Aplicación Cliente

Building upon the PCS, and the previous paragraphs conclusion, this paper extends the existing building blocks of the theory by adding a new element in the theories scope: Tender Attractiveness. This element will be introduced in this sub-chapter and will cover the additional challenges public procurement brings along with regards to PCS. First the functioning of the PCS in the public domain will be discussed in order to better understand what gap Tender Attractiveness has to fulfil and then a suggestion will be made on hoe the PCS cycle should look like when public entities conduct purchasing activities: the may-effect of this thesis.

3.7.1 Applicability of Preferred Customership in the public domain

When consulting academic literature on the preferred customership in the public sector and construction industry in particular the following results are found. Searching for “public procurement” AND “preferred customer status” or “public sector” AND “preferred customer status” no results were generated in scopus.

Adjusting the search results to “construction sector” AND “preferred customer status” generated one paper: “Antecedents and benefits of obtaining preferred customer status. Experiences from the Dutch construction industry” (Bemelmans, Voordijk, Vos, & Dewulf, 2012).Interestingly, this paper emphasizes the PCS in the Dutch construction industry, however, in detail the research focuses on a totally different buyer-supplier relationship compared to this study as it investigates how a prime contractor can obtain a preferred customer status from its suppliers (Bemelmans et al., 2012). Essentially, this is a relationship between two private companies and thus no public procurement practices are used. Basically, the Bemelmans et al. paper focusses on the buyer–supplier relationship between Case Company A’s and Case Company B’s tier-1 and tier-2 suppliers whereas this study focusses on the relationship between a public buying party (Case Company A or Case Company B) and a private tier-1 supplier like Heijmans (see appendix (B)). The main finding of the Bemelmans et al. (2012) paper emphasizes that buying parties who seek to become a preferred customer need to be perceived as a mature customer in the way they manage their supplier relationships (Bemelmans et al., 2012). Moreover, they found that buying parties who have obtained a preferred customer status benefit from it by enjoying more satisfied collaborations (Bemelmans et al., 2012). These results do not generate major findings or leads for this paper directly however it does encourage this paper to focus on the other buyer-supplier relationship within the construction industry. The fact that no other relevant public procurement studies on PCS were found is confirmed by Schiele (2018). Reasoning one step back and arguing on the already discussed context of public procurement identified that public buyer-supplier relationships differs from private interactions which may implicate that the normal PCS cycle of figure 5 is not applicable in the same sequence or context in public procurement. The PCS theory assumes that a preferred customer will receive preferential treatments from their suppliers, for example; suppliers dedicating his or her best engineers to projects or giving customers earlier access to innovations (Hüttinger et al., 2012; Baxter, 2012). In the context of the theory, it is expected that suppliers and buyers do recurrent business and, if the supplier perceives the customer as preferred after an initial business interaction, the buyer will enjoy preferential treatment in the subsequent interaction. This is underlined by P. J. Williamson (1991) who argues that buyers should focus on long-term relationships with one supplier because this incentivizes suppliers to dedicate its best resources to buyers instead of favouring clients which could be gone tomorrow. In retrospect, public sector actors simply cannot ensure repeat business since they are obliged to set out new public tenders compliant tot the rules and regulations for

every new purchase they make. Consequently, two important lessons can be concluded: first, because of the public procurement’s obligation to objectively set out tenders for every new purchase, repeat business is complex to ensure by buying parties because they do not have the freedom to choose their preferred supplier in general and thus preferential supplier selection and business continuation is more complex. Secondly, as a result, supplying parties are hindered in giving preferential treatment towards their customers since they are not guaranteed an opportunity to do so. The red line in these findings is that the

initiation of business relationships (i.e., tender publication and subsequent selecting and awarding process) and functioning of preferential treatment (i.e., reciprocation of clients) is indeed different in public sector and therefor the private sector PCS theory cannot be generalized (see figure 8).

FIGURE 8: A MAJOR DIFFERENCE IMPACTING THE FUNCTIONALITY OF PREFERRED CUSTOMERSHIP IN THE PUBLIC DOMAIN

3.7.2 Theoretical argumentation of why Tender Attractiveness is an appropriate tool enhancing the Preferred Customer cycle´s functioning within public procurement

Building upon the previous findings, this paragraph will argue why tender attractiveness is an appropriate tool which can potentially fill-up a gap currently present in the functioning of preferred customership in the public domain. Firstly, in public procurement and the construction industry specifically, a project tender itself and the moment when a contract of a tender is awarded to a certain supplier, seems to be an important momentum in public procurement. Multiple scholars already acknowledged the importance of projects in the environment of buyer-supplier relationships in the construction industry as Cox & Thompson (1997) said construction mainly focussed on project-based activities. Dubois & Gadde (2000) added that exchanges between buyers and suppliers are transactional instead of relational and consequently suppliers more significantly focus on individual projects instead of possible long-term relationships with clients. This is also acknowledged by Knight et al. (2012) who say that due to strict legal rules public buyers can less easily build up long relationships. Also, public procurers are obliged to set out new tenders via a standard legal protocol enabling transparency and equal opportunities for suppliers to win (Knight et al., 2012). From here, repeat business can less easily be guaranteed towards suppliers resulting in a recurrent focus on individual projects and its tenders. Therefore, the following argument supports the introduction of tender attractiveness to PCS’s scope.

Argument 1: Buyers and suppliers in the public procurement environment more thoroughly focus

on project related business because they are obliged to continuously set out new public tenders frustrating long-term business orientation; hence the tender of an individual project and its short- term impact way more heavily in a business interaction

Next, due to often extensive contracts purchased in the construction industry and the impact these projects can have on a supplier’s business, appropriately analysing a tendered project as a supplier is of great importance (Bagies & Fortune, 2006). Paragraph 3.5.3 also underlined the relevancy of the tender by identifying that the most important factors which influence a supplier’s consideration to bid or not to bid

are tender related factors (figure 9). To put it differently, the empirical findings of the literature review discussing the bid or not to bid decision identify tender-related factors as most significantly impacting the supplier’s decision, what results in a confirmation of tender importance. Tender-related factors were found thirteen times whereas supplier- and customer related topics were notified eight and six times respectively (see figure 9).

Argument 2: The available empirical literature emphasizing what factors influence suppliers in

their consideration to interact with public procurers underline that tender-related factors are most predominant; hence tender related factors should also be given a platform in PCS

Furthermore, SET has emphasized that the concept of attraction related to a customer influences a supplier’s decision to interact with a certain customer as the higher the level of customer attractiveness, the more attention the party will receive from suppliers (Ellegaard & Ritter, 2006; Hüttinger et al., 2012). From here, this paper argues that the same could apply for a customer’s projects and its associated tender. Thus, in line with SET, the higher the attractiveness of a tender project, the more capable the public purchasers will be to attract participants for tenders and ensure their commitment:

Argument 3: In line with SET, the level of tender attractiveness can potentially stimulate