Procurement organisation in project-based setting: a multiple case study of engineer-to-order companies

Abstract

Procurement decisions have a pervasive impact on supply chain performance and market success. This is particularly true in supply chains operating to deliver projects, such as construction and engineerto-order companies, where a focal firm's procurement decisions need to be coordinated with production activities to effectively satisfy customer orders. This study focuses on how the procurement department can be organised in order to support the needs of project-based supply chains better. Starting from a review of the procurement organisation literature in the context of project supply chains, we use a multiple case study methodology and discuss the procurement organisational choices in 11 project-based companies. Within and cross-case analyses allow identifying two possible archetypes, i.e. the procurement-focussed and the project-focussed organisations, as extremes on a continuum that also includes hybrid solutions. The characteristics of each model are discussed, and results are articulated in three propositions connecting procurement organisational variables and contingent factors.

Design Principles and Prescriptions for Planning and Controlling Engineer-to-Order Industrialized Building Systems

“…Wiendahl et al [47] emphasized the importance of defining consistent objectives and communicating responsibilities among supply chain members to have individual and shared goals for guiding production planning and control. From the perspective of construction projects, project delivery systems must have governance mechanisms that support the alignment of stakeholders' goals (e.g., client, contractor, and suppliers) [13].…”

“…Decision-making is often fragmented, and plans are frequently push-driven from upstream to downstream production units along the supply chain [12]; e.g., long-term plans are used for triggering the production and the delivery of components. These problems are often caused by procurement decisions [13], e.g., contracts often link payments to the production or delivery of components rather than to site installation. Rauch et al (2018) [14] stated that the uncertainty can be managed to some extent by introducing short re-planning cycles based on regular feedback from the on-site installation status.…”

A Systematic Approach to Implementing Multi-sourcing Strategy in Engineer-to-Order Production

“…This way, ETO production is characterised by complex environments, high demand variability, multifaceted design stages, and intensive project life cycles [14]. Given these characteristics, PSF can play a strategic role in ETO production [16]. However, the PSF working under this strategy faces an entirely different dynamic compared to working in a production system where production volumes are based on sales forecasts.…”

Supply chain management in construction and engineer-to-order industries

“…Given that firms rely on suppliers to obtain 80% of their materials and components in many contexts, the procurement configuration impacts the performance as well. The paper "Procurement organization in project-based setting: a multiple case study of engineering-to-order companies" by Moretto, Patrucco, Walker, and Ronchi (Moretto et al 2020) studies a procurement organization in project-based companies, in particular, focussing on large-scale construction and ETO projects. The authors investigate how the procurement organization can be designed and how it can be made flexible and adaptable to changes in a project context.…”