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Article
Publication date: 21 February 2018

Andreas H. Glas, Florian U. Henne and Michael Essig

Performance-based contracting (PBC) is a business model for the adaptive and innovative delivery of product-service systems. In PBC, the provider is paid according to the…

Abstract

Purpose

Performance-based contracting (PBC) is a business model for the adaptive and innovative delivery of product-service systems. In PBC, the provider is paid according to the service performance with the aim of providing monetary incentives to safeguard possible outcomes as much as possible for the PBC customer. Performance measurement and its management are crucial for PBC success and, in particular, for the pay-for-performance link. However, the literature on PBC performance management is rather sparse, and there has been no systematic review on the topic. Thus, the purpose of this paper is to fill that gap and to present a comprehensive and systematic review of performance measurement and management in the PBC context.

Design/methodology/approach

The paper builds on a literature review based on a sample of 102 subject-relevant articles from academic journals. The content analysis follows a two-step procedure. First, the articles are coded following a process-based research framework. Second, the content of each process step is assessed in a qualitative text analysis.

Findings

The results show a surprising scarcity of papers that explicitly address performance management topics in the context of PBC. Only the topics of performance specification and performance indicators are broadly addressed, whereas in all of the other areas, e.g., strategic alignment, data capture and reporting, only limited specific findings could be found.

Research limitations/implications

The paper concludes that future research on performance management in PBC should expand its theoretical framework and empirical efforts in four specific proposed directions.

Originality/value

The paper provides an up-to-date review that is focused on performance management and measurement in the emerging context of PBC.

Details

International Journal of Operations & Production Management, vol. 38 no. 11
Type: Research Article
ISSN: 0144-3577

Keywords

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Article
Publication date: 1 April 2017

Andreas H. Glas, Markus Schaupp and Michael Essig

In the EU and especially in Germany, public procurement is bound to a tight legislation that also sets and enforces strategic goals such as innovation or sustainability…

Abstract

In the EU and especially in Germany, public procurement is bound to a tight legislation that also sets and enforces strategic goals such as innovation or sustainability. The purpose of this paper is to analyze whether different archetypes of public procurement organizations (centralized or decentralized; state-level or local-level) perceive and implement strategic goals differently. A survey with data from 104 entities is used for this purpose. The findings reveal that the implementation of strategy is different in centralized or state-level organizations compared with decentralized or local organizations. Centralized organizations give goals such as innovation, transparency, and sustainability a high priority, while local ones highlight regional development and SME support

Details

Journal of Public Procurement, vol. 17 no. 4
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 5 June 2017

Andreas H. Glas and Florian C. Kleemann

Performance-based contracting (PBC) links pricing with performance objectives in service business relationships. Although interest in PBC has surged recently, there is…

Abstract

Purpose

Performance-based contracting (PBC) links pricing with performance objectives in service business relationships. Although interest in PBC has surged recently, there is still great uncertainty about the risks, opportunities and challenges. This paper aims to provide a deeper understanding of the contextual factors of PBC and how providers assess them.

Design/methodology/approach

This paper includes conducting a multiple-case study evaluation and analyzes data from 21 cases. Risks, opportunities and contextual factors are identified through interviews, and the case data are analyzed with several methods, including Borda count and cross-tabulation.

Findings

The results show that the most important factors of PBC are clear responsibilities, clear performance indicators, transparent measurement, cooperative culture and a precise utilization profile of core assets. Surprisingly, incentives are of minor perceived relevance. The analysis supports the differentiation of PBC into two subcategories: lean (low integrated) and customized (high integrated) PBC.

Research limitations/implications

While many studies stress the uniqueness of PBC in accordance with the “one-size-does-not-fit-all” mantra, this research differentiates the standardized PBC from a customized one. The findings face the limitations of case study research and qualitative data analysis in general.

Practical implications

Practitioners are provided with guidance to develop either a customized or a standardized PBC.

Originality/value

Previously, broader empirical insights have still been rare; thus, this paper contributes to the PBC literature, as it provides data from multiple cross-industry cases. The findings (e.g. the minor relevance of incentives) stand in contrast to parts of the academic literature and contribute also to the wider service management field.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 5
Type: Research Article
ISSN: 0885-8624

Keywords

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Article
Publication date: 13 April 2015

Michael Essig, Andreas H. Glas and Josef Gutsmiedl

Given the high importance of information systems for procurement, surprisingly there have been little efforts to analyze the process and the relevant reasons for the…

Abstract

Purpose

Given the high importance of information systems for procurement, surprisingly there have been little efforts to analyze the process and the relevant reasons for the procurement decision of such systems from a stakeholder perspective. The purpose of this paper is to explore these aspects in the context of low-value (C-)parts.

Design/methodology/approach

Research is based on a case study in a pre-fabricator company in Germany and analyzes the process to procure a system for sourcing low-value parts.

Findings

As a finding, the procurement process and decision attributes have been integrated into a framework which supports corporate decision-making considering the procurement reasons of all involved stakeholders (internal departments, external customers and suppliers).

Research limitations/implications

Research is based on case study analysis. Findings are specific to case companies and the environment in which they operate. The framework should be tested further in different contexts.

Practical implications

The developed decision frame supports the evaluation of different sourcing information systems, including clearly measurable criteria but also qualitative or company-strategic decision attributes.

Originality/value

The combination of financial and other perspectives (operations, information technology (IT)-administration, system users, etc.), is used to evolve a robust ex-ante instrument for supporting buying decisions for procurement information systems. The case description also illustrates the findings and develops new insights about stakeholders and buying groups decision-making for information systems.

Details

Journal of Enterprise Information Management, vol. 28 no. 3
Type: Research Article
ISSN: 1741-0398

Keywords

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Article
Publication date: 1 March 2012

Florian C. Kleemann, Andreas Glas and Michael Essig

Faced with reduced budgets and rising service expectations, public authorities are increasingly cooperating with private businesses. This paper examines an alternative…

Abstract

Faced with reduced budgets and rising service expectations, public authorities are increasingly cooperating with private businesses. This paper examines an alternative procurement- and service delivery concept, Performance-based Logistics (PBL). It has been introduced by the US and UK armed forces. However, other nations, such as Germany, are still reluctant to follow. This article has two aims: First, to identify the conceptual characteristics of PBL, and second, to analyze potential reasons why although PBL is popular in some nations, others are so reluctant to introduce it. This will be done using a mixed method approach. The concept of PBL will be introduced by deductively developing a conceptual model of PBL using a business model framework. The analysis of PBL application will be performed using an in-depth case study from the German defense sector. This will be framed by a literature review and concluded by managerial recommendations.

Details

Journal of Public Procurement, vol. 12 no. 2
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 6 March 2019

Andreas Herbert Glas, Clarissa Raithel and Michael Essig

In performance-based contracting (PBC), the provider is paid according to outcomes for its customer, and therefore assumes responsibility for customer risks. Previous…

Abstract

Purpose

In performance-based contracting (PBC), the provider is paid according to outcomes for its customer, and therefore assumes responsibility for customer risks. Previous studies have revealed that risk exposure is a fundamental influencing factor. Thus, the purpose of this paper is to analyze how previous experience with PBC influences the perception of risks.

Design/methodology/approach

This research is based on a cross-industry study. Factor analysis and discriminant analysis are used to reveal to what extent experience influences PBC risk factors.

Findings

It is confirmed that risk perception differs significantly according to previous PBC experience. Thus, significant learning effects are identified in the PBC context.

Research limitations/implications

Experiential learning in PBC can explain entry barriers to PBC faced by new buyers with low levels of experience. Although the internal validity of the sample is high, as all analyzed cases represent PBC buying companies, there are limitations related to external validity.

Practical implications

To manage risks this study provides a structure (12 risks, 3 aggregated factors), which could be used for risk evaluation and strategic and operative risk management. Other implications recommend, e.g., to collaborate with a PBC “veteran” when entering into PBC, as this boosts the level of PBC-related experience.

Originality/value

The findings of this study contribute to identifying PBC risks through the explorative statistical assessment of these PBC risk factors.

Details

International Journal of Productivity and Performance Management, vol. 68 no. 6
Type: Research Article
ISSN: 1741-0401

Keywords

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Article
Publication date: 2 February 2018

Andreas Herbert Glas and Michael Eßig

One of the major methods to promote small- and medium-sized enterprises (SMEs) in public procurement is to split tenders into lots. The basic assumption is that SMEs have…

Abstract

Purpose

One of the major methods to promote small- and medium-sized enterprises (SMEs) in public procurement is to split tenders into lots. The basic assumption is that SMEs have better chances of awarding smaller or more specialized contracts. This paper aims to investigate whether this widely accepted assumption is correct.

Design/methodology/approach

This article examines four hypotheses about the factors that influence SME success in public procurement. The empirical analysis uses real data from 380 contract award files and logistic regression to test the hypotheses.

Findings

The results show that a higher number of lots in a tender does not significantly increase the success rate of SMEs, and other factors, including the type of public procurement procedure, the number of participating companies and the overall tender volume, significantly influence SME success.

Research limitations/implications

There are several implications for theory and practice, including the need to further strengthen the academic evaluation of public procurement policies, the suggestion to implement SME support instruments in public legislation with the utmost caution in practice and the managerial indication that SME competitiveness is more relevant to their success in public bidding than public support policies.

Originality/value

The findings stand in fundamental contrast to the legal regulations, which postulate that lots are the driving force for SME promotion in public procurement. This is also in contrast to public procurement policies that, for many years, have recommended splitting contracts into smaller lots to become SME-friendly.

Details

Supply Chain Management: An International Journal, vol. 23 no. 1
Type: Research Article
ISSN: 1359-8546

Keywords

Content available
Article
Publication date: 20 April 2018

Andreas Herbert Glas

The military of today depends on the availability and readiness of high-technology weapon systems. As the military often has to focus on core tasks (the usage of systems)…

Abstract

Purpose

The military of today depends on the availability and readiness of high-technology weapon systems. As the military often has to focus on core tasks (the usage of systems), logistics and support tasks are outsourced to industry, which means that industrial suppliers gain importance for making weapon systems available and mission ready. However, companies are profit-maximizing and invest their best resources in the most promising business areas, which might be clients other than the (domestic) military customer. This raises the question of how the military can ensure that the defense industry provides the best performance: preferential treatment for the military. The purpose of this study is to investigate preferential treatment in the specific context of defense.

Design/methodology/approach

This paper reports on the examination of factors influencing preferential treatment for the military. The analysis uses structural equation modeling and data from a sample of German defense suppliers.

Findings

The results show that the perceived customer attractiveness has a strong effect on preferential customer treatment. Attractiveness is influenced by trust, commitment and a comparison with other customers.

Research limitations/implications

There are several implications for defense theory and practice, including the need for further consideration of relational in contrast to transactional practices in military–industrial supply collaboration, as these seem highly relevant for getting the best resources for producing and maintaining weapon systems. In addition, increasing customer attractiveness, in particular if the military lacks a domestic defense industry base, is proposed.

Originality/value

The findings are based on a focus sample of only defense suppliers. This paper transfers the industrial discussion about the buyer–supplier relationships and preferential customer treatment to the defense logistics research context.

Details

Journal of Defense Analytics and Logistics, vol. 1 no. 2
Type: Research Article
ISSN: 2399-6439

Keywords

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Article
Publication date: 16 February 2021

Vieri Maestrini, Andrea Stefano Patrucco, Davide Luzzini, Federico Caniato and Paolo Maccarrone

Grounding on resource orchestration theory, this paper aims to study the relationship between the way buying companies use their supplier performance measurement systems…

Abstract

Purpose

Grounding on resource orchestration theory, this paper aims to study the relationship between the way buying companies use their supplier performance measurement systems and the performance improvements obtained from suppliers, with relationship trust identified as a mediator in the previous link.

Design/methodology/approach

The authors design a conceptual model and test it through structural equation modelling on a final sample of 147 buyer-supplier responses, collected by means of a dyadic survey.

Findings

Results suggest that the buyer company may achieve the most by balancing a diagnostic and interactive use of the measurement system, as they are both positively related to supplier performance improvement. Furthermore, relationship trust acts as a mediator in case of the interactive use, but not for the diagnostic. This type of use negatively affects relationship trust, due to its mechanistic use in the buyer-supplier relationship.

Originality/value

The authors’ results contribute to the current academic debate about supplier performance measurement system design and use by analyzing the impact of different supplier performance measurement system uses, and highlighting their relative impact on relationship trust and supplier performance improvement. From a methodological perspective, adopting a dyadic data collection process increases the robustness of the findings.

Details

The International Journal of Logistics Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0957-4093

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Article
Publication date: 8 March 2013

Andreas Glas, Erik Hofmann and Michael Eßig

The purpose of this research is to analyse military logistics providing a decision support instrument for contracting in defence supply chains.

Abstract

Purpose

The purpose of this research is to analyse military logistics providing a decision support instrument for contracting in defence supply chains.

Design/methodology/approach

This instrument – the Performance‐Based Logistics (PBL) portfolio – is developed following the contingency approach. Qualitative interviews and illustrative examples from Germany, Austria and Switzerland are used to validate the portfolio.

Findings

The proposed portfolio examines a military demand in respect of its required effectiveness (robustness and resilience), and the suppliers' ability to influence efficiency (forecast and supply risk). In combination, the contingencies are used to recommend three alternative types of PBL contracting.

Research limitations/implications

This paper is based on conceptual work with illustrative case examples. Therefore, although the authors believe that the PBL portfolio provides useful guidance for further research, the empirical applicability of this instrument must be proven.

Originality/value

The research on PBL is gaining importance, but still there remains a deficiency of theoretical grounding and management instruments. This study is a first approach to use the contingency framework for developing such an instrument. The value of the PBL portfolio lies in supporting normative decision making for contracting military supply.

Details

International Journal of Physical Distribution & Logistics Management, vol. 43 no. 2
Type: Research Article
ISSN: 0960-0035

Keywords

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