Academic journal article International Journal of Purchasing and Materials Management

Evolving Roles and Responsibilities of Purchasing Organizations

Academic journal article International Journal of Purchasing and Materials Management

Evolving Roles and Responsibilities of Purchasing Organizations

Article excerpt

While there is general agreement that the purchasing function can make a substantial contribution to the overall competitive position of the firm, organizational issues in the supply function will influence how and where contributions are made.[1] As firms explore new ways to reduce costs, cut leadtimes, improve product development times, and integrate the supply function within the organization, many are reexamining the organization structure of their purchasing area. Several of the classic questions still exist: Should the supply area be centralized, decentralized, or have a hybrid structure? To whom should the chief purchasing officer (CPO) report? What functions should report to purchasing?[2]

The Center for Advanced Purchasing Studies (CAPS) sponsored its first study investigating organizational relationships in purchasing in 1987.[3] Since that time, much has changed to influence organization of the supply area. Consequently, CAPS sponsored a second study in 1995, with the objectives of assessing both changes since 1987 and identifying current trends and developments.[4]

A total of 119 firms responded to both the 1987 and 1995 studies, providing a unique opportunity to track changes within these organizations. This longitudinal data represented a chance to evaluate how each firm had altered its supply organization in areas such as structure, CPO reporting relationships, CPO titles, and span of control, over the eight year period between studies. We found that substantial changes had occurred.

There is a question as to whether the 119 companies were representative of the total group in the 1987 and 1995 samples. This has been tested and, only with a minor exception in the area of span of control, averages for the 119 firms were identical to the larger sample in each of the two years.

This article addresses two questions. First, what patterns of change are occurring within the supply function of large companies? Comparing group responses, while useful, ignores the dynamics of the changes which occurred between 1987 and 1995 among individual firms. Focusing on the 119 firms that responded to both surveys provides a rare opportunity to assess the extent to which organizational change was occurring within these companies.

Second, what factors lead to the observed trends? While definitive answers are difficult at this stage of the research, our findings give rise to questions with respect to factors which influence organizational change.

STUDY DESIGN AND SAMPLE

The fundamental research questions for both the 1987 and 1995 studies were the same: What are the responsibilities of those charged with executing the supply function in large companies, and how is the function organized? Who is in charge, using what title, and what is the individual's background?

It was important that the second study conform as much as possible to the 1987 study. Consequently, the basic questions dealing with firm size, titles, background of the CPO, reporting lines, responsibilities, organization, and size of the department were kept essentially the same. In the 1995 study, some questions were expanded and new questions added in order to extend the richness of the data collected.

Sample firms were selected from the Fortune 500 manufacturing and service lists, and comprised 21 industry groups. No government organizations, banks, or retailers were included in the sample. A total of 297 responses were received in the 1987 study for a 55 percent response rate. The 1995 [TABULAR DATA FOR TABLE I OMITTED] study received 308 responses for a 51 percent response rate.

A total of 119 firms responded to both studies. The majority of the respondents among these 119 firms, 92 percent, were from the manufacturing sector. This is understandable given that the 1987 study only had 29, or 10 percent, of its respondents from the service sector. The largest industry groups in the sample were electronics (17 percent), chemicals (13 percent), and petroleum and coal (10 percent). …

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