Information availability at the competitive bidding stage for service contracts
Journal of Manufacturing Technology Management
ISSN: 1741-038X
Article publication date: 21 October 2013
Abstract
Purpose
The purpose of this paper is to explore the information that manufacturing companies have available when competitively bidding for service contracts.
Design/methodology/approach
A semi-structured interview study was undertaken with industrialists in various sectors, which are currently facing the issue of servitisation.
Findings
One of the main findings was that, despite the novelty of the process, the decision makers at the competitive bidding stage have an understanding of the involved uncertainties. In particular, the uncertainty arising from the customer as the user of the product and evaluator of the competitive bids in addition to the uncertainty connected to the competitors were identified as the main influences on the pricing decision.
Research limitations/implications
The research implications show the influences and considerations during the decision-making process at the competitive bidding stage for service contracts. These include the customer and the competitors.
Practical implications
Shortcomings in the current industrial practice were identified such as the approaches used to communicate the cost estimate for the service contract. The approaches currently used contradict research findings in the area of communicating uncertainty information, which means that further research is to be done to identify optimal approaches to displaying the uncertainty connected to the communicated information.
Originality/value
This paper offers a basis for research to understand the challenges industry faces when competitively bidding for service contracts. This can be used to develop novel approaches in supporting the decision maker such as a model that presents the probability of winning in comparison to the probability of making a profit.
Keywords
Acknowledgements
The authors gratefully acknowledge the support provided by the Innovative design and Manufacturing Research Centre (IdMRC) at University of Bath, UK funded by the Engineering and Physical Science Research Council (EPSRC) under Grant No. GR/R67507/01 for the research reported in this paper. Furthermore, the authors would like to thank the companies participating in the presented interview study.
Citation
E. Kreye, M., B. Newnes, L. and Mey Goh, Y. (2013), "Information availability at the competitive bidding stage for service contracts", Journal of Manufacturing Technology Management, Vol. 24 No. 7, pp. 976-997. https://doi.org/10.1108/JMTM-05-2012-0059
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited