Intended Focus

The focus of this research is to survey only service organizations, instead of both service and goods producers, in order to fully understand the practices of the service industry. This is because it is believed that service organizations act and source differently due to the unique connection they have with their customers, who are

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generally involved with the very delivery of the service act. This makes service organizations act differently, which potentially translates into different priorities when sourcing items for their firms.

The survey will ask the service industry respondent to answer the questions related to the services sourced for their firm or division within their control. They will be asked to answer the questions based upon their top service sources that would make up roughly 60% of their overall services spend. It would be an alternative option to ask these service organizations to identify if their top sourcing dollars are spent on goods or

services and to then target answers based upon this answer. However, this presents a problem because the analysis will be more difficult to generalize across industries if some managers focus upon goods sourcing and others upon services sourcing due to the

inherent differences required for each (refer to Sections 2.5.2.6 and 3.3 regarding

Supplier Involvement). These differences in sourcing services have been explained to be principally due to the characteristics of intangibility, heterogeneity, simultaneity

(inseparability), perishability, and customer participation.

3.5.1 Measures

The indicators used to measure the theoretical constructs in this research project are based on a literature review of each concept. There are two second order factors to be analyzed: Services Supply Chain Management and Information Technology

Effectiveness. The ‘Services Supply Chain Management’ construct is a second order factor made up of nine first order factors. Items encompassing this construct include the extent to which buying firms exhibit 1) trust, 2) effective communication with partners, 3) share information freely, 4) develop long-term relationships, 5) work to maintain

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reduced supply bases, 6) involve supplies, 7) manage capacity, 8) manage service suppliers, and 9) involve customers in order to serve them more effectively.

Items identifying the “Trust” construct are based upon the works of Parasuraman et al., 1988; and Fredendall et al., 2005 who both analyzed these factors. The construct

“Effective Communication” is operationalized by frequent personal and non-personal contact (Sriram and Stump, 2004) as well as communication that is timely, accurate, adequate, complete and credible (Fredendall et al., 2005). “Information sharing” is operationalized by items from previous supply chain management research about keeping each other informed, exchanging important information and sharing knowledge (Min and Mentzer, 2004; Chen and Paulraj, 2004a; and Li, et al., 2005 & 2006). It also includes items from Paulraj et al., 2008 who looked closely at inter-organizational communication.

In a similar fashion, the “Long-term relationships” measure is operationalized from research measuring the extent to which buying firms 1) view their suppliers as extensions of their company, 2) expect their relationships to last a long time, and 3) work with their suppliers to improve (Bowersox, 1993; Chen and Paulraj, 2004a; Paulraj et al., 2008).

The “Supply base reduction” construct is operationalized by indicators reflecting the extent to which firms tend to focus attention on a smaller group of supply partners (DeToni and Nassimbeni, 1999; Glynn et al., 2003; Chen and Paulraj, 2004a; Gonzalez-Benito, 2007). Meanwhile, the “Supplier involvement” construct is operationalized by items indicating the extent to which buyers involve key suppliers in planning, goal setting and new product/service design, as well as collaborate to solve problems (Chen and Paulraj, 2004; Min and Mentzer, 2004; and Li, et al., 2005 & 2006; Ahlstrom and Nordin, 2006; Gonzalez-Benito, 2007). “Capacity management” is conceptualized by items that

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reflect the extent to which service organizations can flex their resource capacity or

manage their demand profiles (Lovelock and Wright, 1999; Safizadeh et al., 2003; Ellram et al., 2004). The “Supplier Management” construct is operationalized by items

identifying the extent to which 1) service agreements are clearly specified and formal, and 2) supplier relationships are actively managed (Li, et al., 2005 & 2006; Ahlstrom and Nordin, 2006; Gonzalez-Benito, 2007; Cooling, L., 2008). Meanwhile “Customer Involvement” is operationalized by the degree to which a firm focuses upon evaluation, interaction and attention to the customer’s needs (Glynn et al., 2003; Chen and Paulraj, 2004a; Ellram et al., 2004; Min and Mentzer, 2004).

Similar to the services supply chain management concept, the indicators used to measure the theoretical constructs of “Information Technology Effectiveness” are based on an extensive review of related literature. Items encompassing this construct include the extent to which firms (a) use electronic communication links (b) implement effective tools for improving information processing, and (c) possess IT skills and capabilities necessary for their business needs. The “Communication Links” construct is based upon measures from Min and Mentzer, 2004; Chen and Paulraj, 2005; Fawcett et al., 2007; and Paulraj et al., 2008. The “Information Processing Effectiveness” construct is made up of items from the Byrd and Davidson, 2003 research project. The “IT Sophistication”

construct is built upon work from Byrd and Davidson, 2003; Glynn et al., 2003 and de Burca et al., 2006.

Items encompassing the service performance construct measure a wide range of features relevant to the service’s delivery efficiency, effectiveness and quality as well as the customer’s evaluation of their performance. This construct is modeled as a first order

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factor, though the survey items are partitioned into five sub-groups for conceptual categorization purposes. However, this is no prior research to confirm that these categories represent unique constructs that could be empirically substantiated. These categories represent the extent to which the buying firm exhibits the concepts of a) assurance, b) service comprehensiveness, c) service effectiveness, d) customer responsiveness and e) other intangible factors related to their resources.

The “Assurance” category includes items related to internal quality standards, employee expertise, retention and customer service (Parasuraman et al., 1988; Brannick et al., 2002; Glynn et al., 2003; Sanders and Premus, 2005). The “Service

Comprehensiveness” category includes items measuring the service’s flexibility, availability, speed and customization (Parasuraman et al., 1988; Brannick et al., 2002;

Glynn et al., 2003; Schmenner, 2004; Sanders and Premus, 2005). The “Service

Effectiveness” category includes measures for unit cost, reliability, on-time delivery, and cycle time (Parasuraman et al., 1988; Brannick et al., 2002; Glynn et al., 2003; Vickery et al., 2003; Chen and Paulraj, 2004a; Sanders and Premus, 2005; Fawcett et al., 2007). The construct “Customer Responsiveness” includes item measures for customer support, complaint resolution, attention and ultimately retention (Parasuraman et al., 1988;

Brannick et al., 2002; Glynn et al., 2003; Vickery et al., 2003). Meanwhile, the

“Tangibles” category includes measures for the appearance and/or age of the service's equipment, facility and employees (Parasuraman et al., 1988).

Lastly, “Firm Performance” of the buying firm is operationalized by items indicating the extent of changes in return on investment (ROI) (Vickery et al., 2003;

Glynn and Ennis, 2003; Min and Mentzer, 2004; Byrd and Davidson, 2003; Chen and

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Paulraj, 2004; Li et al., 2006), growth in market share (Glynn, Ennis, 2003; Min and Mentzer, 2004; Byrd, Davidson, 2003; Li et al., 2006; Fawcett et al., 2007; Wisner, 2007), growth in sales (Glynn, Ennis, 2003; Min and Mentzer, 2004; Li et al., 2006;

Fawcett et al., 2007) and profit margin on sales (Vickery et al., 2003; Min and Mentzer, 2004; Chen and Paulraj, 2004; Li et al., 2006).