awarded to the National Center for Food Protection andDefense at the University of Minnesota. Any opinions, findings, conclusions, or recommendationsexpressed in this publication are those of the authors and do not represent the policy or position ofthe Department of Homeland Security.

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percent of surveyed executives at Global 1,000 companies feel that disruptions,such as those caused by a security incident, could adversely affect future revenue(Elkins et al., 2005).

Firms implement security for reasons other than brand protection and risk mitigation.Customer requirements may dictate suppliers implement security (Aberdeen ResearchGroup, 2004; Eyefortransport, 2004). Some firms, however, do not feel compelled toimplement security or require it of their suppliers (Rogers et al., 2004). This divergencein security preferences indicates market segments exist with respect to demand forsupplier security.

Perhaps one reason firms do not require suppliers to implement security measuresis that improved security may cause suppliers to increase prices and decrease deliveryreliability. Security measures are costly and suppliers who increase security musteventually raise prices to recoup their investment. Simultaneously, security inspectionsand other requirements add activities to the order cycle, which adds variance to theprocess by definition. For example, a food manufacturer may inspect product forcontamination throughout the production process and before leaving the dock. Theseinspections add activities and their associated variance to the production process,which reduces predictability. In an international context, containers often undergosecurity inspections before embarkation from foreign ports of call. These inspectionsadd variance to the process of loading containers onto outbound vessels. The increasedvariance makes it more difficult to predict when the container will be loaded, whichmay cause the container to miss its sailing date, adversely affecting supplierscapability to deliver goods reliably (Hannon, 2004). In order to offset security risk,purchasing firms that value supplier security should be willing to trade-off price anddelivery reliability.

Voss et al. (2009) examine whether food purchasing agents are willing to trade-offprice and delivery reliability for supplier security. They propose that security marketsegments exist and some purchasing agents value supplier security more than others.Specifically, Voss et al. (2009) propose that concern over security incidents may causesome purchasing agents to place more importance on supplier security than do agentsthat are unconcerned about security incidents. They find that concerned purchasingmanagers are willing to pay more to purchase from a secure supplier but neither groupis willing to accept lower delivery reliability. Methodological constraints led Voss et al.(2009) to use concern over security incidents as a proxy for the importance purchasingagents place on security. This is an acceptable, but impure, method of dividing thesample to ascertain differences in purchasing managers that value security and thosethat do not.

The current research addresses this issue and builds upon Voss et al. (2009)in several ways. First, Voss et al. (2009) utilize multinomial logit estimation ofchoice-based conjoint data, which only provides the aggregate (i.e. average) utilities forthe sample. This work applies hierarchical Bayes (HB) estimation to their choice-basedconjoint data set. HB estimation, a more advanced technique, allows one to estimaterespondent level part-worth utilities. By estimating utilities on the respondent level,one is able to more accurately determine differences between purchasing managersthat place importance on supplier security and those that do not. Very few works in thesupply chain literature have employed conjoint analysis and even fewer, if any, haveutilized HB estimation.

Voss et al. (2009) also call for further investigation into the relationship of securityand quality preferences. Suppliers employing advanced security measures are more

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likely to inspect product for defects and contamination during production andbefore final customer shipment. These inspections would not only uncover securityissues but also product defects caused by other issues (e.g. discoloration/breakage ofproduct or packaging). This improved inspection regimen should reduce the numberof defective products delivered to customers even in the absence of a security incident.We further extend Voss et al. (2009) by delineating whether purchasing managersbelieve security and quality are complimentary supplier attributes. If purchasingmanagers view security and quality as complimentary, suppliers would be able tojustify security investments with knowledge that customers view secure productas also being higher quality product. This would further differentiate the securesuppliers offering.

The purpose of this work is to explore the mental models of food purchasingmanagers supplier choice criteria with a focus on differences between food purchasingmanagers that believe supplier security is important and those that do not.Food supply chains are an important subset of the broader supply chain concept due totheir importance to the populace, the US economy, and their vulnerability. A safe foodsupply is important for societal stability. Agricultural products, and their relatedindustries, significantly contribute to the economic welfare of the USA through jobsand exports (Rand Corporation, 2003). Furthermore, of seven general areas ofUS vulnerability to terrorism, five are related to the food supply chain (Harl, 2002).This level of vulnerability, coupled with the lack of US food supply chain preparednessand potentially disastrous effects of such an attack (Rand Corporation, 2003), has led tothe US Food and Drug Administration (2003) to classify the potential for a terroristattack on the US food supply as a real and current threat. Research on the effects ofsecurity as it relates to food supplier selection is sparse. Further investigation is neededto determine whether security investments hold marketing value in addition tomitigating risks.

Specifically, this research introduces HB estimation of choice-based conjointdata to the supply chain literature and seeks to determine if purchasing agents whoplace a high priority on supplier security are less price sensitive, place a lower priorityon delivery reliability, and place a higher priority on product quality. Additionally, littleis known about the security preferences of food purchasing managers who sourceinternationally. The increased risk of international sourcing could conceivably drivepurchasing managers to demand increased supplier security. This work determineswhether international sourcing influences demand for supplier security and whetherthe importance placed on security influences supplier location preferences.

Literature reviewRisk and supply chain securityChristopher and Lee (2004) note that increasing supply chain risks necessitate riskmanagement activities that may affect firm performance (Brindley, 2004). Risk hasbeen conceptualized as consisting of three basic components: cause, likelihood, andconsequences of the risk event (Ritchie and Brindley, 2007). Johnson (2001) proposestwo basic types of risk: demand and supply. Demand risk occurs as a result of factorsthat make demand unpredictable or might negatively skew demand. These factorsmay include seasonality, volatility of fads, short product life cycles, or the publicsperception of the safety and ethics of the firm. Supply risk involves, the probability ofan incident associated with inbound supply from individual supplier failures or thesupply market occurring, in which its outcomes result in the inability of the purchasing

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firm to meet customer demand or cause threats to customers life and safety (Zsidisin,2003, p. 222).

Purchasing organizations are unable to completely manage many of the risks theyface. They depend on suppliers to perform tasks in an agreed upon manner andmanage their own risks appropriately. Management of risks involving inbound supplyis called supply risk management. Zsidisin and Ellram (2003, p. 15) define supplyrisk management as, [y] purchasing organization efforts that reduce the probabilityof occurrence and/or the impact that detrimental supply events have on the firm, andidentify several supply risk sources. These supply risk sources include price increases,supply discontinuity, and quality defects. Each of these risks can be impacted bysuppliers security competence, or lack thereof, and are compounded by internationalsourcing.

Supply chain security is defined as, The application of policies, procedures, andtechnology to protect supply chain assets (product, facilities, equipment, information,and personnel) from theft, damage, or terrorism, and to prevent the introduction ofunauthorized contraband, people, or weapons of mass destruction into the supplychain (Closs and McGarrell, 2004, p. 8)[1]. While the concepts are interrelated,supply chain security should not be confused with risk. Supply chain security helpsmitigate risk. Security mitigates demand risk by helping protect firms againsttheft, damage, or terrorism and thereby mitigate the risk these may have on firmperformance. Security mitigates supply risk in that it protects customers frompotentially harmful product and also helps ensure supply continuity by reducing theftand improving product quality through damage reduction.

Unfortunately, protecting the US supply chain from security threats is difficult atbest. Only the most visible or important supply chain assets are regularly protected.The size of the supply chain makes it impossible to completely protect all of its nodes.The domestic infrastructure includes roughly 47,000 miles of interstate, 99,000 milesof class I railroad track, 26,000 miles of navigable waterways, 64,000 miles of oilpipeline, 5,200 airports, and 9,400 commercial waterway facilities (Department ofTransportation Bureau of Transportation Statistics, 2005). The interconnectednessof this infrastructure also increases vulnerability. If a major disruption affects onenode, it could also adversely affect other connected nodes. There are also a largenumber of stakeholders involved in any given supply chain. These stakeholdersinclude the human resources that enable efficient and effective supply chain operations(Reade, 2009) and suppliers from whom a firm purchases goods and services.

Failure to protect supply chain assets from a realized security event can haveseveral adverse consequences (Radjou, 2003). A security failure can disrupt customerdeliveries, which may lead to lost revenue. Brand equity could be affected if customerperception of the firm is altered due to the security failure. Revenue loss could lead toinvestor discontent and increase the firms cost of capital should investors chooseto liquidate their equity investments. Major supply chain disruptions have been shownto significantly devalue affected firms stock price (Hendricks and Singhal, 2005).

Supplier selection criteriaSuppliers are important to firm success (Porter, 1985) and selecting appropriatesuppliers is important because it affects inventory policies, production, cash flowrequirements, and product quality (Choi and Hartley, 1996). Braglia and Petroni (2000)posit that supplier selection consists of two steps: first, suppliers are evaluated todetermine if they qualify when measured against certain choice criteria, and second,

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suppliers are selected that meet or exceed these choice criteria. Choice criteria aredefined as The factor(s) [a buyer] uses to evaluate competitive offerings (Lehmannand OShaughnessy, 1974, p. 36).

The criteria used to evaluate suppliers vary, but past research indicates that three ofthe most important are product price, quality, and delivery reliability (Braglia andPetroni, 2000). Price is the economic outlay necessary for the purchase of the product.Quality is defined as the extent to which the suppliers product conforms to buyerspecifications. Delivery reliability is the number of times the suppliers product isavailable for use by a promised date.

There are many reasons delivery reliability is an important supplier selectioncriterion. First, delivery reliability is a very visible supplier attribute. When delivery isunreliable, it can cause severe economic consequences by shutting down a plant ordelaying production (Lehmann and OShaughnessy, 1974). Second, delivery reliabilityaffects the level of safety stock a firm must maintain. Money spent on safety stockcould be reallocated elsewhere if the supplier were able to deliver product reliably. Priceis important because it provides the purchasing agent a way to justify their selection ofa supplier should a problem occur (Lehmann and OShaughnessy, 1974). Further,purchase price directly impacts cost of goods sold, which influences profit margin andthe firms ability to charge appropriate prices.

The quality of purchased goods impacts both costs and the purchasing firms abilityto deliver their product in a timely manner. Poor quality inputs result in higher levels ofproduction waste, an increased need to perform quality assurance checks, increasedsafety stock, and possibly increased liability costs if defective product is sold tocustomers. Poor quality impacts delivery reliability because the purchasing firmcannot be certain that inputs of sufficient quality will be available for production tomeet customer demand in a timely manner.

The impact of security on price, delivery reliability, and qualityThe overall security level of any given supply chain is only as sound as the partnerwith the least security. However, supplier efforts to improve security are complicatedby the fact that security measures are costly and therefore potentially impact pricescharged to customers. There are a number of mechanisms by which security investmentscan increase costs. The cost of security to warehouses is estimated to be $1 to $2 persquare foot of storage space (Warehousing Education and Research Council, 2004). Thisincludes the cost of installing cameras and fences, training personnel, and dedicatinglabor to the security function. Motor carriers must incur the cost of locks for trailers,installation of these locks, added labor, extra administration, key distribution, and backupsystems. These costs could reach $150 per trailer (Kahaner, 2003). For motor carriers tobecome C-TPAT compliant, they must also utilize remote camera systems, electronicgates, and security guards at storage facilities. The cost of screening and trainingpersonnel alone could reach $50 per driver (Cullen and Kilcarr, 2004).

One facet of the US governments overall security program is to extend the zone ofsecurity beyond US borders. The Container Security Initiative places personnel atforeign ports where cargo is inspected before being loaded onto a vessel bound for theUSA. The cost of these inspections is borne by the importer and can cost $125 $250if the inspection is conducted on-site. If conducted off-site, the price increases to$600-$900 ( Jorgensen, 2003b). These inspections also cause delays, which add greatervariability to the process and can potentially cause the container to miss its sailingdate, with little or no recourse available for the shipper (Hannon, 2004).

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Security affects logistics cost and service levels in other ways (Hannon, 2004;Jorgensen, 2003a, b). Security inspections occurring inside firms, at border crossings,and points of embarkation and disembarkation add additional activities to the ordercycle. These security activities increase process variability resulting in increasedsystem inventory. Increased process variability also decreases suppliers abilities tomeet promised delivery dates, which decreases service reliability.

While security has a potentially deleterious effect on supplier price and deliveryreliability performance, it may actually improve the quality of goods delivered to thepurchasing organization. Closs and McGarrell (2004) detail security best practices andadvocate inspecting product to ensure it is safe and complies with specifications. Riceand Caniato (2003) also recommend inspecting product to improve security performance.With regard to food, inspections would assess whether or not the product is free ofcontaminants and meets corporate quality guidelines.

Contaminants may be present due to intentional or unintentional acts. Intentionalacts may include a disgruntled factory worker pouring a harmful chemical into thefood (i.e. bleach) that would cause sickness to those who consume the product.However, not all contaminants are the result of intentional actions. For example, poorlymaintained or malfunctioning production machinery may deposit metal shavings intothe food, which also poses a health risk. Contaminants can also take the form of excessbacteria from spoiled food that has not been refrigerated properly. Additional securityinspections may be designed to catch intentional contamination but unintentionalforms of contamination would also be found in the process. The end result is fewerdeliveries containing product that does not conform to customer specifications therebyincreasing the suppliers quality performance.

However, these inspections are not without penalty, further underscoring the impactsecurity measures have on cost and delivery performance. Personnel must be dedicatedto at least part-time performing the inspections. Further, the time it takes toperform inspections adds greater variability to the activity, adding greater variabilityto the firms entire fulfillment process. This added variability slows the process andmakes it more difficult to predict delivery dates, ultimately decreasing service levels.

Value of security to purchasing agentsResearch has shown that food industry firms differ considerably in their levels ofsecurity implementation (Voss et al., 2009). Given that security measures have potentialprice, delivery reliability, and quality implications, suppliers must decide whether toimplement security measures. This is particularly important when one considers thatprice, delivery reliability, and quality are among the most important criteria usedby purchasing agents to select and evaluate suppliers (Braglia and Petroni, 2000;Chaudhry et al., 1991; Choi and Hartley, 1996; Cardozo and Cagley, 1971; Ellram, 1990;Evans, 1982; Goffin et al., 1997; Hirakubo and Kublin, 1998; Hsu et al., 2006;Kagnicioglu, 2006; Lambert et al., 1997; Lehmann and OShaughnessy, 1974; Li et al.,2006; Min, 1994; Narasimhan et al., 2006; Sheth, 1973; Tullous and Munson, 1991;Vonderembse et al., 1995; Wilson, 1994).

Sheth (1973) posits that perceived risk has an effect on purchasing practices butresearch on the effects of security risk as it relates to supplier selection is sparse. Vosset al. (2009) investigate the trade-offs food purchasing managers are willing to make inorder to utilize suppliers that employ high levels of security and conditions underwhich security may be more important. Specifically, they propose two moderatingconditions international sourcing and concern over security incidents that have

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occurred at the purchasing managers firm will exacerbate the importance foodpurchasing managers place on supplier security. Their findings indicate that purchasingmanagers are unwilling to pay a higher price or accept lower delivery reliability to utilizea secure supplier when neither of the moderating conditions exist.

However, when purchasing managers are concerned about security incidents thathave occurred at their firm, they are significantly more willing to pay the higher pricecharged by secure suppliers. Concerned purchasing managers were still not willing tosacrifice delivery reliability for security.

Interestingly, Voss et al. (2009) find that respondents who were concerned aboutsecurity incidents at their firm were not only less price sensitive but also valued qualityand other strategic supplier attributes more than unconcerned purchasing agents.While they did not formally hypothesize a relationship between quality and security,they conclude that it may be possible to segment food purchasing agents by those thatfocus on price vs those that focus on quality and other strategic supplier attributes.Purchasing agents that are price-focussed would tend to place less value on suppliersecurity because suppliers who employ advanced security measures would likelycharge higher prices to recoup associated security costs. Security is a strategic concernin as much as managers view it as a way to protect brand equity (Voss et al., 2006, 2009;Aberdeen Research Group, 2004) and similar to quality ensure supply continuity.

H1 and H2 propose that purchasing agents who place more importance on securityalso place less importance on price and delivery reliability because they should bewilling to trade-off price and delivery reliability if they expect their suppliers toimplement security measures. H3 proposes that purchasing agents who place moreimportance on security also derive more utility from product quality because securityand quality are potentially symbiotic, complementary supplier attributes and thereforeoccupy the same mental position in the minds of purchasing managers. In essence,H1-H3 posit that purchasing managers are willing to accept higher prices andlower delivery reliability in return for the higher quality and lower risk afforded byimproved security:

H1. Purchasing agents that place more importance on supplier security are lessprice sensitive than agents who place less importance on supplier security.

H2. Purchasing agents that place more importance on supplier security place lessimportance on delivery reliability than agents who place less importance onsupplier security.

H3. Purchasing agents that place more importance on supplier security place moreimportance on product quality than agents who place less importance onsupplier security.

International sourcing adds further risk, cost, and service implications to the equation.In total, 90 percent of international trade, and almost one-half of US imports, aretransported via cargo containers (US Customs and Border Protection, 2004), almostnine million of which are unloaded annually in the USA. It is extremely difficult toensure these containers only carry authorized cargo.

International supply chains are characterized by increased need for security in partdue to an increase in the number of parties that come in contact with any givenshipment (Manuj and Mentzer, 2008a). As the number of parties that come into contact

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with a shipment increases, so does the chance of security incident (Giuniperoand Eltantawy, 2004). These security incidents may include the insertion of counterfeitor adulterated product as well as theft and other issues. Giunipero and Eltantawy(2004) posit that shipment distance is also positively correlated with security risk.International shipments tend to travel a greater distance from origin to destinationwhen compared to domestic shipments. Shipments are at greater security risk while intransit because they are out in the open and relatively unguarded. Increased distancefrom supplier to purchasing firm also limits the purchasing agents ability to monitorsuppliers efforts to prevent theft, contamination, and insertion of unauthorized cargo.For these reasons, purchasing agents are likely to prefer secure international suppliers.

Voss et al. (2009) examined purchasing managers international supplier securitypreferences. Their findings indicate that international sourcing is positively related todemand for supplier security. However, due to their use of multinomial logit estimation,Voss et al. (2009) were unable to assess statistically significant differences in securitydemand between purchasing firms that source internationally and domestically. Due tothe increased security risk presented by international sourcing and a decreased abilityto monitor international suppliers, purchasing firms may be more likely to choosesuppliers that employ more advanced security measures[2]. H4 proposes firms thatsource internationally have significantly greater preference for advanced suppliersecurity when compared to firms that only source domestically:

H4. Firms that source internationally prefer secure suppliers significantly morethan firms that only source domestically.

Voss et al. (2009) also determined that, Ceteris paribus, food purchasing managerswould prefer to source domestically. This finding likely stems from the decreasedsupply risk inherent to domestic sourcing. However, domestic sourcing is not alwayspossible or advisable. Purchasing agents may be forced to source overseas to gain rawmaterials access. Alternatively, purchasing agents may choose to source overseasdespite the increased security risk. If purchasing agents have the option of sourcingdomestically or internationally, they may choose to employ a mix of domestic andinternational suppliers as a means of supplementing domestic capacity. Supplementingdomestic supplier capacity with international sources would help ensure product isavailable in the event that any one supplier fails to meet its quantity obligations (e.g. asa result of unpredictable, location-specific weather events that impact the harvest).While employing redundant suppliers increases supply chain complexity and decreasespurchasing power with any one supplier, Sheffi (2001) posits that redundancy is a key riskreduction technique despite its potential negative impact on efficiency. Firms choosing tosource internationally to supplement domestic capacity would, on one hand, decrease therisk of supply disruptions due to the failure of any one supplier. On the other hand, theywould increase the risk of security incident by utilizing international suppliers.

To compensate for this increased security risk, food purchasing managers shoulddemand higher levels of security from their suppliers so they are able to expand theirsupply base. H5 is based on the notion that: international sourcing entails greatersecurity risk; international sourcing is often imperative (e.g. in the case of food, aproduct may only grow in an international location) and sometimes preferable (e.g. inthe case of food, sourcing internationally allows a firm mitigate supply risk byallowing access to raw materials when other areas have been affected by negativeclimatological events); and supplier security mitigates the increased security risk

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associated with international sourcing thereby affording purchasing agents the abilityto more safely source goods from an international supplier. Therefore, purchasingmanagers who place more importance on security are able to source internationallybecause their suppliers security competence offsets the increased security risk.This would potentially allow the purchasing manager to supplement domesticcapacity with international capacity:

H5. Purchasing agents that place more importance on supplier security are morewilling to source internationally than agents who place less importance onsupplier security.

MethodThis research surveys domestic food industry purchasing managers and useschoice-based conjoint with HB estimation to explore their mental models of supplierpreference with an emphasis on the differences between those managers that place ahigh priority on security when choosing suppliers and those that do not. The methodsection begins with a conceptual overview of conjoint analysis followed by specificmethodological information related to the study.

Overview of conjoint analysisConjoint analysis is a multivariate technique that determines preferences for productsor services (Hair et al., 1998) and has been used previously in the supplier selectionliterature (Wilson, 1994; Li et al., 2006; Tullous and Munson, 1991). Conjoint analysis isbased on the premise that products can be broken down by their attributes, termedfactors, and evaluated by different factor levels. Conjoint assumes respondentsevaluate the value of a product or service by combining the separate amounts of valuederived from the factor levels and produces output in the form of utilities. Utilitiesrepresent respondent preferences for each factor level. Higher utilities indicate a moredesirable level. Levels with a negative utility are less desirable than other levels in thesame factor.

Utilities are used to compute factor importance scores. Factor importance scores areanalogous to main effects and indicate the amount of total possible utility in a modelaccounted for by individual factors. Higher factor importance scores indicate that afactor has a greater influence on supplier preference.

Consider a purchasing manager presented with a conjoint survey that asks him/herto evaluate hypothetical suppliers of a commodity good. The conjoint surveywould contain a number of scenarios and each scenario would depict a number ofhypothetical suppliers. Each supplier would be defined by different levels (e.g. high,medium, and low) of each factor under investigation (e.g. price, quality, deliveryreliability, etc.). The purchasing manager would choose the most preferred supplier ineach scenario based upon how each supplier is defined by their factor levels. Analyzingconjoint data from the survey would reveal the factor that has the greatest (least) effecton supplier choice and the most (least) preferred levels of each factor underinvestigation.

Given the products commodity characteristics in the previous example, thepurchasing manager may focus primarily on price when choosing between suppliers.In this case, price would represent the factor in conjoint parlance and the varyingsupplier prices (e.g. high, medium, and low) presented in the conjoint survey wouldrepresent the factor levels. If this purchasing manager does, in fact, choose commodity

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suppliers based primarily on price then results would indicate that price has thehighest factor importance score and low price would receive the highest utility amongthe price levels.

Several types of conjoint analysis and estimation methods exist. Choice-basedconjoint with multinomial logit estimation has been used extensively to modelpreferences for groups of respondents. Multinomial logit choice-based conjointpools respondents and produces aggregate (i.e. averaged) factor level utilities for theentire sample. This is useful when the sample is homogeneous. However, there areinstances when a sample is not homogeneous and groups of respondents with differentpreferences exist.

Consider the case where a sample is composed of one group that is extremely fondof a product and another group that despises a product. Using multinomial logitchoice-based conjoint, researchers would determine that the sample has lukewarm feelingsbecause that would be the average of love v. hate. Choice-based conjoint utilizing HBestimation overcomes this problem by producing utilities for each individual respondent.

HB estimation has been largely unused due to the amount of computationalprocessing time required for HB utility estimates to converge. Relatively recent advancesin processing power significantly reduce the amount of time required for HB utilityestimation. The interested reader should consult Howell (2009) for further information onHB estimation of choice-based conjoint data.

Study methodology and sample demographicsWhen designing a conjoint study it is important to first understand the realm ofpossible choices subjects may face by conducting interviews and subsequentlydesigning conjoint scenarios to address research questions (Verma and Plaschka,2005). A standard, open-ended interview guide was developed and pre-tested withacademic reviewers and industry practitioners familiar with supply chain securityissues. Interviews were conducted with 15 different entities focussed on eithermanufacturing or distributing food products or involved in food safety and security.These interviews included over 25 managers, which is sufficient to identify a majorityof appropriate attributes and attribute levels (Griffin and Hauser, 1993). Participantresponsibilities ranged from supply chain, purchasing, quality control, and securityfunctions and their positions ranged from manager to executive officer. A purposivesampling approach was taken when selecting the companies for participation. Small,medium, and large firms were included as well as firms focussing on different foodcommodities. Firms that are considered leaders in their industry segment were alsoincluded.

The interviews were conducted over the telephone and in person. In personinterviews were conducted at the companys facility. These interviews utilized structuredand open-ended questions regarding appropriate levels of factors under investigation, thevalue of supplier security, and the relationship of security to other supplier attributes.This information was used to form factor levels. Data collection began with a pretest ofthe conjoint instrument (Churchill, 1979). Levels of price, delivery reliability, and securitywere subsequently modified. The instrument was then made available on-line to a largersample of respondents.

A sample of 1,388 domestic food industry purchasing managers from a variety ofcompanies was drawn from the membership lists of the American Purchasing Societyand the Institute of Supply Management. Of these, 43 respondents were not contactedbecause they were located outside of the USA, 60 letters were undeliverable, and 57

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refused to participate, yielding a usable sample size of 1,228. Three waves of mailingswere utilized to obtain responses. In the first wave, a postcard was mailed informingrespondents they had been selected to participate. The second mailing was sent fourdays after the first. This letter provided respondents with the URL address andpassword to access the on-line conjoint instrument. Following the second mailing,64 respondents completed the survey. Another letter was mailed four weeks later.An additional 66 completed surveys were returned yielding a sample of 130 anda response rate of 10.5 percent. In all, 23 responses were deleted because they failedto complete the survey yielding a final sample of 107 (n 107). Multiple observationsfrom each respondent offer higher reliability than a traditional sample of this size.Table I provides respondent demographics.

The sample was segmented into early and late respondents and demographic datawere compared using w2 difference tests to assess non-response bias. Preferencepatterns for early and late respondents were also compared. No significant differenceswere found between group demographics or preference patterns, implying non-responsebias was not an issue.

Respondents were presented with fifteen scenarios, each containing fourhypothetical suppliers defined by different levels of security, price, quality, deliveryreliability, and location. Respondents were asked to indicate their most preferredchoice of the four hypothetical suppliers presented in each scenario. The choice-basedconjoint software randomizes factor levels presented to each respondent over thecourse of the fifteen scenarios to obtain a balanced view of respondent preferencesacross the sample. An example of one potential scenario is presented in Appendix 1. Theinfluence of each factor and factor level on respondents utility functions was thendetermined utilizing Sawtooth Softwares choice-based conjoint HB package. Factorsand factor levels are presented in Appendix 2 and result in 108 possible scenarios(3 3 3 2 2 matrix).

A vignette was presented at the beginning of the survey instrument that askedrespondents to complete the scenarios as if they were choosing the supplier of animportant food product and describing the levels of quality, price, delivery reliability,security, and supplier location (Hair et al., 1998). A pop-up window was availableduring each scenario to refresh respondents memory of factor definitions.

Following HB estimation of utilities, factor importance scores for security, price,delivery reliability, quality, and location were calculated. As previously stated, factorimportance scores indicate each factors influence on supplier preference. To test H1,H2, H3, and H5 the sample was split at the mean security factor importance score(mean 10.40) to form two groups. Group 1 represents purchasing agents who do notemphasize security when choosing suppliers (n 73; security factor importance scoreo10.40) to the same degree as Group 2 purchasing agents who place a greater priorityon security (n 34; security factor importance score 410.40).

The factor importance scores for Groups 1 and 2 were then rank ordered and t-testswere used to assess significant differences in the between-group factor importancescores. Next, significant differences in the groups preferences for the different factorlevels were assessed. In a post hoc analysis, differences in Groups 1 and 2 mentalpurchasing models were analyzed by assessing within-group statistical differencesbetween factor importance scores and factor level utilities.

To test H4, the sample was recombined and split based on a demographic questionthat assessed the scope of respondents supply base (see Table I). Respondents whoonly source locally, regionally, or nationally were placed in the domestic sourcing

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group (n 44). Respondents who indicated they source globally were placed in theinternational sourcing group (n 63). Significant differences in the domestic andinternational groups preferences for the different factor levels were then assessed.

Results are organized by hypothesis and presented subsequently followed by thepost hoc analysis.

Frequency Count % of Respondents

Respondent TitleVice president 8 7.47Director 21 19.62Manager 41 38.31Other 37 34.57Respondent PositionPurchasing 85 79.43Supply chain/logistics 14 13.08Other 8 7.47Time in Industry0-1 years 6 5.602-4 years 12 11.215-9 years 20 18.6910-14 years 20 18.6915-19 years 13 12.1420 or more years 36 33.64Time in position0-1 years 17 15.882-4 years 34 31.775-9 years 33 30.8410-14 years 7 6.5415-19 years 7 6.5420 or more years 9 8.41Time with employer0-1 years 14 13.082-4 years 21 19.625-9 years 26 24.2910-14 years 14 13.0815-19 years 9 8.4120 or more years 23 21.49Employees in USAo50 5 4.6750-250 11 10.28250-1,000 25 23.361,000-5,000 25 23.36More than 5,000 41 38.31Scope of supply baseLocal 2 1.86Regional 4 3.73National 38 35.51Global 63 58.87Scope of firms activitiesManufacturing/processing 91 85.04Merchandiser/retailer 11 10.28Warehouse/distributor 3 2.80Logistics service provider 2 1.86

Table I.Respondent demographics

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ResultsTable II details the significant differences in factor importance scores between Group 1(low security preference) and Group 2 (high security preference). Table II indicates thatsignificant differences exist between the groups in their respective preferences forsupplier location (LocationG1 24.056 v. LocationG2 15.522; po0.05), price(PriceG1 23.135 v. PriceG2 19.388; po0.10), product quality (QualityG1 21.029 v.QualityG2 17.239; po0.05), and supplier security (SecurityG1 4.626 v.SecurityG2 22.682; po0.05). Group 1 places more importance on supplier location,price, and product quality whereas Group 2 intuitively places more importance onsupplier security. No significant difference was found in the importance placed on deliveryreliability (Delivery ReliabilityG1 27.153 v. Delivery ReliabilityG2 25.168; p40.10).

Table II only tells half of the story with respect to the between-group differences.It is important to also examine directionality by determining significant differences infactor levels. For example, while Group 1 places more importance on quality thanGroup 2, it is possible that Group 1 actually prefers a lower level of product qualitybecause purchasing high quality inputs may not align with their firms strategicpurchasing priorities. In order to determine preference directionality, the between-groupdifferences between mean factor level utility values were examined. The results arepresented in Table III and discussed separately for each factor.

SecurityTable III reveals that both groups prefer advanced supplier security as indicated by thepositive utility values associated with advanced security for both groups. However,Group 2 has a significantly greater preference for advanced security (AdvancedG10.306 v. AdvancedG2 1.907; po0.05) and a significantly greater aversion to basicsecurity (BasicG10.306 v. BasicG21.907; po0.05) when compared to Group 1.This provides evidence that the mean split yielded two groups with significantly differentsecurity preferences in the anticipated direction.

PriceH1 posits purchasing agents who place more importance on supplier security are lessprice sensitive than agents who place less importance on supplier security. Table IIIindicates Groups 1 and 2 are statistically indifferent in their preference for low and highpriced suppliers ( p40.10). Both groups most prefer the lowest prices and are mostaverse to highest prices. However, Group 2 is more willing than Group 1 to pay 1-2percent higher prices (1-2 percent higher priceG1 0.279 v. 1-2 percent higherpriceG2 0.449; po0.10). H1 is moderately supported at the po0.10 level.

Group 1 Group 2Factor Low security preference High security preference t-value p

Delivery reliability 27.153 (1) 25.168 (1) 0.990 0.322Location 24.056 (2) 15.522 (5) 9.910 0.002*Price 23.135 (3) 19.388 (3) 3.126 0.080**Quality 21.029 (4) 17.239 (4) 5.374 0.022*Security 4.626 (5) 22.682 (2) 272.242 0.000*

Notes: aNumbers in parentheses represent the raw ranking of each factor within each group. Factorsare organized from high to low based on Group 1 factor importance scores. *,**Significant differenceat po0.05 and po0.10 levels, respectively

Table II.Differences in factorimportance scoresa

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Delivery reliabilityH2 posits purchasing agents who place more importance on supplier security placeless emphasis on delivery reliability than agents who place less importance on suppliersecurity. Table III indicates Groups 1 and 2 are statistically indifferent in theirpreference for high and low delivery reliability. Both groups most prefer the highestdelivery reliability and are most averse to the lowest delivery reliability. However,Group 2 is more willing to accept 1-2 percent lower delivery reliability (1-2 percentbelow averageG1 0.178 v. 1-2 percent below averageG2 0.332; po0.10). H2 ismoderately supported at the po0.10 level.

QualityH3 posits purchasing agents that place more importance on supplier security placemore importance on product quality than agents who place less importance on suppliersecurity. Both groups most prefer the highest level of quality but are significantlydifferent in their preferences for the other two quality factor levels. Group 1 hassignificantly greater preference for quality that is moderately above industryaverage (moderately higherG1 0.991 v. moderately higherG2 0.700; po0.05) and issignificantly more averse to low quality (equal or belowG12.187 v. equal orbelowG21.785; po0.10) when compared to Group 2. H3 is not supported.

LocationH4 posits firms that source internationally prefer secure suppliers significantly morethan firms that source domestically. Table IV illustrates the differences in factorimportance scores between domestic and international sourcing groups while Table Vprovides the differences in factor level utilities.

Referring to Table IV, the domestic and international groups are very similar in theimportance placed on each of the five factors with the exception of the domestic

Group 1 Group 2Low security preference High security preference t-value p

SecurityBasic 0.306 1.907 248.733 0.000*Advanced 0.306 1.907 248.733 0.000*PriceEqual or below 1.786 1.445 2.431 0.1221-2% higher 0.279 0.449 3.552 0.062**3% or more higher 2.064 1.894 0.591 0.444Delivery reliabilityEqual or above 2.171 1.959 1.355 0.2471-2% below 0.178 0.332 3.176 0.078**3% or more below 2.349 2.291 0.091 0.763LocationDomestic 1.932 1.328 7.169 0.009*International 1.932 1.328 7.169 0.009*QualitySignificantly higher 1.197 1.085 0.570 0.452Moderately higher 0.991 0.700 5.888 0.017*Equal or below 2.187 1.785 3.148 0.079**Notes: *,**Significant difference at po0.05 and po0.10 levels, respectively

Table III.Differences in factor

level utility values bysecurity preference

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sourcing group placing significantly more importance on suppliers delivery reliability(Delivery ReliabilityDomestic 28.556 v. Delivery ReliabilityInternational 25.101;po0.10). Referring to Table V, no significant difference exists between the domesticand international groups preference for advanced supplier security. Voss et al. (2009)find that international sourcing is positively related to preference for advancedsupplier security. Table V supports this finding. Both groups prefer advanced securityand international sourcing is positively related to security demand (AdvancedSecurityDomestic 0.657 v. Advanced SecurityInternational 0.925; p40.10). However, thedifference in security demand is not significant. Table V indicates purchasingmanagers that source internationally do not prefer advanced supplier securitysignificantly more than purchasing managers that source domestically. H4 is notsupported.

H5 posits purchasing agents that place more importance on supplier security aremore willing to source internationally than agents who place less importance onsecurity. Returning to Table III, results indicate both groups prefer to source goods

Factor Domestic Sourcing International Sourcing t-value p

Delivery Reliability 28.556 (1) 25.101 (1) 3.433 0.067**Location 22.547 (2) 20.505 (3) 0.582 0.447Price 20.178 (3) 23.178 (2) 2.219 0.139Quality 19.277 (4) 20.207 (4) 0.345 0.558Security 9.440 (5) 11.009 (5) 0.643 0.424

Notes: aNumbers in parentheses represent the raw ranking of each factor within each group. Factorsare organized from high to low based on the domestic sourcing groups factor importance scores.**Significant difference at po0.10

Table IV.Differences in factorimportance scoresa

Domestic sourcing International sourcing t-value p

SecurityBasic 0.657 0.925 2.354 0.128Advanced 0.657 0.925 2.354 0.128PriceEqual or below 1.472 1.821 2.857 0.094**1-2% higher 0.346 0.323 0.067 0.7973% or more higher 1.818 2.144 2.470 0.119Delivery reliabilityEqual or above 2.280 1.981 3.029 0.085**1-2% below 0.194 0.250 0.465 0.4973% or more below 2.473 2.23 1.782 0.185LocationDomestic 1.782 1.711 0.104 0.747International 1.782 1.711 0.104 0.747QualitySignificantly higher 1.121 1.189 0.233 0.630Moderately higher 0.840 0.939 0.722 0.397Equal or below 1.961 2.128 0.588 0.445Note: **Significant difference at po0.10

Table V.Differences in factorlevel utility values byscope of supply base

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domestically. However, Group 2 is significantly less averse to international sourcing(InternationalG11.932 v. InternationalG21.328; po0.05) and prefers domesticsourcing significantly less (DomesticG1 1.932 v. DomesticG2 1.328; po0.05) thanGroup 1. Purchasing agents that place more importance on supplier security are morelikely to utilize international suppliers compared to purchasing agents that do notplace as much emphasis on security when choosing suppliers. H5 is supported.Implications of these results and others will be presented in the conclusions sectionfollowing a post hoc analysis.

Post hoc analysisThis post hoc analysis seeks to further illustrate differences in the mental supplierchoice models of purchasing agents in Group 1 v. those in Group 2. Table II presents theranked factor importance scores for both groups. We examined the mean factorimportance scores and conducted t-tests to determine significant differences betweensuccessively ranked factors within each group.

Table II is organized by the simple rank ordering of Group 1s factor importancescores with the numbers in parentheses indicating the raw ranking for each factor foreach group. A higher factor importance score indicates respondents place moreimportance on a given factor. Table II indicates that the raw rank ordering of factors isvery similar for the two groups, with the exception of security and supplier location.Both groups choose suppliers primarily based on delivery reliability, with price rankedthird and product quality ranked fourth. Based on raw rankings, the primary differencein the groups is that Group 1 places much more importance on supplier location andmuch less on security. Again, based on raw rankings, Group 2 places much moreimportance on security and less on supplier location. Results for Group 1 are presentedin Table VI and graphically depicted in Figure 1.

Results presented in Table VI and depicted in Figure 1 illustrate that foodpurchasing managers who do not place a priority on security when choosing suppliersbelieve delivery reliability is the most important supplier characteristic, but delivery

Factors Mean t-value p

Delivery reliability 27.153 (1) 1.219 0.227Location 24.056 (2)Delivery reliability 27.153 (1) 2.186 0.032*Price 23.135 (3)Location 24.056 (2) 0.340 0.735Price 23.135 (3)Location 24.056 (2) 1.382 0.171Quality 21.029 (4)Location 24.056 (2) 10.926 0.000*Security 4.626 (5)Price 23.135 (3) 1.203 0.233Quality 21.029 (4)Price 23.135 (3) 13.452 0.000*Security 4.626 (5)Quality 21.029 (4) 17.282 0.000*Security 4.626 (5)

Note: *Significant difference at po0.05

Table VI.Factor importance scoredifferences for Group 1

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reliability is statistically tied in importance with supplier location. However, theimportance of delivery reliability is significantly greater than the importance of price.Supplier location, price, and quality are all statistically equivalent in importance.Group 1 respondents believe security is significantly less important than all othercriteria. Similar analyses for Group 2 are presented in Table VII and Figure 2.

Results presented in Table VII and depicted in Figure 2 illustrate that foodpurchasing managers who place greater priority on security when choosing suppliersutilize a more complex model of supplier choice. A smaller gap exists between the mostand least important criteria, indicating that Group 2 managers utilize all five choicecriteria to a greater degree than Group 1 managers. The more criteria present in a givendecision process, the more complex the mental model required to choose betweenalternatives.

Location

DeliveryReliability

Price

Quality

Security

Importance

Figure 1.Significant factordifferences for Group 1

Factors Mean t-value p

Delivery reliability 25.168 (1) 1.126 0.268Security 22.682 (2)Delivery reliability 25.168 (1) 2.787 0.009*Price 19.388 (3)Security 22.682 (2) 1.442 0.159Price 19.388 (3)Security 22.682 (2) 2.458 0.019*Quality 17.239 (4)Price 19.388 (3) 1.068 0.293Quality 17.239 (4)Price 19.388 (3) 1.809 0.080**Location 15.522 (5)Quality 17.239 (4) 0.778 0.442Location 15.522 (5)

Notes: *,**Significant difference at po0.05 and po0.10 levels, respectively

Table VII.Factor importance scoredifferences for Group 2

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Group 2 respondents believe delivery reliability is the most important suppliercharacteristic, but delivery reliability is statistically tied in importance withsupplier security. The importance of delivery reliability is significantly greater thanthe importance of price, but security and price are significantly equivalent. Security issignificantly more important than quality, but price and quality are statisticallyequivalent. Price is significantly more important than location but quality and locationare statistically equivalent.

Discussion and conclusionSupply chain security has garnered increased attention among practitioners andacademics following the attacks of September 11. Some have proposed that security isfree, similar to quality, but the cost and service benefits of security are contingent uponincreased visibility. Past research indicates that most firms are not yet employingRFID and other technology that would simultaneously improve visibility and security(Voss et al., 2009). Therefore, this research posits that trade-offs still exist related topurchasing goods and services from most suppliers with advanced security.

Results indicate that purchasing managers who place a higher priority on securityare more willing to accept higher prices and lower delivery reliability in order to utilizesuppliers with advanced security. Purchasing managers that place a higher priority onsupplier security are also more likely to source internationally than purchasingmanagers who do not place a high priority on security, but both groups would preferto source domestically if possible. Interestingly, firms that source internationally didnot prefer advanced supplier security significantly more than firms that sourcedomestically.

Both high and low security priority purchasing managers preferred to purchase thehighest quality product from their suppliers. However, purchasing managers who placehigher priority on supplier security were found to value quality less than Group 1.The post hoc analysis revealed that purchasing managers who place a high priority

DeliveryReliability

Price

Security

Importance

Quality

Location

Figure 2.Significant factor

differences for Group 2

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on security potentially utilize a more complex mental model when choosing betweensuppliers. These results have several important research and managerial implications,which are discussed below.

First, results indicate that market segments do exist with respect to purchasingmanagers demand for supplier security. Food suppliers may be able to differentiatetheir offering from competitors by marketing their security competence to purchasingmanagers that value supplier security, similar to those in Group 2. Suppliers withadvanced security should also recognize that food purchasing managers whovalue advanced security appear to be moderately willing to accept higher pricesand lower delivery reliability in exchange for superior security performance.High security priority purchasing managers are also more willing to accept lowerproduct quality than their Group 1 counterparts. However, suppliers should becautioned that the number of firms who place a high priority on security maybe relatively small given number of managers in Group 2.

Second, results have particular significance for practitioners and researchersinterested in international sourcing. Voss et al. (2009) and H4 results indicate thatinternational sourcing has a positive but not significant influence on demand forsupplier security in the food industry. H5 results indicate that respondents who place ahigh priority on security are more likely to source internationally. These findings aresomewhat counter intuitive as they essentially indicate that security preference drivesinternational sourcing rather than the opposite.

The answer may lie in supply uncertainty. In the case of food, supply uncertaintycan be exacerbated by the difficulty in predicting harvest quantities. Food purchasingmanagers must often place orders with suppliers before harvest occurs. Such is thecase with major breweries who often contract to purchase a farmers entire output ofhops or rice years in advance. This leads to a situation where unpredictable weatherevents (e.g. floods, drought, etc.) or possible security concerns (e.g. introduction of footand mouth disease to livestock) specific to one geographic region may adversely affectfood product availability. Food purchasing managers may source internationally toexpand their geographic supply base and mitigate this risk.

However, as suppliers geographic dispersion increases it becomes more difficult forthe purchasing firm to monitor supplier security compliance. Using security as asupplier selection criterion helps ensure only secure suppliers are utilized, whichmitigates security risk whether goods are purchased at home or abroad. In essence,demanding suppliers operate in a secure manner allows the firm to utilize a morediverse portfolio of suppliers, including those that are based overseas. Therefore,demand for supplier security may drive food purchasing firms ability to sourceinternationally. This is likely very contextual and possibly specific to the food industry.In other industries it is likely that the increased security risk inherent to internationalsourcing does, in fact, drive demand for supplier security. Future research should seekto validate this finding in other industries.

Findings related to security and international sourcing may also have implicationsfor the recent increase in near-shoring; locating production closer to demand.Sourcing internationally entails greater security risk but it may be desirable to sourceoverseas to ensure food product availability. Findings indicate that firms may demandincreased supplier security in order to expand their supply base internationally butsecure suppliers are potentially more expensive and less likely to provide highlevels of delivery reliability. The higher cost of sourcing from a secure internationalsupplier, coupled with decreased delivery reliability, may increase the total cost of

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international sourcing to the extent that it is no longer preferable if domestic supplyis available.

Third, results indicate that purchasing managers do not consider security andquality to be complementary. Voss et al. (2009) proposed that two groups of purchasingagents may exist: those that focus on purchasing goods for the lowest price and thosethat focus on other, more strategic, supplier attributes such as quality, deliveryreliability, and security. Results presented in this study indicate that Group 1 purchasingmanagers prefer domestic suppliers with lower prices, higher delivery reliability, andhigher quality. Group 2 purchasing managers are more likely to source internationallyand to accept higher prices, lower delivery reliability, and lower quality. Results presentedin the post hoc analysis indicated that security and quality did not occupy the samemental space for either group of respondents. While security measures may improveproduct quality, purchasing managers do not view them as complementary supplierattributes. Therefore, food suppliers would be ill-advised to use quality as a means ofjustifying their security measures detrimental impact on price and delivery reliability.Alternatively, food suppliers may have to educate purchasing managers on the synergiesbetween security and quality if a relationship between the two attributes truly exists.Future research should seek to empirically confirm that improved securitysynergistically improves product quality.

This research was limited by, and benefited from, its focus on the food industry.The food industry is a particularly rich area for security research but results maynot apply in other domains. Future research should continue this research in differentsettings.

Further, the sample size employed was adequate but should be larger to providegreater generalizability. The small sample size resulted from the need to administerthe conjoint instrument on-line combined with a lack of available e-mail addresses.This forced respondents to manually key in the URL provided in an invitation letter,which likely reduced the response rate. This relatively small sample potentially led toan inability to detect significance levels beyond po0.10 in several instances and alsoled to the inability to ascertain interaction effects.

This work contributed to the academic literature by providing evidence of securitysrelationship to other supplier choice criteria. Further, few supply chain works haveutilized conjoint analysis and this is the first known contribution to utilize choice-basedconjoint with HB estimation. Future supply chain researchers investigatingpreferences for goods, services, or suppliers should consider conjoint as it helps toremove social desirability bias. For example, if a researcher were to directly ask a foodpurchasing manager the value he/she places on security when choosing suppliers, themanager would likely indicate that security is an important concern. The managermay feel that indicating otherwise would reflect poorly on their level of concern forcustomers. Alternatively, they may be concerned with litigious consequences if asecurity incident occurs and it was uncovered that they do not believe supplier securityis important. Choice-based conjoint with HB estimation allows researchers to gain apicture of the importance managers place on security without asking directly.

Supply chain security measures help to protect a firm and its stakeholders fromharm caused by a security event. The uneven implementation of security measuresacross different suppliers, locations, and products may partially reflect differences inpurchasing organizations demand for security from their suppliers. While differentproducts and supply chains entail varying degrees of vulnerability, it would behooveeach firm to at least audit suppliers and uncover security implementation and the

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associated degree of security risk posed by the supplier. Purchasing firm performanceis partially a function of supplier performance and all parties will bear theconsequences if a major security event occurs.

Notes

1. A detailed description of supply chain security best practices is beyond the scope of thiswork. The interested reader should consult Closs et al. (2008). Advanced supplier securitypractices employed in this article are detailed in Appendix 2.

2. Please see Appendix 2 for the conceptualization of basic v. advanced security measures.

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Easterby-Smith, M., Thorpe, R. and Lowe, A. (1991), Management Research: An Introduction,Sage Publications, London.

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Glaser, B.G. and Strauss, A. (1967), The Discovery of Grounded Theory: Strategies for QualitativeResearch, Aldine, Chicago, IL.

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Strauss, A. and Corbin, J. (1990), Basics of Qualitative Research: Grounded Theory Proceduresand Techniques, Sage Publications, Newbury Park, CA.

Appendix 1. Sample Conjoint Scenario

If these were your only four options, which would you choose?

Supplier 1 Supplier 2 Supplier 3 Supplier 4

Security

Advanced

Security

Basic

Security

Advanced

Security

Basic

Price

1-2% Higher thanindustry average

Price

Equal to industryaverage

Price

Equal to industryaverage

Price

3% or More Higherthan industry average

Delivery Reliability

1-2% Below industryaverage

Delivery Reliability

Equal to industryaverage

Delivery Reliability

3% or more belowindustry average

Delivery Reliability

3% or more belowindustry average

Location

United States

Location

Middle East

Location

United States

Location

Middle East

Quality

Moderately Higherthan industry average

Quality

Equal to or belowindustry average

Quality

Significantly Higherthan industry average

Quality

Significantly Higherthan industry average

Figure A1.If these were your onlyfour options, which wouldyou choose?

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Appendix 2

About the author

Dr Doug Voss (PhD, Michigan State University) is an Associate Professor in the Supply ChainManagement at The University of Central Arkansas and the Director of the University of CentralArkansas Center for Logistics Education, Advancement, and Research (CLEAR). Doug received

Factor(Factor Level)

Definition(Factor Level)

Product quality Product quality is defined as how well a suppliers product conforms to yourfirms pre-set specificationsEqual to or below industry averageModerately higher than industry averageSignificantly higher than industry average

Product price Product price is defined as the monetary amount a supplier charges your firmfor their productEqual to or below industry average1-2% above industry average3% or more above industry average

Delivery reliability Delivery reliability is defined as the percentage of time that a supplier deliversproduct at the promised delivery timeEqual to or above industry average1-2% below industry average3% or more below industry average

Security Security is defined as the suppliers application of policies, procedures, andtechnology to protect food supply chain assets from theft, damage, orterrorism, and to prevent the introduction of unauthorized contraband, people,or weapons of mass destruction into the food supply chainA supplier with a BASIC security competence does not employ any, or at leastvery few, of the following:

lock their doors,employ guards,have fences around their facilities,perform background checks on employees,secure inventory, andinspect product for possible contamination before it is shipped

A supplier with an ADVANCED security competence employs most, or themajority, of the following actions:

lock their doors,has fences and gates protecting their facilities,employ guards protecting entrances,perform thorough background checks on all employees and contractors,constantly tracks inventory in a secure environment to make sure it is notcontaminated, andinspect product for possible contamination before it is shipped

Location Supplier location is defined as the location where the supplier manufacturesthe food product that is then shipped to you via the most appropriate mode oftransportationUnited States (Iowa)Middle East (Saudi Arabia)

Table AI.Factor and level

definitions

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