An empirical illustration of the transformation process of purchasing

Abstract

Purpose – The purpose of this paper is to highlight the strategic role of purchasing and model its transformation process based on a case study of a military firm. Design/methodology/approach – The paper reviews the existing literature to highlight the strategic role of purchasing and put forward the transformations the function is undertaking. The model system dynamic approach is then detailed and applied to model the transformation of the purchasing function of a military firm. The modeling software Analytica is then used to run the model and get to results. Findings – The shift of purchasing toward a more strategic function is complex and multidimensional. Implementing these transformations requires flexible designing approaches such as the system dynamic modeling that incorporates both quantitative and qualitative variables to model the function’s changes. The paper details the methodology of applying the system dynamic approach. It recommends a new structure of the purchasing function as well as new and upgraded indicators of purchasing performance and suppliers’ management. Research limitations/implications – A single-case study research. Even though, the objective is not to generalize the findings but to enrich the existing literature as regard the system dynamic modeling in a specific domain, the one-case research setting can be seen as a limitation against generalizeable findings. Practical implications – A clear step-by-step action plan of conducting the transformation of the purchasing function using the system dynamic modeling approach. The paper gives ways to upgrade existing measures of purchasing and policies of suppliers’ management. Originality/value – The application of the system dynamic modeling approach to the specific domain of military purchasing.