MSc thesis

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MSc thesis

7-‐7-‐2014

The influences of supply chain management system

elements on delivery reliability of spare parts suppliers

Sylvia Jorritsma (s1869477) MSc Technology & Operations Management

Supervisor: Prof. Dr. K.J. Roodbergen Supervisor until June ’14: Dr. J. Veldman

Second supervisor: Dr. E. Ursavas

Word count: 11.500

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Abstract

Motivation:

A gap in spare parts management literature exists on how supply chain performance could be controlled by organizations, to protect themselves from negative supply chain influences on spare parts management issues.

Research question:

This research aims to identify in what ways supply chain management (SCM) system elements could influence supply chain performance. This is done by specifically focusing on delivery reliability of spare parts suppliers, as a possible performance outcome of SCM systems in a spare parts supply chain.

Approach:

Case research is performed at the Royal Netherlands Army, whereby each of the nine cases included in the case studies relates to a SCM system including a spare parts supplier and the Army. By relating each case to delivery reliability, relationships are explored between delivery reliability and (sub)elements of the SCM systems.

Findings:

The research has generated several hypotheses on how individual elements within SCM systems chains seem to be directly related to the level of delivery reliability of suppliers. That is, especially elements related to supply chain relationships and coordination/ control mechanisms are considered influential to delivery reliability of spare parts suppliers. In addition, it is confirmed that elements among the SCM systems are highly interrelated, which suggests that (other) elements could also be indirectly related to the level of delivery reliability.

Conclusions:

By repeating this study on similar supply chain performance issues, organizations could investigate how – within specific contexts – SCM system elements relate to each other and to supply chain performance as the system outcome. As a result, they could explore opportunities to control the SCM system elements and protect their organizations from negative supply chain (performance) influences on internal spare parts management issues.

Keywords: Spare parts management, Supply chain performance, Delivery reliability

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1. Introduction

Spare parts management is a special case of inventory management for several reasons (Fortuin & Martin, 1999; Kennedy et al., 2001; Martin et al., 2010). That is, demand for spare parts is often unpredictable and inventory costs are high. In addition, parts may be difficult to retrieve from the market and/or market power of suppliers might lead to uncompetitive prices or underperformance in delivery reliability and -‐flexibility (Fortuin & Martin, 1999; Borenstein et al., 2000). In addition, service requirements within the spare parts supply chain are generally high as consequences of stock-‐outs at the end-‐user of the parts could be financially remarkable (Huiskonen, 2001). Therefore, since since inventory buffers in spare parts supply chains are decreasing (Fortuin & Martin, 1999; Huiskonen, 2001), supply chain performance in terms of lead-‐times, flexibility and reliability of suppliers becomes increasingly important for spare parts availability at the end-‐user. Therefore, in this research, it is explored in what ways supply chain elements could influence supply chain performance. This is done by specifically focusing on delivery reliability of suppliers as one possible supply chain performance outcome. Here, delivery reliability is defined as the degree to which suppliers deliver parts within the agreed delivery time frame. Unfortunately, there is a gap in spare parts management literature on how to control supply chain performance, such as delivery reliability of suppliers, to protect organizations from negative supply chain influences on internal spare parts management. In fact, Huiskonen (2001) is still one of the few researchers that have addressed broader SCM considerations associated with spare parts management. That is, Huiskonen (2001) provides a general framework with which a spare parts SCM system could be studied. The scope of the system relates to the supplier-‐user interface, and the system is build up with four elements (including several sub-‐elements) and several contextual factors that as a whole influence the outcome of the system. In addition, by comparing the research of Huiskonen (2001) with general SCM literature, it could be assumed that this “outcome” relates to supply chain performance. As a result, the framework of Huiskonen (2001) provides an overview of the set of supply chain elements that as a whole influences supply chain performance within a spare parts supply chain.

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what ways the supply chain elements included in the framework could influence delivery reliability performance of suppliers, which is seen as a determinant of spare parts availability at the end-‐user. These insights are found by performing a multiple case study at the Royal Netherlands Army (RNLA). As a result, this research specifically focuses on capital-‐intensive industries wherein complex engineering assets, such as ships, aircrafts or armoured ground vehicles could be found and in which spare parts availability for maintenance operations is crucial for maintaining asset availability.

In relation to the preceding, the purpose of this research is to elaborate on the framework of Huiskonen (2001) and use it to identify ways to control delivery reliability of spare parts suppliers in the user-‐supplier interface, among different supply chain contexts. As a result, this research will first elaborate on the relationships among elements within the framework, and then identify relationships between individual elements and delivery reliability of spare parts suppliers.

The corresponding research question is as follows: In what ways could elements within spare parts SCM systems influence the level of delivery reliability of suppliers?

In addition, three sub-‐questions are identified:

1. What relationships could be found between elements in spare parts SCM systems?

2. What relationships could be found among the system of elements and the level of delivery reliability of suppliers?

3. What relationships could be found among the system of elements, within certain contexts, and the level of delivery reliability of suppliers?

The study provides both theoretical and practical contributions. As said, the study contributes to theory by providing knowledge on how organizations could explore opportunities to control supply chain performance, by implementing the framework of Huiskonen (2001). Also, insights are provided into how relationships among the elements within the framework should be taken into account when exploring the opportunities. In addition, the research provides practical contributions for the RNLA, by performing the study for them and elaborating on the opportunities within the SCM systems to positively influence delivery reliability of its suppliers.

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2. Literature review

In this section, the theoretical foundation for this research will be elaborated on. First, some important challenges related to spare parts management are elaborated on (2.1). Subsequently, it is mentioned what the state of affairs is on spare parts management literature, in response to the challenges (2.2). After that, the gap in literature is mentioned, on which this research is concentrated (2.3). In line with that, the framework mentioned in the article of Huiskonen (2001) is discussed, which will be used in this research to explore possible relationships between supply chain elements and delivery reliability of spare parts suppliers (2.4). After that, findings from the general SCM literature are related to the research of Huiskonen (2001) to get insights into missing explanations on the framework (2.5). Last, proven relationships between the supply chain elements and delivery reliability that are found in general SCM literature are elaborated on, which could provide a general idea on the findings that might result from this research (2.6).

2.1 Spare parts management challenges

The control of spare parts that are needed for maintenance of complex engineering assets at asset owners is difficult and very different from the control of typical stock keeping units (Fortuin & Martin, 1999; Martin et al, 2010; Kennedy et al., 2001). The demand for spare parts for complex assets is often unpredictable, especially when an organization owns only a small number of similar assets and/or when the degree in which the assets are used highly influences the need for maintenance activities. Also, the inventories of the parts often bring along high storage costs and/or high potential risks of obsolescence, whereas many parts are critical. “Criticality” here means that the (financial) consequences of failure of a part are severe when replacement is not readily available (Huiskonen, 2001).

Moreover, several types of spare parts could be expensive and difficult to retrieve from the market (i.e. long lead times), whereas typical stock keeping units are generally widely available (Fortuin & Martin, 1999). In some cases, an asset owner even gets “locked in” to the manufacturer to some extent once it purchases a complex and durable asset. That is, due to proprietary rights, the original manufacturer may be the exclusive seller of aftermarket products, such as spare parts. Borenstein et al. (2000) argue that when organizations have such high market power, the prices of the spare parts and/or the reliability and flexibility in the delivery of the parts may become less competitive.

2.2 Current state of literature on spare parts management

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the last few years. That is, amongst others, research has focused on: parts classification (Braglia et al., 2004; Celebi et al., 2008); spare parts management issues (Cavalieri et al., 2008); forecasting techniques (Boylan & Syntetos, 2008) and inventory modeling (e.g. network design, stocking decisions) (Candas & Kutanoglu, 2007; Kennedy et al., 2001; Rustenburg et al., 2001; Reijnen et al., 2009).

However, in the research of Huiskonen (2001) and Martin et al. (2010) it has been pointed out that despite the value of the articles on these topics, there seems to be one common limitation related to them. That is, many of the spare parts decision-‐making models and techniques that are discussed in the articles have originated from the operations management-‐ and operations research and therefore are generally based on many mathematical assumptions and modeling inventory situations (Huiskonen, 2001; Zomerdijk & De Vries, 2003; Martin et al., 2010). As a result, aspects in the broader context of the spare parts user (i.e. the asset owner) that influence the spare part management issues as well, such as supply chain performance, are generally not taken into account in the models. General reasons for this limitation is that additional factors included in the models will logically increase the complexity even further ór researchers do not have the knowledge on the influences that stem from the external context, since that is a different research field (Huiskonen, 2001).

2.3 Research focus (i.e. research “gap”)

As becomes clear from the previous section, in the current models and techniques discussed in the spare parts literature almost no attention has been provided on the effects of supply chain elements on spare parts management at the spare parts user. Nevertheless, in relation to the mentioned challenges in spare parts management, Huiskonen (2001) and Martin et al. (2010) argue that more research is needed in this area, since the user is increasingly dependent of the external supply chain management context. That is, due to the high costs related to obsolescence and storage of spare parts, in almost all parts of spare parts supply chains inventories are being minimized (Celebi et al., 2008). As a result, problems in the external supply chain like production problems at spare parts manufacturers and/or issues related to delivery reliability and –flexibility of other upstream supply chain parties, could rapidly affect the availability of spares at spare parts users.

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pooling inventories, creating partnerships or sharing demand information. Moreover, in general (SCM) literature many specific articles could be found on the effects of collaboration initiatives on supply chain performance, to explain the possible advantages of collaboration. For example, in the research of Lee et al. (2007) key success factors, like providing access to inventory information, are identified for enhancing reliability performance of suppliers. However, in arriving at their conclusions, such articles from the supply chain management literature have generally not taken into account the specific spare parts management context. That is, it could often be assumed that the collaboration initiatives are investigated between general buyers and suppliers within a supply chain. As a result, it could be highly doubted whether the conclusions would fit to the specific context of spare parts supply chains, and specifically to the supplier-‐user interface.

As a result, it could be summarized that still a gap exists in specific spare parts management literature on how supply chain considerations could be taken into account by spare parts users, to protect themselves from negative supply chain performance influences on its spare parts control.

2.4 Huiskonen (2001) as a starting point to fill the theoretical gap

In relation to the gap in literature, the research of Huiskonen (2001) is one of the few and only researchers that have made a start in addressing SCM considerations associated with spare parts management. In the research of Huiskonen (2001) this is done by focusing on the user-‐supplier interface within a spare parts supply chain. The research identifies four main elements in SCM systems, which are strongly interrelated: Strategy/policies/processes; Network structure; Supply chain relationships and Coordination/control mechanisms, see Figure 2.1. Also, related to these four main elements, some sub-‐elements are defined throughout the text, which are summarized in Table 2.1. However, on the origin of the (sub-‐)elements, no background information is provided in the article. Also, even though the suggested interrelatedness of the elements is shown in the framework by means of arrows (see Figure 2.1), it is not mentioned in the article why such relationships exist.

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Figure 2.1: Constituting elements of a SCM system (Huiskonen, 2001).

Table 2.1: List of (sub-‐)elements and contextual factors, included in the SCM system described by Huiskonen (2001)

List of elements described by Huiskonen (2001)

Strategy/Policies/Processes ! Supplier selection ! Supply strategy

! Service levels of supplier

! Prioritization of service by supplier Network structure

! Ownership – ! Management – and

! Control over inventory locations in the system Supply chain relationships

! Cooperation with parties in the supply chain ! Risk sharing

Coordination/control mechanisms ! Inventory control principles ! Performance measurement ! Incentive systems

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Contextual factors

! Product-‐specific characteristics ! Competitive situation in the market ! Customers’ special requirements ! Supplier characteristics

In relation to the elements within the SCM systems, Huiskonen (2001) argues that both users and suppliers determine their values, and also both parties will have their own views on how the systems desirably should be designed. Moreover, Huiskonen (2001) argues that there will be differences among the systems due to the contextual factors. The identified contextual factors are: product-‐specific characteristics, competitive situation in the market, the general supplier characteristics and the customer requirements of the user (see Figure 2.1 and Table 2.1).

In relation to the performance of a SCM system, it is argued by Huiskonen (2001) that the degree to which the four main elements as a whole bring the conflicting views of suppliers and users into alignment, will determine the outcome of the system. However, what is meant with the “outcome” of the system remains unclear in the article. As a result, Martin et al. (2010) argue that even though Huiskonen (2001) has brought the broader SCM considerations into a framework, it is still unclear how such insights could be used for making improvements in –or controlling– supply chain performance and as a result in solving spare parts management issues within individual organizations.

2.5 Additional insights on the framework of Huiskonen (2001)

In the preceding, it is argued that Huiskonen (2001) does not provide any insights on the origin of the elements included in the SCM system, which are argued be related to the user-‐supplier interface. Nevertheless, similar systems of elements could be found in the general SCM literature. In fact, Chen & Paulraj (2004) have provided a literature review whereby over 400 articles are analyzed across many disciplines, to identify a series of critical elements that as a whole could influence the supplier and buyer performance within a supply chain. In addition, in the review the researchers focused on elements that were relevant within the buyer-‐supplier interface only, which fits to the supply chain perspective of the framework of Huiskonen (2001). The series of elements found in the literature review, are summarized in Figure 2.2. In addition, Table 2.2 summarizes how the individual elements are operationalized throughout the article.

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Table 2.2: List of critical elements influencing buyer-‐supplier performance, as discussed in Chen & Paulraj (2004),

List of elements by Chen & Paulraj (2004)

Strategic purchasing (supply strategy) Competitive priorities

! Manufacturers’ choice in priority of manufacturing tasks – or ! Priority related to cost, flexibility, quality and delivery Supply network structure

! Tasks – ! Authorities – and ! Coordination mechanisms Environmental uncertainty ! Supplier uncertainty ! Manufacturing uncertainty ! Customer/demand uncertainty Customer focus

! Attention to customer needs/expectations

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Top management support

! Time and resources contributed by top management to: • Strategic purchasing

• Supplier relationship development

• Adoption of advanced information technology Information technology

Logistics integration

Buyer-‐supplier relationships ! Supplier base reduction ! Long term relationships ! Communication

• Frequency

• Personal contact involved • Information shared • Communication links ! Cross-‐functional teams

! Supplier involvement (in project/planning processes)

Even though the framework identified by Chen & Paulraj (2004) is very differently structured than the framework of Huiskonen (2001), many commonalities could be identified between the lists of elements included in Table 2.1 and Table 2.2. For example, the elements (supply) network structure and (supply chain) relationships are included in both researches. Furthermore, the elements of strategic purchasing and competitive priorities discussed in Chen & Paulraj (2004) are highly related to the sub-‐elements of supplier selection, supply strategy and prioritization of service by suppliers that are included in the list of elements by Huiskonen (2001). Also, the two contextual factors of competitive situation in the market and customers’ special requirements seem to highly relate to the elements of environmental uncertainty and customer focus. As a result, despite the unknown origin of the elements in the system of Huiskonen (2001), it seems that at least to a certain degree, the general SCM literature could confirm the criticality of the four main elements described by Huiskonen (2001) in the buyer-‐supplier (or user-‐supplier) interface within a supply chain.

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of the framework described by Huiskonen (2001) also relates to supply chain performance.

In addition, it has been mentioned on the research of Huiskonen (2001) that it is not explained why the links suggested in the framework by means of arrows would hold. In contrast, the links in the framework of Chen & Paulraj (2004) are justified by providing a detailed literature support for each link, by containing the references for each link in a matrix table. As a result, since in the research of Chen & Paulraj (2004) some links are justified between elements that are also suggested by Huiskonen (2001), it could be argued that some links in the research of Huiskonen (2001) might be justified with the same literature references. For example, in the research of Chen & Paulraj (2004) the research of Stock et al. (2000) serves as a justification for the links in the framework between supply network structure and both buyer-‐supplier relationships and logistics integration. That is, in the research it is argued that for example within a geographical dispersed supply chain, organizations more often decide to coordinate logistics than within a non-‐dispersed supply chain, which as a result involves closer collaboration. As a result, such arguments might also hold for the link in the framework of Huiskonen (2001) between the network structure-‐ and the coordination/control elements. Nevertheless, still several other links in the research of Huiskonen (2001) are suggested for which no similar link is justified in the matrix of Chen & Paulraj (2004). Also, earlier it has been mentioned that related to certain spare parts management, a lot of “extra” difficulties could be identified, in comparison to regular stock items. As a result, relationships among elements within a spare parts supply chain might be in some cases different from relationships among elements within a regular supply chain.

2.6 Additional insights from the SCM literature

As becomes clear from the research question, this research explores possible relationships between supply chain elements on delivery reliability of spare parts suppliers. In line with this research question, and as argued earlier, the general SCM literature provides some proven links between supply chain elements and delivery reliability of suppliers in general. As a result, even though it is argued that the links found in general SCM literature might not hold in a spare parts management context, the links illustrate the type of relationships that might be found between the SCM system elements in the framework of Huiskonen (2001) and delivery reliability of spare parts suppliers as a system outcome.

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and investment in supplier’s operations. Comparing these activities with some SCM system sub-‐elements that are identified in the research of Huiskonen (2001), i.e. cooperation in the supply chain, performance measurement and/or incentive systems, some common grounds between the elements could be suggested. As a result, in this research similar relationships might be found between these SCM system sub-‐elements and delivery reliability of suppliers in a spare parts context.

Secondly, in the research of Handfield & Bechtel (2002) five main variables are argued to either directly or indirectly influence the supplier’s ability to supply products conform to customer needs. With respect to this research, it should be mentioned that a supplier’s ‘ability to supply products conform to customer needs’ does not directly imply delivery reliability, but it could still indicate that the supplier strives to deliver conform the (contractual) agreements on for example lead times. The five variables are: human-‐specific asset investments, site-‐specific investments, contracts, trust and buyer-‐dependence on a supplier (Handfield & Bechtel, 2002). In addition, Handfield & Bechtel (2002) explain that control mechanisms are very important in a relationship with suppliers, to make them adhere to certain requirements (f.e. delivery requirements). As a result, based on commonalities between these mentioned supply chain elements and the supply chain elements of supply chain relationships and coordination/control included in the framework of Huiskonen (2001), this research might hypothesize similar links between these SCM system elements and delivery reliability of suppliers in a spare parts context.

Last, Handfield & Bechtel (2002) add to their findings that the effectiveness with which control mechanisms could be used, will be tempered in case of large power differences between the buyers and suppliers in a supply chain. This statement seems to be in line with the argument of Huiskonen (2001) that contextual factors like the competitive situation in the market influences the outcome of a SCM system. As a result, by taking into account the context factors for a spare parts supply chain that are described in the research of Huiskonen (2001), it might be explored in this research whether the strength related to relationships between SCM system elements and delivery reliability, could be context-‐specific.

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3. Research Design

In this study explorative and qualitative case research is performed to identify in what ways the individual (sub-‐)elements of the SCM system, in different contexts, could relate to delivery reliability. In doing that, nine case studies are performed, whereby each case relates to a SCM systems including the RNLA as a spare parts user and a spare parts supplier. As a result, by exploring patterns in the set of (sub-‐)elements between cases that have high delivery reliability as a system outcome and low delivery reliability as a system outcome, hypotheses could be generated on relationships between the SCM system elements and delivery reliability. In this way, the research aims to contribute to literature by elaborating on relevant supply chain considerations related to spare parts management.

In the remaining part of this chapter, the details on the research design will be provided. First, the conceptual model (3.1) and the related independent-‐ and dependent variables will be cleared out (3.2). After that, the research method (i.e. the multiple case study) is explained (3.3). In line with that, the case selection method will be explained (3.4). Subsequently, it will be elaborated how the data collection (3.5) and data analysis (3.6) takes place. Last, it is concluded how the quality of the research is maintained with the decisions made in the research design (3.7).

3.1 Conceptual model

As mentioned, the aim of this research is to elaborate on the framework of Huiskonen (2001) and use it to identify ways to control delivery reliability of spare parts suppliers in the user-‐supplier interface, among different supply chain contexts. In the previous chapter, it is explained that Huiskonen (2001) has elaborated that a SCM system consists of four main variables (including several sub-‐variables), which are: strategies/policies/processes, network structure, supply chain relationships and coordination/control mechanism. Moreover, it is argued that the elements and context of a SCM system will determine the “outcome” of the system.

In addition, from the general SCM literature it became clear that for a similar framework the “outcome” was defined as supply chain performance and that some sub-‐elements that are included in the research of Huiskonen (2001) have found to be related to delivery reliability of (general) suppliers. As a result, in this research it is assumed that the elements and context of the SCM system described by Huiskonen (2001) will at least to a certain degree relate to the level of delivery reliability of suppliers.

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Based on these insights from the literature review, the conceptual model for this research is summarized in Figure 3.1. The model is shaped in an arrow, to project how in this research it is assumed that each element included in the model subsequently influences the subsequent element(s) (to the right). Moreover, only the first part of the model is displayed in color, since this relates to the specific part that will be studied in this research. That is, it is studied in what ways the elements within a SCM system could influence delivery reliability as the system outcome, within a specific context. In line with this, in 3.2 it will be explained that the system sub-‐elements and the contextual factors are considered as the independent variables, which influence delivery reliability as the dependent variable.

In addition, in the second part of the model, it is shown that delivery reliability is seen as a relevant determinant of spare parts availability, which in turn is a determinant of asset availability. These elements are included in the conceptual model to show why this research is relevant to perform for asset owners, due to the fact that it relates to internal spare parts management issues – and as a result to asset management issues. That is, in this research it is argued that now that inventory buffers are decreasing within supply chains, supply chain performance such as delivery reliability of suppliers becomes more influential to spare parts availability. In addition, the spare parts availability in turn relates to the ability to perform maintenance and thus to asset availability. However, it is beyond the scope of this research to also investigate these specific influences.

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Figure 3.1: Conceptual model

3.2 Independent-‐ and dependent variable(s)

As becomes clear from the conceptual model, in this research it is assumed that supplier delivery reliability is a determinant, or the “dependent variable”, of the complete set of SCM system elements (within a certain context). As a result, the SCM system sub-‐elements by which the four main variables of a SCM system could be operationalized, are considered the independent variables in this research (see second column of Table 3.1). In the second column of Table 3.1, it is explained what indicators are taken into account in this research to provide a ‘value’ for these independent variables (i.e. the sub-‐elements).

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Table 3.1, it is mentioned on what research sources the (sub-‐)elements and/or the indicators are based.

By integrating the sets of elements described in literature, the list of all the independent variables should be able to cover all main elements of a SCM system. This in fact decreases the risk that relationships between (sub-‐)elements and delivery reliability that are hypothesized in this research that in practice go “via” another element that is not specifically taken into account in the study. Table 3.1: Relevant elements within spare parts SCM system

(Sub-‐) elements (i.e.

independent variables) Indicators Mentioned in research of..

Contextual factors Product-‐specific requirements Competitive situation (supplier) Supplier characteristics Customer requirements

Criticality, demand value, demand pattern and specificity of the parts Market description, competitive position, (other) customers Geographical position, experience

Specific requirements for RNLA w.r.t. delivery (in general) (Huiskonen, 2001) (Huiskonen, 2001) (Huiskonen, 2001) (Huiskonen, 2001) Strategy/Policies/Processes Service goals (supplier)

Service policies (supplier)

Priorities set (supplier)

General strategy (buyer)

Requirements for delivery (buyer)

Order policy (buyer)

Supplier selection (buyer)

Supplier evaluation

Goals w.r.t. delivery lead time and reliability Policies/processes to achieve these goals (e.g. handling orders) Options for

delivery/production priorities for customers Strategy of material logistics department RNLA Requirements set by RNLA for delivery of items (e.g.) Use of demand forecasting and lead time information for

determining orders

Supplier selection criteria/ supply strategy

Process of supplier evaluation

(Huiskonen, 2001; Krause et al., 1998; Krause, 1997) (Huiskonen, 2001; Krause et al., 1998; Krause, 1997) (Huiskonen, 2001) (Huiskonen, 2001) (Huiskonen, 2001) (Huiskonen, 2001; Chen & Paulraj, 2004) (Huiskonen, 2001; Chen & Paulraj, 2004) (Huiskonen, 2001) Network structure Inventory locations and – management

Ownership, management and control on inventory locations

(Huiskonen, 2001; Chen & Paulraj, 2004)

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Communication Sharing of information/resources (buyer/supplier)

Dedicated investments / risk sharing

Supplier involvement in project and planning processes

(Long term) agreements Top management involvement (buyer/supplier)

Trust (buyer/ supplier) Power (buyer<-‐>supplier)

Frequency, communication links, personal contact, means of communication (E.g. site visits?)

Information and/or resources shared Human/asset specific investments in place

Supplier efforts in

maintenance planning and other initiatives

Type and duration of agreements

(Management) functions involved

Description of level of trust Description of power position of both parties

(Chen & Paulraj, 2004; Krause et al., 1998; Krause, 1997)

(Martin et al., 2010; Chen & Paulraj, 2004) (Krause et al., 1998; Krause, 1997; Chen & Paulraj, 2004; Handfield & Bechtel, 2002)

(Chen & Paulraj, 2004)

(Chen & Paulraj, 2004) (Chen & Paulraj, 2004)

(Handfield & Bechtel, 2002)

Coordination/control Degree of coordination/ control between user-‐supplier Sharing of information/resources (buyer/supplier) Logistics integration, insights/ involvement into processes, problems and demand at RNLA,

evaluation on performance Information and/or resources shared (Huiskonen, 2001; Chen & Paulraj, 2004)

(Martin et al., 2010)

3.3 Research methodology

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interface the RNLA as the fixed ‘user’ and a spare parts supplier. In total nine case studies are performed, which means that apart from the RNLA, nine supplying organizations are included in the research.

In this research, case study research is preferred over other types of research (e.g. survey research) because in exploring the relationships among SCM system elements, many open (how/what/why) questions need to be answered (“How does the RNLA generates/places its orders?”, “What type of spare parts are supplied in this system?”, “Why does the RNLA want to manage its own stocks?” Etc.).

3.4 Case selection

As said, the cases in this research are in fact SCM systems, with in the supplier-‐ user interface the RNLA and a spare parts supplier. Moreover, to explore whether the direct and/or indirect relationships exist between sub-‐elements of the SCM systems and delivery reliability as a system outcome, the case selection should at least take into account the following three criteria:

1. The cases should differ with respect to degree of delivery reliability of the supplier as the performance outcome

2. Different context variables should be related to the set of cases 3. Different values on sub-‐elements should be found within the cases

With respect to these three criteria, it must be said that since the “user” in each SCM system is the RNLA, the case-‐selection procedure is in fact involved with selecting the suppliers. That is, only the selection of different suppliers could be used to fulfill the first criteria. In addition, the context factors elaborated on in Table 3.1 relate highly to supplier characteristics and the competitive situation of the supplier. Moreover, values on the sub-‐elements are difficult to explore on forehand, but by selecting different suppliers, the sub-‐elements related to the supplier will at least differ. As a result, in the preceding, when describing the procedure for selecting “cases”, it is in fact described how to select the individual suppliers for the SCM systems.

However, before describing the procedure (3.4.2), it is first elaborated in what way literature on case selection procedures provides some additional insights on the importance of the first two case selection requirements (3.4.1).

3.4.1 Importance of criteria 1 and 2

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that when this type of claims are tested, case selection of suppliers on the dependent variable is very appropriate.

In addition, in the research of Poulis et al. (2013) it is stated that for qualitative case study research in international business, it could be highly desirable to collect (additional) information to identify differences in the contexts among cases, and use that information to select contexts to increase the relevance for the research problem under investigation. In this research, that could be highly desirable for two reasons. First, it can be argued that the reliability of spare parts suppliers is most relevant for suppliers of spare parts for military assets that are crucial to perform the core business of the RNLA and of which the RNLA does not have many reserves. This means that for example assortments of spare parts that are needed in maintenance processes for military combat vehicles are highly relevant to take into account, because the readiness for (future) military missions is dependent of the availability of such vehicles. Also, it could be argued that only for suppliers that actually deliver a sufficient amount of spare parts over the whole period under study, the quantitative analysis on delivery reliability will provide an accurate view on the performance of the supplier. Therefore, this research especially focuses on suppliers that deliver a sufficient amount of items for the most important assortments of the RNLA.

Second, due to the large diversity in the fleet of the RNLA, the supplier base differs in many aspects: delivery volumes, geographical distances, market characteristics (monopolistic vs. competitive market), etc. Therefore, selecting a highly diverse mix of suppliers (w.r.t. these characteristics) will maximize the probability that the sample of cases will be representative for the whole population of suppliers (Seawright & Gerring, 2008). In addition, this selection based on diversity also creates the largest probability that different values for the SCM system design sub-‐elements will be found among the cases.

3.4.2 Case selection procedure

The mentioned criteria have resulted in the following procedure for selecting cases (see Appendix I for the detailed procedure):

" Step 1: Create an overview of all relevant assortments for which suppliers deliver spare parts.

" Step 2: Select from the overview a group of “main” suppliers on basis of the number of orders and/or demand value.

" Step 3: Provide a quantitative analysis on delivery reliability for the group of suppliers. Check for low internal variation in reliability and a sufficient level of variation among cases.

Two degrees of reliability have been found:

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" Step 4: Check the quantitative analysis with qualitative data on delivery reliability.

" Step 5: Make a final selection from the group of suppliers, with the aim to create as much diversity among suppliers as possible based on the context variables ‘supplier characteristics’ and ‘competitive situation’ that are included in the research of Huiskonen (2001) (see Table 3.1). In Table 3.2, the 9 selected suppliers are summarized.

Table 3.2: Supplier selection (i.e. case selection)

3.5 Data collection

As mentioned, to study the SCM systems (or ‘cases’) included in this research, insights are needed from both the supplier and RNLA side on the independent variables, which, as mentioned, are the values of the sub-‐elements in a SCM system (see second column of Table 3.1). In addition, information about the dependent variable related to a case is needed, which is the actual delivery reliability of the supplier in the two most recent years (in this research: 2012-‐ 2013). Supplier Delivery Reliability Monopolistic / Competitive market Type

company Company size Supplier industry Located in the Netherlands (yes/no)

1 High Monopolistic Manufacturer Large Defense No

2 High Competitive Manufacturer Large Non-‐

defense

Yes

3 High Monopolistic Trading

company

Small Defense No

4 High Competitive Trading

company Average Non-‐ defense Yes 5 High Relatively monopolistic Trading company Large Non-‐ defense No

6 Low Competitive Partly

manufacturer

Large Non-‐ defense

Yes

7 Low Competitive Trading

company

Small Non-‐ defense

Yes

8 Low Monopolistic Manufacturer Large Defense No

9 Low Relatively

monopolistic

Trading company

MSc thesis

MSc thesis

The influences of supply chain management system

elements on delivery reliability of spare parts suppliers

Abstract

Table of Contents

1. Introduction

2. Literature review

3. Research Design