Sourcing alternatives as a problem of representation: a conceptual tool and application in textile-apparel supply chain

The main aim of the paper is to introduce a tool, the indifference function, to help to understand supply markets and their link to sourcing alternatives representations and negotiation strategies, including win-win situations. To represent the buyer’s alternatives, the paper proposes a non-orthodox use of the concept of indifference curve and the possibilities of its application explaining sourcing decisions along the supply chain. More specifically, we introduce the concepts of the no-purchase indifference function (indifference to the failure to make a purchase), which is to be compared and contrasted either with the function of the best supply alternatives that can be put forward by the seller or to the curve of the best supply alternatives by selecting the best combinations in all the possible mixes offered by all the possible suppliers in the market. The paper is an attempt to give this theoretical concept from economics an empirical background, highlightening the opportunity for its use in the analysis of business networks. The clothing supply chain is taken as empirical field of research, for it hosts of different purchasing requirements especially considering the impact that the rise of new distribution formats can have on purchasing behaviour of fashion retail companies. In particular the paper shows that depending on the business model different indifference functions emerge and different opportunities for collaboration between actors in the supply network rise.