Examining the effects of source selection method on procurement outcomes
Author
Landale, Karen A.F.
Rendon, Rene G.
Hawkins, Timothy G.
Date
2017-05-03Metadata
Show full item recordAbstract
The purpose of this research is to explore the effects of supplier selection method on key procurement outcomes such as procurement lead time (PLT), supplier performance and buyer team size.
Design/methodology/approach
Data were collected from a sample of 124 archival contract records from the US Department of Defense. A multiple regression model and multivariate analysis of covariance/analysis of covariance models were used to test the effects of source selection method on pertinent procurement outcomes.
Findings
The trade-off (TO) source selection method increases PLT, as does the number of evaluation factors and the number of proposals received. Substantially larger sourcing teams are also associated with the TO source selection method. Nonetheless, the TO method results in better supplier performance.
Practical implications
TO source selections yield superior supplier performance than low-bidder methods. However, they are costly in terms of time and personnel. Any assessment of supplier value should consider not only the price premium for higher performance but also the transaction costs associated with the TO method.
Originality/value
Very little research addresses a buying team’s evaluation of supplier-offered value ex ante and whether that value assessment materializes into actual value-added supplier performance. Low bidder tactics are pervasive, but price (i.e. sacrifice) is only one component of value. Benefits from superior supplier performance may yield greater overall value. If value is critical to the buyer, a TO source selection method – versus a low-bidder approach – is the appropriate tool because of higher supplier performance ex post.
Description
The article of record as published may be found at http://doi.org/10.1108/JDAL-05-2017-0006
Revised: 12 June 2017, 23 June 2017
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.Collections
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