Contracting for complex performance in markets of few buyers and sellers: the case of military procurement

Article"This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited."Purpose – The aim of the paper is to identify and review the impact and challenges of new contractual arrangements on UK military procurement and other limited or oligopolistic markets. Design/methodology/approach – The unit of analysis is the large-scale procurement programme. Two cases of major military platforms (naval and air defence) examine through-life maintenance or “contracting for availability” and build theory on procuring complex performance (PCP). Propositions are developed from the literature then tested and extended from the case analysis, supported by 35 interviews from buyer and supplier representatives. Findings – Examining UK military platform procurement reveals a perspective not present in fast moving high volume supply chains. In oligopolistic markets such as defence, the Ministry of Defence (MOD) represents a market of one, seeking ambitious and non-incremental innovation from the prime contractor during the procurement process. The new contractual arrangements show an increasing shift in responsibility to the prime contractor who coordinates service support and supply chain incentivisation over extended, often multi-decade platform lifecycles. Research limitations/implications – The cases were conducted separately and later compared. Whilst based on defence sources, the paper concludes with general recommendations for all public-private complex procurements and seeks to explore other industry sectors as part of further research into PCP. Originality/value – Examined from a theoretical and practical perspective, the cases reveal the challenges facing procurement in major public-private projects. The changing role identified reflects extended timescales and the quasi-market military procurement environment, compounded by current economic and politically charged conditions. Procurement by default increasingly plays a new shaping role in large-scale programme management driven by outcome-based contracting. Customers such as the MOD must re-evaluate their role under these new contractual arrangements, providing leadership and engaging with future contracting capability and innovation

Interorganizational Collaboration and Value Creation in the Automotive Industry

In response to the difficulties experienced by the automotive industry in adopting new procurement technology this research investigates an emerging phenomenon: electronic interorganizational collaborative platforms consisting of e-Hubs, WebEDI, and CAD networks. A study of eight European cases explores collaborative working and information sharing using e-procurement to transform value creation. Outcomes from interviews and workshops reveal conflicting stakeholder motivation and barriers at firm and industry level. Vehicle manufacturers seek significant cost reductions through large-scale hubs, but are overwhelmed by supplier resistance, structural differences, cultural mismatch, and legacy systems. Suppliers are more selective in their use of electronic applications, but are hindered by network complexity, lack of standards, and limited resources. The study concludes with recommendations concerning electronic topology, supplier relationships, disbenefit, leadership, and a transition from traditional inter-organizational systems thinking. Keywords: collaborative platforms, e-procurement, supplier relationship

Exploring Industry Dynamics in eProcurement: Sense Making By Collaborative Investigation

The case study method supported by interviews is used widely by IS researchers. In ‘messy’ problems, such as the adoption of e-procurement across manufacturing supply chains, a more collaborative approach is needed to explore and make sense of the problem domain. This paper proposes the use of qualitative politicised influence diagrams - QPID – to enable the investigator to structure the process of collaborative investigation as part of an action case strategy. The paper describes how QPID workshops are used as part of a multiple methods research design to support and help practitioners articulate the issues surrounding the adoption of e-procurement in the automotive industry. Four outcomes of the approach are identified: 1) QPID is a systems modelling method that is meaningful to practitioners, 2) QPID can be used to promote good quality conversations, 3) QPID models provide a consistent notation for case description that supports cross-case and industry level analysis, and 4) collaborative workshops, through the creation of trust and shared understanding between researcher and practitioner, can provide a platform for subsequent interventions

Are Hubs the Centre of Things? eProcurement in the Automotive Industry

Organizations are being confused by simplistic, technology-driven models of e-business that allegedly enhance competitive and co-operative capability. Re-examining the perceived wisdom of electronic markets finds shallow, overlapping networks competing for membership, isolated pockets of collaboration and irregular flows of revenue, resembling an ad-hoc arrangement of spokes rather than a hub structure. This paper develops a classification that highlights the link between inclusive/exclusive hub membership and the buyer-supplier relationship as part of planning eprocurement strategy. Three automotive case studies show that introducing electronic hubs without IS-related, industry-level planning simply speeds up the mess

Converging and diverging governance mechanisms:the role of (dys) function in long-term inter-organizational relationships

This paper explores the dynamic interplay of formal/informal governance mechanisms, in terms of functional and dysfunctional consequences for both sides of the dyad, in long-term inter-organizational relationships. Using two longitudinal cases of UK defence sector procurement (warship commissioning) we move beyond notions of complementarity and substitution in governance towards a more nuanced view where the governance mix of inter-organizational relationships can be convergent or divergent. Our findings, showing that relationships can exhibit functional and dysfunctional behaviour simultaneously, lead us to conclude that mismatches in governance mechanisms can be positive as well as negative. In building a context-dependent understanding of governance we both summarize the (dys)functions associated with formal and informal governance mechanisms and explore their impact on relationship exchange performance over time.</p

Servitization and operations management: a service-dominant logic approach

Authors' pre-print draft; earlier version issued as working paper. Final version published in International Journal of Operations & Production Management. Available online at http://www.emeraldinsight.com/The accepted author manuscript version is in ORE: http://hdl.handle.net/10871/31585Purpose – The purpose of this paper is to provide further insight into operations management of the product-service (P-S) transition, known as servitization, and the resulting product service system (PSS) offerings. In exploring the P-S transition, this paper adopts a service-dominant (S-D) logic view of value creation, using it as a lens through which to explore value propositions of the P-S transition and their operations design. Design/methodology/approach – This paper presents an in-depth case study of an original equipment manufacturer of durable capital equipment who, over the last five years, has expanded its offerings to include use- and result-orientated PSS. The research design uses a multi-method approach; employing 28 in-depth qualitative interviews with customers and employees and analysis of texts, documents and secondary data including five years of enterprise resource planning (ERP), call centre and contract data. Findings – The paper identifies ten generic P-S attributes that are abstracted into four nested value propositions: asset value proposition; recovery value proposition; availability value proposition; and outcome value proposition. In examining the operations design for delivery of these value propositions, it is found that the role and importance of contextual variety increases as the organisation moves through the value propositions. Interdependencies amongst the value propositions and differences in operational design for each value proposition are also found. Research limitations/implications – The paper investigates PSS through a S-D logic mindset. First, the paper considers value propositions of PSS not according to “product” or “service” but in terms of how resources (both material and human) are optimally designed to co-create customer value. Second, a value co-creation system of nested value propositions is illustrated. In so doing, the findings have a number of implications for literature on both PSS and S-D logic. In addition, the research adds to the PSS literature through the identification and consideration of the concept of contextual use variety. Practical implications – The paper demonstrates the complexity of the transition from product to service. Specifically, service cannot be seen as a bolt-on extra to their product offering; complexity caused by interactions and changes to the core offering require a systems perspective and consideration of both firm and customer skills and resources. Originality/value – This paper extends existing literature on the P-S transition and its implications for operations management. Notably, it takes an S-D logic perspective of value creation and in so doing highlights the importance and role of contextual use variety in the P-S transition. It also provides further empirical evidence that the P-S transition cannot be treated as discrete stages but is evolutionary and requires a complex systems perspectiv

Business Process Modeling for Successful Implementation of Interorganizational Systems

Studies show that the physical implementation of an interorganizational business process or system can be a major source of operational problems and reduced business benefits. Better process modeling has been advocated as a solution. Although powerful modeling tools exist, current practice often gives short-shrift to documenting the physical implementation details that can create or exacerbate such problems. In this paper we describe the modeling approach we devised for the interorganizational business processes and systems we observe in our ongoing fieldwork. Our approach involves using allowable extensions to a popular modeling notation (BPMN), although other modeling tools would work equally well. We illustrate the benefit of our approach in the case of the Internet Payment Platform, a pilot project of the United States Department of the Treasury

Implementing supply practice at Bridgend Engine Plant: the influence of institutional and strategic choice perspectives,

International audienceThis paper investigates the stalled adoption of a supplier park at Bridgend Engine Plant in the UK. It starts from the position that not all firms can or should implement the same set of practices. Critical incident technique and semi-structured interviews over five years were used to understand the influence of institutional and strategic choices during the implementation of a supplier park. A conceptual framework was developed to incorporate practices broadly associated with parks, i.e. improving supply stability, supply coordination, redefining the OEM/supplier boundary and enhancing interaction between co-located firms. The findings demonstrate a limited implementation of supply practices at Bridgend with only one component supplier brought onto the site. The original plan was to create a supplier park that would "grow" to an industrial park, creating an automotive sector in the area. However, a combination of operational, processual, and contextual factors have conspired against the plan. The combination of a broad range of theoretical and practical elements means there are associated discussions that could be more fully explored. Condensing the interview notes has resulted in the researchers' own interpretation of events becoming a significant reality filter. Whilst single case studies raise inevitable concerns over comparability, our focus is on theoretical generalizability through richness of empirical data. As firms continue to use best practice as a core ingredient of strategy, researchers must respond with robust theoretical concepts explaining adoption and implementation. This paper integrates disparate perspectives across multiple levels in order to build a richer and more believable picture of a stalled initiative. Three key conclusions can be drawn: the contingent nature of "bundles of practice" implications of political ambiguity over the efficiency argument and the effect of isomorphic or bandwagon responses by firms