Cost estimation accuracy in supply chain design: The role of decision-making complexity and management attention

Jesper Norman Asmussen, Jesper Kristensen, Brian Vejrum Wæhrens

Research output: Contribution to journalJournal articleResearchpeer-review

2 Citations (Scopus)

Abstract

Purpose: The purpose of this paper is to investigate how management attention and supply chain complexity affect the decision-making process and cost estimation accuracy of supply chain design (SCD) decisions. Design/methodology/approach: The research follows an embedded case study design. Through the lens of the behavioural theory of the firm, the SCD decision process and realised outcomes are investigated through longitudinal data collection across ten embedded cases with varying degrees of supply chain decision-making complexity and management attention. Findings: The findings suggest that as supply chain decision-making complexity increases, cost estimation accuracy decreases. The extent to which supply chain decision-making complexity is readily recognised influences the selection of strategies for information search and analysis and, thus, impacts resulting cost estimation errors. The paper further shows the importance of management attention for cost estimation accuracy, especially management attention based on conflicting goals induce behaviours that improve estimation ability. Research limitations/implications: A framework proposing a balance between supply chain decision-making complexity and management attention in SCD decisions is proposed. However, as an embedded case study the research would benefit from replication to externally validate results. Originality/value: The method used in this study can identify how supply chain complexity is related to cost estimation errors and how management attention is associated with behaviours that improve cost estimation accuracy, indicating the importance of management attention in complex supply chain decision-making.

Original languageEnglish
JournalInternational Journal of Physical Distribution & Logistics Management
Volume48
Issue number10
Pages (from-to)995-1019
Number of pages25
ISSN0960-0035
DOIs
Publication statusPublished - 2018

Keywords

  • Behavioural theory of the firm
  • Case study
  • Cost estimation
  • Hidden cost
  • Management attention
  • Supply chain complexity
  • Supply chain decision-making
  • Supply chain design

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