INOM EXAMENSARBETE INDUSTRIELL EKONOMI,AVANCERAD NIVÅ, 30 HP

, STOCKHOLM SVERIGE 2017

Strategic SourcingA Supplier Selection Framework for the Swedish Installation Industry

EMMY GERVARD

INGRID JOHANSSON

KTHSKOLAN FÖR INDUSTRIELL TEKNIK OCH MANAGEMENT

www.kth.se

’

Strategic Sourcing: A Supplier Selection

Framework for the Swedish Installation Industry

by

Emmy Gervard Ingrid Johansson

Master of Science Thesis INDEK 2017:87 KTH Industrial Engineering and Management

Industrial Management SE-100 44 STOCKHOLM

Strategiskt inköp: Ett ramverk för leverantörsval inom den svenska

installationsbranschen

av

Emmy Gervard Ingrid Johansson

Examensarbete INDEK 2017:87 KTH Industriell teknik och management

Industriell ekonomi och organisation SE-100 44 STOCKHOLM

Master of Science Thesis INDEK 2017:87

Strategic Sourcing: A Supplier Selection Framework for the Swedish Installation Industry

Emmy Gervard

Ingrid Johansson

Approved

2017-06-09 Examiner

Lars Uppvall Supervisor

Jannis Angelis Commissioner

Bravida Contact person

Camilla Jonzon

Abstract Within the Swedish installation industry there is a tradition of purchasing materials from a few well-established national wholesalers. Due to how the market is structured, with a high service level and internal rigidity, has led the Swedish installation companies into a position where they found it difficult to negotiate the price levels. The complexity of changing the purchasing strategy in the national market has resulted in an interest of investigating the possibility of international sourcing and, thus, how an international supplier could be implemented in the daily procurement business. The purpose of this study is to identify a solution to this problem and to provide an understanding of what aspects that impacts the implementation of an international purchasing strategy specifically for this industry. Due to the lack of knowledge that exists regarding international trading, initial focus must be given to strategic and also appropriate selection of supplier. In order to achieve this goal, all criteria that somewhat affect the selection of supplier must be identified. In addition, it is also necessary to consider how to take these criteria into account and, thus, in which extent they affect the selection of an international supplier. Our study has resulted in a framework that can be used to facilitate the existing complexity of choosing an international supplier. Our results show that quality, price, delivery and service are the four key criteria that have the greatest impact on the selection. In addition to this, it is also necessary to have an understanding of how these are correlated to each and how this should be taken into account. With regard to our result, this is shown depending on the degree of relevance of the respective criterion. This provides valuable information about what to consider, and to what extent, in order to enable a reliable and appropriate selection of supplier. In addition, the framework also provides an opportunity to evaluate a supplier with regard of multiple criteria simultaneously and, thus, gives a comprehensive understanding of the supplier’s ability to meet certain requirements. Key-words: Strategic sourcing, supplier selection, methods for supplier selection, the Swedish installation industry

Sammanfattning

Den svenska installationsindustrin har man en tradition av att köpa material från ett fåtal väletablerade nationella grossister. Däremot har marknadsstrukturen, med hög servicenivå och intern rigiditet, medfört att de svenska elinstallationsbolagen hamnat i en position där de har svårt att förhandla om konkurrenskraftiga prisnivåer. Komplexiteten i att förändra inköpsstrategin på den nationella marknaden har skapat ett intresse att undersöka möjligheterna för import. För att lyckas med en sådan förändring krävs god förståelse för hur man kan implementera en internationell leverantör i den dagliga inköpsverksamheten. Syftet med denna studie är identifiera en lösning på denna problematik och skapa förståelse för vilka aspekter som väger in vid implementering av en internationell inköpsstrategi specifikt för denna bransch. Till följd av den okunskap som finns angående internationell handel ställs initialt fokus på ett strategiskt och lämpligt val av leverantör. För att uppnå syftet måste samtliga kriterier som på något sätt påverkar valet av leverantör identifieras. I nästa steg krävs också hänsyn till hur dessa ska beaktas och i vilken utsträckning de påverkar valet av internationell leverantör. Vår studie har resulterat i ett ramverk som kan användas för att underlätta den komplexitet som finns i att välja en internationell leverantör. Våra resultat visar att kvalitet, kostnad, leveranssäkerhet och service är de fyra huvudkriterier som har störst påverkan i valet. Utöver detta krävs också kunskap för hur samtliga kriterier är korrelerade med varandra och hur de skall tas hänsyn till. Baserat på våra resultat, påvisas detta av kriteriernas respektive grad av relevans. Från detta ges värdefull förståelse om vad som måste beaktas, och i vilken utsträckning, för att göra ett tillförlitligt val av leverantör. Ramverket bidrar även med möjligheten att bedöma en internationell leverantör med hänsyn till flera kriterier samtidigt, och således ges en tydlig helhetsbild över leverantörens möjlighet att möta särskilda krav. Nyckelord: Strategiska inköp, leverantörsval, metoder för leverantörsval, den svenska installationsbranschen

Examensarbete INDEK 2017:87

Strategiskt inköp: Ett ramverk för leverantörsval inom den svenska installationsbranschen

Emmy Gervard

Ingrid Johansson

Godkänt

2017-06-09

Examinator

Lars Uppvall Handledare

Jannis Angelis Uppdragsgivare

Bravida Kontaktperson

Camilla Jonzon

Acknowledgements First of all, we would like to thank the employees at Bravida’s Purchasing Department for believing in us and for giving us the opportunity to perform this Master Thesis. Additionally, we would like to address a special thanks to our supervisor at Bravida, Camilla Jonzon, whose knowledge and guidance have constantly created possibilities for us to develop and improve our work. We would also like to thank all the persons that participated in our inquisitive interviews and answered our questionnaire. Secondly, we would like to thank our supervisor at KTH, Associate Professor Dr. Jannis Angelis, for all advice he has given us during the research process. His guidance has been a valuable support in the research process and has encouraged many new ideas. Last but not least, we would like to address our deepest gratitude to our families that have supported us through this education, and not least this Master Thesis. This would not be possible without you - Thank you. Stockholm, June 2017 Emmy Gervard and Ingrid Johansson

Table of Contents

1. Introduction 1  1.1 Background 1  1.2 Problematization 2  1.3 Purpose 2  1.4 Research Question 3  1.5 Delimitations 3  1.6 Disposition 4  

2. Introduction to the Swedish Installation Industry 5  3. Literature and Theory 8  

3.1 Supply Management 8  3.1.1 Sourcing Strategies 8  3.1.2 Worldwide Sourcing 11  

3.2 Supplier Selection 13  3.2.1 Problem Definition 15  3.2.2 Formulation of Criteria 15  3.2.3 Qualification 18  3.2.4 Final Selection 18  

4. Research Method 23  4.1 Research Process 23  

4.1.1 Literature Review 24  4.2 Data Collection for Building the Supplier Selection Framework 25  

4.2.1 Pre-study 26  4.2.2 Interview 27  4.2.3 Questionnaire 28  4.2.4 Weighting of Key Criteria 30  4.2.5 Weighting of Sub-Criteria 31  

4.3 Process for Applying the Framework for Supplier Selection 32  4.3.1 Selecting the Case 32  4.3.2 Primarily Investigations 32  4.3.3 Data Collection 33  4.3.4 Data Analysis 34  4.3.5 Writing the Report 35  

4.4 Research Quality 36  5. Empirical Results and Analysis 38  

5.1 Criteria for Supplier Selection in the Installation Industry (RQ1) 38  

5.1.1 Problem Definition - Underlying strategic choices 39  5.1.2 Formulation of Key Criteria 42  5.1.3 Formulation of Sub-Criteria 44  5.1.4 Qualification 52  

5.2 Weighting of Criteria for Supplier Selection (RQ2) 53  5.2.1 Method for Supplier Selection 54  5.2.2 Weighting of Key Criteria 55  5.2.3 Weighting of Sub-Criteria 57  

5.3 Application of Supplier Selection Method 61  6. Conclusion 64  

6.1 Summary 64  6.2 Discussion 65  6.3 Reflection of the Developed Framework 67  6.4 Application of the Framework 70  6.5 Contribution 71  6.6 Limitation and Future Research 73  

References 74  Appendices 78  

Appendix I: Semi-structured interview questions 78  Appendix II: Reference list of interviewees 79  Appendix III: Questionnaire 80  Appendix IV: Data for pairwise comparison of key criteria 88  Appendix V: Weighting of sub-criteria 90  Appendix VI: Interview questions to German wholesalers 91  Appendix VII: Scoring of German wholesalers 93  

Table of figures Figure 1. Kraljic’s matrix (Kraljic, 1983) ............................................................................................... 9  Figure 2. Levels of worldwide sourcing. (Trent & Monczka, 2002) .................................................... 11  Figure 3. The purchasing process. (van Weele, 2010) .......................................................................... 13  Figure 4. The supplier selection process adapted from de Boer et al. (2001) ....................................... 14  Figure 5. Illustration of criteria for the supplier selection. (Moser, 2007) ........................................... 16  Figure 6. Overview of the research process. ......................................................................................... 24  Figure 7. Illustration of the process for building the supplier selection framework. ............................ 25  Figure 8. The framework for supplier selection including all criteria. ................................................. 38  Figure 9. Overview of internal challenges, as a result of existing supplier- and buyer power. ............ 39  Figure 10. Kraljic’s matrix applied on international purchases of standard material ........................... 41  Figure 11. The completed framework for supplier selection. ............................................................... 53  Figure 12. Weights of the key criteria. .................................................................................................. 56   Table of tables Table 1. Methods for supplier selection (1.de Boer et al., 2001; 2. de Boer et al., 1998; 3. Monczka et al.,

2005; 4. Pal et al., 2013; 5. Tavana et al., 2012). ............................................................................. 22  Table 2. Overview of pre-study interviews. .......................................................................................... 27  Table 3. Overview of semi-structured interviews. ................................................................................ 28  Table 4. Overview of case study interviews. ........................................................................................ 34  Table 5. Scoring system for evaluating supplier performance. ............................................................. 35  Table 6. Pairwise comparison of key criteria. ....................................................................................... 55  Table 7. Scoring system of pairwise comparison of key criteria. ......................................................... 55  Table 8. The corresponding mean-value and weight to each sub-criterion. ......................................... 57  Table 9. The mean value of the sub-criteria related to cost distributed on work assignment. .............. 59  Table 10.Additional results related to the key criterion of delivery. .................................................... 59  Table 11. The German wholesalers’ scores in each sub-criteria and their final result. ........................ 61  Table 12. Results from the data collected in the product lists. ............................................................. 62  

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1. Introduction __________________________________________________________________________________ The first chapter covers the background and problematization behind our research. Further, we also present the purpose and the research questions as well as a disposition illustrating the different chapters in this report. __________________________________________________________________________________

1.1 Background Swedish installation companies, providers of technical installations and services (Bravida, 2017), are strongly dependent on the wholesaler's role in the value chain (SOU 2000:44). Even though the services, distribution and range of products provided by the wholesalers is extremely valuable (Statskontoret, 2009:6), it puts the installation companies in a position where they find it difficult to negotiate about prices. This results in a complex situation, where continuously rising prices is a threat against declining profit margins and the ability to maintain competitiveness. New and more attractive sourcing alternatives are desirable, which in turn requires an increased focus on methods that ensures a strategic supplier selection. The Swedish Installation industry consists of a few big and many small local players (Bravida, 2016), and thus have the characteristics of being very fragmented. There are no specific entry barriers that prevent new players (SOU 2000:44), neither national nor international, from entering the market (Bravida, 2014). In addition, the industry relies on traditional working methods and is often classified as rigid and conservative. Changes occur rarely and even small adjustments tend to be difficult to implement without major challenges and the industry is overall seen as relatively averse to changes (Statskontoret, 2009:6). As of today, the companies operating within this industry purchase most of the material from wholesalers, whose total service solutions are of high quality and thus highly valuable. That has resulted in the rooted habit and convenience that today characterises these companies when purchasing installation materials from wholesalers. In a study conducted by Boverket (2005), it is stated that the cost of material in the installation industry constitutes approximately 40-50% of the total cost. The high cost for material is mainly because of the several steps in the value chain, where the installation companies purchase material from wholesalers that in turn have purchased it from the manufacturer. The obtained price from the wholesalers is difficult to negotiate and the discount system that permeates this industry creates a low price transparency. (SOU, 2015:105) However, in line with a more global and information-rich society, the conditions in this relative traditional market have started to change (EIO, 2014). According to Monczka et al. (2005) and van Weele (2010), high-qualified purchasing strategies have become a more attractive possibility to compete. Due to how this market is structured, new strategies for purchasing are needed in order to reduce cost. This is necessary in order to achieve a solution that ensures that the cost for materials are kept as low as possible, whereas increased attention has been put to strategic sourcing in terms of international purchasing.

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1.2 Problematization

New strategies are required in order for the Swedish technical service and installation providers to find a solution to the unsustainable situation with continuously rising purchasing prices. What complicates the situation is the rooted praxis that you buy from the closest supplier in the supply chain, which are the wholesalers. Since the wholesalers have tied up the link towards the manufacturers in the supply chain (SOU, 2015:105), there is a limited possibility for the installation companies to improved purchasing strategies on a national level. Therefore, alternative sources that make the Swedish companies less dependent to the national wholesalers must be found. This has led to an increased interest in international purchasing of standard material. To import material from an international wholesaler is seen as an opportunity to get around the lock-in effect that characterises the Swedish market. In addition, there is a hope that international actors are able to provide similar products to a more attractive price and that cost savings then can be achieved. Especially since the price for material is higher in the Nordics compared to the rest of Europe. The traditional processes and working methods that characterise the installation industry is an obstacle to new game-changing strategies. A rigid and conservative attitude is also visible at Bravida, which is the company that this study has been conducted at. The company has a tradition of purchasing standard materials from a few but established wholesalers, which has resulted in practices that today permeates the entire company. The high standard of services and logistics that Bravida is used to is one of the biggest challenges with an international switch. Additionally, Bravida wants to keep its just-in-time philosophy and low stock level, despite a shift in purchasing strategy, which leads to an increased complexity. This due to the fact that Bravida is located in more than 150 locations in the north, which makes is difficult to store material in-house without starting their own wholesale business. To increase Bravida’s potential to achieve a successful transition towards international sourcing it is necessary to carefully consider the aspects that somehow affect its success. This puts pressure on the selection of supplier, which in this case is an international wholesaler. The difficulty lies in how this will be implemented and which criteria that must be prioritised and how. To ensure a supplier selection that suits Bravida, all impacting criteria must be identified and considered.

1.3 Purpose The purpose of this study is to investigate how selection criteria affect the supplier selection when a local company within the installation industry purchase standard material from international wholesalers. This given the degree of importance of each criterion and thus their respectively impact on the supplier selection. By criteria we refer to all those requirements a potential supplier must achieve in order to be considered as an appropriate supplier to the buying company.

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1.4 Research Question The research question has evolved with regard to the purpose and the problematization of the study. The complexity in the market space and the rigidness that Swedish installation industry is characterised by, results in a difficulty to ensure an adapted and successful supplier selection. With this study, we want to achieve a greater understanding of which criteria that are needed to consider and to which extent. From this, the following Main Research Question (MRQ) is investigated:

MRQ: How should international suppliers be selected? To answer this main research question, two operationalized research questions were asked in the process. In order to get an understanding of how suppliers within the installation industry are selected, we must identify which criteria that influence the selection. This, in turn, leads to the first Research Question (RQ1) below:

RQ1: What are the supplier criteria when purchasing materials from wholesalers? To understand how the criteria are used, it is important to capture how different criteria are used in the selection. This, in turn, leads to the second research question (RQ2) below:

RQ2: How are different criteria weighted? To fully understand how different criteria impact the supplier selection, we must know its weight of importance. This because how a certain criterion is weighted affects its significance in the supplier selection. By answering these two research questions it is possible to answer the main research question, and thus fulfil the purpose of this study.

1.5 Delimitations The study has been limited to the case company´s interest and priorities. The case company is a Nordic player but this study has been limited to only focus on the possibilities to increase the share of international purchases of standard material for the Swedish division. This as the divisions has individual market conditions and to some extent also different product demand. Overall, there are significant changes between the different Nordic markets. On behalf of the case company and its preferences, the study was performed with a focus on import from the German market. The German market is seen as a strategic and logic possible market for the case company to take advantage of and create a business relationship in a close future. Furthermore, a limitation has been drawn regarding where in the supply chain the materials will be purchased from, as we only have been focusing on purchases from wholesalers. This in order to easier follow the existing business model, where wholesalers provide most of the material. To get a more targeted scope, the study has a focus on the category of electrical products as its technical area since that is the largest part of the company's businesses (Interviewee B). Additionally, the product basket was fixed and had a limited number of standardised products and consisted of only standard materials.

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Last but not least, we have also made certain limitations regarding what criteria that have been taken into consideration and not in the framework created for supplier selection. A variety of criteria must be considered when a company are in the process to choose one or several suppliers to enter an agreement with. In order to create such a niche and company-specific framework as possible to Bravida, consideration has only been given to those criteria that have been identified by analysing the information conducted from the interviews, combined with the criteria that have been highlighted as most important in the literature. This means, for example, that shall requirements suppliers to Bravida must achieve and which are not negotiable, have not been taken into account in the framework. An example of such shall requirements are financial stability, Bravida's code of conduct, legal aspects as well as other company-specific requirements and standards.

1.6 Disposition Chapter 2 - Market Introduction to the Swedish Installation Industry

In this chapter, we provide an introduction to the Swedish installation industry and its purchasing conditions. Further, the characteristics that reflect the purchasing decision is presented. Finally, we give a brief introduction to Bravida, which this study has been conducted at, as well as an introduction to their business and interest of international purchases.

Chapter 3 - Literature and Theory

In this chapter, we present literature within the two broad fields of supply management and supplier selection. The knowledge obtained from the respective area has been necessary in order to answer the research questions of this study. Within each field, a deeper presentation of underlying subjects is also presented.

Chapter 4 - Research Method In this chapter, the research process and methods used to conduct the supplier selection framework is presented as well as the process of applying the framework in reality. This is followed by a discussion of the research methods validity, reliability and ethics.

Chapter 5 - Empirical Results and Analysis In this chapter, all the obtained results are presented and analysed. The chapter is structured with regard to the underlying research questions, whereas we start with our findings regarding the formulation of criteria. After finding the criteria for supplier selection at Bravida, the next step was to identify their impact on the selection. This is illustrated by respectively weight given to each criterion, which are presented and analysed in the second part of this chapter. Last but not least, we present our findings from applying the conducted framework in practise.

Chapter 6 - Conclusion

In this chapter, we present the conclusions drawn from our finding, which enable us to answer the research questions. This is followed by a recommendation on how to use the framework. This chapter also includes discussions of the different parts included in this study, both how regarding how the framework as developed and the information gained from applying it in reality. Last but not least, we summarises the empirical and theoretical contribution, followed by the limitation and recommendation of future research.

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2. Introduction to the Swedish Installation Industry __________________________________________________________________________________ Chapter two contains an introduction to the Swedish installation industry; how the market is structured and its purchasing situation. The purchasing strategy is highly depending on the industry’s characteristics, whereas the aim of this chapter is to give an introduction and a holistic view of its most important components. __________________________________________________________________________________ The Swedish installation industry is an important part of the building industry. These companies are responsible for service and installation of technical solutions within areas such as ventilation, electricity, heating and plumbing in all types of buildings (Bravida, 2017; SOU, 2002:115). The industry is dominated by tailor-made projects, with projects ranging from case to case, depending on the building site and the client’s preferences (Botrygg, 2015). Generally, these projects often involve multiple players, where the installation companies only are one part. This contributes to a complex situation where all players relies on each other and their respective working processes. In order to coordinate all parts and to enable an as smooth process as possible, these projects are driven by fixed deadlines. (Statskontoret, 2009) The deadlines are often tight and in a case of delays, the individual players have to pay a compensating fee if causing delays to someone else and the project in general. Additionally, there are often few possibilities to store material close to the project area. As a result of these conditions, the installation industry generally faces a complexity in establishing a well-oiled purchasing strategy of having the right amount of material available at the right time. (Interviewee I)

The Purchasing Process The purchasing process within the installation industry contains four main steps. The chain starts with the client, who is the customer of the project and who often has specific preferences on the final result. In the next step, the client looks for a suitable installation provider by putting out the project for open bidding. The installation companies then compete on the ability to offer the best solution, which involves the material that matches the client's preferences to the best possible quality and to the most attractive price. (Interviewee H) This is characterised by high competition, not least because of the fragmented market and many small and local players (Bravida, 2016; Interviewee B). This, in turn, puts a lot of pressure on the strategy of purchasing material, since an attractive bidding price is important to increase competitiveness and to win projects (Botrygg, 2015). A challenge to this is the fact that the cost of material generally stands for 40 % of the total price (Boverket, 2005; Interviewee B). In Sweden, the company that wins the project purchase most of the material from wholesalers, which in turn has purchased the material from the manufacturer (Interviewee H; Andersson & Ohlsson, 2007). A wholesaler can be explained as a company that buys large quantities of material from multiple sources and manufacturers, both national and international, and resell them to retailers. They do not approach the end customer directly, as they rather focus on providing service to the middle segment in the supply chain. (Andersson & Ohlsson, 2007) In the installation industry, this service consists of storage thousands of different products and transports the ordered goods directly to the building site (Interviewee D; SOU, 2015:109). The wholesalers provides a high service level with quick delivery channels, which makes it possible to order material in the afternoon and receive the delivery in the morning the day after (Interviewee I; Interviewee K). As a result of the service provided when purchasing from wholesalers, they do not have to put any effort or extra capital in solving the

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transportation and handling of the unknown need of material in advance. Due to the characteristics of this industry, low standardisation and a well-established just-in-time approach, the purchasing process becomes complex. Hence, the wholesalers solve the complexity of purchasing. From this, it is possible for the installation companies to focus on their core competence, which is giving the customer the best installation on the market. Additionally, the wholesalers also offer technical and administrative support. All the services provided by the national wholesalers are of great value to the installation companies. (Interviewee B)

The Market Structure There are few Swedish wholesalers and the oligopoly situation is characterised by increasing prices (Statskontoret, 2009). However, it is difficult to eliminate the wholesalers in the chain since they have bound the link between the installation companies and multiple manufacturers. (Interviewee B) This makes it impossible for installation companies to approach the manufacturers directly and exclude the wholesaler's profit margin. Further, the situation has created a path dependency due to the internal rigidity in the installation companies, which has getting used to the wholesaler’s great services, product assortment and quick delivery (Interviewee H). Despite the high competition in the installation industry, where all players purchase material from the same wholesalers, it is still characterised by a low price transparency in the material cost. The price for material obtained from the wholesaler is highly individual for each company. This because the price levels depend on discounts and other benefits that is negotiated before and agreement is written. (Botrygg, 2015; SOU, 2015:113) The discount could, for example, be based on the quantity of ordered goods, number of orders and deliveries. This brings benefits for companies that buy large volumes, as it is an opportunity to take advantage of economies of scale. The Swedish competition authority also states that the wholesaler’s discounts in the installation industry are a problem for the overall competition. The discounts create a low price transparency on the market, which makes it difficult to compare prices between different suppliers, and the buyers will therefore always choose the same preferred suppliers. Out of a competition view, they further means that discounts can lead to a rigid path dependency which makes it difficult for new players to enter the market. (SOU, 2015:113) In 2013, the European Union introduced a new regulation within the construction industry, with the purpose to increase the competition and international movement of products. The new regulation states that all construction products with a harmonised standard should be described, judged and have the same CE marking within EU. This makes it easy for the buying company to find appropriate products, regardless of where the products are produced or the seller's nationality. However, there are still many countries that have their own national descriptions and CE markings. The EU commission is aware of the problem and has started working on a solution.. Despite this, the Swedish competition authority claims that the ability for international purchases depends on individual items. They mean that some products are characterised by national standards, preferences of domestic demand and the international economy, which increase the complexity of purchasing them internationally. (SOU, 2015:109) Further, some items demand a larger transport alternative, as a result of their big volume or size, whereas it might be costly to transport them long distances. International purchases are also difficult due to the local characteristics of the industry, with informal barriers such as company culture and established contact networks. According to The Swedish Agency for Public Management, this situation indicates that the established market participants, by using discounts and stated lock-in effects, try to preserve the current company structure and roles in the sector. (Statskontoret, 2009:6)

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Introduction to Bravida This study is conducted on behalf of Bravida, a premier multi-integrated supplier of technical installation and service of buildings and constructions. With a turnover of about 15 billion SEK and more than 10 000 employees (Bravida, 2017), Bravida is one of the biggest players within the installation industry in the Nordic market. The company provides a wide range of services and operates within three main technical areas; Electrical, Heating and Plumbing and HVAC (Bravida, 2016), in which electrical installations and services is the largest part (Interviewee B). As of today, 60-70% of all the installation materials at Bravida are purchased from wholesalers (Interviewee B). In the end of 2014, Bravida declared that they began a long-term project with the goal to reduce the purchasing cost by 10 % (Bravida, 2016). According to the company, an important element to reach this goal is to increase international purchases. This since there is not much that distinguishes Bravida from its competitors in terms of efficiency, which has led to a desire to achieve better prices for the purchased material. (Interviewee B)

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3. Literature and Theory __________________________________________________________________________________ This chapter presents the literature that has been relevant to perform this study. The first part covers supply management, which gives a holistic view of the literature of sourcing strategies, worldwide sourcing and the purchasing process in general. In the second part the focus is scaled down to supplier selection. This is the main focus area in the thesis and covers an introduction to supplier selection, its process, key criteria and evaluation methods. __________________________________________________________________________________

3.1 Supply Management Supply management is the broader concept for all activities that must be coordinated in connection with a company’s purchases and inbound flow of material (van Weele, 2010). This means that the concept includes all activities related to supplier selection, risk management and material planning and control (Kraljic, 1983; Harrison et al., 2014). By understanding the concept, it is possible to achieve a holistic view to the methods, processes and strategies related to purchasing. The general interest for supply management has increased and in 2010, van Weele (2010) argued that this is a result of a more transparent and fast changing society. He believes that the increased accessibility to information has contributed to this as well as it has enabled a competition on a global scale. This has also been highlighted by Monczka et al. (2005), who argues that the access to information has changed the conditions in the industry. The changed conditions have made it possible to obtain the right products at the right time and to a competitive price. In addition, it has also become something that today’s customers expect, which explains why an increased focus on supply management is required. (Gordon, 2009) For companies to stay competitive, they are forced to constantly improve the value of their products and services. This, in turn, puts high pressure on how to handle the purchasing processes (Monczka et al., 2005) which additionally has contributed to an increased focus on strategic sourcing (Harrison et al., 2014). Further on, the global era expands the limits, which has led to a focus of managing sourcing on a global scale.

3.1.1 Sourcing Strategies One essential part of a company’s supply management is to choose a suitable sourcing strategy. The importance of supply management has also been emphasised by Kraljic (1983), who argue that supply management is a critical factor when the supply market is complex and the purchased material is of big importance. Kraljic (1983) argues that the matrix could be a useful tool when one should plan and develop a sourcing strategy that considers both the importance of purchasing compared to the complexity of the supply market. Ever since Kraljic's matrix was invented for 30 years ago, it has been the most discussed and frequently used methodology for companies with the aim to establish an appropriate sourcing strategy (Cox, 2015; IIAPS, 2017; O’Brien, 2009; Monczka et al., 2005). When a company should allocate their resources in a manner that helps them to achieve their objectives, it is important to create a sourcing strategy with regard to the characteristics of the purchased products. This in order to allocate the company’s resources in a manner that helps them achieves their objectives (Cooper et al., 2001; Gelderman & van Weele, 2003). Kraljic’s matrix captures this importance and divides products in different categories depending on their characteristics and thus the suitable strategy. The purchased materials are divided into the matrix by

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their specific supply risk and impact on profit. The profit is related to the importance of the purchase, where each item is measured with regard to the volume purchased and its percentage of the total costs. Further, the degree of importance of a particular purchase also depends on its impact on product quality and future business growth. The supply risk, on the other hand, reflects the complexity in the supply management. This is measured by the items short- and long-term availability of the product and how the market is structured, which corresponds to a number of potential suppliers. Further, the supply risks evaluate the make-or-buy opportunities, competitive demand, substitution possibilities and the risk associated with storage. From the combination of these criteria, the products are positioned in this matrix within one of the four groups: materials-, supply -, purchasing- and sourcing management, seen in figure 1. (Kraljic, 1983)

Figure 1. Kraljic’s matrix (Kraljic, 1983)

Each of the four different categories included in the matrix requires an individual purchasing approach. Regarding non-critical items, it is normally enough to apply simple decision policies such as, for example, market analysis and inventory optimization models. This helps companies to get a good market overview, by only using forecast of short-term demands. When having products classified as leverage items, the company must focus on finding substitutes, both regarding alternative suppliers and products. It is also important to exploit the power of the purchase, by examining the vendor selection and potential substitute of the product. This requires reliable market data, with short- to medium-term demand planning and price forecasts. According to Kraljic (1983), the most important products are the ones that are classified as bottleneck- or strategic items. Bottleneck items have a high complexity in the supply market but can usually be obtained to a low price, whereas they tend to have a low impact on the profit. If the purchased products have the characteristics of being bottleneck items, a company should focus on having an inventory to secure the volume and create potential backup plans. This requires medium-term supply and demand-forecasts, very good market data and knowledge of inventory costs. The strategic items, on the other hand, have a big impact on the company's future success whereas decisions regarding these products often are made at a top level. For these product is it essential to establish long-term supply relationships with the supplier. Further, these items requires high level analysis, which should include both forecasts and potential risks, to enable a detailed market research and thus receive information about the long-term supply and demand trends. (Kraljic, 1983) Since Kraljic (1983) published his purchasing portfolio analysis, it has become a well-known and

!!!!!

!!!

Low

Low

H

igh

High

Complexity of supply management

Importance of purchasing

Leverage Items Strategic Items

Non-critical Items Bottleneck Items

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commonly used guidance technique for how to develop a managerial action plan and how to perform supplier segmentation (Cox, 2009; Gordon, 2008). However, a more recent methodology for management of strategic sourcing has been developed by A.T. Kearney, which is known as the Purchasing Chessboard. (Schuh et al., 2009) They describe strategic sourcing as a process where the purpose is to reduce cost and increase value, which in turn needs consideration of both management of the supply chain and purchasing strategies. The initiative behind this methodology was the identified shift in power, where the power has shifted from the buyer to the seller. From this, Schuh et al. (2009) criticised previous methodologies such as Kraljic’s matrix, as they argued that this shift made them inapplicable. The basic concept of this new methodology is the balance between supply and demand. The recommendation is then that companies should develop their strategic sourcing strategies in regard of where the needed products or materials are positioned in the matrix. Schuh et al. (2009) argue that this results in a simple and clear model, as these are concepts that most managers and other influencers already are familiar with. (Schuh et al., 2009) Despite that Schuh et al. (2009) presents the Purchasing Chessboard as a more sophisticated methodology with a new approach to strategic sourcing, Cox (2015) argues that there are several similarities between this methodology and Kraljic’s matrix. Even though the focus of the analysis differs between them, Cox (2015) means that both methods focuses on the degree of importance of specific products and that the recommendation to managers regarding how to develop strategic sourcing is similar. Cox (2015) criticises them both and argues that the methodologies have a too strong focus on cost reduction and tactical spend management. Further, he means that it is necessary to have a greater focus on value for money. Gordon (2008) also criticises the use of segmentation matrices, especially Kraljic's matrix. This since he means that it is too difficult to categorise different suppliers in regard to the, according to him, too imprecise terms. Gordon (2008) further argues that the use of segmentation matrices is limited and that they only should be applied in the initial phase of the supplier selection process. When the purpose is to investigate if other potential suppliers exist, rather as a decision tool to facilitate the final selection. However, Schuh et al. (2009) states in the Purchasing Chessboard report that a company’s purchasing strategy not only should be seen as one part of the overall business strategy. Instead, they mean that strategic sourcing is what drives a company’s strategy and what makes them competitive (Schuh et al., 2009), which in other words results in creating value for the company (van Weele, 2010). Despite the critic directed to the models, Gelderman & van Weele (2003) highlights the importance of managing different products with different strategies. As earlier mentioned, the overall interest for sourcing strategies has increased (van Weele, 2010). The valuable overview of the purchasing condition that Kraljic’s model provides makes it possible to develop differentiated purchasing and supplier strategies (Gelderman & van Weele, 2003; de Boer et al. 2001). Gelderman & van Weele (2003) further points to the recognition of Kraljic’s model and states that his theory is the general approach to multiple sectors when handling the purchasing portfolio management. However, they want us to bear in mind that choosing the right strategy is complex, and that it cannot be solved by only using two-dimensional matrixes. The choice of strategy is highly sensitive and based on more factors that the models do not cover, such as the overall business strategy, the situation on the supply market and the individual suppliers capacity and intentions. The models obtained from the literature are therefore not applicable without performing any adjustments, but could be helpful when creating a segmentation of different products and developing differentiated strategies. (Gelderman & van Weele, 2003). Schuh et al. (2009), the creators of the Purchasing Chessboard, also states that the importance of strategic sourcing has increased. They explain this as a result of the globalisation, which has changed the purchasing conditions for all companies. Above all, it has led to a possibility for

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companies to sell and purchase material on a worldwide basis. (Monczka et al., 2005) This, in turn, increases the complexity of choosing the right purchasing strategy, which further enhances the need of a holistic model. (Schuh et al., 2009)

3.1.2 Worldwide Sourcing Worldwide sourcing has become a strategy for companies that want to take advantage of the benefits available outside the national market (Monczka et al., 2005; Schuh et al., 2009). A worldwide sourcing approach is primarily common in industries with the goal to take advantages of lower unit costs. (van Weele, 2010) However, to enable a shift from domestic to international purchases, the activities linked to the purchase must be evaluated. In this shift, Trent & Monczka (2003) explains different types of stages occurring when a company adapts to worldwide sourcing, which are described in figure 2 below. Their model includes five different stages, where each stage indicates to which extent the company has applied a worldwide sourcing strategy. As the company’s integration and coordination evolve, the company’s strategy is considered to reach the next level. (Trent & Monczka, 2003)

Figure 2. Levels of worldwide sourcing. (Trent & Monczka, 2002)

The first and initial step towards worldwide sourcing is international purchases, which means ordinary purchase of goods but from another country. The final step is global sourcing, in which the purchasing activities, such as materials, processes and designs, are integrated and coordinated with suppliers across the world. (Monczka et al., 2005) Regardless of how far in these levels the company precedes its worldwide sourcing strategy, the goal is still the same, to find efficiencies in the purchase of material and services abroad (Schuh et al., 2009). This is primarily done when international differences in price levels exist and when the offers from the local suppliers are not satisfying (Bedey et al., 2008). Already in 2003, Trent & Monczka (2003) predicted that companies most probably would move up in the levels towards global sourcing, as a result of the need for global integration in the supply management. Since then, the prediction has turned into reality and company’s increased movement towards global sourcing has been clarified in multiple studies. (van Weele, 2010; PWC, 2010) The overall gain of approaching global sourcing is that the close business relationships and coordination

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plans create an ability to achieve a trustworthy and well-functioning supply. However, Trent & Monczka (2003) conclude that it is important to understand the differences between international purchases and global sourcing and to what extent it suits the business, before implementing such strategies within the company. In addition, global sourcing is related to several risks and comes with both positive and negative aspects (van Weele, 2010). The advantages and disadvantages related to global sourcing are frequently discussed in the literature (Monczka et al., 2005; O’Brien, 2009; van Weele, 2010). As mentioned earlier, the interest for global sourcing is often based on its potential contribution to cost efficiencies. The opportunity to achieve costs advantages from worldwide sourcing is due to multiple factors, for example, inexpensive labour and lower unit cost of purchased material. In addition, a global sourcing strategy can be applied in order to put more pressure on existing suppliers or to stimulate competition on the national market. (van Weele, 2010) Except the advantages already mentioned, sourcing worldwide also creates an opportunity to take advantage of resources that are not available locally, creating a competitive base by using an alternative supplier and increase the overall capacity of total supply. (Bedey et al., 2008; Monczka et al., 2005) Although there are several advantages with implementing a global sourcing strategy, it is also highly important to be aware of the risks and disadvantages of such a strategy. Monczka et al. (2005) state that the biggest challenge with worldwide sourcing is the ignorance of international standards and processes related to purchasing. Additionally, Kotabe & Murray (2004) means that sourcing plans, distribution channels and service networks must be fully established to succeed. Further, they also highlight the risk of only seeing the possibilities and not see how surrounding costs and risks can results in higher total cost and disadvantages later on. One surrounding cost is related to the longer distance between a company and its supplier, which result in increased transportation costs, lead times and risk of delays. (Kotabe & Murray, 2004) Van Weele (2010) also highlights the risks and disadvantages related to global sourcing and agrees with Kotabe & Murray (2004) that on-time delivery and quality assurance are two of the most problematic areas when applying a global sourcing strategy. In addition to these direct costs, there are also hidden costs that are difficult to identify at the beginning of the process. These are the costs that could occur due to cultural- or language differences, the risk of changing of politics in the country, losing intellectual property and an increasing cost of monitoring. (Bedey et al., 2008; Monczka et al., 2005) Furthermore, the trend of reducing cost and provide a higher quality has increased the need of a just-in-time production, as well as it leads to a desire to always achieve better, cheaper and faster solutions (O’Brien, 2009). This philosophy requires a close working relationship that places big responsibility on the top management and the purchasing managers know-how. (Kotabe & Murray, 2004; Monczka et al., 2005).

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3.2 Supplier Selection One of the six steps within the purchasing process is the supplier selection (van Weele, 2010). A more global marketplace places new demands on the industry and this has resulted in increased focus on supplier selection and strategically purchasing methods since conscious choices within theses two areas have become a way to keep a competitive edge. (Moser, 2007) With an increased focus on how to source strategically, and not least by worldwide sourcing, has the interest for maintaining a good purchasing process followed the same path. Below follows a description of van Weele’s (2010) approach to the purchasing process, in which he highlights the supplier selection as one out of six important steps in the purchasing process.

Figure 3. The purchasing process. (van Weele, 2010)

Even though all steps are closely connected and individually important to reach a good result (van Weele, 2010), Petroni & Braglia (2000a) found the second step in the process, the supplier selection, to be more important. In the report “A quality assurance-oriented methodology for handling trade-offs in supplier selection“, Petroni & Braglia (2000a) highlights a trend that the supplier selection in the purchasing process is undergoing a lot of pressure to reach a higher quality. This has, in turn, led to an increased interest in the subject. Van Weele (2010) also highlights the importance of performing a conscious selection of supplier, not least since mistakes in this process can have devastating consequential effects, such as bankruptcy and inability to meet important requirements. Due to the importance of supplier selection, companies should evaluate their suppliers regularly to be able to keep the supplier that best meets the requirements. (Petroni & Braglia, 2000a) Roger Moser (2007) has in his book, “Strategic Purchasing and Supply Management”, defined supplier selection as follows;

“Supplier selection is part of supplier management and includes all activities necessary to select a specific supplier for basic materials, products or services on a long-term or short-term basis based on

a supplier’s respective capabilities and offerings in order to generate competitive advantages.” (Moser, 2007:24)

These activities that Moser points out in the definition of supplier selection is further elaborated by van Weele (2010). Van Weele (2010) means that the activities include to determining the method for subcontracting, how to evaluate the preliminary qualification of suppliers and drawing up the list of bidders. The following activities are preparations of the request for quotation and finally the analysis of the received bids. As described in the purchasing process, figure 3, and worth mentioning again is that the quality of the purchase depends heavily on each step. From this, the activities in the supplier selection process will have a great impact on the final result and it is, therefore, important to describe its process. (van Weele, 2010) In a study conducted by de Boer et al. (2001), they present a framework that could be applied in the supplier selection process. The framework shows how the supplier selection could be executed. This is valuable since several decisions-makings steps need to be taken into consideration in order to

Determination of purchasing specification

Supplier selection Contract Ordering Expediting Evaluate

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ensure an ultimate selection of a supplier. The framework was developed with inspiration and knowledge gained from previous sourcing strategies conducted by Kraljic (1983) and Faris et al. (1967). (de Boer et al., 2001) Kraljic’s matrix divides different sourcing strategies depending on the items supply risk and profit impact (Kraljic, 1983). Faris et al. (1967) classify three types of purchasing situations, depending on how often the purchase takes place. With these strategies in mind, the framework is able to handle different typical supplier selection situations and methods for how the selection can be made. (de Boer et al., 2001) The framework, illustrated in figure 4 below, are divided into four main areas; the problem definition, the formulation of criteria, the pre-qualification and the final selection. In these stages, the supplier selection process handles both the complexity of purchasing as well as the extent of importance of different internal criteria. (de Boer et al., 2001) This process could also be compared to the approach provided by O’Brien (2009), who explained the supplier selection process as a funnel, where potential suppliers decrease along the way. The supplier’s performance will be evaluated and those suppliers that do not meet the requirements will be eliminated. An evaluation of each supplier’s performance will take place after every activity, which in the end ultimately will help to identify which supplier or suppliers that are or are not appropriate for the company to continue with. (O’Brien, 2009)

Figure 4. The supplier selection process adapted from de Boer et al. (2001)

As illustrated in the figure 4 above, the framework for the supplier selection process conducted by de Boer et al. (2001) contains four different and separate parts. Although there are clear differences between the different steps, each part still plays a central role in the processes of selecting a supplier. In addition, it is also extremely important that all steps are connected to each other and follows the same path. (de Boer et al., 2001) In the following sections follows a more detailed description of each of the four different steps.

Problem Definition

Formulation of Criteria

Qualification

Final Selection

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3.2.1 Problem Definition In the first step, the problem definition, a company must decide which strategic approach they should follow. Additionally, the focus is also to formulate what expectations on the performance a company has on a certain supplier. It is important that the company considers multiple purchasing alternatives, for example, whether they should make or buy and how many suppliers they should involve. By evaluating different purchasing alternatives, the decision makers gain a holistic view of all possible solutions. From this, they will be able to perform a conscious choice of strategy that suits the company, its vision and future goals. When the strategic approach is chosen and when the decision makers has a clear view of what they want to achieve with the supplier selection, the process moves on to locate all potential suppliers. (de Boer et al., 2001)

3.2.2 Formulation of Criteria In the second step, the buying company should identify the criteria that somehow affect the company’s willingness to buy. These criteria are the aspects the buyer must consider when selecting a suitable supplier for the chosen problem definition. (Monczka et al., 2015) The capabilities of different suppliers vary. To enable a consistent evaluation between them it is, therefore, important to formulate all criteria in the beginning of the selection process. What complicates the step of formulation of criteria is that there are no specific guidelines regarding how this should be performed since this is highly individual for different companies. (de Boer et al., 2001) However, the criteria should be defined according to the company’s strategic approach. The three criteria of cost, quality and delivery are frequently highlighted as the most important criteria (Dulmin & Mininno, 2003; Pal et al., 2013). These criteria are often seen as obvious, but since they tend to affect the success of the purchase in the biggest extent and accordingly, have the greatest influence on the purchase (Monczka et al., 2005). When all criteria that affect the purchasing have been identified, the buyer can evaluate the supplier in multiple categories. The advantage of having a broad approach is that it creates a possibility to evaluate the supplier’s ability to accomplish all the criteria simultaneously. (de Boer et al., 2010) However, it is difficult to find a supplier that meets all requirements perfectly, whereas a selection of supplier usually requires a trade-off between different criteria. (Dulmin & Mininno, 2003; Moser, 2007) Except that the criteria works as indicators regarding what the company is valuing in a potential supplier, the company must also find a way to understand their degree of importance on the selection. Depending on the importance of the purchase and the characteristics in the industry, the buying company needs to perform a systematic categorisation of the importance of each criterion. This since suppliers have different types of capabilities and the buyer must evaluate the trade-off between criteria. (van Weele, 2010) This has to be done by each company individually since their yield varies depending on the specific situation and internal preferences (de Boer et al., 2001).

Criteria for Supplier Selection This section gives an in-depth explanation of different criteria that are important in the supplier selection. As mentioned before, how the company choose to formulate the criteria will have a crucial role in the supplier selection (Pal et al., 2013). Since the purpose is to evaluate potential suppliers only with regard to the criteria that have been stated, and from this decide which company to partner with. Even though the overall objective of supplier selection is to minimise risk and maximise value, there is no standard way of how this should be done. However, by defining the criteria according to the

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sourcing strategy and using them consistently make it possible to evaluate the suppliers on rightful terms. (Monczka et al., 2011; Pal et al., 2013) Multiple studies have been performed within the subject, in which criteria that generally requires consideration when choosing supplier have been presented. (de Boer et al., 2001; Kannan & Tan, 2002; Katsikeas et al., 2004; Swift, 1995) Although there are many different opinions about which criteria that require consideration and not, the three quantitative criteria price, quality and delivery are frequently mentioned as the most important criteria for supplier selection. (Dulmin & Mininno, 2003; Kannan & Tan, 2002; Narasimhan et al., 2001; Petroni & Braglia, 2000b) Except for these commonly highlighted criteria in supplier selection, service is also routinely seen as an important criterion (Kannan & Tan, 2002; Pal et al., 2013). Although quantitative aspects are usually emphasised, non-quantitative and softer aspects are not to be forgotten (Moser, 2007). Moser (2007) has combined his own findings with previous knowledge and from this he has summarised the, according to him, most relevant criteria within supplier selection. Further, Moser (2007) argues that by evaluating potential suppliers with respect to the enlarged number of criteria in his list, it is possible to more accurately see their strategic value. Below follows a figure including Moser’s (2007) list of the most essential and frequently used criteria related to supplier selection.

Figure 5. Illustration of criteria for the supplier selection. (Moser, 2007)

Cost management is the criterion that is most widely applied in the evaluation and has always been rated as important. That lower price levels are desirable is a fundamental fact within purchasing. However, Moser (2007) highlight that its high importance could be out-dated since it might be based on traditional purchasing strategies, where lower prices adds value. This is not always equivalent with today's values. In order to change from traditional purchasing, the criterion of cost management is not just depending on the price. Instead, Moser (2007) describes cost management as competitive pricing and willingness to continuous cost cutting by improving the production and processes. (Moser, 2007)

Criteria for Supplier Selection

Cost management

Delivery

Short-term flexibility

Quality management

Long-term flexibility

Innovative capabilities

Collaborative capabilities

Risk management

Marketing support

Financing support

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According to Kannan (2002) should quality management be the most prioritised criterion in the supplier selection. Quality is, however, a term that is difficult to explain as this criteria is heavily depending on the industry. In addition, there is a distinct difference between an operational definition of quality and what the customer see as quality. Ultimately, it is the customer that sets the preferences and the customer-oriented quality definition is often the most controlling parameter. (Moser, 2007) When companies outsource activities to the supplier, they put a lot of dependency in the delivery and that the supplier are able to provide a qualitative solution of logistics. If the supplier’s performance in this criterion is reliable, it enables that the buying company can keep a continuous flow of supply and thus control the level of inventory. (Moser, 2007) A well-functioning and high qualitative delivery solution is an especially important criterion for companies that wants to achieve a just-in-time philosophy. (Kotabe & Murray, 2004) The criterion surrounding flexibility gives an indication of the supplier ability to respond to change. short-term flexibility shows if the supplier can react to changes in a near future in factors such as product mix, volume, the options of delivery time and new product development. The other criterion, long-term flexibility, refers to the ability to make changes of more strategic nature, which are important for the supplier’s long-term competitiveness. To be flexible in a changing environment and ability to match buyer's future interest is highly valued in supplier selection. However, flexibility as a criterion can be difficult to measure since it is based on future potential. (Moser, 2007) The criterion innovation capabilities have increased and show the supplier’s capability to be innovative. This is highly relevant in industries that are characterised by fast-changing climate and that, therefore, are in need of high R&D development. The supplier criterion that is needed is, therefore, connected to the supplier financial investments in R&D, independent new product development and their identifications of innovation in the supply chain. The general goal of this criterion is to find a supplier that is in the front edge of development and that actively is contributing to new materials and technical solutions. (Moser, 2007) Collaborative capabilities refer to integrating the vertical chain and increase the support between suppliers and buyers. (Moser, 2007) High integration makes it possible to work efficiently towards a common goal and by combining interest find efficiencies in process, production and innovations. (van Weele, 2010) The three final criteria are risk management, marketing support and financing support. Risk management has to do with the increased risk of not having full control and follows the whole process, from making the product to delivery. The criterion of marketing support refers to the information provided by the supplier and how the given knowledge can improve the buying company’s services and products. Finally, the criterion of financial support evaluates the financial stability of the supplier. (Moser, 2007)

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3.2.3 Qualification The third step is the process of reducing all the available suppliers to a smaller number of suitable and thus more interesting suppliers (de Boer et al., 2001), which is illustrated as the tapered area in figure 4. In this stage, all suppliers that are not seen as good enough are removed and the few suppliers that still exist after this are those the company wish to analyse deeper. The importance of the pre-qualification step depends on how many suppliers that is available from the beginning. Above all, this step is highly necessary if the market includes many suppliers. This in order to avoid that time, and thus money, are being wasted on further investigation of suppliers that would not be able to handle the requested proposal anyway. (O’Brien, 2009) How the pre-qualification is performed varies and could be carried out in more than one step. However, the first step is always to find the acceptable suppliers. (de Boer et al., 2001) O’Brien (2009) means that there are some company requirements that easily eliminate non-acceptable suppliers, such as the number of employees, the turnover’s financial status and if they follow a quality management system or not. By doing this simple research, it is possible to quickly eliminate those companies that do not have the capacity or quality management in place. (O’Brien, 2009) There are many more complex and accurate methods of how this elimination process can be done, and the methods are all originally found in the supplier selection literature for the final selection of supplier. However, Boer et al. (2001), still stress that this part in the supplier selection processes is pre-qualification, as they believe that its characteristics is more of a sorting process rather than a ranking process. The methods they propose for the pre-qualification are categorical methods, data envelopment analysis, cluster analysis and case-based-reasoning systems. (de Boer et al., 2001)

3.2.4 Final Selection The fourth step, the final selection, is the last phase in the evaluation process before selecting the supplier or suppliers. How this is performed varies and we will elaborate more on the main existing methods in this section. However, the main function with these methods is to use them as tools when evaluating the suppliers that are left from the pre-qualification with the aim of finding the best alternative. According to de Boer et al. (2001), the distinction between the final selection and the pre-qualification is that this step is a ranking process of all acceptable suppliers, instead of the pre-qualifications sorting approach. To be able to do this, the decision maker proceeds from the criteria stated in step 2, formulation of criteria, in the framework. Additionally, each criterion is considered depending on its degree of importance. (de Boer et al., 2001) The process of selecting a supplier is often complex and consists of multiple criteria that are dependent on each other, which creates a situation where trade-offs between the criteria must be evaluated. (Petroni & Braglia, 2000a) The literature especially highlights the complexity of how to prioritise the criteria of cost, delivery and quality (Narasimhan et al., 2001; Petroni & Braglia, 2000b), which especially is common in environments characterised by a just-in-time approach (Dulmin & Mininno, 2003). One frequently mentioned example is the trade-off between delivery time and cost, where both are preferred to be low but the dependency of slower transport and low cost is difficult to overcome. The interconnection between the criteria are almost a foregone conclusion and depending on how much the company is willing to change the importance of one criterion, directly mean that another one will be affected. (van Weele, 2010) Additionally, Gordon (2008) highlights the importance of seeing beyond the price level and thus consider other aspects that also affects if a

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certain supplier is appropriate or not. He also stresses that it is important to be consistent throughout the whole supplier selection process. (Gordon, 2008)

Methods for Supplier Selection Supplier selection methods could be explained as well-designed tools that help companies to facilitate the complexity of choosing an appropriate supplier (de Boer et at., 2001; Monczka et al., 2005; Tahriri et al., 2008). Various models for supplier selection are discussed in the literature and which one to apply must be done with great awareness (Petroni & Braglia, 2000b). Especially since the choice of method could have a significant impact on the overall process and success of the supplier selection. All methods has its own advantages and disadvantages, while they also differ in how easy or advanced they are to apply. (Monczka et al., 2005) Moser (2007) argues that it is an advantage if the applied approach supports both quantitative and non-quantitative criteria. Although there has been much research in the field, there is no approach that is considered to be the most appropriate method to apply independently on the situation (Moser, 2007). When creating a tool for supplier selection, it is necessary to consider the conditions at the specific company and adapt the tool accordingly. It is not uncommon that companies apply a combination of different methods since that might result in the most suitable method to that specific company. (Tahriri et al., 2008) Tahriri et al. (2008) discuss the importance of exploring different methodologies before choosing which supplier selection model to develop as, again, it will have a great influence on the continued process. Worth mentioning is that even though the design between different approaches varies the purpose is the same, that is to reduce risk and maximise value related to a company’s purchases. (Monczka et al., 2005). Some of the most common methods for supplier selection discussed in the literature could be classified within the following categories; mathematical programming, cost-based system, categorical system and weighted-point methodology (de Boer et al., 2001; Monczka et al., 2005; Pal et al., 2013). Regardless of model, they generally include the same or similar overall steps. The first step in all models is to initially identify all criteria that have an impact on the selection and which thus must be considered. The next step is to evaluate and analyse each supplier by measuring or rating their performance in regard to each of the stated criteria. (Petroni & Braglia, 2000a) In models that have the characteristics of mathematical programming, the supplier selection is mainly made with regard to quantitative criteria (de Boer et al., 2001), i.e. criteria that can be quantified and measured (Blomkvist & Hallin, 2015). When applying such a method in the supplier selection, the decision is based on a mathematical objective function. The function is then used to solve the problem and reduce the complexity in the decision-making. This with regard to all stated criteria find the most optimised solution that either maximise or minimise the output. For example, if the objective either is to maximise profit or minimise costs. (de Boer et al., 2001) One of the advantages of mathematical programming is that it is possible to take several criteria and aspects into account, and then use simulation to achieve the most optimal output (Pal et al., 2013). It is also argued that it is easier to ensure objectiveness since it forces the decision makers to give a specific goal on the criteria. (de Boer et al., 2001) In goal programming models, the models are flexible enough to take multiple goals and target levels into account, and from data simulations find the most optimal compromising level between them (Pal et al., 2013). On the other hand, it only considers quantitative criteria, which can give a distorted perception of reality if many qualitative criteria exist. (de Boer et al., 2001) What is considered to be the optimal solution also depends on the opinions of those who are responsible for

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the supplier selection, e.g. purchasing managers or staff, because they decide the weight of different criteria. (Kokangul & Susuz, 2008) In categorical methods are the suppliers categorised based on their performance in various criteria and achieve a rating such as "positive", "neutral", "good" and "poor" (de Boer et al., 2001). This rating is often obtained with respect to input from internal users within the company. Despite that categorical models often are classified as simple (Monczka et al., 2005), Petroni (2000) criticises the use of categorical methods due to the difficulty of not evaluating different aspects equally. The methods have a stronger focus on qualitative aspects and they must be performed with great subjectivity, which in turn results in a less imprecise method. He further states that it is difficult to prevent that the ratings are not influenced by recent or previous events. (Petroni, 2000) In the end, when all suppliers have been evaluated in regard to each category, a summarised rating is obtained. This is done in the same way, however, with regard to the supplier's overall performance. (Pal et al., 2013) Worth mentioning is that categorical methodologies mostly are discussed as tools for the pre-qualification stage i the supplier selection process, rather than for the final supplier selection. (de Boer et al., 2001; Pal et al., 2013) However, de Boer et al. (2001) also argues that even though they are more suitable in the pre-qualification, it could still be applied in the final selection. Cost-based models are based on the attempt to quantify and assess all potential costs that may arise when performing a purchase from a supplier. Additionally, the evaluation considers all the additional costs that could occur when a supplier fails to meet the company's requirements and not performed as planned. (Monczka et al., 2005) For criteria that do not have cost parameters or where the cost is difficult to obtain, it becomes more complex. In those cases, the evaluation must be performed with regard to the weight of that specific criterion and combine this with the cost approach. The total cost of all criteria is then expressed in terms of benefits and penalty percentage to the unit cost. (de Boer et al., 2001) To achieve a reliable tool for supplier selection, all pre-, during- and post-transaction costs must be considered (de Boer et al., 2001). However, it is important to understand that the supplier that ends up with the lowest price, not necessarily is the most appropriate selection (Monczka et al., 2005). A weighted-point methodology is a systematic approach in which it is possible to take multiple criteria into account. In this methodology, each criterion is given a weight and depending on this, it is possible to distinguish its degree of importance to the supplier selection. According to Monczka et al. (2005), weighted-point methodologies are comparably easy and flexible to use and can thus be applied by most companies. The first step when applying a weighted-point methodology is to identify and select all key criteria that somehow affect the selection of supplier. (Monczka et al. 2005) The next step is to weight all criteria depending on their importance, which in turn indicates which criteria that will have a greater impact on the final selection. The criteria that end up with the greatest combined weight is considered to have the highest impact on the supplier selection. (Tahriri et al., 2008) In other words, how a certain criterion is being weighted indirectly affect which supplier that is considered as most appropriate. Therefore, it is highly important that this step is performed with great awareness (Petroni, 2000), and with respect to the company’s overall strategic objectives. When all weights are defined, the supplier is evaluated and scored in each criterion. The received score in each criterion is then multiplied with its corresponding weight. Finally, the weighted scores are summed and the supplier that ends up with the highest overall score is considered to be the most suitable alternative. (de Boer et al., 2001; Moser, 2007; Tahriri et al., 2008) Some of the advantages of weighted point methodologies are that it supports multiple criteria of both qualitative and quantitative kind and that it is a comparably simple and time efficient approach to use.

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(Moser, 2007) The criticism towards these methods is primarily directed to the weighting of criteria and how this is being performed. Narasimhan et al. (2001) argue that the use of the approach is limited as he means that the weights are arbitrarily set and, therefore, that it is difficult to ensure that they are set in an objective manner. This becomes a problem since the ideology of the methodology is that the selection of a suitable supplier should be performed with regard to these weights. Independent on which weighted point methodology to apply, Moser (2007) stresses that the issue regarding how to weight different criteria is, in fact, the most difficult and most essential part to solve in order to ensure a strategic supplier selection. Dulmin & Mininno (2003) also directs criticism to the weights and their implications on the supplier selection. They mean that the weights’ significance to the supplier selection is misleading, because a supplier’s total score may be due to high scores in individual criteria. If a supplier receives a poor score in one specific criterion, a high score in another criterion can still balance it. Dulmin & Mininno (2003) argues that this does not always correspond with how it works in reality, as it usually is more complex than that. Another important aspect worth highlighting with regard to the given weights is the assumption that all criteria could be pairwise compared to each other. This is a simplification of how it could work in reality since lack of information and unwillingness can make it difficult to perform such comparison and still make the weighting reliable. (de Boer et al., 1998) The choice of supplier selection method should be made with regard to the company’s situation, objectives and available resources. In addition, the decision of which supplier selection method to apply strongly depends on which criteria that are important and that thus must be taken in consideration. To base the decision with regard to the identified key criteria is extremely important, not least since various methods supports different dimensions, either qualitative or quantitative or both. Finally, it is also important to be aware of the advantages and disadvantages coming with each method. In table 1 following on the next side is a brief summary of the different methodologies.

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Mathematical Programming

Cost-Based System Categorical System Weighted-Point

Description Considers multiple quantitative criteria in a single objective function.1 By filling in the criteria target level and constraints, a comparison between them is done to find the optimal supplier.

A qualification of all cost that is connected to the choice of supplier, such as delivery, quality and service. For qualitative data, it is possible to combine it with the criteria´s weight.

The most basic method that categories the supplier criteria on the base of a rating from positive to poor performance and the supplier is chosen of its overall rating sum.1, 4

Considers multiple criteria of both qualitative and quantitative kind. The criteria are given weights depending on their importance in the supplier selection. The supplier receives scores depending on its performance, which then are multiplied with respective weight. 1,3

Criteria Single-dimensional or Multi-dimensional. (Quantitative)2

One-dimensional. (Only costs)2

Multi-dimensional.2

Multi-dimensional.2

Users

- The user differs depending on the type of mathematical programing model.1

- Most suitable for larger firms. - Large supply base is necessary.3

- Suitable for smaller firms. - Could be applied by firms that are in the development phase of an evaluating method.3

- Suitable approach for most firms.3

Advantages - Optimisation of results, with regard to either single or multiple objectives. - Objective and have specific quantitative goals and constraints.1, 4

- Gives total cost. - Considers the cost of unplanned events and non-performance. - Potential to identify long-range improvements - Objective.3

- Clear and systematic evaluation process. - Easy to implement. - Minimal data requirements. - Inexpensive.3

- Flexible approach - Single system that supports a combination of qualitative and quantitative criteria. - Moderate implementation costs.3

Disadvantages - Only supports quantitative data.1, 4 - Complex.5

- Needs to have the objective function explicitly stated.1

- Single deal model. - Only applicable on simple cases where cost data exists. - lowest price is not always the best choice.3

- No detailed information on the supplier performance. - Least reliable. - Manually collected data and less frequently used.3

-Difficult to select the criteria, the weight of each criterion and to score the suppliers’ performance properly. - Demands detailed analysis.3

Table 1. Methods for supplier selection (1.de Boer et al., 2001; 2. de Boer et al., 1998; 3. Monczka et al., 2005; 4.

Pal et al., 2013; 5. Tavana et al., 2012).

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4. Research Method __________________________________________________________________________________ This chapter provides a detailed description of the methods used and their contribution. The chapter starts with a description of the research process, that gives a comprehensive understanding of the how the thesis has been conducted. This is followed by the methods for collecting data and how the data were used in the weighting of key and sub-criteria. With the contribution from these methods, we were able to build the supplier selection framework that this study has resulted in. Thereafter, we explain the process of applying the framework on three German wholesalers. The chapter finishes with a discussion around the validity, reliability and ethics of chosen methods. __________________________________________________________________________________

4.1 Research Process This thesis has been performed on the behalf of a Swedish company operating within the installation industry, where the focus was to study a problem area that they had identified. The research process started in the middle of January when we first met with our supervisor and had access to our office at company’s headquarters in Stockholm. During the first weeks in the research process, a fundamental pre-study was conducted. Focus at this stage in the process was to gain information and get a broad understanding of the case company, the situation and the complexity of the situation that they experienced. Early in the research process we also initiated a comprehensive literature review, which also proceeded throughout the whole process. By taking part of information collected from previous literature, we were able to improve our knowledge within the research area and thus better understand the problem. In addition, it contributed to a deeper insight into what had been done before and increased our understanding of the business in which Bravida operates. From this initial phase in the research process we found that one underlying problem for the company was how they should select an appropriate international supplier, in this case, international wholesalers. From this, we choose to develop a framework for supplier selection adapted to the current situation in the organisation. In order to create this framework, we needed to investigate which criteria that somehow affect the selection. With support from the pre-study and the insight this gave us, we continued to deepen our research and collection of primary data. Interviews were held with employees at the company in order to identify the, according to them, most important criteria. The next step was to investigate to which extent different criteria affect the supplier selection, in other words, how these should be weighted in the framework. To ensure a realistic perception of these weights, these were based on the attitudes of the employees. This was conducted through a questionnaire, where employees had to answer several questions evolved from the identified criteria. From this, we were able to weight different criteria in a way that reflects the culture and the working conditions at the company. Another part of this study was to apply the completed framework in reality. Except the purpose to gain a broader understanding of the framework and how it could be used, we also saw it as an opportunity to identify potential future improvements. In addition, this part also contributed to a great value to the research requestor, since they obtained valuable information about the wholesalers.

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The analysis and reflection was carried out continuously throughout the research process. This was important in our study since it contained several parts that needed to be analysed in order to proceed to the next step. However, we began a more structured and comprehensive final analysis when all interviews were conducted and when the questionnaire was collected. From our final analysis, we were able to obtain our results of the study and thus reach the end of the research process. An overview of our research process is illustrated in figure 6 following below.

Figure 6. Overview of the research process.

4.1.1 Literature Review In the literature review is previous research, within the area of interest, highlighted and explained (Blomkvist & Hallin, 2015). This part covers theories related to the subject of the study and lays a foundation for the theoretical framework that helps the researchers to answer the research questions. The purpose of the literature review is also to identify what has been done within the research area before and what gaps that still exists (Collis & Hussey, 2014). A comprehensive literature review was initiated in the initial phase of the study and has progressed continuously through the research process. At this early stage in the process, the problem had not yet been defined. This, in turn, contributed to a very wide focus where all information was not relevant for the research itself. However, the information gained was still useful for the continued process, as the literature collected helped to gain a holistic view of the phenomena studied and the industry in general. The value of this is further emphasised by Blomkvist & Hallin (2015) who express the need to understand the existing knowledge to enable the creation of new. From this wide search, we were able to scope an interesting purpose of this study and position our work in a particular topic. The literature review was mainly focusing on Supply Management and Supplier Selection. The information conducted from previous work and research has been used as a body of knowledge to help to solve the study’s research question. (Collis & Hussey, 2014) Multiple types of sources and search engines have been used, such as books, articles, and other published material from different data engines provided by KTH B and Google Scholar. In line with Collis & Hussey (2014), a critical approach has been applied to all information that has been collected. The keywords used when

Literature review

Analysis

Pre-study Empirical study Application Conclusion

• Introduction • Problem formulation • Unstructured interviews • Stating key criteria

• Semi-structured interviews • Stating sub-criteria • Questionnaire • Weighting of sub-criteria

• Application of supplier selection framework • Interviews with German wholesalers • Evaluation of wholesalers

• Discussion • Formulation of final result

Jan Feb Mars April May June

Continuous dialog and discussion with our supervisor, both at KTH and the company

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searching for relevant information were:

“Swedish installation industry”, “supply management”, “strategic sourcing”, “international purchases”, “global sourcing”, “purchasing process”, “supplier evaluation”, “supplier selection”,

“supplier criteria”, “methods for supplier selection”, “weighted-point system”, “cost-based system”, categorical system”, “mathematical programming”.

4.2 Data Collection for Building the Supplier Selection Framework In this subchapter, we describe how the framework for the supplier selection was build. The framework is based on both the literature review and the empirical results. It is also built in multiple steps, where different parts of the literature and the empirical result contribute to the main result in each step. We have chosen to create the framework based on the process framework conducted by de Boer et al. (2001), which are further elaborated on in the literature review in chapter 3.2. Our framework reflects it in its basic process, where the supplier is selected by proceeding through the four steps; problem definition, formulation of criteria, qualification and final supplier selection. With support from this process, we were able to capture multiple strategically decisions and factors that need to be taken into consideration in order to create a trustworthy supplier selection. However, we would like to point out that de Boer et al.’s framework is used as a support and modifications in the steps may exist since the results also depend on the empirical result collected in regard of this specific case and the study’s limitations. Figure 7 give a holistic view of the supplier selection process and the main contributors to each step. By following this process and the methods chosen, we were able to find a framework for supplier selection to Bravida.

Figure 7. Illustration of the process for building the supplier selection framework.

Research Question 1 !!

Research Question 2 !!

Problem Definition

Formulation of Criteria

Qualification

Final Selection

•  Selecting the method • Weighting of key criteria • Weighting of sub-criteria

Pre-Study Interviews

Interviews

Supply Management

Supplier Selection

Questionnaire

Method for weighting of key criteria

Method for weighting of sub-criteria

Supplier Selection

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The process for building the framework is seen in the middle of the figure, whereas the columns on the left and right side illustrate which methods and which literature we have used to fulfil the requirements in each step. Primary data, data conducted from original sources (Collis & Hussey, 2014) have been gathered by performing pre-study interviews, semi-structured interviews and a questionnaire. To make it easier for the reader to understand the purpose with each method, a more detailed description of each step is presented in the sub-chapters following below.

4.2.1 Pre-study A pre-study was conducted in order to get a broader insight into the situation at Bravida. This was of high relevance for the continued research process since it helped to get a greater understanding of the complex situation that Bravida experienced. In addition, when building a framework for supplier selection the first phase is to create a problem definition (de Boer et al., 2001). In this phase, the buyer should evaluate the strategic incentives for approaching a new supplier and to understand this, and its strategic impact, we used information obtained in the pre-study. During the pre-study, information was mostly gathered using an unstructured interview approach. Unstructured interviews are an interview methodology where no preparations have been performed in advance by the interviewers. According to Blomkvist & Hallin (2015), unstructured interviews could with advantage be used in the beginning of an empirical study, when the aim is to get a broader understanding of the bigger picture and get an increased insight into the research topic. Interviews were mostly held with people from the purchasing department in Stockholm. This since they actively work on a strategic purchasing level and from this we believed that they are those that have the greatest insight in Bravida’s future goals related to international purchases. Since we used an unstructured interview approach during this phase, the interviewees were allowed to elaborate freely on the subject of purchasing from an international supplier. From these interviews, we were able to find the main strategic incitements for international purchases. It was also a way to understand the most critical factors that need to be handle in order to implement the strategy at Bravida. The most critical factors were then used as our key criteria in the framework, in order to get a strong connection to Bravida’s strategy. All except three interviews in the pre-study was held at Bravida’s headquarter in Stockholm and lasted for approximately one hour. The three interviews that were not performed at the head office were held at Division Stockholm’s office in Solna Business Park. See table 2 for a summary of all interviews in the pre-study.

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Title Department Date Form

Nordic Purchasing Manager Ventilation Stockholm 2017-01-18 Live

Nordic Purchasing Manager Electrical Stockholm 2017-01-19 Live

Nordic Purchasing Manager Heating and Plumbing Stockholm 2017-01-19 Live

Category Analyst Stockholm 2017-01-23 Live

Systems Engineer, Master data Stockholm 2017-01-23 Live

Responsible for the purchasing system Stockholm 2017-01-24 Live

Purchasing Controller Stockholm 2017-01-26 Live

Purchasing Manager for coordinated purchasing Stockholm 2017-01-27 Live

Project Manager 1 Solna 2017-01-27 Live

Project Manager 2 Solna 2017-01-27 Live

Leading installer Solna 2017-01-27 Live

Table 2. Overview of pre-study interviews.

4.2.2 Interview A second round of interviews was held in order to define the key criteria and sub-criteria that impact the supplier selection at Bravida. The purpose of these interviews was to identify what affect employees’ choice of material and what they base their decision on. Additionally, the interviews also provided a greater understanding of how the purchasing process is designed today. By stating the criteria, it is possible to evaluate the suppliers on the thing that is most important for Bravida. These interviews were held without mentioning the primarily chosen key criteria, that were identified during the pre-study, since we wanted to verify that the strategy could be aligned with the thoughts and opinions of those who purchase standard material on a daily basis. Although the main purpose was to identify important criteria related to supplier selection at Bravida, the purpose was also to investigate how employees’ attitudes are to international purchases from wholesalers, how it can vary internally and if it varies depending on the role of responsibility within the company. The questions raised in the interview are seen in appendix I. A semi-structured interview methodology was used in these interviews. In semi-structured interviews, the questions are related to categories or themes instead of specific formulations. Having that said, this interview methodology could be seen as a guide for the interview rather than an already predetermined document with certain questions. The advantage of using semi-structured interview methodology is that its flexibility tends to result in a more genuine conversation as well as the absence of rules often contributes to valuable information that otherwise would not have been obtained. That there is no predetermined order or exact questions can also be a difficulty. Whether the semi-structured interview methodology proves to be an advantage or disadvantage depends entirely on the interaction between the interviewer and the interviewee. (Blomkvist & Hallin, 2015)

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The interview phase consisted of seven telephone interviews and consisted of project managers, installers and managers of various kinds see table 3. All interviewees have some sort of relation to purchasing of material at Bravida and they, therefore, contributed to a good insight in how the process is designed today and what advantages and disadvantages that exist. Worth pointing out are that all the respondents who currently have higher positions and thus greater responsibility at Bravida, also have has a history as installer and project leader at Bravida. As an installer, you work on site at the projects and thus have daily contact with various materials and products, and they, therefore, tend to have a major impact on the material purchased. This, in turn, explains the relevance of including their opinion in the research. A list of possible interviewee objects to contact was provided from the supervisor at Bravida. This list was reviewed and those who were considered relevant to the study were contacted via email. When choosing a sampling frame, it is important to consider if the sample’s opinions could be generalised on the scope of interest, and thus the population (Collis & Hussey, 2014). In order to enhance the possibility that the results reflected the perspective from the greater mass at Bravida, we choose interviewees with different responsibilities and locations.

Title Department Date Time Form

Division Purchaser Div. South 2017-03-07 54 min Telephone

Project Chief Div. South 2017-03-07 41 min Telephone

Project leader 1 Gothenburg 2017-03-13 44 min Telephone

Leading installer 1 Gothenburg 2017-03-13 47 min Telephone

Leading installer 2 Gothenburg 2017-03-15 52 min Telephone

Project leader 2 Gothenburg 2017-03-15 30 min Telephone

Purchase Calculator Västerås 2017-03-15 39 min Telephone

Table 3. Overview of semi-structured interviews.

4.2.3 Questionnaire The purpose of the questionnaire was to identify how the criteria should be weighted in order to achieve a supplier selection that best meets Bravida’s requirements. In addition to this, general questions were also asked in order to understand what the employees think is important to succeed with an international sourcing strategy. The questionnaire is found in appendix III. While the interviews had a more qualitative form, the questionnaire was a way of collecting quantitative primary data from a big group of participants. In fact, one of the advantages of performing a questionnaire is that it is a relatively quick and easy way to collect a large amount of data. (Blomkvist & Hallin, 2015) In addition, Collins & Hussey (2014) enhance that the questions are structured and carefully chosen to enable a good result. Structured interview questions are characterised by well-defined and precise questions where the interviewee, for example, are asked to rate their response on a scale. Since each response indicates a number on a fixed scale, the input is relatively simple to measure and compare (Blomkvist & Hallin, 2015). Since the focus was to collect information to the supplier selection framework, we used the information conducted in the interviews

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and from this, we were able to formulate questions related to each criterion. These questions were branch specific, structured and carefully considered. In order to understand the importance of each criterion, the respondents were asked to rank its importance on a scale ranging from 1-10. A score of 1 indicated little importance whereas 10 correspond to very high importance. From this the weight of the sub-criteria could be identified, the methodology for this is further explained in section 4.2.5. The questionnaire was made in the online programme SurveyMonkey, as this is what Bravida normally use when performing internal questionnaires. That the questions are answered in a reliable way is a keystone in receiving a good result. (Blomkvist & Hallin, 2015) We, therefore, evaluated formulated questions and tried, to the best extent possible, to use an easy language to avoid misinterpretations. We also reduced the risk of misinterpretations by presenting the purpose, as well as the scope, in the beginning of the questionnaire. Further, letting the respondents be anonymous enhanced reliability. With this, our hope was also that the answers reflects the respondent's own opinions without being affected by the company’s ambitions. In addition, the questionnaire was modified and controlled by Camilla Jonzon, international coordinator, and Adam Segergren, Purchasing Controller. After this, a pilot was initiated in which the three Purchasing Managers were asked to answer all the questions; this to further ensure that the questionnaire was formulated correctly and that it captured important aspects. The questionnaire was sent by email to a target group of 1854 employees, which included 927 project managers and 927 installers. The target group was chosen on the basis they are the ones that work with the products and purchase material on a daily basis. As of today, Bravida has a total number of 927 project managers and 3807 installers. From this is it possible to see that the project leaders are fewer than the installers and the proportion of people reached in each group is not the same. Despite this, we choose to send out the questionnaire to roughly the same amount in each group with the thought of an equal saying in the result. In order to sort out 927 installers from the total amount of 3807, we used the random function in Excel and gave each installer a randomised number between 0.00-1.00. The installers with the lowest numbers were then chosen to participate in the questionnaire. In total did 360 employees responded to the questionnaire, which is approximately 19% of the total target group. Out of this, 50% were project managers, 30% were leading installers or installers and 20% had other roles at Bravida. That only about one-fifth answered the questionnaire can depend on several factors. One explanation is that even though all installers at Bravida have an email address, they do not check it continuously. The installers work out on projects and because they are not assigned any work phone, they are not expected to check the mail continuously. From this, it was considered reasonable that the share of project managers was bigger, as they work from offices and performs purchases to a greater extent. According to Collis & Hussey (2014), there are two major problems with questionnaires. The first is questionnaire fatigue, which refers to the unwillingness to answer the questionnaire since they get an overload of request and emails. However, to use a questionnaire was still considered the best alternative to get a broad knowledge of the employee’s attitudes. The second problem is non-response bias, which is when the questionnaire is not returned. The action towards this was to send a reminder to the ones that had not answered two days before the deadline.

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4.2.4 Weighting of Key Criteria In this subchapter, we present the methodology used to identify the weight to each key criteria. We used a method based on pairwise comparisons of all possible combinations of the four key criteria. By letting the respondents choose which out of two criteria they considered to be most important, in all combinations, the difficulty that may arise when ranking all criteria based on importance was avoided. We believed that the pairwise comparison would contribute to an improved and thus more reliable comparison. Another alternative would have been to weight the key criteria in accordance with Bravida’s strategy. For example, if delivery is considered as the most important criterion, it should also receive the highest weight. However, since Bravida did not yet have any fully developed strategy in terms of international sourcing, we considered the pairwise comparison to be a better alternative. The pairwise comparison was obtained by using the respondent’s answers to question 9-14 in the questionnaire, see appendix III. In the respectively pairwise comparison of the key criteria, the respondents were asked to chose one out of two key criteria that they found more important than the other, alternatively if they considered them to be equally important. If choosing one criterion to be more important than the other, the respondents also had to score the degree of importance of the winning criteria. The degree of importance indicates how much more important the winning criteria is on a scale ranging from 1 to 5, where 1 corresponds to a little bit more important and 5 was defined as much more important. To define the weights, we first needed to find out which criteria that won and in what degree. To do this, we created a table in which the respondent’s answers were separated. From this, it became easier to distinguish how many respondents that chose what criteria and to what extent they found it important. In order to be able to compare the criteria from each other, the degree of importance is given a positive grade on one criterion and a negative on the other. The grading system has the same number as they choose as their degree of importance, but positive or negative depending on the criteria. The grade was then multiplied by the number of respondents in each degree of importance, to obtain the total grade. Finally, we took the mean of the sum of the total grades and used this number to find the winning criteria and its degree of importance. If the result was positive, it indicated that the positive criteria won and vice versa. In order to achieve an as simple point system as possible, we used a standardised approach to give points to the winning and the losing criteria. Each of the winning criteria got the score of their initial point plus one.

𝐶!"##"#$ =  𝐶!"!#!$%  !"#$% + 1 We did this since our zero grade, which indicated that the criteria are of equal importance, have a 100% match to each other and 1 in percentage gives 100%. It was also important to add +1 on the winning criteria to receive a lower percentage when you take it in its inverse. This has to be done since the losing criteria were given the score of the inverse of the winning criteria.

𝐶!""#$%& =  1

𝐶!"##"#$

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When all criteria had been given a final score, illustrated as 𝐶!"##"#$ and 𝐶!"!"#$%, all points to each key criteria was summarised. From this, we were able to find the weight of each key criterion by using the following formula:

𝑊𝑒𝑖𝑔ℎ𝑡  𝑜𝑓  𝑘𝑒𝑦  𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛 =  𝑇ℎ𝑒  𝑠𝑢𝑚𝑚𝑒𝑑  𝑠𝑐𝑜𝑟𝑒  𝑓𝑜𝑟  𝑡ℎ𝑒  𝑘𝑒𝑦  𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛

𝑇𝑜𝑡𝑎𝑙  𝑠𝑐𝑜𝑟𝑒  𝑓𝑜𝑟  𝑎𝑙𝑙  𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑎

From this, the weight of each key criterion could be obtained.

4.2.5 Weighting of Sub-Criteria Here is the methodology used to identify the weights of the sub-criteria presented. By using the response obtained from the questionnaire, we were able to identify the weights. All calculations were performed in excel. Since the sub-criteria are at the second level of importance, under the weight of importance of its corresponding key criteria, we used a less detailed method to find these criteria. When identifying the weights of the sub-criteria, we used a similar approach for all the sub-criteria related to the key criteria of quality, delivery and service. As mentioned in section 4.2.3, one part in the questionnaire included questions designed to accurately match a specific sub-criteria. By analysing the answers obtained on these questions, it was relatively easy to distinguish the weight of the respective sub-criteria. The sub-criteria and its matching question are found in appendix V. Firstly, we sorted all questions according to its key criteria in an excel file. Then all responses to each question were summarised, i.e. all answers regarding how different respondents ranked the importance of different sub-criteria. In the next step, the mean value in respective question was calculated. In cases when a sub-criterion relied on more than one question, the mean of the answers to these questions was used. To ensure a high degree of reliability of all the mean values we also calculated the median. Since there was no major difference between the mean values and the median, we found the calculated mean values to be credible. All mean values for the sub-criteria belonging to the same key criteria were summarised and thus the weight of respective sub-criteria could be calculated.

𝑊𝑒𝑖𝑔ℎ𝑡  𝑜𝑓  𝑠𝑢𝑏𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛 =  𝑇ℎ𝑒  𝑠𝑢𝑚𝑚𝑒𝑑  𝑠𝑐𝑜𝑟𝑒  𝑓𝑜𝑟  𝑡ℎ𝑒  𝑠𝑢𝑏𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛

𝑇𝑜𝑡𝑎𝑙    𝑠𝑐𝑜𝑟𝑒  𝑓𝑜𝑟  𝑠𝑢𝑝𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑎  𝑏𝑒𝑙𝑜𝑛𝑔𝑖𝑛𝑔  𝑡𝑜  𝑡ℎ𝑒  𝑠𝑎𝑚𝑒  𝑘𝑒𝑦  𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑎

Although we followed a similar methodology for the sub-criteria connected to quality, delivery and service, some modifications had to be done considering the sub-criteria related to delivery. To identify the weights of these sub-criteria, we used the answers obtained in the questions 25-27 in the questionnaire. The different answering alternatives in these questions were formulated differently and not on a scale ranging from 1-10. Instead, the number of answering alternatives was 5 in question 25 and 26 and 6 in question 27. To be able to follow the same approach as in the other sub-criteria, we considered it considered necessary to transform these answers in accordance with the 10-degree scale, where 1 indicates little importance and 10 indicates very much important. When adjusting the responses to fit the scale ranging from 1-10, it followed the same path, see appendix V. In other words, the answers that indicated low importance was similarly assigned the equivalent low value on the new scale.

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Regarding the weighting of the sub-criteria associated with the key criteria of cost, another approach was required. This since the response obtained from the questionnaire was incomplete. To address this problem, we found that the most appropriate option was to provide all the three sub-criteria under cost with a similar weight, whereupon they were set to 33%. The other alternative would have been to not include these sub-criteria at all in the completed framework. However, we considered that regardless of whether we choose to put them equal or not include them at all would have the same impact on its meaning in the framework.

4.3 Process for Applying the Framework for Supplier Selection This section contains a presentation of the part in the study when we applied the completed framework for supplier selection in reality. This was done in order to get an understanding of how it could and should be used. To enable a structured approach for this, we used the methodology for a case study recommended by Collis & Hussey (2014). According to them, a case study is a methodology used to explore the studied phenomena in its natural setting (Collis & Hussey, 2014). Although this part, of applying the framework, is not a pure case study we still considered it to be important to follow a clear process and thus, we found it helpful to follow the process illustrated by Collis & Hussey (2014).

4.3.1 Selecting the Case The selection of the case refers to selecting the appropriate case, with the aim to satisfy the author's interests and ability to generalise the results over larger population (Collis & Hussey, 2014). The first step when applying the framework was to select which suppliers, i.e. wholesalers, to evaluate. The focus was to investigate wholesalers on the German market as this was given from Bravida. Initially, a list of potential German wholesalers was obtained from Bravida. In addition, a comprehensive research with the purpose to identify other alternatives was performed. When doing this research our focus was rather broad. As long as a wholesaler was operating within the right business area, it was considered interesting enough for a first contact and to continue to the primary investigation. Finally, a list of a total of ten interesting alternatives was conducted. The search engine used for this was Google.

4.3.2 Primarily Investigations During the primary investigations the author become familiar with the context in which the case should be conducted (Collis & Hussey, 2014). In our case, this was done in conjunction with the pre-study, chapter 4.2.1, where we gained a holistic understanding. However, to find the contact information to relevant contact persons at each of the ten selected companies was difficult. In general, to get an initial contact with the German wholesalers turned out to be a big challenge. Not least since the only way to contact several of them was to send and email to their respective service desk. Also in the cases when the contact information was found, the number of responses was still very poor. To address this problem we started to contact them by phone instead. Even though there were some difficulties due to the differences in language, this turned out to be a much better option. However, due to these communication difficulties, some of the interesting alternatives were eliminated from the list. Of the remaining options, three wholesalers were selected for a continued discussion. Except that these three wholesalers offered products within the right field, i.e. the electrical category, the choice

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was mainly done with regard to these companies’ interest in Bravida. The three German companies have participated anonymously, with respect for both them and for Bravida, and are therefore referred to as Company A, Company B and Company C in the following report.

4.3.3 Data Collection The data collection presents the determination of how, where and when data was collected (Collis & Hussey, 2014). From this step, the gathered information could be used to evaluate the chosen suppliers according to the created framework for supplier selection. Primary data was collected via offer proposals and telephone interviews from each company. To use multiple methods for collecting data is important since that increases the reliability and the possibility to receive both quantitative and qualitative data (Collis & Hussey, 2014). More information about each part follows below.

The Product List A fixed product list containing a total of 20 articles was obtained from Bravida. The purpose of this list was to use it as a tool for comparing the German wholesaler’s price levels, both between each other but also compared to the price levels that Bravida are used to. It other words, it was a way of distinguishing how competitive the German wholesalers were compared to the Swedish in terms of price per unit. Since all obtained data was of quantitative form, it was comparably easy to compare the obtained data with the current levels. All items in the list were standard electrical material, as this was a delimitation made in this study. The product list was sent to each of the three German wholesalers, whereas they were asked to fill in matched articles and reply with a first offer. If they did not have exactly the same product with exactly the same manufacturer in their assortment, they were asked to fill in similar alternatives. Each wholesaler was also well informed about the purpose of the list, i.e. that it would only be used as a first reference and that it would not be determining for a possible future cooperation with Bravida. Interviews Before we booked the meetings for interviews with the German wholesalers, they were first informed that this was done as one part in a Master Thesis, but still on behalf of Bravida. Because we represented Bravida, it was also considered important that the interviews held a professional level. In addition, the interviews were made with great awareness and accuracy. The purpose was to gather information that could be used to perform a reliable evaluation of each supplier, whereas very detailed and specific information was necessary. Telephone interviews were held with each of the three companies. In our perspective, physical meeting or videoconference would probably have been better alternatives, since we believe that would have contributed to a greater clarity and thus also a reduced risk of possible misconceptions. Regarding videoconference, however, not all of the wholesalers had the opportunity to the equipment in-house. From this, and in order to ensure that all three wholesalers were evaluated on the same basis, we considered it more appropriate to use an option was possible for each of the three companies. To keep professional level whiles also ensure that all necessary information was collected, semi-structured interview questions were considered the most appropriate option. More information about semi-structured interview methodology is found in section 4.2.2. Each of the questions asked in the interview represented one sub-criterion in the framework for supplier selection, the interview

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questions are found in appendix VI. In some sub-criteria, we had to formulate additional questions in order to obtain a better basis to evaluate the supplier. In other words, the key and sub-criteria included in the final framework for supplier selection were the basis when formulating our questions to the German wholesalers. Worth mentioning is that this approach was used for all sub-criteria except for those that belongs to the key criterion cost, where we evaluated the supplier's performance based on their response to the product list. This was necessary since otherwise it would not be possible to evaluate each supplier's performance in respectively criteria. As mentioned, the interview questions are found in appendix VI, and in appendix VII it is shown which question that corresponds to which sub-criterion. It could be argued that structured questions would have contributed to more detailed and less unclear answers, however, we considered it important to maintain some degree of flexibility to achieve a more genuine conversation. In order to ensure that no information was misunderstood and to give the companies the opportunity to complete and further develop their answers in some questions, a summary was sent to them for confirmation.

Name Date Time Form

Company A Company B Company C

2017-03-23 2017-04-12 2017-04-19

65 min 49 min 57 min

Telephone Telephone Telephone

Table 4. Overview of case study interviews.

4.3.4 Data Analysis The data analysis is done as a within-case analysis or cross-case analysis, in order to present the analysed phenomena or pattern that has been found in the data collection (Collis & Hussey, 2014). In this case, the data analysis evolves from data that was collected when we applied the framework for supplier selection on the chosen suppliers, i.e. wholesalers. The framework developed in this study has the characteristics of a weighted point methodology. In order to evaluate which supplier or suppliers that are most suitable and best fit to Bravida, therefore, the analysis of the data collected was performed with regard to the framework and the approach of such an methodology. As explained in previous subchapter, 4.3.3, the questions asked to the German wholesalers evolved from the key and sub-criteria included in the final framework for supplier selection. When all information and data was collected, the next step was to analyse all information with regard to the framework. Since each question asked was linked to one specific sub-criterion, it means that all information also was analysed with regard to that specific criterion. Depending on how well one supplier performed in each of the criterion, it was given a score on a scale ranking from one to three. Worth mentioning, again, is that in case of the sub-criteria related to cost, the suppliers were evaluated with regard to their first offer on the material in the product list. The given score represents how well, alternatively, less good the wholesaler is considered to achieve Bravida’s requirements. A score of 1 point indicates a poor performance, 2 indicates a good performance and 3 a very good performance. The choice of applying a scoring system ranging from 1-3 was because we felt that a simple scoring system was most appropriate in case of Bravida. We argue that it would be too complex to use a larger scoring system containing more options, as it then can be difficult to determine what distinguished one score from another. When the answers were too diffuse or too inadequate to score, the suppliers received zero points in that criterion. The scoring system is illustrated in table 5.

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Scoring system

0 points - Diffuse or inadequate performance 1 point - Poor performance, do not meet the requirement 2 points - Good performance, meets the requirement 3 points - Very good performance, meets the requirement very well

Table 5. Scoring system for evaluating supplier performance.

When each of the three wholesalers had been awarded a score in respective sub-criterion, this score was multiplied by the weight of the criterion, as this is the procedure to follow according to the literature (de Boer et al., 2001; Moser, 2007; Tahriri et al., 2008). In those cases when we asked multiple questions with regard to one single sub-criterion, we first calculated the average score and then the mean value was multiplied with the weight, see below:

𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑  𝑝𝑜𝑖𝑛𝑡  𝑜𝑓  𝑠𝑢𝑏𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑎 =  𝑆𝑐𝑜𝑟𝑒  𝑖𝑛  𝑠𝑢𝑏𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛  ×  𝑊𝑒𝑖𝑔ℎ𝑡  𝑜𝑓  𝑠𝑢𝑏𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛 After that, the weighted point for all sub-criteria corresponding to a certain key criterion was summarised:

 !!!!   (𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑  𝑝𝑜𝑖𝑛𝑡  𝑜𝑓  𝑠𝑢𝑏𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑎)!

The summed value was multiplied with the weight of respective key criterion, and then the final score of each wholesaler’s performance was obtained: 𝐹𝑖𝑛𝑎𝑙  𝑠𝑐𝑜𝑟𝑒 =  𝑆𝑢𝑚  𝑜𝑓  𝑤𝑒𝑖𝑔ℎ𝑡𝑒𝑑  𝑝𝑜𝑖𝑛𝑡𝑠  𝑖𝑛  𝑡ℎ𝑒  𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔  𝑠𝑢𝑏𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑎  ×  𝑊𝑒𝑖𝑔ℎ𝑡  𝑜𝑓  𝑘𝑒𝑦  𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛

4.3.5 Writing the Report In accordance to the recommendation provided by Collin & Hussey (2014), the report was written in a structured approach to clearly demonstrate that the analysis and conclusion were linked to the collected data. Tables were used to show the result of individual answers and its impact in the supplier selection framework, in order to prove the link to the data collection and facilitate the reader's understanding.

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4.4 Research Quality To ensure trustworthy results of this master thesis, a high level of validity and reliability are necessary. Validity can be explained as investigating the right thing and reliability refers to the fact that it has been studied in the right way. High reliability does not guarantee high validity while a high validity requires a high reliability. (Blomkvist & Hallin, 2015) How a high validity and reliability was ensured in this thesis, with regard of both internal and external factors, is presented below.

Internal Validity Internal validity refers to the causal relationship between the variables and results, and is also called logical validity. Internal validity is achieved by conducting plausible causal arguments, where the logical reasoning keeps a sufficiently high level to support the research conclusions. (Gibbert et al., 2008) Our research could be criticised with regard to how the criteria were formed. This since the importance of one criterion strongly depends on the other criteria. From this, there might be a risk that the outcome depends on more things than the stated incoming factor. This dilemma was addressed by further defining the each key criterion with underlying sub-criteria, to distinguish the key criteria from each other and create independence. By doing this, we were able to analyse patterns and draw trustworthy conclusions. Additionally, we compared our obtained results to existing literature, in order to identify both similarities and differences. In accordance with Blomkvist & Hallin (2015), the literature reviewed was connected to the subject of problematization, purpose and research question. Additionally, the theory consisted of multiple sources from different contexts, in order to verify the findings with multiple perspectives in mind. Thus, the methodology of theory triangulation was used throughout the research processes in order to verify and increase validity (Gibbert et al., 2008).

Construct Validity Construct validity refers to the process of capture the relevant concepts and thus, how well the research investigates the subject it claims to investigate. Construct validity indicates how well the observation reflects reality and is an important aspect to take in consideration during the data collection. To achieve high construct validity, the thesis should have clear chain of evidence, in order to facilitate a reconstruction from initial research question to final conclusion. Additionally, it is achieved by triangulation, where different data collection sources and strategies are used to study the same phenomena. (Gibbert et al., 2008) In our study, the reader understands the process of how the research questions turned into conclusions by the chain of evidence obtained from the analysis and discussions. The triangulation was not complete since data was collected from articles and interviews but not observations. We argue that observation would be difficult in our case since we investigated the employee's values and pattern of thought related to purchases, and no physical observation could be done in a systematic way. However, multiple other methods were used in order to collect data, such of unstructured-, semi-structured interviews and a questionnaire. The interviews qualitative characteristics may decrease the construct validity since it leaves room for the researcher's own interpretations and influences (Blomkvist & Hallin, 2015). Something we did in order to reduce this was to ask neither non-leading nor value-added questions in the interviews. Additionally, we asked the interviewees to further explain their answers in those cases when we did not fully understand what they meant. Last but not least, we also recorded all interviews. From this, we tried to enhance the construct validity. Additionally, before sending the questionnaire to the target group, a pilot was first performed. The choice to test the questionnaire before it was sent out was to avoid misinterpretation and thus enhance the possibility to capture the aiming concept.

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External Validity External validity, or generalizability as it is also called, refers to which extent the research can be adapted to another settings outside the studied one. Methodologists’ highlights the difference between statistical generalisation and analytical generalisation. In analytical generalisation, the generalisation is made from empirical results on theory, when the statistical generalisation is rather applied to a population. In order to achieve an analytical generalisation, it is recommended to conduct 4-10 cases, either as a nested approach within an organisation or as a cross case between different organisations. (Gibbert et al., 2008) In this thesis, the lack of cases makes it possible to criticise it on its ability to achieve external validity. Its niche focus in combination with the fact that the literature states that both the industry and company have a specific impact on the supplier selection (de Boer et al., 2001), make us question its generalizability. However, we argue that the employees within the installation industry, regardless of company, share similar purchasing opinions. This is emphasised by the industry rigidity and similar supply management, as a result of the few existing Swedish wholesalers. Thus, we argue that the result of criteria and their weights are generalizable to some extent. Despite this, the general research question might not share the same conclusion when it is put in a new setting. Finally, and in accordance with Gibbert et al. (2008), has the sampling choices been explained in order to facilitate a clear rationale in the case study.

Reliability According to Gibbert et al. (2008), a study’s reliability depends on the extent to which the study could be repeated and obtained with the same results. Regardless of who intends to re-conduct the study, another researcher should be able to achieve the same results by following the same steps and repeating the procedure presented in this thesis. Further, Gibber et al. (2008) mean that a high reliability is correlated with the absence of random errors, transparency and replication. For us to achieve reliability of this study, all elements that have contributed to our results are clearly presented in chapter four and the chapter for the research method. The aim of this chapter has been to provide the reader with sufficient information to repeat the study and thus also receive the same results. However, the fact that our results mainly are based on qualitative information obtained from interviews held at Bravida, the reliability of this study and its possibility to be repeated could be questioned (Collis & Hussey, 2015). As the information conducted is influenced by the interviewees’ own experiences and opinions, it might not reflect the greater perspective at Bravida. From this, it might also be difficult to obtain the same results. However, the fact that the interviewees provided similar information, independent of their role and geographical affiliation within the company, is something we argue increase the reliability of this study. The fact that no interviewee that provided information, which was used to build the framework, participated anonymously increases the reliability of this study.

Ethics This study has been performed in accordance with Blomkvist & Hallin (2015) thoughts in ethics, in order to achieve good ethical principles. All interviewees participated on own grounds, while also being careful that no one was injured or resented from the work done. No one has been forced to participate and neither any experiments on people have been performed. We have followed the recommendation that exists regarding how to achieve scientific work and thus also sought a high level of impartiality. To ensure that the interviews held was conducted under ethical circumstances, all interviewees were asked if name and title could be published. At the same time, all participants were also asked if they were okay with us recording the interview.

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5. Empirical Results and Analysis __________________________________________________________________________________ In this chapter, the results of this study are presented and analysed. The chapter is divided with regard to the underlying research questions. First, we present our results that have contributed to the identified criteria important for supplier selection at Bravida. Secondly, to understand which impact each criterion has on the supplier selection, the weight of respective criterion and thus it degree of importance is presented. Thirdly, the results from applying the framework in reality are presented, followed by an analysis including the most important insights gained from this. __________________________________________________________________________________

5.1 Criteria for Supplier Selection in the Installation Industry (RQ1) Our empirical findings have resulted in a framework with the purpose to facilitate the supplier selection. The first main step in the creation of this framework was to understand which criteria that drive the specific choice of supplier for Bravida. With this in mind, we were be able to answer RQ1:

RQ1: What are the supplier criteria when purchasing materials from wholesalers? To answer the first research question and to enable a structured analysis, we have taken support from the framework of supplier selection process conducted by de Boer et al. (2001). Their framework presents a general approach in how to perform a supplier selection by following the four steps; problem definition, formulation of criteria, qualification and final selection. Although each step is different and requires different decisions, the overall aim is still to facilitate the selection of a supplier. With support from this framework, we are able to handle both the purchase complexity and the importance of the criteria. Based on our results and conducted analysis, a framework for supplier selection has been developed. The framework includes the four identified key criteria, as illustrated in figure 8. Finally, this subchapter includes a detailed analysis of how the criteria were found. In view of this framework, the first research question has been answered.

Figure 8. The framework for supplier selection including all criteria.

Quality Cost Delivery Service

•  Product reliability •  User simplicity •  Warranty and claim

policy

Supplier Selection

•  Price •  Logistic price •  Discount

•  On time delivery •  Lead time •  Frequency and

volume

•  Technical support - •  Administrative

support •  Technical product

description •  Language

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5.1.1 Problem Definition - Underlying strategic choices The problem definition is the first step in the framework for supplier selection process conducted by de Boer et al. (2001). This step is strongly connected to the choice of criteria since it more or less is the foundation of the strategic direction of the supplier selection. Focus in this part is to define what expectations the selecting company has on a future supplier (de Boer et al. 2001). This also means that the company must decide what strategic approach they want, and are able, to follow. In order for Bravida to start purchasing from an international wholesaler, we find it determinant to create a new strategy and connect it to the current purchasing strategy. This since we find that it will be difficult for Bravida to only rely on international purchases, an assumption we have made from multiple identified challenges, seen in figure 9.

Figure 9. Overview of internal challenges, as a result of existing supplier- and buyer power.

Figure 9 illustrates some identified challenges towards a shift from national to international purchases at Bravida. Internal challenges include fundamental strategies and purchasing processes that are difficult to change without altering the company’s general business plan. Bravida is a decentralised organisation with a well-established just in time philosophy (Interviewee B). Above all, the rigidity that classifies Bravida, as well as the entire business, is a challenge to changes within the company (Interviewee C). The decentralised organisation structure also enhance the difficulty to change the purchasing process since it requires that everyone are ready and willing to adapt to the new conditions. We find it difficult to create coherence and to make everyone work for the same thing since it requires compromises on the current purchasing processes. The potential compromise is a consequence of the comprehensive solution that the Swedish wholesaler provides. The different aspects included in the comprehensive solution provided by the wholesalers, which is a challenge towards an international strategy, is seen under the supplier power in figure 9. Firstly, the Swedish wholesalers have well-established transportation systems that can deliver a wide range of products with short lead-time. If approaching an international supplier it is most likely that this process will be characterised with longer lead-times and a different product assortment (Interviewee B). Interviewee B highlights this as a challenge and says; “Our current wholesalers have very much material and a wide range of articles in their assortment. This will be a challenge when it comes to using foreign wholesalers” – Interviewee B. The last challenges, volume discounts and reliable partnership, are highly valuable for Bravida. These are also the factors that can create long-term damage on the domestic sourcing strategy if being mistreated. The second part that has an external impact on the choice of sourcing strategy is the buyers, i.e. the customer that order the

•  Purchasing process •  Few storage possibilities •  Just in time philosophy

•  Decentralised organisation •  Individual purchasing

responsibilities •  Preferences

•  Rigidity towards changes

•  Products •  Big assortment •  High quality

•  Transportation of goods •  Short lead time •  Punctuality

•  Services: technical & administrative. •  Volume discounts •  Reliable partnership

Supplier power Internal challenges Buyer power

•  Demand traditional brands •  Prescribed material

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installation project. The buyers have power when it comes to the choice of material, especially since they have an opportunity to prescribe which material or which manufacturer that they want to have (Interviewee B, Interviewee C). Additionally, the buyer prefers traditional brands, which can be a problem for international suppliers if they do not have the same product assortment, and not the Swedish standard brands. From this, we see that the complexity of committing to an international purchasing strategy depends on both internal and external factors. Together these factors create a lock-in effect in the purchasing process. Additionally, the general rigidity towards changes makes it difficult to break the path dependency. Due to these factors, we argue that international purchases will be a process that will start in a small scale, both when it comes to volume and integration, and then increase if everything works out properly. To integrate an international purchasing strategy in small steps is also highlighted in the literature. Trent & Monczka (2002) captures the complexity of a shift from domestic to international purchases, where they mean that the shift most probably is an iterative process occurring in different levels. The five levels are ranked from domestic purchasing to global sourcing, where a higher level indicates that the company is adapting a more and more global sourcing strategy. They further elaborate around the fact that it is important to understand which level that is suitable for the business, before adapting to a higher level then the company are able to manage (Trent & Monczka, 2002). There are many risks of entering a global sourcing strategy (van Weele, 2010) and we find it necessary to be aware of these risks, their impacts and how they should be handled within the company. By being aware of these aspects, we argue that there is a greater possibility to draw the benefits out of the complexity related to international purchases. The importance of a well-developed sourcing strategy has been observed from multiple sources in the literature review (Schuh et al, 2009; van Weele, 2010, Gelderman & van Weele, 2003). Additionally, we found it important that the level of the international sourcing strategy is aligned with the characteristics of the purchased products. Different products have different characteristics when it comes to their strategically impact on the supply management, and should therefore be treated accordingly. Two different tools for purchasing portfolio analysis are presented in the literature review of this study; Kraljic’s matrix (Kraljic, 1983) and the Purchasing Chessboard (Schuh et al., 2009). However, we found the Chessboard to be a too detailed tool as an initial step. Kraljic’s matrix, on the other hand, compares the importance of purchasing to the complexity on the market and from this, we argue that it gives a valuable holistic view to the purchasing strategy. Delimitation in this study is that we have only looked at the possibilities to purchase electrical standard material, and it is only this kind of material we took into consideration when we applied the matrix. When applying this product category in Kraljic’s matrix, we found the most suitable position to be non-critical items, see figure 10 on next page.

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Figure 10. Kraljic’s matrix applied on international purchases of standard material

Taking the characteristics of standard material in mind, we argue that this category belongs to the group non-critical items in the matrix. The complexity on the supply market is low since standard materials are produced and sold in big volumes worldwide. The products are also interchangeable by several products and brands of similar features. We also consider the importance of the purchasing to be low, since standard material is comparably cheap. Additionally, that standard material could be positioned as non-critical items is because of the role of the Swedish wholesalers. As before mentioned, we find it is most reasonable to approach international purchases gradually and this makes it possible to still rely on the safe Swedish market if problems would occur. Standard material is frequently used during installations and stocked by several Swedish wholesalers (Interviewee I). Due to this, Bravida could benefit from the Swedish wholesalers fast delivery and receive a wide range of standards material within a day. The Swedish wholesalers also provide some standard material in their local stores, where the installers at Bravida have the opportunity to pick up needed material directly. In fact, the possibility to still purchase material from the local wholesalers is a necessity according to Interviewee C, otherwise it will be a too big risk with international purchases. Further, Interviewee C says; “Bravida is highly dependent on the opportunity to purchase material from the local wholesalers and, for that reason, we will not be able to end our purchases from them” – Interviewee C. With regard to this, we argue that the complexity on the supply market is considered to be low. However, it is difficult to know how the Swedish wholesalers will react when Bravida changes the volumes purchased from them. There is a risk that they will change their current price levels to Bravida. Another scenario is that the relationships becomes so infected that they do not longer want to cooperate with Bravida. On the other hand, this is something that it is hard to predict, whereas we still argue that standard material should be classified as non-critical items. To summary, all these aspects mentioned in this subchapter must be considered when Bravida changes their current purchasing strategy. The fact that standardised material could be classified as non-critical items are something we find to be an advantage since that means a reduced strategic risk for Bravida. In the following sub-chapters are the additional steps for completing the supplier selection framework to Bravida.

!!!!!

!!!!

Standard material

Low

Low

H

igh

High

Complexity of supply management

Importance of purchasing

Leverage Items Strategic Items

Non-critical Items Bottleneck Items

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5.1.2 Formulation of Key Criteria By analysing our findings conducted in the pre-study, the four key criteria included in the framework was identified. From this, the first part of the completed framework was then obtained. These criteria are considered to be most important when selecting a supplier at Bravida and should thus be given priority. These are:

● Quality ● Cost ● Delivery ● Service

Although different criteria were emphasised by different respondents and to varying degrees, these were still raised repeatedly, which we argue indicates a degree of relevance. The problem definition that emerges is how Bravida should relate to these four criteria and their underlying sub-criteria and how they ultimately affect the selection of a supplier. Quality To ensure a great final result in all of Bravida’s projects, high-product quality is an important factor to the company (Interviewee D; Interviewee A; Interviewee I). As a matter of fact, Interviewee A says; “Quality is a basic requirement that must be met” – Interviewee A. The importance of only working with high quality products is a well-established working methodology that permeates the entire business, from the project leaders that are responsible for the purchase to the installers that work with the products on daily basis. (Interviewee I; Interviewee A) When changing the purchasing approach and thus deviate from the safe and well-known market purchase towards an international alternative, it is necessary that products be of the same high quality as of today. (Interviewee D, Interviewee I) This became clear during the interviews, as all interviewees highlighted quality. With regard to the literature, quality is a well-established supplier selection criterion (Moser, 2007) and according to Kannan (2002) is it also the most valued one. Due to the importance of quality and its strong connection to Bravida’s strategy, we have chosen quality to be key criterion in the supplier selection framework.

Cost The cost of international purchases has been a constantly repeating subject during the interviews held in the pre-study. Each project manager is responsible for his or hers projects (Interviewee C), whereas cost also is something all must consider when purchasing material. The installation industry is characterised by high material costs, which stands for approximately 40-50% of the total cost of the finished installation (Boverket, 2005; Interviewee B). The price for material is a concerning subject. Currently, the wholesalers have a big supply power and the market structure creates an environment where prices constantly tend to increase. (Interviewee A) The supply power is a result of the market being dominated by few well-established wholesalers. The oligopolistic situation that arises enables that they are able to increase the price of material due to the lack of competition. This situation is further aggravated by the market structure, where the wholesalers have tied up the link to the manufacturers, which makes it difficult for Bravida to find appropriate purchasing alternatives if they would like to walk around the wholesalers. (Interviewee C; Interviewee B) Despite the current market situation, Bravida has determined to change this trend and declared that they are working towards a total cost reduction of 10% (Bravida, 2016). To achieve this goal, lower price per unit is an essential part and therefore something Bravida wants to focus on. (Interviewee B; Interviewee A) Due to how

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the national market is structured, focus on international alternatives is an interesting alternative. (Interviewee B) Related to this, Interviewee A says; “The price levels are currently our biggest problem and also the main reason behind the import initiative” – Interviewee A. Due to the importance of cost when choosing an international supplier, the key criterion cost was implemented in our framework.

Delivery That delivery is a crucial aspect at Bravida is evident. Results from the interviews show that this is a major challenge related to international purchases, how it will be managed as well as other aspects that somehow is connected to this key criterion (Interviewee G; Interviewee D; Interviewee A; Interviewee B; Interviewee C; Interviewee I; Interviewee H). Interviewee B means that delivery is one of the most important criteria when selecting a supplier, e.g. wholesaler. This also mean that if a certain supplier is not able to meet Bravida’s high standards and requirements regarding delivery, it is not the most suitable supplier to partner with. Delays in delivery tend to have devastating effects on the project and in addition to this, Interviewee C says; “The anxiety lies in the cost that arises if something goes wrong” – Interviewee C. The importance of on-time delivery further increases due to the limited timeframe that permeates this business (Interviewee B; Interviewee C). In addition, interviewee A also highlights the challenge regarding delivery due to the complexity of transporting big goods. He means that there is a risk that the logistic price per unit for big goods will be too high, as a result of the longer distances and thus the increased price for transportation. The big goods also contribute to a complexity in terms of storage opportunities. Since the opportunity to storage is very limited at Bravida, it is not possible to order larger volumes and have it stored at the site (Interviewee K; Interviewee D; Interviewee H). Interviewee A further stresses that the challenges regarding delivery might reduce the cost savings of buying material from another country. Since delivery is such an important criteria at Bravida and since there currently are no interest in handling this in-house, this is a central aspect when selecting a supplier to the company. Our analysis is the importance of this criterion will be even bigger when applying an international sourcing strategy. From this, delivery was chosen as a key criterion included in our framework.

Service

The last key criterion included in the supplier selection framework is service. With regard to our findings, there is a fairly clear difference between this key criterion compared with the other three key criteria. Unlike the others, service was not an equally obvious and stressed criterion in the interviews. However, this might also depend on the fact that service itself is a criterion that can involve many different factors, and what the definition of service really is and what services that are important might vary depending on who you ask and his or her personal needs. Therefore, it is also difficult to define service in a way that is completely consistent with the reality at Bravida. Interviewee B believes that one of the greatest challenges when purchasing standard material from an international wholesaler is the risk of not having the opportunity to obtain the same high-qualified service level that is provided today. The Swedish wholesalers offer technical support, which the installers and projects managers can turn to if they need any guidance when purchasing material, possible returns and other service recovery (Interviewee B). When you are entering a new phase and when a company should implement a new business strategy, it is important that there are support functions like this and that somebody can answer any questions and concerns. Interviewee C, who says that customer service and customer satisfaction are incredibly important, stresses this. As of today, this is not a problem at Bravida. Interviewee I even claims that such services are not longer needed, as such material that requires technical competence are not ordered anymore. However, how

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these conditions changes when purchasing material from an international wholesaler is difficult to predict and, therefore, it can not be ensured that such services will not be important. On the contrary, the opportunity to technical support may be crucial for how well these products are received internally. Interviewee B further stresses that as of today, employees at Bravida are not used to dealing with international wholesalers and the complexity that may arise. Since this is a risk Bravida is afraid of, Interviewee B believes that this is something that must be investigated before proceeding too far with the process. That service is an important criterion for supplier selection is also highlighted in the literature (Kannan & Tan, 2002; Pal et al., 2013). Given the knowledge obtained from both the pre-study and the literature, service was chosen as the fourth and last key criterion in our model.

5.1.3 Formulation of Sub-Criteria In this subchapter, we will present our additional results in regard to the key criteria identified at Bravida. Each main criteria is followed by three or four additional sub-criteria that further explains the implication of the key criterion and what other aspects that also must be considered in order to fulfil them, see figure 8. Despite that different interviewees highlighted different criteria and that some were more accurate in their responses, we have by our analysis been able to categorise different sub-criteria to the four key criteria. As described in the section of problem definition, our results show that the most important criteria could be categorised into quality, cost, delivery and service. These criteria are further discussed in terms of how they impact Bravida’s choice of supplier and the risk that comes with not fulfilling the criteria. Below follows a more detailed description regarding how the analysis has been performed.

Sub-criteria to Quality Quality is chosen as one key criterion since it is an important criterion at Bravida. As in the pre-study, all of the interviewees in the semi-structured interviews did at some point elaborate around the area and multiple sub-criteria was shown to ensure the high-quality standard. From this, we argue that the key criterion could be verified. According to Interviewee Q high quality on purchased products is a necessity to succeed with international purchases. Even though he believes that it is the hope to receive products at a lower price that drives Bravida towards approaching international purchases, he does not think it will be possible to implement the products if they do not retain the same high quality that they are used to. (Interviewee Q) The requirement for high-quality products was also seen when the interviewees were asked about the most influencing factors in the purchase, where both Interviewee N and Interviewee L mentioned quality as one of the most crucial factors. However, when asked how important quality was compared to the other factors, Interviewee N put quality on a fourth place after price, delivery and user simplicity. He further meant that the user simplicity is closely related to the quality, but if he needed to choose between them, the user simplicity would be more important. Interviewee N further stresses that this has to do with the quality assurance that Bravida performs before the products are put in the purchasing system, Bravis. Regarding Bravis, Interviewee N further says; “When we order from Bravis, we assume that the products we buy are approved and that they maintain an accepted quality”– Interviewee N. Despite this, he still believes that there exist a quality risk, and means that is difficult to know if the products they install would hold. (Interviewee N) Interviewee O agrees with this risk and means that that the quality is a risk when buying abroad since it is not a certainty that the product have the same quality as they would get from Swedish wholesalers. Due to this risk, it is important to purchase an equivalent product from international wholesalers. (Interviewee P)

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Interviewee L has also noticed that there exist a resistance among employees at Bravida to try new products, regardless if the product are bought from a Swedish wholesaler or not, and he means that this has to do with the fact that they feel insecure about the product reliability. Even if the products are quality approved by Bravida, the employees are responsible for their own projects and it is necessary to believe in the products they install. He further means that even if time is put on finding new products, it might still be difficult to get the project leaders to order them. This since they have built up a reliability to the old products and therefore an understanding if they are able to install the products in the building or not. (Interviewee L) To summarise these findings, we have found that most of the interviewees see it as a risk to try new product since it may impact the well-known quality standards. This is seen as a risk even if Bravida only work with quality assured products (Interviewee P; Interviewee N). Therefore, we conclude that it is a criterion that needs to be put into the supplier selection framework as a sub-criterion named product reliability. This sub-criterion indicates a more qualitative approach where the criterion measures how well the product suits the employee’s preferences and established standards. We argue that we can focus on the employee's preferences of quality, instead of the product quality, since all Bravida’s products available in the purchasing system must meet the standard quality requirements that Bravida has. Despite the approved quality standards, there is still a risk that the employees will not buy the products if they see a risk in lower but still approved, quality. Therefore, it is also a risk that it is difficult to actually implement the products. (Interviewee P; Interviewee L; Interviewee O) How well the sub-criterion of product reliability will be fulfilled depends on the employee's perception of quality and how much more than the approved level of quality that needs to be achieved. This is information that is hard to gain by reading the basic product description. Interviewee O agrees with this and says that it is a necessity to have more knowledge about the products to be able to implement international purchases. In order to obtain this knowledge, it is necessary to work with the product in practice and from this get a perception of how it works and which projects is it most suitable. (Interviewee O; Interviewee N; Interviewee M; Interviewee L) To try products to this extent is often difficult and impossible. However, sometimes the suppliers are able to demonstrate the products and explain its function (Interviewee L) When the respondents were asked if and in that case how they are informed about new products available in the system did both Interviewee Q and Interviewee O say that they do not get any notification about such activities. Interviewee M says that such information sometimes is announced on a shared digital platform but that it is difficult to stay updated since Bravida’s product catalogue contains thousands of articles. Further, Interviewee L says; “It is very much learning by doing when it comes to new products” – Interviewee L. Our findings show that the employees feel that information about new products is necessary in order to ensure high product reliability and to feel comfortable in ordering the product when it is available in the purchasing system. The complexity of how quality is measured is also captured in the supplier selection literature, were quality can indicate different things for the operation or the customer (Kannan, 2002). In our research, the installers at Bravida could be seen as customers to Bravida’s purchasing system, since they individually decide which products they want. Due to this, both the empirical result and the literature shows that it is the employee's preferences of quality that is the most controlling parameter, and in this case, that lean towards the need for product reliability. The second sub-criterion that was noticed during the interviews was the product's ability to work as simple as the usual purchased products. That the installers prefer the same quality was noticed in the first sub-criteria of product reliability, but the second sub-criteria have a focus on quality towards working hours. When asked about the most important factors when making a purchase, did multiple

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interviewees answer that the products should be “easy to use” (Interviewee Q; Interviewee O; Interviewee N). From this, we formulated the second sub-criteria to be user simplicity. With regard to this sub-criterion, Interviewee Q said; “User simplicity is important to ensure the solution that is most profitable over time” - Interviewee Q. Additionally, Interviewee Q stated this criterion as the second most important criterion overall when performing purchases. He mean that user simplicity is essential to ensure the alternative that is the most profitable option in terms of time since the additional working hours otherwise would consume the unit cost. Time is money and that the installers feel comfortable in adapting to the new alternative material will affect how easy or difficult a particular product is to install. Interviewee O agrees with this and also point to the fact that it is important to have a good way of working to ease the physical workload and spare the body. To work with easily installed products are also a safety precaution and give less room for errors (Interviewee N). Interviewee O further says that simplicity is important to keep a good working moral since the installers are also used to work in a certain way with specific product characteristics. The third and last sub-criterion under quality is warranty and claim policy. This criterion controls the guarantee provided by the supplier, in order to ensure that the supplier will take responsibility for defects products. The conditions for how these terms are formulated can differ between different companies, products and countries, and is, therefore, important to include in the supplier selection framework. Defect products, or product that does not fulfil the required quality, can have a big negative effect on the business. It can, for example, result in higher costs, delays of the project and cause penalty fees. Bravida has also customers that expect guarantee from them and follows the Swedish standard of five years. Due to this, it is important for Bravida to have several years’ warranty of the products. (Interviewee N; Interviewee M) Interviewee N further states that the guarantee is a way for Bravida to show that they are a trustworthy and serious company. However, it can be difficult to determine whether the product is good enough and you may have to rely on the supplier. In this case, it is a security to buy from well-known suppliers, since then it is easier to know if they have trustworthy and lasting products. (Interviewee N) To get pass the significant risk with guarantees, the length of the supplier’s guarantees will be taken into consideration. Additionally, their solution for returning the product and change of product will be considered. Another important factor that goes under this sub-criterion is the requirements regarding the environment. To be an approved supplier to Bravida there are some environmental requirements that need to be fulfilled (Interviewee L) Environmental certifications is also increasing in the building industry in general and depending on the environmental classification on the building the material must be purchased accordingly. Interviewee M, who works with new production and environmental certified buildings, often finds it difficult to purchase new material since they need to fulfil all requirements. He further means that the cost of time spent on finding new products consume the lower unit price (Interviewee M). To summary, several sub-criteria have been identified in connection to the key criteria of quality. Our findings showed that aspects related to quality are highly important at Bravida, whereas these also must be included in the supplier selection framework adapted to Bravida. The sub-criteria identified has been formulated and included in the framework as:

● Product reliability ● User simplicity ● Warranty and claim policy

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Sub-criteria to Cost Cost is always a determinant factor when purchasing material, whereas it was chosen as a key criterion. It could be argued that companies continuously aim to reduce their spending and increase profitability. There are different ways for companies to cut cost, such as reducing the amount needed, increase efficiency and eliminate waste. However, for Bravida to achieve the goal to reduce total cost by 10%, lower price per unit is an important part. In fact, by analysing multiple factors it could be argued that the product price will have the most significant effect at Bravida. Firstly, the installers are used to working under tight cost deadlines (Interviewee R) and do not purchase more material than they need (Interviewee N). Secondly, the way of handling material is an important part of Bravida’s just-in-time philosophy. As a result of this philosophy, Bravida has no or few storage possibilities (Interviewee L; Interviewee Q; Interviewee O; Interviewee P). Related to this, Interviewee L says; “In some projects there is a possibility of stocking materials at the project area, but that opportunity only exists in very few cases and only in large projects” – Interviewee L. This is an advantage in terms of costs, as it eliminates non-value adding costs for storage and time. Thirdly, the total cost can also be reduced by the installers’ efficiency. However, the efficiency is similar among the installation companies, and not many actions can be done to reduce cost by reducing the installers working hours (Interviewee I). From this analysis, we agree with Bravida and argue that the price of material will have a crucial part to achieve the company’s goal to reduce costs. In the key criterion of cost, we need to take all things that will affect the total cost of a particular purchase in consideration. According to van Weele (2010) is the possibility to receive a better price abroad one of the main reasons to why companies enter a global sourcing strategy. This is also visible in the empirical findings, where Interviewee Q states that he believes that it is the better product prices that have to encourage the interest for international purchases. In the key criterion of cost, we have therefore chosen to take the sub-criteria unit price in consideration. The better price can, for example, be done due to on an inexpensive labour cost or lower unit cost of material. (van Weele, 2010) When the respondents in the semi-structured interviews were asked what factors that are important when making a purchase, most of them mentioned price as one of the most important aspects (Interviewee M; Interviewee L; Interviewee N; Interviewee Q; Interviewee P; Interviewee O; Interviewee R). Interviewee N argued that the price is the most crucial aspect when making purchases and Interviewee P thinks it is the second most important aspect. Despite that the interviewees mentioned the importance of the cost criteria, they also proceed in describing that there are multiple aspects that must be considered when it comes to the price. The price is, for instance, often related to the type of product that is needed and the specific occasion. From this we noticed among several interviewees (Interviewee N; Interviewee L; Interviewee Q; Interviewee O), that the unit price often comes with a trade-off in the key criterion quality. The trade-off between price and quality varies depending on specific purchases. For instance is the price more determent for products that does not have a big impact on the final result, while the quality otherwise has the most determent value (Interviewee L). For items that are similar, employees that manage purchases are supposed to choose the cheapest alternative, regardless of which wholesaler that is the supplier (Interviewee N). Interviewee N elaborated around how the quality and price generally affect each other and means that there is always a balance in how these criteria should be managed in order to make a good purchase. Further, Interviewee M highlights the risk of buying too cheap material and says; “Buying very cheap material can be risky, since we still have to ensure a certain quality on our work” – Interviewee M. This balance is, however, often managed easily since all purchases of standard material are performed with regard to the “Bravida assortment”. The Bravida assortment is the company’s product catalogue, which contains the material that the employees are

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expected to relate to when purchasing materials. The articles in the catalogue is selected to suit Bravida’s business and according to Interviewee N, are the products in the catalogue carefully chosen to balance the trade-off between quality and price. Due to this, the quality is ensured to be on an approved level and the focus can be put on the unit price. (Interviewee N) Another determent factor that impact the product price is when it is put in relation to the product’s user simplicity. Despite the quality insurance that is provided by the “Bravida assortment”, which means that all products have received an approved quality level, there still exist quality differences between products that can make a big impact on how easy or difficult the product is to install. The complexity lies in calculating the total price of the material, where both the time needed to install the material and its unit price is taken into consideration. The time it takes to perform the installation is also correlated to cost. However, this cost is complex to estimate since it has to do with the installers habits and the complexity of the installation (Interviewee Q; Interviewee O; Interviewee N) Interviewee N further states that saved money obtained from a lower unit cost easily can be consumed by working hours, if it results in products with lower that are more difficult to work with. The second sub-criterion that will be taken in consideration in the supplier selection is the price for logistics. This criterion takes all the costs related to the transportation of goods in consideration, from the supplier’s storage to the installations building site. This criterion could, to some extent, be seen as new to Bravida since the Swedish wholesalers include the transportation costs in its unit cost. Due to this, the cost of transportation is often seen as “free” and no consideration needs to be taken to the separate cost for this when proceeding with the purchase. As a result, the employees at Bravida are used to order the alternative with the cheapest unit cost, no matter the order size, frequency or location for delivery. This has worked well for the Swedish wholesalers, which have multiple storages, spread across the country (Interviewee B). The same system will probably not be reasonable with an international wholesaler, as the cost for transportation will increase with the distance. The price for the logistics will have a determinant role on the total cost of a purchase, and thus a high impact on the supplier selection. Therefore, we have chosen to include the sub-criteria logistic price in the supplier selection framework. During the semi-structured interviews, none of the interviewees mentioned the logistic cost as a problem, which is different to the sub-criteria unit price, where the interviewees often expressed their concern of its trade-off towards quality. We argue that this depends on the current market situation, where the logistic price is not something they need to take in consideration. Despite the lack of empirical response within the subject, we argue that we need to take the risk of additional surrounding cost in consideration when analysing the logistic price. Kotabe & Murray (2004) express the increased risk of logistics when approaching worldwide sourcing, as surrounding cost may occur when the lead-time and risk for delays increase. This is also seen in the literature, where Narasimhan et al. (2001) and Petroni & Braglia (2000b) argue that it is common with a trade-off between the criteria of cost and delivery. On-time delivery is an important factor for Bravida and we will analyse it further under the key criteria of delivery. However, we would like to point out that compromises on the logistic price that results in poor delivery reliability can have big consequences on the installers efficiency and predicted time slots, and thus affect the total cost negatively. (Interviewee O; Interviewee P; Interviewee Q) The third sub-criterion that affects the cost is discounts. In contrary to the unit price and the logistic price, is discounting a factor that reduces the total cost. Discounts have an important role in the installation industry, where the companies can benefit from volume discounts (Botrygg, 2015; SOU, 2015:113) Regarding the criteria of cost, Moser (2007) highlights that it is important to take other

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aspects than the total cost into consideration. He means that one important additional aspect to consider is the ability to align the pricing strategy and create cost reductions by improving the process and production. (Moser, 2007) In this case, the discounts come with the promise of a high order volume, something that we find as a trigger for a developed partnership. Bravida would benefit from a deepened partnership since that would increase the possibility to create a common strategic alignment, where both the buyer and supplier contribute to future cost reductions. Further, we find that this is of importance when handling worldwide sourcing, due to the higher risks of new suppliers and products. The importance of this has been discussed within the literature, where Trent & Monczka (2003) predicts that more companies will move up in the levels, from international purchases towards global sourcing, to create efficiencies by being more strategically aligned. To summarise, the empirical findings show that cost is an important key criterion. Depending on the most important influencers, the key criterion of cost has been divided into three sub-criteria. The findings also showed that the sub-criteria are big influencers on other independent criteria since other criteria can result in a higher total cost if they are not well implemented. To cover a wide spectrum of potential cost and its subsequent risks, the following sub-criteria have been established in the supplier selection framework:

● Unit price ● Logistics price ● Discount

Sub-criteria to Delivery

The delivery solution has big impact on the purchase decision at Bravida. Further, it is important to highlight that the key criterion of delivery is difficult to define precisely. This since our analysis indicates that delivery is the collective name for a series of activities and aspects related to the comprehensive key criteria of delivery. To the question; “What factors are important when you make a purchase?”, did several of the respondents highlights delivery as one of the most important criterion (Interviewee M; Interviewee L; Interviewee N; Interviewee O. Interviewee P). The fact that delivery is an important criterion is also mentioned in the literature and Moser (2007) highlights delivery as one of the most important criteria related to supplier selection. Even Dulmin & Mininno (2003), Pal et al. (2013) and Petroni & Braglia (2000b) emphasises delivery as one out of three key criteria to prioritise when selecting the supplier to partner with. Thus, it is important to understand what contributes to a good delivery standard at Bravida. One factor that is important when it comes to deliveries is on-time delivery; in order know at what exact time the delivery should arrive (Interviewee O; Interviewee N; Interviewee L). On-time delivery was one of the most frequently mentioned attributes related to delivery and both Interviewee P and Interviewee O stressed that it is the most important factor related to purchases. Further, Interviewee O says; “Knowing what time I get the material is incredibly important when purchasing material” – Interviewee O. Delays results in inefficiencies, waste of resources and valuable time in the already limited timeframe and the work becomes negatively affected. (Interviewee N; Interviewee P; Interviewee K) In addition, Interviewee M says; “If there is a delay, there is a risk that we can not secure our delivery to the customer, which is not preferable because it can result in forfeit” – Interviewee M. In other words, a poor delivery performance could result in increased cost, which enhances the importance of an accurate delivery time (Interviewee M; Interviewee L). The importance of on-time deliveries is also seen in the literature; since on-time deliveries enables a continuous flow of supply (Moser, 2007). Interruptions in this continuity create delays, which in turn can have

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devastating secondary effects. According to our results, this is often the case when delays occur at Bravida. Despite that Interviewee N says that it often is possible to re-structure the work, the majority of the respondents’ answers indicated that it creates major problems and that it usually becomes very costly. Although this opportunity may exist, our results demonstrate that delays are not to be preferred in the already tight timeframe in projects at Bravida. Another important aspect to consider is the lead-time, and thus the time it takes from order to delivery (Interviewee O; Interviewee P; Interviewee L). The high delivery reliability received from the Swedish wholesalers has brought a certain convenience among the employees at Bravida. The fact that wholesalers are able to deliver material from one day to another is very valuable, while it has reduced the need for thorough planning of purchases. As of today, there is an economic incentive to order materials with two days notice. Due to this, Interviewee O and N states that they strive to make orders two days in advance, but that one to two days, after all, is the most common. Further, they both stresses that they are aware of that this is something that Bravida is accustomed to. In addition, there are currently no incentives to plan the purchases more than two days ahead. (Interviewee O) The short lead-time is something that the employees are used to and might become a problem in respect to international purchases (Interviewee N; Interviewee L) However, interviewee L mentions that longer lead-times has worked before, when the wholesalers had fewer delivery days. By comparing the empirical results with the literature is it possible to see a clear link between them. The literature emphasises delivery, which for example includes lead-time and on-time reliability, as one important criterion in supplier selection (Dulmin & Mininno, 2003; Pal et al, 2013; van Weele, 2010). This matches the attitude at Bravida. We argue that one reason to why delivery is so important at Bravida is because of the high level of today’s solution and the already tight timeframe available in different projects. This in combination with the limited opportunity to store additional material on site contributes to the high importance of delivery and lays the foundation to the well-established just in time philosophy. Interviewee P says that in those projects when there is an opportunity to store material it is also possible to plan the work and ordering of material further ahead. Interviewee O agrees and says that stocking of material would be an advantage considering international purchases. On the other hand, he also mentioned that it would be too costly for the company. As of today, Bravida’s just in time approach works, but there is no doubt that it will be a challenge for a transition towards international purchases. The last sub-criterion that has been included in the framework is frequency and volume. According to Monczka et al. (2005), it is in supplier selection important to consider all criteria that somehow affect how suitable a supplier is to partner with. This includes both comprehensive key criteria as well as additional sub-criteria. Having this in mind we argue that the sub-criterion of frequency and volume must be included in the framework since eventual limits in this aspect will impact on how well a certain supplier is considered to match Bravida. To summary, from our findings delivery was identified as a key criterion when selecting a supplier to Bravida. With respect to the results obtained from the conducted interviews, the key criterion of delivery consists of several sub-criteria that also require consideration in order to perform a careful selection of the supplier. From this, the sub-criteria that has been included in the framework are:

● On-time delivery ● Lead time ● Frequency and volume

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Sub-criteria to Service

Based on our findings, it is not difficult to conclude that employees at Bravida are accustomed to high qualitative service within purchases. Further, Interviewee L says “We have received the service provided by the wholesalers and thus, also adapted to it as it has evolved” - Interviewee L. Despite the tradition of receiving high service it was still complicated to identify the corresponding sub-criteria. In fact, the most frequently mentioned aspects related to service could be categorised within the key criteria of delivery, which is included as a separate criterion in the developed framework. (Interviewee L; Interviewee Q; Interviewee M; Interviewee N; Interviewee O). However, there was still a distinction related to some of the sub-criteria related to services, which is further analysed below. The two first sub-criteria are technical support and administrative support. Regarding technical support, several of the interviewees actually said that this service is not used very often (Interviewee O; Interviewee P; Interviewee Q). Further, Interviewee P said; “Technical support is available if you need it, but I rarely use it. If you need help, you usually ask the manufacturer and not the wholesaler” - Interviewee P. One reason to why this kind of service is rarely used depends on that the technical knowledge is available internally at Bravida (Interviewee L). In fact, it is argued that the national wholesalers do not have the technical competence in-house, instead, they turn to the supplier directly for this type of support. (Interviewee L; Interviewee N). However, interviewee M says that it is important that the wholesaler provide the contact information to the supplier, since they currently do not have the time to establish this relation themselves. Further, he means that it might be easier to receive technical support from the wholesalers, rather than using the internal competence. This since the in-house specialists’ usually has tight time-schedules. Additionally, the wholesalers are very willing to provide the information needed as can increase their sales. (Interviewee M) The second sub-criterion, the administrative support, can be useful when having questions regarding order status or other administrative issues (Interviewee Q). Although our analysis indicate that technical and administrative support are less important sub-criteria, as these services are rarely used, we still considered them as important criteria when choosing a supplier. Bravida does not have any previous knowledge of purchasing material from an international wholesaler and therefore they do not know how it will work in practice. If these support functions do not exist when they are needed, it could have devastating effects on the projects. In addition, since the employees at Bravida are used to high service level and products they are familiar with and which they have knowledge of, we argue that it could be the reason to why there is a limited need for these support functions today. When purchasing material from an international wholesaler, the traditional material may be replaced by similar alternatives and new questions may arise. Therefore, we argue that both technical support and administrative support are important sub-criteria to include in the framework. The third sub-criterion included in the model is technical product description. A technical product description contains detailed information about the specific product and is incredibly important for the user. (Interviewee C) When purchasing material from the national wholesalers, this information is always included. Since Bravida has not purchased material from an international wholesaler before, they do not know the standard of technical product descriptions outside the national boundary. That a potential international partner is able to provide this information is necessary for investing in international purchases says Interviewee C, otherwise, it will be a too big risk.

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The fourth and last sub-criterion, language, was created with respect to all the mentioned sub-criteria. To receive a suitable support it is required it is communicated in a language that the employees at Bravida understand. Focus in this study is German wholesalers, but to obtain technical product descriptions in German will not be possible alternative. (Interviewee C) In fact, Interviewee N believes that this information must be given in Swedish. According to Bedey et al. (2008) and Monczka et al. (2005) it is a risk with language differences when applying an international sourcing strategy. Employees at Bravida are not used to other than Swedish in their daily work, which is a challenge towards applying an international purchasing strategy. (Interviewee B; Interviewee R; Interviewee M) However, Interviewee N states this would not be a too big problem since they rarely communicate directly with the wholesaler. On the other hand, it is important that you can communicate with the wholesaler if something goes wrong (Interviewee Q). Due to the fact that employees at Bravida are not used to languages other the Swedish and, in some cases, English, we find that it will be difficult to collaborate with a wholesaler that cannot provide information or communicate in these languages. Taken this into consideration, language was considered to be an important criterion to include in the supplier selection framework. Below follows a summary of the sub-criteria that have been included in connection to the key criterion service in the framework for supplier selection. We argue that these aspects are important to consider when selecting an international supplier to suit Bravida. Not least when changing the strategy and applying an international sourcing strategy. The four sub-criteria are:

• Technical support • Administrative support • Technical product description • Language

5.1.4 Qualification The qualification, or pre-qualification, is the third step in the supplier selection framework developed by de Boer et al. (2001). The primarily purpose with this step is to reduce the number of potential suppliers to a smaller group, only including the most attractive suppliers that the company want to initiate negotiations with. (O’Brien, 2009) In other words, this step is about sorting out the best and most suitable suppliers. (de Boer et al., 2001) By doing this, the company will spare both time and money by not proceeds on further and more depend ranking analysis. Applying this step on Bravida means reducing the number of potential wholesalers to a group including those alternatives that Bravida wants to keep in the process and continue the discussion with. Before initiating a contract with a new supplier i.e. wholesaler, Bravida has a certain number of requirements a wholesaler shall meet and which cannot be negotiated. Examples of such requirements are financial stability, legal standards and other requirements. In reality, it is, therefore, natural to eliminate those alternatives that fail to achieve these basic standards in this stage. However, since we have chosen to not consider these shall requirements in our study, any elimination has not been performed. Besides this and with regard to the situation that Bravida currently face, where the company is in the beginning of a switch towards international purchases, they have a rather curious and broad interest in the overall German market. The situation that occurs if fulfilling this switch will include game-changing strategies, where the conditions arising are completely new for Bravida. From this, we find that Bravida’s focus of potential suppliers should be kept relatively widespread. Therefore, our result in the pre-qualification is that all German wholesalers that provide standard

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material within the electrical category are considered interesting enough to keep in the process at this stage in the transformation. In other words, our analysis is that Bravida at this stage do not have any structured or clear framework that can be used as a tool to sort which wholesalers that are interesting or not. Not as long as the potential wholesaler in question provides standard electricity material. It means that there is no need to either initiate or implement a structured qualification process in order to sort out any non-qualified options. However, in the case of Bravida, it is possible to rank supplier with regard to company specific preferences and opinions for which suppliers that or more or less appropriate to partner with. The activity to rank suppliers with regard to their performance is according to de Boer et al. (2001) performed in the last and fourth step in the supplier selection process that is the final selection.

5.2 Weighting of Criteria for Supplier Selection (RQ2) This chapter aims to answer the second research question. After identifying the most important criteria connected to supplier selection at Bravida, we had to understand how the four key criteria and additional sub-criteria impacts the selection and thus, how they should be weighted. The weight of a criterion indicates its degree of importance in the supplier selection and impacts the final score of a certain supplier. By defining these weights, we were able to answer RQ2:

RQ2: How are different criteria weighted? To answer the second research question and determine the weights of the different criteria that affect the supplier selection, consideration was given to the employees’ opinions. As earlier described, our analysis have been performed with respect to the process for supplier selection developed by de Boer et al. (2001) and this part covers the fourth stage, the final selection. Based on our results we were able address weights to each criterion and thus complete the framework for supplier selection, see figure 11. The framework includes all identified criteria and their respectively weight. This chapter presents our performed analysis to be able to state the weight of the criteria. In view of this framework, the second research question has been answered.

Figure 11. The completed framework for supplier selection.

Quality 31% Cost 21% Delivery 36% Service 12%

•  Product reliability - 34% •  User simplicity - 34% •  Warranty and claim

policy - 32%

Supplier Selection

•  Price - 33% •  Logistic price - 33% •  Discount - 33%

•  On time delivery - 31% •  Lead time - 41% •  Frequency and

volume - 28%

•  Technical support - 24% •  Administrative

support - 25% •  Technical product

description - 22% •  Language - 28%

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5.2.1 Method for Supplier Selection The first thing to take into consideration to facilitate the final supplier selection is to choose an appropriate selection method. According to Petroni & Bragila (2000b), the choice of method for supplier selection must be done with great awareness. In addition, it must also be adapted with regard to the condition that currently characterises the specific company (Tahriri et al., 2008). With regard to the process for supplier selection developed by de Boer et al. (2001), this means that the method chosen must evolve with respect to the identified key criteria. To use support from an already established method for supplier selection was to create an appropriate final supplier selection framework for Bravida. The previously identified criteria have laid the foundation for the framework and thus made it possible to create a supplier selection that is specifically adapted to Bravida. As the identified key criteria are both quantitative and qualitative, it was considered crucial to create a framework that supports both dimensions. That it is important to not only consider quantitative criteria is emphasised by both Moser (2007) and Ghodsypour & O’Brien (1996), who states that the selection of the supplier also should evaluate qualitative aspects. The importance of qualitative aspects is further enhanced by the fact that Bravida operates in a conservative and rigid industry, which in turn also affects how changes are received internally. This further means that a successful supplier selection is largely dependent on how it is received by the project managers and leading installers, not least since these are responsible for purchases directly to projects. From this, it is essential to include their opinion in the process in order to make the selection successful. To summarise these findings, we find that it is necessary to take both quantitative and qualitative aspects into account to achieve a strategic supplier selection for Bravida. With respect to the argument and necessity of combining both quantitative and qualitative criteria, we considered that it was not suitable to use neither mathematical programming models nor categorical models. This since mathematical programming models only consider quantitative data and categorical models primarily focuses on qualitative data (de Boer et al., 2001; Pal et al., 2013). Also, a cost system approach was not considered to be suitable, since our results from the interviews showed that cost factors are not the solely factors important in a supplier selection for Bravida. On this basis and with respect to our results of criteria, our framework has been developed is a modified approach of weighted-point methodology. Weighted-point methodologies support both qualitative and quantitative criteria in a combined single system (Monczka et al., 2005) and thus, considered to be the most suitable option for supplier selection for Bravida. Apart from the fact that a weighting point model was considered as the most obvious choice of method based the identified key criteria, the choice of method was also supported by its advantages. According to Monczka et al. (2005), is the weighting point methodology a flexible and comparable cheap model to apply. However, due to the complexity of existing weighted-point methodologies in combination with the objective to develop a model adapted for Bravida, a comparably more simplified method was developed. This in order to ensure a model that is truly adapted with regard to the complexity that the company face, and thus contribute to a more useful tool to Bravida. To summarise our findings, it was found that a weighted point methodology was the most reasonable method of supplier selection. This choice was based on the identified criteria and how they could be evaluated in the most appropriate way. The next step was to address weights to the criteria, which follows in the next section, 5.2.2.

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5.2.2 Weighting of Key Criteria In this subchapter, we will present the calculated weights of the key criteria. The method for achieving these results is seen in chapter 4.2.4. Table 5 illustrates the results from the pairwise comparison. A more detailed overview of the results from each comparison is found in appendix IV. The winning criterion is, in table 5, illustrated with bold text whereas the number indicates how much more important it is to the compared criterion. The number of importance is given by the mean of all respondents’ answers.

Table 6. Pairwise comparison of key criteria.

By examining the results shown in table 6, it is easy to distinguish that the key criterion delivery always has proved to be the most important criterion in comparison to the other alternative. At the same time, the results also indicate that the key criterion service never turned out to be the most important criterion in the pairwise comparison. Already at this stage and without any deeper analysis, our results indicate that delivery is the most important key criterion and that service is the least important criterion when selecting a supplier to Bravida. However, in order to identify their exact degree of importance, and thus the weights of all the key criteria, additional calculations is necessary. To be able to use these scores properly when calculating the exact weights, the initial results obtained from the pairwise comparison had to be modified in a way that gave points to the winning and losing criteria. As explained in section 4.2.4, the winning criterion was added by one point whereas the losing criterion was given the score of the inverse of the winning criteria. The results obtained after these adjustments are seen in table 7.

Table 7. Scoring system of pairwise comparison of key criteria.

The vertical and horizontal axis in table 7 states the four key criteria. The vertical axis illustrates the criteria that were fixed in the comparison, written in bold text. The horizontal axis illustrates the

5 4 3 2 1 Criteria 0 Criteria 1 2 3 4 5

Quality - Service

Quality - Delivery

Quality - Price

Delivery - Price

Service - Price

Service - Delivery

0.2

0.8

1.7

1.3

0.8

0.8

CRITERIA Quality Cost Delivery Service SUM Weight

Quality 1,0 1,8 0,8 2,3 5,9 31%

Cost 0,6 1,0 0,6 1,8 3,9 21%

Delivery 1,2 1,8 1,0 2,7 6,7 36%

Service 0,4 0,6 0,4 1,0 2,4 12%

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criteria that the fixed criterion was compared to. Thus, the comparison was made along the horizontal axis and the results are illustrated in table 7. The grey diagonal area represents the outcome when one criterion is compared to itself, whereupon the score of 1 indicates 100% similarity in importance. The weight of each criterion was obtained by comparing it sum to the total sum, and thus the weight reflects its share of importance in comparison the other criteria. The final weights for each key criterion were added into the framework for supplier selection, seen in figure 12.

Figure 12. Weights of the key criteria.

As illustrated in figure 12 above, our results show that delivery is the most important key criterion when selecting a supplier to Bravida. We argue that this can be explained by how the company operates and their current business strategy, which demands high delivery reliability. We further find that the delivery solution provided by the national wholesalers more or less has become the foundation for Bravida’s way of working. The high service level related to the delivery means that Bravida can keep its just-in-time philosophy and purchasing process, where materials can be ordered continuously without major planning ahead. If the delivery processes would change and become less reliable, we argue that Bravida would need to have the opportunity for in-house storage of material, as a security and to reduce the risk of delays. Stocking of material is, however, against the company’s strategy, which again demonstrates how important well-functional delivery solution is for Bravida. The fact that the key criterion of quality was weighted as the second most important criterion is also something we think is reasonable. High quality is crucial to enable high value to the customers, and as a natural consequence, is it required that the products maintain a good quality. The third most important criterion is cost. That cost proved to be less important than delivery and quality is something we find very interesting, as there is a great focus on cost from a strategic perspective. From the strategic perspective are the high price levels on the national market one of the main reasons behind the interest in international sourcing. However, the lower importance does not mean that it is not important, instead it rather indicates that delivery and quality is more important in comparison. The literature highlight the fact that the selection of supplier generally requires trade-offs between different criteria and other important aspects (Petroni & Braglia, 2000a), and it is not uncommon that the buying company is forced to trade-offs in delivery, quality and cost (Narasimhan et al., 2001; Petroni & Braglia, 2000b). This is further discussed by Dulmin & Mininno (2003), who also argue that this is especially common in companies that have a just-in-time philosophy. Although the current high price levels are the main reason for wanting to change the purchasing strategy at Bravida, our results indicate that it will be able to implement such a strategy if it results in a too big trade-off in terms of delivery and quality. Out of all of the four key criteria, our results showed that service is the least important criterion, whereupon it has the lowest weight in the framework for supplier selection. That service was

Quality 31% Cost 21% Delivery 36% Service 12%

Supplier Selection

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considered as a less important criterion was expected since this was not a commonly mentioned aspect during the interviews held. However, how the need for a support function and other services will change when purchasing material on an international market is difficult to predict, whereas it still is considered as an important criterion to include in the framework for supplier selection. To summarise, we find the findings from the questionnaire to be well aligned with the information conducted in the interviews as well as the knowledge gained from the literature. However, that cost turned out to be a less important criterion could seem contradictory since the goal at Bravida is to purchase material to the lowest possible price. That cost was given a lower weight compared to delivery and quality could be explained by the fact that it is difficult to measure the value of these two criteria. If a supplier is not able to meet Bravida’s requirement in terms of delivery and quality, it could have devastating following effects on the projects. This, in turn, could result in a bigger total cost then the cost for material, as well as it also is difficult to predict. From this, we argue that the high weights in delivery and quality depends on the risk of unexpected costs that could occur if the suppliers do not meet Bravida’s requirements.

5.2.3 Weighting of Sub-Criteria This section presents the weights to all sub-criteria. Each key criterion includes three or four sub-criteria and together their weights contribute to 100% out of their respectively key criterion. The mean values and weights are illustrated in table 7 below and the method for calculating them is seen in section 4.2.5. As a small recap, the mean value indicates the importance of the sub-criteria on a scale ranging from 1 to 10, where 1 means that it is not important and 10 indicates that it is very important.

Table 8. The corresponding mean-value and weight to each sub-criterion.

Sub-criteria Mean Weight

Quality

Product Reliability 8.4 34%

User simplicity 8.3 34%

Warranty and claim policy 7.9 32%

Cost

Price 7.7 33%

Logistic price - 33%

Discounts 7.2 33%

Delivery

On-time delivery 6.0 31%

Lead-time 8.1 41%

Frequency and volume 5.6 28%

Service

Technical support 7.1 24%

Administrative support 7.5 25%

Technical product description 6.5 22%

Language 8.4 28%

Results of sub-criteria related to cost

Results of sub-criteria related to delivery

Results of sub-criteria related to service

Results of sub-criteria related to quality

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As illustrated in table 8, our results indicate that most of the sub-criteria received comparable high mean, which indicates their importance in the supplier selection, This can be a result of our careful selection of sub-criteria, where we only included the criteria that were considered to impact the supplier selection.

Quality With regard to our results related to quality, it is shown that the most, and almost equally, important sub-criteria are product reliability and user simplicity. We find this as a natural outcome since these sub-criteria are considered to be highly valuable to several employees. In addition, we argue that these criteria more or less also are included in Bravida’s strategy since high product reliability and user simplicity lays a foundation to achieving a high quality of the installation. Additionally, if these sub-criteria are not fulfilled, there is a great risk that it will affect the project negatively, both when it comes to additional costs and required time. With this in mind, it is not surprising that these sub-criteria are among the three highest-valued sub-criteria in the final framework. The sub-criteria of warranty and claim policy has received a lower, but still relatively high mean values compared to other sub-criteria. Something that can seem contradictory when it comes to user simplicity is the fact that Bravida’s current product assortment contains a lot of different, but still, similar products. In other words, in some cases when the employees are to purchase a product, there are several different alternatives available for similar products. From this, we argue that the installers are used to work with different kinds of products and that they are able to adjust their work accordingly. Due to this, it could be argued that user simplicity should not have been given such a high weight. However, despite the installers’ high knowledge and ability to customise material to the projects, there is still general ways of handling the material that might change when purchasing material from an international supplier. Due to this, in combination with the fact that several interviewees highlighted the importance of user simplicity, we find that it needs to be taken into great consideration when selecting a supplier.

Cost When calculating the weights to the sub-criteria related to cost, we had to use a different approach, which is further explained in section 4.2.5. As seen in table 8, the sub-criterion of logistic price was not assigned any question in the questionnaire. This choice was made due to the fact that employees at Bravida are not used to pay for the transportation separately, as it is included in the unit price. From this, we argue that it would be difficult for the respondents to imagine the impact that this would have on the purchase. Regarding the sub-criteria unit price and discounts, the mean values was calculated to 7.7 respectively 7.2. However, an interesting observation is seen in table 9, where the mean value is presented separately depending on the employees working assignment. These results show that the importance of cost increase with the employee's grade of responsibility in accordance to the project's general cost. Due to this, we find that this result depends on how important the purchase is in general in their specific assignment. The deviation of importance in the sub-criteria makes it difficult to enhance the credibility of the weights. In addition, the lack of data for the logistic price further increases the complexity of achieving credible weights.

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Table 9. The mean value of the sub-criteria related to cost distributed on work assignment.

Another complexity of giving weights to the sub-criteria related to cost lies in our lack of knowledge regarding the price for the different sub-criteria. For instance, we do not know the cost of each criterion nor how they will affect the total price. To find answers to their importance by asking respondents that compare the international market to the domestic one will also be misleading. This since an international supplier would have different possibilities when it comes to the price. For example, it is possible that the unit price will be lower but the logistic price will most probably increase. Additionally, we have no knowledge of how the discount system works on a international market and how it will affect the unit price. Neither do we know how the prices could shift in the future and how these possibilities should influence the weights. Due to this complexity, we choose to assign all the sub-criteria with the same weight. This indicates that they are equally important and are of equal importance for the total price.

Delivery The weights for the sub-criteria of delivery were established by converting the time-spans into numbers, in order to get an objective view of the importance of each sub-criterion. From this, we were able to address the weights of each sub-criterion. However, the answers before converting them into numbers are given in table 10.

On time delivery Mean

Punctuality 3 h span

Lead time Mean Dependency of purchasing with one day delivery 6/10 dependency Possibility to improve the long-term planning time 6/10 possibility Share of one-day deliveries that could be planned 40-60 % Possible long-term planning time 3-4 days Reasonable lead time from wholesaler 2 days

Volume and frequency Mean Deliveries per week 3/week

Table 10. Additional results related to the key criterion of delivery.

Project leader 8,2

Leading installer 7,4

Installer 5,8

Project leader 7,4

Leading installer 7,2

Installer 6,3

Logistic price -

7,2Discounts

Results of subcriteria related to cost

Price 7,7

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Our results show that the sub-criterion of lead-time was given the highest weight, with a mean value of 8.1. We find that the high value is a natural consequence of the current purchasing process, where delivery with short lead-time more or less is a matter of course. In the question regarding how dependent the employees are to one-day deliveries, our results show a mean value of 6, out of 10 in dependency, see table 10. However, the results also indicate that there is a comparably big opportunity to improve the long-term planning since the mean value is calculated to a value of 6 on the scale ranging from 1 to 10. In addition, when asking how many of the previous one-day deliveries that could have been performed further ahead, the majority of the respondents answered that 40-60% of the orders could have been done at an earlier stage. Further, our results show that for material that could be purchased with a bigger time-span could be ordered 3-4 days in advance. Despite this, the respondent found that it is reasonable to demand a 2-day delivery time for wholesalers. We find this to be a reasonable time since the data collected show that half of the material could be bought 4 days before, and the other half on 1 day before, which gives a mean time for all deliveries to be 2 days. Due to this, we can see that it is highly valuable for the employees to have short lead times, which consequently gives a high weight in the supplier selection framework. Additionally, the result shows us that compromises on the purchasing processes can be done since half of the purchases can be ordered with longer time-spans. Further, this demonstrates that international purchases with longer lead times are a possibility. On-time delivery and frequency and volume, with a mean of respectively 6.0 and 5.6, is the other two sub-criteria under delivery in the supplier selection framework. For the sub-criteria on-time delivery, we found that the delivery could be 3 hours from the stated delivery time without negative effects on the projects. The Swedish wholesalers are extremely accurate in their deliveries (Interviewee L; Interviewee M), and the indication of a possible 3 hours time-span show that on-time delivery does not need to be equally precisely when moving towards international purchases, which consequently gives a lower weight for the sub-criterion of on-time delivery. The lower importance of volume is analysed in the same manner, where they could get deliveries 5 times per week from the Swedish wholesalers but only need 3 times, which indicates a lower grade of importance.

Service In the interviews held, service functions were not considered to be the most important criterion, which is also indicated in the lower weight of the key criterion service. Despite this, our results show that the sub-criteria related to service, which is technical support, administrative support and product descriptions, have a mean value between 6.5 to 7.5. These are reasonable high values, which we consider further strengthens our earlier argument that it is important to keep service as a key criterion in the supplier selection framework. The language criterion distinguishes itself among the other sub-criteria since it is a criterion that makes it possible to satisfy the other sub-criteria. In order to make the international switch to successful, Bravida and the potential wholesaler must be able to be communicated in an understandable way. This, in combination with the risk associated with lack of functional communications (Interviewee B; Interviewee R; Bedey et al., 2008; Monczka et al., 2005), makes us believe that the higher weight is reasonable.

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5.3 Application of Supplier Selection Method In this section follows the results and analysis from when the developed framework was applied on three German wholesalers. Our main purpose of applying the framework in reality was to see what knowledge we could obtain from it as well as getting a greater understanding of what kind of data and information that is needed for the framework to be as useful as possible. In table 11 following below, is each of the three wholesalers score by their performance in each sub-criterion. A detailed presentation of how the scores were calculated is found in section 4.3.4.

Table 11. The German wholesalers’ scores in each sub-criteria and their final result.

By examining the values illustrated in table 11, it is seen that company B has obtained the highest final score in the supplier evaluation. In other words, if only looking at the final scores, our analysis shows that company B is the most suitable supplier for Bravida. On the other hand, it is also seen that there is not much that differs between the three companies, neither regarding the final score nor the scores in respective sub-criteria. To give a short recap, the wholesaler’s respective score in each criterion was distributed with respect to the response received during the interviews and the data collected from the offered product lists. Each question during the interview corresponded to one sub-criterion. Depending on their response they were given a score, ranging from 0 to 3, that indicates how well or not well their performance was considered to be. The scores illustrated in table 11 are the mean values of all scores given to each sub-criterion. Each wholesaler’s score in respective question, and thus sub-criterion, is seen in appendix VII. However, something worth mentioning is that the scoring system supports a score of 0 points, which was given to non-existent or too inadequate answers. This could seem misleading since in cases where a company has answered a specific question but only received 1 point, that indicates a poor performance, they still receive a higher final score than those companies that did not answer at all and

4455

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77

88

99

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1111

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1414

1515

1616

1717

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1919

2020

21212222

BB CC DD EE FF GG HH II JJ

A B C

Product reliability 34% 1,75 2 1,75

User simplicity 34% 1 2 2

Warranty and claim policy 32% 2 2 2

Price 33% 1 1 1

Logistic Price 33% 0 0 0

Discounts 33% 2,5 2,5 2,5

On-time delivery 31% 1 1 1

Lead-time 41% 2 2 2

Frequency and volume 28% 2,3 2,3 2,3

Technical support 24% 2 2 2

Administrative support 25% 1 1,5 1

Technical product description 22% 1,5 1,5 1,5

Language 28% 2 2 21,57 1,71 1,67FINAL SCORE

Cos

t

21%

Del

iver

y

36%

Serv

ice

12%

Weight of key criterion

Sub-criterionWeight of sub-

criterion

Company

Qua

lity

31%

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thus received 0 points. An example of this is seen in one of the questions related to administrative support and more exactly the question regarding IT-system, see appendix VII. In this case, Company B said that they offer online support to their customers in Germany. As a result of the language differences, however, Company B said that Bravida’s use of this service might be limited. From this, the performance was seen as poor and thus Company B only received 1 point. On the other hand, the opportunity to obtain online support was not highlighted by Company A or C, whereas they did not receive any points. Even though a poor score results in a higher final score, we argue that it is better to show that a company’s performance is poor within a specific criterion, rather than not knowing at all. This since the lack of information could have devastating effects. Based on these findings, we want to highlight that the credibility of the scoring of the wholesalers heavily depends on the quality of the obtained response in each question. In the sub-criteria connected to cost and delivery, each company have been awarded the same score, see table 11. Regarding the scores in logistic price were all the three companies given 0 points. The choice to not give them any points in this questions related to fact that all of them said that they would use an external forwarder to handle the delivery to Sweden (Company A; Company B; Company C). Although they all found that around 2-4 days delivery time would be reasonable to Sweden, we did not found this information credible without being in contact with the delivery company itself. However, since all the three companies scored 0 points, it did not influence the comparison between the wholesalers final score. The points assigned to each company regarding the sub-criterion of user simplicity were based on the data obtained from the product list. The question raised under user simplicity was how similar the offered products provided by each company were to the original articles in the list. As mentioned before, did the list contain 19 different articles in total. All articles were classified as standard material within the electric category. In order to give scores to the wholesalers regarding the similarity of offered products, the information they send in the product list was analysed. There offered articles were sorted by how many items that were exactly the same and with the same manufacturer as in the original list and how many items that was complementary, see table 12. The score for similarity were then based on how many items that were exactly the same.

Table 12. Results from the data collected in the product lists.

As illustrated in table 12, Company C was the wholesaler which best matched the products in the product list. In addition, 44 % of the items offered items were exactly the same products with the same manufacturer as in the original list. Worth pointing out is that there is not a particularly big difference between Company C and B, which overall managed to match 74% of the of the total number of articles. Since it was not much that distinguished Company C from Company B in terms of similarity of products, they were both awarded 2 points. Company A, on the other hand, was considered to have a poor performance and thus they only received 1 point.

Question Company A Company B Company C

In the given product basket, how many of the products are exactly the same? 2 7 7In the given product basket, how many are complements? 3 7 9Number of offered articles 5 14 16% of offered articles 26% 74% 84%

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Another difference between the companies are the scores given to the sub-criterion of product reliability, where Company B received a higher score than Company A and C, see table 11. This difference is based on the fact that Company B gave a more detailed and reliable response regarding how they follow up product quality, and thus received 2 points. Company A and C received a lower score since their response were not as comprehensive, see appendix VII. Although this is one of the reasons to why the final score differs between the three wholesalers, we do not consider this to be sufficient enough to determine how appropriate or inappropriate a particular company is to Bravida. Despite the noted differences, we have found that there is generally not much that distinguishes the three different wholesalers from each other. The final scores are similar and even if examining their scores in each question, there is still not much that separates them. In cases where they do differ from each other, it was still difficult to know exactly how to score their performance. In general were 2 points distributed to the greatest extent. 2 points indicate that the wholesaler’s response was considered to be good, but it was impossible to know how good since the answers were not exact. It could be argued that more specific answers would enable a more accurate final score. Another complexity is the fact that there is possible that the answer change depending on the situation. For example, the price could change depending on the ordered volume and the service performance on the project character. From this, we find that it is difficult to say that one wholesaler should be considered as a better supplier to Bravida than another, even though Company B received the highest final score. To summarise these findings, we have found it difficult to determine which one of the wholesalers that is most suitable for Bravida. Due to the non-exact responses combined with the complexity to score the wholesalers performance, we argue that it is unreasonable to say that the company that received the highest final score actually is the best alternative. Another factor that makes it difficult is Bravida’s lack of international purchasing strategy. We find this to be a requirement to be able to more accurately evaluate the wholesaler’s performance. In other words, in order to measure a wholesaler’s performance and qualities, it is also necessary to know what you are asking for and what exact requirements that exists. This will be further discussed in chapter 6.

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6. Conclusion __________________________________________________________________________________ Chapter 6 covers both the conclusions draw from our findings as well as a discussion of the insights gained. Initially, the research questions are repeated and answered, followed by a recommendation of what use one can have of our results. Then follows a discussion of the most significant opportunities and challenges towards an international purchasing strategy at Bravida. We also provide the reader with a discussion of how the framework for supplier selection was developed, its imperfections and how it could be improved. Further, we discuss the knowledge and valuable insights obtained from applying the framework in reality. Finally we summarises this study’s theoretical and empirical contribution as well as it limitations and suggestions for future improvement opportunities. __________________________________________________________________________________

6.1 Summary The aim of this study was to identify how an international supplier selection should be performed within the Swedish installation industry. In order to reach the aim of this study, a main research question was formulated. This required two additional research questions. We were able to answer the research question by using multiple methods, where each part contributed to address the problem. Each research question is repeated and answered below. For increased understanding, we refer to the final framework that is illustrated in figure 11 in section 5.2.3.

RQ1: What are the supplier criteria when purchasing materials from wholesalers? Our results show that multiple criteria of both qualitative and quantitative kind are important when selecting an international supplier to Bravida. From our findings, we were able to categorise important aspects into four key criteria, which were quality, cost, delivery and service. In addition, each key criterion is based on three or four underlying sub-criteria. Together the key and sub-criteria provide a comprehensive guidance of which requirements a supplier must achieve in order to make the selection reliable and adapted for the company. It is also concluded that all key and sub-criteria must be considered when selecting an international supplier. How to consider these criteria as well as knowing what criterion or criteria to prioritise depends on their degree of importance, which is answered in the second research question following below.

RQ2: How are different criteria weighted? With the knowledge that both qualitative and quantitative criteria had to be prioritised when selecting an international supplier to Bravida, we felt that we had to develop a framework that supports both parts. Based on that argument, we considered it most appropriate to create a modified weighted point methodology in order to facilitate the supplier selection at Bravida. In weighted point methodologies, the criteria are assigned with weights to address the complexity of their individual importance on the supplier selection. In addition, the weights highlight the criteria interconnection and thus what supplier characteristics to prioritise. Analysing the opinions and attitudes of the employees at Bravida identified the weights given to each key and sub-criteria included in the framework. From this, we argue that the framework also reflect what the company must prioritise in order to enable a switch toward international sourcing internally. Our results of how the different criteria should be weighed are shown in figure 11 in 5.2.3. From this, we were able to answer the main research question.

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MRQ: How should international suppliers be selected?

First of all, a supplier must be selected with great awareness. We argue that this awareness is particularly noticeable within the installation industry since companies active within this business are strongly dependent on the comprehensive solution provided by the wholesalers. The supplier’s performance must be evaluated with regard to the buying company’s requirements and demands. This since a misfit could have devastating consequences. Our framework has been developed in order to facilitate this process and solve the complexity that might arise when evaluating a supplier. The developed framework indicates which criteria that are determined and to which degree. In addition, the framework contributes to valuable insights when the company must decide which trade-offs to prioritise. From this, it is possible to evaluate the suppliers in multiple criteria simultaneously and thus receive a comprehensive understanding of which supplier that should be selected. To conclude, companies within the installation industry should use the conducted framework to enable a systematic supplier evaluation and thus facilitate the selection of international suppliers. The developed framework will be a valuable guidance when Bravida proceed further into the process towards international sourcing. It will give them important information regarding what criteria to prioritise when selecting which supplier to source from. To select an international supplier is difficult, not least at Bravida where we have identified multiple challenges that must be bridged. Another complexity is also how to consider the trade-offs between different criteria. However, since the weights of the criteria have evolved from the opinions and attitude of the employees, we argue that the framework act as an indicator that shows which supplier that are most appropriate considering the culture at Bravida. Thus, the framework captures the complexity regarding which criteria to prioritise in order to find a suitable international supplier to the company. Our conclusion, and hence our recommendation, is to use the framework as a guidance and not necessarily as a tool for the final selection. To evaluate suppliers with regard to the framework means giving scores depending on their performance. The supplier that ends up with the highest final score is the supplier that should be selected. For Bravida to be able to use the framework as a tool for the final selection, rather than guidance, they would have to specify the requirements they have on an international supplier. From this, we conclude that Bravida needs to develop their international strategy and state specific requirements in order to have an increased use of the framework. If Bravida proceeds with this, we have a strong belief that Bravida’s use of the conducted framework will increase. Today, and before specifying their requirements, we recommend that international suppliers within the installation industry should be chosen with guidance from the conducted framework.

6.2 Discussion The developed framework for supplier selection shows that the crucial criteria, in order of importance, are; delivery, quality, cost and service, see figure 11 in section 5.2.3. Below follows a discussion of some interesting findings obtained from our results. Our results indicate that delivery and quality are the most important criteria at Bravida. We argue that their importance is connected to the associated risk that occurs if the international suppliers would not be able to achieve a sufficiently high standard. In a case where a specific supplier is not able to achieve Bravida’s requirements within delivery or quality, it would have devastating following

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effects. This since Bravida’s general business strategy relies on the ability to provide high service and quality. Additionally, it will consequently result in increased costs. The fact that delivery and quality are related to cost, and that their dependency forces Bravida to trade-offs between them, became clear when analysing our empirical results. In other words, they meant that low abilities in quality and delivery resulted in high additional costs, and vice versa. Both the literature review and our findings show that delivery, quality and cost are the most important criteria in supplier selection (Monczka et al., 2005; Dulmin & Mininno, 2003; Kannan & Tan, 2002; Narasimhan et al., 2001; Petroni & Braglia, 2000b). In our case, we argue that the lower importance of cost relates to its dependency to delivery and quality. Another potential explanation to why delivery became the most important criteria is the fact that there is always a risk of changes in the delivery conditions, as a result of unpredicted events. Even if a supplier provides a high qualitative and reliable delivery solution, there are still many factors that can affect the delivery negatively. Potential unexpected events that may occur are, for example, heavy traffic or bad weather conditions that cause delays. In addition, the risk of delays increases with longer transport distances. This uncertainty is a major risk to Bravida and the company’s just in time philosophy, which already is characterised by tight timeframes that demand delivery at short notice. However, our results show that there is potential for better forward planning related to purchases, which thus increase the opportunity to purchase material from an international supplier. Taking this into account, we consider that the service Bravida receives from the national wholesalers sometimes is unnecessarily high. This since we argue that several of the purchases made with short notice at Bravida, is a result of knowing that it also is possible. This strengthens our belief that it is possible to establish an international sourcing strategy, even if it results in a longer lead-time. The uncertainty regarding delivery is something we found to be different if comparing this key criterion to the key criteria of quality and cost. We do not consider the other two criteria to be less important, but we argue that they are not equally exposed to unexpected events in the same extent. For example, the cost of material is obtained before performing the actual purchase. This cost is visible and depending on its competitiveness, Bravida can decide whether to proceed with the purchase or not. This differs from the key criterion of delivery, where the purchase is completed before knowing if the delivery will arrive on time or not and where unexpected events involve hidden costs that can not be estimated until they actually arise. From this, we consider it reasonable that delivery was given a higher weight compared to cost and quality. In addition to the discussion following above, another thing we consider important to highlight in our results is that no criterion has been given an unreasonably high value. The difference between the key criteria is more apparent than the one between the sub-criteria connected to each key criterion. The fact that no criterion is considered to dominate the entire selection, is something we find to increase the possibilities with international purchases at Bravida. We argue that a heavily weighted criterion would have been a barrier to international sourcing. This since a selection of supplier often comes with a trade-off between different important aspects. In a case where one criterion completely dominates the others in the selection, it may be difficult to find a supplier that is considered to be sufficiently good in that individual aspect. However, this is not the case at Bravida, which facilitates the possibility of finding a suitable international supplier to the company. Our findings also show that Bravida faces multiple challenges if initiating international purchases. These challenges are of both the internal and external kind, see the subchapter of problem definition in 5.1.1. However, we argue that the most significant external challenges are a result of the Swedish

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wholesaler’s comprehensive supply solution. We argue that this is something that Bravida internally must decide how to relate to. In our analysis, we argue that the solution provided by the Swedish wholesalers has created path dependency and supplier rigidity. This since a change of supplier would, more or less, directly demand undesired compromises on an already well-functioning sourcing strategy. The fact that Bravida is a decentralised and traditional company further enhances this complexity. However, the results obtained from the analysis shows that almost half of the orders could have been conducted differently, without compromising the employee's order process or the finished result. By differently we mean, for example, that they could have been conducted without the more or less classical option to make purchases from one day to another. Thus, and again, we see a possibility to implement an international sourcing strategy at Bravida. A challenge that is crucial to bridge, in order to succeed with international purchases, is Bravida’s internal resistance towards changes. To bridge this we recommend small iterative changes where an initial step towards a changed sourcing strategy is a strategy that has many similarities to the current one. By basing the selection of an international supplier with regard to the employees’ values, as we have done in this study, we argue that the supplier automatically is evaluated to suit the current culture. As a result, we argue that the supplier selection is one part of a new strategy but that fits into the current organisation, which makes the change more feasible to implement internally. Considering this, we find that an international purchasing strategy will not have a big impact on the current purchasing strategy initially. Bravida should implement an international purchasing strategy gradually and see it as an iterative process with improvement potential.

6.3 Reflection of the Developed Framework Formulation of Criteria

The first thing that had to be done when developing the framework was to find the most important criteria for Bravida. With support from both the empirical findings and the literature review, the found key criteria were quality, cost, delivery and service. These different parameters were frequently mentioned in the interviews. This in combination with the fact that the framework was developed with regard to the employees’ opinions, it became a natural consequence to choose them as key criteria. The problem definition, that states the fundamental strategy of the supplier, strengthens the method of letting the employees’ values reflect the supplier selection. This since there is multiple challenges that complicate international purchases and we therefore find that is crucial that the supplier meets the employees’ requirement in order to obtain a sustainable transition. As mentioned in the literature review, there are several other criteria that also are important but which not have been included in our supplier selection framework. These are, for example, the supplier's financial support and risk management, which indicate how stable the supplier are when it comes to financial status and unexpected events. (Moser, 2007) Our decision to not include these criteria in the framework was done with the argument that these are aspects that should be controlled before doing any deeper investigation and continued discussion with the supplier, to both save money and valuable time. Other valuable criteria are the supplier's ability to short- and long-term flexibility and their collaborative capabilities. In some extent, these criteria show the suppliers willingness to integrate their business with regard to Bravida’s requirements. A close coordination and integration is enhanced by the global sourcing theory, in which a close business relationship enables a trustworthy and well-functioning supply of goods (Trent & Monczka, 2003). This would be highly valuable since that

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would enable that Bravida and its supplier could develop in line with each other and create better conditions for the existing criteria in the supplier selection framework. The lack of long-, short-term flexibility and collaboration, as well as other criteria mentioned in the literature review, indicates that our supplier selection framework might not be applicable in a longer perspective. This since it does not evaluate the supplier on its future possibilities or ambitions when committing to Bravida. One explanation to why these criteria are not included is their strategic focus. From this, we argue that they are not really related to purchases of standard material performed on a daily basis, which is what we have investigated when we asked for the employees’ opinions. On the other hand, if the purpose was to initiate long-term relationships, these aspects might be important to consider as well. However, with regard to the analysis from the problem definition, that showed that the material was non-critical items and the strategic sourcing level was low, we argue that our current criteria are enough as an initial step. On the other hand, it is reasonable to believe that these criteria will be have a more determinant role in the framework in the future, with an enhanced international purchasing strategy or if proceeding with more strategic items.

Weighting of Criteria The weights given to each key and sub-criteria have a strong impact on the selection of a supplier. In our framework, the weights are based on the attitudes of the employees. Therefore, it could be argued that the weights are influenced by current conditions and thus reflect how the criteria must be prioritised in order to suit the current working philosophy. By that, we mean, that the degree of importance of each criterion is strongly influenced by what aspects employees regard as most important in current business culture. Although all respondents were informed that the focus of this study was purchases of standard material from German wholesalers, we still believe that maintaining current working methods influenced them. This indirectly means that the choice of supplier is based on how well a certain supplier is able to adapt to Bravida’s current business model and if this is reasonable or not is worth to discuss. However, we argue that it might be difficult to succeed with purchases from a German wholesaler if Bravida has the requirement that it must fit into the current business model and, for instance, the well-established just in time philosophy. It could be discussed if it might have been more appropriate to base the weights of each criterion according to the company’s business strategy, rather than on the attitudes of the employees and thus indirectly their current working conditions. On the other hand, that would require Bravida to have an already established international sourcing strategy. Since this is not the case at Bravida, this was not a possible alternative. In addition, even if such a strategy would have existed, we find that it would be a risky step this early in the company’s process towards international purchases. Given the rigidity and conservatism within the company, we argue that an important first step is to get a comprehensive understanding of the internal attitude towards international sourcing. We consider that it would be a too big risk to implement such a major strategy change without first knowing that the employees are ready and that it would be possible to perform internally. Therefore, the most appropriate solution to ensure reasonable weights might have been to first set the weight with regard to the employees’ attitudes, as we did, and then perform necessary adjustments in order to make it applicable in a strategically perspective as well. However, it also requires a clear strategy regarding international purchases and that Bravida had had a greater perception of what aspects that are required strategically to make it feasible. In the future and when Bravida has gone further in the process of international purchases, it may be necessary to adjust the weights so that they match the company’s continued goals and visions.

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Another thing worth discussing is our decision to use two different approaches when weighting the criteria. Regarding the weighting of the key criteria, a slightly more accurate approach was used since we, in this case, performed a pairwise comparison of each combination of the key criteria. The choice to not use the same approach when identifying the weights to the sub-criteria was because we felt it would be too extensive. However, it could have contributed to more reliable weights. In addition and as earlier mentioned, we also had to make a very simplified weighting regarding the sub-criteria related to cost, as a result of insufficient answers from the completed questionnaire. Arbitrary set weights is one of the reasons to why Narasimhan et al. (2001) criticises supplier selection methods that are based on weighting of criteria. Overall, the fact that it is difficult to weight criteria in a reasonable and credible manner is frequently mentioned in the literature (Moser, 2007). Our choice to value the sub-criteria related to cost equally, however, was due to our lack of knowledge regarding the trade-off between them. The complexity of cost lies in the fact that none of them could be valued higher than another since it is the combined result, and thus the total cost, which is most relevant. We understand that result and the final score can be misleading if different costs are valued equally, whereupon the total cost is not valued. Therefore, we also want to highlight that it is important to always review the impact of the cost criterion when choosing a supplier by using the framework. In addition, this is also something that could be further developed and adjusted in the future.

The Scoring System The last thing before completing the supplier selection framework was to create a grading system that could be used to give scores to the suppliers, depending on their performance in each sub-criterion. Which score the supplier receives depends on how well the supplier is considered to meet Bravida’s requirements. For this, we choose to use a simple grading system that ranged from 0-3 points. As previously mentioned, Bravida has no developed strategy for international sourcing and the lack of specified requirement makes it difficult to score the sub-criteria with a more advanced grading system. The negative side of choosing a simple grading system is that the supplier's final score will be lower, whereupon it is more difficult to see possible differences between the evaluated suppliers. A more advanced grading with a bigger range, for example 0-100, would make it easier to distinguish different suppliers performance from each other. However, we argue that the complexity to give grades to the suppliers increases in line with and more advanced grading system, especially if not having any specific requirements to relate to. Therefore, in order to improve the grading system we argue that Bravida need to develop company specific requirements for each grading level.

Sustainability The purchases impact on sustainability, and thus how the wholesaler’s work with this, is an import aspect to consider when choosing sourcing strategy. Despite its importance, we have chosen to not focus on this as an individual criterion in our supplier selection framework. This is mainly based on the fact that sustainability is not valued in the daily purchases, but rather, included as an overall perspective in product quality, which on the other hand is included in the framework. Additionally, the products are quality assured by Bravida’s shall-requirement, which also considers sustainability as one of the factors that need to achieve a certain level in order to be applicable in Bravida’s assortment. However, we think it is possible that sustainability may have an enhanced part in the supplier selection framework in the future.

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6.4 Application of the Framework With support from the framework, three German wholesalers were evaluated with regard to the stated, and thus Bravida specific, criteria. From this, we gained knowledge regarding what information and data that is necessary in order to perform a relevant and reliable supplier evaluation. The gained insights are here discussed, as well as a discussion about how the framework could be improved to increase its usefulness. One of the most important insights gained from applying the framework in practise, is the fact that its usability is reduced if receiving too inadequate information and data for the evaluation. Before starting the data collection for this part, detailed questions were formulated with regard to the identified criteria important for supplier selection at Bravida. Even though the questions were formulated with great awareness, we found this to still not be enough when we began the evaluation of each supplier's performance. Something we realised when we applied the framework was that it is difficult to conduct a reliable supplier evaluation if the response to the questions asked is too diffuse and undetailed. In other words, in order to be able to measure the performance of the suppliers in the respective criteria, specific and accurate answers are necessary. Then it also becomes easier to make a more concrete comparison. From this, it is also worth discussing if another methodology than telephone interviews would have provided more measurable information. However, the choice of conducting telephone interviews was considered the most appropriate option considering the existing conditions and the limited time frame. Another important insight related to this is the importance of knowing what to demand from the supplier before beginning the evaluation. The fact that it is important to know what requirements that exist, before beginning the investigation of a supplier, became very clear when the framework was applied. Similarly, it is first then, as it is possible to determining if the information received is enough or not. This part of the study was considered very valuable since this knowledge would not have been obtained if the framework had not been applied in reality. What also became clear when applying the framework was that it was difficult for the wholesalers to give specific answers. Their ability to meet high levels in several of the sub-criteria was dependent on the situation, where order volume, the range of products and cost were common parameters that come up as crucial factors. However, the negotiation process had not been initialised when we applied the framework on the German wholesalers. We believe that this is the main reason behind their vague response. In the negotiation process, the requirements that the supplier needs to fulfil must be stated. With this information, we argue that it is possible to receive more exact answers and thus a more accurate final score in the supplier selection. How big influence the negotiation will have on the final result is impossible to predict and no analysis has been conducted related to this. However, our result shows that the final score between the suppliers was similar and due to the vague answers we could not say that one supplier should be selected over another. It is therefore possible that the negotiations will have a determining role in the final selection of supplier. This since more credible scores and possible changes in a few sub-criteria will have a significant impact on the supplier's final score. As discussed in section 6.2, we choose to create a simple grading system. This was done with the argument that a more advanced system would demand specified requirement levels, which also specifies which score that correlates with a particular performance. However, when we applied our scoring system on the responses obtained from the three German wholesalers, we found that it was still difficult to determine the supplier’s score. The complexity of giving appropriate scores in supplier

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selection is also highlighted in the literature (Monczka et al., 2005). Further, Monczka et al. (2005) mean that the weighting method demands accurate analyses of the supplier in order to give reliable scores. We agree with his opinion regarding the necessity to perform deeper analyses. Further, we also find that this is connected to our previous knowledge regarding the impact of the negotiations, where the initial agreements might be changed and thus the score must be changed accordingly. Since we applied the framework before completing the negotiation phase, the negotiation space in relation to their answers might result in a misleading final score. From this, it could be discussed if a sufficient in-depth analysis, which both we and the literature request, only could be obtained after the negotiation process. Or at least, it is argued that Bravida must prioritise to clearly specify which space of negotiation that is available within the respective criterion and how it is connected to the scoring system. With this information in mind, it is necessary to discuss how the framework should be used. It could be argued that the framework should not be used as a tool to actually select one or several suppliers over other alternatives. Maybe, the framework should rather be used as guidance when performing the negotiations. This since we argue that the framework gives valuable information regarding what aspects and what requirements to focus on in the negotiations and not. An agreement with a supplier often brings trade-offs between different criteria. These trade-offs are often difficult to avoid since it is difficult to find a supplier that meets all requirements perfectly. We argue that the created framework can bring useful insights in this process. Since it can help to visualise when a good performance in one criterion results in too negatively impact in another, which thus can result in a lower final score. Thus, the framework can be used as a tool to see everything in a broader perspective simultaneously and be a useful guidance when deciding what criteria to focus on.

6.5 Contribution Theoretical Contribution

A natural consequence of this study’s case specific niche and focus on empirical contribution is that the theoretical contribution is fairly limited. However, this thesis could be classified as phenomena driven, which is when established literature has a knowledge gap when it is investigated in a certain context (Blomkvist & Hallin, 2015). In this research, we have used existing literature within the area of supply management, more specific supplier selection, and adapted the obtain knowledge on the Swedish installation industry. From this, it could be argued that this study will complement the existing literature in the area of supplier selection, by applying it to the Swedish installation industry, and thus contribute to enhanced knowledge within the field. In addition, the empirical results confirm the literature considering the fact that the most important criteria in the supplier selection generally are delivery, cost and quality, which is emphasised by Monczka et al. (2005), Dulmin & Mininno (2003), Kannan & Tan (2002), Narasimhan et al. (2001) & Petroni & Braglia (2000b). However, our results also showed that service is a key criterion in the installation industry and by that we demonstrated the difficulty of choosing appropriate criteria solely on the existing literature. The phenomenon that the importance of criteria shifts depending on industry and the specific situation is something that is further analysed by de Boer et al. (2001). Further, the fact that the degree of importance changes depending on certain circumstances implies that it is difficult to generalise other results on how the different criteria are weighted in new situations (de Boer et al., 2001). Our results support his argument, which further amplifies our niched contribution to the theory’s knowledge gap.

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Empirical Contribution

The empirical contribution of this study addresses the complexity of on what basis an international supplier should be selected within the Swedish installation industry. From this, the contribution is related to what criteria that a company within this industry must consider and to what extent when implementing an international sourcing strategy. What complicates such a transformation is the fact that this industry often is classified as rigid and conservative. That, in turn, places higher demands on the selection and that it is performed with regard to reasonable assumptions. With that said, the contribution of this study has resulted in a framework that helps to facilitate this complexity and which could help to ensure that all important aspects are considered based on its degree of relevance. The completed framework is found in figure 11 in subchapter 5.2.3. The empirical findings obtained in this research have resulted in valuable information to Bravida. Since our results provide guidance regarding which criteria that must be prioritised, and to which extent, when the company should start purchasing standard material from an international supplier. First, we would like to emphasise that Bravida should use the framework as a guidance in the beginning of the shift towards an international sourcing strategy. We argue that Bravida will be able to take advantage of the insights that the framework provides when evaluating which international supplier to source from. In other words, as of today, we do not recommend Bravida to use the conducted framework as a tool when performing the final selection of a supplier. This since that would have required that Bravida already had specified what requirements they actually have on an international supplier. Therefore, this is something we recommend Bravida to focus on in a close future. Secondly, Bravida could apply the framework after performing the negotiations with each potential supplier. The negotiations may have a significant impact on the supplier’s score that is received when applying the conducted framework. However, by applying the framework after completing the negotiations, it is possible to see how the supplier’s truly performance in each sub-criterion. From this, the most important criteria are taken into consideration and the selection is thereby made with regard to the supplier's overall performance. Additionally, the framework gives a holistic view of the supplier’s strengths and weaknesses, which makes it easy to distinguish the supplier's competitiveness in regard to others. Thirdly, the framework can also be used as a tool to measure the performance of current suppliers. By this, we mean, that the framework could be used for a retrospective purpose and evaluation of old agreements, rather than for forward-looking of future possibilities. Thus, the framework will be a tool for evaluation of the performance of the national wholesalers, which could contribute to valuable information regarding which trade-offs that have been done in specific criteria over time.

73

6.6 Limitation and Future Research The purpose of this study has been to investigate how international suppliers should be selected within the installation industry. We argue that the results obtained from this study, as well as the conducted framework, will contribute to valuable insights for companies active within this industry that are at the beginning of a shift towards international sourcing. This study has been conducted on behalf of Bravida, whereas our research only has taken one sector into account. This, in turn, implies that the applicability of our findings is limited. A limitation identified in relation to the usability of the framework is that a company’s requirements on a supplier must be specified in order to increase the value that can be derived from applying the framework. If not having specific requirements to take into consideration, we find that it is difficult to evaluate a supplier’s performance properly. This complexity is also related to the scoring of a supplier’s performance that follows when using the framework. We argue that it is basically impossible to enable a credible scoring if not having specified requirements to relate to. In order to be able to use the framework as a tool for the final supplier selection, rather than as a guidance regarding what to consider and not, we argue that a company must focus on specifying exactly what they demand of a supplier. In addition, a company must also specify their negotiating space within the respective criteria. By developing guidelines for the negotiations, we believe that the company can become more targets driven when having negotiations with suppliers. Another thing that needs to be improved in the future is the weights given to the sub-criteria under cost. As a result of weak results related to these sub-criteria, we had to use a very simplified approach in this case. In order to improve the framework and increase its reliability, it is necessary to specify the weights related to this criterion in the future. Last but not least, another limitation that affects our results is the fact that the study is based on static assumptions. That is, the study reflects the conditions that have been relevant at a certain time. This is a limitation as this is something that integrates over time in reality. For example, this indicates that even if a supplier performed very well in one certain criterion in the last evaluation, it could still obtain a poor score today and thus not be considered as an appropriated supplier to the company. A future improvement opportunity of the framework in this regard could be to initiate a follow-up process that ensures that the selection of the supplier is not based on single incidents.

74

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Technology, The Netherlands. 5th edition. Interviews Anderberg, Henrik; Project Manager. Interview 27 January.

Adolfsson, Fredrik; Purchase Calculator. Interview 15 March.

Belin, Erik; Purchasing Manager for coordinated purchasing. Interview 27 January.

Cedgard, Jonas; Leading Installer. Interview 13 March

Daun, Henrik; Nordic Purchasing Manager Ventilation. Interview 18 January.

Edner, David; Responsible for the purchasing system. Interview 24 January.

Falk, Mattis; Leading Installer. Interview 15 March.

Friberg, Anders; Category Analyst. Interview 23 January.

Hellgren, Hampus; Project Leader. Interview 15 March.

Holmberg, Stefan; Division Purchaser. Interview 7 March.

Hohensee, Jonas; Project Leader. Interview 13 March.

Hörnell, Åsa; Systems Engineer, Master data. Interview 23 January.

Levin, Per; Nordic Purchasing Manager Electrical. Interview 19 January.

Lundin, Tobias; Project Chief. Interview 7 March

Nell, Kenneth; Project Manager. Interview 27 January.

Schütz, Per; Nordic Purchasing Manager Heating and Plumbing. Interview 19 January.

Segergren, Adam; Purchasing Controller. Interview 26 January.

78

Appendices

Appendix I: Semi-structured interview questions Etiska frågor:

• Är det okej att vi publicerar ditt namn, titel, roll? • Är det okej om vi spelar in?

Frågor relaterat till inköp:

• Hur  ser  din  roll  ut  inom  inköp  idag?  • Hur långt innan planerar du inköp? • Hur lägger du en order? (Bravis/telefon) • Hur mycket går du på rutin?

o Hur mycket research görs vid inköp av en viss produkt? • Om det en produkt har korsreferenser, hur går du tillväga då? • Om det en produkt har korsreferenser, vilka faktorer väger in i ditt val? • Vilka faktorer är viktiga när du gör ett inköp?

o Kan du ranka dem? • Vad tycker du är det viktigaste med dagens grossist inköp? • Vilken övrig service får du av grossisterna idag?

o Hur viktig är den övriga service som ges av grossisterna? o Vad är viktigast?

• Brukar du ta hjälp av grossisterna att specificera materialet eller gör du det själv? • Hur mycket styrs du av grossisternas logistiklösning vid inköp?

o Vilka faktorer är viktiga? • Inköpsrelaterade försening, beror det oftast på dålig planering hos er eller på grossisten? • Hur påverkas ett projekt av en försening? • Hur stort lager brukar ni ha tillgång till på arbetsplatsen?

Internationella inköp:

• Hur ser du på möjligheten till internationella inköp? • Vad är viktigt att tänka på vid internationella inköp? • Vad finns det för hinder?

o Vilket är det största? • Vad finns det för risker?

o Vilken är den största? • Vad anser du krävs för att satsa mer på internationella inköp? • Vad hade behövts för att du skulle känna dig trygg? • Ser du några andra begränsningar i servicen vid internationellt inköp? • Hur ser du på möjligheterna till en bättre framförhållning vid inköp?

o Vilka faktorer är viktiga för att skapa detta? • Ser du några större möjligheter på vissa produkter och i så fall vilka?

Förbättringar:

• Vad känner du hade behövts för att göra ett optimalt inköp? o Vilka faktorer?

• Hur blir ni utbildade om nya produkter? • Hur visar Bravida ett intresse för att ni ska göra ett bra inköp? • Är det något du vill tillägga i valet av internationella grossister?

79

Appendix II: Reference list of interviewees

Title of interviewee Department Reference

Nordic Purchasing Manager Ventilation Stockholm A

Nordic Purchasing Manager Electrical Stockholm B

Nordic Purchasing Manager Heating and Plumbing Stockholm C

Category Analyst Stockholm D

Systems Engineer, Master data Stockholm E

Responsible for the purchasing system Stockholm F

Purchasing Controller Stockholm G

Purchasing Manager for coordinated purchasing Stockholm H

Project Manager 1 Solna I

Project Manager 2 Solna J

Leading installer 1 Solna K

Division Purchaser Div. South L

Project Chief Div. South M

Project leader 1 Gothenburg N

Leading installer 1 Gothenburg O

Leading installer 2 Gothenburg P

Project leader 2 Gothenburg Q

Purchase Calculator Västerås R

80

Appendix III: Questionnaire

Personlig information

1. Vilken åldersgrupp tillhör du?

< 30 år

31-40 år

41-50 år

> 51 år

2. Hur länge har du varit anställd hos Bravida?

0-5 år

6-10 år

11-15 år

16-20 år

> 21 år

3. Vilket teknikområde arbetar du mest med?

El

VS

Vent

Annat (förklara tack)

4. Inom vilket område arbetar du mest?

Entreprenad

Service

Annat (förklara tack)

81

5. Vilken befattning har du i dagsläget inom Bravida?

Montör

Ledande montör

Projektledare

Övrigt

6. Vilken division tillhör du?

Nord

Stockholm

Syd

Övrigt

82

Värderingar vid internationella inköp

Ingen potential

1 2 3 4

Mycket stor potential

5

7. Hur ser du på Bravidas potential till internationella inköp av standardmaterial?

8. Ranka dessa faktorer efter hur viktiga de är för dig vid inköp av standardmaterial från grossist.

Var god att rangordna dina svar från 1 till 8. (Nr 1 = Viktigaste, Nr 8= Minst viktig) Du kan bara använda en

specifik siffra en gång i din rangordning.

Specifik grossist

Individuella preferenser

Användarvänlighet

Vana

Kvalitet

Prisbild

Leveranstid

Service

83

Här vill vi att du ska värdera hur viktigt kvalitet, service, leveranssäkerhet och pris är i jämförelse

med varandra. Kriterierna kommer att ställas mot varandra parvis och då har du följande alternativ:

Det ena kriteriet är viktigare än det andra och hur mycket viktigare fylls i på en skala 1-5.

(1=lite viktigare, 5=mycket viktigare)

Kriterierna är lika viktiga - fyll i mitten på skalan

Ha i åtanke att alla frågor handlar om inköp av standardmaterial från en tysk grossist.

Värderingar

Kvalitet

5 (K) 4 (K) 3 (K) 2 (K) 1 (K) lika viktigt 1 (S) 2 (S) 3 (S) 4 (S)

Service

5 (S)

9. Vilket är viktigast och i vilken utsträckning?

Kvalitet

5 (K) 4 (K) 3 (K) 2 (K) 1 (K) lika viktigt 1 (L) 2 (L) 3 (L) 4 (L)

Leveranssäkerhet

5 (L)

10. Vilket är viktigast och i vilken utsträckning?

Kvalitet

5 (K) 4 (K) 3 (K) 2 (K) 1 (K) lika viktigt 1 (P) 2 (P) 3 (P) 4 (P)

Pris

5 (P)

11. Vilket är viktigast och i vilken utsträckning?

Pris

5 (P) 4 (P) 3 (P) 2 (P) 1 (P) lika viktigt 1 (L) 2 (L) 3 (L) 4 (L)

Leveranssäkerhet

5 (L)

12. Vilket är viktigast och i vilken utsträckning?

Pris

5 (P) 4 (P) 3 (P) 2 (P) 1 (P) lika viktigt 1 (S) 2 (S) 3 (S) 4 (S)

Service

5 (S)

13. Vilket är viktigast och i vilken utsträckning?

Leveranssäkerhet

5 (L) 4 (L) 3 (L) 2 (L) 1 (L) lika viktigt 1 (S) 2 (S) 3 (S) 4 (S)

Service

5 (S)

14. Vilket är viktigast och i vilken utsträckning?

84

Support

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Väldigt

viktigt

10

15. Hur viktigt är teknisk support från grossist?

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Mycket viktigt

10

16. Hur viktigt är det att få tillgång till produktinformation från leverantör? Ex. demonstrationer på

avdelningen

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Mycket

viktigt

10

17. Hur viktigt är det med övrig support över telefon? ex. frågor om leverans, lagerhållning, etc

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Mycket

viktigt

10

18. Hur viktigt är manualer och produktblad på svenska från grossist?

Obefintliga

1 2 3 4 5 6 7 8 9

Väldigt

goda

10

19. Hur goda är dina engelskakunskaper?

Ingen

möjlighet

alls

1 2 3 4 5 6 7 8 9

Väldigt

stor möjlighet

10

20. Hur ser du på möjligheten med manualer och produktblad på engelska?

85

Logistik

Inte alls

beroende

1 2 3 4 5 6 7 8 9

Mycket

beroende

10

21. Hur beroende är du av att beställa grossistmaterial med en dags framförhållning?

22. Generellt sett, hur stor andel av de inköp som görs från ena dagen till den andra hade kunnat planerats

med större framförhållning?

0-20%

20-40%

40-60%

60-80%

80-100%

Motivera gärna ditt svar:

23. Hur lång framförhållning är möjlig vid inköp av standardmaterial?

1 dag

2 dagar

3-4 dagar

5-7 dagar

Mer än 7 dagar

Ingen

möjlighet

1 2 3 4 5 6 7 8 9

Väldigt stor

möjlighet

10

24. Hur ser du på möjligheten till till bättre framförhållning vid inköp?

86

25. Hur lång ledtid från grossist anser du är rimligt då du genomför ett inköp av standardmaterial?

1 dag

2 dagar

3-4 dagar

5-7 dagar

Mer än 7 dagar

26. Hur många leveranser per vecka anser du är rimligt från grossist vid köp av standardmaterial?

1/vecka

2/vecka

3/vecka

4/vecka

5/vecka

27. Generellt sett, hur precis i tiden bör leveransen vara för att projektet inte ska påverkas negativt?

0-30 min

30min-1 timme

1-3 timmar

3-8 timmar

2 dagar

Mer än 2 dagar

28. Ungefär hur stort är ditt genomsnittliga orderbelopp?

< 500 kr

500-1000 kr

1000-3000 kr

3000-5000 kr

5000-10 000 kr

> 10 000 kr

87

Produktinformation

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Väldigt

viktigt

10

29. Hur viktigt är prisbilden vid inköp av grossistmaterial?

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Väldigt

viktigt

10

30. Hur viktigt är rabatter vid inköp av grossistmaterial?

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Väldigt

viktigt

10

31. Hur viktigt är kvalitet vid inköp av standardmaterial?

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Väldigt

viktigt

10

32. Hur viktigt är produkternas användarvänlighet vid inköp av standardmaterial?

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Väldigt

viktigt

10

33. Hur viktigt är garantier?

Inte alls

viktigt

1 2 3 4 5 6 7 8 9

Väldigt

viktigt

10

34. Hur viktigt är grossisters returhantering?

88

Appendix IV: Data for pairwise comparison of key criteria 1. Quality

2. Cost

3. Delivery

Weight

How important is the suppliers return policy? (Q:34)

7,7

How important is the suppliers warranty policy? (Q:33)

8,1

SUM 24,6

User simplicityHow important is it that prodcuts are easy to use when purchasing standard material? (Q:32)

8,3 8,3 34%

Warrenty and Claim policy 7,9 32%

Product RealibilityHow important are quality when purchasing standard material? (Q:31)

8,4 8,4 34%

Results of subcriteria related to quality

Weight

SUM -

- -

DiscountsHow important are the discounts when purchasing material from wholesalers? (Q:30)

33%7,2

Logistic price

33%

33%

Results of subcriteria related to cost

PriceHow important is the price when purchasing material from wholesalers? (Q:29)

7,7

Weight

SUM 20,5

31%

On-time delivery

Results of subcriteria related to delivery

How important are on-time deliveries? (Q:27)

6,0

Frequency and volume How important is it to have the opportunity to many deliveries per week? (Q:26)

6,4

29%

Lead-time How imporant are short lead-time from supplier? (Q:25)

8,1 39%

89

4. Service

Initial value Modified Initial value Modified Initial value Modified

5/week 10 1 day 10 0 - 30 min 104/week 8 2 days 8 30 min - 1h 83/week 6 3-4 days 6 1-3 h 72/week 4 5-7 days 4 3-8 h 51/week 2 More than 7 days 2 2 days 3

More than 2 days 2

How imporant are short lead-time from supplier?

How important are on-time deliveries?

How important is it to have the opportunity to many deliveries

per week?

Weight

SUM 29,4

6,5

Results of subcriteria related to service

7,1 24%Technical support

Administrative supportHow important is other additional phone support from supplier? (Q:9)

7,5 25%

Technical product descriptionHow important is that the supplier provides product description? (Q:16)

How important is technical support from supplier? (Q:8)

22%

Language How important is it that the supplier provides manuals and product description on Swedish? (Q:18)

8,4 28%

90

Appendix V: Weighting of sub-criteria 1. Quality – Service

2. Quality – Delivery

3. Quality – Price

4. Delivery – Price

5. Service – Price

6. Service – Delivery

Quality ServiceScore 5 4 3 2 1 Neutral 1 2 3 4 5Weight 5 4 3 2 1 0 -1 -2 -3 -4 -5# Respondents 29 21 35 26 0 108 5 6 3 7 2Sum 145 84 105 52 0 0 -5 -12 -9 -28 -10TOTAL SUM 322 TOTAL: 242

MEAN: 1,330578512

Quality DeliveryScore 5 4 3 2 1 Neutral 1 2 3 4 5Weight 5 4 3 2 1 0 -1 -2 -3 -4 -5# Respondents 14 9 10 19 9 109 16 18 18 15 15Sum 70 36 30 38 9 0 -16 -36 -54 -60 -75TOTAL SUM -58 TOTAL: 252

MEAN: -0,23015873

Quality PriceScore 5 4 3 2 1 Neutral 1 2 3 4 5Weight 5 4 3 2 1 0 -1 -2 -3 -4 -5# Respondents 18 20 26 23 14 102 15 16 7 9 2Sum 90 80 78 46 14 0 -15 -32 -21 -36 -10TOTAL SUM 194 TOTAL: 252

MEAN: 0,76984127

Delivery PriceScore 5 4 3 2 1 Neutral 1 2 3 4 5Weight 5 4 3 2 1 0 -1 -2 -3 -4 -5# Respondents 19 13 26 31 26 87 18 15 7 4 6Sum 95 52 78 62 26 0 -18 -30 -21 -16 -30TOTAL SUM 198 TOTAL: 252

MEAN: 0,785714286

Service PriceScore 5 4 3 2 1 Neutral 1 2 3 4 5Weight 5 4 3 2 1 0 -1 -2 -3 -4 -5# Respondents 10 2 10 16 14 74 31 29 39 14 13Sum 50 8 30 32 14 0 -31 -58 -117 -56 -65TOTAL SUM -193 TOTAL: 252

MEAN: -0,765873016

Service DeliveryScore 5 4 3 2 1 Neutral 1 2 3 4 5Weight 5 4 3 2 1 0 -1 -2 -3 -4 -5# Respondents 4 1 5 4 8 79 18 32 33 31 37Sum 20 4 15 8 8 0 -18 -64 -99 -124 -185TOTAL SUM -435 TOTAL: 252

MEAN: -1,726190476

91

Appendix VI: Interview questions to German wholesalers 1. Quality

Product reliability: • Are products quality assured? • Is it a requirement for manufacturers to quality assure products?

o How often? • How do you follow up that the manufacturers make their quality assurance? • On what basis do you select suppliers?

User simplicity:

• How similar are the products that you offer? (Product list) • In the given product basket, how many are exactly the same? (Product list) • In the given product basket, how many are complements? (Product list)

Warranty and claim policy:

• Do you have warranty and return of goods policies? o How do you follow up?

• What is your policy regarding warranty? o How many years?

• What is your return policy? o How many days?

2. Cost Price:

• Similarity in price? (Product list) • Are there additional costs for service of support functions?

o For technical support? E.g. calculations of lightning. o For administrative support? E.g. delivery status, reclaims

• Other expenses? o E.g. translation of manuals and product description?

• How often are renegotiations performed? • Are there different types of agreements?

Logistic price:

• What is the price for logistic? o Price per delivery?

• Price for returns? • Customs? • Other cost regarding transport?

Discount price:

• Do you work with discounts system? o Volume based? o How do you work with discounts?

92

3. Delivery On time delivery:

• How will the transport solution look like? o Internal or external forwarder?

• How accurate in time do you think is possible to be in your deliveries? Lead-time:

• How long lead-time do you have to Sweden? • Where are your stocks located? • Does the assortment vary geographically?

o If it differs, how much? Frequency and volume:

• How often can you deliver? o # Times/week? o # Transports i.e. how many trucks available?

• How flexible are you regarding transport? • How large/small volumes can you handle?

o Volume/delivery? o Do you have volume requirements for deliveries to Sweden?

4. Service Technical support:

• What technical support services/functions do you have? o On what time? o What are they including?

Technical product information:

• Do you provide technical product descriptions? o Product description in English/Swedish? o Is this something you are responsible for?

Language:

• How good are the English skills in support functions? o E.g. regarding administrative support, ex stock levels

§ How skilled are your suppliers in English. o E.g. regarding technical support

Administrative support:

• What type of administrative support do you have? o At what time?

• Do you have an IT system that can help us with administrative questions? E.g. order status

93

Appendix VII: Scoring of German wholesalers 1. Quality

2. Cost

Question Company A Company B Company C

Are products quality assured? 2 2 2It is a requirement for manufacturers to quality assure products? 2 2 2How do you follow up that the manufacturers make their quality assurance? 1 2 1On what basis do you select suppliers? 2 2 2

MEAN: 1,75 2 1,75

How similar are the products that company X offers? 1 2 2MEAN: 1 2 2

Do company X have warranty and return of goods policies? 2 2 2What is company X’s policy regarding warranty? 2 2 2What is company X’s policy regarding return? 2 2 2

MEAN: 2 2 2

Quality

Product Reliability:

User simplicity:

Warranty and claim policy:

Question Company A Company B Company C

Similarity in price? 1 1 1Competitive price? 1 1 1

MEAN: 1 1 1

What is the price for logistics? 0 0 0What is the price for returns? 0 0 0Are there any other costs regarding transport? 0 0 0

MEAN: 0 0 0

Do you work with discounts systems? 3 3 3How do you work with discounts system? 2 2 2

MEAN: 2,5 2,5 2,5

Logistic price:

Discounts:

Cost

Price:

94

3. Delivery

4. Service

Question Company A Company B Company C

How will the transport solution look like? 2 2 2How accurate in time do you think it is possible to be in your deliveries? 0 0 0

MEAN: 1 1 1

How long lead time do company X have to Sweden? 2 2 2MEAN: 2 2 2

How often can company X deliver? 2 2 2How flexible is company X regarding transport? 2 2 2How large/small volumes can you handle? 3 3 3

MEAN: 2,3 2,3 2,3

Delivery

On-time delivery:

Lead time:

Frequency and volume:

Question Company A Company B Company C

Do company X provide technical support? 2 2 2

MEAN: 2 2 2

Do company X provide technical product description? 2 2 2Is this something company X is responsible for? 1 1 1

MEAN: 1,5 1,5 1,5

What type of administrative support do you have? 2 2 2Do company X have an IT-system that can help to answer administrative questions? 0 1 0

MEAN: 1 1,5 1

Do company X provide technical product description in Swedish/English? 2 2 2MEAN: 2 2 2

Service

Technical support:

Technical product description:

Administrative support:

Language: