Strategic Procurement Practices for the Industrial Supply Chain

Abstract

Early sourcing decisions have a critical impact on the performance of industrial construction projects. However, the industrial construction sector has been relatively understudied, especially the sourcing and supply chain practices typically implemented in early phases of capital projects. This study reports on how engineering-procure-construction (EPC) firms select suppliers in the early stages of the project. Particular focus involves the decisions firms make in sourcing process and the types and roles of supporting information. The paper reports on five case studies with large EPC firms. Data were collected from multiple individuals in each firm with extensive supporting documentation. A cross-case analysis describes similarities and differences between EPCs and helps to compare empirical findings with the broader literature. Findings contradict some areas of the literature, in particular the push for strategic supplier alliances. Other findings confirm the strategic importance of early procurement decisions to project performance and similarity across the types of decision drivers for supplier selection. Practitioners will find the case studies useful examples of current practice to compare with their corporate efforts. Researchers will similarly find details that extend extant literature, proposing new avenues for future research.