Supply chain collaboration in performance-based contracting: an empirical study

Abstract

PurposeDespite the significant increase in the adoption of performance-based contracting (PBC) in various industries, the primary value drivers of it are still not clear. Considering a lack of empirical evidence for PBC, this study investigates the effects of collaboration between the suppliers to understand the value offerings created in PBC by empirical findings. The purpose of this paper is to examine how supply chain collaboration (SCC) affects PBC benefits.Design/methodology/approachUsing data from 381 survey participants who hold the title of manager or above, hypotheses are tested using structural equation modeling (SEM).FindingsThe results reveal that a strong and positive relationship between SCC and PBC benefits.Research limitations/implicationsOne of the limitations of this research is the collection of data through the Amazon Mechanical Turk online service. The experience level of participants in PBC and the absence of validation of these scale items by industrial experts are other limitations of this study. Nonetheless, the authors found convincing evidence that SCC has a positive effect on PBC benefits.Practical implicationsThe findings highlight the importance of SCC to increase financial, operational and non-financial benefits of PBC for practitioners. The findings offer guidance for managers aiming to increase PBC benefits through SCC.Originality/valueThis is the first study to empirically examine the impact of SCC for better PBC and contributes to the body of knowledge by providing empirical findings in a PBC context. This research also develops valid and reliable instruments to measure PBC benefits through rigorous empirical and statistical analysis that can be used in future studies.

Effect of Supplier Collaboration on Company Performance through Lean Manufacture and Inventory Control

“…Furthermore, the company's ability to share knowledge with suppliers (SC1) of 0.700 and share information with suppliers (SC2) of 0.739 has an impact on increasing company performance, which is shown that the company can produce products according to the criteria of customer needs and deliver products to customers according to the specified time. This research is in line with research that states that supplier collaboration can significantly improve the implementation of company performance (Cheng et al, 2012;Tarigan, 2019;Cao & Zhang, 2011;Uvet et al, 2020;Al-Abdallah et al, 2014). Inventory control significantly increased company performance in the manufacturing industry with a significant level of 0.05.…”

“…Research conducted by (Uvet et al, 2020) explains that supplier collaboration results can directly improve supplier communication and will affect the company's logistics performance and achieve the highest operational performance improvement. H3: Supplier collaboration influences company performance.…”

“…Companies can also involve customers to contribute to determining product development in detail and product requirements accurately so that data from customers can be integrated directly with company systems (Uvet et al, 2020). The company's efforts to overcome supply shocks are building partnerships with suppliers .…”

“…The collaboration that the company builds is essential in increasing the company's competitiveness and performance. This collaboration provides better results than companies that move individually, so collaboration can build together by providing improvements in creating efficient and productive operations (Uvet et al, 2020). Companies in China show that collaboration with suppliers can improve operational performance and financial performance.…”

Decreasing e-waste through reliability enhancement encouraged by performance-based contracting

“…In the defense industry, this is called performance-based logistics. In the private sector, it is known as performance or outcome-based contracting or "power by the hour" (Ng and Nudurupati, 2010;Ong et al, 2005;Uvet et al, 2021). Considering the projected life of a system, longevity results in more maintenance time, which reduces readiness/availability.…”