Purchasing in service triads: the influence of contracting on contract management

Multi-demand supply chain triads and the role of Third-Party Logistics Providers

Purpose

Third-party logistics providers (3PLs) have significantly evolved during the last decades, yet their role within a supply chain triad has been overlooked; this study examines empirically the 3PLs' role using four established theories: resource-based view, social capital perspective, agency theory and transaction cost economics.

Design/methodology/approach

This study examines the role of 3PLs in four supply chain triads, using the case study approach. Sources of evidence include interviews and secondary data.

Findings

The 3PL had different roles in multi-demand triads as service developer, customer adaptor and customer developer. The 3PL, by offering advanced services, became a service developer. The 3PL as a customer adaptor offered customised services and gain the client's trust. As a customer developer, the 3PL acted on behalf of its client in expanding its operations and meeting competitive needs.

Research limitations/implications

The results of the case study methodology can only be generalised to similar types of 3PL. Supply chain triads are an emerging research field; theories like the resource-based view and transaction cost economics are established in the dyadic context and require further elaboration when applied in triadic contexts.

Practical implications

The findings provide practical insights into the role that 3PL can play in supply chain triads, how they can upgrade their role by long-range planning and extending their services to create supply chain efficiency.

Social implications

Understanding the 3PL's role in triads can improve how companies and economies respond to crises like the recent pandemic outbreak.

Originality/value

It uncovers three different 3PL roles in supply chain triads by using four established theories.

Managing buyer experience in a buyer-supplier relationship in MSMEs and SMEs

Monitoring buyer experience provides competitive advantages for suppliers as buyers explore the market before reaching a salesperson. Still, not many B2B suppliers monitor their buyers' expectations throughout their procurement journey, especially in MSMEs and SMEs. In addition, the inductive research on evaluating buyer experience in buyer-supplier relationships is minimal, leaving an unexplored research area. This study explores antecedents of buyer experience during the buyer-supplier relationship in MSMEs and SMEs. Further, we investigate the nature of the influence of extracted precursors on the buyer experience. Firstly, we obtain the possible antecedents from the literature on buyer-supplier experience and supplier selection criteria. We also establish hypotheses based on transaction cost theory, resource-based view (RBV), and information processing view. Secondly, we employ an investigation based on the social media analytics-based approach to uncover the antecedents of buyer experience and their nature of influence on MSMEs and SME suppliers. We found that buyer experience is influenced by sustainable orientation, management capabilities (such as crisis management and process innovation), and suppliers' technology capabilities (digital readiness, big data analytical capability).

Making agency theory work for supply chain relationships: a systematic review across four disciplines

Purpose

Contemporary supply chain relationships inherently rely on delegation of work between organizations and, thus, are subject to agency problems for which a wide range of governance mechanisms exist. This review of agency theory (AT), across four distinct fields, explains the connection between governance mechanisms and supply chain relationship types.

Design/methodology/approach

The study uses a systematic literature review (SLR) of articles using AT in a supply chain context from the operations and supply chain management, general management, marketing, and economics fields.

Findings

The authors categorize the governance mechanisms identified to create a typology of agency relationships in supply chains.

Research limitations/implications

The developed typology provides parsimonious theory on different forms of supply chain agency relationships and takes a step towards a “supply chain-oriented agency theory” explaining and predicting relationship types and governance in supply chains. Furthermore, a future research agenda calls for more accurate measuring of agency costs, to examine residual gains alongside residual losses, to take a dual-sided perspective of agency relations and to adopt AT to examine more complex supply networks.

Practical implications

The review provides a menu of governance mechanisms and describes situations under which these mechanisms could be deployed to guide managers when developing their supply chain relationships.

Originality/value

The first review to combine and elaborate views from four major disciplines using AT as a lens to supply chain relationships. Expanding the traditional set of governance mechanisms provides academics and practitioners with a bigger “menu” of options to consider.

An empirical investigation of governance mechanism choices in service outsourcing

Purpose

Drawing on transaction cost economics (TCE) theory and organizational information processing theory (OIPT), this study investigates how the alignments between the characteristics of service (i.e. task complexity and measurement ambiguity) and governance mechanisms (i.e. contract specificity and monitoring) can affect service performance.

Design/methodology/approach

The paper uses a rigorously designed survey to collect data from professionals who manage service outsourcing contracts in various industries. The respondent pool consists of randomly selected members of the Institute of Supply Management (ISM). The authors’ research question is analyzed using 261 completed and useable responses. Structural equation modeling is adopted to examine the data and test the proposed hypotheses.

Findings

The authors find that both contract specificity and monitoring have a positive impact on supplier performance. Further, for high task complexity services, contract specificity is more effective than monitoring, and for high measurement ambiguity services, the opposite is true. Moreover, the effect of contract specificity is mediated by monitoring.

Practical implications

Service outsourcers should use both contract specificity and monitoring in governing outsourced services and know that the former depends on the latter during execution. Facing resource constraints, they can prioritize crafting detailed contract provisions over implementing monitoring for highly complex services but consider monitoring as the primary governance tool in services whose outcomes are difficult to measure.

Originality/value

This study is the first to couple TCE with OPIT and consider the nature of outsourced services in the choice of governance mechanisms and empirically test the simultaneous effects of contract specificity and monitoring in the context of service outsourcing.

Value co-creation in humanitarian service triads: service provision for beneficiaries

Purpose

The purpose of this study is to understand how humanitarian service triad members contribute to value co-creation, and how they assess the continuity of services in humanitarian supply chains (HSCs) to ensure support for beneficiaries.

Design/methodology/approach

The study applied a qualitative methodology through a single case study of a humanitarian service triad composed of non-governmental organisations (NGOs), service providers and beneficiaries. Empirical data were collected through semi-structured interviews and observations.

Findings

The findings confirm that the humanitarian service triad perspective in HSCs allows better understanding of humanitarian assistance. The findings indicate six components grouped into a humanitarian service triad framework, namely: service design, service reachability, training serviceability, collaboration, synergy, ethical considerations and after-service care.

Research limitations/implications

This research contributes to understanding of humanitarian services provision by studying service triads in humanitarian settings. It also confirms the need for cooperation between practitioners in services provision. The findings are limited to the context of refugees in Turkey, specifically humanitarian service triad located in Izmir area.

Practical implications

The Humanitarian Service Triad Framework for Service Provision proposed in this paper can be used as a tool for policy makers and practitioners involved in service design in HSC contexts, stressing the need for including all the framework components in practice.

Originality/value

This study is one of the first to focus on a humanitarian service triad, which includes beneficiaries as triad members in long-term humanitarian service provision.

Beyond COVID-19 supply chain heroism, no dust settling yet – lessons learned at Rolls Royce about advancing risk management thinking

Purpose

While there is a rich body of risk management literature and while there have been valuable theoretical advancements on the specific impact of the COVID-19 pandemic on risks, this paper aims to posit that at least four more advancements are needed.

Design/methodology/approach

The co-author from Rolls Royce (RR) illustrates the risks experienced and risk management approaches taken in its manufacturing and supply chain operations both in the earlier stages of the pandemic as well as after the first year of the pandemic.

Findings

The COVID-19 pandemic offers a unique risk scenario that is beyond the scope of most existing risk management literature. The impact of the pandemic is very multi-faceted, not location specific but very global and experienced throughout the entire supply chain, across industries and over a much extended timeline with multiple time horizons. In manufacturing operations, there have been major instances of supply chain heroism in the first year of the pandemic and there is a lot more work ahead.

Originality/value

The authors' co-created paper enriches the perspective on COVID-19 research in manufacturing and supply chain operations by pointing at empirical opportunities, the need for more inter disciplinary research and the need to consider multiple time horizons.

Understanding the impact of supply-side decisions and practices on supply risk management

Purpose

In the era of market turbulence, sourcing specialists consistently face challenges to keep the availability of the material efficiently and effectively without any disruption. Sourcing strategies and planning have a huge impact on procurement performance. The purpose of this paper is to examine the relationships among different sourcing strategies and supply risk management and performance and additionally, the role of procurement practices in different strategic settings.

Design/methodology/approach

This is empirical research that collected data gathered from 223 procurement specialists working in various manufacturing firms through a structured questionnaire. Valid data is then analyzed through the structure equation modeling technique for hypotheses testing.

Findings

The findings of this study reveal that supplier development is a partial complementary mediator between multiple supplier strategy and supply-side risk management. While in a volatile business environment, strategic supplier strategy has a significant negative impact on supply-side risk management, and in this case supplier development acts as a competing partial mediator between the two. Contract management has resulted in an important mechanism to be deployed in a strategic sourcing strategy. It is also shown that supplier risk management is also associated with improved supply management performance.

Practical implications

This paper establishes an explanation of theoretical and practical understanding of sourcing strategies and empirically shows that supplier development is the appropriate mechanism to deal with supply-side risk management, which in turn positively impacts on supplier management performance.

Originality/value

This study contributes to supply chain risk management literature, especially in the context of strategic risk management and explains how a strategic decision can impact supply risk management. This provides a piece of empirical evidence regarding the use of well-established procurement practices to improve supply performance.

Designing, writing-up and reviewing case study research: an equifinality perspective

Purpose

Several researchers struggle with designing, writing-up and reviewing case study research, but constructing a template for describing and justifying methodological choices is – in contrast with quantitative research – undesirable due to the creative nature of qualitative research. Therefore, the purpose of this paper is to provide insight into the multitude of paths to rigorous case study research and promote rigorous case study research in the service community.

Design/methodology/approach

Based upon a review of seminal articles and textbooks, different paths to rigorous case study research are identified. Subsequently, these paths are compared with existing practices in case studies in service research published between March 2017 and April 2019.

Findings

Seminal articles and textbooks detail different paths to achieve rigor with regard to research purpose, design, data, analyses and write-up. Overall, the most popular paths in the service community are those proposed by Eisenhardt and Yin. Meanwhile, service researchers increasingly challenge the dichotomy between the inductive and deductive logic by choosing an abductive logic. Transparency and reflexivity are the main points of attention among service researchers doing case study research.

Originality/value

By providing insight into the multitude of paths to rigorous case study research along with their popularity in the service community, this paper helps service researchers to balance rigor and creativity when engaging in case study research. Additionally, this paper offers a framework for reviewing case study research in terms of rigor and creativity.

The influences of contract structure, contracting process, and service complexity on supplier performance

Purpose

To build a more comprehensive understanding of factors affecting the success of service contracting, the purpose of this paper is to investigate the influences of service complexity, contract structure and contracting process on the buyer-perceived supplier performance in business-to-business (B2B) services.

Design/methodology/approach

A research model is developed based on transaction cost economics and the research on service contracting. The model is tested by the survey data collected. Professional focus groups on LinkedIn are used to generate the list of potential respondents. The sample consists of 177 purchasing professionals from 25 countries.

Findings

The results indicate that three major contract dimensions and follow-up management practices positively influence buyer-perceived supplier performance. Furthermore, service complexity amplifies the effects of incentives designed in the contract and the buyer’s follow-up contract management on perceived supplier performance.

Research limitations/implications

The sample consists of respondents from 25 countries and provides good geographic coverage. However, the results should be generalized with caution because not all countries were represented equally.

Practical implications

The study suggests a framework and guidelines for purchasing managers to improve the design and management of service contracts to secure good performance from their supplier.

Originality/value

This paper contributes to understanding the performance-enhancing aspects of designing and monitoring service contracts in B2B contexts. It also adds to the knowledge of the role of service complexity in successful B2B service purchasing.

Effective contracting for high operational performance in projects

Purpose

The purpose of this paper is to examine combinations of contract clauses in order to ascertain which combinations correlate to high operational performance (OP).

Design/methodology/approach

Two hypotheses were formulated from contracting theory and tested on data collected from 45 projects. Fuzzy set qualitative comparative analysis was used and validated with multiple regression and simulation.

Findings

The hypotheses were tested to determine whether combinations of classical, relational, and/or associational contract clauses correlate to high OP. The results show that whereas high OP correlates to combinations of relational and associational contract clauses, classical and relational clauses should not be combined.

Research limitations/implications

Directions are proposed to guide future research in order to produce a more nuanced testing of contractual complementarity.

Practical implications

The managerial implications of the findings include a more thorough understanding of the use of contract clauses and of which clauses managers should combine to achieve high OP.

Originality/value

This study contributes to the theory of contractual incompleteness and complementarity, specifically in the context of project contracting. The analysis produced two theoretical implications: first, that better performing contracts are created when combining relational and associational contract clauses; and second, that in projects, relational and classical contract clauses are not complementary with regards to realizing high OP.