Procurement

About: Procurement is a research topic. Over the lifetime, 25669 publications have been published within this topic receiving 334145 citations.

The Simple Micro-Economics of Public-Private Partnerships

Abstract: We build a unified theoretical framework to analyze the main incentive issues in Public Private Partnerships (PPPs) and the shape of optimal contracts in those contexts. We present a basic model of procurement in a multitask environment in which a risk-averse agent chooses unobservable efforts in cost reduction and quality improvement. We begin by studying the effect on incentives and risk transfer of bundling building and operation into a single contract, allowing for different assumptions on the contractual framework and the quality of the information held by the government. We then extend the basic model in several directions. We consider the factors that affect the optimal allocation of demand risk and their implications for the use of user charges and the choice of contract length. We study the relationship between the operator and its financiers and the impact of private finance. We discuss the trade-off between incentive and flexibility in long-term PPP agreements and the dynamics of PPP contracts, including cost overruns. We also consider how the institutional environment, and specifically the risk of regulatory opportunism, affects contract design and incentives. We conclude with some policy implications on the desirability of PPPs.

A research agenda for supply chain and business management thinking

Abstract: Summarises the key learning points in supply and value chain mapping. It demonstrates that there is no best way to manage supply chains. Concludes that the key to success in business is based on recognising the types of supply chains that exist and aligning strategy and operational practice with the specific properties of the supply chain that the company is positioned within. It is argued that some supply chain structures do not lend themselves to effective value appropriation, so that entrepreneurial rents may not be achievable in all circumstances. It is argued, in conclusion, that this way of thinking about supply chains and supply innovation – referred to here as procurement and supply competence – is underdeveloped in business management thinking.

Transantiago: a tale of two cities

Abstract: The government decided to revamp the whole public transport system of Santiago integrating the much reputed public underground and the private buses based on a structure of trunk and feeder services, a modern bus fleet, a touchless smart payment card, a centralized control system, and franchised the new bus structure through an international call for tenders to 10 national and international firms. The new integrated public transport system known as Transantiago started operating on February 10, 2007. Unfortunately, the system has presented severe problems since then alienating most of its users and heavily damaging the government approval rates and reputation. This paper focuses first on how Transantiago was planned, how the new set of services was designed, how they were grouped into common tendering units and how demand uncertainties were managed during this process. The business model is discussed and the transition planned between both transit systems is introduced. The paper then discusses the implementation of the system and ends with suggestions for the Transantiago authorities and lessons to be learned from this traumatic process. (a) For the covering entry of this conference, please see ITRD abstract no. E215911.

Exact algorithms for procurement problems under a total quantity discount structure

Abstract: In this paper, we study the procurement problem faced by a buyer who needs to purchase a variety of goods from suppliers applying a so-called total quantity discount policy. This policy implies that every supplier announces a number of volume intervals and that the volume interval in which the total amount ordered lies determines the discount. Moreover, the discounted prices apply to all goods bought from the supplier, not only to those goods exceeding the volume threshold. We refer to this cost-minimization problem as the total quantity discount (TQD) problem. We give a mathematical formulation for this problem and argue that not only it is NP-hard, but also that there exists no polynomialtime approximation algorithm with a constant ratio (unless P = NP ). Apart from the basic form of the TQD problem, we describe four variants. In a first variant, the market share that one or more suppliers can obtain is constrained. Another variant allows the buyer to procure more goods than strictly needed, in order to reach a lower total cost. We also consider a setting where the buyer needs to pay a disposal cost for the extra goods bought. In a third variant, the number of winning suppliers is limited, both in general and per product. Finally, we investigate a multi-period variant, where the buyer not only needs to decide what goods to buy from what supplier, but also when to do this, while considering the inventory costs. We show that the TQD problem and its variants can be solved by solving a series of min-cost flow problems. Finally, we investigate the performance of three exact algorithms (min-cost flow ∗Corresponding author, e-mail: dries.goossens@econ.kuleuven.be