Showing papers on "Procurement published in 1996"

Eight imperatives for the new it organization

Abstract: In an overview of the future role of the IT organization, the authors examine the business and technological changes that are effecting change in many IT units. There are four major process changes in the way firms operate ? reengineering operational processes, reengineering support processes, rethinking managerial information flows, and redesigning network processes ? that all have a major impact on the IT unit. A distributed computing environment, new development software methods, capabilities like the Internet and other networks, new entrants in the computer industry, and outsourcing are the technological changes affecting the IT organization. The authors cite eight imperatives in which IT organizations must excel in order to succeed: Achieve two-way strategic alignment. Management and IT must work together to ensure that their initiatives are aligned. Develop effective relationships with line management. Communication between IT and line personnel will ensure integration of business and technology capabilities. Deliver and implement new systems. Systems delivery will include not only development but also procurement and integration. Build and manage infrastructure. IT units must develop an architecture, establish standards, communicate the value of the infrastructure, and operate the increasingly complex infrastructure. Reskill the IT organization. New skills ? not just technical skills but business skills ? will be needed. Manage vendor partnerships. IT managers must be informed buyers and negotiators. Build high performance. The IT unit must meet increasingly demanding performance goals. Redesign and manage the federal IT organization. Firms must establish the placement of IT decision-making power and the distribution of managerial responsibilities. Rockart et al. also examine the new role of IT management in ensuring that all line managers understand the potential of IT and how to use it effectively and that business strategies are effectively implemented. Success is dependent on line managers' response in planning and implementing new IT-based processes.

Why is the laboratory an afterthought for managed care organizations

Abstract: Market forces have dramatically influenced the environment in which healthcare is delivered, but these changes do not need to be interpreted negatively by community laboratorians. Only total vertical integration of laboratory medicine can control episode-of-care cost. Opportunities also exist for horizontal integration with community partners to provide geographical coverage and to compete favorably for managed care contracts. Lowering cost through "economies of scale" may apply to the procurement of supplies and equipment, but the delivery of services must be considered in the context of their overall effect on episode-of-care cost. Laboratory services may make up 5% of a hospital's budget but leverage 60-70% of all critical decision-making such as admittance, discharge, and medication. Laboratory outreach can help the medical center's financial stability by: (a) providing tests and service that can reduce or avoid a hospital stay; (b) using the additional volume of testing to distribute existing fixed costs and lower unit cost; and (c) adding revenue as a direct contribution to margin. To successfully compete for contracted managed care services, the laboratory must network with other providers to demonstrate comprehensive access and capacity. Community hospital laboratories perform 50% of all laboratory tests in this country and have adequate excess capacity to fulfill the remaining community needs.

CSFs in Competitive Tendering and Negotiation Model for BOT Projects

Abstract: The build-operate-transfer (BOT) model of project development is implemented through the award of a concession to a private sector consortium for the financing, building, and operating of infrastructure projects. Project promoters must, however, realize that the process of winning a major BOT contract in a competitive tender is full of uncertainties and risks. This paper shows that the financial and technical strength of the consortium is regarded as the most important critical success factor in a BOT tender. It also presents the competitive tendering and negotiation model for BOT promoters involved in tendering BOT projects. BOT promoters must give special and continued attention to the model in order to develop a superior proposal that will increase their chances of securing a profitable BOT contract.

Organizational buying behavior: past performance and future expectations

Abstract: Reviews the academic research conducted on organizational buying behavior since the publication of Sheth’s model of industrial buying behavior in 1973. Discovers an impressive amount of research primarily focused on the decision‐making process, environmental influences and conflict resolution in joint decisions. Also, there is an emerging area of research on supply‐chain partnering and the use of information technology such as networked computing and online data services. States that there is a surplus of empirical studies using descriptive methods and that more analytical approaches on the one hand, and conceptual constructs on the other. Focusses on future academic research in organizational buying behavior. Concludes that purchasing function is dramatically shifting from the transaction‐oriented to the relational‐oriented philosophy, and it is also shifting from domestic to global sourcing. This will change the role, processes and strategies of procurement and, therefore, new research opportunities will emerge for academic scholars. These include understanding suppliers as customers; cross‐functional supplier teaming; economic value of supplier equity; supply experience curves; hub and spoke organization; bonding with suppliers; global sourcing processes; cross‐cultural values in purchasing; cross‐national rules and regulations; and service procurement.

Forecasting and Inventory Management of Short Life-Cycle Products

Abstract: In this paper, we provide an integrated framework for forecasting and inventory management of short life-cycle products. The literature on forecasting and inventory management does not adequately address issues relating to short life-cycle products. We first propose a growth model that can be used to obtain accurate monthly forecasts for the entire life cycle of the product. The model avoids limiting data requirements of traditional methods. Instead, it extracts relevant information from past product histories and utilizes the information on total life-cycle sales and the peak sales timing. Using disguised demand data from a personal computer PC manufacturer, we validate the model. Next, we model the inventory management problem for the short life-cycle environment. The uncertainty in demand is modeled through the uncertainty in the realized values of the parameters of the forecasting model. The high cost of terminal inventory, shortages, and rapidly changing procurement costs are all included in the model. Extensions to the basic model are also developed. Using optimal control theory, we derive a solution that provides valuable information on procurement cutoff time and terminal service levels. A detailed example explains the characteristics of the policy and its relevance in decision making. Many of the issues covered in the models were brought to our attention while implementing a forecasting model at a PC manufacturer. The benchmark monthly forecasts and the associated inventory levels provide information that can be very helpful in planning and controlling marketing, sales, and production.

Selecting Design-Build: Public and Private Sector Owner Attitudes

Abstract: Modern owners of constructed facilities are increasingly investigating a variety of alternative procurement methods. These methods include design-build, turnkey, and construction management. To effectively service this market-driven expansion of project delivery strategies in the construction community, a fundamental understanding of owner attitudes is required. This paper discusses results of research conducted to address owners' attitudes toward one specific alternative contracting method, design-build. A tremendous growth in design-build and limited existence of documented research on owner's attitudes toward design-build necessitate a focus on this particular delivery strategy. Primary design-build selection factors identified and analyzed include establishing cost, reducing cost, establishing schedule, shortening duration, reducing claims, large project size/complexity, and constructability/innovation. Additionally, a comparison of private and public owner design-build attitudes is documented.

Strategic planning in construction companies

Abstract: Strategic planning is an essential function of senior management in any business firm. Planning involves the firm's behavior in a competitive market and adaptation of the company's resources towards the selected market strategy. This paper presents a methodological procedure for strategic planning in a construction company. This procedure consists of the following stages. First, examine the company's mission. The mission reflects the owners' views with regard to the company's scope of activities and objectives. Second, survey the company's business environment. The environment includes both general economic factors that affect all types of business activity and additional factors, specific to the construction sector. This survey should reveal the specific “packages” of prospective project opportunities and highlight potential threats to a company's orderly activity. Third, analyze the company's main resources. The main resources in this respect include the construction capacity, the procurement system, th...

Buyer-seller relationships in the procurement of logistical services

Abstract: This study presents a two-phase model of interfirm exchange in the logistical supply industry. The first phase uses transaction cost analysis to identify conditions leading to market-based transactions, unilateral agreements, and bilateral alliances. The second phase illustrates how formal controls and relational norms yield performance in market, unilateral, and bilateral governance systems. A test of the model with data from 189 logistical supply relationships suggests that bilateral alliances emerge through the interaction of user investments in the logistics supplier, supplier logistical services, and marketplace uncertainty. Bilateral alliances attain desired outcomes through participative management and flexibility. By contrast, market-based transactions yield desired outcomes through formalization and solidarity. Unilateral agreements gain performance through formalization, participation, information sharing, and solidarity. Implications for logistics management and theory are discussed.

Product remanufacturing and disposal: A numerical comparison of alternative control strategies

Abstract: textIn this paper we consider a single-product, single-echelon production and inventory system with product returns, product remanufacturing, and product disposal. For this system we consider three different procurement and inventory

The Impact of Compulsory Competitive Tendering on Refuse Collection Services

Abstract: Compulsory competitive tendering (CCT) of blue-collar services such as refuse collection and street cleaning was introduced in the UK by the Local Government Act 1988. This law, imposed by central government, obliged elected local authorities to expose specific services to competitive tendering at fixed intervals and subject to national guidelines. Whilst the issue of competitive tendering of public services has generated a substantial literature over recent years (see Domberger and Rimmer (1994) for a review), there have been relatively few studies of compulsory competitive tendering.2 This paper uses a dataset on refuse collection costs and services for the 365 English local authorities over the period 1984-94. It follows on from Szymanski and Wilkins (1993) who analysed the same database using data up until 1988

A transaction cost analysis of quality, traceability and animal welfare issues in UK beef retailing

Abstract: Presents a study of the procurement of beef by UK supermarkets. Investigates the hypothesis that a retailer’s choice of beef supplier is influenced by the transaction costs incurred in different supply relationships. Measures the relative importance of the transaction costs incurred by retailers as a result of concerns over quality consistency, traceability and farm animal welfare using conjoint analysis. Data for the conjoint analysis were collected through a postal survey of UK supermarket retailers. From the results, suggests that the information and monitoring costs arising from the need to ensure that beef supplies are of a consistent quality are relatively important influences on the choice of supplier, followed by the traceability of cattle, whether the beef originates from a farm assurance scheme and the price paid by the retailer. Also analyses procurement preferences of individual respondents, revealing some interesting differences between the retailers. Concludes that strategic alliance partnerships between retailers, processors and marketing groups composed of farmers may emerge as the method of vertical co‐ordination which minimizes transaction costs.

Contracting for Services in a Decentralized System

Abstract: Public management is changing rapidly due to the extensive privatization of public services through government contracting wvith private organizations and the devolution of the funding and administration of government programs to states and localities. These trends are spurred by a belief in the salutary effects of market competition and local decision making on public services. This article presents research on contracting for substance abuse services in North Carolina that indicates that privatization and devolution may not create competitive markets without substantial public intervention. Services in this state are very decentralized with a prominent administrative role for county authorities. Little formal competition exists for contracts. Government purchasing officials-contrary to the competitive market model-rely heavily on trust and long-standing relationships with private service agencies to guide contracting decisions. Public purchasing officials generally lack an adequate number of local agencies due to low funding and localized markets. Program innovation tends to occur through external public and private grants, and the ongoing evaluation of programs and their outcomes is often quite difficult. The article concludes with policy recommendations to improve the effectiveness and competitiveness of contracted services. The devolution of government programs to state and local communities and the privatization of public services, especially through contracting out services to private service organizations, are central issues of contemporary public management. Proponents of devolution argue that local decision making will allow public services to be more responsive to community needs and thus provide more efficient, cost-effective services. Advocates of privatization contend that contracting will lower the cost of public services through competition. Both devolution and privatization tap into the widespread disaffection with government programs among the American citizenry. 277/Journal of Public Administration Research and Theory Financial support from the Arts and Sciences Research Council and the Center for the Study of Philanthropy and Voluntarism at Duke University is gratefully acknowledged. The authors are indebted to Brint Milward and Anthony Mulvihill for comments on earlier drafts of this article. J-PART 6(1996):2:277-296 This content downloaded from 157.55.39.4 on Sat, 10 Sep 2016 05:09:17 UTC All use subject to http://about.jstor.org/terms Symposium on the Hollow State Given the importance of these two major trends, an analysis of contracting in North Carolina is particularly timely. Contracting for social and health services in North Carolina occurs within a decentralized structure lacking strong centralized control at the state level. Forty-one area authorities have jurisdiction over service procurement and delivery; the geographic boundaries of these areas tend to create localized contracting markets that vary considerably. The basic argument we make in this article runs counter to the prevailing wisdom about devolution and privatization. In decentralized service systems with local contracting markets government officials rely heavily on trust and long-standing ties and relationships to guide contracting decisions. Little formal competition exists, in part due to serious obstacles to the development of a competitive market on the supply side. Faced with financial and political obstacles to change, innovation in services tends to occur as a result of federal, state, or foundation grants. In this article we focus on the procurement of substance abuse services in North Carolina by local area authorities. After describing the history of the evolution of substance abuse services, we examine key aspects of the purchaser-supplier relationship and its effect on the configuration of local services. In subsequent section we discuss the absence of competition in contracted services and the implications of important trends in health and social policy on contracted services in North Carolina.

Information Systems Outsourcing Decision Making: A Managerial Approach

Abstract: From the Book: Organizations are increasingly considering outsourcing part or all of their information systems activities to external suppliers. Some client organizations have very high expectations of outsourcing, fed by positive media attention and eloquent suppliers. Other clients doubt whether the improvements attributed to outsourcing will arise and fear that they will become overly dependent on external suppliers. The main conclusion of the research presented in this book is that outsourcing only leads to the improvements decision makers expect if specific conditions are fulfilled, and that it may otherwise even appear to be detrimental to the organization. Improvements from outsourcing are never achieved automatically but must be supervised, and enforced if necessary, by the client organization. The question of outsourcing is an inherent part of organizing the IS function of any organization. It is an important decision, that can have-reaching short and long term consequences, both positive and negative. The management of any organization should, when (re)organizing the IS function, decide what part of the IS function is to be performed internally and what part could be better outsourced to external suppliers. IS outsourcing decisions should be taken with care, as today the IS function plays an important role in most organisations. The IS function is the aggregate of activities and resources needed to establish and sustain the information systems an organization needs. The IS function often takes up an increasingly large part of an organization's expenditures. Nowadays almost every organization depends to some extent on computerized information systems and the IS function is often of strategic importance to the organization. Furthermore the strategy of an organization can be supported or limited by the possibilities of information technology. Innovative information systems can even support and pave the way for new products or services. The question of who is to provide these information systems is therefore very important. The research described in this book is intended to support the management of organizations that are considering or have chosen to outsource. A model for IS outsourcing decision-making is provided in this book. Managers can use this model during analysis to decide whether outsourcing will be sensible and beneficial for their organization. The model is also intended to be used during the supplier selection process and to design and manage the outsourcing relationship. The model is based upon established organizational theories and case study research. The model is described in chapter 5, which can be read and used independently from the other chapters of this book. Recommendations for IS suppliers are given which can used when developing marketing strategies and strategies for the acquisition and tendering process. The result of this research is intended to be used in practice, I therefore look forward to receiving comments and suggestions, and I am willing to answer questions from practitioners implementing the guidelines provided in this book.

Transaction costs and slaughter cattle procurement: Processors' selection of supply channels

Abstract: This article investigates the hypothesis that different supply channels impose different types (and levels of) transaction costs on beef processors in the United Kingdom. The choice of supply channel is therefore influenced by these transaction costs. Recent food safety legislation and increasing consumer concerns over farm animal welfare may have altered the transaction costs arising from different supply channels. Conjoint analysis is used to measure the relative importance of selected transaction costs in a processor's procurement decision. A survey of UK beef processing firms is used to collect data for the conjoint analysis. The results suggest that the monitoring costs arising from the traceability of cattle to the farm of origin are particularly important. The implications for vertical coordination in the beef marketing chain are discussed. © 1996 John Wiley & Sons, Inc.

Cost-reducing investment, optimal procurement and implementation by auctions

Abstract: The authors analyze a model in which potential suppliers invest in research and development (R&D) and then compete for a procurement contract from a buyer. If the buyer is able to commit to a procurement mechanism before the investment stage, the full-information solution can be uniquely implemented by first-price and second-price sealed-bid auction mechanisms when the R&D technology exhibits decreasing returns to scale. If the procurement mechanisms and the levels of investment are chosen simultaneously, the full-information solution cannot be implemented. The authors discuss how the second-best equilibrium contract varies with the number of suppliers. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Machine, method and medium for dynamic optimization for resource allocation

Abstract: A machine, method and medium for allocating resources over given time periods. Various requests (e.g., from customers) are received for products and/or services, and a preferred scheme for allocating resources, over a plurality of time periods, to provide the requested products and/or services, is determined. Marketing, procurement and production processes are taken into account in the analysis. The end result is a set of systems indicating how the resources should be deployed over the various time periods to satisfy customer demand.

Pre‐construction project partnering: developing the process

Abstract: The use of subcontracting within the modern construction industry has become commonplace with many main contractors only undertaking the management and co‐ordination activities. The reliance on subcontractors has put much stress on the subcontractor — main contractor relationship. As main contractors have realized that the greatest potential for cost saving lies with subcontractors, the prevalence of unfair contract conditions, dutch auctioning and other onerous practices has increased. This paper describes a procurement approach, utilizing limited competition, developed by a top UK main contractors (MC) in order to improve its relationships with subcontractors. The approach, termed semi‐project partnering, was implemented on a commercial development. The approach was supported by research which identified: what MC's employees want from subcontractors; what subcontractors want from main contractors; and a study to benchmark MC's performance with that of other main contractors. It was concluded that this approach offers a number of benefits for the client, main contractor, partnering subcontractors and professional consultants. These included an improved team approach; an improved understanding of the project; more compliant subcontractor bids; better/closer relationships; more reliable programming; less confrontation; and lower tendering costs. It was also identified through debriefing subcontractors that sub‐contractors were quoting a10% lower than normal due to this approach.

Outsourcing in the private and public sectors: an unpredictable IT strategy

Abstract: IT outsourcing has grown considerably in the private sector, with IT software and service suppliers reporting increased revenues. Similarly in the public sector, the introduction of market testing and compulsory competitive tendering (CCT) will inevitably lead to the contracting-out of significant levels of IT work. This may lead to the demise of some public sector IT departments where external bids are favoured over those offered by the in-house team. This paper is divided into two sections. First, it considers some of the relevant literature on IT outsourcing in both private and public sector British and American organizations. It draws together important themes which explain the attraction of IT outsourcing to senior executives. Second, it introduces the results from a questionnaire survey of nearly 200 UK private and public sector organizations on IT outsourcing. In particular it looks at the proportion of organizations that claims to use outsourcing, how contracts are negotiated and the type of IT solutions preferred by IT managers. The central argument is that IT outsourcing poses significant challenges to both private and public sector organizations and is not simply a quick-fix panacea. Moreover, public sector IT managers would do well to analyse some of the less favourable reports from private sector outsourcing as they gear themselves up for CCT in the months ahead.

Reengineering the Food Supply Chain: The ECR Initiative in the Grocery Industry

Abstract: The food supply chain moves food from the farm gate to the consumer, transforming raw commodities into products that can be conveniently purchased, prepared, and consumed. The chain is comprised of food procurement and manufacturing companies, wholesale/distribution firms, brokers, food service firms and restaurants, and retail grocery firms. It is remarkable for its efficiency, diversity of firm sizes and types, and responsiveness to consumers. "Reengineering" is the radical redesign and restructuring of business processes (Hammer). In place of incremental adjustments to changing conditions and opportunities, it calls for a rethinking of business activities, information flows, and organizational forms from a whole systems perspective. Reengineering is evident throughout the food supply chain and the broader food system, but perhaps the most comprehensive reengineering effort is the grocery industry's Efficient Consumer Response (ECR) initiative. This industry-wide effort is bringing together food manufacturers, distributors, brokers, and retailers. The aim is to increase efficiency through new forms of cooperation and coordination that are often based on

Application of bot system for infrastructure projects in china

Abstract: The Build-Operate-Transfer (BOT) concept has now become an accepted means of securing private-sector involvement in infrastructure projects. The popularity of BOT mechanisms is growing in the developing countries, which offers increasing investment, construction, procurement, and other business opportunities for the investors from developed countries. This paper identifies the major areas where BOT systems are applied in China. Market potential for absorbing foreign investment involved in a BOT system has been evaluated. In particular, the market prospects for power, transportation, and water resource projects are investigated. The study also identifies the enjoyable benefits, other favorable conditions, and key factors affecting the application of BOT in the Chinese infrastructure projects. The government policies on taxation, foreign exchange, and favorable conditions to attract foreign investment to this application are examined. The applicable investment patterns and the procedures of adopting BOT have been investigated, and are presented to assist foreign investors planning to develop infrastructure projects in China.

The economic theory of a military draft reconsidered

Abstract: During the debate over conscription in the United States over 20 years ago, most economists argued that a volunteer force was unequivocally more efficient than a draft force. But Dwight Lee and Richard McKenzie recently demonstrated that under certain conditions conscription will be more efficient. However, Lee and McKenzie omitted some important determinants of the relative efficiency of a volunteer system from their analysis. Using their framework as a starting point, this paper develops a more comprehensive model of optimal military manpower procurement system choice. The key findings are that (1) productivity considerations tend to make the volunteer force the more efficient force and recent trends in technology have arguably accentuated this tendency but (2) the larger is the level, and the elasticity, of demand for defense, the more likely the draft is to be the optimal procurement method.

Mitigating Procurement Hazards in the Context of Innovation

Abstract: This paper extends the transaction cost economics framework to examine the contractual hazards that arise in the course of technological innovation. We identify three main strategic hazards related to future technological opportunities that may develop in business transactions: loss of technological pacing possibilities on the technological frontier, loss of technological control at or behind the frontier, and design omissions. In examining these hazards we focus on the increasingly common phenomenon of vertically integrated firms supplying downstream competitors. We then analyze how constellations of safeguards, particularly relational safeguards, can augment transaction-specific safeguards in many instances to ensure high-powered incentives are maintained. We also consider under what conditions downstream divestiture is a desirable economizing option. Supportive illustrations are drawn from the desktop laser printer and telecommunications industries.

The Government Procurement Agreement: Implications of Economic Theory

Abstract: This paper analyzes the provisions of the new Agreement on Government Procurement (GPA), drawing insights from trade theory and recent developments in the economics of information and law. A central conclusion is that in a world where imperfectly informed procurers purchase from imperfectly competitive firms on behalf of imperfectly informed tax-payers, it is not easy to devise rules which would be optimal in all situations. Nevertheless, the non-discriminatory provisions of the GPA seem to approximate closely the rules which would maximize global welfare. A significant benefit of the GPA is in helping to overcome national agency problems in procurement by creating mechanisms for reciprocal international monitoring supported by multilateral enforcement. There is, however, scope for improvement. First, the GPA does not equip bidders for government contracts to vault over trade restrictions, so the creation of genuine international competition for government procurement remains crucially dependent on the liberalization of trade. Secondly, weaknesses remain in the enforcement mechanism. These include the low level of compensation to a successful challenger, the absence of restrictions on settlements, and the lack of provision for challenge and review of bail-outs. The paper proposes certain improvements. (This abstract was borrowed from another version of this item.)