Managing engineering contractors in the UK petrochemicals industry

Abstract

Purpose The purpose of this paper is to investigate, at the industry level, the modes of governance used by multinational companies in the UK petrochemical industry to outsource maintenance activities to engineering contractors. The study focusses on a form of novel governance structure called an Employer Panel (EP). Design/methodology/approach The study applies an inductive case study method to investigate the contractor governance mechanisms in 19 out of the 20 major petrochemical instillations located in the UK. Data included interviews, documentary and secondary evidence gathered from the cases and also industry bodies. Findings The study uncovered three distinct types of governance mode: market, managing contractor, and EP of contractors. The latter relies on the governance process of “mandated collaboration” to coordinate. Research limitations/implications The main limitation is the focus on a particular industry, albeit an important one. The research implications include extending the empirical research into other sectors which use on-site contracted maintenance such as ship and aircraft manufacturing. Practical implications The EP structure with its mandated collaboration process is of value to managers of contractual relationships as it gives insights into coordinative process and it may provide an alternative model for managing outsourcing relationships. Social implications The mandated collaborative process requires clients to engage its contractors in longer term relationships, thus increasing corporate social responsibility and providing wider job security for contractor employees. Originality/value The EP mode, as far as can be ascertained, has not been addressed in the literature before.

Service level agreement directed to suppliers of materials and services of the petrochemical sector: a criteria analysis

“…Table 3 shows the indexes and their description, linked to the research hypotheses, and the authors related to each topic. (Porter, 2008;Ritson et al, 2017;Sellitto et al, 2018Sellitto et al, , 2015Slack et al, 2010; CT2) The importance to seek suppliers who are constantly concerned about reaching low production costs and become flexible in the need to adjust prices. CT3) The importance to seek suppliers who focus on productivity efficiency.…”

“…Thus the aspect cost is not as important in this segment (Ritson et al, 2017). The maintenance of the efficient processes optimises its resources and adds value to its product or service, thus increasing the service level every client expects from their supplier (Chen and Thomas, 2017).…”

“…This statement takes on a special condition, especially if they are guided into the supply chain that exists in the process that holds the interconnection of a series of internal and external steps and which oftentimes differ from each other (Slack et al, 2010). One of the important criteria in this strategy and delivery flexibility lies in quickly reacting to the changes in delivery times that were previously agreed on, whether for longer or shorter (Ritson et al, 2017). Meeting this requirement means obtaining desired service levels by positively impacting on all the supply chain (Chopra & Meindl, 2016).…”

“…This industry has no innovative character concerning its processes and operations, but it does when it comes to its products and services, enabling this criterion to not impact on the operations' strategy (Eidelwein et al, 2016). Therefore, innovative strategies are suggested in the petrochemical industry concerning its processes and operations (Ritson et al, 2017…”