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Supply chain alignment as process: Contracting, learning and pay-for-performance

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>5/03/2018
<mark>Journal</mark>International Journal of Operations and Production Management
Issue number3
Volume38
Number of pages24
Pages (from-to)732-755
Publication statusPublished
Early online date21/02/18
Original languageEnglish

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.

Bibliographic note

This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.