Public procurement: A performance management perspective

A case study at Swedish Defence Materiel Administration

Master Thesis: Business Administration with specialization in

International Logistics and Supply Chain Management, 30hp AUTHOR: Johan Klevensparr, 11531882, [email protected] SUPERVISOR: Per Skoglund

EXAMINER: JÖNKÖPING 0516

Abstract

Master Thesis in Business Administration

Title: Public procurement: A performance management perspective Author: Johan Klevensparr Date: 2016-05-22 Subject terms: Public procurement, performance indicators, purchasing, strategic procurement, categorization, dimensions

Purpose - The purpose of this thesis is to explore what performance indicators that exist within public procurement in defence sector context and how such performance indicators can be categorized.

Methodology - For the purpose of this thesis, an abductive approach was applied. This thesis is characterized as an exploratory multimethod qualitative research, which emphasize a single case study and a comprehensive research literature review. The empirical data was collected using semi-structured interviews, observations and documentary. The empirical data was analyzed using a data display and analysis, whereas a descriptive and content analysis was used for the research literature review.

Findings - Initially, a comparison between the conducted research literature review and the empirical study resulted in 117 performance indicators were abled to be identified. Furthermore, with support from the research literature review, the empirical study and the frame of reference, categorizations of performance indicators were possible. Through research literature review, the author were able to identify eight dimensions cost, quality, time, flexibility, sustainability, innovation, risk and compliance, all of which can be aligned to public procurement. Through the empirical study, seven elements were identified as categories. These elements include business strategy and development, operations management, category management, supplier management, customer management, procurement and expert and system support, all of which with aligned performance indicators. Through the frame of reference, three decision-levels were used as categorization of performance indicators. The decision-levels could either be strategic, tactical or operational. Finally, a merger of decision-making levels and elements resulted in a conceptual model, visualizing how elements with aligning performance indicators within public procurement could be organized and structured.

Research limitations - At first, this thesis uses only one database for the research literature review, limiting the search result of publications concerning the research topic of this thesis. Secondly, single cases study within the defece sector, which limits the amount of information and may prevent transferability possibilities for other public procurement organizations.

Future research - From the result of this thesis, several potential research opportunities has been discovered. First, following-up and measure PIs in public procurement in order to justify the “real” compliance to rules and regulation. Another one is possible challenges with implementing PIs in public procurement organizations. Lastly, measuring process maturity in public organization would allow benchmarking possibilities among public organizations and defece sector procurement.

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TABLE OF CONTENT 1 INTRODUCTION ...... 2 1.1 BACKGROUND ...... 2 1.2 PROBLEM FORMULATION ...... 3 1.3 PURPOSE ...... 3 1.4 DISPOSITION ...... 4 2 FRAME OF REFERENCE ...... 6 2.1 PUBLIC PROCUREMENT ...... 6 2.2 PERFORMANCE MANAGEMENT ...... 12 3 METHODOLOGY ...... 14 3.1 RESEARCH PROCESS ...... 14 3.2 RESEARCH APPROACH ...... 14 3.3 RESEARCH DESIGN ...... 15 3.4 RESEARCH STRATEGY ...... 15 3.5 DATA COLLECTION ...... 17 3.6 DATA ANALYSIS ...... 22 3.7 RESEARCH QUALITY ...... 23 4 RESEARCH LITERATURE REVIEW ...... 26 4.1 DESCRIPTIVE ANALYSIS ...... 26 4.2 CONTENT ANALYSIS ...... 30 5 EMPIRICAL DATA ...... 36 5.1 CASE COMPANY ...... 36 5.2 EMPIRICAL FINDINGS ...... 38 6 RESULT AND ANALYSIS ...... 42 6.1 WHAT PERFORMANCE INDICATORS CAN BE IDENTIFIED WITHIN PUBLIC PROCUREMENT? ...... 42 6.2 HOW CAN PERFORMANCE INDICATORS WITHIN PUBLIC PROCUREMENT BE CATEGORIZED? ...... 54 7 DISCUSSION ...... 63 7.1 RESULT DISCUSSION ...... 63 7.3 LIMITATIONS ...... 64 8 FINAL CONCLUSION ...... 65 8.2 THEORETICAL AND PRACTICAL CONTRIBUTIONS ...... 65 8.3 FUTURE RESEARCH ...... 66 REFERENCES ...... 67 BIBLIOGRAPHIC (RESEARCH LITERATURE REVIEW) ...... 69 APPENDIX ...... 73

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TABLE OF FIGURES

FIGURE 1 THESIS DISPOSITION ...... 4 FIGURE 2 FIVE FORCES OF THE PROCUREMENT SYSTEM ...... 8 FIGURE 3 PURCHASING PROCESS ...... 11 FIGURE 4 PUBLIC PROCUREMENT PROCESS ...... 12 FIGURE 5 RESEARCH PROCESS ...... 14 FIGURE 6 RESEARCH APPROACH ...... 15 FIGURE 7 THE LINKED BETWEEN DATA COLLECTION METHOD AND RESEARCH QUESTIONS ...... 17 FIGURE 8 DATA ANALYSIS PROCESS ...... 22 FIGURE 9 FMV HIERARCHAL STRUCTURE ...... 36 FIGURE 10 FMV PERSPECTIVES ...... 38 FIGURE 11 PUBLIC PROCUREMENT PERFORMANCE MODEL (PPPM) ...... 62 FIGURE 12 PUBLIC PROCUREMENT PERFORMANCE MODEL (PPPM) ...... 65

LIST OF TABLES

TABLE 1 LIST OF CONCEPTS AND SEARCH WORDS ...... 18 TABLE 2 SAMPLE GENERATION ...... 18 TABLE 3 SCREENING PROCESS AND FINAL SAMPLE ...... 19 TABLE 4 LIST OF INTERVIEWS ...... 21 TABLE 5 LIST OF OBSERVATIONS ...... 21 TABLE 6 DISTRIBUTION OF PUBLICATIONS OVER TIME ...... 26 TABLE 7 DISTRIBUTION OF JOURNALS ...... 27 TABLE 8 DISTRIBUTION OF DOCUMENT TYPE ...... 28 TABLE 9 DISTRIBUTION OF PERFORMANCE DIMENSIONS OVER TIME ...... 28 TABLE 10 CLASSIFICATION OF PUBLICATIONS WITH SUITABLE DIMENSIONS ...... 29 TABLE 11 COST DIMENSION ...... 30 TABLE 12 QUALITY DIMENSION ...... 31 TABLE 13 TIME DIMENSION ...... 32 TABLE 14 FLEXIBILITY DIMENSION ...... 32 TABLE 15 INNOVATION DIMENSION ...... 33 TABLE 16 SUSTAINABILITY DIMENSION ...... 33 TABLE 17 RISK DIMENSION ...... 34 TABLE 18 COMPLIANCE DIMENSION ...... 35

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1 Introduction This chapter introduces the thesis concerning public procurement. Initially, the background to the purpose will be presented, which will consecutively lead to the problem formulation. This is followed by the purpose, which previous sections have set a foundation for. Finally, the chapter ends with a disposition of the thesis. 1.1 Background New Public Management (NPM), as its known today, was introduced already in the 1980s, causing reforms and changes that echoed throughout public organizations across the world (Hood, 1991). According to Schedler, Lawrence and Mussari, (2004), was NPM combination of models and a wide range of practices including performance measurement, program evaluation, resource management methods and other techniques tested in the 20th century. The ambition of NPM was to improve the overall performance of public organizations by focusing on professional management, performance methods, output controls, decentralization, competition, private-sector management and accountability (Hood, 1991; Fryer, Antony and Ogden, 2009).

However, this thesis instigates in the modern public management reforms and strategies, addressing performance management and measurement in public organization (Schedler, Lawrence & Mussari, 2004). More precisely, this thesis is directed towards public procurement.

In recent years, the role of public procurement gained interest among researchers due to its complexity, aiming to fulfill politic, economic and social objectives (Flynn and Davis, 2014; Murray, 2009; Thai, 2009). This implicates on covering a wider range of public services such law and order, health services, social services, education, defence, transport and environmental impacts (Thai, 2009; Albjörn and Freytag, 2012; Ùbeda, Alsua & Carrasco, 2015), all of which are subsidized by public money (Flynn and Davis, 2014; Arrowsmith, 2010b; Murray, 2009; Thai, 2009; Knight, Harland, Telgen, Thai, Callender & McHen, 2007).

In the last couple of years, the public sector has experienced extensive management and financial restructurings due to social and economic pressure at both national and global level in order to “do more with less” (Schapper, Veiga Malta & Gilbert, 2006). Budget constraints (Richart, 2015; Albjörn and Freytag, 2012), government downsizing, public demand for increased transparency, fairness and equity have forced public organizations improving their procurement efficiency, effectiveness and outcomes (Thai, 2009). Correspondingly, public organizations are facing a rapid development of emerging technologies, implying wider range of products and service, environmental concerns and increased complexity of trading agreements and regulations (Thai, 2009). As a result, public organizations have re-directed their aim from being primarily ad-hoc oriented to take on a more strategic role, improving the overall organizational performance (Poister, 2010; Richart, 2015). However, aligning the organizational strategic objectives with organizational and operational performance has been difficult (Poister, 2010; Hoque, 2008).

The lack of reliable performance indicators covering public procurement has caused public organizations to explore performance indicators used in private organizations. Although the differences between sectors are well recognized in research (Knight et al., 2007), learning cross sectors can be of great value since they are becoming more and more alike (Albjörn and Freytag, 2012). Recent research conducted by Bemelmans, Voordijk & Vos, (2013); van Weele, (2014) and van Lith, Voordijik, Castano & Vos, (2015), have recognized performance indicators as essential enablers for the development of the procurement function in becoming more strategic. A study conducted by Rendon, (2015), reveals that public procurement in defence sector are reaching low level of maturity in their procurement function, primarily involving monitor and measuring performance.

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Considering previous reasoning, it is of great interest to further explore public procurement and what performance indicators are currently being assessed. A case study has been conducted at a public procurement organization in Sweden that is currently looking over their performance indicators, aligning it to the overall organizational strategy. 1.2 Problem formulation The current economic environment followed by political and social-economic pressure, such as limited budgets, creates both challenges and opportunities for procurement organizations in their transformation in becoming more strategic (Richart, 2015). To be able to meet the needs of all stakeholders involved in public procurement, and given the strategic role that public procurement nowadays plays, performance measures have become essential in order to determine and evaluate the overall performance of an organization (Caniato, Luzzini & Ronchi, 2014; Gunasekaran and Kobu, 2007). Previous research on procurement as a strategic function has been conducted in literature, addressing the complexity of public procurement (Flynn and Davis, 2014; Diggs and Roman, 2012; Murray, 2009; Thai, 2009), benchmarking of public procurement processes (Schapper et al, 2006; Rendon, 2015) and procurement processes maturity (Bemelmans et al., 2013 and van Lith et al., 2015). However, less extensive research addressing public procurement performance indicators and incorporated categorizations is documented. Furthermore, Rendon, (2015) argues that there is a need for measuring procurement process and outcomes, as well as the development of such indicators. This is in line with Murray (2009), who states that here has been a gap in public procurement performance. Thus, it is of interest to explore what performance indicators that exist in public procurement and how performance indicators can be categorized. 1.3 Purpose It has been stated in the problem formulation that there has been limited research addressing public procurement performance indicators, specifically, the lack of incorporated alignments of such indicators. Consequently, there has been a challenge for public procurement organizations making strategic decisions for the organization. Therefore, it is important for public procurement organization to identify appropriate performance indicators that could demonstrate the direction of the organization, expose areas of improvements and support managers supervising the public procurement processes. Thus, the purpose of this thesis has been formulated as followed:

“The purpose is to explore what performance indicators that exist within public procurement in defence sector context and how such performance indicators can be categorized”.

To achieve this purpose, it has been broken down into two research questions. In order enable categorization of performance indicators within public procurement, performance indicators needs to be identified. Thus, the first research questions is formulated as followed:

1. What performance indicators can be identified within public procurement?

In order to be able to categorize performance indicators, it is essential to know what performance indicators there are. Thus, will the result from the first research question make it possible to categorize performance indicators within public procurement. Hence, the second research question is formulated as:

2. How can performance indicators within public procurement be categorized?

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The purpose of the thesis is answered once the first and second research question is responded to, e.g. the combined result of the first and second research question contribute to answer the purpose of this thesis.

1.4 Disposition The content of this thesis is divided into seven chapters, where each chapter describes its content more in-depth. The illustration of the following Figure 1 will clarify how each chapter is linked throughout the thesis.

Figure 1 Thesis disposition

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Chapter 1: The introduction chapter presents the background of this thesis, followed by the problem formulation regarding performance indicators within public procurement. These two section results in a purpose, which is broken down into two research questions. The chapter ends with a thesis disposition.

Chapter 2: The methodology chapter explains how the research for this thesis has been conducted. Initially, the research process is described, followed by research approach, research design and research strategy. The middle section of this chapter presents how data have been collected and analyzed. The chapter ends with a discussion regarding the quality of this thesis.

Chapter 3: The frame of reference chapter address the main theories used in this thesis. This chapter presents two theories, public procurement and performance management.

Chapter 4: This chapter presents the results of the conducted research literature review for this thesis. At first, a descriptive analysis is presented which is then followed by a content analysis.

Chapter 5: The empirical data chapter presents the case company and the empirical findings of this thesis. The findings include performance indicators and categories within public procurement.

Chapter 6: The result and analysis chapter present the result and analysis conducted in order to answer the research questions. Initially, the result from the research literature review and the empirical study is presented. This is followed by a combined analysis of the research literature review and the empirical findings, resulting in a final sample of performance indicators. This chapter ends with categorization of performance indicators within public procurement. Thus, answering the second research question.

Chapter 7: The discussion chapter is divided into two discussion sections. The first addresses discussion regarding the result of the thesis. The chapter ends with a limitation discussion.

Chapter 8: The final conclusion chapter is the last chapter presented in this thesis. This chapter involves fulfillment of purpose, theoretical and practical contributions, followed by suggested further research.

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2 Frame of reference This chapter presents theoretical information regarding public procurement and performance management. Initially, a comprehensive description of public procurement will be presented. This is followed by a theoretical perspective on performance management.

2.1 Public procurement Public procurement can be referred to a government’s activity of purchasing the goods and services needed to carry out its functions (Arrowsmith, 2010b). Furthermore, Prier and McCue, (2009) defines public procurement as:

“the designated legal authority to advise, plan, obtain, deliver, and evaluate a government´s expenditures on goods and services that are used to fulfill stated objectives, obligations, and activities in pursuant of desired policy outcomes”

According to Arrowsmith, (2010b), the concept of public procurement can be described in three phases; (1) determining which goods or services are to be bought and when (procurement planning), (2) the process of placing a contract to acquire those goods or services which involves, in particular, choosing who is to be the contracting partner and the terms on which the goods or services are to be provided and (3) the process of administrating the contract to ensure effective performance. In order to illustrate the diversity of public procurement, Arrowsmith, (2010b) argues the transactions of procurement can be categorized in three types: Goods - supplies or products, which can either be simple items such as office furniture, or very complex items such as missiles or tanks. Works - primarily construction, involving building roads, railways, bridges, and government buildings. Services - emphasizes on manual services such as maintenance of government buildings, cleaning of roads, professional services such as architects or engineers for construction, legal services or consultancy services.

2.1.1 Public procurement system Public procurement system´s ability to achieve policies and objectives is influenced by the environment, simultaneously as it influences its environment (Arrowsmith, 2010b). As each country has its own culture, laws and regulations, economic and social conditions, the procurement system as such is therefore exclusive to that particular country (Thai, 2009). However, all procurement systems, independent in which country its located at, is somewhat exposed to environmental forces. The environment consists of five major forces; (1) market forces, (2) political forces, (3) legal forces, (4) social, economic and other forces, and (5) internal forces.

(1) Market forces The market forces is primarily represented as market competition, which determines whether or not the objectives of the procurement are achieved regarding socio-economic objectives, if governmental entity can fulfill its needs in dimensions of timeliness, quality and cost of purchased goods, services and capital assets (Thai, 2001). Due to globalization, procurement has become more complicated and challenging concerning communication, currency exchange rates and payments, customs regulations, lead-time, foreign government regulations, trade agreements and transportation (Thai, 2001; Thai, 2009). Furthermore, Thai (2001) argues that procurement professionals are torn between free trade agreements and their countries´ economic

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development/stabilization policies implying that the choice between selecting domestic or foreign firms becomes difficult.

(2) Political forces The political forces can be described by the concept of the iron triangle, which is very popular in the area of defence procurement (Thai, 2001). The iron triangle is a coalition of three cornerstones; interests groups, bureaucrats and legislative body, all of which creates a triangle of relationship, influencing one another (Thai, 2001). The interest groups can represent a group of individuals and organizations in the private sector, trade associations, professional associations and business firms or companies within a democracy (Thai, 2001). These interest groups are influencing the procurement system in several ways such as lobbying legislative bodies to authorize or change procurement acts, influence budget authorization and appropriations processes (Thai, 2001). Usually, a government program is a compromise among different interest groups, policy makers and management (Thai, 2001). Following the procurement program authorization and appropriations stages, the iron triangle immediately shifts (Thai, 2001). According to Thai (2001), public procurement professionals are having trouble making “right” decisions as they are confronted by political pressure, subsequently assuring value for money. An example, provided by Thai (2001) concerns whether or not a procurement professional should maintain future business competition by keeping weak companies in business or let these go out of business and leave a few specialized firms to compete for contracts?

(3) Legal forces In opposition to public procurement rules and regulations, the legal forces refers to a broad legal framework that governs all business activities (Thai, 2001). According to Thai (2001) these activities, primarily includes research and development (regulations addressing the safety and health of new products), manufacturing (emphasizing with safety and health regulations at workplace and pollution control), marketing (regulations stressing the deception of advertising, disclosure or product characteristics), personnel (regulations addressing the equal opportunity for women and minorities), and contracts (stresses both private and public contract requirements, disputes and contract violation, which are governed under the same contract law).

(4) Social, economic and other forces The social forces are primarily represented by free media, civil societies, engaged local communities and independent citizens, all of which are key components for good governance. Additionally, these social forces support the governance, intentionally or not, by holding procurement officials accountable for transparency, fairness and efficiency, enabling participation, oversight and proactive engagement (Thai, 2009). This could include creating concrete opportunities for participation and oversight thorough participatory development of procurement regulations and policies, procurement budget allocations, monitoring income and asset declarations, enable the development of independent and competitive media that can investigate and report on procurement process and corruption (Thai, 2009). Other forces that influence the procurement system are culture and technology (Thai, 2001). Within certain cultures, a gift is a common public relation practice, however, distinguishing a gift from a bribe is difficult and thereby challenging for procurement practitioners (Thai, 2001). Furthermore, due to the rapid development of new technology such as e-signature and procure information technology, public procurement has been forced to adopt new methods aligning such change (Thai, 2001).

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(5) Internal forces The public procurement system’s, ability achieving procurement policies or goals is highly influenced by the internal forces (Thai, 2001). According to Thai (2001), these internal forces can be descried as followed: • The interaction between elements of the public procurement systems, various officials and organizations in the three branches of government (executive, legislative and judiciary), actors and sub-agencies within a department or executive agency and actors and organizations external to sub-agencies • Type of goods, services and capital assets required for an agency´s missions • Professionalism or quality of procurement and procurement-related workforce

Adopted from Thai, (2001), pg.33 Figure 2 Five forces of the procurement system

2.1.2 Public procurement objectives There are numerous of objectives within in Public procurement and even though objectives may differ, it is essential to understand these objective and how they interact with one another (Arrowsmith, 2010b). Arrowsmith, (2010b) has identified eight key objectives, all of which is briefly described below.

Value for money (VfM): Value for money is commonly defined by the concepts of economy, efficiency and effectiveness (Erridge and Nondi, 1994). Furthermore, Arrowsmith (2010a) and Arrowsmith (2010b) adds that "value for money" is the efficiency in acquisition of required goods, works or services by ensuring that the goods, works or services are suitable e.g. meet requirements for the task in question and that they are not over specified. In addition, "value for money" concludes an arrangement to secure what is needed on the best possible term as well as ensure that the contracting partner can delivery what was agreed.

Integrity: Integrity emphasizes on the idea that public procurement organizations is expected to carry out procurement without any influence of corruption such as bribes (Arrowsmith, 2010b), and to avoid improper, wasteful or fraudulent practices (Knight et al., 2007).

Accountability: “Accountability encompasses the idea of conducting public procurement in a manner that can be traced and defended, is transparent and consistent, satisfies and manages stakeholders’ expectations, is fair and equitable, and follows ethical norms set within organizational and societal contexts in order to maximize the benefit obtained from spending public funds" Diggs and Roman, (2012).

Equality: Equality refers to equal treatment for those participating in the procurement system and have two roles; (1) serve to achieve other objectives of the procurement system such as value for

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money, prevent corruption or open up markets for competition securing the best possible offer, and (2) serve as an objective of the procurement process in its own right (Arrowsmith, 2010b).

Fairness: Fairness refers to fair treatment of suppliers and emphasizes on procedural fairness (e.g. "due process") according to which suppliers have a right to have their case heard before a decision that may adversely affect them such as excluding them from a possible contract (Arrowsmith, 2010b).

Horizontal policies: Horizontal policies refer to efficient implementation of industrial, social and environmental policies in procurement (Arrowsmith, 2010b). Furthermore, these policies could include improving access to procurement for SME´s by providing training on public procurement procedures or better information, resulting in a wider participation by additional firms leading to improved quality tenders, hence enhancing value for money (Arrowsmith, 2010b).

Opening up public markets: Opening up public markets emphasizes on international trade and the fact that governments have deliberately favored domestic industry in awarding contracts (Arrowsmith, 2010b). Public procurement organizations are achieving their objectives through the development of trade rules. These trade rules includes; (1) prohibiting discrimination against the suppliers, goods and services of other countries, (2) requiring the adoption of transparent procedures for awarding procurement contracts, (3) standardization of procedures for awarding public procurement contracts and (4) addressing corruption.

Efficiency in the procurement process: Efficiency in the procurement process refers to how the procurement process itself should carried out without unnecessary or disproportionate delay or waste of resources and unreasonable costs for suppliers (Arrowsmith, 2010b).

According to Arrowsmith, (2010b), "both the objective of value for money in acquiring the goods, works or services and the objective of equal treatment (in the sense of equal access to the opportunities of government business) might suggest that contracts should generally be awarded by open tender in which any qualified firm may participate; but the costs of submitting and evaluating a large number of tenders may be considered to be disproportionate to any benefits to these objectives, with the result that a selective tendering procedure (limited to invited firms only) is considered more appropriate".

2.1.3 Procurement process The public procurement process as such, is comparable to the private purchasing process due to common routines and similar steps (Knight et al, 2007; Murray, 2009). However, despite the similarities, this sub-section will briefly cover both public and private procurement process in order to provide readers with sufficient information and to expose the complexity of public procurement processes.

2.1.3.1 Purchasing process The purchasing function traditionally encompasses the process of buying and is considered as an operational activity (van Weele, 2014). Further more, Van Weele, (2014) defines purchasing as:

“ The management of the company´s external resources in such as way that the supply of all goods, service, capabilities and knowledge which is necessary for running, maintaining and managing the company´s primary and support activities is secured at the most favorable conditions”.

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In the purchasing process, in which activities occur, van Weele, (2014) emphasizes on six distinct phases; (1) determining specification, (2) selecting supplier, (3) contracting, (4) ordering, (5) expediting and evaluation and (6) follow-up and evaluation. However, before the purchasing process begins, the process is initiated with a need or a problem that needs to be solved or fulfilled (Knight et al, 2007).

(1) Determining specifications This phase emphasizes on specifying the need of a good or a service, by determine the functionality. However, before determining specifications, the organization is confronted with a make or buy decision. This decision concerns the organization ability to determine if the product/service or parts of it can be produce or developed in-house or if they should be contracted out. Furthermore, this decision is also supported by the specification, which includes both functional and technical specifications, which can be referred to as the purchase order specification. The purchase order specification contains a set of documents that encompasses quality specifications, logistics specifications, legal and environmental specifications and a target budget.

(2) Supplier selection Once the purchasing requirements have been defined and transformed into functional or technological specifications, a supply market exploration is performed (van Weele, 2014). According to Knight et al., (2007), this phase is normally occurs correspondingly with the specifications. The supplier selection phases include four sub-phases; (1) method for sub-contracting, (2) preliminary qualifications of suppliers and drawing up the “bidders” list, (3) preparations for the request for quotations and analysis of the bids received and (4) selection of supplier. Where the last step is the most important involving tender and “bidder long list”, which becomes “bidders short list”.

(3) Contracting This phases emphasizes on the contract and potential negotiations of terms and conditions such as price, delivery terms (incoterms), terms of payment, penalty clauses and warranties. However the purchasing agreement naturally depends on the product, project or service that is to be purchased (van Weele, 2014).

(4) Ordering The ordering phase includes establishing the routine in which the order should be placed, usually electronically. Furthermore, order routines needs to be developed, as well as the order handling process, which is determine in earlier phases but executed in this phases (van Weele, 2014).

(5) Expediting and evaluation The expediting phase emphasizes on whether or not the supplier live up what was agreed upon. There are approaches to expediting, all of which stresses in what stage the purchasing organization prevents errors form occurring. “Exception expediting”, awaits the feedback from customer regarding delivery delays and than takes immediate action. A “Routine statues check” is where the purchasing organization contact the supplier a few days post delivery with a request to confirm delivery date, preventing unexpected surprises. The “advanced statues check” is primarily used for critical purchased parts and critical suppliers. This stages involves continuous progress check and on-site visits e.g. “field expediting”.

(6) Follow-up and evaluation This phase emphasizes on the buyer’s role post the customer delivery such as warranty claims, penalty clauses and administrative work, involving archiving. In addition, vendor rating is also included in this phase since it adds value to both the purchasing organization as well as the

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supplier in terms of re-selection of supplier. Vendor rating can involve documenting experiences of the supplier such as supplier´s quality and delivery record, competitiveness and innovation

Figure 3 Purchasing process

2.1.3.1 Public procurement process As seen in Figure 3 above, Skoglund, (2012) has pointed out the processes and limitations included in public procurement based on van Weele. However, in comparison to van Weele´s, (2014) description of the procurement process, the Swedish Competition Authority, (2016) has divided the public procurement process in in three phases; preparation phase, execution phase and the contract management phase. Based on the Swedish Competition Authority, (2016), the phases can be summarized as followed:

Preparation phase: Demand and need analysis: The purpose of this step is to identify what is needed and when it is needed. This step includes early involvement of the customer, identify the need for the entire authority and analyze previous contracts, consider environmental and social aspects in the specification and the total value of what is needed since the threshold value determines the tendering process. Supply market research and analysis: The purpose of this step is to acquire sufficient knowledge regarding market availability (e.g. what the market has to offer) and what suppliers exist on the market. However, equality and treatment among supplier are essential and it is therefore important not to provide any information that could result in advantages for a particular supplier. A market analysis should answer the following questions. (1) What does the market offer with regard to the need intended to procure? (2) What suppliers exist on the market? (3) Is the specifications reasonable? (4) Can the supplier meet the specifications? (5) Is it price or quality that creates the competition on the market? (6) What is the threshold value of the need? Strategy development: This step is the finally step in the preparation phase which summarizes the previous two steps, resulting in a strategy. In addition, this step includes the choosing of procurement procedure and as well as what law to apply (LOU1 and LUFS). In addition, determining if the value is above or beneath the threshold value needs also to be considered. Below the threshold value, simplified, selection, direct award and competitive dialogue procedure are the alternatives.

1 LOU is an abbreviation for Swedish Public Procurement Act (2007:1091) whereas LUFS is an abbreviation for Defence and Security Procurement Act (2001:1091) all of which are derived form the EU- directives and basic principles of Union Law

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Whereas above the threshold values, open procedure, restricted, negotiated and competitive dialogues are the alternative procedures. Furthermore, construction of specification and preparations for the tendering process are also handled. To ensure that all that’s is needed is included, the following questions needs to be answered, (1) Does LOU comply with the procurement procedure? (2) Is there a framework agreement that complies with the actually need? (3) Is the procurement within the budget? Has the specification been constructed in such a way that it encourages innovation?

Execution phase: Tendering and supplier selection: The preparation phase should have provided sufficient information concerning the product or service intended to procure enabling the tendering process. The tendering processes which is also known as the solicitation process, primarily involves the execution of already decide things in the previous phase. This phase includes; request for tender, evaluate tender, qualifications of supplier, supplier selection and awarding contract. Contracting: The final step is to sign the contract and contract closeout.

Contract management phase: Expediting and evaluation: This step emphasizes on contract briefing, regulate the co-operation, assure a point-of-contact and develop routines. Follow-up and evaluation: This step address whether or not the supplier actually live up to what was agreed upon. It involves monitoring the performance of the supplier such as on-time deliveries, the right quality and quantity of delivered goods or services and that price taken by the supplier is actually according to the contract. Lastly, an evaluation of the whole procurement process is conducted, in order to utilizes “lessons learned” and improve the process when receiving a new procurement assignment.

Adapted from Swedish Competition Authority, (2016)

Figure 4 Public procurement process 2.2 Performance management The strategic approach on performance management encompasses strategic frameworks, performance indicators, methodologies and processes, all of which enable employees to gain significant insights of the overall organizational performance (Poister, 2010). According to Poister, (2010), performance management can be defined as:

“the process of setting goals for an organization and managing effectively to achieve those goals and eventually bring about the desired outcomes. In that sense, strategic management can be viewed as a performance management at a strategic level”. (Poister, 2010. pg 251)

In the following sections, performance measures will be presented and also a method on how decision-levels can be used to categorize performance measures.

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2.2.1 Performance measures Performance measures (PMs) are used to determine the efficiency and effectiveness of an action (Gunasekaran and Kobu, 2007) and as Kaplan (1990) states: “No measure, no improvement”. In order to completely understand PMs and metrics, one has to clarify and define the difference between a measure and a metric. According to Coyle, Langley, Novack and Gibson, (2012), a measure can be defined as a simple quantitative reading such as an output originated from an activity or process involving no calculations whereas a metric on the other hand, involves calculations or combinations of measurements, often a ration. Nevertheless, Gunasekaran and Kobu (2007), states that performance measures and metrics are not solely measuring performances since they are embedded in within politics, emotions and behavioral matters. Performance measures enable a more open and transparent communication between people, which enhances co-operative supported work. Hence, improving organizational performance (Gunasekaran and Kobu, (2007).

The purpose of measuring organizational performance can be summarized to six principles (Gunasekaran and Kobu, (2007); (1) identify success; (2) identify whether customer needs are met; (3) help the organization to recognize its processes and distinguish what they know or what they do not know; (4) identify areas where difficulties, bottlenecks and wastes are located as well as areas of improvement; (5) ensure that decisions are based on facts, not assumptions, emotions, faith or intuition and (6) expose if planned improvements actually were executed.

2.2.2 Performance levels Gunasekaran et al., (2001) states that performance measures that are used in all organizations influence decisions in different levels. According to Gunasekaran et al., (2001), there are three decision levels that performance indicators can be categorized into; (1) strategic, (2) tactical and (3) operational. The strategic category emphasizes typically on performance indicators reflected by top management decisions regarding financials (Gunasekaran et al., 2001; Gunasekaran and Kobu, 2007), organizational goals and objectives (Neely et al., 1995; Meybodi, 2013; Caniato et al., 2014, development core competencies, understanding external environmental factors such as the state of competition, technology and globalization (Meybodi, 2013; Nair, Jayaram and Das, 2015). The tactical category address performance indicators influence by middle management (Gunaserakran and Kobu, 2007) allowing the strategic ones to be achieved (Neely, Gregory and Platts, 1995). The tactical performance indicators concerning indicators that are appropriate in both the strategic category, as well as in the operational category. This primarily involves planning of the day-to-day operations as well as specific and technical perspectives regarding cost, quality, cycle time and delivery (Gunasekaran, 2001; Meybodi, 2013). The operational category focuses on the day-to-day operations that can be monitored and measured such as productivity of employees, lead-times and inventory (Gunasekaran et al., 2001; Caniato et al., 2014). The choice of which category a performance indicator (e.g. strategic, tactical and operational) should be aligned to is determined by which category is considered to be the most appropriate (Gunasekaran et al., 2001; Gunasekaran and Kobu, 2007).

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3 Methodology This chapter presents research methodology and methods used to achieve the purpose of the thesis. Initially, a brief introduction will be given regarding the work process, as well as the linkage between research questions and methods. This is followed by research approach, research design, research strategy, collection and data analysis. The chapter ends with a discussion regarding research quality. 3.1 Research process The research process, in which this thesis has followed can be divided into seven steps, see in Figure 5. The research process was initiated by a company visit where “surprising facts” from observations concerning performance indicators in public procurement were identified. Following this, a brief literature review within public procurement was conducted where a gap was identified. Thus, justifying what was observed during the company visit actually was of interest. Based on the company visit and the brief literature review, a problem formulation and research questions were formulated. In order to answer the research questions and fulfill the purpose, a research strategy was chosen by the author.

Figure 5 Research process For this thesis, a case study was considered to be an appropriate research strategy for the empirical study, providing a more in-depth understanding of a phenomenon. Correspondingly to the case study, a research literature review was conducted in order to gain knowledge and to explore the phenomenon that has previously been observed. The data collection techniques used in the empirical study includes semi-structured interviews, observations and documentary. When relevant data had been obtained from both the empirical study and the research literature review, two separate data compilation were conducted. Based on the data analysis, the research questions were abled to be answered. Thus, fulfilling the purpose of the thesis.

3.2 Research approach Conducting research will involve the use of theory, whether it is used in the design of the research may not be clear, however, during the presentation of the findings and conclusion it tends to be more obvious (Saunders, Lewis and Thornhill, 2012). The extent to which the author is well aware of theory in a research can be exposed based upon the reasoning in which the study adopts. According to Saunders et al., (2012), there are three research approaches: inductive, deductive and abductive.

The research approach, which underpins this thesis, is primarily an abductive approach which is a combination of an inductive and deductive approach. The process of which this thesis have been exercising an abductive research approach is in line with Saunders et al., (2012) and Patel and Davidson, 2011), and can be described in three major steps; (1) ideas were formulated where “surprising facts” was discovered through observations (inductive), (2) based on that, a theoretical framework was developed through a extensive research literature review (deductive),

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correspondingly as a case study was conducted (inductive) and (3) the final conclusions were developed combining the result of both approaches (abductive). Hence, it cannot be stated that this thesis is entirely inductive. An illustration justifying the selected research approach can be seen in Figure 6.

Adapted from Ekström, (2012) and Skoglund, (2012)

Figure 6 Research approach 3.3 Research design The research design refers to the general plan how researchers intend answering their research questions in order to fulfill their purpose (Saunders et al., 2012). This includes selecting the methodological choice of a research design, as well as deciding the nature of the research design (Saunders et al., 2012). The methodological choice of a research, includes selecting a quantitative, qualitative or multiple methods research design (Saunders et al., 2012). Whereas the nature of a research design concerns the way in which you intend to ask your research questions, which either is of exploratory, descriptive or explanatory character (Saunders et al., 2012).

As this thesis has applied more than one qualitative data collection technique with associated data analysis procedures, the methodological choice of this thesis is what Saunders et al., (2012) refers to as a multimethod qualitative study. Furthermore, this methodological choice is according to Saunders et al., (2012) preferable since it allows researchers to conduct a more comprehensive data collection, analysis and interpretation. Lastly, due to the fact that that the collection of data are derived from interviews, observations and a research literature review, and the findings and result will not be presented in numbers, this thesis is according to Wilson, (2010) and Saunders et al., (2012) characterized as a qualitative.

The nature of this thesis can, according to Saunders et al., (2012) and Yin, (2014), be seen as exploratory since the purpose of this thesis is to explore, which allows the author to gain insight about the research topic and discover what is happening. In addition, by conducting an exploratory research, the possibility of being flexible and adaptable to change enables the author to answer the research questions, thus fulfilling the purpose of this thesis.

3.4 Research strategy A research strategy emphasizes on the overall plan on how you intend to encounter your research questions, e.g. where to retrieve data, how to collect and analysis data, as well as ethical issues and constraints that might arise performing a research (Saunders et al., 2012). Furthermore, the choice of research strategy is essential achieving coherence throughout the entire research (Saunders et al., 2012). Therefore, this section presents the research strategies of this thesis. Initially, a systematic literature review is presented which is followed by the case study.

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3.4.1 Research literature review For this thesis, a research literature review has been conducted in order to describe existing knowledge, justify the need for new research, explain research findings and quality of available research, all of which are in line with Fink, (2010). Du to the fact that the body of public procurement is well covered in literature, this strategy will enable possible answers to the research questions in this thesis, thus fulfilling the purpose and contributing to already existing literature. In addition, the definition provided by Fink, (2010) aligns with the author´s perception and aim for a research literature review. Thus, the definition of a research literature review is:

“ A systematic, explicit, and reproducible method for identifying, evaluating and synthesizing the existing body of completed and recorded work produced by researches, scholars, and practitioners.”

There are several ways of conducting a research literature review, which derive from authors such as Esterby-Smith, Thorpe and Jackson, (2015), Savin-Baden & Major, (2013) or Fink, (2010). However, this thesis undertakes the seven steps by Fink, (2010). These steps can be briefly described as followed: (1) selecting a research questions, (2) selecting bibliographic or article database, (3) choosing search terms, (4) Applying practical screening criteria, (5) applying methodological screening criteria, (6) doing the review and (7) synthesizing the results. How these steps have been applied to this thesis will be more in detail described and illustrated in chapter 3.5.1.

The conducted research literature review contributed to several areas within this thesis. Initially, the research literature review contributed to justify the research gap acquired through observations (e.g. the purpose of the thesis) resulting in refining the research questions, which is line with Flink, (2010). Secondly, the research literature review provided a more in-depth knowledge within the topic of this thesis. Lastly, the research literature review was a research strategy within this thesis in order to obtain acceptable knowledge within the body of public procurement, which was used to answer the research questions, thus fulfilling the purpose of this thesis.

3.4.2 Case study In this thesis, a case study has been conducted in order to collect empirical data. The reasons for choosing a case study as a strategy for this thesis have been many. First, conducting a case study enables answers for research questions built on what and how (Saunders et al., 2012). As this thesis is built on such research questions, Saunders et al., (2102) and Yin, (2014) states a case study is considered be the most appropriate strategy. Since this thesis of exploratory character, conducting a case study allowed the author to explore the research topic (public procurement) and the phenomenon (performance indicators) in real-life context, which is in line with Saunders et al., (2012) and Merriam, (2009). In addition, a case study allowed the author to gain richer understanding of a particular phenomenon (performance indicators in public procurement), which is strengthened by Saunders et al., (2012) and Merriam, (2009) who both argue that for such purposes, a case study is considered the appropriate choice. Saunders et al., (2012) also states that conducting a case study allows researchers to be flexible since the initial boundary set might not be the appropriate one. Therefore, a case study allowed the author to be flexible depending on what information was retrieved and based on that provide high-quality answers to research questions, thus fulfilling the purpose of the research.

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In order to gain more in-depth data about a particular phenomenon, rather than a wider range of data, exercising multiple cases, a single case study was selected. The case company, situated in Stockholm, Sweden, was chosen due to the author´s interest of the industry, and the fact the company specializes in public procurement, procuring goods and services for inter alia Swedish Armed Forces (FM).

3.5 Data collection This section presents the procedure in which data were collected for this thesis. Initially, the linked of how the data collection methods have been applied to answer the research questions are illustrated. This is followed by a more in-depth description on how data were collected with support from a research literature review. Finally, this section ends with a case study description on how data were collected through interviews, observations and documentation.

The linked in which data collection methods have been applied to answer the research questions can be illustrated in Figure 7 below.

Figure 7 The linked between data collection method and research questions

3.5.1 Research literature review The database used to retrieve data for this thesis was ABI/INFORM Global, which is also known as ABI (ProQuest). The choice of this particular database was based two statements; (1) the fact that this database is considered to be a bibliographical database, covering a broad range of context (Esterby-Smith et al., (2015) and (2) the university library argued that this database was considered to be suitable since it involves significant scholarly journals addressing the topic of this thesis. The first step of the research literature review was to summarize search terms (e.g. key words) and concepts that frame the research questions. Since search terms and concepts were discovered through observations, no exploratory “pre-search” was needed to justify several searches in order to gain initial understanding of the research topic. The list of concepts with belongings search terms is illustrated in Table 1.

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Table 1 List of concepts and search words The second step was to generate a large enough sample that includes a manageable number of appropriate publications. As seen in Table 2, this sample generation was conducted by entering search terms and Boolean operators in the database, as suggested by Esterby-Smith et al., (2015) and Fink, (2010). The search was conducted in four separate rounds; (1) initially, a single search covering only the procurement concepts was conducted which generated 174 960 hits, (2) the second single search covering the performance measurement concept, generated 3 423 436 hits, (3) the combined search, which included both previous searches, targeted the purpose of the thesis and generated 86 326 hits, and (4) the combined search with added delimitations such as language, and by the author chosen journals generated 7843 hits. The last search round (4), was considered to include a large enough sample for a research literature review while still being manageable. A more comprehensive and detailed information, concerning the distribution of publications in the final round search, can be found in Appendix 1.

Table 2 Sample generation Even though the initial sample, derived from the sample generation, is recognized as manageable, the sample needs further screening. The additional screening allowed the sample to be reduced by eliminating publications that did not match the purpose of this thesis, as well as justify a well-

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constructed analysis. Consequently, the screening process is divided into three steps: (1) Title review emphasizes on the titles of all research in the initial sample. Articles that did not align with the purpose were eliminated. Thus, 7 438 articles were eliminated, leaving 405 hits to be further analyzed. (2) Abstract review stresses the abstract of the 405 articles, allowing further analysis of each article, which resulted in 286 eliminations, leaving 119 articles. (3) Article review was the final screening step, emphasizing on a more in-depth analysis, incorporating sections such as result, conclusions, implications and figures. The result of this step generated a final sample of 46 articles, which sets the foundation of this research, hence provides information that allows the first and second research question to be answered. The screening process can be seen in Table 3.

Table 3 Screening process and final sample The screening process has been conducted by the author, and since appropriate journals was set as a delimitations in the sample generation, the inclusion criteria for the screening process could be more specific. This allowed the screening process to be more efficient and credible, despite the relative large sample. The screening process was based on the following inclusion criteria:

1. Publications focusing on procurement indicators or measures 2. Publications focusing on purchasing indicators or measures 3. Publications focusing on public procurement indicators or measures 4. Publications addressing public procurement objectives 5. Publications addressing performance dimensions 6. Publications examining strategic procurement

In addition to the final sample, nine other publications have been added. These publications were obtained through other databases such as SciencDirect, Taylor & Francis, Cengage Learning and from two webpages; NIGP 2 ,CIPS 3 and OECD 4 . Publications that were obtained from SciencDirect consist of three journals whereas publications obtained from Taylor & Francis consists of one journal and two books. Cengage Learing contributed with one book and lastly, two webpages were used as a source of information. All nine publications were considered important as they all contained complementary information which provided the author more in- depth information of the research topic.

3.5.2 Interviews Interviews are considered primary data since it allows researches to collect qualitative information for a specific study (Saunder et al., (2012). There are several techniques of conducting interviews and in this thesis semi-structured interviews have been conducted since that technique is favorable for both an exploratory and explanatory study (Saunders et al., 2012). All interview conducted were face-to-face interviews. However, one interview was conducted in a group of three (author included), which is according to Sunders et al., (2012) referred to as a “group

2 The Institute for Public Procurement 3 Chartered Institute of Procurement & Supply 4 The Organization for Economic Co-operation and Development

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interview”. Despite the difficulties addressed in Saunders et al., (2012) of conducting a “group interview”, the conducted group interview contributed to richer discussion among the respondents which resulted in more in-depth explanations and allowed the author to further explore new concepts within the topic within this thesis, which according to Saunders et al., (2012) are seen as advantages of conducting a group interview. All interview were conducted in Swedish, which allowed a more qualitative discussion since people tend to have a difficult time express them selves in a foreign language. In addition, by conducting the interview in Swedish, potential misunderstandings were prevented. However, additional work had to be done to translate and transcribe the information obtained. During all interviews conducted notes were taking by the author. These notes was then compressed into shorter summaries, which according to Saunders et al., (2012) is referred to as “transcript summaries”. Furthermore, these “transcript summaries” were performed shortly after each interviews while the information was still up to date and “fresh in mind”, in order to reduce the possibility of information loss (Saunders et al., 2012).

The author had a set of key questions in order to explore the research topic and the research questions. According to Saunder et al., (2012), these key questions can be referred as “open questions”, encouraging more in-depth answers. Furthermore, the author used “probing questions”, which according to Saunders et al., (2012), allows the researcher to follow up on pointers to further explore responses that were of significance for the research questions. The “key questions” used in all interviews can be seen in Appendix 2. The list of interviews can be seen in Table 4.

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Table 4 List of interviews The respondents of the conducted interviews are scattered across the different divisions in the organization. The selection of these respondents was based on observations performed by the author and in consultation with assigned supervisor at FMV. Furthermore, the chosen respondents were considered experienced within the topic of this thesis and therefore the possibility of retrieving qualitative and valuable information was considered high which is in line with Saunders et al., (2012).

The collected were personal opinions on performance measures within public procurement, definitions of such measures and how the procurement process is currently functioning. In addition to the interviews, conversations with category leaders, purchasing coordinators and strategic buyers have been iterative procedures throughout the thesis ensuring that the information retrieved has not been misunderstood.

3.5.3 Observations Observations within research are considered primary data since the information is retrieved directly at site, without any interference of the data intended to collect (Saunders et al., (2012). Yin, (2010) describes an observation as followed, “an invaluable way of collecting data because what you see with your own eyes and perceive with your own sense is not filtered by what others might have self-reported to you”. Moreover, observations can be performed in various ways and for this study observer-as- participant has been conducted. Observations have been performed in order to create a holistic view of public procurement, procurement process and how performance measures are applied within a public organization. In addition, the conducted observations resulted in opportunities for complementary questions and explanations from respondents for in-depth understanding of public procurement, processes and performance measures. Lastly, the observations exposed which potential employees that are were significant for interviews conducted in this thesis. The list of observations can be seen in Table 5.

Table 5 List of observations

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3.5.4 Documentary Documents acquired from a case study are considered as secondary data since such documents have been constructed and affected by someone else with another purpose (Saunders et al (2012). According to Saunders et al., (2012) secondary data are primarily used both in a descriptive and explanatory research associated to business and management research. Furthermore, documentary can either be collected through text materials, which includes shareholder reports, email conversations, or any documentation, provide by the case company or non-text materials which mainly include video recordings, pictures, drawings and webpages (Saunders et al., 2012).

For this thesis, documentation has primarily been collected through statically reports, annual reports, PowerPoint presentations, PDF-files, internal webpage and previous strategy work conducted by employees. The documentation that has been shared primarily consists of information regarding public procurement in defense sector, organizational structure, supply flow, ERP-system functions, procurement processes and performance measures for the organization. The information retrieved have been studied and then analyzed in order to complement and support information gathered from interviews and observations. 3.6 Data analysis This section describes the process of which information has been analyzed in this thesis. Initially, the analysis process of the research literature review will be presented, followed by a description of the analysis of on the case study. Lastly, a discussion how quality has been considered for this thesis is presented.

3.6.1 Data analysis process The process of how to conduct a data analysis may vary depending on research. Nevertheless, the aim of the data analysis is to interpret data and draw meaning from it (Saunders et al., 2012). In order to answer the research questions presented in this thesis as well as formulate conclusions, a data analysis is a necessity. In this thesis, two types of data were analyzed separately and simultaneously. While the research literature review was analyzed, summarized and visualized, the empirical data where following the same procedures as the literature review. According to Merriam, (2009) this procedure is a way of acquiring more reliable data. The author intended to use the analysis to explore key themes and create a conceptual framework (Saunders et al., 2012). The process in which data have been analyzed within this thesis can be illustrated in Figure 8.

Adapted from Hèden and Tiedemann, (2014)

Figure 8 Data analysis process

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3.6.2 Descriptive & Content analysis The data collected through the research literature review have been analyzed with support from the database ABI/Inform, which provided basic information to be categorized into document type, year and type of journal. However, functionality of ABI/Inform was limited and therefore the information was exported to excel. The excel-template provided several additional functionalities such as diagrams for visualization, calculation tools and the possibility of more in- depth categorizations, all of which to create a holistic overview of the information retrieved from ABI/Inform. The final sample of publications was completely reviewed and relevant information was summarized, simplified and submitted into the rows and columns in the excel-template, resulting in a long-list of performance indicators and dimensions. Publications containing similar indicator name, dimensions or had the same meaning were merged together, resulting in a short- list. From the short-list, a descriptive part and a content analysis part were conducted.

The descriptive part primarily presents statistical visualizations such as distribution of publications per year, distribution of journals per year, distribution of document type per year and distribution of dimensions over time. The information provided from the descriptive analysis are applicable to support the author´s conclusions regarding the development of dimensions in literature over time, as well as what document types and journals are most frequently appearing in theory concerning the research topic for this thesis.

The content analysis is the fundamental part since it elucidates and defines dimensions and performance indicators identified in theory. Furthermore, the information extracted from the research literature review has been summarized, categorized and aligned to designated dimension, indicator name and definition. In addition, the content analysis allows a visualization of indicator names, definitions and articles connected to each dimension. Lastly, from the information provide by the research literature review, conclusions were drawn.

3.6.3 Data display and analysis The collected empirical data have been analyzed in three steps. Initially, the transcript summaries was transcribed into an excel-template since excel provided several functionalities such as diagrams for visualization, calculation tools and the possibility of more in-depth categorizations, all of which to create a holistic overview of the information retrieved from interviews, observations and documentary. The transcript summaries was completely reviewed and relevant information was summarized, simplified and submitted into the rows and columns in the excel- template, resulting in a long-list of performance indicators and definitions. This step is according to Saunders et al., (2012) refers to as “data reduction”. The next step of the data analysis was to organize and categorize that data in such way that it could easily be visualized which is in line with. Initially, data were selectively entered into appropriate cells, categorized as indicator name, definitions and article. As a result, a matrix was created which was than complemented by the documentary in order to add more information that was not obtained through the conducted interviews and observations. Similar to the descriptive analysis, indicator names, definitions and other information that was comparable were merge together. Lastly, based on the matrix, relationships and patterns were identified allowing conclusions to be made, which is in line with Saunders et al., (2012) and can be referred to as “drawing and verifying conclusions”. 3.7 Research quality The standard for demonstrating quality to a quantitative research has long been conducted by validity, reliability and generalizability. However, whether or not these are fitted and transferable to qualitative research has been a hot topic among practitioners (Savin-Baden and Major, 2013). Therefore, this thesis will addresses research quality in line with Savin-Baden and Major, (2013),

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who argues that quality research can be ensured by acknowledge credibility, transferability, dependability and conformability. Lastly, ethics within this thesis will be addressed.

3.7.1 Dependability Dependability refers to how the research findings will endure over time (Savin-Baden and Major, 2013). This emphasizes on how well a conducted research has been documented and for this thesis, the process in which the data collection have been conducted is well described and documented. For the research literature review, search words, Boolean operators and combinations has been illustrated. This allows others to replicate the database search and receive similar results. However, since this database search was conduced at a particular time, a new search will most likely result in an increased number of publications and generate a different final sample. Hence, preventing this research literature review to be identically replicated. Regarding key questions and the data obtained from the conducted interviews and observations, has been documented as detailed as possible. Thus, allowing researchers to follow the progress. In addition, the location and the respondent´s working title have been documented allowing others to conduct similar interviews and observations. However, due the fact that organizations change over time, business processes and performance indictors are likely to follow. In addition, the employees of an organization is also changing over time due to resignations, retirements and

3.7.2 Credibility The credibility of a research refers to in which the result of the conducted research can be convincing and believable (Savin-Baden and Major, 2013). For this thesis, formal and structural requirements have been followed, allowing readers to trace and follow the reasoning process throughout the thesis. The attended seminars allowed other researches, as well as the supervisor to provide feedback on the progress of this research, justifying what is researched actually is in line with the topic and the purpose of the thesis. In addition, the process in which the data collection have been conducted regarding the research literature review, as well as the empirical study such as interviews and observations, allows for a fair representation of “reality”, which is in line with Savin-Baden and Major, (2013).

3.7.3 Transferability The transferability of a research refers to whether or or not the result can be applied to similar situations elsewhere, where the responsibility for that lies upon the one who wishes such possibilities (Savin-Baden and Major, 2013). This is in line with Saunders et a., (2012), who addresses that the possibility of applicable the findings of a research to other settings. For this thesis, such intentions have not been the primarily focus since only a single case study has been conduced. Thus, may transferability be difficult to achieve. However, due to the size of the case company, the coverage in which it conducts business and the way the internal processes are currently functioning, there is the possibility for the performance indicators to be applied, with slight modifications, into similar organizations within the research topic which is in line with Saunders et al., (2012).

3.7.4 Conformability The conformability of a research emphasizes on the impartiality of the researcher during the data analysis and the interpretation of the data obtained (Savin-Baden and Major, 2013). Furthermore, this include whether or not these interpretation made by researchers can be justified by others (Savin-Baden and Major, 2013). For this study, having the respondents revise the information obtained though interviews, assured that the author correctly comprehended the information. Furthermore, through attended seminars, the progress of this thesis has been perceived by other researchers. Lastly, the author has no former connection for the organization or the respondents.

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3.7.5 Ethics The author consider it is essential to discuss ethics within a research, since ethical concerns will emerge as early as when choosing research topic, formulating the research design and how to accesses the data needed to finalized the research (Saunders et al., 2012). Saunders et al., (2012) define ethics as: “to the standards of behavior that guide your conduct in relation to the right of those who become the subject of a work, or affected by it”.

For this thesis, the ethical considerations can be divided and accounted for in two primary parts. The first part, concern ethical considerations addressing the organization as a whole, involving all business processes, personnel and documentations within the organization. The second part concerns all respondents participating in this thesis.

The ethical consideration was initiated as early as in as in September 2015, when applying for a master thesis employment at the case company. Before, granted access two requirements set by the case company had to be fulfilled. First, a Swedish citizenship was required which was than followed by a security check. Lastly, a master thesis employment contract needed to be signed. In most companies researchers are considering ethics in terms of secrecy of business or trade secrets. However, for this particular case company the ethical considerations involve defence secrets, which may have an impact on national security. Since the case company mange classified documents and information on different classifications levels as well as commercial secrecy on regular basis, cautiousness was required from the author at all times.

All respondents have been informed that they can be anonymous if they prefer and that participation is voluntary. The case company agreed on giving the authors permission to use company specific information. Thus, is the name of the company stated in the thesis. However, a few respondents have requested not to be referred to as name and therefore they are referred to as their working title. In order to overcome ethical issues, the author has considered the code of ethics, along with the principles that follows such obligations as discussed in Sunders et al., (2012). Before this thesis could be published, the author’s supervisor at the case company had to revise the thesis, which is in line with Sunders et al., (2012) definitions to confidentiality and anonymity. This to ensure that nothing that should not be included in the thesis is in fact included. Lastly, the author has no previous experience or connection to the case company or the respondents within this research.

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4 Research literature review This chapter presents the data collected through a research literature review. The data collected are presented in two parts, a descriptive analysis part and content analysis part. The descriptive part is emphasizing on statistical data whereas the content analysis part address a more in-depth analysis of the findings identified in literature. 4.1 Descriptive analysis This section presents the first part of the conducted research literature review. Initially, the articles of the final sample are analyzed according to distribution of publications over time, followed by the distribution of the chosen journals. Furthermore, statistics regarding the distribution of document type is presented followed the distribution of dimensions and metrics over time. Lastly, a holistic view over performance dimensions will be presented.

4.1.1 Distribution of publications over time The final sample of the research literature review consists of 55 publications that are distributed over the time period of 1993 until 2016. Furthermore, no limitations concerning the year of publication were established in the initial search resulting in that the oldest publication identified were published in year 1973, by Jim Myckleby. However, no significant publications were recognized before 1993 that could contribute to this thesis as illustrated in Table 6.

*Implies that at least one publication is obtained from another source than ABI/Inform

Table 6 Distribution of publications over time As can be seen in Table 6, the number of significant publications in the final sample remains fairly low until the end of 2004. Post the year of 2004, there is a trend of increasing publications, but between the years of 2009 and 2013 the trend decreases and stagnates. This is followed by distinctive recoil in the number of publication in the year of 2014. As seen in Table 6, the low number of significant publications identified in 2016 can be explained by that this thesis is being conducted early spring of 2016. Hence, leaving a gap for publications within that year which this thesis is not able to cover. What is noteworthy is that the number of publications published the last 6 years (2010 until 2016), represents approximately 50%(26) of the total sample. Given that, this thesis is based on relatively up-to-date research within the research topic.

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4.1.2 Distribution of journals The articles included in the final sample of the research literature review was published in various journals, see Figure 7. The journals were selected by the author in consultation with the university library at Stockholm School of Economics (SSE). The selected journals were considered the most appropriate journals for this thesis topic.

*Publication retrieved form other databases than ABI/Inform; ScienceDirect (Erridge and Nondi, 1994; Paulraj et al., 2006; Easton et al., 2002) and Taylor & Francis (Diggs and Roman, 2012). **Literature (Thai, 2009; Knight et al., 2007; van Weele, 2014) ***Webpage (NIGP and CIPS ,2016; OECD, 2016) Table 7 Distribution of journals Furthermore, the selected journals covers various subject areas such as purchasing (European Journal of Purchasing and Supply Management, International Journal of Purchasing and Materials Management, International Journal of Purchasing and Supply Management, Purchasing, Summit etc.), procurement (Government Procurement, Journal of Public Procurement, The International Journal of Public Sector Management, Public Administration Review etc.), performance (Benchmarking, Public Performance and Management Review, Measuring Business Excellence, Production Planning & Control etc.), and several others. In addition, the figure illustrates the number of publications belonging to each journal that is included in the final sample. The Journal of Public Procurement and Benchmarking are the dominating journals, representing 14,5% (8) respectively 13%(7) of the total number of publications. They are followed by The International Journal of Public Sector Management, Summit and Purchasing. Lastly, as seen in Figure 7, the focus areas in which this thesis emphasizes on are clearly exposed due to the name of the selected journals. Hence, aligns with the research topic of this thesis.

4.1.3 Distribution of document type over time The distribution of document type in relation to publishing year of the final sample can be illustrated in Figure 8 below. The document type includes ten different groups. Eight of them are derived from ABI/Inform and has been automatically classified and characterized according to ABI/Informs definitions; (1) Case study, (2) Case study, Feature, (3) Commentary, (4) Feature, General Information, (5) Journal Article, (6) News and (7) Periodical. The other two classifications is made by the author and includes; (7) Web and (8) Literature.

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Table 8 Distribution of document type The document type that is by far the most representative is Feature, which stands for 32 articles (58%) of the total amount of examined publications. This leaves 13 articles (42%), all in which are relatively evenly spread across the other document types. However, what is noteworthy in this sample is that the document types; Case study and Case study, Feature, does not occur before year 2010.

4.1.4 Distribution of performance dimensions over time In order to be able to identify patterns in the eight dimensions (compliance, cost, time, flexibility, innovation, sustainability, quality and risk) discovered in the research literature review, a visualization of their distribution over time can be illustrated in Figure 9. According to Figure 9, the cost, quality and time dimensions are relatively consistent throughout the time period, which last between 1993 and 2016. These three dimensions are common in different types of industries and are recognized as “standard” dimensions, measuring performance. Furthermore, these three dimensions are normally presented all together within the same publication.

Table 9 Distribution of performance dimensions over time

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As seen in Figure 9, sustainability as a dimension is mentioned already in 1994, however, it becomes more frequently mentioned in publications from 2007. This pattern is similar to the compliance dimension, the risk dimension and innovation dimension. Perhaps the rapid development of technology since 2000, as well as the financial crisis in 2007-2008 has had an impact on both private and public organization to be more cautious and proactive in their way of controlling and managing business performance. In order to be more adaptable to the ever- changing environment, the focus has been directed to other performance dimensions such as flexibility, innovation and sustainability while still considering the core dimensions such as cost, quality and time. In addition, perhaps the development of new public management in the late 1990´s and early 2000 has contributed to the development of dimensions over time.

4.1.5 Distribution of publication cross dimensions The initial step towards creating a conceptual framework, all performance measures in the research literature review had to be identified. A long-list of performance measures, sorted in alphabetical order was created in an excel-template, which can be seen in Appendix 3. Following that, performance indicators with similar meanings were than grouped and classified based on six performance areas; cost, quality, time, flexibility, innovation and sustainability. However, two additional performance areas had to be added to the research literature review, risk and compliance. These two additional performance areas were added due to incongruities among the performance indicators and the existing performance areas. Hereinafter the performances areas are referred to as dimensions. The classification of publications with suitable dimensions can be visualized in Table 10 below.

*Publication retrieved form other databases than ABI/Inform; ScienceDirect (Erridge and Nondi, 1994; Paulraj et al., 2006; Easton et al., 2002) and Taylor & Francis (Diggs and Roman, 2012). NP* = number of **Literature retrieved from Taylor & Francis (Thai, 2009; Knight et al., 2007) an d Cengage Learning (van Weele, 2014) publications ***Webpage (NIGP and CIPS ,2016; OECD, 2016)

Table 10 Classification of publications with suitable dimensions

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4.2 Content analysis This section will present the dimensions identified in the research literature review, along with indicator name and their definitions. Initially, in-depth analysis of each dimension with assigned indictor and definitions is presented. Indicator name, in which the definition row is blank, is caused by inadequate explanations within the research literature review. However, several indicator names are justified solely by its own name. Thus, the definition rows are left blank.

4.2.1 Cost The cost dimension refers to the overall purchasing performance and can be described as the result of the efforts of the purchasing people and suppliers together (Caniato et al., 2014). As seen in Table 11, cost savings/cost avoidance and spend under management are by far the most represented indicators within the cost dimension. Savings can either be realized or implemented (NIGP and CIPS, 2016) and are primarily calculated as a percentage of total spend. As seen in Table 11, spend under management is well recognized and covered in literature and can be further categorized into spend per category (McCue and Gianakis, 2001; Handfield et al., 2015), spend per supplier (Jacoby, 2005) and contract spend (Kay, 2005; van Weele, 2014). Within this cost dimension, little attention is draw to the general cost for the purchasing function. However, the cost of purchasing activities (Caldwell and Howard, 2014; McGuinness, 2013; NIGP and CIPS, 2016 and the administrative cost per contract (NIGP and CIPS, 2016) are briefly mentioned. Furthermore, the concept for total cost of ownership (Pohl and Förstl, 2011; McCue and Gianakis, 2001), life-cycle-cost (Nair et al., 2015; McCue and Gianakis, 2001; Scharf, 2006; Knight et al., 2007; van Lith et al., 2015) and transaction costs (Molander, 2014; Morgan, 2000; Knight et al., 2007; OECD, 2016) are frequently occurring in the chosen publications.

Table 11 Cost dimension

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4.2.2 Quality The quality dimension emphasizes on the purchasing department as a service provider, measuring customer satisfaction, supplier relationship, process efficiency and the overall performance of the purchasing department (Caniatio et al., 2014). As seen in Table 12, the quality dimension is the largest dimension relative the total number of indicator names. On-time delivery, customer satisfaction, supplier satisfaction and supplier relationship management (SRM) are the most frequent performance indicators in the final sample. The on-time delivery (Chao et al., 1993; Nair et al., 2015; Pohl and Förstl, 2011; Caniato et al., 2014; Jacoby, 2005; Kay, 2005; Tudor, 2005; Paulraj et al., 2006; Erridge and Nondi, 1994; Thai, 2009; Knight et al., 2007; OECD, 2016; van Lith et al., 2015; Rendon, 2015; van Weele, 2014), is defined as a ration of orders that arrive at the scheduled time. Customer satisfaction (Ellram and Carr, 1994; Chan and Chan, 2004; Meybodi, 2013; Nair et al., 2015; Pohl and Förstl, 2011; McCue and Gianakis, 2001; Beatham et al., 2004; Simon et al., 2011; Caniato et al., 2014; Atkinson, 2007; Scharf, 2006; McGuinness, 2013; Tudor, 2005; Hoque, 2008; Paulraj et al., 2006; Diggs and Roman, 2008; Thai, 2009; NIGP and CIPS, 2016) and supplier satisfaction (Chan and Chan, 2004; Pohl and Förstl, 2011; Caniato et al., 2014; Atkinson, 2007; McGuinness, 2013; Tudor, 2005; Albjörn and Freytag, 2012; Paulraj et al., 2006; Diggs and Roman, 2008; Erridge and Nondi, 1994; Knight et al., 2007), both with no distinctive definition in literature but is measured in number of complaints. Those are followed by employee training (Meybodi, 2013; Nair et al., 2015; Pohl and Förstl, 2011; Beatham et al., 2004; Morgan, 2000; Hopkins and Howe, 2014; Hoque, 2008; NIGP and CIPS, 2016; OECD, 2016; McCue and Gianakis, 2001), number of suppliers (Simon et al., 2011; Caniato et al 2014; Easton et al., 2002; Erridge and Nondi, 1994; van Lith et al., 2015; Brammer and Walker, 2011; Pohl and Förstl, 2011; van Weele, 2014) and employee satisfaction (Beatham et al., 2004; Simon et al 2011; Caniato et al., 2014; Thai, 2009).

Table 12 Quality dimension

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4.2.3 Time The time dimension is similar to the quality performance dimension and emphasizes on the purchasing department as an internal service provider (Caniato et al., 2014). However, the time dimension focuses on the needs, measured in terms of service level (Caniato et al., 2014). A holistic overview of the time dimension indicates that the common factor for most articles address time as the duration of one or more activities to generate an output. Furthermore, considerably attention has been aimed towards procurement cycle time (Nair et al., 201; Prier and McCue, 2009; Thai, 2009; NIGP and CIPS, 2016; OECD, 2016; Dwyer, 2010; Jacoby, 2005), which can be defined as the time from the beginning of the sourcing process to the time that a contract is executed. Following that, purchase order cycle time (Chao et al., 1993; Jacoby, 2005; Erridge and Nondi, 1994; van Lith et al., 2015; Richart, 2015, lead-times (Pohl and Förstl, 2011; Handfield et al., 2015; Knight et al., 2007; McCue and Gianakis, 2001) and purchase order administrative lead-time (van Weele, 2014; Pohl and Förstl, 2011; Handfield et al., 2015; Knight et al., 2007; McCue and Gianakis, 2001) ), all of which can be considered comparable. However, no distinctive definition was provided in literature. The time dimension can be measured in numerous ways but when emphasizing on time regarding internal administrative process, it normally is measured in months, weeks or days. Whereas, when addressing project duration, years might be more appropriate depending on the make or buy decision early in the procurement process. Noteworthy is that little attention is directed towards the lead times of the tendering process and project duration. As seen in Table 13, there are various indicators within the time dimension.

Table 13 Time dimension 4.2.4 Flexibility The flexibility dimension refers to the ability to respond quickly to design changes, changes in production volume or schedules, access to new technologies and involvement in new product development (Nair et al., 2015). The flexibility dimension is briefly covered in literature and primarily includes changes and modifications in requirements (Handfield et al., 2015) or in contracts (McGuinness, 2013; Erridge and Nondi, 1994; Rendon, 2015). Changes in delivery times and volumes are also indicators for the flexibility dimension (Handfield et al., 2015; Caniato et al., 2014). In this dimension, no definitions are given since no distinct definitions were identified in the research literature review. In addition, all indicator names are relatively self- represented and does not need further clarifications.

Table 14 Flexibility dimension

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4.2.5 Innovation The innovation dimension refers to an organization’s ability to generate new ideas and undertake organizational learning, which is considered a more strategic approach to business performance (Hoque, 2008; Nair et al., 2015). The primary goal of these new ideas is to improve the overall business performance by promoting innovativeness regarding development of business process, new product development (NPD), or initiatives support innovation (Nair et al., 2015). Even though the innovation dimension was frequently mentioned in literature, few indicator names were actually discussed. However, E-procurement was considered the primary indicator name (OECD, 2016; Brandmeier and Rupp, 2010; Caniato et al., 2014) for innovation, followed by awards (Simon et al., 2011; Hopkins and Howe, 2014). Lastly, lessons learned were addressed as an innovation performance indicator by NIGP and CIPS, (2016). Similar to the flexibility dimension, no distinct definitions were provided in the research literature review and therefore not stated. However, the indicators names identified are relatively self-represented and does not need further clarifications.

Table 15 Innovation dimension 4.2.6 Sustainability The sustainability dimension can be referred to Brammer and Walker, (2011) wide definition which include five sub-categories; 1) Environmental, which are activities primarily included within the purchasing function, such purchasing recyclable and reusable packaging in order to reduce the amount of packaging material purchased in conducted projects with other functions within the firm and with suppliers. Furthermore, ensuring that supplier´s processes and products are environmentally sound by working with life cycle analysis and designing products for reuse recycling; (2) Diversity which primarily address programs designed to encourage sourcing from minority owned business such as from small and local suppliers or women and veteran-owned businesses; (3) Safety which emphasizes on ensuring safe working conditions and movement of incoming purchased material; (4) Human rights which emphasizes ensuring that suppliers maintain fair and humane working conditions, pay a reasonable wage to their workers, comply with child labour laws etc; (5) Philanthrophy which focuses on community activities, donations and volunteering a local charities. As seen in Table 16, the primary indicator name is diversity spend (Pohl and Förstl, 2011; Prier and McCue, 2009; Richart, 2015; Telgen and Thai, 2008; Atkinson, 2007; McKevitt et al., 2014; Snider and Rendon, 2008). The diversity spend is defined as the number of supplier that is considered a diversity supplier such as SMEs and minority owned businesses. Waste management (Chan and Chan, 2004; Brandmeier and Rupp, 2010; Meybodi, 2013; Brammer and Walker, 2011; NIGP and CIPS, 2016) refers to savings due to improved waste and disposal handling. Noteworthy is that global sourcing ratio and CO2 emission per purchased item are identified and discussed in the same article written by Pohl and Förstl, (2011). From a holistic perspective, few articles in the research literature review are discussing performance indicator focused on internal sustainability.

Table 16 Sustainability dimension

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4.2.7 Risk The risk dimension is complex and covers both internal and external risk. External risk refers to risks caused by external forces such as changes in the environment, changes in rules and regulations, emerging technologies and currency fluctuations. Risk management (Beatham et al., 2004; Schapper et al., 2006; Hoque, 2008; Caldwell and Howard, 2014; Liu et al., 2014) is the most frequently used performance indicator in this research literature review. However, no distinct definition was discussed. Currency risk indicator (Pohl and Förstl, 2011; Caldwell and Howard, 2014) was referred to as preventing changes in cost due to currency fluctuations by securing fixed rates. The supplier risk performance indicator was addressed in Hopkins and Howe, (2014); Brandmeier and Rupp, (2010); Caldwell and Howard, (2014), and can be defined as ensure delivery independent on business and environmental changes such as bankruptcy and in occasions of war. Technology risk (Caldwell and Howard, 2014) emphasizes on the risk of emerging technologies. Internal risk refers to a company’s ability to encounter external risks and ensuring competencies for such procedures. Regarding the project risk performance indicator (Liu et al., 2014), no definition was provided in literature.

Table 17 Risk dimension 4.2.8 Compliance The compliance dimension refers to organization´s ability to comprehend with the rules and regulation that follow public procurement. The majority of publications identified in the research literature review were addressing compliance dimension. As seen in Table 18, the eight procurement objectives defined by Arrowsmith, (2010b) in chapter 2.1.2, can all be recognized in the research literature review. Value for money (Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Telgen and Thai, 2008; Arrowsmith, 2010a; McGuinness, 2013; Hopkins and Howe, 2014; Murray, 2001; McKevitt et al., 2014; Erridge and Nondi, 1994; Thai, 2009; Knight et al., 2007; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015), transparency (Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Molander, 2014; Fritzen, 2007; Goh, 2012; Goodsell, 2006; McGuinness, 2013; McGuinness, 2013; Hopkins and Howe, 2014; Albjörn and Freytag, 2012; Thai, 2009; Knight et al., 2007; OECD, 2016; Rendon, 2015) and accountability (Raymond, 2008; Brammer and Walker, 2011; Schapper et al ., 2006; Telgen and Thai, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Gelderman et al., 2006; Albjörn and Freytag, 2012; Diggs and Roman, 2012; Thai, 2009; Knight et al., 2007; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015), are the compliance indicators supported by most publications. They are followed by efficiency (Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Telgen and Thai, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Molander, 2014; Fritzen, 2007; Goh, 2012; Goodsell, 2006; Hopkins and Howe, 2014; Albjörn and Freytag, 2012; NIGP and CIPS, 2016; OECD, 2016), integrity (Raymond, 2008; Brammer and Walker, 2011; Prier and McCue, 2009; Arrowsmith, 2010a; Goodsell, 2006; Albjörn and Freytag, 2012; NIGP and CIPS, 2016; OECD, 2016), equality (Brammer and Walker, 2011; Snider and Rendon, 2008; NIGP and CIPS, 2016; Arrowsmith, 2010a; OECD, 2016), fairness (Raymond, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Goodsell, 2006; McGuinness, 2013; Hopkins and Howe, 2014; NIGP and CIPS, 2016; OECD, 2016) and competition (Snider and Rendon, 2008; Arrowsmith, 2010a; Hoque, 2008; McKevitt et al., 2014; Erridge and Nondi, 1994; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015). Additional indicators that were identified in the research literature review, which belonged

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to the compliance dimension, include scrutiny (Fritzen, 2007), dependability (Goodsell, 2006), corruption (Fritzen, 2007), legality (Goodsell, 2006), fairness (Raymond, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Goodsell, 2006) and openness (Molander, 2014; McGuinness, 2013, Hopkins and Howe, 2014).

Table 18 Compliance dimension

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5 Empirical data This chapter presents the empirical findings that have been obtained through interviews, observations and documentary. Initially, the case company will be presented by providing a concise but elaborative description. This is followed by the empirical findings obtained through the data collected at the case company. 5.1 Case company This section presents a description of the case company. Initially, a background is presented followed by organizational structure. Lastly, the procurement process is described.

5.1.1 Background The Swedish Defense Materiel Administration (FMV) procures, maintains and supports the whole range of defence equipment on assignment from the Swedish Armed Forces (FM) and other authorities such as the police and the cost guard with a “cradle to the grave” perspective. With a turnover of approximately 20 billion SEK and more than 3500 employees located in 33 place cross Sweden, FMV assist the Swedish Armed Forces with specialist knowledge of high technology defence and security related procurement as well as providing general support. Furthermore, this includes designing, planning and implementation of such systems. The process in which FMV fulfills its tasks are initiated by the Swedish Government, who provides prerequisites in the form of appropriation to the Swedish Armed Forces, which in turn has a need for new capabilities. FMV than transforms the need for new capabilities into a technical specification A visualization of FMV´s role and different stakeholders, see Appendix 4.

5.1.2 Organizational structure FMV as an organization is of hierarchal structure where the FMV Board is accountable to the Swedish Government for running FMV. The day-to-day operations are managed by the General Director and his Deputy Director General. The Staff and the Directors General´s Office at FMV assist and supports the Director General with advices and essential information to effectively running the organization. Their main responsibilities include FMV-wide management and budgeting, coordination and planning as well as monitor activities together with of other staff. The Staff within FMV consist of Accounting and Finance Staff, HR Staff, Information Staff, IT Staff and Legal Affairs. As illustrated Figure 9, FMV is divided into six functional divisions, all of which have their area of responsibility and of expertise. However, working together is essential in order to deliver the equipment required by the Armed Forces when and where it is needed.

Figure 9 FMV hierarchal structure

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System and Production Management Division This division is where the needs of the Swedish Armed Forces and FMV´s ability to fulfill those needs are encountered. Through close dialogues with FM, the needs are transformed to internal assignments, where all perspectives that need to be accoutered for are considered. In addition, this division control and manage the technical aspects as well as the design of operational chain, function objects and the technical systems. Within these aspects, suggestions are proposed to FMV´s production plan that is determined by the board.

Procurement and Logistics Division The Procurement and Logistic Division´s primary focus is to delivery equipment availability to the Swedish Armed Forces and units both nationally and internationally. This involves procuring, managing equipment such as underwear, equine equipment, chainsaws, battle tanks, submarines and helicopters and providing logistics support for all units in the Swedish Armed forces. Furthermore, the Procurement and Logistic Division decides what equipment will be operational, what equipment that needs maintenance and what equipment that needs to be kept in storage. In order to do so, this division works directly with different units at the Swedish Armed Forces. In order to ensure equipment availability, the equipment is continuously monitored through different statues, indicating whether or not necessary actions need to be taken.

Storage, Service and Workshop Division This division provides logistic support for FM in terms of transportation, material supply, maintenance and service. The service provided by FMV occurs 24 hours a day, all year around and on all locations where FM conduct operations, both national and internationally. FSV´s assignment, inter alia include inspections, repairs and maintenance of vehicles and systems, storage, transportation and subsistence.

Commercial Operation Division The Commercial division is responsible for commercial matters throughout FMV and is the lead division in how FMV acts in the market place e.g. how FMV conducts procurement, strategic purchasing and placing of orders. The commercial division enables FMV to contribute commercial expertise at the early stages of Armed Force’s planning and strategic work by working closer to both FMV and the supplier market. In addition, the Commercial division provides support to all current project-based work across all divisions by expertise in business and purchase control. This involves how to manage different suppliers, maintaining a strategic approach throughout a project as well as how the procurement process should be customized to achieve commercial advantages through different business models. For further hierarchal structure for each department, see Appendix 5.

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5.2 Empirical findings Today FMV and its divisions are practicing performance indicators in order to improve the overall performance of the organization. The performance indicators that are currently being used are derived from the financial conditions, appropriations and service-level agreements (SLA) set by the Swedish Government and the Swedish Armed Forces. All these parameters constitute the steering documents for FMV, which permeates the entire organization. At first, the board constructs a business plan based on the initial values in which the direction of FMV is addressed. This includes the vision and mission, as well as the strategic objectives and development of the organization. Subsequently, the board concludes the vision and mission of FMV as well as five holistic goals for the organization. A breakdown of the board´s business plan is than conducted in consultation between the General Director and the General Directors Offices. The result is a more in-depth business plan with eight prioritized goals aligned with three holistic perspectives being; 1) “Authority”, (2) “Business” and (3) “Customer”. The authority perspective primarily involves the obligations that follow with any authority such as compliance with rules and regulation established by the Swedish Government and EU. The business perspective emphasizes on “fundamental” business functions such as financials, operation management, production, procurement processes, commercial outlooks, category management and contract management. Figure 10 FMV perspectives The customer perspective emphasizes solely on the customer by ensuring customer satisfaction, which is established, not only by fulfilling the needs, but exceeding the needs. In addition, the General Director´s business plan also includes detailed description for each division’s responsibility regarding the three perspectives where key performance indicators are aligned, and baselines are determined. Following this, each division constructs its own business plan, targeting the prioritized goals with additional focus areas and performance indicators with aligned activities. Lastly, each department, in co-operation with the sections, is constructing a final business plan with more hands-on performance indicators and activities. All of which can be aligned to the business plan of the board. However, due to different ERP-systems, differences in routines and the variation of tasks, goods and services, performance indicators within each department tend to vary. Therefore, each department will be presented separately.

5.2.1 General Director and General Director´s office The organizational performance indicators include measures that reflect the strategy and development of the organization as a whole. These include financial performance such as revenue, earnings, operating costs and number of purchase orders followed by employee statistics such as employee turnover, absenteeism, gender equality ratio, number of reviewed procedures and patents. These indicators are monitored and followed-up in each division and in each unit.

Furthermore, in addition to the above mentioned performance indicators, risk assessments are being conducted at yearly bases. These risk assessments can be divided four risk categories; (1) strategic risks, (2) operative risks, (3) financial risks and (4) compliance risks. The strategic risk emphasizes on risks that may arise within the top management. This includes risks that can be associated to the strategic objectives, vision and mission, prioritized goals and the performance indicators that exist in the organization. In addition, risks are associated customers financial and political aspects such as deteriorating budgets, customer loyalty and international co-operation are also included in this category. The operative risks emphasize on risk that arises through

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organizational, administrative, technical or human flaws. This includes working routines, manuals, processes and reports. In addition, the balance between working tasks and resources, system support, IT, incidents or disruptions that may affect deliverance performance and supplier risks are also included in this category. Financial risks primarily emphasizes on signed contract agreements or contacts that are to be signed. In addition, exceeding the financial conditions and appropriations determined by the government, as well as risks in credit and currency risks are also included in this risk category. Compliance risk emphasizes on compliance in rules and regulations related to Swedish law, Union law, EU-directives, procurement laws, environmental law, as well as contract compliance. All these risks are measured qualitatively as the probability of such risks to occur and the consequence of such risks if it occurs. A table of the performance indicators and definitions for this division can be seen in Appendix 6.

5.2.2 System and Production Management Division System and Production Management Division (SPL) specifies steering for other divisions at FMV. The performance indicators identified at SPL are in most occasions identical to AL, Gripen and T&E, whereas FSV included others. Hence, the performance indicators of SPL will be briefly presented. A more in detailed definition will be provided when presenting the other divisions. SPL have five performance indicators; delivery performance, prioritized delivery performance, milestone efficiency, the ability to quote scheduled operations and ability to initiate scheduled operations, which all can be seen as operational measures. In addition to those, a quality management indicator are measured which aim is to prevent mischiefs concerning people, environment and material. It is measured as number of breakdowns, accidents or number of incidents due to flaws in design. Lastly, there are proceeding work regarding whether is possible to add and implement three additional performance indicators being availability, forecast accuracy and cost calculation quality. A table of the performance indicators and definitions for this division can be seen in Appendix 7.

5.2.3 Procurement and Logistics Division The Procurement and Logistic Division is recognized as the project production division, and is responsible for performance indicators connected to delivery performance, milestone efficiency and ability to quote scheduled operations. In addition, gender equality and sick leave are indicators for this division. The delivery performance is defined as the number of complete deliveries to FM relative the number of planed delivers that FMV has committed to for the present year. This include delayed deliveries from previous years which been re-scheduled to be delivered present year. However, delays caused by FM are not included in this performance indicator. Furthermore, this indicator is measured by number of complete deliveries as well as the value of deliveries. Milestone efficiency is defined as truly completed deliveries, in time, relative what is contracted during the period. The ability to quote scheduled operations is defined as demitted quotations relative current committed quotations. Whereas, the ability to initiate scheduled operations lack definition. Gender equality is defined as the distribution between genders and is measured by ratio for the division and for each unit. At this division, the gender equality indicator is measured both at a manager level and employee level. Sick leave can be defined as time of from work, which can either be paid or not paid. It is measured by a ratio for the divisions as a whole, as well as for each unit. As of recently, the possibility of adding and implementing three additional performance indicators are being considered. The performance indicators that are being addressed are; availability, forecast accuracy, and cost calculation quality. Since they are all in the construction phase, distinct definitions have not yet been concluded. However, the availability indicator will address the availability of aircrafts while considering flight hours and cost. A table of the all performance indicators and definitions for this division can be seen in Appendix 8.

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5.2.4 Storage, Service and Workshop Division The performance indicators addressed in this division primarily concern complaints and throughput times of conduced services and maintenance in workshops. Complaints are defined as number of deviations in relation to the number of delivered orders. Throughput time is defined as the time for necessary action on vehicles and other equipment. Furthermore, throughput times also refer to the time it takes for inspection of standardized vehicles. In addition, regular warehouse performance indicators are addressed in this division. However, those are excluded in this thesis. A table of the all performance indicators and definitions for this division can be seen in Appendix 9.

5.2.5 Commercial Operation Division Based on the prioritized goals that the Commercial Division is responsible for, four major performance indicators has been targeted; competition, small orders, savings and product costing calculations, all of which has activities assigned to them. In addition, this division has conducted further breakdown of the prioritized goals resulting in four focus areas; delivery performance, customer relationship management, secure resource, cultivate. Delivery performance refers to internal processes of the commercial operation division and included performance indicators such as the average number of procurement assignments per employee, number of administered contracts per section and employee, number of completed procurement assignments conducted in different awarding procedures per section, number of review procedures and productivity. Customer relationship management refers to establish, develop and strengthen customer relationship both internal and external and include soley one performance indicator, customer on-site visits. Secure resources is defined as the ability of working proactively to ensure and distribute resources with “correct” competencies to solve assignments and is not represented by any indicators. Cultivate refers to the development of standardized and effective working procedures and tools, that support implementations of such result of continues project development. This focus area include solely one performance indicator, number of purchase orders through determined purchasing channel. For this division, the routines on extracting data for the performance indicators as well as the performance indicators them selves tend to vary between the departments and the sections. A table of the all performance indicators and definitions for this division can be seen in Appendix 10.1.

The Commercial Operation Staff supports both procurement departments by extracting and follow-up performance indicators including productivity, the average number of procurement assignments per employee, number of administered contracts per section and employee, number of completed procurement assignments conducted in different awarding procedures per section, competition/monopoly, average lead-time for initiating a new procurement assignment, number of purchase orders, purchase order volume, number of “small” purchases, number of procurement assignments in monopoly procedure, the total value of procurement assignments in monopoly procedure, product cost calculation and number of procurement assignments where product costing calculations has not been conducted, all of which are reported to the head of each department which in turn report to the Commercial Operation Division Manager and so forth. Some of these performance indicators are directly extracted from different ERP-systems without any interference of manually work, whereas others requires further attention in Excel. A table of the all performance indicators and definitions for this division can be seen in Appendix 10.2.

The Goods and Service Department is responsible for the majority of all framework agreements concerning FM, and procure goods and services that are not directly connected to any equipment system. Similar to the IMS, this department´s performance indicators include savings, number of procurement assignments, number of ongoing category initiatives, number of call off order personnel that have 100% mandate, number of purchase orders in each purchasing channel, number of purchasing orders in each purchasing channel, number of procurement assignments per employee, number of customer on-site visits, lead-time for operative procurement, number of dossiers, number of completed call off orders, number of completed procurement assignments

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conducted in different awarding procedures, lead-time for operative procurement, number of standing orders exceeding the value limit, number of purchase orders outside the mandate of the individual who make call off orders, order quality, purchase order of not approved goods or services, assortment control, number of review procedures, number of suppliers connected to e-procurement/catalogue and number of invoices. This department extracts and works more frequently with their performance indicators. Similar to the Commercial Operations Staff, some of these performance indicators are directly extracted from different ERP-systems without any interference of manually work, whereas some requires further attention in Excel. A table of the all performance indicators and definitions for this division can be seen in Appendix 10.3.

The Military System Department is heavily project based and primarily procures goods and services for “internal customers” such as the Procurement and Logistics Division and Test and Evaluation Division. As this department consider it self as solely operative and include performance indicators such as savings, product cost calculation, number of customer on-site visits, quality checks, lead-time for operative procurement, number of new procurement assignments, number of ongoing procurement assignments, number of new procurement assignments, number of procurement assignments in queue, number of contracts under management, number of procurement assignments per employee, number of signed contracts within a period, and average lead-time for initiating new procurement assignment. Furthermore, this department does not extract any performance indicators it self but the Commercial Operations Staff are doing that for them. The information is delivered to the head of the department and than distributed cross the sections. A table of the all performance indicators and definitions for this division can be seen in Appendix 10.4.

The Business Strategy and Methodology Support Department differs from all other units at FMV as it supports other divisions and departments in their strategic work. This department has three major responsibilities; support, develop and follow-up the category management work and projects. This division include performance indicators such as number of purchase orders through determined purchasing channel, purchasing volume within assortment, realized savings as a percentage of implemented savings, realized savings as a percentage of possible savings, realized savings as a percentage of target value, purchasing channel efficiency as a percentage of target value, contract compliance as a percentage of target value, delivery performance, delivery performance prioritized assignments, number of contract changer during the period, the total change in price during the period relative to original contracted cost, number of remaining items at final delivery, number of accepted deviations at final delivery, number of warranty defects, whereof number of consistent defects, number of specification changes during the period that affect time, cost or quality, project savings and risk. The primary performance indicator, which is identified in all other departments, is savings. However, this department also address contract compliance and as of recently Supplier Relationship Management (SRM) related to projects. The saving indicator is referred to as spend where this department supports other departments and divisions in the organization with spend analysis related to other divisions and departments strategic work within category management. The compliance indicator indicates whether the purchased volumes can be assigned a contract. Lastly, the supplier relationship management indicator is primarily addressed in projects and includes delivery performance, contracts and quality deviations. A table of the all performance indicators and definitions for this division can be seen in Appendix 10.5.

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6 Result and analysis In this chapter the two research questions are answered with support for the frame of reference, research literature review and the empirical findings. The first research questions is answered and analyzed with support for the research literature review and the empirical findings. The second research question is answered and analyzed with support form the frame of references, the research literature review and the empirical findings. 6.1 What performance indicators can be identified within public procurement? The author has identified several performance indicators that exist in public procurement. In the research literature review, 96 performance indicators were identified whereas the empirical findings contributed with 98 performance indicators. By interpreting, comparing definition and meanings of indicators derived from both the research literature review and the empirical study, merges and alignment were possible. However, where definitions were not provided or when the meanings of performance indicators were imprecise, the definition row was left blank. The merges resulted in a final sample of 117 performance indicators, all of which will are summarized and described in chapter 6.1.3. An illustration of the final sample can be found in Appendix 11. Initially, performance indicators that was solely identified in the research literature review will be presented followed by performance indicators solely identified in the empirical study. Lastly, the final sample will be presented.

6.1.1 Research literature review Performance indicators from the research literature review that could not be aligned with any PIs from the empirical study include 33 performance indicators. In the cost dimension, operating cost (Easton et al., 2002; Caniato et al., 2014), cost of purchasing activities (Caldwell and Howard, 2014; McGuinness, 2013, NIGP and CIPS, 2016), largest supplier spend (Jacoby, 2005), spend via e-auction (Caniato et al., 2014), transaction cost (Molander, 2014; Morgan, 2000; Knight et al., 2007; OECD, 2016) and efficiency of the purchasing department (Beatham et al., 2004; Simon et al., 2011; Caniato et al., 2014; Thai, 2009) were not identified in the empirical study. The quality dimension had the largest number of misaligned performance indicators and include purchase order backlog (van Weele, 2014), supplier satisfaction (Chan and Chan, 2004; Pohl and Förstl, 2011; Caniato et al., 2014; Atkinson, 2007; McGuinness, 2013; Tudor, 2005; Albjörn and Freytag, 2012; Paulraj et al., 2006; Diggs and Roman, 2008; Erridge and Nondi, 1994; Knight et al., 2007), stakeholder satisfaction (Nair et al., 2015), supplier turnover (Caniato et al., 2014), number of suppliers (Simon et al., 2011; Caniato et al., 2014; Easton et al., 2002; Erridge and Nondi, 1994; van Lith et al., 2015; Brammer and Walker, 2011; Pohl and Först, 2011; van Weele, 2014), number of active supplier (Jacoby, 2005), number of certified suppliers (McCue and Gianakis, 2001), number of invoices per category (van Weele, 2014), number of invoices per supplier (van Weele, 2014), number of invoices processed (van Weele, 2014), employee satisfaction (Easton et al., 2002; Simon et al., 2011), employee training (Meybodi 2013; Nair et al., 2015; Pohl and Förstl, 2011; Beatham et al., 2004; Morgan, 2000; Hopkins and Howe, 2014; Hoque, 2008; NIGP and CIPS, 2016; OECD, 2016; McCue and Gianakis, 2001), reputation (Diggs and Roman, 2008), supplier on-site visits (Handfield et al., 2015), accuracy (Chao et al., 1993, Kay, 2005) and average contract length (Brammer and Walker, 2011). Noteworthy is that, supplier satisfaction, employee satisfaction and employee training, are in private organizations recognized key factors since they provide valuable information for organization improvement. In the sustainability dimension, performance indicators such as CO2 per purchased item (Pohl and Förstl, 2011), flexible working patterns (Hoque, 2008; Pohl and Förstl, 2001), global sourcing ration (Pohl and Förstl, 2011), number of firms involved in local supplier development programs (NIPG and CIPS, 2016) and saving due to improved waste management (Chan and Chan, 2004; Brandmeier and Rupp, 2010; Meybodi, 2013; Brammer and Walker, 2011; NIGP and CIP,S 2016) have not been recognized in the empirical findings. In the innovation dimension, awards (Simon et al., 2011; Hopkins and

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Howe, 2014), contribution to new product development (Caniato et al., 2014), e-procurement (OECD, 2016; Brandmeier and Rupp, 2010; Caniato et al., 2014) and time-to-market (Caniato et al., 2014) were not identified the in the empirical study. In the time dimension, procurement cycle time (Nair et al., 2015; Prier and McCue, 2009; Thai, 2009; NIGP and CIPS, 2016; OECD, 2016; Dwyer, 2010; Jacoby, 2005) was the only performance indicator that not could be identified in the empirical study. Lastly, performance indicators aligned with flexibility, risk and compliance dimension were all identified in the empirical study. Hence, no further explanations are given.

6.1.2 Empirical study In the empirical findings, 56 performance indicators could not be aligned with any of the performance indicator identified in the research literature review. Performance indicators that reflect the organization´s financials and employees include gender equality, chargeability, cost and earning per customer and year, contract cost, product cost calculation, patents, number of full time employees, number of women employees, number of employees over 55 years of age, number of employees younger than 35 years of age, average age, number of retirement and number of spontaneous resignations. Furthermore, performance indicators that emphasizes on savings (realized savings as a percentage of possible savings, assortment efficiency as a percentage of target value, project savings, purchasing channel efficiency as a percentage of target value, number of order through determined purchasing channel, purchasing volume with contract assortment, and contract changes (total changes in contract length during the period relative to the original contract length, contract size, number of price changes in contracts during a period, total changes in price during the period relative original contract cost) were also not identified the research literature review. Furthermore, performance indicators that emphasizes on productivity (number of procurement assignments in queue, number of call of order employees that have 100% mandate, number of purchase orders in respective channel, number of purchase order per employee, number of dossiers in progress, number of completed call of orders, number of standing orders exceeding the value limit, number of purchase orders outside the mandate of the individual who make call off orders, purchase order of not approved goods or services, assortment control, number of deviant invoices, productivity, number of procurement assignments conducted in different awarding procedures, total number of purchase orders, number of “small” purchases, the total value of conducted procurement assignment sin monopoly procedure) and quality of processes (delivery performance, milestone efficiency, ability to quote scheduled operations, ability to initiate scheduled operations, availability, forecast accuracy, compliance risk) were also not addressed in the research literature review. Additional performance indicators that were identified in the empirical study include order quality, lead-time for operative procurement, number of category initiatives.

6.1.3 Final sample of indicators The final sample includes 117 performance indicators, all of which will be presented below.

Absenteeism or “sick leave” as an indicator was identified both in the research literature review by Beatham et al., 2004; Simon et al., 2011), and in the empirical study. However, no definition was provided in the research literature. Hence, the empirical study defines it as employees that are absent from work for various reasons such as sickness, mental illness, care of children ect. Can either be paid or non-paid. Henceforth, absenteeism will be used for this thesis.

Gender equality as a performance indicator was solely identified in the empirical study and can be defined as the distribution between genders. It is measured in ratio for the organization, divisions, units and sections.

Cost and earnings per customer and year was solitary discovered as a performance indicator in the empirical study. A definition for this indicator was not provided nor considered to be necessary.

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Operating costs was identified in the literature review by Easton et al., 2002; Caniato et al., 2014, and in the empirical study. It is defined as the total cost of the purchasing department (Easton et al., 2002; Caniato et al., 2014).

Cost of purchasing activities was identified solely in the research literature review by Caldwell and Howard, (2014); McGuinness, (2013); NIGP and CIPS, (2016). However, no distinctive definition was discovered in literature.

Patent as a performance indicator was identified in the empirical study and can be defined as the number of patent owned and/-or developed.

Diversity spend as a performance indicator was identified both in the research literature review (Pohl and Förstl, 2011; Prier and McCue, 2009; Richart, 2015; Telgen and Thai, 2008; Atkinson, 2007; McKevitt et al., 2014; Snider and Rendon, 2008; NIGP and CIPS, 2016) and in the empirical study. It is defined as the number of suppliers that accounts for a diversity supplier such as SMEs, minority and veteran-owned businesses etc. Measured in value and ratio. In the empirical study, distinctive definitions was provided regarding small business spend (less than 50 employees and with a annual or balance sheet lower than 10 million euros per year), medium sized businesses (less than 250 employees and with a annual revenue or balance sheet that is not higher than 50 millions respectively 43 million euros per year), micro businesses (less than 10 employees and with a annual revenue or balance sheet lower than 2 million euros per year). Henceforth, diversity spend will be used as the aggregated indicator in this thesis.

Contract size was identified in the empirical study and can be defined as contract size in terms of contract value. Additionally, three sub indicators was defined; less than 5 million SEK, between 5-20 million SEK, and more than 20 million SEK.

Re-negotiations that have an impact on the delivery performance as in indicator were identified in the empirical study. However, no distinctive definition was provided.

Number of re-negotiations, similar to the indicator above, was identified in the empirical study and no distinctive definition was provided. Arguably, the indicator is rather self-explaining.

On-time delivery as an indicator was identified both in research literature review (Chao et al., 1993; Nair et al., 2015; Pohl and Förstl, 2011; Caniato et al., 2014; Jacoby, 2005; Kay, 2005; Tudor, 2005; Paulraj et al., 2006; Erridge and Nondi, 1994; Thai, 2009; Knight et al., 2007; OECD, 2016; van Lith et al., 2015; Rendon, 2015; van Weele, 2014), and in the empirical study. However, a wider indicator name was provided in the empirical study (delivery performance). Delivery performance can be defined as the number and value of complete deliveries relative the number of planed delivers committed to for the present year. Since no distinctive definition was provided in the literature review, this definition is used. Henceforth, both indicators will be used.

Administrative cost per contract as an indicator was identified in the research literature review by NIGP and CIPS, (2016). However, no further definition was provided.

Number of full-time employees, number of women employees, number of employees over 55 years of age, number of employees younger than 35 years of age, average age, number of retirements, number of spontaneous resignations are all performance indicators that were solely identified in the empirical study. Similar to the above, no definitions were provided since the indicators are rather self-explaining. Nevertheless, the majority of them are measured as a percentage of the total. In oppose to the previous described performance indicators, other types of resignations as an indicator was discovered both in

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the research literature review by Caniato et al., (2014) and in the empirical study. However, no distinctive definition was provided for this indicator either. Henceforth, all indicators previously mentioned will be used in this thesis.

Number of purchase orders through determined purchasing channels as an indicator was identified in the empirical study, and emphasizes on how purchase order can be directed through different channels. In this case, purchase orders be either free text, standing orders or though e-catalogue. The definition is as followed: the number of purchase orders through determined purchasing channel divided by number of purchase orders.

Purchasing volume within contract assortment was identified in the empirical study is measured in ratio and volume.

Spend under management as in indicator was identified both in the research literature by Dwyer, (2010); Richart, (2015); Pohl and Förstl, (2011); Prier and McCue, (2009); Molander, (2014); Handfield et al., (2015); Caniato et al .,(2014); Kay, (2005); Hopkins and Howe, (2014); Diggs and Roman, (2008); NIGP and CIPS, (2016), as well as in the empirical study. It has been defined as to increase visibility and promote sourcing decisions which incorporates spend analysis, category management and strategic sourcing. Additionally, more precise indicator names related to spend management was also identified in both data collection techniques. Realized savings as a percentage of implemented savings, as an indicator was identified both the research literature review by NIGP and CIPS, (2016) and the empirical study. It can be defined as realized savings divided by implemented savings. Realized savings as a percentage of possible savings, as an indicator, was solely identified in the empirical study and is defined as realized savings divided by possible savings. Whereas, realized savings as a percentage of target value was identified in the research literature review by Richart, (2015); Prier and McCue, (2009); Handfield et al., (2015); Atkinson, (2007), as well as in the empirical study. Furthermore, it can be defined as realized savings divided with the target value for realized savings. Assortment efficiency as a percentage of target value and purchasing channel efficiency as a percentage of target value as indicators were identified solely in the empirical study and can be defined as the purchasing volume within the assortment, divided by target value for the assortment, respectively the number of purchase orders through determined purchasing channel divided by target value for channel efficiency. Henceforth, the more precise indicator names such as realized savings as a percentage of implemented savings, realized savings as a percentage of possible savings, realized savings as a percentage of target value, assortment efficiency as a percentage of target value and purchasing channel efficiency as a percentage of target value will be used in this thesis.

Contract spend compliance and contract compliance as a percentage of target value are two performance indicators identified in the research literature review respectively the empirical study. The meaning is relatively similar, however, the definitions varies. Contract spend compliance is defined as the difference between theoretical savings and actual savings, e.g. "maverick buying" (Kay, 2005; van Weele, 2014). Whereas contract compliance as a percentage of target value is defined in the empirical study as the purchasing volume through contracted supplier, divided by target value for contract compliance. The definition provide in the empirical study is considered more appropriate and suitable to this thesis. Thus, contract compliance as a percentage of target value will be used as an indicator for this thesis.

Largest supplier spend as an indicator was solely identified in the research literature review by Jacoby, (2005). This indicator had no distinctive definition in the research literature review. However, the indicator name is rather self-explaining.

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Spend via e-auction, was identified in the research literature review by Caniato et al., (2014). Even though a definition not was provided in the research literature review, this indicator addresses the purchasing volume that has been conduced through e-auction.

Project duration as a performance indicator was identified both in research literature review by Chan and Chan (2004); Liu et al (2014), as well as in the empirical study. However, since no distinct definition was provided in the research literature review, the empirical study defined project duration as the actual project length being the start of the project subtracted by contract/final delivery. For a ratio, divide the result with the original contracted time for contract delivery.

Contract cost as a performance indicator was identified solely in the empirical study and is defined as the actual cost for the project divided by the original contracted cost. However, in the research literature review, life cycle cost (Nair et al., 2015; McCue and Gianakis, 2001; Scharf, 2006; Knight et al., 2007; van Lith et al., 2015) and total cost of ownership (Pohl and Förstl, 2011; McCue and Gianakis, 2001) are two comparable terms that have an impact on the total cost of a project as well as product or service procured. Total cost of ownership (TCO) can be defined as the purchase price of an asset including the costs of operations and expenses during the entire life cycle. Whereas, Life cycle cost (LCC) can be defined as a technique to establish TCO. Thus, both these affect the total cost of the contract. Henceforth, contract cost will be the aggregated indicator in this thesis.

Transaction costs as an indicator was identified solely in the research literature review by Molander, (2014); Morgan, (2000); Knight et al., (2007); and OECD, (2016) and can be defined as the number of transactions and their associated costs.

Efficiency of the purchasing department as an indicator was identified in the research literature review by Beatham et al., (2004); Simon et al., (2011); Caniato et al., (2014) and Thai, (2009). This indicator can be defined as the ratio between a general output (including total spending and percentage of that spending directly managed by the purchasing department) and a general input (including operational costs of the purchasing department, number of purchasing professionals, administrative personnel within the department and number of active suppliers).

Number of contract changes during the period as a performance indicator was identified in the empirical study. However, a similar indicator was identified in the research literature review by McGuinness, (2013); Erridge and Nondi, (1994) and Rendon, (2015), whom all address changes and modifications in contracts. Henceforth, the number of contract changes during the period will be used as the aggregated indicator.

Number of specification changes during the period that affect time, cost or quality as an indicator was identified in the empirical study. This indicator is in line with Handfield et al., (2015) and Brandmeier and Rupp, (2010), who address changes in contract requirements. Henceforth, the number of specification changes during the period that affect time, cost or quality will be used as the aggregated indicator.

Total changes in contract length during the period relative to the original contract length, number of price changes in contracts during a period and the total change in price during the period relative to original contract cost were solely identified in the empirical study and had no further definitions since the indicator names are relatively self-explaining.

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Number of remaining items at final delivery and number of accepted deviations at the final delivery were identified in the empirical study. These two indicators were defined in a broader context as indicators related to quality deviation. However, for this thesis these PIs will be used separately.

Project savings as an indicator was identified in the empirical

Number of procurement assignments in queue as in indicator was identified solely in the empirical study. Since the indicator name is relatively self-explaining, no further definition was provided. A comparable indicator with similar meaning was identified in the research literature review by van Weele, (2014), who address purchase order backlog as an indicator. However this indicator emphasizes solely on purchase orders and not procurement assignments. Therefore, these two indicators needs to be accounted for and measured separately.

Number of category initiatives initiated was identified in the empirical study and can be defines as the number of category initiatives that is initiated in order to expose savings. These initiatives rely heavily on strategy work in order to identify possible categories where savings actually can be realized.

Number of call of order employees that have 100% mandate was identified as en indicator in the empirical study since some organization have employees that solely make call off orders at someone´s behalf. This indicator is defined as the number of personnel that makes call off orders who have 100% mandate in the assortment.

Number of purchase orders in respective purchasing channel as an indicator was identified solely in the empirical study and is defined as the percentage of purchase orders allocated to each purchase channel; free text order, standing order, catalogue orders and free text order errors.

Number of purchase orders per employee as a performance indicator was identified in the empirical study and is defined as the average number of purchase orders per employee.

Number of customer on-site visits was identified in both the empirical study and in the research literature review by Pohl and Förstl, (2011). No further definition was proved either in the empirical study or in the research literature review. However, the indicator name itself is relatively self-explaining.

Number of dossiers in progress as an indicator was identified in the empirical study and can be further defined as the number of dossiers in progress in the working list of employees who make call off orders.

Number of completed call off orders as an indicator was identified solely in the empirical study and is defined as the number of free text orders, standing orders and catalogue orders in total and average for a particular category relative to the individual.

Lead-time for operative procurement as an indicator was identified in the empirical study and was defined as the average lead-time in days for different purchase order to be handled, free text orders, standing orders or catalogue orders. However, indicator names with similar meanings but lacks definitions were identified in the research literature review; purchase order administrative lead- time (van Weele, 2014; Pohl and Förstl, 2011; Handfield et al., 2015; Knight et al., 2007; McCue and Gianakis, 2001), purchase order cycle time (Chao et al., 1993; Jacoby, 2005; Erridge and Nondi, 1994; van Lith et al., 2015; Richart, 2015; Caniato et al., 2014) and purchase order processing time

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(Easton et al., 2002; Diggs and Roman, 2012). Hence, lead-time for operative procurement will be the aggregated indicator name.

Number of standing orders exceeding the value limit as an indicator was identified solely in the empirical study and can be defined as the number exceeded value limits connected to the mandate of the individual who makes call off orders.

Number of purchases outside the mandate of the individual who make call off orders was identified in the empirical study and can be defined as purchased of goods or services in other categories than what the individual is mandated for.

Order quality as an indicator was identified solely in the empirical study and can be defined as the number of purchase orders addressed non-contracted supplier.

Purchase orders of not approved goods or services was identified in the empirical study and can be defined as the number of purchase orders per individual that are not approved to be purchased by the purchasing function or the customer.

Assortment control is an indicator identified in the empirical study and can be define as the number of purchase orders per individual towards a contract supplier where assortment control has not been followed.

Review procedures as an indicator has been identified in the empirical study and can be defined as the number of review procedures during a year, win and losses. In the research literature review, Snider and Rendon, (2008) uses bid protests as an indicator name which having an identical meaning. Henceforth, review procedures will be the common indicator name.

Number of suppliers connected to e-procurement/catalogue as an indicator was identified both in the research literature review by van Weele, (2014), as well as in the empirical study. Since no distinct definition was provide in literature. Therefore, the empirical definition will be used being which is as follows; the number of supplier connected to e-procurement/catalogue divided by the total number of suppliers.

Number of deviant invoices was identified in the empirical study and can be defines as the number of invoices that does not match a purchase order.

Productivity as an indicator was identified in the empirical study and can be defined as the number of new procurement assignments in a certain “status” relative number of completed procurement assignments in a certain “status”.

Average number of procurement assignments per employee as an indicator was identified in the empirical study and can be defined as the total number of completed procurement assignments divided by the total number of employees.

Number of administrated contracts as an indicator was identified in the empirical study and can be defined as the number of ”active” contracts that are being manage the day the report was extracted from the ERP-system. This is in line with the indicator provided by Caldwell and Howard, (2014); McGuinness (2013) and NIGP and CIPS, (2016), who addresses solely the number of contracts. Henceforth, the empirical indicator name and definition will be used.

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Competition/Monopoly as an performance indicator was identified both in the research literature review by Snider and Rendon, (2008); Arrowsmith, (2010a); Hoque, (2008); McKevitt et al., (2014); Erridge and Nondi, (1994); NIGP and CIPS, (2016); OECD, (2016) and Rendon (2015), as well as in the empirical study. Since no definition was provided in research literature review, the definition provided in the empirical study will be used which is as followed; the number of procurement assignments conducted in competition respectively monopoly procedure. Henceforth, competition/monopoly will be recognized as competitive tendering in this thesis.

Number of completed procurement assignments conducted in different awarding procedures as an indicator was identified solely in the empirical study and can be defined as the number of completed procurement assignments above or below the threshold limits. The threshold limits include different tendering procedures, which can conducted in either an open, restricted, negotiated, competitive dialogue, simplified, selection, direct award or competitive dialogue.

Average lead-time for initiating new procurement assignment was identified as an indicator in the empirical study and can be defined as the difference in time (days) from which a new procurement assignment is received to when it is initiated. This indicator is measured in different tendering procedures such as open, restricted, negotiated, competitive dialogue, simplified, selection, direct award or competitive dialogue. However, tendering process lead-time by Erridge and Nondi, (1994), was identified as an indicator in the research literature review. Since this indicator have identical meaning as the in the empirical study, tendering process lead-time will be used as the aggregated indicator.

The total number of purchase orders as an indicator was identified solely in the empirical study. No distinctive definition was provided since the indicator name itself is rather self-explaining. Thus, accounts for the total number of purchase orders managed by the organization, which in turn can be broken down to departments, units or sections for more detailed information.

Number of “small purchases” as an indicator was identified solely in the empirical study and is defined as purchases > (less than) 500 0000 SEK.

The total value of conducted procurement assignments in monopoly procedures as an indicator was identified in the empirical study. No further definition was provided since the indicator name itself somewhat self-explaining.

Product cost calculation as an indicator name was identified in the empirical study and can be defined as the number of purchase orders where product cost calculations has been used, and has a value less than 10 MSEK.

Number of purchase orders where product cost calculation has not been conducted was identified in the empirical study. However, no definition was provided since the indicator name was considered self-explaining.

Delivery performance as an indicator was identified in the empirical study and can be defined as the number of complete deliveries relative the number of planed delivers that the procurement organization has committed to for the present year. This include delayed deliveries from previous years which been re-scheduled to be delivered present year. However, delays caused by the customer are not included in this performance indicator. Furthermore, this indicator is measured by number of complete deliveries as well as the value of deliveries. In the research literature review, two comparable indicator was identifies; delivery reliability by Ellram and Carr, (1994) and delivery speed by Dwyer, (2010). Delivery reliability was defined as the ratio of the number of

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deliveries performed without any errors within a period, whereas a definition for delivery speed lacking. Henceforth, delivery performance will be the aggregated indicator.

Delivery performance prioritized assignments was identified solely in the empirical study. No distinctive definition was proved because this indicator was considered comparable to the previous. The reason for having prioritized assignments is that some assignments are of higher importance for customers. Therefore, it should specifically be measured and reported. Thus, justifying possible deteriorations in other assignment´s delivery performance and lead-times.

Milestone efficiency was identified solely in the empirical study and can be defined as truly completed deliveries, in time, relative what is contracted during the period.

Ability to quote scheduled operations was identified solely in the empirical study and can be defined as demitted quotations relative current committed quotations.

Ability to initiate scheduled operations was identified solely in the empirical study and had no distinctive definition. However, the indicator name itself is rather self explaining. Hence, no further definition is needed.

Quality management as an indicator was identified in the empirical study and can be defined as the number of breakdowns, accidents or incidents that involves employees, equipment or systems. In the research literature review, number of accidents was identified as a comparable indicator by Beatham et al., (2004) and Hoque, (2008). However, no distinctive definition was provided. Thus, will the definition, provided in the empirical study, be used in combination with the number of accidents as an indicator name.

Availability was solely identified in the empirical study. Since this performance indicator is under development, no distinctive definition was provided. Even though a definition was not provided, this indicator will still be PI within this thesis.

Forecast accuracy solely identified in the empirical study. Since this performance indicator is under development, no distinctive definition was provided. Even though a definition was not provided, this indicator will still be PI within this thesis.

Customer satisfaction as an performance indicator was identified both in the empirical study and in the research literature review by the following publications; Ellram and Carr, (1994); Chan and Chan, (2004); Meybodi, (2013); Nair et al., (2015); Pohl and Förstl, (2011); McCue and Gianakis, (2001); Beatham et al., (2004); Simon et al., (2011); Caniato et al., (2014); Atkinson, (2007); Scharf, (2006); McGuinness, (2013); Tudor, (2005); Hoque, (2008); Paulraj et al., (2006); Diggs and Roman, (2008); Thai, (2009); NIGP and CIPS, (2016). Furthermore, this indicator can be defined as the number of deviations/complaints in relation to the number of delivered orders. According to the empirical study, this indicator was measured only once a year.

Supplier satisfaction as an indicator was identified solely in the research literature review (Chan and Chan , 2004; Pohl and Förstl, 2011; Caniato et al., 2014; Atkinson, 2007; McGuinness, 2013; Tudor, 2005; Albjörn and Freytag, 2012; Paulraj et al., 2006; Diggs and Roman, 2008; Erridge and Nondi, 1994; Knight et al., 2007), and can be defined as the number of supplier complaints received during a period.

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Stakeholder satisfaction was identified in the research literature review as a performance indicator. However, even though no distinctive definition was provided by Nair et al., (2015), a possible measure could perhaps be complaints or feedback provided by the government.

Supplier turnover as a performance indicator was identified solely in the research literature review, supported by Caniato et al., (2014). Nevertheless, even though no distinctive definition was provided, the indicator name itself is rather self-explaining and describes the frequency in which supplier are replaced by new ones.

Number of suppliers was identified as an indicator in the research literature review (Simon et al., 2011; Caniato et al., 2014; Easton et al., 2002; Erridge and Nondi, 1994; van Lith et al., (2015); Brammer and Walker, (2011); Pohl and Först, (2011); van Weele, (2014). However, no definition was provided.

Awards as an indicator was identified in the research literature review by Simon et al., (2011) and Hopkins and Howe, (2014). Even though no distinctive definition is provided in the conducted research literature review, this indicator emphasizes on encouragement for a well-performed work or creativity think for improvements.

Contribution to New Product Development (NPD) was identified as an indicator in the research literature review, supported by Caniato et al., (2014). Similar to the previous indicator, this indicator had no distinctive definition either.

E-procurement as an indicator was identified in the research literature review by OECD, (2016); Brandmeier and Rupp, (2010); and Caniato et al., (2014). However, since no definition was provided in the research literature review, this indicator may perhaps indicate whether an organization is using E-procurement as innovative functionality, exposing an organization’s adaptability to the changing environment.

Lessons learned was identified in the research literature review as an indicator of a more qualitative characteristic (NIGP and CIPS, 2016). Even though no distinctive definition was provide, this indicator emphasizes on an organizational ability to comprehend and assimilate previous experience.

Time-to-market (Caniato et al., 2014) and CO2 emission per purchased item (Pohl and Förstl, 2011) were both indicators was identified in the research literature. However, no distinctive definition were provide in the research literature review. Hence, no definitions will be provided for these indicators.

Number of active suppliers (Jacoby, 2005), number of certified suppliers (McCue and Gianakis, 2001), number of invoices per category (van Weele, 2014), number of invoices per supplier (van Weele, 2014) and number of invoices processed (van Weele, 2014), all of which were identified in the research literature review. However, since the indicator names are relatively self-explaining no further definition was provided in the research literature.

Employee satisfaction as an indicator was identified in the research literature review by Easton et al., (2002) and Simon et al., (2011). However, even though no distinctive definition was provided in the research literature review, employee satisfaction can be measured through surveys.

Employee training as an indicator was identified in the research literature review by Meybodi (2013); Nair et al., (2015); Pohl and Förstl, (2011); Beatham et al., (2004); Morgan, (2000); Hopkins and

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Howe, (2014); Hoque, (2008); NIGP and CIPS, (2016); OECD, (2016) and McCue and Gianakis, (2001), and is defined as the number of hours and spend as in cost per employee for training.

Number of training programs offered for employees, trainee opportunities for students and participants was identified as indicator in the research literature review by Hoque, (2008). For this indicator, no definition was provided. However, since indicator itself is rather self-explaining, perhaps a definition is exaggerated.

Reputation as an indicator was solely identified in the research literature review by Diggs and Roman, (2012) and can be defined as the reputation for the procurement organization as a whole as well as the expertise that a procurement organization possesses. It is often presented as satisfaction reports from customers and suppliers.

Staff turnover was identified both in the research literature review (Beatham et al., 2004; Simon et al., 2011) and in the empirical study. However, no distinctive definition was provided in either data collection techniques. Yet, the staff turnover indicator emphasizes on organization´s ability to retain employees.

Flexible working pattern as an indicator was identified in the research literature review by Hoque, (2008) and Pohl and Förstl, (2011) and can be defined as the number of employee’s swopping jobs within the organization. This indicator exposes career opportunities as well as potential obstacles in the organization such as why employees in certain divisions tend to swap more frequently.

Supplier on-site visits as an indicator was identified solely in the research literature review by Handfield et al., (2015) and can be defined as the number of supplier on-site visits.

Accuracy was identified in the research literature review by Chao et al., (1993) and Kay, (2005) and can be defined as the number of errors made by the procurement department in areas such as specifications, quantity, price and due date.

Average contract length as an indicator was identified in the research literature review by Brammer and Walker, (2011), and had no distinctive definition devoted to it.

Global sourcing ratio as a performance indicator was identified in the research literature review by Pohl and Förstl, (2011) and can be defined as the spend on international suppliers as a ration of all supplier.

Number of firms involved in local supplier development programs as an indicator was identified in the research literature review by NIGP and CIPS, (2016). Even though no distinctive definition was provided in the research literature review, this indicator emphasizes on sustainability for supplier improvement.

Savings due to improved waste management as an indicator was solely identified in the research literature review by (Chan and Chan, 2004; Brandmeier and Rupp, 2010; Meybodi, 2013; Brammer and Walker, 2011; NIGP and CIP,S 2016), and can be defined as waste and disposal handling that result on savings for the organization. In addition, this indicator also aligns to environmental objectives of an organization due to improved processes handling wastes.

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Value for money (Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Telgen and Thai, 2008; Arrowsmith, 2010a; McGuinness, 2013; Hopkins and Howe, 2014; Murray, 2001; McKevitt et al., 2014; Erridge and Nondi, 1994; Thai, 2009; Knight et al., 2007; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015), integrity (Raymond, 2008; Brammer and Walker, 2011; Prier and McCue, 2009; Arrowsmith, 2010a; Goodsell, 2006; Albjörn and Freytag, 2012; NIGP and CIPS, 2016; OECD, 2016), efficiency (Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Telgen and Thai, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Molander, 2014; Fritzen, 2007; Goh, 2012; Goodsell, 2006; Hopkins and Howe, 2014; Albjörn and Freytag, 2012; NIGP and CIPS, 2016; OECD, 2016), accountability (Raymond, 2008; Brammer and Walker, 2011; Schapper et al ., 2006; Telgen and Thai, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Gelderman et al., 2006; Albjörn and Freytag, 2012; Diggs and Roman, 2012; Thai, 2009; Knight et al., 2007; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015), and equality (Brammer and Walker, 2011; Snider and Rendon, 2008; NIGP and CIPS, 2016; Arrowsmith, 2010a; OECD, 2016) were all identified in the research literature review. Whether or not these should be accounted for as indicators or objectives is arguable since these indicators are supposed to permeate all functions of public organizations and in their day-to-day operations.

Additional indicator names such as scrutiny (Fritzen, 2007), dependability (Goodsell, 2006), corruption (Fritzen, 2007), legality (Goodsell, 2006), fairness (Raymond, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Goodsell, 2006; McGuinness, 2013; Hopkins and Howe, 2014; NIGP and CIPS, 2016; OECD, 2016), transparency (Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Molander, 2014; Fritzen, 2007; Goh, 2012; Goodsell, 2006; McGuinness, 2013; McGuinness, 2013; Hopkins and Howe, 2014; Albjörn and Freytag, 2012; Thai, 2009; Knight et al., 2007; OECD, 2016; Rendon, 2015) and openness (Molander, 2014; McGuinness, 2013, Hopkins and Howe, 2014) are all embedded within public procurement objectives by Arrowsmith, (2010a) and can thereby be aligned the most appropriate one. Henceforth, these are included in public procurement objectives, and are not seen as individual indicators in this thesis.

Procurement cycle time as an indicator was identified in the research literature review by Nair et al., (2015); Prier and McCue, (2009); Thai, (2009); NIGP and CIPS, (2016); OECD, (2016); Dwyer, (2010) and Jacoby, (2005). Furthermore, this indicator can be defined as the time from the beginning of a sourcing process to the time that a contract is executed.

Chargeability as an indicator was identified in the empirical study and can be defined as the number of chargeable hours in relation to total hours or available hours. This indicator can be measured for the organization as a whole or be broken down into divisions and even on an individual level.

Risk management (Beatham et al., 2004; Schapper et al., 2006; Hoque, 2008; Caldwell and Howard, 2014; Liu et al., 2014), market risk (Liu et al., 2014) and project risk (Liu et al., 2014) were all identified in the research literature review with lacking definitions. Technology risk (Caldwell and Howard, 2014) was identified in the research literature review and can be defined as the ability to comprehend with emerging technologies. However, in the empirical study, a comparable indicator that addresses all risk indicators previously mentioned was identified as strategic risk. This indicator emphasizes on risks that may arise within the top management. This includes risks that can be associated to the strategic objectives, vision and mission, prioritized goals and the performance indicators that exist in the organization. In addition, risks that are associated customer’s financials and political aspects such as deteriorating budgets, customer loyalty and international co-operation are also included in this risk category. Thus, will the strategic risk be used as an aggregated indicator for risk management, market risk, project risk and technology risk within this thesis.

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Supplier risk (Hopkins and Howe, 2014; Brandmeier and Rupp, 2010; Caldwell and Howard, 2014) was identified as a PI in the research literature review. However, similar to the risk management indicator, no definition was provided. In the empirical study, a comparable indictor was identified as operative risk. This indicator emphasize on risks that arises through organizational, administrative, technical, human or supplier flaws. This includes working routines, manuals, processes and reports. In addition, the balance between working tasks and resources, system support, IT, incidents or disruptions that may affect deliverance performance are also included in this category. Thus, will the latter indicator be used as an aggregated indicator within this thesis.

Currency risk as an indicator was identified in the research literature review by Pohl and Förstl, (2011) and Caldwell and Howard, (2014) and can be defined as the number of occasions that precautions have been considered concerning changes in cost due to currency fluctuation by i.e. securing fixed rates. In the empirical study, a comparable, however, much wider indicator was identified, namely financial risk. This risk primarily emphasizes on signed contract agreements or contacts that are to be signed. In addition, the possibility of exceeding the financial conditions and appropriations determined by the government, as well as risks in credit and currency risks are also included in this risk category. Thus, will the latter indicator be used as an aggregated indicator within this thesis.

Compliance risk as an indicator was solely identified in the empirical study and emphasizes on compliance in rules and regulations related to Swedish law, Union law, EU-directives, procurement laws, environmental law, as well as contract compliance.

6.2 How can performance indicators within public procurement be categorized? In order to categorizes performance indicators within public procurement, performance indicators needs to be identified. Subsequently, a categorization can be conducted. Based on the research literature review, the frame of reference chapter and the empirical study, the author has found three possible ways in which performance indicators can be categorized; (1) decision- making levels, (2) elements and (3) dimensions.

6.2.1 Decision-making levels According to Gunasekaran et al., (2001) and Gunasakaran and Kobu, (2007), performance indicators can be categorized into three decision levels; strategic, tactical and operational. Due to the comprehensiveness of each decision-level, they will be presented separately.

6.2.1.1 Strategic The strategic level address public performance indicators that targets organization financials (Gunasekaran et al., 2001; Gunasekaran and Kobu, 2007), organizational goals and objectives (Neely et al., 1995; Meybodi, 2013; Caniato et al., 2014), development of core competencies, understanding external environmental factors such as the state of competition, technology and globalization (Meybodi, 2013; Nair et al., 2015) should all be aligned within this level. The organizational goals and objective often include the key performance indicators of the public organization (Caniato et al., 2014) and strategic risk (Beatham et al., 2004; Schapper et al., 2006; Hoque, 2008; Caldwell and Howard, 2014; Liu et al., 2014). Furthermore, the financial performance indicators that is considered to be most appropriate and can be aligned with the strategic level includes, total earnings (empirical study), earnings per customer and year (empirical study),

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operating costs (Easton et al., 2002; Caniato et al., 2014), financial risk (Pohl and Förstl, 2011; Caldwell and Howard, 2014), cost of purchasing activities (Caldwell and Howard, 2014; McGuinness, 2013; NIGP and CIPS, 2016) and chargeability (empirical study). Moreover, all financial indicators can be broken down according to the organizational structure, tracing earnings and cost all the way down to a specific section. Furthermore, the strategic level also include indicators that can contribute to business recognition and development such as reputation (Diggs and Roman, 2012), patents (empirical study), awards (Simon et al., 2011; Hopkins and Howe, 2014), number of training programs offered for employees, trainee opportunities for students and participants (Hoque, 2008), flexible working pattern (Hoque, 2008; Pohl and Förstl, 2011), gender equality (empirical study) and e- procurement (OECD, 2016; Brandmeier and Rupp, 2010; and Caniato et al., 2014). In addition, employee satisfaction (Easton et al., (2002) and Simon et al., (2011), employee training (Meybodi 2013; Nair et al., 2015; Pohl and Förstl, 2011; Beatham et al., 2004; Morgan, 2000; Hopkins and Howe, 2014; Hoque, 2008; NIGP and CIPS, 2016; OECD, 2016; McCue and Gianakis, 2001), staff turnover (Beatham et al., 2004; Simon et al., 2011), absenteeism (Beatham et al., 2004; Simon et al., 2011), number of full-time employees (empirical study), number of women employees (empirical study), number of employees over 55 years of age (empirical study), number of employees younger than 35 years of age (empirical study), average age (empirical study), number of retirements (empirical study), number of spontaneous resignations (empirical study) as well as other types of resignations (Caniato et al., 2014) are all considered strategic since they all have an affect on the overall organizational performance and professionalism.

6.2.1.2 Tactical The tactical level address public procurement indicators that are influenced by the middle management and support strategic indicators to be achieved. At this level, planning of day-to-day operations as well as specific and technical supporting strategies is of concern. Performance indicators that can be aligned to the tactical level include all indicators that emphasizes on spend such as diversity spend (Pohl and Förstl, 2011; Prier and McCue, 2009; Richart, 2015; Telgen and Thai, 2008; Atkinson, 2007; McKevitt et al., 2014; Snider and Rendon, 2008; NIGP and CIPS, 2016), contract size (empirical study), purchasing volume within contract assortment, realized savings as a percentage of possible savings (empirical study), realized savings as a percentage of possible implemented savings (NIGP and CIPS, 2016; empirical study), realized savings as a percentage of target value (Richart, 2015; Prier and McCue, 2009; Handfield et al., 2015; Atkinson, 2007; empirical study), assortment efficiency as a percentage of target value (empirical study), purchasing channel efficiency as a percentage of target value (empirical study), contract compliance as a percentage of target value (empirical study), project savings (empirical study), largest supplier spend (Jacoby, 2005) and spend via e-auction (Caniato et al., 2014). Furthermore, the tactical level also includes indicators that contribute to business improvements such as number of category initiatives (empirical study), lessons learned (NIGP and CIPS; empirical study 2016), supplier satisfaction (Chan and Chan, 2004; Pohl and Förstl, 2011; Caniato et al., 2014; Atkinson, 2007; McGuinness, 2013; Tudor, 2005; Albjörn and Freytag, 2012; Paulraj et al., 2006; Diggs and Roman, 2008; Erridge and Nondi, 1994; Knight et al., 2007), customer satisfaction (Ellram and Carr, 1994; Chan and Chan, 2004; Meybodi, 2013; Nair et al., 2015; Pohl and Förstl, 2011; McCue and Gianakis, 2001; Beatham et al., 2004; Simon et al., 2011; Caniato et al., 2014; Atkinson, 2007; Scharf, 2006; McGuinness, 2013; Tudor, 2005; Hoque, 2008; Paulraj et al., 2006; Diggs and Roman, 2008; Thai, 2009; NIGP and CIPS, 2016), stakeholder satisfaction (Nair et al., 2015), contribution to new product development (Caniato et al., 2014), number of firms involved in local supplier development programs (NIGP and CIPS, 2016), supplier turnover (Caniato et al., 2014), review procedures (Snider and Rendon, 2008), savings due to improved waste management (Chan and Chan, 2004; Brandmeier and Rupp, 2010; Meybodi, 2013; Brammer and Walker, 2011; NIGP and CIP,S 2016) and global sourcing ratio (Pohl and Förstl, 2011).

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6.2.1.3 Operational The operational level includes performance indicators that primarily is coherent to the day-to-day operations and can be monitored and measured on daily basis. Furthermore, the operational level is the category where “production” characteristic indicators can be aligned, that reflects the direction and the current status of public procurement processes. This include indicators that can be associated to productivity such as number of procurement assignments in queue (empirical study), purchase order backlog (van Weele, 2014), number of dossiers in progress (empirical study), number of invoices processed (van Weele, 2014), number of completed call off orders (empirical study), average number of procurement assignments per employee (empirical study), number of administered contracts (Caldwell and Howard, 2014; McGuinness, 2013; NIGP and CIPS, 2016), productivity (empirical study), number of purchase orders through determined purchasing channel (empirical study), number of call of order employees that have 100% mandate (empirical study), number of purchase orders in respective purchasing channel (empirical study) and number of complete procurement assignments conducted in different awarding procedures (empirical study). Furthermore, the operational level also include indicators that contribute to efficiency and quality of public procurement processes such as on-time delivery (Chao et al., 1993; Nair et al., 2015; Pohl and Förstl, 2011; Caniato et al., 2014; Jacoby, 2005; Kay, 2005; Tudor, 2005; Paulraj et al., 2006; Erridge and Nondi, 1994; Thai, 2009; Knight et al., 2007; OECD, 2016; van Lith et al., 2015; Rendon, 2015; van Weele, 2014), re-negotiations that have an impact on the delivery performance (empirical study), number of re-negotiations (emprical study), project duration (Chan and Chan, 2004; Liu et al., 2014), efficiency of the purchasing department (Beatham et al., 2004; Simon et al., 2011; Caniato et al., 2014 and Thai, 2009), , number of purchase orders per employee (empirical study), number of customer on-site visits (Pohl and Förstl, 2011), number of deviant invoices (empirical study), order quality (empirical study), transaction cost (Molander, 2014; Morgan, 2000; Knight et al., 2007; OECD, 2016), number of remaining items at final delivery (empirical study), number of accepted deviations at the final delivery (empirical study), accuracy (Chao et al., 1993; Kay, 2005), procurement cycle time (Nair et al., 2015; Prier and McCue, 2009; Thai, 2009; NIGP and CIPS, 2016; OECD, 2016; Dwyer, 2010; Jacoby, 2005), tendering process lead-time (Erridge and Nondi, 1994), competitive tendering (Snider and Rendon, 2008; Arrowsmith, 2010; Hoque, 2008; McKevitt et al., 2014; Erridge and Nondi, 1994; NIGP and CIPS, 2016; OECD, 2016, Rendon, 2015), the total number of purchase orders (empirical study), number of ”small” purchases (empirical study), the total value of conducted procurement assignments in monopoly procedures (empirical study), product cost calculation (empirical study), number of purchase orders where product cost calculation has not been conducted (empirical study), delivery performance (empirical study), milestone efficiency (empirical study), ability to quote scheduled operations (empirical study), ability to initiate scheduled operations (empirical study), availability (empirical study), forecast accuracy (empirical study) and lead-time for operative procurement (empirical study). Other indicators that can be aligned to the operational level included indicators that concern contracts and changes in contracts such as number of contract changes during the period (empirical study), total changes in contract length during the period relative to the original contract length (empirical study), average contract length (Brammer and Walker, 2011), number of price changes in contracts during a period (empirical study), the total change in price during the period relative to original contract cost (empirical study), number of specification changes during the period that affects time, cost or quality (empirical study) and contract cost (empirical study). Lastly, number of suppliers (Simon et al., 2011; Caniato et al., 2014; Easton et al., 2002; Erridge and Nondi, 1994; van Lith et al., (2015); Brammer and Walker, (2011); Pohl and Först, (2011); van Weele, (2014), CO2 emission per purchased item (Pohl and Förstl, 2011), number of active suppliers (Jacoby, 2005), number of certified suppliers (McCue and Gianakis, 2001), number of invoices per category (van Weele, 2014), number of invoices per supplier (van Weele, 2014), number of standing orders exceeding the value limit (empirical study), number of suppliers connected to e-procurement/catalogue (van Weele, 2014), number of purchases outside the mandate of the individual who make call off orders (empirical study), , purchase orders of not approved goods or services (empirical study), assortment control (empirical study) and supplier on-site visits (Handfield at al., 2015), can also be include in the operational level.

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6.2.2 Elements The “elements” that are presented below were identified in the empirical study. However, the term “element” is by the author a created term since no generic term was provided in the empirical study, in the research literature review or in the frame of reference chapter. The author has no distinctive definition of the term “element”. However, it should be seen as a category in its own, describing headings of several fundamentals within defence sector procurement, which was identified in the empirical study. The following elements provide suggestions on how some of the identified PIs can be aligned to each element.

6.2.2.1 Business strategy and development This element is derived from the “business” perspective in the empirical study, and primarily emphasizes on strategic objectives and goals of an organization, which by its definition is in line with (Neely, (1995); Gunasekaran et al., (2001); Meybodi, (2013) and Caniato et al., (2014). As discovered in the empirical findings, the board, together with stakeholders, concludes the strategic objectives and goals of an organization. However, those are derived form rules and regulation that encompasses each country´s government, which public organizations are supposed to comprehend with. Therefore, key performance indicators, which are generally conclude by the board, together with other stakeholders, should be seen as strategic. Thus, be aligned to this element. However, for this thesis, key performance indicator identified in the empirical study will not be aligned to this element. The reason for this is that key performance indicators (KPIs) vary among public organization and therefore selecting the KPIs identified in this empirical study would not be representative. Moreover, comparable to the strategic decision- making level, performance indicators that reflect a public organization’s overall performance should also be aligned into this element. This include financial indicators (total earnings, earnings per customer and year, operating costs, revenue, chargeability, cost of departments), development of competencies (employee training, umber of training programs offered), statistical report concerning the employees of an organization (number of employees, absenteeism, staff turnover, gender equality, employee satisfaction), risk management (strategic risk, financial risk), technology development (e-procurement, patent), as well as indicators that contribute to organizational recognition (reputation, awards, opportunities for trainee programs, patents). Lastly, the majority of performance indicators that can be aligned with this element are indicators that are concluded at the top management level. Thus, being strategic.

6.2.2.2 Operations Management The operation management element is also derived from the “business” perspective in the empirical study but represents its own element. This element primary emphasizes on the planning and controlling of day-to-day operations, as well as specific and technical supporting strategies that supports and ensures that the strategic objectives and goals of an organization actually are achieved (Gunasekaran, 2001; Meybodi, 2013). Furthermore, this element can be divided into three sub-elements, all of which are seen as tactical since they aim at supporting tactical business strategies that encourages improvements.

(1) Category management, as an element, is considered to be of a tactical character since decisions are primarily made by middle management. This element includes performance indicators that focus on savings. The tactical work concerning savings is performed with support of spend analysis and address indicators such as diversity spend, realized and implemented savings, contract compliance, purchasing channel efficiency and spend via e-auction, number of category initiatives, all in which can be directly aligned with this element. (2) Supplier management element address performance indicator that is considered to be both of tactical and operational character. However, the only performance indicator that

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was identified and considered to be tactical includes supplier satisfaction. Based result of this thesis, supplier satisfaction is solely measured in number of complaints. (3) Customer relationship management address performance indicators that emphasize on customer satisfaction and are measured in number of complaints.

6.2.2.3 Procurement The procurement element is the widest of all elements discovered in this thesis. It covers a wide range of performance indicators that can directly be associated with execution phase and contract management phase of the procurement process. This element, inter alia, include performance indicators that can be aligned to the duration of procurement activities (lead-time for operative procurement), tendering process (tendering process lead-time, number of complete procurement assignments conducted in different awarding procedures) and contract changes (total changes in contract length during the period relative to the original contract length, average contract, number of price changes in contracts during a period, the total change in price during the period relative to original contract cost). Due to the width of this element, all performance indicators that are aligned with the operational decision-making level can also be aligned with this element. Hence, the procurement element can be recognized as primarily operational.

6.2.2.4 Expertise and Service Support The expertise and service support element is solely a operational element since its primarily aim is to provide support for the day-to-day operations. This includes system and computer support, legal advisers, and engineering support. However, since no performance indicators could be identified for this element, assumptions of what a performance indicator that can be aligned with this element might look like. Perhaps, response time of internal support would fit as a performance indicator, which according to the authors could be defined as the duration between when support is needed until it has been solved.

6.2.2.5 Authority The authority element represents all obligations and compliances with rules and regulations that a public procurement organization has to consider as an authority, beyond the execution of “regular” businesses procuring goods and services. This element is based on the procurement objectives stated by Arrowsmith, (2010b); value for money, integrity, accountability, equality, fairness, horizontal policies, opening up public markets (competition) and efficiency in the procurement process. All of which permeates public organization in their way of procuring goods and services. Consequently, this element affects all other elements, decision-making levels and performance indicators identified and addressed in this thesis. In the empirical study, indicator such as diversity spend, contract compliance as a percentage of target value, competitive tendering, number of complete procurement assignments conducted in different awarding procedures and compliance risk are all examples of performance indicators derived from the public procurement objectives.

6.2.3 Dimensions The dimensions that are presented below are derived from the research literature review as well as the frame of reference chapter. Neely et al., (1995), Caniato et al., (2014) and Nair et al., (2015) are all using the term dimension when categorizing performance. Hence, the term dimension is applied in this thesis. Additionally, for this thesis, the term dimension should be seen as a category in which procurement performance indicators can be aligned to. The following dimensions will present how the 117 PIs identified in this thesis are distributed and aligned to each dimension.

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6.2.3.1 Cost The cost dimension in public procurement context primarily include financial performance indicators that describes the overall performance of a public procurement organization, as well as the performance of the purchasing department in terms of cost savings and cost avoidance. This is in line with Caniato et al., (2014) who emphasizes on savings, as in spend, which is the results of efforts performed by purchasing people and suppliers together. Based on merges of performance indicators, the following performance indicators that could be aligned with this dimension include cost and earning per customer and year (empirical study), operating cost (Easton et al., 2002; Caniato et al., 2014), cost of purchasing activities (Caldwell and Howard, 2014; McGuinness, 2013; NIGP and CIPS, 2016), administrative cost per contract (NIGP and CIPS, 2016; empirical study), realized savings as a percentage of implemented savings (NIGP and CIPS; 2016; empirical study), realized savings as a percentage of possible savings (empirical study), realized savings as a percentage of target value (empirical study, largest supplier spend (Jacoby, 2005), spend via e-auction (Caniato et al., 2014), contract cost (empirical study), transaction cost (Molander, 2014; Morgan, 2000; Knight et al., 2007; OECD, 2016), efficiency of the purchasing department (Beatham et al., 2004; Simon et al., 2011; Caniato et al., 2014; Thai, 2009), project savings (empirical study), product cost calculation (empirical study) and chargeability (empirical study).

6.2.3.2 Quality The quality dimension in public procurement context is a wide dimension and includes performance indicators that reflect the quality of the organization itself, as well as how public organizations conducts its businesses. This is in line with Caniato et al., (2014) who emphasizes on the purchasing department as a service provider, measuring the quality of internal processes, customer satisfaction and supplier relationship. The total number of performance indicators that has been aligned with this dimension consists of 61 PIs, which represents the majority of all performance indicators identified. The following PIs has been included in the quality dimension; absenteeism (Beatham et al., 2004; Simon et al., 2011; empirical study), contract size (empirical study), re-negotiations that have an impact on the delivery performance (empirical study), number of re-negotiations (empirical study), on-time delivery (Chao et al., 1993; Nair et al., 2015; Pohl and Förstl, 2011; Caniato et al., 2014; Jacoby, 2005; Kay, 2005; Tudor, 2005; Paulraj et al., 2006; Erridge and Nondi, 1994; Thai, 2009; Knight et al., 2007; OECD, 2016; van Lith et al., 2015; Rendon, 2015; van Weele, 2014), number of purchase orders through determined purchasing channels (empirical study), purchasing volume within contract assortment (empirical study), assortment efficiency as a percentage of target value (emprical study), purchasing channel efficiency as a percentage of target value (empirical study), contract compliance as a percentage of target value (empirical study), number of remaining items at final delivery (empirical study), number of accepted deviations at the final delivery (emprical study), number of procurement assignments in queue (empirical study), purchase order backlog (van Weele, 2014), number of category initiatives initiated (empirical study), number of call of order employees that have 100% mandate (emprical study), number of purchase orders in respective purchasing channel (empirical study), number of purchase orders per employee (empirical study), number of customer on-site visits (Pohl and Förstl, 2011; empirical study), number of dossiers in progress (empirical study), number of completed call off orders (empirical study), number of standing orders exceeding the value limit (empirical study), number of purchases outside the mandate of the individual who make call off orders (empirical study), order quality (empirical study), purchase orders of not approved goods or services (empirical study), assortment control (empirical study), review procedures (Snider and Rendon, 2008; empirical study), number of suppliers connected to e- procurement and catalogue (van Weele, 2014; empirical study), number of deviant invoices (empirical study), productivity (empirical study), average number of procurement assignments per employee (empirical study), number of administrated contracts (Caldwell and Howard, 2014; McGuinness, 2013, NIGP and CIPS, 2016; empirical study), the total number of purchase orders (empirical study), number of “small purchases (empirical study), the total value of conducted procurement assignments in monopoly procedures (empirical study), number of purchase orders where product cost calculation has not been conducted (empirical

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study), delivery performance (empirical study), milestone efficiency (empirical study), ability to quote scheduled operations (empirical study), ability to initiate scheduled operations (empirical study), availability (empirical study), forecast accuracy (empirical study), number of accidents (Beatham et al., 2004; Hoque, 2008; empirical study), customer satisfacton ( Ellram and Carr, 1994; Chan and Chan, 2004; Meybodi, 2013; Nair et al., 2015; Pohl and Förstl, 2011; McCue and Gianakis, 2001; Beatham et al., 2004; Simon et al., 2011; Caniato et al., 2014; Atkinson, 2007; Scharf, 2006; McGuinness, 2013; Tudor, 2005; Hoque, 2008; Paulraj et al., 2006; Diggs and Roman, 2008; Thai, 2009; NIGP and CIPS, 2016; empirical study), supplier satisfaction (Chan and Chan , 2004; Pohl and Förstl, 2011; Caniato et al., 2014; Atkinson, 2007; McGuinness, 2013; Tudor, 2005; Albjörn and Freytag, 2012; Paulraj et al., 2006; Diggs and Roman, 2008; Erridge and Nondi, 1994; Knight et al., 2007), stakeholder satisfaction, (Nair et al., 2014), supplier turnover (Caniato et al., 2014), number of suppliers (Simon et al., 2011; Caniato et al., 2014; Easton et al., 2002; Erridge and Nondi, 1994; van Lith et al., 2015; Brammer and Walker, 2011; Pohl and Först, 2011; van Weele, 2014), number of active suppliers (Jacoby, 2005), number of certified supplier (McCue and Gianakis, 2001), number of invoices per category (van Weele, 2014), number of invoices per supplier (van Weele, 2014), number of invoices processed (van Weele, 2014), employee satisfaction (Easton et al., 2002; Simon et al., 2011), staff turnover (Beatham et al., 2004; Simon et al., 2011; empirical study), employee training (Meybodi 2013; Nair et al., 2015; Pohl and Förstl, 2011; Beatham et al., 2004; Morgan, 2000; Hopkins and Howe, 2014; Hoque, 2008; NIGP and CIPS, 2016; OECD, 2016; McCue and Gianakis, (2001), number of training programs offered for employees, trainee opportunities for students and participants (Hoque, 2008), average contract length (Brammer and Walker, 2011), reputation (Diggs and Roman, 2008), supplier on-site visits (Handfield et al., 2015) and accuracy (Chao et al., 1993; Kay, 2005).

6.2.3. Time The time dimension public procurement context primarily emphasizes on the duration executing public procurement activities which is in line with Caniato et al, (2014), who argue that the time dimension is measured in terms of service level. Performance indicators that could be aligned to this dimension include project duration (Chan and Chan, 2004; Liu et al., 2014), lead-time for operative procurement (empirical study), tendering process lead-time (Erridge and Nondi, 1994; empirical study), and procurement cycle time (Nair et al., 2015; Prier and McCue, 2009; Thai, 2009; NIGP and CIPS, 2016; OECD, 2016; Dwyer, 2010; Jacoby, 2005).

6.2.3.4 Flexibility The flexibility dimension in public procurement context emphasizes on the ability to respond quickly and adapt to changes in customer needs. Primarily, this includes changes and modifications in requirements and contracts. In addition, Nair et al., (2015) states that flexibility also include ability to respond to changes in volumes and schedules, design, specification, as well as access new technologies. For this thesis, 5 performance indicators were identified that could be aligned to this dimension; number of contract changes during the period (McGuinness, 2013; Erridge and Nondi, 1994; Rendon, 2015; empirical study), number of specification changes during the period that affect time, cost or quality (Handfield et al., 2015; Brandmeier and Rupp, 2010; empirical study), total changes in contract length during the period relative to the original contract length (empirical study), number of price changes in contracts during a period (empirical study) and the total change in price during the period relative to original contract cost (empirical study.

6.2.3.5 Sustainability The sustainability dimension refers to the wide definition of Brammer and Walker, (2011) found in the content analysis chapter. In addition, the sustainability dimension also emphasizes on sustainability and diversity within public organizations themselves regarding their employees. The identified performance indicators that could be aligned to this dimension included gender equality (empirical study), diversity spend (Pohl and Förstl, 2011; Prier and McCue, 2009; Richart,

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2015; Telgen and Thai, 2008; Atkinson, 2007; McKevitt et al., 2014; Snider and Rendon, 2008; NIGP and CIPS, 2016; empirical study), number of full-time employees (empirical study), number of women employees (empirical study), number of employees over 55 years of age (empirical study), number of employees younger than 35 years of age (empirical study), average age (empirical study), number of retirements (empirical study), number of spontaneous resignations (empirical study), other types of resignatons (Caniato et al., 2014; empirical study), CO2 emission per purchased item (Pohl and Förstl, 2011), flexible working patterns (Hoque, 2008; Pohl and Förstl, 2011), global sourcing ratio (Pohl and Förstl, 2011), number of firms involved in local supplier development programs (NIGP and CIPS, 2016) and savings due to improved waste management (Chan and Chan, 2004; Brandmeier and Rupp, 2010; Meybodi, 2013; Brammer and Walker, 2011; NIGP and CIP,S 2016).

6.2.3.5 Innovation The innovation dimension in public procurement context emphasizes on an organization´s ability to generate new ideas and undertake organizational learning (Hoque, 2008). Furthermore, Nair et al., (2015) states that by promoting innovativeness such as initiatives that support innovation, business process development and new product development can be achieved. From all the PIs identified in this thesis, only 6 PIs could be aligned to this dimension. These include patent (empirical study), awards (Simon et al., 2011; Hopkins and Howe, 2014), contribution to new product development (Caniato et al., 2014), e-procurement (OECD, 2016; Brandmeier and Rupp, 2010; Caniato et al., 2014), lessons learned (NIGP and CIPS, 2016) and time-to-market (Caniato et al., 2014).

6.2.3.6 Risk The risk dimension was briefly identified in the research literature review and more in detail in the empirical study. This dimension emphasizes on risks that public organizations encounter, all of which derived from the five forces of the procurement system by Thai, (2001). The performance indicators identified for this dimension includes strategic risk (Beatham et al., 2004; Schapper et al., 2006; Hoque, 2008; Caldwell and Howard, 2014; Liu et al., 2014; empirical study), operative risk (Hopkins and Howe, 2014; Brandmeier and Rupp, 2010; Caldwell and Howard, 2014; empirical study), financial risk (Pohl and Förstl, 2011; Caldwell and Howard, 2014; empirical study) and compliance risk (empirical study).

6.2.3.7 Compliance The compliance dimension was identified both in the research literature review, as well as in the empirical study. This dimension emphasizes on the public procurement objectives stated by Arrowsmith, (2010b). The public procurement objectives identified in this thesis include (value for money ((Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Telgen and Thai, 2008; Arrowsmith, 2010b; McGuinness, 2013; Hopkins and Howe, 2014; Murray, 2001; McKevitt et al., 2014; Erridge and Nondi, 1994; Thai, 2009; Knight et al., 2007; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015; empirical study), integrity ((Raymond, 2008; Brammer and Walker, 2011; Prier and McCue, 2009; Arrowsmith, 2010b; Goodsell, 2006; Albjörn and Freytag, 2012; NIGP and CIPS, 2016; OECD, 2016; empirical study), efficiency (Raymond, 2008; Schapper et al., 2006; Snider and Rendon, 2008; Telgen and Thai, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Molander, 2014; Fritzen, 2007; Goh, 2012; Goodsell, 2006; Hopkins and Howe, 2014; Albjörn and Freytag, 2012; NIGP and CIPS, 2016; OECD, 2016; empirical study), accountability ((Raymond, 2008; Brammer and Walker, 2011; Schapper et al ., 2006; Telgen and Thai, 2008; Prier and McCue, 2009; Arrowsmith, 2010a; Gelderman et al., 2006; Albjörn and Freytag, 2012; Diggs and Roman, 2012; Thai, 2009; Knight et al., 2007; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015; empirical study) and equality (Brammer and Walker, 2011; Snider and Rendon, 2008; NIGP and CIPS, 2016; Arrowsmithb, 2010; OECD, 2016; empirical study). In addition, to all procurement objectives, two specific indicators were identified, competitive tendering (Snider and Rendon, 2008; Arrowsmith, 2010b; Hoque, 2008; McKevitt et al., 2014; Erridge and Nondi,

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1994; NIGP and CIPS, 2016; OECD, 2016; Rendon, 2015; empirical study) and number of completed procurement assignments in different awarding procedures (empirical study).

6.2.4 Public procurement performance model Based on the decision-making level and the elements identified in the frame of reference chapter respectively the empirical study, a conceptual model was developed. Initially, each element was assigned an a horizontal “box”, and based the definitions of the elements in chapter 6.2.2, as well what indicators was aligned to respective element, the author structured the elements vertically, starting with the most strategic element at the top followed by the other elements in a descending order. However, since the authority element influences all other elements, this element was assigned a vertical “box” and was placed vertically, on the right side, covering all other elements.Lastly, in order to cover the width of the decision-making levels, stretching from strategic to operational, a line was considered to be the most appropriate. Thus, on the left hand side, a line representing the decisions-making levels is assigned. However, due to the fact that tactical level is considered to addresses both strategic and operational performance indicators (Gunasekaran et al., (2001), this level is excluded and should be seen as a varying between the strategic and the operational decision-making levels. By merging the decision-making levels with the elements, a visualization of how elements with aligning performance indicators within public procurement could be organized.

Figure 11 Public procurement performance model (PPPM)

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7 Discussion This chapter presents the discussion concerning the result of this thesis, as well as the methods used to collect data for this thesis. Initially, a discussion of the two research questions will be presented, followed by a method discussion that address strength and weaknesses of the methods used. Finally, this chapter ends with research biases and limitations of this thesis. 7.1 Result discussion The purpose of this thesis is to explore what performance indicators exist within public procurement in defence sector context, and how performance indicators can be categorized. The following discussion is structured to follow the two research questions that have been broken down from the purpose.

7.1.1 What performance indicators can be identified within public procurement? The aim of this research question was to identify performance indicators within in public procurement. Initially, the research literature review exposed 96 performance indicators that could be connected to public procurement. All of which set the foundation for further exploratory research in the empirical study. The performance indicators identified in the empirical study exposed 98 performance indicators, which was then compared to the research literature review. The conducted analysis of interpreting and merging performance indicators with similar meanings resulted in a final sample of 117 performance indicators in total. Due to the result of this research question, it is difficult to argue that performance indicators within public procurement are lacking. However, it is recognizable that performance indicators that address supplier, customer satisfaction, employee satisfaction and business process improvement in public procurement, have been neglected and need further improvements.

In the research literature review, performance indicators addressing training of employees, employee satisfaction, customer satisfaction and supplier satisfaction are relatively well recognized in literature but not in “reality” whereas performance indicators such as tendering processes lead-times, awarding procedures and competitive tendering, are recognized in “reality” and not in literature. Furthermore, performance indicators that address the overall performance of the organization, especially financial indicators, are highly recognized both in the research literature review and in the empirical study.

The time interval, meaning how frequently these performance indicators are supposed to be follow-up and measured depends on the categorization of each indicator. Performance indicators that are considered more operative can be measured more frequently such as monthly, weekly or even on daily bases whereas performance indicators that are considered more strategic can be measured and reported quarterly or yearly.

7.1.2 How can performance indicators within public procurement be categorized? The second research question is structured to categorize performance indicators within public procurement. Thus, categorizations of performance indicators within public procurement have been conducted with support from the research literature review, the empirical study and the frame of reference chapter. The result can be divided in three categories; (1) decision-making levels, (2) elements and (3) dimensions. Hence, the author believes that the inquiry has been answered satisfactorily. In order to align performance indicators to the decision-making level category, the author had to determined whether the PIs were considered strategic, tactical or operational. With category definitions derived from the frame of reference chapter and performance indicators definitions derived from the research literature review as well as from the empirical study, the author was abled to align PIs with the most appropriate decision-making

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level. Hence, the frame of reference chapter is highly relevant for this thesis and this particular category.

The element category was identified through the empirical study where PIs identified in the research literature review and in the empirical study could be aligned to each element. The element category identified in the empirical study consist of 8 elements; (1) Strategy and Business Development, (2) Operations Management, (3) Category Management, (4) Supplier Management, (5) Customer Relationship Management, (6) Procurement, (7) Expertise and Service Support and (8) Authority. These elements provide a structural overview of performance indicators in defence sector procurement, as well as the responsibilities public organizations has as an authority, affecting all other elements in public organizations while conducting public procurement.

The dimension category was identified with support from research literature review, as well as the empirical study. This resulted in a total 8 dimensions; (1) cost, (2) quality, (3) time, (4) flexibility, (5) sustainability, (6) innovation, (7) risk and (8) compliance. All these dimensions were abled to be aligned with performance indicators. The dominating dimension was the quality dimension, which stands for the majority of all indicators identified in this thesis, namely 61 out of 117. This is followed by the cost and sustainability dimensions, which have 15 performance indicators aligned to each on of them. The compliance dimension includes 7 performance indicators whereas the flexibility dimension includes 5 indicators. The remaining two dimensions, risk and time, both have 4 indicators aligned to each one of them. Based this, indicators that can be aligned to time, flexibility and innovation dimensions are less adopted and common. This is in line with Caniato et al, (2014), who also address the sustainability dimension as less adopted. As mentioned in the research literature review chapter, incongruities among performance indicators and performance dimensions were exposed at early stage. Therefore, the risk and compliances dimensions were added. Noteworthy is that indicators that could be aligned to these two dimensions were represented both in the research literature review, as well as in the empirical study. Thus, justifies the usefulness of a risk and compliance dimension.

Practitioners might argue that the result of this thesis is not transferable to other public procurement organization due to the defence sector context. However, the result it self is actually what allows this thesis to be to be transferable since the majority of the identified performance indicators were actually identified both in the research literature review and in the empirical study. Lastly, due to the extensive research literature review and the conducted empirical study, the author believes that the identified performance indicators in this thesis may be relatively representative for public procurement organization and not only fitted for public procurement organizations in defence sector context. 7.3 Limitations This thesis is exploring what performance indicators that exist in public procurement within a defence sector context. Further, it identifies how such performance indicators can be categorized. However, this thesis has several limitations. At first, this thesis uses only one database for the research literature review, limiting the search result of publications concerning the research topic of this thesis. Furthermore, the final sample of the research literature review may perhaps be considered too small. Adding additional publications to the final sample increases the possibility of identifying additional performance indicators that exist within public procurement organizations. Thus, the result may be different. Furthermore, the fact that this thesis has conducted a single case study within the defence sector, limits the amount of information and may prevent transferability possibilities for other public procurement organizations.

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8 Final conclusion In this chapter, the author concludes the result and discussion, as well as presents the author´s contribution in a theoretical and practical perspective where a conceptual framework is addressed. This is followed by potential future research that the author has identified.

8.1 Fulfillment of purpose Within this thesis, information regarding what performance indicators exist within public procurement in defence sector context, and how performance indicators in public procurement can be categorized have been presented. The approach for fulfilling the purpose of this thesis has been performed by answering the two research questions. The result of the first research questions shows that 117 performance indicators were identified in public procurement. Thus, the first research question is fulfilled. The second research questions shows that performance indicators within public procurement can be categorized in three different categorize; decision- making levels, elements and dimensions. These categorizes is broken-down into sub-categorizes as seen in chapter 6.2. Thus, the second research question is fulfilled. Based on the result from the two research question, the authors conclude that the purpose of this thesis is fulfilled.

8.2 Theoretical and practical contributions Based on the result and analysis of this thesis, the author has identified three possible theoretical contributions. At first, the risk and the compliance dimensions that was identified during the research literature review has, to the author´s knowledge, not yet been covered or addressed in public procurement context. These dimensions is a way to categorizes public procurement indicators where the risk dimension emphasizes on all risks that public organizations encounter, all of which derived from the five forces of the procurement system by Thai, (2001). The compliance dimension emphasizes on the rules and regulations of public organizations, as well as the eight procurement objectives stated by Arrowsmith, (2010b). Secondly, all elements addressed in chapter 6.2.2 can be seen as a contribution since no previous research, to the author´s knowledge, have address and structured these particular elements as seen in Figure 12. Thus, these elements can be considered theoretical contributions. Thirdly, the conceptual framework which was developed by merging the decision-making levels from the frame of reference chapter with the elements from the empirical study, can be seen as a theoretical contribution. To the author´s knowledge, such conceptual framework that provides a holistic overview of public procurement structure and performance decision levels has not previously been developed in literature.

Figure 12 Public procurement performance model (PPPM)

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Lastly, all 54 performance indicators identified in the empirical study that was not merge or aligned with indicators from the research literature review can be considered a theoretical contribution. Therefore, based on the reasoning above, the author conclude that all these possible contribution may in fact contribute to existing literature within public procurement and defence sector procurement.

The practical contribution of this thesis is the Public procurement performance model (PPPM) which allows public procurement organizations and mangers to visualize the alignment of the strategic objects of organizations with operational performance, which previously, according to Poister, (2010) and Hoque, (2008), have been seen as difficult. Furthermore, this conceptual framework allows practitioners a holistically overview of how to potentially categorize performance indicators based on the performance indicators that a public organization currently have. However, since some of the identified performance indicators and categorizes are derived from the empirical study, modifications are required in order to be transferable to other public organizations. Furthermore, this framework may expose and recognize areas that lack appropriate performance indicators and categories. Thus, will this thesis contribute to the existing body of knowledge in public procurement performance and the way public procurement organizations and managers assess and measure performance in order to improve the overall performance. 8.3 Future research While the thesis provide valuable understandings on what performance indicator exist in public procurement in a defence sector context and how such indicators can be categorized, the result of this thesis prompts future research opportunities.

As this thesis emphasizes on identifying performance indicator in public procurement in a defence sector context and how such indicators can be categorized, future research may therefore actually measure and follow-up performance indicators within public procurement. This, in order to justify the “real” compliance to rules and regulation that public organizations are obligated to follow. However, such research may be somewhat sensitive and complex for the particular public organization that researchers tend to investigate.

As the result of this study exposed several performance indicators that was identified in the research literature review but not in the “reality” and vice versa, other researchers might find it interesting to explore possible challenges of implementing such performance indicators in public organizations.

Within this thesis, impact of the responsibilities and compliance with rules and regulations that public procurement organizations is obligated to follow as an authority, has been briefly discussed. Therefore, future research may aim at investigate how public organizations actually encounters and manages the forces of the procurement system by Thai, (2001), especially, how they comply with the eight public procurement objectives stated by Arrowsmith, (2010b).

Lastly, in Rendon, (2015), procurement process maturity is measured for the US Navy, where a lower maturity was identified in the contact administration and contract closeout processes. Due to the result of this thesis, some indicators may perhaps contribute to improve such areas allowing procurement maturity to reach a higher level. Thus, it is of interest to further explore procurement process maturity in public sectors and the affect of performance indicators as enablers.

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The Organization for Economic Co-operation and Development (OECD) http://www.oecd.org/gov/ethics/procurement-key-performance-indicators.htm Last time visited 2016-04-23

Tudor, S. (2005) Benchmarking procurement: The Business of Public Sector Procurement, Summit, Vol. 8 Issue 2 pp. 17-18 van Lith, J., Voordijk, H., Castano, J. M. , Vos, B. (2015) Assessing maturity development of purchasing management in construction, Benchmarking: An International Journal, Vol. 22 No. 6 pp. 1033-1057

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Appendix The appendix has been structured to follow the thesis structure. Initially, the distribution of publications in the sample generation is presented, followed by the interview key questions used during the interviews as guidelines. This is followed by a long-list of performance indicators identified in the research literature review. Following that, FMV´s role and stakeholders are presented, followed by hierarchal structure of FMV. Appendix 6-10.5 address the performance indicators identified in the empirical study. Lastly, in appendix 11, the final sample of performance indicators is presented.

Appendix 1 - Distribution of publications in the sample generation

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Appendix 2 - Interview key questions guidelines

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Appendix 3 - Research literature review long-list

The following tables present the long-list of performance indicators identified in the research literature review an alphabetical order.

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Appendix 4 - FMV´s role and stakeholders As this figure illustrates, FMV as an organizations and how other stakeholders influences FMV.

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Appendix 5 - Hierarchal structure for each department

Appendix 6 – Performance indicators identified at the General Director and General Director´s office

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Appendix 7 – Performance indicators identified at the System and Production Management Division

Appendix 8 - Performance indicators identified at the Procurement and Logistic Division

Appendix 9 – Performance indicators identified at the Storage, Services and Workshop Division

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Appendix 10.1 - Performance indicators identified at the Commercial Operation Division

Appendix 10.2 - Performance indicators identified at the Commercial Operation Staff

Appendix 10.3 - Performance indicators identified at the Goods and Service Department

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Appendix 10.4 - Performance indicators identified at the Military Systems Department

Appendix 10.5 - Performance indicators identified at the Business Strategy and Methodology Support Department

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Appendix 11 - Final sample of performance indicators

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