The division of responsibility for project supply

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Journal of Purchasing & Supply Management 13 (2007) 87–97 www.elsevier.com/locate/pursup

The division of responsibility for project supply Nina Modig Department of Technology Management and Economics, Division of Logistics and Transportation, Chalmers University of Technology, SE-412 96 Gothenburg, Sweden Received 1 March 2006; received in revised form 26 April 2007; accepted 7 May 2007

Abstract Activities undertaken at project sites, such as construction work and festivals, regularly generate substantial material flows. Management of these flows is important to ensure project success, e.g. by avoiding delays, but is seldom discussed in literature. To advance knowledge on these issues, a study was undertaken to determine the need for coordination of the often numerous project participants’ logistical activities. The division of responsibility for procurement, transport and handling of the project supply was, therefore, examined. Based on three cases, findings show that considerable coordination needs exist due to extensive use of system sourcing and significant outsourcing of logistical activities. r 2007 Elsevier Ltd. All rights reserved. Keywords: Material supply; Project; Coordination

1. Introduction Projects initiated to produce customised products and services in varying geographical locations in a short period of time, like houses, events or peacekeeping operations, often require the skills of numerous specialists to be combined in unique ways (e.g. Dinsmore and CabanisBrewin, 2006; Young, 2003). Consequently, multiple organisations often form alliances to carry out projects. Also in non-project dominated industries, organisations transform from classic, vertically integrated and multidivisional organisations into leaner networks consisting of interacting, functionally specialised firms (Achrol, 1997; Walker, 1997; van Hoek and Weken, 1998). Through interaction with other specialised firms, organisations can adjust more easily to varying customer demands, regulations and environments. With increasing specialisation, the work required to perform a task is divided into a large number of sub-tasks. Important aspects of organising work thus become more about dividing work among involved actors and coordinating and integrating these activities within and across organisational boundaries in order to Tel.: +46 31 772 13 22; fax: +46 31 772 13 37.

E-mail address: [email protected] 1478-4092/$ - see front matter r 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.pursup.2007.05.001

create customer value. This is, therefore, an area where extensive work has been undertaken which has led to the development and widespread use of tools like Gantt-charts, work breakdown structure (WBS), project databases, critical path method (CPM) and so forth (White and Fortune, 2002). However, studies exploring procurement, transport and handling of material flows incurred by project activities has been limited (e.g. Beresford and Pettit, 2005; Hyll, 2005; Minis et al., 2006; Modig, 2004; Olsson, 2000). The importance of these issues is considerable, however, as work processes generally are linked in projects (Turner and Keegan, 2001) and the time during which supply can create value is very limited. A late delivery might not only cause project delays, such as if windows are delivered late to a construction site, but can also result in project failure, such as if crucial equipment for a concert or emergency relief operation is delayed. Those studies that have focused on project supply have shown that it often is associated with unnecessary costs, delays, waste and misunderstandings (e.g. Hyll, 2005; Love et al., 2004; Pettit et al., 2006). By improving knowledge on the division of responsibility for project supply, further development of logistics research within this area is facilitated and misunderstandings, costs, waste and delays associated with project supply can

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possibly be reduced by identifying and targeting coordination needs. This leads us to the purpose of this manuscript, which is to explore how responsibility for procurement, transport and material handling activities is divided in projects and analyse possible reasons for this. The aim of the manuscript is to discuss, based on the analysis, the coordination-needs related to project supply. An introduction to literature concerning the research area is followed by a discussion on the choice of method and a presentation of how empirical material has been collected. The division of responsibility for project supply follows and is explored based on three studied cases. In Section 5, possible explanations for the findings are analysed. This is followed by a discussion on the need to coordinate material flows to, from and at project sites due to the existing division of responsibilities for project supply. The article ends with a presentation of conclusions and an identification of interesting issues for further research. 2. Theoretical framework Literature concerning the research topic is presented here. The first part of this section, which gives an overview of project production characteristics, leads to the identification of system sourcing theories and supply network literature as areas of interest. 2.1. Project production characteristics To be able to explore and explain how the responsibility for project supply is divided in temporary settings it is of essence to understand the special characteristics associated with project production. The term ‘‘project production’’ is here used to denote the production of a product or service at a temporary site by a temporary organisation, i.e. an organisation that is formed to carry out a specific project and then dissolve. Projects are initiated to solve complex tasks of almost any type and size and can be found in most business sectors (Engwall et al., 2003). Where mass production is characterised by developing products before producing and finally marketing them, project production is characterised by the product/service being developed after an order has been secured so as to fit customer requirements (Hobday, 2000). Not only clients but also sites, budgets and involved organisations vary between projects. But, just as the unique aspects of a product or service generally are created at the site by combining mostly standardised materials and services, material, components and skills used in projects undertaken in one and the same industries are often similar (Dubois and Gadde, 2000; Koskela, 1992). A wide range of goods and services is often needed to execute projects, e.g. sports equipment, media equipment, food and beverage and construction material is needed to execute the Olympic Games (Minis et al., 2006), and procurement constitutes a majority of project costs (Ibn-Homaid, 2002). Industries

that are dominated by project production are also characterised by a high degree of specialisation (e.g. Vrijhoef and Koskela, 2005) and, due to the design intensity and complexity associated with the products/ services produced, many are made up of extremely complicated and non-routine tasks (Hobday, 2000). In contrast to mass production, which is focused on optimisation and standardisation of operations, project production achieves economies of scale through specialisation and use of modularity principles (Hellstro¨m and Wikstro¨m, 2005). By outsourcing activities, temporary organisations can adapt more easily to changing customer requirements and environments. However, this also results in a less stable and fragmented supply network (Hellstro¨m and Wikstro¨m, 2005; Vrijhoef and Koskela, 2000). As a consequence, it is necessary to mediate between module suppliers (on both a technical and organisational level) more often in project production than in mass production (Hellstro¨m and Wikstro¨m, 2005). As products/services are adjusted according to customer requirements, classical job design is difficult to apply (Turner and Keegan, 2001). Therefore, to gain economic benefits and reduce the need for coordination of project work, the outcome of different project processes are generally well defined, but how they are to be achieved is left to the workers to decide upon (Stinchcomb, 1959). In so doing, the professional knowledge of the workers, i.e. the specialists, can be utilised. This is in line with the principle that decision rights should be collocated with knowledge in organisations so that knowledge transfer costs and control costs can be minimised (Christie et al., 2003). Although project production is beneficial when different types of knowledge and skills need to be integrated and a high level of uncertainty is associated with the task, project production is, indeed, associated with a number of disadvantages. For example, project production is less suitable for performing routine tasks, it hinders development at the over-all product/service level and learning across organisations and projects is slow (Hobday, 2000). Project production characteristics and the advantages and disadvantages found in the literature are summarised in Table 1. From the project production characteristics listed in Table 1, we can conclude that organisations involved in projects often are highly specialised and involved in the development of the final product through their design and production of modules or sub-tasks. By breaking down project outputs into modules and sub-tasks that are outsourced, a risk exists that no single organisation involved in a project has sufficient knowledge about other involved organisations’ production processes to be able to procure or coordinate the material needed for a project. Focusing on the consequences that this would have on procurement of material, the use of modular supply and decentralised procurement principles needs to be explored. These principles are combined in the system-sourcing

ARTICLE IN PRESS N. Modig / Journal of Purchasing & Supply Management 13 (2007) 87–97 Table 1 Project production characteristics and some of the advantages and disadvantages associated with project production

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Table 2 Summary of theories on system sourcing System sourcing

Project production Advantages Characteristics

 Production is carried 

 



out by multi-firm alliances Customised outputs. Product development occurs during production Wide range of mostly standardised input material and services Widespread modularisation, specialisation and outsourcing Outputs instead of operations/processes are well defined

Advantages

 Utilisation of

 



workers’ professional knowledge Collocation of decision rights and knowledge Modularisation facilitates the handling of product and production complexity Allows different skills and knowledge to be combined efficiently

Disadvantages

Disadvantages

 Extensive







coordination of different module suppliers is necessary Includes many complicated and nonroutine tasks Hinders development at the overall product/service level Learning across organisations and projects is slow

concept that discusses the use of full service suppliers. Therefore, Section 2.2 presents literature on the subject. Due to the large number of organisations generally involved in project production and the complex, customised products produced from a wide range of largely standardised material and services, supply networks formed for project production are likely to be complex. To explore the effect of project production characteristics on transport and handling activities and to discuss coordination needs, Section 2.3 presents literature on supply networks. 2.2. System sourcing As the focus of the literature search is to evaluate the attractiveness of system sourcing for project production, Table 2 summarises the advantages and disadvantages of the concept. Using full service suppliers for entire modules and subtasks, instead of a number of component suppliers, is called system sourcing and is based on modularity principles (Gadde and Jellbo, 2002). The use of modularity principles have gathered significant pace during the last decade and especially dominate those industries that produce highly complex products to satisfy constantly changing consumer demands (Doran et al., 2007). However, the use of modularity principles necessitates modular products and services. To be able to decompose systems into modules, standardised interfaces are required that allow variation and flexibility in the configuration of systems (Gadde and Jellbo, 2002). The use of decomposable product architectures enables the design of flexible, loosely coupled and

      

Flexible production system Reduction of fixed costs Reduced 1st-tier supplier base Reduced need for coordination between suppliers of modules and sub-tasks Economies of scale through specialisation Facilitates management of heterogeneous inputs Lead times can be reduced

 Decomposition of products and services is generally difficult

 Extra tier of suppliers  Increased need for coordination 

of suppliers at the overall system level Supply activities spread among numerous organisations

modular production organisations (Sanchez and Mahoney, 1996). Increasing modularisation thus enables production processes to be decentralised and the use of outsourcing principles normally increases (Gadde and Jellbo, 2002). Through the use of outsourcing, modular organisations can concentrate their resources on those activities that provide unique value to their customers while non-core activities are performed by specialist suppliers (Doran et al., 2007; Quinn and Hilmer, 1994; van Weele, 2005). This results in suppliers and distributors becoming further involved in value-adding activities, like supply, assembly and distribution, whereas the focus of the main manufacturer changes somewhat from operations to coordination and integration of supply chain members (Doran et al., 2007; van Hoek and Weken, 1998). Outsourcing further enables organisations to reduce their fixed costs for assets and adjust more easily to changes. However, as the sub-contractors’ margins also have to be accounted for, the variable cost grows (Ernst and Kamrad, 2000). Apart from the impact of purchasing on the organisation’s bottom line, the supply risk associated with every item must also be considered when outsourcing decisions are made (Kraljic, 1983). In addition, a risk exists with modularisation in that an extra tier of module suppliers might have to be added to the supply chain (Lau and Yam, 2005). This is due to the fact that suppliers who are responsible for delivering full systems to projects often have to rely on a network of service and equipment sub-suppliers to secure sufficient capacity and capabilities (Hellstro¨m and Wikstro¨m, 2005). It is not only the product architecture that influences possible designs of production organisations, the organisation structure and the expected experiences and capabilities of the organisations in a production network can also impact on the possibilities of decomposing products. The structure of an industry (Ernst and Kamrad, 2000) or existing industry standards (Schilling and Steensma, 2001) can either, for example, facilitate or hinder the application of modularisation principles. To be able to modularise and outsource

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activities, organisations are also very dependent on the skills of their purchasers, as outsourcing tends to result in purchasers becoming extensively involved in the control and coordination of material supply (Cavinato, 1989). An advantage of system sourcing is that it allows an organisation to reduce its supplier base (Arnold, 2000). Instead of spending considerable resources on the management and maintenance of relationships with numerous component suppliers, more effort is spent on a smaller number of system suppliers. The potential improvements that system sourcing can provide can largely be attributed to a higher degree of specialisation resulting in economies of scale. Specialisation and decomposition of a product or process also increases the adaptability of the overall system, e.g. to changing demands, technologies and contexts, as modules can be substituted (Sanchez and Mahoney, 1996; Schilling, 2000; Walker, 1997). This allows for a reduction of traditional buffers used by organisations to respond to uncertainties (Walker, 1997; van Hoek and Weken, 1998). The division of products or processes into modules also decreases the need for coordination across the interfaces of different modules, thereby allowing tasks, such as production and product development, to be performed autonomously and concurrently (Lau and Yam, 2005). As a consequence, lead-times can be reduced but the flow of goods in the supply chain changes considerably as it is spread across supply chain members and modules (van Hoek and Weken, 1998). Thus, specialisation and decomposition of products and processes brings with it a need for coordination and integration at the overall system level, e.g. for allocating resources and setting consistent objectives (Sanchez and Mahoney, 1996; Walker, 1997). The use of system sourcing also necessitates that customers manage their suppliers by specifying desired outputs instead of how the outputs are to be produced (Gadde and Jellbo, 2002). This can sometimes be difficult and result in considerable costs (Novak and Eppinger, 2001). However, one of the main difficulties with system sourcing is the division of a system into suitable modules and sub-tasks. This is due to interdependencies between different parts and functions of systems and varying competences of the organisations involved in the production. Examples of aspects that have to be considered when modules and sub-tasks are defined are assembly, packaging and transport possibilities (Gadde and Jellbo, 2002). However, the more heterogeneous the inputs (such as technologies, capabilities and customer demands) are in a production network, the greater the value that can be obtained through modularisation (Schilling, 2000). 2.3. Supply networks The potential impact that project production characteristics have on material transport and handling activities is necessary to explore to be able to discuss coordination needs related to project supply.

A supply network is ‘‘ya network of autonomous or semi-autonomous business entities involved, through upstream and downstream links, in the different processes and activities that produce physical goods or services to customers’’ (Lin and Shaw, 1998, p. 197). Supply networks consist of sets of supply chains, thereby encompassing the mess and complexity of networks involving, for example, lateral links and reverse loops (Harland et al., 2001; Lamming et al., 2000). Supply networks are formed to achieve operational synergies between interacting organisations and units. That organisations cooperate in supply networks can normally be attributed to factors such as economies of scale, which promote specialisation, or economies of scope, which encourage firms to concentrate resources on developing core competences (Nassimbeni, 1998). Organisations in supply networks are interconnected by material and service flows, information flows, monetary flows (e.g. Christopher, 1998; Jonsson and Mattsson, 2005) and flows of physical resources (e.g. Stefansson, 2004). The focus of this study is primarily on material flows as uncertainties in the supply of parts can have a considerable impact on the supply network’s performance (Lin and Shaw, 1998). Smooth material flows are especially important for project production as work processes generally are linked (Turner and Keegan, 1999). Different types of supply networks exist and some of the attributes used to differentiate them by are the number and type of nodes and links in the network, their operations and their business objectives. The structure of supply networks differ depending on the nature of the product produced (e.g. Fisher, 1997; Lamming et al., 2000). The production of standardised, non-innovative products is focused on efficiency and cost reduction, whereas flexibility and responsiveness are important factors in networks focused on the production of innovative products with unpredictable demands. Interestingly, both types of supply networks are likely to be found in supply networks for projects. As noted in Section 2.1, input material and services for project production are generally highly standardised, thereby indicating a narrow supply network focused on efficiency and quality (Fisher, 1997; Lamming et al., 2000). Project outputs are, however, often customised and include many complicated and non-routine tasks, thus indicating a broad upstream supply network focused on flexibility and responsiveness (Lamming et al., 2000). Consequently, supply networks formed around a main contractor and sub-contracting units assume a convergent, tree-like configuration where the output is the result of the assembly of individually manufactured components (Lin and Shaw, 1998; Nassimbeni, 1998). The large size of the supply networks used for the production of complex products makes management of them difficult (Lamming et al., 2000). Management is further complicated by the fact that the products become more differentiated as they move down supply networks, resulting in increasingly complex manufacturing operations (Ernst and Kamrad, 2000). Due to the high value of many

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components in the late stages of supply networks, organisations try to cooperate in a just-in-time fashion to reduce inventory, and suppliers are often located close to the production site (Lin and Shaw, 1998). Examples of this type of supply network can be found in the construction (Vrijhoef and Koskela, 2000), automobile (Lin and Shaw, 1998; van Hoek and Weken, 1998) and aerospace industries (Lin and Shaw, 1998). From the literature presented above, the use of system sourcing appears to be appealing to facilitate the management of projects and their supply networks, e.g. by reducing the need for direct contact between project participants. Extensive use of system sourcing is, however, also likely to result in the need for considerable coordination needs at the over-all project level. To establish if this is the case in projects, empirical data needs to be explored. 3. Methodology After having studied literature, to explore possible effects of project production characteristics on procurement, transport and handling of project supply, it is time to study how temporary organisations divide responsibility for project supply in reality. The empirical data presented in this manuscript is part of a larger study, the aim of which was to identify similarities and differences among various temporary logistics solutions, as theories in the area were limited and often only applicable to single industries. During the initial stages of the study, a number of project managers from different industries were interviewed to identify logistical issues of particular interest. It soon became clear that they had limited knowledge and control of the material that was transported to and from project sites. Thus, to clarify who was responsible for procurement, transport and handling activities in projects became part of the study. The case study methodology was applied as existing theories were mainly limited to division of responsibility for production work and not the logistical activities incurred by this. The purpose of the research, therefore, also became exploratory and explanatory. This made it suitable to use qualitative case studies as they can provide deeper and richer data than quantitative methods (Ellram, 1996; Stuart et al., 2002). The idea of cases is according to Ragin and Becker (1992, p. 1) ‘‘that the objects of investigation are similar enough and separate enough to permit treating them as comparable instances of the same general phenomenon.’’ The studied cases were chosen to have varying aims and to represent several industries to allow identification of possible differences and similarities in how responsibility for logistical activities was divided. This is in line with Eisenhardt (1989) and Stuart et al. (2002), who stress that the selection should be guided more by diversity and the potential the cases have to contribute to the research objectives than by concern for randomness. Although the chosen cases differed considerably in many aspects, such as ownership of project,

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industry and the participating organisations’ experience from similar projects, one of the findings in the study was that temporary organisations divide responsibility for work and logistics in a very similar way. However, the study was limited to include projects undertaken at project sites, i.e. non-physical projects such as organisational development were not included. An additional limitation of the study was made, i.e. to focus on the movements of goods, as opposed to people, because the requirements for transporting the two differ considerably. The empirical findings presented are derived from three case studies. Based on these cases, it is not possible to generalise the results to a larger population. However, by providing rich case descriptions, results become transferable as it allows readers to compare similarities between sending and receiving context (Halldo´rsson and Aastrup, 2003). The studied cases are a military exercise, a construction project and a sailing event. Empirical data have mainly been collected through qualitative interviews, but direct observations and internal documentation have also been used as sources to allow richer data and ensure internal validity. Interviews were conducted with persons within the temporary organisations, i.e. the organisations formed to carry out the projects, and their partner organisations who were responsible for material flows to, from and at the project site. Interviewees were identified using snowballing. In total, the author conducted 20 interviews with 11 persons for the three cases presented in the manuscript. The interview questions were openended: according to Bryman and Nilsson (2002), this is an appropriate strategy when areas are being explored that are not thoroughly researched. Respondents play a central role in validating researchers’ presentation of collected data through falsifications and corrections (Ellram, 1996; Halldo´rsson and Aastrup, 2003). Based on the interviewees’ revision of interview documents and case descriptions, minor changes and clarifications of the presented material were made. 4. Empirical findings—exploring the division of responsibility for project supply The cases concern the supply of material needed to carry out three different projects. The first case presented is the final exercise of 7500 military conscripts and their officers, which took place in Central Sweden during 2 weeks in the spring of 2003. The second case is a study of a construction project undertaken in 2002 and 2003 to remodel 13,000 m2 of an old building in the centre of Gothenburg into offices and guest apartments for various companies. The third case is a study of a public sailing event that took place in Gothenburg over 9 days in the summer of 2002. For all cases, a description of project characteristics is followed by a presentation of how procurement, transport and handling responsibilities were divided. After the individual case presentations, key facts are synthesised for all cases.

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4.1. Military exercise The final training of military conscripts and their officers is a service that was provided at the training site over 2 weeks’ time. Depending on a pre-determined sequence of exercises and the nature of the exercises, the mix of participating military units varied. On average, each unit spent 7–9 days on training and a couple of days on transports. Most of the goods transported to and from the training site consisted of vehicles, group equipment such as tents, and personal effects of the conscripts and officers. Thus, procurement of material for the training was limited but transport and handling needs on the way to and from as well as at the temporary site were considerable. The transports were carried out during a period of 2 months and for a majority of them the military’s own transport resources were used. As part of the temporary organisation created to carry out the military exercise, a special transport group was formed to plan and coordinate transports of participating military units and their equipment to the chosen site. Long distance transports to the site were carried out using existing resources within the military organisation or were provided by a number of external transport operators. Feed transports were used to transport military units from their original location to the start of the main transport or from the end of the main transport to their final location, if needed. Participating military units or local representatives of the military organisation that possessed the required knowledge and supplier network planned and arranged feed transports. Due to the special nature of the material, e.g. explosives and armoured vehicles, conscripts generally took care of the material handling during transport and at the site. The respective military units carried out transport at the site. Another group of specialists within the military organisation transported consumables such as fuel and provisions to the site. 4.2. Construction The output of the project, i.e. a remodelled building, took approximately 1 year to complete on site. The majority of the material delivered to the site during this time, such as plasterboards, bathroom modules and windows, was integrated into the building. Based on the owner’s desired use of the building and the given project start and end times, the contractor developed a rough layout and time plan. The contractor then divided the project into different sub-tasks and established the sequencing of these in a Gantt-chart. Numerous specialists, such as architects and carpenters, which were provided by the contractor, sub-contractors or suppliers, produced the modules and sub-tasks. These specialists usually worked in the project for a limited time. The temporary organisation, formed by the contractor, selected and contracted suppliers for vital elements of the ‘main body’ of the house. These were critical to project

success and represented a considerable part of the project budget or had long production lead times, e.g. precast concrete modules, plasterboard, bathroom modules and kitchen fixtures. An external company, specialised in the procurement, ordering and handling of construction materials, then ordered the material to coincide with work at the construction site. The external specialist also procured a large part of the non-vital and relatively inexpensive material needed for the main body of the house. An external logistics service provider, contracted by the temporary organisation, transported all material from the location of the suppliers to the construction site. In those cases where additional services were required, like temporary storage, consolidation or kitting, material was transported to the location of the external specialist. After having conducted these services, the external specialist transported this material to the site on demand. Upon arrival at the site, either workers employed by the contractor or the external specialist handled the material. All material that was considered part of ‘building services,’ such as ventilation, heating and sewage systems, was procured, transported and handled by sub-contractors, their suppliers or by external logistics service providers. 4.3. Sailing event The port of Gothenburg was one of 11 harbours to act as end destinations for race legs in a round-the-world regatta. During the 9 days that the race boats and their crews spent in Gothenburg, an event was staged in the harbour area to give publicity to the sport of sailing and provide entertainment for everyone in Gothenburg. In total, 350,000 visits were made to the site with a maximum of 25,000 visitors present at the site at the same time. To stage the sailing event, a broad spectrum of material was needed at the site. Some of this material, like food and beverages, was consumed at the site whereas other material, like portaloos and marquees, was sent back to their original location or forwarded to other locations after the event. Including preparations, event production and restoration, the site was used for approximately 1 month. An official event programme, produced by the temporary organisation formed to carry out the project, guided the sequence of activities at the site during the actual sailing event. The organisation was also responsible for all the main features, such as marquees and bridges, and functions, such as restaurants and press service, at the site. The experienced persons hired (as part of the temporary organisation) to be in charge of providing the main features and functions at the site not only managed operations at the site, they also took full responsibility for procurement, transport and handling of the required material. The restaurant manager, for example, was responsible for the supply of food and beverages to the restaurants at the site, the person responsible for site layout ordered marquees and portaloos, and the entertainment manager was in charge of the sound and light systems. A mix of people

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from the temporary organisation, the sub-contractors, the suppliers and the external logistics service providers, were involved in procurement, transport and handling of material needed to provide the desired functions and features at the site. Apart from this material, the racing syndicates, eight in all, each managed the supply of material and services to their race boats and teams. The numerous exhibitors and sponsors also procured the material they needed individually, e.g. brochures and product samples, and either took care of the transport and handling themselves or contracted it out to suppliers or external logistics service providers. 4.4. Empirical synthesis Key characteristics for the projects presented in Sections 4.1–4.3 are synthesised in Table 3. As can be seen in Table 3, the output of the military and sailing event projects are services. Thus, project sites had to be restored before the projects ended. This was not the case in the construction case where the outcome of the project was a combined apartment and office building, i.e. a tangible product. The time during which work was performed at the project sites varied from 1 month to a year between the three projects, just as the scope of the projects varied to some extent. Similar for all projects were, however, that the sequence of activities undertaken at the site was established in programs and that multiple organisations were involved in the projects. To produce the desired project outputs, groups of specialists were contracted. The material used in the different projects varied in nature, i.e. in the construction case most material was consumed at the site, whereas most material was returned to its original location in the military case. The input material to the sailing event project was a mix of material consumed at the site and material forwarded to other locations once the event ended. In the military case, project supply could be divided into two groups, i.e. military units and their equipment

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(MU&E) and consumables (C). A similar division could be made in the construction case between vital elements of ‘‘main body’’ (VE), non-vital elements (NVE) and building services (BS). In the sailing event case, project supply could instead be divided into main features and functions at the site (F&F) and race team and exhibition material (RT&E). A rough division of responsibility for procurement, transport and handling activities associated with this project supply categories and the temporary organisations’ degree of involvement in these activities are reflected in Fig. 1. The dark grey areas represent those activities in which the temporary organisations were directly involved. The semi-dark grey fields represent activities carried out by organisations that had been directly appointed by the temporary organisations, whereas light grey fields symbolise activities that are planned and organised by 1-tier suppliers. The actual activities represented by the light grey fields are, however, carried out by 1st or higher tier suppliers, e.g. BS-material might be transported and handled by the appointed service provider, by the service provider’s suppliers or by third parties. It is worth noting that procurement includes both purchasing of material and services. Thus, although no new material is procured in the MU&E-category, the temporary organisation is directly involved in procuring long distance transport and handling services for this category. The split procurement field for this category illustrates that transports and handling activities are planned and procured by both the temporary organisation (long distance) and 1-tier suppliers (feed transports). In spite of the differences found among the studied cases, the temporary organisations all took responsibility for procurement of material and services that were crucial for the success of their project. The actual transport and handling activities were, however, often outsourced to 1st or higher tier suppliers as well as the procurement, transport and handling of non-critical material and services.

Table 3 Key project facts Project characteristics

Military exercise

Construction

Sailing event

Project output

Service: training

Product: remodelled building

Service: entertainment and marketing

Production time at site

Two months (2 weeks of training)

One year

One month (event: 9 days)

Production schedulingmilestones

Predetermined time and sequence of exercises

Gantt-chart detailing time and sequence of construction activities

Published event programme detailing time and sequence of activities

Scope

Training of 7500 people

Remodelling 13,000 m2

Stage sailing event for 350,000 visits

Production groups

Military units

Craftsmen representing various trades

Persons specialised on providing main features and functions at the site

Material requirements

Majority of material returned to original location after training

Majority of material integrated into building

Mix of consumables and material that was forwarded or returned after the sailing event

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Supply activitity

Military exercise MU&E

C

Construction VE

NVE

Sailing event BS

F&F

RT&E

Procurement Transport Handling = Performed by temporary organization = Performed by 1-tier suppliers = Organized by 1-tier suppliers. Performed by party appointed by 1st or higher tier supplier. Fig. 1. A rough division of responsibility for project supply.

5. Analysis The findings indicate that:



Services and products produced by the studied temporary organisations were often divided into different modules or sub-tasks delivered by diverse parts of the temporary organisations or external partners.

The extensive sub-division of products and services in project production has previously been mentioned by e.g. Dubois and Gadde (2000) and Olsson (1998). The use of extensive sub-division and outsourcing in the studied cases can be explained by the fact that the projects were carried out to produce complex products and services that required the combined skills of numerous specialists. With work sub-division, the complexity inherent in project production through heterogeneous inputs, customised products, volatile environments and short timeframes can be managed. It also allows temporary organisations to use system sourcing to facilitate coordination at lower system levels and to use decentralised procurement structures to utilise the professional knowledge of the workers and collocate decision rights with knowledge. In addition, the work sub-division structure allows temporary organisations to outsource modules and sub-tasks to external organisations so that they can achieve flexible production networks, reduce fixed costs, utilise specialised suppliers to achieve economies of scale and secure the capacities and capabilities they need to produce the highly customised product/service their customer desires.



The studied temporary organisations considered the procurement of vital project material and services to be the core of their business but also the procurement and/or planning of transport and handling services associated with these activities.

The rationale for this is likely to be linked to the potential impact that these transport and handling

arrangements can have on project execution and costs.1 In the military case, for example, the aim of the project was to test and further develop the skills of the conscripts and their officers by having all the armed forces’ units practicing together. The presence of the units at the site at the right time was, therefore, of utmost importance for the execution of the project and hence became the focus of the temporary organisation. Apart from the importance of having the right resources available at the right time, price and the amount of material that was required is likely to have played a vital role for whether procurement, transport and handling activities were performed by the temporary organisations or contracted out. In the construction and sailing event cases, for example, procurement of material constituted a large part of the budgets. To have control of items that were purchased in large volumes or that were very expensive thus became important to the temporary organisations, as these items could have a significant effect on the production costs and market price (van Weele, 2005). If these items were procured, handled or transported inefficiently, the impact on the projects could be serious.



Transport and handling operations constituted a part of the studied temporary logistics solutions that was often outsourced.

This considerable outsourcing of logistics services can probably be explained by the fact that traditional logistics services normally do not give major competitive 1 In the event case, one might argue that since the handling of the boats and their equipment was outsourced to partner organisations, the temporary organisation did not take full responsibility for logistics activities associated with vital and unique parts of their project. However, the event was part of a larger project, i.e. a round-the-world regatta. The aim of the local event was to give publicity to Gothenburg and sailing as well as being a fun event for everyone living in or visiting the city. The focus of the event and its temporary organisation was thus on the local site activities. Consequently, it was reasonable that the temporary organisation was responsible for material flows associated with the main features and functions at the local site whereas racing syndicates and exhibitors, who were involved in the round-the-world regatta for the entire race duration, planned and handled their own logistics activities.

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advantages or cost benefits (Andersson and Norrman, 2002). As a large part of project supply often consists of standardised material, such as food products in the sailing event and plasterboards in the construction case, outsourcing is facilitated as no customer-specific handling or special vehicles are required. The broad spectrum of material required for projects also necessitates a broad range of logistical services that can be difficult for individual firms to provide. As the responsibility for transport and handling activities generally was outsourced, this necessitates significant coordination of all input material at the overall system level.



The underlying principle for the division of responsibility for outsourced supply activities seemed to be the distribution of specialist knowledge and access to vital resources among those involved in the studied projects.

The importance of specialist knowledge and access to resources were also emphasised in the interviews. A high level of expertise is not only needed to procure goods—the different characteristics of the material also result in diverse handling and transport requirements, e.g. different temperature and packaging requirements, as well as varying demand patterns. In the construction case, knowledge of building services was required to procure part of the material, just as the layout and supply of material necessary to provide the chosen site with desired features in the sailing event project required specialist knowledge. Apart from specialist knowledge of production techniques and product alternatives, local knowledge and contacts can also be crucial if activities are spread over a wide geographic area (van Weele, 2005); the military case is a good example of this. 6. Discussion—material flows and coordination needs Division of work gives rise to an opposing force, i.e. the need for coordination (Mintzberg, 1979). Thus, by simplifying project production through dividing the project output into smaller modules and sub-tasks that are easier to manage, temporary organisations also create a considerable need for coordination of all actors and activities at the overall system level. Coordination of production work carried out in projects is mainly achieved through product definitions (Stinchcomb, 1959) and production schedules, e.g. blueprints and Gantt charts in the construction case. Thus, the outcome of sub-tasks is defined as well as the delivery date and location; however, the material flows that the production activities incur seem to be left uncoordinated. As many organisations often are involved in the final assembly and the production of components and parts at the project site, purchasers need to have knowledge of not only the modules or sub-tasks they are responsible for but also of its role in the project to be able to manage the production and material flows satisfactorily.

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This is a considerable challenge when complex products are being produced and many components have a high value. Considering the extent to which transport and handling activities are outsourced, there is a risk that the need for coordination of material flows at the overall system level, e.g. sequencing loading and unloading of material in connection to project sites, is further augmented as the number of organisations involved in the supply of material to project sites is considerable. Therefore, if transport and handling services can be standardised and consolidated to a few logistics service providers, this would facilitate coordination, allow economies of scale to be achieved and transaction costs to be reduced (Andersson and Norrman, 2002). However, standardised logistics systems have a lower efficiency than systems adapted to individual products (Lumsden et al., 1998; Modig and Stefansson, 2006) and consolidation of services put considerable demands on logistics service providers, as they have to be able to transport and handle a broad range of material. On the other hand, standardisation makes it easier to reconfigure logistics systems, which is advantageous, as organisations work together in projects for a limited time, thereby making it more difficult to develop networkspecific logistics capabilities. As these capabilities cannot be developed, the logistics systems in themselves cannot provide temporary organisations with a competitive advantage compared to other temporary organisations (Pfohl and Buse, 2000). However, if the logistical system facilitates production at site, this could give temporary organisations a competitive advantage if the problems mentioned in the introduction, i.e. unnecessary costs, waste and delays, can be reduced. Production at the site can, for example, be facilitated by reduced storage of material at the site, which allows workers to move more freely and make transport and handling of material at the site easier, or a reduction of unproductive time for workers, caused by a lack of material due to queues in an unloading area. 7. Conclusions and further research The article contributes to research on temporary organisations and logistics by adding knowledge on how responsibility for procurement, transport and material handling activities is divided in projects and the rationale underlying this division. Based on these findings, which show that a multitude of organisations are involved in project supply activities, a need for extensive coordination of material flows to, from and at project sites is identified. The extensive sub-division and outsourcing of production work found in the cases have been highlighted in theory prior to this study. However, that responsibility for production work also brings with it responsibility for procurement, transport and handling activities associated with the production have not been confirmed previously. The study thereby draws attention to the fact that specialist knowledge and access to crucial resources in specific trades or locations are important factors when responsibility for

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project supply is divided. Although the reliance on specialist knowledge and contacts with potential suppliers is not surprising, it pinpoints two of the reasons why numerous organisations are involved in project supply and why it might be difficult for project managers to get an overview of material flows to, from and at project sites. It also underlines the importance of the suppliers’ and the project contractor’s competence in all areas, i.e. procurement, production, transport and handling, to the success of a project. How these capabilities can be mapped to support temporary organisations in selecting suitable project suppliers and sub-contractors is an interesting issue to develop in further research. The significant outsourcing of transport and handling activities also affects how material flows can be coordinated and integrated to best support activities at project sites. Some research has been conducted regarding the effects of consolidating transport and handling services and performing site material handling activities, like customising or kitting material, in earlier stages of the supply network to reduce the number of operations carried out at project sites (e.g. Minis et al., 2006; O’Brien and Fischer, 2000; Olsson, 2000). Studies in this area are, however, largely exploratory and further research would, therefore, be valuable. The results from the study are limited to three exploratory and explanatory case studies, all performed in Sweden. The chosen method is suitable for these studies and the results are valuable for further development of the area. However, the propositions developed in the manuscript would benefit from additional testing through further case studies and the use of other research techniques, which would allow covering a broader range of projects. Acknowledgements Support for this research was provided by the Swedish Agency for Innovation Systems and Transportstiftelsen LTS. The author would like to thank colleagues, anonymous reviewers and the editor for valuable comments on the paper. References Achrol, R.S., 1997. Changes in the theory of interorganizational relations in marketing: toward a network paradigm. Academy of Marketing Science 25 (1), 56–71. Andersson, D., Norrman, A., 2002. Procurement of logistics services-a minute’s work or a multi-year project? European Journal of Purchasing & Supply Management 8 (1), 3–14. Arnold, U., 2000. New dimensions of outsourcing: a combination of transaction cost economics and the core competencies concept. European Journal of Purchasing & Supply Management 6 (1), 23–29. Beresford, A.K.C., Pettit, S.J., 2005. Emergency relief logistics: an evaluation of military, non-military and composite response models. International Journal of Logistics: Research and Applications 8 (4), 313–331.

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