Differences between theoretical predictions and operational performance in a stock control application

Over the past decade, several experienced Operational Researchers have advanced the view that the theoretical aspects of model building have raced ahead of the ability of people to use them. Consequently, the impact of Operational Research on commercial organisations and the public sector is limited, and many systems fail to achieve their anticipated benefits in full. The primary objective of this study is to examine a complex interactive Stock Control system, and identify the reasons for the differences between the theoretical expectations and the operational performance. The methodology used is to hypothesise all the possible factors which could cause a divergence between theory and practice, and to evaluate numerically the effect each of these factors has on two main control indices - Service Level and Average Stock Value. Both analytical and empirical methods are used, and simulation is employed extensively. The factors are divided into two main categories for analysis - theoretical imperfections in the model, and the usage of the system by Buyers. No evidence could be found in the literature of any previous attempts to place the differences between theory and practice in a system in quantitative perspective nor, more specifically, to study the effects of Buyer/computer interaction in a Stock Control system. The study reveals that, in general, the human factors influencing performance are of a much higher order of magnitude than the theoretical factors, thus providing objective evidence to support the original premise. The most important finding is that, by judicious intervention into an automatic stock control algorithm, it is possible for Buyers to produce results which not only attain but surpass the algorithmic predictions. However, the complexity and behavioural recalcitrance of these systems are such that an innately numerate, enquiring type of Buyer needs to be inducted to realise the performance potential of the overall man/computer system.

Encouraging innovation in business relationships:a research note

How do buyer–supplier relationships affect innovation? This study suggests that the relational exchange norms of flexibility, information sharing, and solidarity (the bright side) encourage buyer innovation. However, negative (dark side) aspects of relationships with suppliers—loss of supplier objectivity, increasing buyer expectations, and supplier opportunism—may accompany the bright side and subsequently reduce buyer innovation. The study reports on the simultaneous effects of the bright and dark sides on innovation and the resultant effect on supplier performance as evaluated from the buyer's perspective. Using data from the travel and computer industry, regression models reveal that the bright side encourages buyer innovation. Buyers reciprocate this support by enhancing their supplier evaluations. The findings indicate that rising buyer expectations—supposedly a dark side of relational exchange—encourage innovation, while loss of supplier objectivity reduces relationship performance. These findings imply that the bright and dark sides are not mutually exclusive dimensions of good versus bad behavior.

Resource allocation in decentralised computational systems:an evolutionary market-based approach

We present a novel market-based method, inspired by retail markets, for resource allocation in fully decentralised systems where agents are self-interested. Our market mechanism requires no coordinating node or complex negotiation. The stability of outcome allocations, those at equilibrium, is analysed and compared for three buyer behaviour models. In order to capture the interaction between self-interested agents, we propose the use of competitive coevolution. Our approach is both highly scalable and may be tuned to achieve specified outcome resource allocations. We demonstrate the behaviour of our approach in simulation, where evolutionary market agents act on behalf of service providing nodes to adaptively price their resources over time, in response to market conditions. We show that this leads the system to the predicted outcome resource allocation. Furthermore, the system remains stable in the presence of small changes in price, when buyers' decision functions degrade gracefully. © 2009 The Author(s).

Introduction : the role of quality, production and technological innovation in improving competitive performance

Quality, production and technological innovation management rank among the most important matters of concern to modern manufacturing organisations. They can provide companies with the decisive means of gaining a competitive advantage, especially within industries where there is an increasing similarity in product design and manufacturing processes. The papers in this special issue of International Journal of Technology Management have all been selected as examples of how aspects of quality, production and technological innovation can help to improve competitive performance. Most are based on presentations made at the UK Operations Management Association's Sixth International Conference held at Aston University at which the theme was 'Getting Ahead Through Technology and People'. At the conference itself over 80 papers were presented by authors from 15 countries around the world. Among the many topics addressed within the conference theme, technological innovation, quality and production management emerged as attracting the greatest concern and interest of delegates, particularly those from industry. For any new initiative to be implemented successfully, it should be led from the top of the organization. Achieving the desired level of commitment from top management can, however, be a difficulty. In the first paper of this issue, Mackness investigates this question by explaining how systems thinking can help. In the systems approach, properties such as 'emergence', 'hierarchy', 'commnication' and 'control' are used to assist top managers in preparing for change. Mackness's paper is then complemented by Iijima and Hasegawa's contribution in which they investigate the development of Quality Information Management (QIM) in Japan. They present the idea of a Design Review and demonstrate how it can be used to trace and reduce quality-related losses. The next paper on the subject of quality is by Whittle and colleagues. It relates to total quality and the process of culture change within organisations. Using the findings of investigations carried out in a number of case study companies, they describe four generic models which have been identified as characterising methods of implementing total quality within existing organisation cultures. Boaden and Dale's paper also relates to the management of quality, but looks specifically at the construction industry where it has been found there is still some confusion over the role of Quality Assurance (QA) and Total Quality Management (TQM). They describe the results of a questionnaire survey of forty companies in the industry and compare them to similar work carried out in other industries. Szakonyi's contribution then completes this group of papers which all relate specifically to the question of quality. His concern is with the two ways in which R&D or engineering managers can work on improving quality. The first is by improving it in the laboratory, while the second is by working with other functions to improve quality in the company. The next group of papers in this issue all address aspects of production management. Umeda's paper proposes a new manufacturing-oriented simulation package for production management which provides important information for both design and operation of manufacturing systems. A simulation for production strategy in a Computer Integrated Manufacturing (CIM) environment is also discussed. This paper is then followed by a contribution by Tanaka and colleagues in which they consider loading schedules for manufacturing orders in a Material Requirements Planning (MRP) environment. They compare mathematical programming with a knowledge-based approach, and comment on their relative effectiveness for different practical situations. Engstrom and Medbo's paper then looks at a particular aspect of production system design, namely the question of devising group working arrangements for assembly with new product structures. Using the case of a Swedish vehicle assembly plant where long cycle assembly work has been adopted, they advocate the use of a generally applicable product structure which can be adapted to suit individual local conditions. In the last paper of this particular group, Tay considers how automation has affected the production efficiency in Singapore. Using data from ten major industries he identifies several factors which are positively correlated with efficiency, with capital intensity being of greatest interest to policy makers. The two following papers examine the case of electronic data interchange (EDI) as a means of improving the efficiency and quality of trading relationships. Banerjee and Banerjee consider a particular approach to material provisioning for production systems using orderless inventory replenishment. Using the example of a single supplier and multiple buyers they develop an analytical model which is applicable for the exchange of information between trading partners using EDI. They conclude that EDI-based inventory control can be attractive from economic as well as other standpoints and that the approach is consistent with and can be instrumental in moving towards just-in-time (JIT) inventory management. Slacker's complementary viewpoint on EDI is from the perspective of the quality relation-ship between the customer and supplier. Based on the experience of Lucas, a supplier within the automotive industry, he concludes that both banks and trading companies must take responsibility for the development of payment mechanisms which satisfy the requirements of quality trading. The three final papers of this issue relate to technological innovation and are all country based. Berman and Khalil report on a survey of US technological effectiveness in the global economy. The importance of education is supported in their conclusions, although it remains unclear to what extent the US government can play a wider role in promoting technological innovation and new industries. The role of technology in national development is taken up by Martinsons and Valdemars who examine the case of the former Soviet Union. The failure to successfully infuse technology into Soviet enterprises is seen as a factor in that country's demise, and it is anticipated that the newly liberalised economies will be able to encourage greater technological creativity. This point is then taken up in Perminov's concluding paper which looks in detail at Russia. Here a similar analysis is made of the concluding paper which looks in detail at Russia. Here a similar analysis is made of the Soviet Union's technological decline, but a development strategy is also presented within the context of the change from a centralised to a free market economy. The papers included in this special issue of the International Journal of Technology Management each represent a unique and particular contribution to their own specific area of concern. Together, however, they also argue or demonstrate the general improvements in competitive performance that can be achieved through the application of modern principles and practice to the management of quality, production and technological innovation.

Developing a decision framework for the strategic sourcing of biomass

The deployment of bioenergy technologies is a key part of UK and European renewable energy policy. A key barrier to the deployment of bioenergy technologies is the management of biomass supply chains including the evaluation of suppliers and the contracting of biomass. In the undeveloped biomass for energy market buyers of biomass are faced with three major challenges during the development of new bioenergy projects. What characteristics will a certain supply of biomass have, how to evaluate biomass suppliers and which suppliers to contract with in order to provide a portfolio of suppliers that best satisfies the needs of the project and its stakeholder group whilst also satisfying crisp and non-crisp technological constraints. The problem description is taken from the situation faced by the industrial partner in this research, Express Energy Ltd. This research tackles these three areas separately then combines them to form a decision framework to assist biomass buyers with the strategic sourcing of biomass. The BioSS framework. The BioSS framework consists of three modes which mirror the development stages of bioenergy projects. BioSS.2 mode for early stage development, BioSS.3 mode for financial close stage and BioSS.Op for the operational phase of the project. BioSS is formed of a fuels library, a supplier evaluation module and an order allocation module, a Monte-Carlo analysis module is also included to evaluate the accuracy of the recommended portfolios. In each mode BioSS can recommend which suppliers should be contracted with and how much material should be purchased from each. The recommended blend should have chemical characteristics within the technological constraints of the conversion technology and also best satisfy the stakeholder group. The fuels library is made up from a wide variety of sources and contains around 100 unique descriptions of potential biomass sources that a developer may encounter. The library takes a wide data collection approach and has the aim of allowing for estimates to be made of biomass characteristics without expensive and time consuming testing. The supplier evaluation part of BioSS uses a QFD-AHP method to give importance weightings to 27 different evaluating criteria. The evaluating criteria have been compiled from interviews with stakeholders and policy and position documents and the weightings have been assigned using a mixture of workshops and expert interview. The weighted importance scores allow potential suppliers to better tailor their business offering and provides a robust framework for decision makers to better understand the requirements of the bioenergy project stakeholder groups. The order allocation part of BioSS uses a chance-constrained programming approach to assign orders of material between potential suppliers based on the chemical characteristics of those suppliers and the preference score of those suppliers. The optimisation program finds the portfolio of orders to allocate to suppliers to give the highest performance portfolio in the eyes of the stakeholder group whilst also complying with technological constraints. The technological constraints can be breached if the decision maker requires by setting the constraint as a chance-constraint. This allows a wider range of biomass sources to be procured and allows a greater overall performance to be realised than considering crisp constraints or using deterministic programming approaches. BioSS is demonstrated against two scenarios faced by UK bioenergy developers. The first is a large scale combustion power project, the second a small scale gasification project. The Bioss is applied in each mode for both scenarios and is shown to adapt the solution to the stakeholder group importance and the different constraints of the different conversion technologies whilst finding a globally optimal portfolio for stakeholder satisfaction.

Buyer profiles:an empirical investigation of changing organizational requirements

Many authors have commented that the profile of the industrial buyer must change if purchasing is to adapt the increasingly dynamic and complex contexts in which firms operate. This exploratory, empirical study examined and compared the trait profiles of current top performers and of 'ideal' buyers for the future. This approach links buyer traits with perceived managerial satisfaction with role performance. Based on cluster analysis, we present a taxonomy of five 'ideal' types of buyer. We propose that future research should seek to match the identified trait clusters with a typology of purchasing contexts. © 2001 Elsevier Science Ltd.

Purchasing green transport and logistics services:implications from the environmental sustainability attitude of 3PLs

Environmental sustainability is an area of increasing importance for third party logistics (3PL) companies. As the design and implementation of services requires interaction between buyer and 3PL, the 3PLs are in a critical position to support the efforts towards greening operations of different supply chain participants. However the literature in this field reflects a gap between the perspectives of buyers and 3PLs. This chapter attempts to fill this void through an explorative case study analysis on the environmental attitude of 3PLs in order to derive implications for buyers’ behavior. The results indicate that the buyer’s role is critical in different ways in the development of green initiatives among 3PLs. An increased orientation towards longer-term contracts and joint development would likely enhance the level of green initiatives. Indirectly, the buyer has the opportunity to influence its 3PLs through interaction with employees on different levels in the company, including top management.

Purchasing green transport and logistics services:implications from the environmental sustainability attitude of 3PLs

Environmental sustainability is an area of increasing importance for third party logistics (3PL) companies. As the design and implementation of services requires interaction between buyer and 3PL, the 3PLs are in a critical position to support the efforts towards greening operations of different supply chain participants. However the literature in this field reflects a gap between the perspectives of buyers and 3PLs. This chapter attempts to fill this void through an explorative case study analysis on the environmental attitude of 3PLs in order to derive implications for buyers’ behavior. The results indicate that the buyer’s role is critical in different ways in the development of green initiatives among 3PLs. An increased orientation towards longer-term contracts and joint development would likely enhance the level of green initiatives. Indirectly, the buyer has the opportunity to influence its 3PLs through interaction with employees on different levels in the company, including top management.

A diversity dilemma in evolutionary markets

Markets are useful mechanisms for performing resource al- location in fully decentralised computational and other systems, since they can possess a range of desirable properties, such as efficiency, decentralisation, robustness and scalability. In this paper we investigate the behaviour of co-evolving evolutionary market agents as adaptive offer generators for sellers in a multi-attribute posted-offer market. We demonstrate that the evolutionary approach enables sellers to automatically position themselves in market niches, created by heterogeneous buyers. We find that a trade-off exists for the evolutionary sellers between maintaining high population diversity to facilitate movement between niches and low diversity to exploit the current niche and maximise cumulative payoff. We characterise the trade-off from the perspective of the system as a whole, and subsequently from that of an individual seller. Our results highlight a decision on risk aversion for resource providers, but crucially we show that rational self-interested sellers would not adopt the behaviour likely to lead to the ideal result from the system point of view.

Evolutionary market agents and heterogeneous service providers:achieving desired resource allocations

In future massively distributed service-based computational systems, resources will span many locations, organisations and platforms. In such systems, the ability to allocate resources in a desired configuration, in a scalable and robust manner, will be essential.We build upon a previous evolutionary market-based approach to achieving resource allocation in decentralised systems, by considering heterogeneous providers. In such scenarios, providers may be said to value their resources differently. We demonstrate how, given such valuations, the outcome allocation may be predicted. Furthermore, we describe how the approach may be used to achieve a stable, uneven load-balance of our choosing. We analyse the system's expected behaviour, and validate our predictions in simulation. Our approach is fully decentralised; no part of the system is weaker than any other. No cooperation between nodes is assumed; only self-interest is relied upon. A particular desired allocation is achieved transparently to users, as no modification to the buyers is required.

Sharing of value in business relationships:a theoretical model

This paper explores the sharing of value in business transactions. Although there is an increased usage of the terminology of value in marketing (such concepts as value based selling and pricing), as well as in purchasing (value-based purchasing), the definition of the term is still vague. In order to better understand the definition of value, the author’s argue that it is important to understand the sharing of value, in general and the element of power for the sharing of value in particular. The aim of this paper is to add to this debate and this requires us to critique the current models. The key process that the analysis of power will help to explain is the division of the available revenue stream flowing up the chain from the buyer's customers. If the buyer and supplier do not cooperate, then power will be key in the sharing of that money flow. If buyers and suppliers fully cooperate, they may be able to reduce their costs and/or increase the quality of the sales offering the buyer makes to their customer.

Public policy and electrical-grid sector innovation

Purpose – This paper aims to investigate the manner in which technological innovation in the European electrical-grid sector has developed by focusing, in particular, on the effect of public policy on innovation. To achieve this aim, this paper highlights how technological innovation and development progressed from the 1960s to the 1980s, and contrasts this period with the deregulated/privatization environment. Design/methodology/approach – The paper is based on a series of in-depth multiple company case studies of grid companies, some of their suppliers and other actors in their broader business network. Empirical data were collected through 55 interviews. Findings – The authors find that a phase of mutual collaboration was encouraged in the first period, which led to strong technological innovation with a focus on product quality and the development of functionality. Buyers played a pivotal role in the development of products and posed technical requirements. In contrast, the current role of the buyer has transformed principally into one of evaluating competing bids for specific projects. Today, buyers face increasing pressure to substantially lower CO2 emissions and transform the energy grid system. These goals are difficult to achieve without a new way of thinking about innovation. Research limitations/implications – Models to achieve innovation must not only focus on individual research projects; instead, the innovation should be factored into normal business dealings in the supply chain. Practical implications – We propose that policymakers and regulators need to: accommodate for innovation and address the collaborative elements of innovation when developing policies and regulations. Furthermore, regulators have the option of either developing a strategic vision for the electrical-grid network or incorporating sustainability into the evaluation of electrical grids and, thus, consumers’ willingness to pay. Originality/value – This paper makes a distinctive contribution in the area of innovation for electrical grids. Our paper shows how innovation and the development of new technology for electrical grids changed over time. Furthermore, this paper describes the energy sector in terms of a business network comprising the different actors involved in innovation and development and, thus, their role in the energy supply chain.

Is keiretsu really a source of competitive advantage for Japanese automotive suppliers?

Purpose - The purpose of this paper is to examine how firms create and sustain competitive advantage in the inter-firm business relationships from a supplier's perspective. It also investigates what factors affect their competitiveness and relationship between buyers and suppliers. Design/methodology/approach - This is an exploratory study on keiretsu partnerships composed of four main phases: analysis of theoretical perspectives, construction of a conceptual framework, interview of a CEO, and finally, a survey questionnaire with Japanese automotive suppliers. Findings - As a result, this paper classified these 11 companies into four supplier groups (affiliated or independent Tier 1 suppliers; affiliated or independent Tier 2 suppliers) and analysed their competitiveness developing the research propositions further. The benefits of affiliation under a keiretsu partnership are discussed, showing that there may be little benefit in being an affiliated Tier 1 supplier. Even more critical, the results show that independent Tier 2 supplier may be more competitive than affiliated tier ones. Originality/value - These intriguing results reveal an urgent need of investigating Japanese automotive supply chains from the suppliers' perspectives in the future research. This paper extended the literatures on competitive advantage and business relationships at both theory and managerial practice.

Power in distribution channels - Supplier assortment strategy for balancing power

This paper focuses on the move from buyer dominance toward interdependence between buyers and suppliers in a distribution channel. The paper introduces a case study collected through in-depth interviews and participative observations. It examines the relationships between a timber supplier and its customers in the builders' merchants sector. We stress the relevance of considering actions intended to change the power balance, rather than focusing only on trust. The power balance in a dyadic relationship is dynamic, and power positions need to be constantly re-evaluated. An important power resource is information asymmetry, manifested in the supplier's information about: products, regional and local demand, and the usage of the products. For practitioners, we highlight the possibility of exerting a non-coercive power resource, such as information asymmetry, in order to increase the relative power. Furthermore, being open about the power position between a buyer and a seller can foster a more efficient collaboration.

How can economic sociology help business relationship management?

Purpose – By analyzing organizations as social actors and business relationships as social relationships, sociology can improve business relationship management. This paper aims to explore the issues involved. Design/methodology/approach – A business relationship is an interactive exchange between two organizations embedded in a network of business connections. The paper reviews theories of social actions and social actors and the concepts of economic field and embeddedness to illustrate some social dimensions of business relationships. Findings – Social action and social actor theories emphasize that co-operation is always encumbered with conflicts, that consciousness about the relationship is fundamental for both strongly and weakly structured actors, and that actors (people involved in a business relationship) always have some freedom of manoeuvre. The concept of economic field underscores the specificity of each business relationship and the critical need for concrete analysis. The concept of embeddedness highlights that no business relationship is possible without personal bonds. Research limitations/implications – These are the first results of a deeper and broader research directed towards a conceptual model of business relationship management. Practical implications – The paper can help managers to analyze more deeply the social dimensions of business relations with both suppliers and buyers. Consciousness, the ongoing presence of conflicts, the unavoidable role of personal bonds, and interactivity are always relevant in business relationship management. Originality/value – The paper integrates sociological and business marketing approaches. It applies essential sociological theories and concepts to business relationship management.