Managing Buyer-Supplier Relationships: Empirical Patterns of Strategy Formulation in Industrial Purchasing

By Terpend, Regis; Krause, Daniel R. et al. | Journal of Supply Chain Management, January 2011 | Go to article overview

Managing Buyer-Supplier Relationships: Empirical Patterns of Strategy Formulation in Industrial Purchasing


Terpend, Regis, Krause, Daniel R., Dooley, Kevin J., Journal of Supply Chain Management


INTRODUCTION

The industrial purchasing process is complex and involves many interrelated decisions made in a complex environment. To help buyers (1) manage a high number of purchases in various environments, the field of purchasing has relied on classification schemes since the early 1980s, primarily purchasing portfolio models (e.g., Kraljic 1983). These models are prescriptive in nature and built on the premise that the context surrounding categories of similar purchases dictates a unique relationship strategy, and that adopting this strategy will improve performance. Since these models have not been empirically validated, it is difficult to evaluate the extent to which companies have implemented the strategies prescribed by the models, and the degree to which following these strategies leads to better performance. By extension, it raises questions about how buyers rationalize the high number of purchases they manage.

Given the lack of empirically based classifications, it has been assumed that portfolio models provided adequate direction for buyers in terms of how to make major types of purchases. However, building a taxonomy is helpful for determining whether the reality experienced by buyers is similar to that described in portfolio models. In general, a taxonomy examines the commonalities and differences across a large variety of units--in our case, purchases made by companies--and classifies them according to shared and unshared characteristics. From a practitioner standpoint, the development of a taxonomy of purchases may help buyers rationalize the purchases they currently manage, and determine whether important purchase types are missing from existing models. From a research standpoint a taxonomy provides clues about whether the dimensions articulated in existing portfolio models provide valid segregations among the various types of purchases.

Thus, the goal of this study is to uncover a taxonomy of purchases made by buyers, and to use this taxonomy to discover patterns of decisions made by buyers during the purchasing process. We believe researchers and practitioners alike can learn more about how buyers approach their relationships with suppliers in response to strategic goals of their firm and supply market conditions. The research question is: Are there patterns that emerge from buying firms' purchasing decisions that allow researchers to identify various families of purchases? If so, are there potential performance gains for firms that adopt the taxonomy?

To meet our objective, we collected data from a sample of large industrial U.S. firms and conducted a cluster analysis. Our taxons were selected to capture three domains relevant to the purchasing cycle: the strategic intent of the buying firm, the competitive market forces at work in the market in which the product or service is purchased, and buyer-supplier relationship factors. These factors manifest the purchasing strategy pursued by buyers for various types of purchases. We also consider the performance outcomes for each type of purchase.

This paper is organized as follows: first, we review the extant literature, including previous purchasing strategy-research and existing purchase classifications and introduce the general hypotheses that frame our work. Second, we introduce the various dimensions that underlie our taxonomy. Third, we describe the steps of our methodology and present results. Finally, we discuss our findings and their implications for future research and for practitioners.

LITERATURE BACKGROUND

This section provides an overview of the research literature used for the theoretical foundations of our study. The theoretical scope of this paper falls at the junction of two main streams of literature: (1) the purchasing strategy literature and, (2) the purchasing portfolio literature.

Purchasing Strategy

While the origin of operations strategy can be traced back as early as the 1960s (i. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Managing Buyer-Supplier Relationships: Empirical Patterns of Strategy Formulation in Industrial Purchasing
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.