Academic journal article International Journal of Purchasing and Materials Management

Redefining the Purchasing Function: An Entrepreneurial Perspective

Academic journal article International Journal of Purchasing and Materials Management

Redefining the Purchasing Function: An Entrepreneurial Perspective

Article excerpt

Turbulence in the external environments of companies is producing a number of changes in the roles and responsibilities of the purchasing function. Capitalizing on the opportunities created under such conditions requires that purchasing be approached as a potential source of competitive advantage that adds value to the corporate operation. One perspective is that functions such as purchasing must become more entrepreneurial if they are to make significant strategic contributions in the future.

This article summarizes the results of a study directed at purchasing managers regarding the nature of entrepreneurship and its applicability within the purchasing function. The results suggest that managers are placing increasing importance on the need for entrepreneurship, and are able to identify specific activities within purchasing where entrepreneurship is most critical. Major obstacles in achieving an entrepreneurship focus are identified, and examples of entrepreneurial behavior within purchasing are provided.

INTRODUCTION

The purchasing function has undergone tremendous change over the past twenty years, much of which has been induced by factors outside the organization. Companies have been forced to adapt the structure, roles, and operations of their purchasing departments to function in an external environment that is increasingly turbulent.[1] Management is confronted with new technologies, cutthroat competition, problematic sources of supply, costly regulations, widely fluctuating interest and exchange rates, and fragmented customer markets. Forces such as these have not only elevated the visibility and strategic importance of purchasing, but they have altered the ways in which the purchasing task is accomplished.

In many firms, purchasing has become a senior level department, reporting directly to the chief operating officer.[2] Some companies have integrated purchasing with materials management, assigning significant responsibility to the combined function.[3] Still others have decentralized decision making, and transformed purchasing from a staff to a line function.[4]

Within purchasing itself is a growing focus on strategic supplier management. A growing number of firms are reducing the pool of suppliers on which they rely, and placing more emphasis on long-term cooperative relationships.[5] Managers are finding that while cost and efficiency are still important, they must gravitate more toward finding unique opportunities that will create value and produce competitive advantages.

Underlying changes such as these is the need to develop some sense of where the organization and management of purchasing is headed. One emerging perspective is that functional areas such as purchasing must become more entrepreneurial if firms are to remain competitive.[6] That is, they must take responsibility for developing innovative, creative approaches fro capitalizing on emerging opportunities in the external environment.

The purpose of this research to determine the extent to which purchasing professions perceive a role for entrepreneurship in their operations. Results are reported from a study of purchasing managers regarding how they define entrepreneurship, its relative importance, and the purchasing tasks and responsibilities that most lend themselves to entrepreneurial management. In addition, many constraints on entrepreneurship within purchasing are identified.

THE NATURE OF ENTREPRENEURSHIP

The term "entrepreneurship" has resisted precise definition for more than two hundred years.[7] The traditional emphasis has been on the efforts of an individual who goes against the odds in translating a vision into a successful business enterprise. More recently, entrepreneurship has been conceptualized as a process which can occur in organizations of all sizes and types, and which has both behavioral and attitudinal components. Approached in this manner, it refers to the process of creating value by bringing together a unique package of resources to exploit an opportunity. …

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