Conceptualising the impact of information asymmetry on through-life cost: case study of machine tools sector

Information asymmetry (IA) in terms of contextual variety and importance is one of the most challenging aspects of through-life costing in product-service systems (PSS). IA is an imbalance in the information, data and knowledge shared among the parties involved in a contractual agreement. In manufacturing systems under PSS, interaction and effective communication among several parties who are involved in a contractual agreement, rely on the continuity and accuracy of information and context. In such systems, contextual variety exhibits complexity and uncertainty in through-life costing and subsequently in PSS cost assessment. Although the economic aspect of PSS has been studied previously, the impact of IA on through-life cost and for different PSS solutions has not been detailed. Considering manufacturing value chains, this paper introduces a new concept of PSS-hierarchy to perform through-life costing in the presence of IA for various PSS solutions. Moreover, this paper proposes a generic life-cycle model for different PSS solutions to assess the total cost of ownership (TCO). The proposed model has been developed to support decisions on contract design in manufacturing systems. This study considers the manufacturer, service provider and customer perspectives to develop the TCO model using a machine tool manufacturing case study

Knowledge Communication in Product Development Projects

During the last decades, a number of studies have been concerned with com-munication related to new product development. These have looked at either intra-organizational communication between departments or communication between new product development teams and external stakeholders such as customers or suppliers. Only little research, however, has combined internal and external stakeholder communication and explored the role of technology uncertainty on communication. The purpose of this study is to examine how technology uncertainty affects project manager communication behavior during new product development. We carried out an embedded case study of a major NPD project in the automation industry. The findings indicate that technology uncertainty is positively related to communication frequency between project manager and project stakeholders during the early phase of NPD project. In addition we found a negative association between technology uncertainty and the breadth and depth of communication between project manager and stakeholders in early phase of the NPD project. These findings indicate that under high technology uncertainty, managers of NPD projects modify their communication behavior not only with respect to how frequently they communicate with stakeholders, but also to which stakeholders they communicate and how deeply they engage different stakeholders in different phases of the new product development project.

Current practice and challenges towards handling uncertainty for effective outcomes in maintenance

The combination of viable heuristic attributes with statistical measurements presents significant challenges in industrial maintenance for complex assets under through-life service contracts. Techniques to obtain and process heuristic attributes raise numerous uncertainties which often go undefined and unmitigated. A holistic view of these uncertainties may improve decision-making capabilities and reduce maintenance costs and turnaround time. It is therefore necessary to identify and rank factors that influence uncertainties originating from challenges in the above context. This, along with an identification of who contributes to such challenges and current practice to handle them, sets the focus for this study. The influence of 32 categorised factors on uncertainty is assessed through a questionnaire completed by nine experienced maintenance managers from a leading defence company. The pedigree approach is applied to score validity of respondents’ answers according to their experience and job role to normalise scores. Results are discussed in interviews with respondents along with current practice in and ways to improve uncertainty assessment. Scores are weighted through the Analytical Hierarchy Process (AHP) in order to identify the most influential factors on uncertainty in maintenance. The analysis revealed that these include: intellectual property rights (IPR), maintainer performance, quality of information, resistance to change, stakeholder communication and technology integration. These are verified with 40 practitioners from various industrial backgrounds. From the interviews, it is deemed that a holistic view of heuristic and statistical attributes ultimately allows for more accomplished decision-making but requires trade-offs between quality and cost over the asset’s life cycle

A Conceptual Framework of Reverse Logistics Impact on Firm Performance

This study aims to examine the reverse logistics factors that impact upon firm performance. We review reverse logistics factors under three research streams: (a) resource-based view of the firm, including: Firm strategy, Operations management, and Customer loyalty (b) relational theory, including: Supply chain efficiency, Supply chain collaboration, and institutional theory, including: Government support and Cultural alignment. We measured firm performance with 5 measures: profitability, cost, innovativeness, perceived competitive advantage, and perceived customer satisfaction. We discuss implications for research, policy and practice

Enhancing service requirements of technical product-service systems

Due to the integration of product and services as a new business model, product reliability and strategies for cost reduction at the early design stage have become important factors for many manufacturing firms. It is, therefore, critical at this phase to analyse the risk involved with Service Requirements noncompliance in order to help designers make informed decisions; as these decisions have a large impact on the Product Life Cycle (PLC). An investigation has been performed into how Service Requirements are analysed in a service orientated business to achieve reduced Life Cycle Cost (LCC) and improvements of existing Service Requirements. Weibull distribution and Monte Carlo principle have been proposed to do so; as they are considered as the most widely used in product reliability studies in the industry sector. A generic methodology for risk evaluation of failure to deliver a new product against Service Requirements is presented in this paper. This is part of the ongoing research project which aims to, apart from comparing current and targeted Service Requirements, it also facilitates an optimisation of them at the minimum risk of nonconformity

Innovation, competition and public procurement in the pre-commercial phase

Should the supply or the demand side bear the risk connected to innovation? The two polar cases identified in the literature are the supply push and the demand pull. The former is the typical one, with the supplier bearing the costs and obtaining the benefits from innovating. The latter is technology procurement, where the buyer takes the risk, by procuring the innovative good or service. With respect to this, pre-commercial procurement is a peculiar solution that can explain the debate found in the literature relative to its configuration either as a supply-side or a demand-side instrument. The separation from the commercial phase allows the procurer to take only (part of) the risks connected to R&D services. Also, competition among suppliers gives the opportunity of evaluating different solutions and to obtain, in the commercial phase, a lower price for the innovative good. The counterpart of all this is a large portion of risk being left to the supplier. As a consequence, suppliers need to obtain a larger share of the benefits of the innovation process. This economic reason, besides the legal restrictions on State aid, explains the need for a shared risks-shared benefits approach, centred on the agreements on the assignment of IPRs

Effectiveness of R&D project selection in uncertain environment: An empirical study in the German automotive supplier industry

This paper presents results of an empirical large-scale study on uncertainty reduction of R&D projects and R&D project selection. The empirical field is the German automotive supplier industry. We explore R&D project selection practices in this specific industry and briefly contrast our findings with the academic research and management literature in this field. We concentrate on answering three research questions (with focus on questions no. 1 and 2): I. Which information and related uncertainties are crucial for the product selection decision to the R&D decision makers? II. How do R&D decision makers today cope with typical challenges related to reducing uncertainty? Where do they face major problems and how effective are they? III. What are major implications for managing the Fuzzy Front End (FFE) of innovation process in industry practice and respectively for further academic research in this field? Key findings are that on the one hand certainty about fields of product applications, target markets and production feasibility are most important criteria for initial product selection decisions. On the other hand market and cost related uncertainties (e.g. sales volume, product price, cost per unit) cannot be satisfyingly reduced in practice before project approval for development or definite termination of projects. Although different uncertainty profiles exist within the process of project evaluation, most companies do not systematically choose available product selection methods and tools according to specific uncertainty situations. Intuition still plays a major role in R&D product selection. Some first conclusion drawn from this research are: A sufficient level of resources (including financial and methodological know-how), a systematic use of suitable project selection instruments, and a fit with the company specific as well as the OEMs' product/brand strategies can be potential levers for more effective uncertainty reduction before product decision. --

Management Control Systems and Contextual Variables in the Hospitality Industry

Purpose – The paper examined management control systems (MCS) in Indonesian hospitality sector. This study examines the impact of six contextual factors at one time to determine the importance of each factor on the design of MCS. Design/methodology/approach – The paper is based upon data collected through a survey sent to “star” hotels in Central Java, Indonesia. Using Chenhall (2003) design, a regression equation is run to examine the relationship between MCS and the contextual variables of environment, technology, structure, size, strategy and culture. Findings – The paper finds that higher levels of the contextual variables of technology, structure, and culture are related to more sophisticated MCS while size is related to more traditional MCS. Research limitations/implications –These findings are related to the hospitality industry in Indonesia. Future research could examine different settings (i.e. country, industry, etc) and investigate the effect of each contextual variable on the relationships between MCS and firm performance. Originality/value – The present study extends the scope of MCS system in accounting literature by testing Chenhall (2003) works on the relationship between contextual variables and MCS. It attempts to fill the gap in contingency-based studies that have previously focused on one aspect of contingency by considering six contextual factors. Furthermore, this paper also contributes to a fuller understanding of MCS practices in Indonesia and the hospitality industry and helps management in determining its most effective design. Keywords Hospitality management, Management Control Systems, Indonesia, Contextual Variable

The Causality of Supply Relationships

This study examines the 'logic' or underlying causality of supply relationships. It develops and tests hypotheses, in a LISREL model, on detailed data for 553, 450 and 226 supply relationships in the US, Japanese and European automobile industries. The differences found between the three regions seem small, given the received view that there are fundamental differences between 'Japanese' and 'Western' contracting. However, the differences that remain suggest that in the US perhaps the 'Japanese system' has been surpassed, in a 'third way' that combines the advantages of sufficiently durable relations with the advantages of an open system with great variety.Automobile industries;Learning theory;Social exchange theory;Supply relationships;commitment