Purchasing And Supply Management Research Articles

Steering through the storm: a process framework to guide purchasing and supply managers in navigating low-probability-high-impact disruptions

PurposeThis study seeks to explore the strategies purchasing and supply managers can employ to navigate the challenges presented by low-probability-high-impact (LPHI) disruptions. The core aim is to create a process framework that provides a systematic, step-by-step method to help purchasing and supply managers effectively deal with the chaos triggered by LPHI events.Design/methodology/approachThe study draws on qualitative data collected from eight firms operating within different industries (healthcare, fishing, food retail and manufacturing), where two firms represented each industry. The data underwent a thorough analytical process involving open coding, axial coding and aggregation of categories, resulting in the identification and formulation of overarching themes.FindingsThe analysis unveiled five primary challenges purchasing and supply management (PSM) encountered during the COVID-19 pandemic. These include supply shortages, supplier opportunism, the imperative to build a new supply base, price volatility and the need to make critical decisions based on limited information. It also identified contingent factors that influenced the magnitude of these challenges and approaches applied to address them. Additionally, it identified five responses to the challenges and two contingent factors that affected the responses.Originality/valueThis study extends the existing body of knowledge in purchasing and supply management by developing a process framework tailored to assist purchasing and supply managers in effectively addressing LPHI disruptions. To the best of our knowledge, this is one of the first studies to offer a structured, step-by-step approach that guides PSM professionals in navigating the chaos likely to be caused by such events.

A Critical Exploration of Bargaining in Purchasing and Supply Management: A Systematic Literature Review

AbstractBargaining with suppliers is a key Purchasing and Supply Management (PSM) activity but there is considerable ambiguity over what bargaining entails and the concept currently lacks a systematic treatment, despite its significant interest to PSM professionals. The literature shows that bargaining can be seen as an adversarial approach to negotiation (in contrast to more integrative/collaborative ones) and also the back-and-forth discussion over price and other variables between buying and supplying organisations to reach an agreement. In addition, many will move between fundamentally distributive and integrative approaches as the discussions play out. A systematic literature review of the Scopus, ProQuest, ScienceDirect, JSTOR and Web of Science databases was undertaken to address this gap, identifying 427 relevant journal papers that were systematically analysed. First, descriptive techniques identified the trajectory of published papers, methods, theories and their industrial context. Second, content analysis identified the key constructs and associated operational measures/variables of bargaining. Third, the constructs have then been ordered temporally and by areas of location (organisational/departmental and individual levels) to generate a model and inform a series of practice-based recommendations at different stages of the bargaining process. The findings will allow future researchers to use the constructs either directly in developing focused hypotheses to test relationships or as a basis for refinement and extension in cumulative theory building and testing. In addition, a series of focused research gaps have been identified, such as addressing the current contradictory findings of the effect of purchasing volume or organisational size on bargaining power.

The role of purchasing and supply management in diffusing sustainability in supply networks: A systematic literature review

AbstractOne of the most difficult supply network challenges facing companies today is how to diffuse sustainability not only among their direct (first‐tier) suppliers but also throughout their supply networks. Although a growing body of research has been dedicated to addressing this challenge, the role of purchasing and supply management (PSM) in sustainable supply network development remains underexplored. In this paper, we present a systematic review of the literature on the role of PSM in the diffusion of sustainability in supply networks. We analysed 133 peer‐reviewed papers published in 21 journals in the field of PSM. We scrutinized the theories, methods and levels of analysis used in sustainable PSM research, classified the practices for diffusing sustainability in supply networks and identified the role of PSM in the diffusion of sustainability. Accordingly, we put forward a set of propositions that link diffusion practices—and the role of PSM in these practices—with embedded and peripheral sustainability and suggest future research directions.

Implementing Industry 4.0 technologies: Future roles in purchasing and supply management

Technological advancements associated with Industry 4.0 drive a paradigm shift with economic and social consequences where digitalization, robotization, and other emerging technologies reshape the interconnection between organizations. Critical areas that need to adapt to the change are inter-organizational buyer-supplier relationships managed by Purchasing and Supply Management (PSM) professionals. That is, their future responsibilities and skills are likely to change. Introducing the concept of specialized roles to summarize needed competencies, this research conducted a real-time Delphi study using an internet-based platform involving 47 procurement experts. As a result, the roles of the Data Analyst, Master Data Manager, Process Automation Manager, Supplier Onboarding Manager, System Innovation Scout, and Legislation Specialist were identified as essential Industry 4.0 PSM roles. For these roles, the probability of their occurrence, industry impact, desirability, and level of industry adoption are assessed. Based on emerging technologies in PSM and adopting a human-centered perspective, this research shows the need to focus on talent development to enable a technology-driven revolution. Thus, the contributions lay in the literature on Industry 4.0 and the PSM skills and capabilities domain, highlighting the required roles for Smart Working and effective Smart Supply Chains management as parts of the digital transformation journey.

The Value of Data‐driven Category Management: A Case for Teaching Data Analytics to Purchasing and Supply Management Students

AbstractAs companies look to differentiate themselves with the help of their suppliers, the need for robust and sophisticated purchasing and supply management (PSM) processes that allow for informed decision‐making becomes increasingly important. These processes often rely on sophisticated data analytics to inform the design of a company’s category management strategy, such as its supply network design, its supplier relationship management, and its supplier performance management. Therefore, data analytics skills are crucial for PSM professionals. To foster these skills, we developed an innovative approach for teaching students how to use data analytics tools and techniques in PSM through the use of a teaching case called “Savingtools.” This case, developed in collaboration with a company undergoing a PSM transformation, illustrates the value of data‐driven category management in PSM. The case further demonstrates the principles and tools related to PSM data management, spend analysis, and classification, and allows for in‐depth data analysis, including visualizations. Our approach has been shown to effectively enhance student learning and comprehension, and we believe that it prepares future supply chain leaders while advancing PSM pedagogy.

The role of absorptive capacity and big data analytics in strategic purchasing and supply chain management decisions

Big data analytics (BDA) is widely used in sales, marketing, distribution, and finance; however, its implementation in supply chain management, specifically in purchasing and supply management (PSM), has been slow and uneven. This study investigates the impact of BDA on strategic PSM decisions and how it interacts with a company's absorptive capacity. We conducted a survey of 222 purchasing and supply chain managers in international companies across various industries. Using structural equation modeling, we found that the exploration, assimilation, and transformation capabilities of purchasing departments are crucial in facilitating the use of BDA for strategic decision-making in PSM. Companies that excel in BDA in the PSM space are better equipped to capitalize on new and existing knowledge sources, which improves their performance. However, only businesses with the right resources can fully leverage BDA for high-level strategic decision-making; when BDA is applied to operational PSM activities, the desired effects may not be achieved.

Determinants of supplier payment times before and during the pandemic: Empirical evidence from UK firms

Timely, compliant payment to suppliers is a significant issue in purchasing and supply management (PSM) but research into its determinants is limited. Here we draw on social responsibility, fintech and digital purchasing literatures, and institutional and stakeholder theories to explain variations in supplier payment times. A sample of 509 firms spanning 2018–2021 is used for panel regression analysis. Contrary to expectations, the COVID-19 pandemic did not lead to longer payment times or reduced compliance with payment terms, which we attribute to state-funded business supports and corporate decisions to accelerate payment to vulnerable suppliers. Institutional pressure in the form of payment codes was associated with shorter payment times and improved compliance during the pandemic. Supply chain finance (SCF) was associated with longer payment times during the pandemic while e-invoicing had no effect. Overall, institutional pressure seems to contribute to faster payment but stakeholder-centred fintech and digitalisation does not.

Developing design principles for the implementation of AI in PSM: An investigation with expert interviews

The use of artificial intelligence (AI) in purchasing and supply management (PSM) has great potential, e.g. for automating processes and supporting PSM employees. Nevertheless, the number of realized AI use cases in PSM is still limited, and mostly in large companies. This paper examines first requirements for the implementation of AI in PSM. Second, design principles are developed on the basis of the identified requirements. Third, exemplary AI use cases in PSM are presented. For this purpose, a literature analysis is first conducted and followed by interviews with 17 PSM and technology experts. Finally, 40 requirements for the implementation of AI in PSM are developed from the conducted expert interviews. Based on these 40 requirements, ten design principles are developed in the sense of the design science research (DSR) approach to describe the relevant activities for the implementation of AI in PSM. The artifacts developed in this paper will contribute to the implementation of AI in PSM. The applicable research results should facilitate the transfer of knowledge into practice and contribute to the establishment of the DSR method in PSM research.

New competences enhancing Procurement’s contribution to innovation and sustainability

This research presents the results of a multiple method study exploring the future competence requirements for purchasing and supply management (PSM) professionals in the face of increasing demand for innovative and sustainable product and service solutions. Data collection consisted of four stages: first, a World Café was held to gather experts’ insights into PSM skills, which helped to refine a first survey round of eleven open-ended questions. A second survey round then followed, presenting four scenarios based on the results of the initial round. Finally, interviews were conducted to explore the results in detail. The participants in all stages were senior PSM experts from a variety of sectors, including manufacturing and service organisations, as well as academic institutions, consulting firms and non-governmental organisations. The results show that the expected changes in the future business environment mainly concern the application of digital technologies, increasing supply chain flexibility and transparency, sustainability performance and the need to build soft skills to support interpersonal relationships as well as hard skills to support supply chain design.

Digital transformation of the purchasing and supply management process

PurposeThe aim of this study was to identify interventions for and mechanisms of the digital transformation of purchasing and supply management (PSM) processes. The digital transformation of tactical and operational PSM processes has often progressed slowly despite the solid knowledge of advanced technologies.Design/methodology/approachThis study used a qualitative exploratory approach based on 14 interviews with PSM executives from firms that are continuously working toward using advanced technologies in their PSM processes but have not yet gained full strategic benefits from digital transformation.FindingsThis study formulates five propositions regarding interventions and mechanisms that can positively influence the digital transformation of PSM processes. The main intervention in this regard is the renewal of data infrastructure, including platforms. PSM-related data should meet needs from both tactical and operational viewpoints. When applications serve as a source of data, they support digital transformation. Mechanisms such as supplier measurement and process improvement are outcomes of the digital transformation of PSM processes.Practical implicationsThis study highlights the importance of common data sets for tactical and operational purchasing. These purchasing data should be owned and served by a cross-functional team. To create this interoperability, a firm needs global governance of open standards.Originality/valueThis study makes a theoretical contribution to the discussion of what kind of interventions positively influence on the digital transformation of PSM processes. Specifically, this study explains the integration needs of data and applications.

Creating resilient supply chains through a culture of measuring

The COVID-19 pandemic and the ensuing disruptions to global supply chains have brought risk management to the fore. While guidance on risk management is proliferating, an area that is largely untapped is risk measurement. The pandemic has made us realize the criticality of risk measurement and the need to develop a culture of continuous measuring. Based on our interviews with purchasing and supply management (PSM) professionals about how they measure and manage risk, we offer a framework integrating how to rethink risk measurement, how to continuously measure risk, how to translate measurement into action, and how to establish a culture of continuous measuring. It captures a shift in mindset that is needed to truly take risk measurement to the next level. Once this is accomplished, it can help PSM professionals build more resilient supply chains.

Exploring colliding logics of supply chains and business ecosystems in purchasing and supply management

PurposeA shift in supply management is underway. Nonlinear connections of buyers and sellers in business ecosystems challenge conventional supply management practice. Digital technologies and network connectivity lower the costs of connecting and collaborating with loosely related external parties. This paper aims to explore how this challenges conventional purchasing and supply management (PSM) practice.Design/methodology/approachThis paper builds on the extended case research method. It is based on a theoretical conceptualization, which is explored through a case study.FindingsThe authors find that both supply management’s contribution to value creation, value appropriation and collaborative interfaces change with the emergence of multifaceted business systems.Research limitations/implicationsThe paper is developed within a specific industrial context, and the findings are not directly transferrable to other contexts. However, the authors believe that on an analytical level, there is value in transferring the insights into other manufacturing contexts.Practical implicationsManagers must challenge the taken-for-granted thinking that follows from linear supply management practices and start rehearsing the role of PSM when dealing with supplies from business ecosystem lead firms.Originality/valueThis research takes up a novel issue, highly relevant for PSM practitioners as well as for theory. To the best of the authors’ knowledge, nothing has been written about the colliding business logics of conventional PSM and that of business ecosystems.

Unveiling the critical drivers of purchasing and supply management in apparel manufacturing industry

In a multibillion-dollar industry employing millions, the role of purchasing and supply management (PSM) is often underestimated despite its pivotal contribution. This study addresses the pressing need to understand and optimize PSM in the context of the apparel manufacturing industry. The objectives are to identify key factors influencing PSM and provide industry stakeholders with a strategic roadmap for improvement.

Guest Editorial: A purchasing and supply management view of supply resilience for better crisis response

Purchasing and supply management (PSM) has been under great pressure since the COVID-19 pandemic first shook the world. Companies and public organizations faced new kinds of supply disruptions, and at a scale never seen before. New response abilities were required from PSM to address these challenges and disruptions. This Editorial introduces four articles in the Special Issue on “PSM learning from the pandemic: transforming for better crisis management.” These empirical contributions show how companies could build resilience to survive and be competitive during the COVID-19 pandemic. This Editorial discusses how supply resilience should be conceptualized in post-pandemic supply chains adopting a PSM perspective. We suggest that supply resilience practices should be developed and planned according to whether they strengthen existing supply chain relationships (bridging) or establish new ones (buffering) and whether they are short-term (temporary) or long-term (permanent) orientated. Furthermore, three supply resilience capabilities, absorbing, responding and capitalizing, should be prioritized in supply chains for responding to and recovering from global crises and disruptions. Supply resilience is key to crisis response and recovery, and PSM has an essential role in building and sustaining that resilience.

Getting back into the swing of things: The adaptive path of purchasing and supply management in enhancing supply chain resilience

The COVID-19 crisis posed significant challenges to global supply chains (SCs) and exposed their vulnerability to disruption. As SCs have evolved into complex structures comprising a multitude of globally dispersed companies that collaborate closely with one another, purchasing and supply management (PSM) have played a key role in addressing the crisis. The existing PSM measures for increasing supply chain resilience (SCRES) were stress tested and it became evident that these methods are applicable only to a limited extent due to their static perspective and their lack of a network character. Thus, this paper examines the role of PSM by identifying implemented response measures. By conducting 40 semi-structured interviews with experts from original equipment manufacturers and first-tier suppliers in the German automotive industry, a comprehensive overview of the industry was obtained. To reflect the network nature of the industry and the adaptive path of PSM, the data analysis is framed by resource dependence theory and the adaptive cycle approach. The results of the study are 25 response measures of PSM to enhance SCRES, categorized into three waves of measures: initial measures upon the occurrence of the disruption, temporary measures during the disruption, and post-disruption measures. In this way, the study contributes to the existing literature by demonstrating that PSM takes on a major role in increasing resilience by implementing diverse response measures. In addition, the study shows that PSM follows the path of an adaptive cycle, and that after the disruption and the initial and temporary measures, PSM adapts, which is reflected in the post-disruption measures. For practitioners, the study provides a list of response measures to increase resilience that can be used to review existing measures or implement new ones.

Managing from a distance in international purchasing and supply

International purchasing and supply management (PSM) teams have long faced the visibility and understandability challenges of managing geographically dispersed and culturally distant suppliers. Problems arising from inadequate monitoring and control over suppliers can be attributed to geographical and cultural distance, capability gaps, weak institutions, and supply market dynamism. With transaction costs theory as our lens, we examine how international geographically and culturally distant purchasing and supply management (PSM) teams control emerging economy suppliers with formal management controls. We use interview survey data on 339 international customer-Chinese supplier relationships using supplier perceptions of the extent to which performance measurement and monitoring practices are used by their primary customer in the purchase reorder decision and control. The results demonstrate that the cultural and, to a lesser extent, geographical distance between the customer and the supplier is associated with more extensive use of formal management controls. Also, we find the relationship between geographical or cultural distance and the importance of performance measurement is strengthened for suppliers of complex components.

The effect of team-member knowledge, skills and abilities (KSAs) and a common learning experience on sourcing teamwork effectiveness

PurposeA lack of sourcing-specific team research prevents a full understanding of sourcing teamwork effectiveness (STE). Moreover, the limited purchasing and supply management (PSM) team literature often tends to focus on an aggregate group level. The paper makes a step towards adopting an individual actor perspective on teamwork effectiveness with an emphasis on the context of sourcing, explicating the effects of team-member knowledge, skills and abilities (KSAs), and examining how these relationships are moderated by a common learning experience of strategic sourcing masterclass.Design/methodology/approachBased on a cross-sectional survey, this study analyses a sample of 90 sourcing team members from a global aerospace manufacturing company using hierarchical regression analysis.FindingsThe results suggest that four of the five KSAs positively and significantly affect STE; the exception was collaborative problem solving. Masterclass learning outcomes were found to positively moderate the effects of these KSAs on STE, again exclusive of the collaborative problem-solving KSA.Research limitations/implicationsCross-sectional design focused only on the aerospace sector may affect generalizability. Further, longitudinal research designs would capture the effects of the common learning experience over an extended period.Practical implicationsSourcing team members could be selected based on having KSAs which significantly affect teamwork effectiveness. Training and development for sourcing teams should combine guided reflexivity and cross-training to deliver learning outcomes that create similar team mental models.Originality/valueThe study provides an individual team-member perspective on the functioning of sourcing teams which is absent in the extant research. It contributes to the very limited research base on skills in PSM.

Information Asymmetry in Business-to-Business Negotiations: A Game Theoretical Approach to Support Purchasing Decisions with Suppliers

The digital transformation confronts purchasing and supply management (PSM) with numerous new challenges, such as digital procurement objects and the information asymmetry between buyers and suppliers. Existing approaches contributing to PSM research (e. g., the selection of suppliers or the calculation of equilibrium prices) have in common that information regarding suppliers (e. g., production costs) must be well-known. However, this information is rarely accessible to purchasers due to the existing information asymmetry. This problem is addressed by a game-theoretical model based on a Stackelberg game to assist PSM in dealing with the information advantage of software suppliers. The applicability in practice is evaluated by a real-world case study from the automotive industry. The results show that the presented model can support decision-making in purchasing by a qualitative analysis of profit scenarios for different negotiation strategies. The model contributes to dismantling the information asymmetry and provides a basis for determining negotiation prices, also for digital procurement objects. This research motivates both supply and purchase managers to jointly optimize their product costs and thus increase their competitiveness on the market.

Econometrics and archival data: Reflections for purchasing and supply management (PSM) research

Purchasing and supply management (PSM) has faced unprecedented disruption over the past two years due to COVID-19 pandemic, input shortages, extended supplier lead times, record international transportation costs, and commodity price increases. Studying such phenomena is often best completed using archival data, such as data from government agencies or international organizations. This manuscript emphasizes how leveraging archival data often necessitates an iterative research process whereby researchers must first familiarize themselves with the data to ensure their scientific hypotheses can be appropriately tested. We further provide recommendations regarding how researchers should formulate generalized linear models (GLMs) to test theoretical predictions. Our approach emphasizes mapping scientific hypotheses to statistical hypotheses, as opposed to centering on issues of omitted variable bias (OVB). An illustrative example is provided where Census Bureau trade data are compiled to test whether the insurance and freight costs for waterborne containerized imports from Asian nations that enter through West Coast ports have risen more than the same products imported through East Coast ports. The research suggests the need to reorient how GLMs are formulated to better ensure researchers structure them to appropriately test their theory, in contrast to the current zeitgeist that overly emphasizes OVB.

Exploring the influence of ICT on sustainability in supply management: Evidence and directions for research

This paper explores the influence of information and communication technology (ICT) adoption on sustainability practices in purchasing and supply management (PSM) as well as its effects on purchasing performance. To accomplish this objective, a comprehensive review of the literature was conducted. The review revealed that little research has been carried out on the effects of digitalization on PSM, the unclear impact of sustainability initiatives on purchasing performance, and the dearth of (empirical) studies concerning ICT, sustainability, and PSM. To address these research gaps, hypotheses were defined and a conceptual framework was tested through a survey involving 131 companies operating in the Finnish economy. The results indicated that both operational and tactical procurement ICT systems positively influence sustainability practices in PSM. Moreover, sustainability practices supported by ICT systems were found to have a positive influence on purchasing performance. This paper differs from previous studies as it suggests a paradigm shift whereby technology is recognized as being integral to sustainability due to their reciprocal relationship, rather than being viewed simply as an enabler or barrier. The study also contributed to the literature by suggesting a novel framework that considers ICT and sustainability in PSM in an integrated way, overcoming the limitations of previous studies that considered them separately.