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. 2 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 3 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 ................................................................................................................................................................