Procurement and Contractual Choices for Engineer-to-Order Supply Chains

Complex projects are increasingly collaborative, involving ever greater numbers of multiple organizations, while also seeking to deliver high levels of innovation. To gain insight into how supply chain management might be developed to better support these developments, many have looked to high volume manufacturing to benchmark and seek best practice. Outcomes have often fallen short of expectation: in the construction sector, for instance, productivity and adversarial relationships are still a major cause of concern in many countries. While there have been some successes in transferring technologies and supply chain innovation from high volume manufacturing to engineering intensive sectors, such as construction, shipbuilding, machinery, and capital goods, the more general narrative is of the difficulties that have arisen. We see these difficulties arising from underlying differences between the supply chain types, and have developed a body of knowledge for “engineer-to-order” situations to better support such sectors. The procurement process is crucial to establishing conditions for success and is typically a major source of concern for the supply chain. Hence, we summarize the findings of a research project that focused on developing the principles required for procurement excellence and to structure the possible contractual choices in engineer-to-order supply chains.