Study on Difference Between Supplier’s and Buyer’s Recognition on Supplier Capabilities Assesment in the Korean EPC Industry
Park, Sung-Yoon
Department of Accounting
Graduate School, Daejeon University
(Directed by Prof. Choi, Su-il Ph. D.)
In Engineering, Procurement, Construction(EPC) industry, where projects are conducted through many firms’ collaboration, it is necessary to adopt Supply Chain Management (SCM) to obtain optimal outcome. Contractor plays a central role in the supply chain and is responsible for assessing suppliers’ capabilities and utilize them as core resources to carry out a project. Therefore, the contractor’s ability to understand suppliers’ capabilities provides a foundation for successful and effective performance management of the project.
This study conducted a single embedded case study in Korean EPC industry to investigate the differences between contractor’s and its suppliers’ assessment on the capabilities of the suppliers and how contractors can assess their suppliers’ capabilities more accurately. Contractors?buyers?are assigned to assess their suppliers’ capability through online survey while the suppliers assess their own capabilities. Questionnaires to assess the supplier’s capability were designed based on related literatures and grouped into four categories such as technical/operational capability, developmental capability, relational capability and business capability. A major Korean EPC firm and its 106 suppliers participated in completing the survey and the results show in what categories the discrepancy of the recognition on assessment between a buyer and a supplier is made.
The results of this study show that on the whole, the suppliers assess their own capabilities in four categories highly above the buyers’ assessment. Particularly noteworthy is the result that many suppliers have the strongest propensity to overassess their capabilities in category of technical/operational capability.
This study contributes to the research of suppliers’ capability management in the context of SCM for project business by providing a case of EPC industry and can suggest directions leading to shared understanding of suppliers’ capability in SCM. In addition, to analyze and understand the differences between buyers’ and its suppliers’ own assessment on the capabilities of the suppliers contributes towards providing a foundation for successful and effective performance management of the project in EPC industry.