Designing and implementing open book accounting in buyer–supplier dyads: A framework for supplier selection and motivation

Though Open Book Accounting (OBA) is a well-known practice in supply chain management, the lack of guidelines to support managers to implement it effectively has been highlighted in the literature. This paper discusses a methodology to support the selection of suppliers with whom to successfully cooperate in OBA projects and the identification, for each buyer–supplier dyad, of appropriate incentives to enable cost data disclosure. The methodology has been developed using empirical findings from an action research the authors have conducted in close collaboration with an Italian manufacturer of modular kitchens and 19 of its suppliers. It emerges that the sourcing strategy and the nature of cost data disclosed should drive the buyer's decisions on how to use disclosed account data and how to select the most appropriate set of incentives to encourage suppliers' participation. In particular, the sourcing strategy mainly affects the supplier's reaction to incentives and the uses of cost data shared, while the nature of open books agreements primarily influences the buyer's attitude to commit resources to specific suppliers and, therefore, to activate the more costly incentives. These findings have interesting implications for the identification of the suppliers with whom to collaborate in open books programs, for the selection of incentives to mitigate suppliers' natural reluctance to disclose cost data, and for restrictions in the use of disclosed data to ensure that they are not abused within and outside the relation.