ABSTRACT
This chapter discusses the role of purchasing and supply in service-based business models. It examines the significance of operating models such as ‘power by the hour’ and ‘contracting for availability’. The chapter explains the implications for buyer–supplier collaboration in outcome-based models involving complex performance. It analyses a supply chain in relation to potential for remanufacturing and product recovery. The chapter also discusses the connection between service-based business models and sustainability. It proposes the concept of services to the supply chain as an important source of adding value and as a distinct yet complementary approach to production operations. The traditional view of operations management involves the transformation model as consisting of inputs, i.e. raw materials, which are transformed via production into outputs, i.e. finished products. As the role of purchasing and supply has become more prominent in the organization, the value of including a procurement professional in preliminary talks with suppliers before production commences is recognized as standard practice.
