T his research investigates the value of category captainship (a management practice in which a retailer relies on a manufacturer for recommendations regarding strategic category management decisions) in retail supply chains. We consider a setting where the scope of category management is limited to assortment decisions and demand enhancing activities. We assume that the retailer selects a category captain among multiple competing manufacturers with privately known capabilities for driving category traffic. First, we consider a benchmark scenario where the retailer is responsible for category management. Then, we consider the category captainship scenario where the retailer selects one of the manufacturers as a captain to manage the category. We find that captainship is more likely to emerge in categories where the cost of managing variety, the retail margins, and the competition for captainship are moderate and the captain is more capable of driving traffic compared to the retailer. In such categories the collaboration between the retailer and the captain ensures sufficient surplus for both parties. Finally, we show that captainship can also benefit the non-captain manufacturers.

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A lthough product modularity is often advocated as a design strategy in the operations management literature, little is known about how consumers respond to modular products. In this research we undertake several experiments to explore consumer response to modularly upgradeable products in settings featuring technological change. We consider both the initial product choice (between a modularly upgradeable product and an integral one) and the subsequent upgrade decision (replacement of a module versus full product replacement). First, we show that consumers tend to discount the cost savings associated with modular upgrades excessively (insufficiently) when the time between the initial purchase and the upgrade is short (long). This suggests that modular upgradability as a product feature has higher profit potential for slowly rather than rapidly improving products. Second, we observe a preference reversal between the initial purchase and the point of upgrade: At the point of initial purchase, people foresee making a full product replacement in the future, yet, when faced with the actual upgrade decision, they are more likely to revert to modular upgrades. Finally, we discuss and test several pricing and product design strategies that the firm can use to respond to these cognitive biases.

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I n this paper, we examine the suggested link between product architecture (i.e., the extent to which a product is modular vs. integral) and supply chain configuration (i.e., whether the product development is done internally by the manufacturer in an integrated supply chain or in collaboration with a supplier in a decentralized supply chain). Our model suggests that the choice of product architecture depends on firm, market, and product characteristics in addition to supply chain structure. In contrast to other studies, we find that the optimal mapping from architecture to supply chain structure is not always one-toone. A decentralized supply chain may be associated with a more integral product when the technical collaboration penalty is not excessive and suppliers have significantly superior product development capabilities. Furthermore, in a decentralized supply chain, the nature of the relationship between the original equipment manufacturer and its supplier (adversarial or collaborative) plays a role in the choice of product architecture: modular architectures are more likely when the parties have adversarial relationships, while long-term trust-based relationships facilitate more integral product architectures.

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Several firms are interested in manufacturing and selling new products based on a new process technology. Before manufacturing can begin, either these Original Equipment Manufacturers (OEMs), or a Contract Manufacturer (CM) needs to adopt the process technology, i. e., make a capacity investment in it. Due to market uncertainty, the timing of capacity investment is crucial. In such a setting, we investigate how the timing of process adoption, an important determinant of time‐to‐market, is impacted by the make/buy decision. We first characterize the optimal time for process adoption and show that this delay depends on competitive intensity, cost structure and the rate of forecast improvement. Due to differing cost structures, incentives and risks, an OEM and a CM may invest in a new process technology at different times. We show that while there are conditions where outsourced manufacturing can be advantageous for the OEM from a time‐to‐market perspective, there are also cases where the OEM would be disadvantaged. In these cases, the OEM can accelerate process adoption by risk sharing through joint investment. Finally, the right choice of CM is extremely important for an OEM that faces a short time window for product introduction: An efficient CM not only provides low costs but also rapid access to new process technologies, and therefore higher revenues.

SummaryModularly upgradable product designs have been advocated to offer environmental and economic advantages; however, they are not commonly used in the consumer electronics industry. In this article, we investigate the economic and environmental benefits and challenges of modular upgradability for consumer electronics. From an economic point of view, we posit that the limited adoption of modular upgradability in consumer electronics is owing to various demand-, technology-, and competition-related issues. From an environmental point of view, we posit that modularly upgradable product designs may not necessarily lead to superior environmental outcomes. To reach meaningful conclusions regarding the environmental benefits of modular upgradability, one needs to understand how product architecture affects demand, production, and consumption patterns, which arise from endogenous consumer and manufacturer choices. It is also important to take into account that modular upgradability may have potentially differentiated effects in the production, consumption, and postuse phases of the lifecycle.