A Performing Manufacturer Mitigates Risk by Using Performance Information Systems

Abstract

A manufacturer initially approached the researchers to identify how to use the performance information of their high-performance urethane coating system to increase quality. The research project used the construction industry structure to identify owners who understood the high risk and transactions caused by low bid practices. Intelligent owners understood that value was delivered by expert contractors using high performance products rather than warranties. However, during the economic downturn, high performing contractors reverted to the low bid practices of using warranties to win work rather than performance. To create a high-performance environment, the manufacturer again approached the researchers to mitigate the risk caused by their warranties. The research identified that risk was not mitigated by warranties, but by transparency and performance information. A structure was developed that mitigated risk caused by a change in paradigm that resulted in a "win-win" result in a test case that involved the school district. As the system was installed, the performance of contractors increased, and the sprayed urethane foam contractors became the only roofing contractors at the school district to consistently maintain their installed roofs and mitigate the risk to the client at their own cost without using the manufacturer's warranty.