Whilst there is much research material on buyer and supplier performance assessment and management, a relationship perspective can bring an added dimension, especially to the performance of close, mutual relationships. This article aims to bring a relationship performance understanding to the study of buyer–supplier exchange. Unfortunately, business-to-business relationships are assumed to enhance performance but what little research has been conducted is limited to a few dimensions reflecting a narrow theory or practice assumption. To remedy this we investigate a relationship performance definition that incorporates both non-financial and financial dimensions. The results are developed from seven qualitative interviews followed by a postal survey incorporating the views of 200 industrial buyer respondents in the UK. To examine the relationship among the performance variables, factor analysis was conducted on 21 dimensions of performance included in the research. On this basis, key dimensions of relationship performance are grouped and implications drawn for defining relationship performance and its measurement. The authors conclude that it is meaningful to take a relationship performance position when managing buyer–supplier interactions. However, not all the dimensions identified may be available to all types of relationships.
This paper examines the early progress towards the adoption of supply chain management (SCM) relationships in construction. It is based on a literature review and survey of the views of construction practitioners. We contend that SCM has many of the features associated with a 'fifth generation innovation'. This paper suggests that although construction practitioners have some knowledge of SCM they need a better conceptual understanding of it and new and more systematic approaches to its implementation.
Business-to-business (B2B) marketsites are quickly becoming one of the major issues for companies in their search for opportunities to improve visibility of their trading activities and sources of further cost reduction. The paper begins with a synthesis of potential benefits resulting from participation in marketsites and then provides a number of initial classifications of marketsites. The paper then introduces some of the major inhibitors and enablers of marketsites and views these from a number of perspectives such as the structure of marketsites, the degree of centricity and the types of products purchased through such marketsites. Finally, some recommendations for further research are made.
This paper will discuss the concept of relationship development. It will argue that whilst existing literature focuses on an economic power relationship this is incorrect. The focus should be based on a concentration on the trade off between the level of dependency that a firm is prepared to accept, compared to the level of certainty that they perceive to be realistic.
The basic premise of this study is that suppliers, in order to compete successfully in the marketplace, have to develop certain innovative capabilities that, in turn, depend on the type of relationship that is established with customers (in other words, the strategic role assumed by the supplier in the supply chain). Based on a study of 198 suppliers operating in the food packaging machinery industry, structural equation modelling has revealed that customers actually assign suppliers different roles and give them varying levels of responsibility in the product development and manufacturing stages. These roles are correlated to the supplier's distinctive innovation capabilities. Clustering analysis is used to divide the suppliers into homogeneous groups. Innovative capabilities are not only associated with traditional competencies in R&D and product/process innovation but also in supportive capabilities in the form of absorptive capacity, technological scanning, innovation-oriented culture, skills and know-how of individuals and managerial practices. The impact of different innovative capabilities (both technological and managerial) on critical performance factors such as price, quality, time and flexibility is measured for each type of supplier in turn. The research findings lend support to the hypothesis that the level of investment in technology and the acquisition of specific managerial capabilities are, to a large extent, a determinant of supplier–customer interdependence.
This article explores the awareness of effective purchasing and the priority that purchasing is given within small and medium size enterprises (SMEs). Results of a survey of 400 small firms are used to identify the challenges and responses faced by SMEs. Finally, the author suggests paths which might be followed by such firms in seeking to achieve best in class performance in purchasing activities.
In this article, the development of management accounting is connected to purchasing and supply management. The accounting system can act as a strong enabler as well as a barrier to the development of purchasing. A number of measures are identified and discussed leading to the conclusion that there are some highly interesting and relevant new techniques available. Using these, it should be possible to foster a stronger relationship focus in the purchasing function, which would enable managers to carry out a segmented approach to purchasing and supply management. Today, however, it would appear that managers largely fail to take advantage of these techniques.
In modular assembly, car manufacturers can choose to assemble the modules internally or to outsource the units assembling the modules. These module assembly units (MAUs) can be located inside or outside the assembly plants. This paper analyzes the conditions provided for MAU performance by ownership and location, the constitutive dimensions of a MAU's organizational form. Based on a case study at Volvo and theoretical arguments, the paper shows that organizational forms provide different conditions for MAU performance. It is concluded that no organizational form is best and that different forms should be used. It is also concluded that companies must control MAUs, which influences how the conditions provided by different organizational forms can be utilized.
Recent literature suggests that outsourcing, properly understood and managed as an integral part of strategy, can aid competitiveness. This paper examines the process of outsourcing manufacturing to understand its role in the new strategic agenda. A system model which indicates the critical workflow interfaces between the production system and internal support functions is proposed. The model helps determine the cross-functional interdependencies of the outsourcing process. A four-phase model of strategic outsourcing is then developed. The model serves both as an internal management tool and as an external marketing tool. This leads to synthesis of a practical framework that links six generic phases of outsourcing to strategic planning. The framework includes key activities with built-in performance measures and expected output for each of the phases. The research methodology combines theory study with case study and action research in Aalborg Industries, which operates in the heavy industry. Hence, the research pursues both academic and industrial application.
This paper aims to contribute to the development of a conceptual model for studying the direct and indirect impact of various forms of electronic procurement (EP) on a firm's integral purchasing (-related) costs. The model builds on existing classifications of purchasing-related costs and benefits and is illustrated by means of empirical data. Building the model leads us to conclude that assessment of the direct impact but especially the indirect impact of EP is far from straightforward. A form of EP may not only affect different categories of purchasing-related costs but also induce opposing direct effects within one such category. In addition, indirect effects can occur in many ways, as drastic reduction costs in one category may offer possibilities for structural changes in existing purchasing routines, which may in turn affect costs and benefits in other categories as well.
A key task of the purchasing function is to secure adequate and timely supplies of necessary input factors. In some industries, however, this task is challenging, as it may be difficult to obtain timely and reliable input, e.g. in industries based on natural resources. This may have serious implications for firms’ ability to compete effectively in their output markets. Few empirical studies of purchasing behaviour have focused on how actors cope with uncertain supply. Also, the fast-growing market orientation literature generally seems to have neglected the importance of supply. This paper aims to provide insight into the poorly understood question of how upstream actors cope with uncertain input supply to handle customers’ needs and wants. To investigate our research problem an exploratory study was conducted among 20 upstream actors in the seafood industry. A quasi-experimental approach was applied by selecting firms from two industry branches so that one group was exposed to the “treatment” (i.e. uncertain supply) while the other group was not. Our findings show that when supply is uncertain it is of utmost concern and considered a key determinant in satisfying the firms’ target markets.
The findings of a survey into the outsourcing activities of large organisations in the Edinburgh and Lothian region of Scotland are reported in this paper. The aim was to carry out a study of outsourcing activity against a theoretical framework of practice and problems derived from the literature. It was found that 70% of the organisations outsourced at least one activity, with cleaning, maintenance, catering, security, and manufacturing/operations being the most common areas, the principal motivation being to improve the quality and cost of the activity outsourced. The criteria used for selecting outsourcing contractors were mainly reputation, cost, previous contacts and technical capability. The main benefits of outsourcing were reduced costs, improved quality of service, increased management focus on core activities, and access to new capabilities. The main problems with outsourcing were loss of control, poor supplier management and problems with confidentiality and opportunist exploitation by supplier. This research was supported by Lothian and Edinburgh Enterprise Ltd.
The overall purpose of this research was to analyze internal communication patterns, service quality initiatives, supplier management strategies and internal performance in organizations providing high levels of service quality to their external customers. Data was collected from 118 purchasing executives of manufacturing and service organizations. Respondents were asked to assess external and internal service quality as well as identify a number of internal service quality-oriented activities employed in their firms. Data was summarized for respondents stating a high level of external service quality. Comparative information was also supplied for the respondents stating lower levels of external service quality.
Purchasing portfolio models have received a great deal of attention during the last two decades. The simplicity of application and the focus on power-dependence balancing has been appreciated by practitioners and academics alike. In this paper we argue that using ‘given’ products as a port of departure, in addition to a dyadic perspective on purchasing management, may be counterproductive where purchasing efficiency is concerned. First, the object of exchange is not ‘given’ when firms interact, but may be subject to continuous joint development. Second, the dyadic perspective may obscure potentials for enhancing productivity and innovativeness since both parties have other relationships that impact on the collaboration between them.
System sourcing is receiving increasing attention in purchasing. Previous research has dealt mainly with the opportunities provided by the approach. The aim of this paper is to explore its inherent complexity. System sourcing is analysed with regard to the system definition applied, the division of labour in development and manufacturing tasks, and the capabilities of the customer and the potential suppliers. The most important conclusion is that system sourcing strategies must consider the relationship between the partitioning of the total system in the design phase and the aggregation of the various subsystems in final assembly. The paper ends with four managerial implications.
The purpose of the article is to describe and compare the purchasing process for advanced versus basic logistics services. Further some specific observations are presented from the procurement of advanced third-party logistics services, with respect to service definitions, providers evaluations and contracts. The purchasing process of logistics services will in the future need to be more differentiated due to current business trends. Hence companies must analyse how these new procurement situations will impact on their purchasing processes in order to understand what new resources, routines and competence they need to have in order to purchase logistics services in an effective way.
This article investigates the role of purchasing/supply management in the target costing process. It is based on case studies of eleven firms that use target costing. In addition to exploring the role of purchasing, purchasing's interface with suppliers was investigated.
Because of supply chain management and other factors, purchasing's performance is considered an important element of corporate performance. Nonetheless, the measurement of purchasing performance, and comparing that performance to other purchasing departments has proven to be very difficult. These difficulties stem from the lack of valid measurement criteria and adequate methodologies to aggregate individual performance measures into a single index of overall performance. Many methodologies are unable to account for the relative importance of performance measures, which varies among firms.
Supply chain management often requires the integration of inter- and intra-organizational relationships and coordination of different types of flows within the entire supply chain structure. Inter-company integration and coordination via information technology has become a key to improved supply chain performance. Recent advances in information technology enable firms to manage effectively and inexpensively the coordination of not only the physical flow of materials but also the flow of different types of information such as demand, capacity, inventory, and scheduling, through a supply chain. Despite its importance, little attention has been given in the literature to the issue of measuring the magnitude and the effectiveness of available information that logistics information systems provide. This study provides a generic measure to show how well or to what degree a firm is integrated or “coupled” with the members of its supply chain structure from an information flow system perspective. The measure, called degree of supply chain coupling (DSCC), is a 2-tuple index which takes into account both the intensity and extent to which information about demand, capacity, inventory, and scheduling is shared and used by the firm in both directions of the supply chain. We indicate several productive practical uses of the DSCC measure at both macro and micro levels.
