Engaging suppliers for reliability improvement under outcome-based compensations

Li, Dong; Mishra, Nishant

doi:10.1016/j.omega.2020.102343

Cited by 16 publications

(3 citation statements)

References 28 publications

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“…Management consultants [74][75][76][77][78][79][80][81][82][83][84][85][86][87][88][89][90] agree outcome based contracts are the most important evolution of the Internet of Things. This is known as servitization [61, [91][92][93][94][95]. Consensus exists about the content of the business model canvas [52,53,[72][73][74][75][76]96].…”

Section: As a Service Business Models And The Role Of Value Thereinmentioning

confidence: 99%

Insight into the Calculation Process to Decide Business Customer Value on the Digital Transformation Market

Titu,

Cozmiuc

2023

Preprint

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As a service business models have been ranked by management consultants the management innovation of 2020, and yet are scarcely theorized. Therein, value stipulations in customer contracts lead to the shift from product to service. However, there is no available research about the nature, formula and decisional process about these value stipulations. The motive for this research is to fill in this gap. The goal is to provide first insight about value stipulations in as a service business models: their formula and decisional methodology. The article is a multiple theory building case study on leading platform as a service providers, which aims to contruct the paradigm of the value decision methodology to invest in this technology by purchasing it from dedicated vendors. The methodology works to identify the management instruments involved in the decisional activities to invest in digital technology, where each management instrument is assumed to match an activity at seller and buyer; the sequence of the activities using the Critical Path Method gives the decisional process. Dependent variables are the elements of the as a service business contracts: the customer offering (product-service solution) and the value created, captured and delivered by the solution. Independent variables are given by empirical data analysis. Findings show a relationship between dependent variable value in the as a service business model contracts and independent variables governance objective, strategy, as a service business model type, activity management techniques (roadmap, program, project, operations, lean start-up), capital allocation techniques (equity, debt, options, venture capital typology). If innovation is exploitative, then the customer offering is known and value is determinable via roadmap – project management techniques (program, project, an operations) and capital allocation techniques for precictable environment, If innovation is radical, then the customer offering is not known and value is a target used to architect the solution via lean start-up innovation techniques funded by venture capital. The contribution is a new theoretical construct and deep insight into the practice of digital transformation considering all inherent issues.

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Section: As a Service Business Models And The Role Of Value Thereinmentioning

confidence: 99%

Insight into the Calculation Process to Decide Business Customer Value on the Digital Transformation Market

Titu,

Cozmiuc

2023

Preprint

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“…In addition, the interaction between different operational decisions is analyzed in more complex settings with multiple types of service contracts. Li and Mishra (2021a) study how an OEM should optimally incentivize its upstream suppliers to improve component reliability when the product that it manufactures is supported under three types contracts. Li and Mishra (2021b) compare the efficiency of performance-based contract with warranty and transaction-based contract when the spare parts face obsolescence risk and the supplier uses lifetime buy as a mitigation strategy.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The supplier's repair service is triggered by random equipment failures. Following the framework used in many papers on service contracts (e.g., Kim et al., 2010; Jain et al., 2013; Li et al., 2018; Li and Mishra, 2021a), we model the failure repair process as an

M/M/\infty

queue. System failures occur as a Poisson process with a rate λ that is determined by some exogenous activities such as product design and manufacturing.…”

Section: Modelmentioning

confidence: 99%

Negotiation for service contracting: incentives, bargaining power, and customer risk aversion

2022

Int Trans Operational Res

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In this paper, we analyze negotiation of service contracts when an equipment user (customer) outsources product failure repair service to an MRO (Maintenance, Repair, and Overhaul) supplier. The customer is risk averse due to serious consequences of system disruption. The two parties negotiate pricing terms and repair rate. We model the bilateral negotiations under three types of service contract: (i) fixed‐fee contract under which the customer pays a lump sum, (ii) pay‐per‐repair contract under which the customer pays for each repair incident, and (iii) uptime‐based contract under which the customer pays for product uptime. We investigate how different incentives under each contract interact with agents' bargaining power and customer risk aversion in the negotiation process, both theoretically and numerically. Despite that previous studies have shown that fixed‐fee contract generally does not provide incentives for suppliers to invest in repair capacity while uptime‐based contract does, we find that under a bargaining framework fixed‐fee contract can result in the highest (yet suboptimal) repair rate. Furthermore, consensus on contract types may not be achieved between the two parties. For the supplier, uptime‐based contract can result in the highest payoff while pay‐per‐repair contract leads to the lowest. For the customer, it may prefer to choose pay‐per‐repair contract when it is less risk averse and when the supplier has more bargaining power. Our results show some unexplored merits of other types of contracts when the advantages of uptime‐based contract have been highly cited.

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Maintenance Capacity Design and Quality Improvement in the Presence of Outsourcing of Maintenance Service

Miao,

Peng,

Shangguan

et al. 2024

J. Syst. Sci. Syst. Eng.

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Engaging suppliers for reliability improvement under outcome-based compensations

Cited by 16 publications

References 28 publications

Insight into the Calculation Process to Decide Business Customer Value on the Digital Transformation Market

Insight into the Calculation Process to Decide Business Customer Value on the Digital Transformation Market

Negotiation for service contracting: incentives, bargaining power, and customer risk aversion

Maintenance Capacity Design and Quality Improvement in the Presence of Outsourcing of Maintenance Service

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