Using Real Options in ERP-Systems for Improving Delivery Reliability

Today's machinery and equipment industry is a highly volatile market, giving rise to frequently instable and inapprehensible buyer-supplier-relationships and to turbulences with respect to reliability of deliveries. With this paper we propose a minimal invasive approach how to overcome existing capability limitations in production planning, scheduling and procurement of ERP-systems by using real options as means for coordinating the divergent interest of buyers and suppliers. Following the design research paradigm, we first describe how real options can be integrated in a contemporary ERP-system. In a supplemental evaluation, the attitude toward using this approach is discussed. This final discussion provides insights whether companies in the machinery and equipment industry are willing to adopt our real options approach, or if they prefer the use of other, not necessarily IT-enabled, means for handling the poor delivery reliability.