Performance-based contracting in service supply chains: a service provider risk perspective

2014 ◽  
Vol 19 (2) ◽  
pp. 153-172 ◽  
Author(s):  
Kostas Selviaridis ◽  
Andreas Norrman
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Agency Theory ◽  
Influencing Factors ◽  
Financial Risk ◽  
Service Providers ◽  
Content Type ◽  
Service Supply Chain ◽  
Contractual Relationships ◽  
Service Supply Chains

Purpose – The performance of service supply chains in terms of service levels and cost efficiency depends not only on the effort of service providers but also on the inputs of sub-contractors and the customer. In this sense, performance-based contracting (PBC) entails increased financial risk for providers. Allocating and managing risk through contractual relationships along the service supply chain is a critical issue, and yet there is scant empirical evidence regarding what factors influence, and how, provider willingness to bear PBC-induced risk. This paper aims to address this gap. Design/methodology/approach – The paper draws on agency theory and two cases of logistics service supply chains, in the food retail and automotive industries respectively, to identify key influencing factors. Data were collected through semi-structured interviews with 30 managers of providers and sub-contractors and review of 35 documents, notably contracts and target letters. Findings – Four influencing factors were found: performance attributability within the service supply chain; relational governance in service supply chain relationships; provider risk and reward balancing; and provider ability to transfer risk to sub-contractors. The propositions developed address how these factors influence provider willingness to bear PBC-induced risk. Research limitations/implications – The factors identified are external to the provider mindset and refer to the management of contractual relationships and service delivery interactions along the service supply chain. The paper contributes to agency theory by stressing the risk allocation implications of bi-directional principal-agent relations in service supply chains. Practical implications – The study suggests ways in which providers can increase their capacity to bear and manage financial risk related to PBC design. Originality/value – The paper identifies factors that influence provider willingness to bear financial risk induced by PBC in service supply chains.

scholarly journals Challenges in extending sustainability across a transport supply chain

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Helena Forslund ◽  
Maria Björklund ◽  
Veronica Svensson Ülgen
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Agency Theory ◽  
Service Providers ◽  
Third Party ◽  
Information Asymmetries ◽  
Environmental Implications ◽  
Content Type ◽  
Transport Supply

Purpose Sustainability approaches across product supply chains are well-known, while similar knowledge on transport supply chains (TSC) is limited. The purpose of this paper is to explore sustainability approaches and managerial challenges in extending sustainability across a TSC. Design/methodology/approach This paper presents a case study of a TSC with a shipper, a third-party logistics firm and a hauler. Each actor’s views on sustainability-related communication and relations with other TSC actors are analyzed through the lens of agency theory. Findings Each dyad in the TSC reveals different, more or less collaboration-based approaches. Challenges are revealed, including the lack of shipper understanding for the TSC context and the use of immature contracts, which disincentivizes sustainability compliance. The multi-tier study object reveals the silencing of distant actors and the need for actors to take on mediating roles to bridge information asymmetries. Research limitations/implications Combining literature perspectives (relations, communication and agency theory) provides a deeper understanding of the approaches applied and identifies different challenges. The inclusion of agency theory reveals principal problems such as information asymmetries between agents and less-informed principals and suggests complementary labels of supply chain actors. Practical implications Practical contributions include the highlighting of managerial challenges, which can aid managers in extending sustainability across TCSs. Social implications The case study method offers insights into collaboratively improving sustainability in supply chains (such as using contracts), thus having social and environmental implications. Originality/value The paper narrows knowledge gaps about managing sustainability among logistics service providers and analyzes data from multi-tier actors.

Service supply chain: strategic interaction and relationship value

2016 ◽  
Vol 31 (5) ◽  
pp. 611-624 ◽  
Author(s):  
Hua Song ◽  
Kangkang Yu ◽  
Samir Ranjan Chatterjee ◽  
Jingzi Jia
Keyword(s):  
Supply Chain ◽  
Manufacturing Industry ◽  
Service Providers ◽  
Strategic Interaction ◽  
Mediating Effect ◽  
Content Type ◽  
Business Context ◽  
Service Supply Chain ◽  
Relationship Value ◽  
Chinese Manufacturing Industry

Purpose The purpose of this paper is to empirically investigate the linkages between strategic interaction and relationship value, with a variety of co-creating value strategies as conceptual mediators. Design/methodology/approach This study reports on a field survey conducted in the Chinese manufacturing industry. A total of 180 questionnaires were sent to customers of service providers, and 120 valid responses were received, representing a response rate of 66.7 per cent. The data were then analyzed by using a number of statistical tools. Findings The results suggest that strategic interaction leads to a positive effect on the relationship value without any regard to the size of the customer. However, the mediating effect of product-based service is more significant for large-size customers, whereas the mediating effect of integrated managerial service is more significant for medium- and small-size customers. Originality/value This study explores how value might be created in a business-to-business context in a service supply chain from a relationship marketing perspective. It distinguishes product-based service and integrated managerial service as co-creating value strategies and further clarifies the different mechanisms underlying their relationships with strategic interaction between service supplier and customer. In particular, this study suggests that although strategic interaction may yield superior relationship value, the size of the customers will determine what kind of co-creating strategies would be preferred.

Challenges and opportunities to integrate the oldest and newest manufacturing processes: metal casting and additive manufacturing

2020 ◽  
Vol 26 (6) ◽  
pp. 1145-1154 ◽  
Author(s):  
Paul Lynch ◽  
C.R. Hasbrouck ◽  
Joseph Wilck ◽  
Michael Kay ◽  
Guha Manogharan
Keyword(s):  
Supply Chain ◽  
Additive Manufacturing ◽  
Supply Chains ◽  
Service Providers ◽  
Three Dimensional ◽  
Metal Casting ◽  
Content Type ◽  
Digital Ecosystem ◽  
Volume Production ◽  
Low Volume

Purpose This paper aims to investigate the current state, technological challenges, economic opportunities and future directions in the growing “indirect” hybrid manufacturing ecosystem, which integrates traditional metal casting with the production of tooling via additive manufacturing (AM) process including three-dimensional sand printing (3DSP) and printed wax patterns. Design/methodology/approach A survey was conducted among 100 participants from foundries and AM service providers across the USA to understand the current adoption of AM in metal casting as a function of engineering specifications, production demand, volume and cost metrics. In addition, current technological and logistical challenges that are encountered by the foundries are identified to gather insight into the future direction of this evolving supply chain. Findings One of the major findings from this study is that hard tooling costs (i.e. patterns/core boxes) are the greatest challenge in low volume production for foundries. Hence, AM and 3DSP offer the greatest cost-benefit for these low volume production runs as it does not require the need for hard tooling to produce much higher profit premium castings. It is evident that there are major opportunities for the casting supply chain to benefit from an advanced digital ecosystem that seamlessly integrates AM and 3DSP into foundry operations. The critical challenges for adoption of 3DSP in current foundry operations are categorized into as follows: capital cost of the equipment, which cannot be justified due to limited demand for 3DSP molds/cores by casting buyers, transportation of 3DSP molds and cores, access to 3DSP, limited knowledge of 3DSP, limitations in current design tools to integrate 3DSP design principles and long lead times to acquire 3DSP molds/cores. Practical implications Based on the findings of this study, indirect hybrid metal AM supply chains, i.e. 3DSP metal casting supply chains is proposed, as 3DSP replaces traditional mold-making in the sand casting process flow, no/limited additional costs and resources would be required for qualification and certification of the cast parts made from three-dimensional printed sand molds. Access to 3DSP resources can be addressed by establishing a robust 3DSP metal casting supply chain, which will also enable existing foundries to rapidly acquire new 3DSP-related knowledge. Originality/value This original survey from 100 small and medium enterprises including foundries and AM service providers suggests that establishing 3DSP hubs around original equipment manufacturers as a shared resource to produce molds and cores would be beneficial. This provides traditional foundries means to continue mass production of castings using existing hard tooling while integrating 3DSP for new complex low volume parts, replacement parts, legacy parts and prototyping.

Doing good across organizational boundaries

2018 ◽  
Vol 38 (12) ◽  
pp. 2389-2412 ◽  
Author(s):  
Hugo K.S. Lam
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Financial Risk ◽  
Theoretical Perspective ◽  
Secondary Data ◽  
Content Type ◽  
Signalling Theory ◽  
The Impact ◽  
Moderating Role

Purpose The purpose of this paper is to theoretically hypothesise and empirically test the impact of sustainable supply chain practices (SSCPs) on firms’ financial risk. Design/methodology/approach This research adopts signalling theory to explain the signalling role of SSCPs and the moderating role of the signalling environment in terms of supply chain characteristics. It collects and combines longitudinal secondary data from multiple sources to test the direct impact of SSCPs on firms’ financial risk and the moderating role of supply chain complexity and efficiency. It conducts various additional tests to check the robustness of the findings and to account for alternative explanations. Findings This research shows that SSCPs help firms reduce financial risk but do not affect their returns. Moreover, the risk reduction of SSCPs is greater for firms with more complex and efficient supply chains. The findings are robust to alternative variable measurements and analysing strategies. Research limitations/implications This research reveals the role of SSCPs in reducing financial risk, urging researchers to pay more attention to the financial risk implications of supply chain practices in general and SSCPs in particular. Practical implications This research encourages firms to engage in SSCPs to reduce financial risk and enables them to assess the urgency of their SSCPs investments in view of the complexity and efficiency of their supply chains. Originality/value This is the first research examining the impact of SSCPs on financial risk, based on longitudinal secondary data and signalling theory. The empirical evidence documented and the theoretical perspective adopted offer important implications for future practice and research on SSCPs.

Supply chain quality management and organizational performance

2019 ◽  
Vol 27 (1) ◽  
pp. 232-249
Author(s):  
Matloub Hussain ◽  
Mehmood Khan ◽  
Mian Ajmal ◽  
Bilal Ahmad Khan
Keyword(s):  
Supply Chain ◽  
Quality Management ◽  
Supply Chains ◽  
Conceptual Framework ◽  
Organizational Performance ◽  
Empirical Data ◽  
Equation Modeling ◽  
Content Type ◽  
The Impact ◽  
Service Supply Chains

Purpose Supply chain quality management (SCQM) has gained less attention in the Arab world, and there is a clear dearth in existing research on this topic, particularly in service organizations. Therefore, the purpose of this paper is to propose a conceptual framework for investigating the impact of SCQM and associated indicators on organizational performance (OP). Design/methodology/approach Empirical data have been collected through a survey distributed to a sample of major telecom companies in United Arab Emirates (UAE). To test the conceptual framework, structural equation modeling (SEM) has been used to analyze the data collected from 248 respondents of telecom companies. Findings The empirical data showed that SCQM practices are significantly correlated with innovation and operations performance. Statistical analysis through SEM also revealed that customer satisfaction has highest direct impact on OP. Research limitations/implications External factors (government regulations, policies and culture) also affect the SCQM practices. Hence, future work should incorporate these parameters as well. Practical implications This is a contribution to the continuing research into SCQM, giving supply chain managers and designers a practical way for measuring and implementing SCQM practices across service supply chains. Originality/value The contribution of this research, through successive stages of data collection, measurement analysis and refinement, is a set of reliable and valid framework that can be subsequently used in conceptualization and measuring quality of service supply chains.

Digital manufacturing-driven transformations of service supply chains for complex products

2014 ◽  
Vol 19 (4) ◽  
pp. 421-430 ◽  
Author(s):  
Jan Holmström ◽  
Jouni Partanen
Keyword(s):  
Supply Chains ◽  
Service Providers ◽  
Early Stage ◽  
Design Science ◽  
Sustainable Use ◽  
General Purpose ◽  
Digital Manufacturing ◽  
Content Type ◽  
Complex Product ◽  
Service Supply Chains

Purpose – The purpose of this paper is to explore the forms that combinations of digital manufacturing, logistics and equipment use are likely to take and how these novel combinations may affect the relationship among logistics service providers (LSPs), users and manufacturers of equipment. Design/methodology/approach – Brian Arthur’s theory of combinatorial technological evolution is applied to examine possible digital manufacturing-driven transformations. The F-18 Super Hornet is used as an illustrative example of a service supply chain for a complex product. Findings – The introduction of digital manufacturing will likely result in hybrid solutions, combining conventional logistics, digital manufacturing and user operations. Direct benefits can be identified in the forms of life cycle extension and the increased availability of parts in challenging locations. Furthermore, there are also opportunities for both equipment manufacturers and LSPs to adopt new roles, thereby supporting the efficient and sustainable use of digital manufacturing. Research limitations/implications – The phenomenon of digital manufacturing-driven transformations of service supply chains for complex product does not yet fully exist in the real world, and its study requires cross-disciplinary collaboration. Thus, the implication for research is to use a design science approach for early-stage explorative research on the form and function of novel combinations. Practical implications – Digital manufacturing as a general-purpose technology gives LSPs an opportunity to consolidate demand from initial users and incrementally deploy capacity closer to new users. Reengineering the products that a manufacture currently uses is needed to increase the utilization of digital manufacturing. Originality/value – The authors outline a typology of digital manufacturing-driven transformations and identify propositions to be explored in further research and practice.

scholarly journals Coordination Analysis of Revenue Sharing in E-Commerce Logistics Service Supply Chain With Cooperative Distribution

SAGE Open ◽  
2019 ◽  
Vol 9 (3) ◽  
pp. 215824401987053 ◽  
Author(s):  
Yaoguang Zhong ◽  
Fangfang Guo ◽  
Zhiqiang Wang ◽  
Huajun Tang
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Supply Chains ◽  
Revenue Sharing ◽  
Two Stage ◽  
Logistics Service ◽  
Service Supply Chain ◽  
Decentralized Decision Making ◽  
Decision Making System ◽  
Service Supply Chains

With the rapid development of e-commerce, logistics distribution has become the bottleneck of its development. It is urgent to study how to optimize the cooperation between e-commerce platforms and logistics service providers. Based on Stackelberg game theory, this research first studies the decision making of two-stage logistics service supply chains consisting of the e-commerce mall and the logistics service provider without cooperative distribution, in which decentralization and centralization are analyzed, respectively. Then, it is extended to the decision making of three-stage logistics service supply chains consisting of e-commerce malls, express delivery companies, and terminal distributors. The results show that the profit, sales volume, and logistics service effort of the centralized decision-making system are higher than those of the decentralized decision-making system, regardless of the two-stage or three-stage logistics service supply chain. Therefore, it is vital to formulate a reasonable profit distribution scheme based on revenue-sharing contract to achieve the cooperation among the partners of logistics service supply chain, so as to achieve a win-win situation in which all of their profits increase. Finally, a numerical example is presented to verify the results, and some issues are proposed for future research.

Designing and managing the Optimum strategic FM supply chain

2014 ◽  
Vol 12 (4) ◽  
pp. 330-336 ◽  
Author(s):  
Michael Pitt ◽  
Sarich Chotipanich ◽  
Ruhul Amin ◽  
Sittiporn Issarasak
Keyword(s):  
Supply Chain ◽  
Service Providers ◽  
Chain Structure ◽  
Supply Chain Design ◽  
Final Decision ◽  
Supply Chain Network ◽  
Content Type ◽  
Supply Chain Strategy ◽  
Strategic Issues ◽  
Service Supply Chain

Purpose – The purpose of this paper is to overview carefully selected existing literature to enable further analysis directly concerned with facilities management (FM) supply chain structure, components, strategic issues, challenges and risk. Following the key aspects of assembly, design and, most importantly, management of FM supply chain are explored so that a guidance design framework can be put forward. Design/methodology/approach – This paper examines the optimum technique that can be applied by clients and FM service providers where FM functions are outsourced. The paper initially defines the network structure of the FM supply chain and then suggests a conceptual model for making decisions about FM supply chain network at the strategy level. Furthermore, the paper argues for both supply chain design and for critical node micro management in a transparent supply chain environment with the FM acting as the strategic lens through which the focus of the supply chain is achieved. Findings – This paper presents a process for designing and making decisions of FM service supply chain network. The process begins with an examination of the needs of facility services. It is followed by the step of identifying available options in delivering and processing the services. The third stage involves modelling structures of FM supply chain network. Then to make a final decision, all possible models have to be evaluated for their optimisation, both quantitative (cost) and qualitative (performance). At the end, the model with best optimisation should be selected. Originality/value – This paper proposes a conceptual framework for designing facility service supply chain strategy and configuration to fit with the specific nature of facility service demand of a given organisation. The framework, featuring a set of processes including examining demand nature, identifying options available and analysing options, is first aimed at providing an assisting tool in identifying optimum supply chain network/solution of facility services and, second, intends to stimulate further discussions on this continuously evolving and challenging market.

scholarly journals The impacts of supply chain finance initiatives on firm risk: evidence from service providers listed in the US

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hugo K.S. Lam ◽  
Yuanzhu Zhan
Keyword(s):  
Supply Chain ◽  
Multinational Corporations ◽  
Financial Risk ◽  
Service Providers ◽  
The United States ◽  
Political Connections ◽  
Firm Capabilities ◽  
Content Type ◽  
It Capability ◽  
Supply Chain Finance

PurposeThis study empirically investigates how supply chain finance (SCF) initiatives together with different firm capabilities and resources (i.e. information technology (IT) capability, operational slack and political connections) affect the financial risk of service providers.Design/methodology/approachThis study collects secondary longitudinal data to test for a direct impact of SCF initiatives on service providers' financial risk. It further investigates the moderating effects of the service provider's IT capability, operational slack and political connections. Additional tests and analytical strategies are performed to ensure the robustness of the results.FindingsThe findings indicate that SCF initiatives help service providers mitigate financial risk. The risk reduction is greater for service providers with higher IT capability, operational slack and political connections, but the last factor applies only to multinational corporations, not domestic companies.Research limitations/implicationsThe data used in this research is limited to SCF service providers publicly listed in the United States, which may restrict the generalisability of the findings. Nonetheless, the research urges scholars to focus more on the financial risk implications of SCF in different market contexts.Practical implicationsThis study encourages service providers to embrace the power of SCF initiatives for mitigating financial risk and allows them to evaluate their SCF investments in light of different firm capabilities and resources.Originality/valueThis is the first study investigating the impacts of SCF initiatives and various firm capabilities and resources on service providers' financial risk. The empirical findings provide important implications for future research and practices.

scholarly journals Who’s to blame or praise? Performance attribution challenges in outsourced service provision in supply chains

2016 ◽  
Vol 21 (5) ◽  
pp. 513-533 ◽  
Author(s):  
Kostas Selviaridis
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Service Provision ◽  
Service Management ◽  
Service Providers ◽  
Harmful Effect ◽  
Performance Measurement System ◽  
Business Services ◽  
Content Type ◽  
Performance Attribution

Purpose The aim of this paper is to understand the antecedents and effects of performance attribution challenges arising in the provision of business-to-business (B2B) services in supply chains. Design/methodology/approach The study draws on three in-depth case studies of logistics service providers (LSPs) offering supply chain solutions to their clients in Sweden. The analysis of performance attribution challenges and their antecedents and effects is based on 38 semi-structured interviews and review of 43 documents, including contracts and performance monitoring records. Findings Three key antecedents of performance attribution challenges are stressed. Two of these, the inseparability and contestability of service inputs, are closely related to the notion of service co-production. The third antecedent is the limited provider capability in performance data collection and analysis. Performance attribution challenges may result in provider aversion to performance-related risk and have a harmful effect on client relationships, for example, in terms of provider perceptions of opportunism and unfair allocation of gains. These effects can be mitigated through contracting, interventions in performance measurement system design and deployment of relational mechanisms. Research limitations/implications The paper extends the service management literature that emphasises on service co-production by suggesting that inputs of the client firm and its supply chain partners may not only vary in quality but also can be inseparable from provider inputs and highly contestable. It also empirically demonstrates how performance attribution challenges and their antecedents and effects manifest themselves in B2B service provision, as opposed to supply chain settings where the main user of logistics services is the consumer. Practical implications LSP managers should contract for performance based on high-quality and incontestable external inputs they rely upon. Contractual specifications (performance indicators and related incentives) should explicate and consider the inputs required by clients and their supply chain partners to minimise their contestability. Originality/value The study proposes an empirically based framework of the antecedents and effects of performance attribution challenges, an issue that has received scant attention in logistics outsourcing research and the business services literature more broadly.

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