Academic literature on the topic 'Information suppliers'

Despite a growing scholarly interest in performance measurement systems (PMS) for collaborative networks, the literature highlights the success of co-operation from the buyer’s perspective, with far less attention given to the supplier’s perspective (Yeniyurt et al., 2014). In addition, only limited empirical research has been conducted on PMS in small and medium-sized enterprise networks (Bititci et al., 2012). This study investigates how information sharing and supplier integration in a buyer-supplier relationship (BSR) affect suppliers’ performance in the context of small firms. Information sharing includes both providing information (to a buyer) and receiving information (from a buyer). According to the results, neither BSR integration nor information sharing are associated with suppliers’ overall or financial performance. However, BSR integration showed a positive association with suppliers’ non-financial performance. Moreover, information sharing (both providing and receiving) in the innovation perspective showed a positive association with suppliers’ non-financial performance.

It is widely accepted that capable suppliers do important role for buyer's competitiveness in today's business environment. Moreover, not only the importance of supplier development but also the importance of sub-supplier development has been emphasized. This study examines how buyer's efforts of supporting sub-supplier development impacts on performance of prime supplier. The study results show that while buyer's effort of monitoring and information sharing to sub-suppliers improve the performance of prime supplier, buyer's effort of knowledge sharing do not improve prime supplier's performance.

Problem definition: We consider a buyer sourcing from multiple competing suppliers who exert cost-reduction efforts before procurement contracts are awarded. Academic/practical relevance: The supply chain is subject to the classic hold-up problem—as the lack of a contract commitment hinders suppliers’ incentives to make investment upfront—complicated with supplier competition. Methodology: With deterministic cost-reduction outcomes, suppliers will not exert any effort if this effort is observable, and a pure-strategy equilibrium does not exist if the effort is unobservable. We analyze the mixed-strategy equilibrium with unobservable supplier effort, in which suppliers randomize their efforts and the buyer designs an optimal procurement mechanism. Results: We show that the optimal procurement mechanism can be implemented by a conventional single-price reverse auction with a random reserve price. The mixed strategy of supplier effort generates endogenous information asymmetry on supplier costs that provides suppliers with information rent, which sustains their efforts. The endogenous information asymmetry improves effort efficiency (by inducing positive supplier effort), yet introduces trade inefficiency (by causing the possible failure of trade between the parties). Although increasing supplier competition (measured by the number of suppliers) hurts the effort efficiency, it improves trade efficiency. As a result, the buyer is always better off introducing supplier competition by including more than one supplier in the supply base. However, the desired supply base size (number of suppliers) depends on the product revenue: For high-margin goods, the optimal size is achieved with two suppliers, whereas for low-margin goods, a larger supply base is better for the buyer. We show that the result based on deterministic cost reduction can be established as a limit of the case when uncertainty in cost reduction exists and shrinks to null. Managerial implications: Our study helps to understand the impact of supplier competition when supply-chain parties deliberately make their actions unpredictable to avoid being held up. The findings provide managerial guidance on procurement auction and supply base designs.

This article describes using a nonlinear APVIOBPCS to model the resilience response to the failure of one of the suppliers of a two-tier supply chain comprising a retailer and two suppliers. The second supplier then supplies all the goods required by the retailer. The model is chosen as the simplest case to examine resilience. Time to recover from disruption to ship all goods required by customers is slightly worse when the order rate when it reaches capacity limits but is less than the delay in the system from supplier to final shipment. Just over one weeks' maximum shipments stock at each tier guarantees shipments impervious to the collapse of one supplier, controller type has little effect on the performance of the model. These results agree with other researchers in general trend but not in detail. The response does not match the ‘Resilience Triangle.'

Purpose – The purpose of this paper is to examine whether original equipment manufacturing (OEM) suppliers can affect the development of buyer competence by manipulating two environmental factors: the development of competence in OEM supplier's external business relationships and the competitive pressure of the OEM supplier environment. Design/methodology/approach – The sample population consisted of 1,000 OEM suppliers in the Taiwanese information technology (IT) industry. Partial least squares analysis was used to examine the causal relationships among the variables. Findings – The empirical results revealed that the pressure of the external environment pushes OEM suppliers to develop competence through external business relationships. This competence in turn affects the development of buyer competence. Furthermore, OEM supplier impact on buyer competence development is positively associated with the importance of OEM supplier in outsourcing relationship. Originality/value – The paper empirically examines whether the impacts of the OEM supplier derived from different sourced environments play distinct roles in the development of the OEM supplier's power.

This study aims to design a supplier performance assessment model for information technology services provider in small medium enterprises (SME) in Indonesia. Supplier performance assessment is important to improve supplier performance and maintain long-term relationships between SME (buyer) and their suppliers. This supplier Assessment models are developed based on the review literature and interviews with procurement staff in SMEs. Performance assessment criteria are identified and tested for validity by providing a questionnaire to procurement section in SMEs. In order to obtain importance weight of each criteria toward performance score, a questionnaire to weighed the criteria are distributed to procurement staff and analyzed the answers using the Analytical Hierarchy Process (AHP) method. The final performance score is calculated based on the standardized value of each criteria multiplied by its weight. Based on the implementation of this model in SMEs, it is known that the proposed model is suitable to assess the supplier’s performance and greatly help the SMEs in managing the performance of their suppliers.

Supplier selection and assessment is at the core of the procurement process. This study investigates how procurement officers in Israel's universities select and assess their suppliers. The authors explore which information channels officers use to assess suppliers and find that incidental and informal information sources are the most frequently used followed by official sources. The authors examine the criteria used by officers to select suppliers and identify quality and price as significantly more important than most other criteria. Finally, the authors do not find strong evidence that officers categorize suppliers to key and non-key suppliers according to the university's goals.

In this paper, we provides contract design mechanisms and analysis for manufacturers to manage decentralized supply chain. Suppose the manufacturer’s final product consists of components, each produced by a different supplier, and the manufacturer first purchases components from suppliers, then assembles them into final product and meet demands aftermarket realization. While supply chain’s internal cooperation always benefits both, suppliers are often reluctant to proactively share their own production cost structure, otherwise manufacturers may depress purchase prices, which may reduce supplier’s profit. Manufacturers on the other hand, prefers to be informed of true cost information in order to gain greater revenues. We takes manufacturer’s perspective and design the optimal contract menu for suppliers, both to enable suppliers to disclose private cost information and to maximize the benefits. We start by modeling the original problem and find that the original problem is a complex multidimensional optimization problem. We then examine the nature of the original problem solving and devise the solution algorithm to arrive at the optimal contract menu. This algorithm reduces the complexity of the original question from o(2 n ) to o(n). We further investigate the influence mechanism of model parameters on the results and find that when market demand increases or the selling price of the final product increases, value of private information increases significantly. However, if market demand uncertainty increases, the value of information may increase or decrease for both sides.

This paper studies how transfer pricing schemes interact with sub suppliers' opportunistic behaviors to affect supply chain performance. Effective supply chain management requires careful consideration of sub-suppliers', especially with respect to transfer pricing issues. Firms increasingly approach their sub-suppliers to drive compliance with firms' defined transfer pricing schemes. The paper models the supply chain incorporating asymmetric information among all the parties, supplier's innovation activities, sub suppliers' corruption possibility, and transfer pricing schemes. It examines the impact of various transfer pricing schemes on supply chain efficiency. Specifically, it conducts a performance comparison between the variable-cost transfer pricing scheme and the full-cost transfer pricing scheme. The paper finds that the sub supplier's choice of a transfer pricing scheme affects the supplier's sourcing decisions and the supply chain performance, and the variable-cost transfer pricing scheme performs better in achieving supply chain coordination. Therefore, the present research seeks to explore and increase one's understanding of critical factors that contribute to overcome aforementioned complexities and unique challenges of managing sub-suppliers for transfer pricing schemes. The present research expands on the theory of transfer pricing schemes and sub-supplier management context.

Information system development (ISD) projects have been associated with the "software crisis" for over three decades. A set of common "root causes" has often been cited in literature with corresponding "solutions". Yet the overall project success rate has remained low, resulting in a paradox of many solutions and little progress over the years. This study examines the management of application software acquisition from external suppliers in ISD projects. Three case studies are documented based on participant observation with complete membership roles. After within-case analyses highlighting issues in individual cases, crosscase analyses are conducted, first to identify a pattern of ISD project challenges and then to search for their explanations. Concepts from agency theory, contract theory and product development literature are used in the process of diagnosing root causes behind the observations. The proposed explanation is that the Traditional Systems Development Framework (TSDF), characterized by competitive-bidding-monopolized-development, underlies the identified root causes. Accordingly, competitive development is suggested as an alternative approach. Following the "Inference to the Best Explanation" (IBE) analytical strategy, the suggested approach is subject to two contrastive analyses, first with the prepackaged software development and then with the construction industry, to demonstrate that the suggestion is a "warranted inference". Further analogical analyses illustrate the feasibility of development competition for software product development. A Performance-Based Systems Development Framework (PBSDF) is outlined as a tentative implementation of the suggested competitive development approach for ISD projects supported by risk-sharing supplier contract and a relative product evaluation approach. A number of future research implications are described as a result of this study after summarizing the research contributions.

Organisational information systems development (OISD) projects have long been associated with failure. Not surprisingly, the cost of these failures is enormous. Yet, despite numerous studies, understanding of real-world projects is limited. In particular, little is known about the way in which various factors affect the success of OISD projects. Prior research has focussed on OISD projects from an in-house or client perspective, and the views of the supplier have largely been ignored. By investigating OISD project success factors from the supplier perspective, this doctoral study helps address this gap. Based on an empirical investigation drawn from data collected from Scottish IS/IT solution suppliers, this research identifies and analyses 20 success factors for supplier-based OISD projects, and a range of more detailed, inter-related sub-factors related to each of the twenty. The work confirms the importance of many factors identified in the extant literature. A number of additional factors not previously identified are also exposed. Important differences between supplier and client perspectives are revealed. The findings also develop a variety of factors that have merited scant treatment in the OISD project success factor literature. The means by which OISD project success factors propagate their influences to affect project success was also investigated. This is revealed to be a complex phenomenon comprising billions of causal chains interacting with a few million causal loops. The propagation process is performed by a sizeable network of factors, the topology of which seems to reflect the complexities of real-world OISD projects. Hence, the network is used to propose a new theory for success factors that contributes new insight into the behaviour of these projects. The research also reveals that supplier-based OISD projects are oriented more towards project success than project management success and that OISD project success criteria are far more than simply measures of success. Indeed, the overall conclusion of this thesis is that the concept of OISD project success factors is far more complicated than has been previously articulated.

In many procurement auctions, entrants determine whether to participate in auctions accounting for their roles of intermediaries who search for the best (or the cheapest) input suppliers. We build on a procurement auction model with entry, combining with intermediary search for suppliers. The novel feature is that costs of bidders are endogenously determined by suppliers who strategically charge input prices. We show the existence of an equilibrium with price dispersion for inputs, generating cost heterogeneity among bidders. Interestingly, the procurement cost may rise as the number of potential bidders increases. (author's abstract)
Series: Department of Economics Working Paper Series

Smartphone are very common to use by more people and for more purposes, and the interest into the mobile applications development has increased. Many companies, that are exposing their service as web services, intended to enable mobile access to distribute their web resources. This work is about developing a mobile phone application for disseminating operational information to customers and suppliers of the company “100 Procent Media AB”.  This application is based on android as operating system. The company put messages on its server that the mobile application later reads and store data in the database of the mobile application. The customers of the company receive a message that is stored in the server of the developing application.

This study surveys the theoretical literature dealing with the behavior of technology suppliers in the presence of network externalities with a focus on economies of compatibility setting and promotional pricing. Positive network externalities arise when a good is more valuable to a user because more users adopt the same good or compatible ones. There are two issues with network externalities: demand side and supply side. This paper focuses on the supply side, and it relates the way that technologies are chosen and promoted. On the supply side, product compatibility choice, technology sponsorship, penetration pricing, and product pre-announcement are the competing strategies of firms operating in a market with network externalities. Among these strategies, compatibility choice decisions and promotional pricing are presented in the two different subsections, which follows.
Master of Arts

Introduction: Open Source ERP is considered as a viable alternative of proprietary ERP paradigm. Open Source ERP is getting more and more acceptance among Small and Medium Sized Enterprises (SMEs) recently. Majority of Proprietary ERP vendors are changing their strategy nowadays and extend their focus on SMEs, even though SMEs are not that interested in Proprietary ERP systems. The factors that may motivate SMEs to select an Open Source ERP over proprietary ERP are not identified empirically in previous researches. Few researches raised the issue of cost and thus proposed that Open Source ERP is appropriate for SMEs. The other factors than cost involved in the selection process are yet to investigate empirically.

Purpose: The overall purpose of this thesis work is to contribute in knowledge domain of Open Source ERP. Open Source ERP is an emergent area but it has the potential to attract many organizations to implement this kind of ERP Systems. The issue under investigation throughout this research will be the selection process of Open Source ERP in Small and Medium Sized Enterprises (SMEs). The focus will be to identify mutually most important factors, from the perspective of SMEs and Suppliers that may motivate the Small and Medium Sized Enterprises (SMEs) to select OS ERP.

Method: Data obtained from the respondents is quantified in the research. Information gathered from the SMEs who have implemented Open Source ERP and from the Suppliers through web based survey. Two separate questionnaires comprised of various questions related to different factors in selecting of Open Source ERP solutions were made and sent to both SMEs and Suppliers of Open Source ERP. Opinion from an Open Source ERP expert is obtained regarding different factors motivate SMEs to select Open Source ERP. The results obtained from respondents through empirical findings were analyzed thereafter.

Conclusions: SMEs were investigated regarding the importance of various rationales when they were selecting Open Source ERP solutions. The degree of importance of various factors in selection process might be diverse from organization to organization. It might be dependent on the size, geographical location of the organization or many other issues. Despite all this, there might be some common factors that may be always considered as foremost factors which influence SMEs to select an Open Source ERP over proprietary ERP.

Thesis (M.S.)--State University of New York at Binghamton, Thomas J. Watson School of Engineering and Applied Science, Department of Systems Science and Industrial Engineering, 2009.
Includes bibliographical references.

In this paper, we present our findings of a survey exploring the adoption of the new product development process improvement concepts in the automotive suppliers sector in Turkey. With this investigation, we aim to uncover differences in the way suppliers are adopting new product development (NPD) process improvement concepts. Our results indicate that indeed the adoption of the concepts varies across suppliers, and two important factors explaining, in part, this result are: (1) supplier involvement in design, and (2) the potential branding impact of the part/modules supplied.

Because of rising global competition and more rapid technological changes, the need for faster development of products with higher quality and reliability has increased, also elevating the importance of supplier involvement. Accordingly, companies give high priority to development of relationships with their suppliers, including collaborative product development. This paper focuses on evaluating current suppliers, which are to be involved in design decisions and product development processes. First, an overview of the supplier involvement in product development process is described. Then, a questionnaire form is introduced, which was administered to 40 automotive suppliers to determine the supplier selection criteria’s importance levels. Survey results were evaluated using statistical means for reliability and suitability. Finally, in order to select the best supplier, results were evaluated using a method integrating Analytical Network Process (ANP) and Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). The evaluation criteria were weighted with ANP, and then supplier companies were ranked using TOPSIS methodology.

Capability analysis is a necessary step in the early stages of supply chain formation. Most existing approaches to manufacturing capability evaluation and analysis use structured and formal capability models as input. However, manufacturing suppliers often publish their capability data in an unstructured format. The unstructured capability data usually portrays a more realistic view of the services a supplier can offer. If parsed and analyzed properly, unstructured capability data can be used effectively for initial screening and characterization of manufacturing suppliers specially when dealing with a large pool of prospective suppliers. This work proposes a novel framework for capability-based supplier classification that relies on the unstructured capability narratives available on the suppliers’ websites. Naïve Bayes is used as the text classification technique. One of the innovative aspects of this work is incorporating a thesaurus-guided method for feature selection and tokenization of capability data. The thesaurus contains the informal vocabulary used in the contract machining industry for advertising manufacturing capabilities. An Entity Extractor Tool (EET) is developed for the generation of the concept vector model associated with each capability narrative. The proposed supplier classification framework is validated experimentally through forming two capability classes, namely, heavy component machining and difficult and complex machining, based on real capability data.

Abstract The paper wants to improve the procurement processes for custom-made machineries and components. Indeed, the current methods and software platforms adopted by industries for purchasing machineries do not consider value generated through the entire lifecycle. Furthermore, the purchasing process of custom-made components from external suppliers is often and still characterized by several negotiation activities. This paper wants to improve this context by proposing two approaches to fostering the procurement processes. The first objective is to define an approach for standardizing the method for configuring machineries to be supplied from suppliers and to establish an approach for estimating their costs. The most important benefits of such an approach consist of (i) machinery selection based on the Total Value of Ownership (TVO), and (ii) optimized suppliers’ selection by strengthening relationships between customers and suppliers. The second objective is to define a method and a software platform for managing the procurement phase of custom-made components. The most important benefits of this approach consist of (i) the standardization of procurement policies for custom and standard components, and (ii) the faster budgeting process. Future work consists of defining a reference model for gathering primary data required for TVO computation and defining standard agreements between suppliers and customers.

System reliability is usually predicted with the assumption that all component states are independent. This assumption is particularly useful for systems with outsourced components. The assumption, however, may produce large errors in the system reliability prediction since many component states are strongly dependent. The purpose of this study is to develop an accurate system reliability method that can produce complete joint probability density function (PDF) of all the component states, thereby leading to accurate system reliability predictions. The proposed method works for systems whose failures are caused by excessive loading. In addition to the component reliability, system designers also ask for partial safety factors for shared loadings from component suppliers. The information is then sufficient for building a system-level joint PDF. Algorithms are designed for a component supplier to generate partial safety factors, which enables accurate system reliability predictions without requiring proprietary information from component suppliers.

This report analyzes the current service level of winter operations in Indiana and explores opportunities to optimize performance. We analyze data regarding winter operations managed by INDOT and provide specific quantified estimates of opportunities to improve efficiency while also managing costs. For our exploration, we use data provided by INDOT sources, qualitative insights from interviews with INDOT personnel, literature survey data and benchmarking information, salt and supplier data analysis, and simulation. As part of our research, we developed a simulation model to visually represent the impact of alternate management of trucks for snow removal and a dashboard to understand the impact. Our analysis suggests the following: (1) opportunities exist to coordinate salt delivery by suppliers and combine local city salt purchases with INDOT’s purchases to save costs, (2) adjusting routes will reduce deadhead, (3) understanding truck maintenance and truck locations improves performance, and (4) incorporating critical locations into snow route planning will meet service thresholds. These insights provide implementable recommendation initiatives to improve winter operations performance. The simulation tool developed in this project simulates various weather events to draw insights and determine appropriate resource allocations and opportunities for improving operational efficiency. The report thus provides a quantifiable approach to winter operations that can improve the overall service level and efficiency of the process.

The Mechanistic-Empirical Pavement Design Guide (MEPDG) has been employed for pavement design by the Indiana Department of Transportation (INDOT) since 2009 and has generated efficient pavement designs with a lower cost. It has been demonstrated that the success of MEPDG implementation depends largely on a high level of accuracy associated with the information supplied as design inputs. Vehicular traffic loading is one of the key factors that may cause not only pavement structural failures, such as fatigue cracking and rutting, but also functional surface distresses, including friction and smoothness. In particular, truck load spectra play a critical role in all aspects of the pavement structure design. Inaccurate traffic information will yield an incorrect estimate of pavement thickness, which can either make the pavement fail prematurely in the case of under-designed thickness or increase construction cost in the case of over-designed thickness. The primary objective of this study was to update the traffic design input module, and thus to improve the current INDOT pavement design procedures. Efforts were made to reclassify truck traffic categories to accurately account for the specific axle load spectra on two-lane roads with low truck traffic and interstate routes with very high truck traffic. The traffic input module was updated with the most recent data to better reflect the axle load spectra for pavement design. Vehicle platoons were analyzed to better understand the truck traffic characteristics. The unclassified vehicles by traffic recording devices were examined and analyzed to identify possible causes of the inaccurate data collection. Bus traffic in the Indiana urban areas was investigated to provide additional information for highway engineers with respect to city streets as well as highway sections passing through urban areas. New equivalent single axle load (ESAL) values were determined based on the updated traffic data. In addition, a truck traffic data repository and visualization model and a TABLEAU interactive visualization dashboard model were developed for easy access, view, storage, and analysis of MEPDG related traffic data.

This report describes the results of technical analysis, field tests, and laboratory tests that were performed for LED highway lighting options by the Energy Efficiency and Reliability Center (EERC) at Purdue University Northwest for the Indiana Department of Transportation (INDOT). This effort was conducted over the past 3 years to evaluate and test the technology and viability of using modern highway lighting technology to enhance energy efficiency, safety, security, and economic development of communities and roadways. During the testing period there was a continuous discussion between INDOT and EERC regarding the laboratory and field testing of INDOT approved luminaires submitted by vendors. There were multiple discussions with INDOT and vendors regarding the individual details and issues for the 29 luminaires that were tested. A comparison study was conducted by EERC of the various alternatives and comparison to currently installed luminaires. Data was collected for field tests of the luminaires by EERC and INDOT personnel for the luminaires. Field data was evaluated and compared to lighting models using vendor supplied ies data files. Multiple presentations were made at 3 separate Purdue Road Schools regarding the results and procedures of the testing program by EERC in conjunction with INDOT. A total of 22 final reports, considered confidential by INDOT, for individual vendor luminaires have been prepared as part of this effort. These reports were submitted sequentially to INDOT as testing was completed during the course of this effort. A total of 29 luminaires were tested. Some luminaire testing was terminated during testing due to design issues or vendor requests. All testing was summarized in the INDOT specification sheet attached to each report. Observations regarding the consistency of the supplied test luminaire with the requirements of Section 7.2 of the INDOT test procedure “Procedure for evaluation and approval list requirements for solid state ballasted luminaires ITM 957-17P” is provided in the Appendix to the report for each luminaire. Details regarding how these tests were performed and the respective associated evaluation of performance and reliability are provided in the report. This effort included: consideration of published and vendor information; appraisal of products consistent with national industry standards; review of physical design, thermal performance; laboratory testing of photopic performance, reliability, life cycle data and characteristics, and power characteristics; technical and probabilistic risk studies; and field testing and analysis of LED light sources including comparison to currently installed conventional light sources. Assistance in preparing INDOT standards for highway lighting was provided on multiple occasions.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.