Supply chain alignment as process: contracting, learning and pay-for-performance. Issue 3 (21st February 2018)

• Record Type: Journal Article
• Authors: Selviaridis, Kostas; Spring, Martin
• Is Part Of: International journal of operations & production management. Volume 38:Issue 3(2018)
• Page Start: 732
• Page End: 755
• Publication Date: 2018-02-21
• Subjects: Learning -- Pay-for-performance -- Inter-organizational relationships -- Contracting -- Supply chain alignment; Production management -- Periodicals; Business logistics -- Periodicals; 658.5
• DOI: 10.1108/IJOPM-01-2017-0059
• Languages: English
• ISSNs: 0144-3577

Abstract

Abstract : Purpose: The purpose of this paper is to understand how buyers and suppliers in supply chains learn to align their performance objectives and incentives through contracting. Design/methodology/approach: Two longitudinal case studies of the process of supply chain alignment were conducted based on 26 semi-structured interviews and 25 key documents including drafts of contracts and service level agreements. Findings: The dynamic interplay of contracting and learning contributes to supply chain alignment. Exchange-, partner- and contract framing-specific learning that accumulates during the contracting process is used to (re)design pay-for-performance provisions. Such learning also results in improved buyer-supplier relationships that enable alignment, complementing the effect of contractual incentives. Research limitations/implications: The study demonstrates that the interplay of contracting and learning is an important means of achieving supply chain alignment. Supply chain alignment is seen as a process, rather than as a state. It does not happen automatically or instantaneously, nor is it unidirectional. Rather, it is a discontinuous process triggered by episodic events that requires interactive work and learning. Practical implications: Development of performance contracting capabilities entails learning how to refine performance incentives and their framing to trigger positive responses from supply chain counterparts. Originality/value: The paper addresses supply chain alignment as a process. Accordingly, it stresses some important features of supply chain alignment.