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Strategic Role and Contribution of Purchasing in Singapore: A Survey of CEOs.


The purchasing function is receiving increased attention as a key contributor to the strategic success of the firm. This study seeks to identify the strategic role of the purchasing function and the contributions that purchasing can make in an organization. A mail survey was conducted among CEOs based in Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km).  to examine the relationship between corporate competitive strategy and purchasing objectives, as well as how purchasing affects business performance through its integration with other functions, its partnership with suppliers, and its involvement in team decisions. The data collected were factor analysed Verb 1. factor analyse - to perform a factor analysis of correlational data
factor analyze

analyse, analyze - break down into components or essential features; "analyze today's financial market"
 and the results suggest that purchasing objectives are affected by the firm's corporate competitive strategy. More important, purchasing can yield better business performance through greater integration with other functions, closer partnership with suppliers, and greater involvement in team decisionmaking.


Purchasing is a very traditional activity. Despite its long history, however, it is only in the past three or four decades that there has been widespread recognition of the importance of efficient purchasing. Previously, purchasing was generally regarded as a routine clerical function or as a service function concerned with spending (Lysons 1981). Since the mid- mid-
Middle: midbrain. 
1970s, there has been a growing, albeit sporadic sporadic /spo·rad·ic/ (spo-rad´ic) occurring singly; widely scattered; not epidemic or endemic.

spo·rad·ic or spo·rad·i·cal
1. Occurring at irregular intervals.

, interest in strategic approaches to the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  process, with an emphasis on the scope for pro-activity. However, there has been little consideration of the contribution that may be made to the overall competitive effort of the organization (Rajagopal and Bernard Ber·nard , Claude 1813-1878.

French physiologist noted for his study of the digestive and nervous systems.
 1993). Farmer (1978) found that multinational manufacturing companies show a growing awareness of the importance of the supply function as an element in corporate activity.

When the deep recession of the early 1980s began to grip industries, purchasers found themselves on the ascendancy as·cen·dan·cy also as·cen·den·cy  
Superiority or decisive advantage; domination: "Germany only awaits trade revival to gain an immense mercantile ascendancy" Winston S. Churchill.
. They tended to work closely with suppliers to improve schedule and quality reliability, to seek mutual benefits from more effective liaisons, and to guarantee supplies into the future (Bailey and Farmer 1986).

Recognizing the importance of the purchasing function in overall corporate performance, most progressive firms today are paying close attention to their purchasing functions and have attempted to improve the management of their supplier networks. Also, recent writings have begun to recognize the importance of purchasing in formulating corporate-level strategies (Watts Watts, residential section of south central Los Angeles. Named after C. H. Watts, a Pasadena realtor, the section became part of Los Angeles in 1926. Artist Simon Rodia's celebrated Watts Towers are there. , Kim Kim

orphan wanders streets of India with lama. [Br. Lit.: Kim]

See : Adventurousness
, and Hahn Hahn   , Otto 1879-1968.

German chemist. He won a 1944 Nobel Prize for his work on atomic fission.

Noun 1. Hahn - German chemist who was co-discoverer with Lise Meitner of nuclear fission (1879-1968)
Otto Hahn

In terms of direct contribution, for some organizations, purchasing is important. In others, it is critical. For example, the average firm in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area.  spends about 60 percent of sales on materials and equipment (Killen Killen can refer to:

  • Killen, Alabama, a town in Lauderdale County
  • Killen, County Tyrone, a village in the Strabane District Council area of Northern Ireland
  • Chris Killen, New Zealand professional footballer
 and Kamauff 1995). In contrast, the expenditure on wages, salaries, and fringe benefits fringe benefits, the benefits, other than wages or salary, provided by an employer for employees (e.g., health insurance, vacation time, disability income).
 amounts to only about one-third of the materials cost or 20 percent of sales.

The logical question to ask is, "With the growing importance of purchasing, how has the CEO's perception of the purchasing function changed?" More important, how will this perception shape purchasing-supplier partnerships as well as affect purchasing's role in team decisionmaking in organizations today? According to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 Johnston Johnston, town (1990 pop. 26,542), Providence co., N central R.I., a suburb of Providence; inc. 1759. Among its manufactures are jewelry, textiles, and fabricated metals. Johnston is the home of several insurance companies.  and Lawrence Lawrence.

1 City (1990 pop. 26,763), Marion co., central Ind., a residential suburb of Indianapolis, on the West Fork of the White River. It has light manufacturing.

2 City (1990 pop. 65,608), seat of Douglas co., NE Kans.
 (1991), many industry observers attribute Ford's gains over General Motors in the 1980s to Ford's proactive moves to forge forge

Open furnace for heating metal ore and metal for working and forming, or a workshop containing forge hearths and related equipment. From earliest times, smiths (see smithing) heated iron in forges and formed it by hammering on an anvil.
 strategic partnerships with suppliers.

Overall, the cost and economic impact of purchasing are often underestimated. Purchases continue to exceed 55 to 60 percent of sales in many industries (Ansari and Modaress 1987; Anderson Anderson, river, Canada
Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic
, Griffiths Griffiths is a surname with Welsh origins, as in Gruffydd ap Llywelyn Fawr. People called Griffiths recorded here include:
  • Bede Griffiths
  • Cecil Griffiths
  • Colin Griffiths
  • Ciaran Griffiths
  • David Griffiths, there are several people by this name.
  • H. W.
, and Laseter 1993; Leenders and Fearon Fearon may refer to:

  • Brendon Fearon, British criminal
  • James Fearon, American political scientist
  • Martin Fearon (born 1988), English footballer
  • Phil Fearon (born 1956), British record producer
 1993). Thus, the fundamental questions is, "How can the CEO'S perception of purchasing affect business performance?" Most firms try to increase profit by reducing labor costs and increasing sales, while at the same time overlooking o·ver·look  
tr.v. o·ver·looked, o·ver·look·ing, o·ver·looks
a. To look over or at from a higher place.

 a significant opportunity in the form of total supply chain management (Killen and Kamauff 1995). Research has shown that without access to world-class world-class
1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater.

 suppliers, a firm will find it Increasingly difficult to meet the demands of its sophisticated customers (Monczka and Trent Trent, city, Italy
Trent, Ital. Trento, Latin Tridentum, city (1991 pop. 101,545), capital of Trentino–Alto Adige and of Trent prov., N Italy, on the Adige River and on the road to the Brenner Pass. It is an industrial and tourist center.

With growing emphasis on the purchasing function, it is especially essential and interesting to have a better understanding of its role in and contributions to the organization. As such, this study is timely. Specifically, this article seeks to:

1. Understand the CEO's perceptions and expectations of the purchasing function in Singapore.

2. Examine the relationship between the corporate competitive strategy and the CEO's perceptions and expectations of the purchasing function.

3. Examine the effects of purchasing-supplier relationships on business performance.

4. Study the effects of the purchasing function's involvement in team participation on business performance.

5. Study the effects of the purchasing function's integration with other functions on business performance.

A mail survey was sent to 800 CEOs of firms randomly selected from the mailing list An automated e-mail system on the Internet, which is maintained by subject matter. There are thousands of such lists that reach millions of individuals and businesses. New users generally subscribe by sending an e-mail with the word "subscribe" in it and subsequently receive all new  of the Singapore Institute of Purchasing and Materials Management Materials management is the branch of logistics that deals with the tangible components of a supply chain. Specifically, this covers the acquisition of spare parts and replacements, quality control of purchasing and ordering such parts, and the standards involved in ordering,  (SIPMM). Recipients of the questionnaire were requested to respond to questions designed to measure their perceptions and expectations of the purchasing function, general competitive strategies of the firm, purchasing-supplier relationships, purchasing's participation in team decision making, the purchasing function's integration with other functions, and business performance of the firm.


Ammer Ammer can refer to:
  • the upper course of the river Amper in Bavaria, Germany.
  • Ammer (Neckar), a small river in Baden-Württemberg, Germany, tributary of the Neckar.
 (1974) has already noted that top management views purchasing as having a passive role in the business organization. The 1973-74 oil crisis and other related raw materials shortages drew attention to the importance of purchasing. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding.

See also: Spite
 the crisis, top management and purchasing professionals did not react to improve the role of purchasing in corporate strategy (Farmer 1978). Porter (1975), in his seminal work A seminal work is a work from which other works grow. The term usually refers to an intellectual or artistic achievement whose ideas and techniques have been adopted or responded to in later works by other people, either in the same field or in the general culture.  on the forces that shape the competitive nature of industry, identifies buyers and suppliers as two of the five critical forces. Thus, the strategic importance of the supplier and the firm as a buying entity began receiving recognition in the mainstream strategy literature.

The 1980s were a period of shifting attitude with regard to purchasing's role in corporate strategy. While many authors noted the benefits of greater strategic involvement by the purchasing function, there was limited significant research until late into the decade (see, for example, Spekman 1981; Browning, Zabriskie, and HuellMantel 1983; Spekman 1985; Burt n. 1. (Zool.) See Birt.

Noun 1. Burt - English psychologist whose studies of twins were later said to have used fabricated data (1883-1971)
Cyril Burt, Cyril Lodowic Burt
 and Soukup 1985; Caddick and Dale 1987). During the early 1990s, the research focus appears to have shifted toward the integration of purchasing with other functions, and the means by which the purchasing function can work to become recognized as a significant contributor to the firm's success (e.g., Freeman Freeman can mean:
  • An individual not tied to land under the Medieval feudal system, unlike a villein or serf
  • A person who has been awarded Freedom of the City or "Freedom of the Company" in a Livery Company
  • The Freeman
 and Cavinato 1990; Pearson Pear·son   , Lester Bowles 1897-1972.

Canadian politician who served as prime minister (1963-1968). He won the 1957 Nobel Peace Prize for his role in the negotiation of a solution to the Suez crisis (1956).
 and Gritzmacher 1990; John and Young 1991; Monczka 1992).

Kaiser (1976) posits that purchasing strategy is influenced by the type of buy and the supplier market. Another study by Jain Jain   also Jai·na
A believer or follower of Jainism.

[Hindi jaina, from Sanskrit jaina-, relating to the saints, from jina
 and Laric (1979) indicates that purchasing is important to the achievement of the marketing strategy of the firm. Hahn, Kim, and Kim (1986) also present a conceptual framework For the concept in aesthetics and art criticism, see .

A conceptual framework is used in research to outline possible courses of action or to present a preferred approach to a system analysis project.
 to examine the effects of a purchasing strategy that encourages competition among suppliers. Later, Watts, Kim, and Hahn (1992) develop a conceptual framework for connecting purchasing to the firm's competitive strategy and to the strategies of other functions. These studies are, however, only conceptual in nature and have not been tested empirically.

Previous studies have also focused on specific areas of purchasing such as supplier partnerships (Stuart 1993) and empowering of the purchasing function (Giunipero and Vogt
This article is about the title Vogt. For the surname, see Vogt (surname). For the place in Germany, see Vogt, Germany. For the musical group, see Funker Vogt.

Vogt (also Voigt; plural Vögte; Dutch voogd; Danish
 1997). These studies exclude corporate competitive strategy as a factor that can affect the way purchasing forms partnerships with suppliers. Further, others like Rajagopal and Bernard (1993) outlined a framework to map the development of a competitive purchasing strategy, which, however, remains untested empirically.

A study on team participation by Ellram and Pearson (1993) also suggests a transition from individual purchasing responsibility to a team-based approach. However, the research does not examine the consequences of the team-based approach. To date, there is no research that examines the possible affect of the CEO's perceptions and expectations of the purchasing function on supplier partnerships and team participation. Also, Stuart (1993) has established a model for supplier partnerships and tested it empirically using a questionnaire, which was distributed to a broad-based broad-based

Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased
 sample of industries. He confirmed the empirical test of his model exclusively to supplier partnerships. However, the model does not address how corporate competitive strategy can influence the purchasing philosophy and committed resources.

A review by Ellram and Carr CARR Carrier
CARR Customer Acceptance Readiness Review
CARR Carrollton Railroad
CARR Corrective Action Request and Report
CARR City Area Rural Rides (Texas)
CARR Configuration Audit Readiness Review
CARR Customer Acceptance Requirements Review
 (1994) revealed that much of the research completed in purchasing is either conceptual in nature or is based on a small number of case studies. While some studies have based their findings on data gathered from a large number of firms, most do not report the use of statistical analysis to support the findings of the research.

In another study, Tan TAN

See tax anticipation note (TAN).
 (1990) Looked at how the electronics industry in Singapore organizes its purchasing function. In this study, respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy.  were questioned on the goals and objectives of purchasing, and organizational and management issues such as centralization cen·tral·ize  
v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es
1. To draw into or toward a center; consolidate.

, the existence of a central purchasing authority, the use of computers, and the freedom to formulate formulate /for·mu·late/ (for´mu-lat)
1. to state in the form of a formula.

2. to prepare in accordance with a prescribed or specified method.
 departmental policy and run the department. Most purchasing managers A Purchasing Manager is an employee within a company, business or other organization who is responsible at some level for buying or approving the acquisition of goods and services needed by the company.  (89 percent) feel that their top management recognized the importance of purchasing. The study also reports that firm size does not seem important to top management's recognition of purchasing. However, it did not examine the possible effects of corporate competitive strategy on purchasing and how purchasing can affect business performance. Wang (Wang Laboratories, Inc., Lowell, MA) A computer services and network integration company. Wang was one of the major early contributors to the computing industry from its founder's invention that made core memory possible, to leadership in desktop calculators and word processors.  (1997) examined purchasing trends among manufacturing firms in Singapore and how using JIT JIT - dynamic translation  can affect the changes that are taking place in purchasing departments Noun 1. purchasing department - the division of a business that is responsible for purchases
business department - a division of a business firm
. Her study, however, overlooks the effects that purchasing may have on business performance.

Thus far, there is no recorded empirical research Noun 1. empirical research - an empirical search for knowledge
inquiry, research, enquiry - a search for knowledge; "their pottery deserves more research than it has received"
 on the effect of corporate competitive strategies on purchasing. To establish the purchasing function's role in strategy, a major study of purchasing's role and participation in corporate strategy is needed (Ellram and Carr 1994).


This study seeks to address some purchasing research gaps mentioned earlier. A framework that incorporates the CEO's perceptions of the importance of purchasing, purchasing's integration with other functions, the purchasing-supplier partnership, the role of purchasing in team decisions, and the contribution of purchasing to business performance is developed. The conceptual framework is shown in Figure 1.

Corporate Competitive Strategy

Porter (1980) proposed the first generic strategy to be cost leadership. This strategy requires aggressive construction of efficient-scale facilities, a vigorous pursuit of cost reduction from experience, tight cost and overhead control, and cost minimization. Its cost position gives the firm a defence against rivalry Rivalry
Robbery (See THIEVERY.)

Rudeness (See COARSENESS.)

Brom Bones and Ichabod Crane

bully and show-off compete for Katrina’s hand. [Am. Lit.
 from competitors. Achieving a low overall cost position often requires a high relative market share.

The second generic strategy is to differentiate the product or service offering, creating something that is perceived industry-wide as unique. Approaches to differentiation can take the form of product design, brand image, product features, customer service, dealer network, or other dimensions Other Dimensions is a collection of stories by author Clark Ashton Smith. It was released in 1970 and was the author's sixth collection of stories published by Arkham House. It was released in an edition of 3,144 copies. . Product innovation is deemed extremely important. However, this strategy may not allow the firm to ignore costs, though it is not the primary strategic target. Differentiation provides insulation insulation (ĭn'səlā`shən, ĭn'sy–), use of materials or devices to inhibit or prevent the conduction of heat or of electricity.  against competitive rivalry because of brand loyalty by customers and resulting lower sensitivity to price. Further, Porter argues that achieving differentiation may sometimes preclude pre·clude  
tr.v. pre·clud·ed, pre·clud·ing, pre·cludes
1. To make impossible, as by action taken in advance; prevent. See Synonyms at prevent.

 gaining a high market share. It often requires a perception of exclusivity, which is incompatible incompatible adj. 1) inconsistent. 2) unmatching. 3) unable to live together as husband and wife due to irreconcilable differences. In no-fault divorce states, if one of the spouses desires to end the marriage, that fact proves incompatibility, and a divorce  with high market share (Porter 1980).

These two competitive strategies present the most important dimension of Porter's model, namely, the basis of competition for firms is either its uniqueness (differentiation strategy) or its low-cost leadership.

Purchasing Objectives

A commonly used definition of procurement objectives is to purchase the right quality of material, at the right time in the right quantity from the right source, at the right price (Lysons 1981; Bailey and Farmer 1986; Warts Warts Definition

Warts are small, benign growths caused by a viral infection of the skin or mucous membrane. The virus infects the surface layer. The viruses that cause warts are members of the human papilloma virus (HPV) family.
, Kim, and Hahn 1992; Killen and Kamauff 1995). But what is right? According to Killen and Kamauff (1995), some primary objectives of the purchasing function include buying at the lowest price ensuring the required quality and service, maintaining the specified material quality level, and maintaining good supplier relationships. Two contrasting purchasing strategies related to supplies appear to focus on cost and quality. In the former, the main concern would be price while in the latter, the main concern would be attributes of the product purchased, which would include the product's physical characteristics, features, functions, technology, and performance capabilities.

One would logically expect that the purchasing department and top management set the purchasing objectives. As such, purchasing objectives will dovetail dovetail
n a widened or fanned-out portion of a prepared cavity, usually established deliberately to increase the retention and resistance form.
 with the corporate strategy of the organization. In short, purchasing objectives need to be congruent con·gru·ent  
1. Corresponding; congruous.

2. Mathematics
a. Coinciding exactly when superimposed: congruent triangles.

 with organizational values and goals (Killen and Kamauff 1995). It then follows that the definition of right in a purchasing strategy must be consistent with the other functional area goals and objectives, and in turn be consistent with corporate competitive goals and objectives (Watts, Kim, and Hahn 1992). If purchasing objectives are not in line with corporate competitive strategy, this may result in a conflict in the goals of the firm and of the purchasing function. With an overall cost leadership strategy requiring tight cost control, one can also expect the purchasing function to emphasize cost minimization. Hence, the first hypothesis is as follows:

H1a: The more an organization emphasizes cost leadership in its competitive strategy, the more cost-focused are the purchasing objectives.

H1b A category under the U.S. Immigration and Nationality Act by which aliens can enter the U.S. for three years if they work in a specialized field and their employers cannot fill the position locally. The three years may also be extended to six years. : The more an organization emphasizes differentiation in its competitive strategy, the more quality-focused are the purchasing objectives.

Again, based on Porter's (1980) argument that differentiation and cost competitive strategies are not complementary additional hypotheses are as follows:

H1c: The more an organization emphasizes cost leadership in its competitive strategy, the less quality-focused are the purchasing objectives.

Hid: The more an organization emphasizes differentiation in its competitive strategy, the less cost-focused are the purchasing objectives.

CEO's Perception of Importance of Purchasing

Within a particular undertaking, purchasing may be accorded a relatively high or low status. The CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  regards the status of the purchasing function as important if there is equality of standing between purchasing and other departments. Purchasing will be consulted in areas other than the price, quality, and availability of materials, for instance, in strategy formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating.

American Law Institute Formulation
 and market planning. The purchasing function can also be involved in framing corporate policy (Lysons 1981). Any function will be deemed very important If it contributes to the overall success of the organization and is able to increase organizational profits effectively.

Many organizations claim that their purchasing function is equally important as other functions. However, the actual degree of importance as perceived by the CEO can be evaluated by examining the extent of the purchasing function's involvement in strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. . With an intense participation in strategic planning, purchasing can no longer be considered as just a "clerical function."

Purchasing-Supplier Partnership

An organization's success depends somewhat on a successful relationship with its external suppliers. It is one of purchasing's main jobs to cultivate cul·ti·vate  
tr.v. cul·ti·vat·ed, cul·ti·vat·ing, cul·ti·vates
a. To improve and prepare (land), as by plowing or fertilizing, for raising crops; till.

 these relationships and to ensure they continue to be successful (Killen and Kamauff 1995). Traditionally, firms have used some form of bidding process for selecting suppliers. Under such a system, a supplier is selected through competitive bidding Competitive bidding

A securities offering process in which securities firms submit competing bids to the issuer for the securities the issuer wishes to sell.

competitive bidding

, often on the basis of the lowest bid price. Some authors have suggested that the philosophical underpinnings of the competitive bidding approach to supplier selection can lead to higher total cost in the long run (Hahn, Kim, and Kim 1986).

According to Stuart (1993), short-term Short-term

Any investments with a maturity of one year or less.


1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time.
 contracts, evaluation by bid, and numerous suppliers characterize the traditional adversarial ad·ver·sar·i·al  
Relating to or characteristic of an adversary; involving antagonistic elements: "the chasm between management and labor in this country, an often needlessly adversarial . . .
 relationship between purchasers and suppliers, with an emphasis on price. Partnerships and strategic alliances between purchasers and suppliers are gradually replacing these adversarial relationships (Gentry 1993). Supplier partnering, or strategic alliancing, establishes and maintains an ongoing relationship between the two partners. For it to work, it requires information sharing See data conferencing. , joint problem-solving activities, and mutual dependency dependency

In international relations, a weak state dominated by or under the jurisdiction of a more powerful state but not formally annexed by it. Examples include American Samoa (U.S.) and Greenland (Denmark).
 (Womack, Jones, and Roos 1990). Stuart (1993) states that such a partnering arrangement involves a thorough review of potential suppliers by the buying team and is hence time-consuming and expensive. Longer-term contracts, multiple criteria in supplier selection, and fewer selected suppliers characterize the supplier partnership. Such partnerships require extensive time and effort and imply higher costs on the part of the purchasing unit. As such, only those firms which place significant importance on the purchasing function would be likely to foster the formation of such strategic alliances. Thus, it is hypothesized that:

H2: The more important purchasing is perceived to be by the CEO, the greater the extent of the purchasing-supplier partnership.

Role of Purchasing in Team Decisions

Purchasing is a critical link in the entire value-added process, having both internal and external customers (Giunipero and Vogt 1997). Today, the team concept is becoming increasingly important in managing a business (Scholtes 1988; Ellram 1990; Ellram 1991; Bartlett and Ghosal 1990). Multidisciplinary mul·ti·dis·ci·pli·nar·y  
Of, relating to, or making use of several disciplines at once: a multidisciplinary approach to teaching. 
 teams are essential to success in a volatile business environment (Murphy and Heberling 1996). A team includes the use of a committee, task force, or group of people from a variety of functional areas to achieve a common goal (Ellram and Pearson 1993). Issues, which have broad and strategic implications, are increasingly decided at team level. With the workings of a team, purchasing personnel may also have an opportunity to participate in decisions previously closed to them. Thus, the team approach represents an excellent opportunity to increase the purchasing function's influence in decisionmaking, as well as its strategic participation and visibility to others in the firm (Ellram and Pearson 1993). Murphy and Heberling (1996) state that the integrated product team must have the support of top management to achieve real success. They propose that teaming and empowerment em·pow·er  
tr.v. em·pow·ered, em·pow·er·ing, em·pow·ers
1. To invest with power, especially legal power or official authority. See Synonyms at authorize.

 can bring about both opportunity and risk. Teaming provides an opportunity for any functional discipline to show that it can add value to the process. However, the reaction of purchasing professionals to these new management philosophies is not clear. They can either watch teaming from the sidelines Sidelines

Hypothetical position referring to noninvolvement in a stock; merely watching.
 or support it enthusiastically and productively.

Since the team approach would involve the purchasing function in more strategic decisionmaking, the CEO must perceive the purchasing function to be of significant importance before involving it extensively in team projects. However, if purchasing were not perceived to have an important role, it would be excluded from most team projects and would not be asked to contribute to team decisions. As such, it is postulated pos·tu·late  
tr.v. pos·tu·lat·ed, pos·tu·lat·ing, pos·tu·lates
1. To make claim for; demand.

2. To assume or assert the truth, reality, or necessity of, especially as a basis of an argument.


H3: The more important purchasing is perceived to be by the CEO, the greater the extent of the purchasing function's involvement in team decisionmaking.

Purchasing Function's Integration with Other Functions

According to Rajagopal and Bernard (1993), organizations exercise the best control over the cost of purchased goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax.  only when synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action.  exists between departments. Integrating purchasing with other functions implies the contribution or the adding of value to other functions, such as engineering and marketing. To Lysons (1981), purchasing has a low status in the organization when purchasers tend to do what they are told. Thus, if the purchasing function is deemed unimportant un·im·por·tant  
Not important; petty.

unim·portance n.
, it would most likely be told to purchase whatever other departments need. It would not be asked to contribute to the other departments. Thus, it is logical to postulate postulate: see axiom.  that the more important the CEO perceives the purchasing function, the more likely it is to contribute to other functions. Thus, the next hypothesis is as follows:

H4: The more important purchasing is perceived to be by the CEO, the greater the extent of purchasing's integration with other functions.

Business Performance

Organizations are concerned with profitability in their business ventures. Issues like profitability, sales volume, customer retention, and competitiveness affect the bottomline. A detailed study of Japanese success in industrial competitiveness reveals that at least some portion of that success is due to the supplier relationship (Womack, Jones, and Roos 1990). An ongoing relationship encourages suppliers to develop a better understanding of customer needs and quality requirements. This typically results in reduced variability in output quality and rejected products and higher quality inputs into a purchasing firm's operations (Trevelen 1987). Good buyer-seller relationships facilitate the organization's efforts in managing superior performance (Rajagopal and Bernard 1993). As such, good purchasing-supplier partnerships can be posited to improve business performance. Thus, the next hypothesis is as follows:

H5a: The greater the extent of the purchasing-supplier partnership, the better the business performance of the organization.

Researchers have postulated that, given access to information on the firm's strategy and involvement in key decisionmaking issues within the firm, the purchasing function can be an important contributor to the overall strategic success of the firm (Landeros, Reck, and Plank 1995). The concept of supporting team involvement maintains that improved interfunctional cooperation and understanding can improve the commitment to and quality and speed of decisionmaking. Therefore, the next hypothesis is as follows:

H5b: The greater the extent of purchasing's involvement in team decisionmaking, the better the business performance of the organization.

Few firms today can allow purchasing or any other functional management area to operate in isolation. The increasing complexity of most business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets  requires the expanded use of cross-functional teams In business, a cross-functional team is a group of people with different functional expertise working toward a common goal. It may include people from finance, marketing, operations, and human resources departments.  of various specialists in a highly analytical analytical, analytic

pertaining to or emanating from analysis.

analytical control
control of confounding by analysis of the results of a trial or test.
 decisionmaking process. As such, the integration of purchasing with all other functions is also key in determining business performance. Therefore, it is hypothesized that:

H5c: The greater the extent of purchasing's integration with other functions, the better the business performance of the organization.

The 10 hypotheses represent relationships highlighted in the conceptual framework found in Figure 1. They postulate the relationships between competitive strategy, purchasing objectives, and purchasing importance as viewed by the CEO. The relationships between the purchasing function's integration with other functions, its involvement in team decisions, purchasing-supplier partnership, and business performance are also discussed.



Data were collected through a mail survey. The sampling frame used in this study consisted of 800 CEOs from the SIPMM mailing list. Those in the manufacturing industry include firms dealing with electronics, computers, plastics, semiconductors, printing, and construction materials. Firms from the service industry include hospitals, hotels, and restaurants. The CEO was chosen as the target respondent In Equity practice, the party who answers a bill or other proceeding in equity. The party against whom an appeal or motion, an application for a court order, is instituted and who is required to answer in order to protect his or her interests.  because the survey questions addressed the CEO's perceptions and expectations of the purchasing function, the overall performance of the organization, and the corporate competitive strategy. Using such broad-based questions meant that only the CEO or top management executives would be able to answer them accurately. Even though the CEO may not know the purchasing function in detail, he or she was the best person to direct the relevant individual in the organization to provide the information.


The multiple indicators of each construct in the study were gathered from a variety of sources. Some of the measures used were well established, some were modifications of existing measures, and others were developed from scratch using descriptive studies mentioned in the literature as a guide.

The operationalization of the "Corporate Competitive Strategy" construct involved the development of measures from descriptive studies in corporate competitive strategy. The main source is Porter's (1980) study. Purchasing objectives were measured based on cost or quality as the main focus of the objectives. These measures were adapted from Killen and Kamauff's (1995) study. Lysons' (1981) measures, "CEO's Perception of the Importance of Purchasing", were also adapted to operationalize the construct.

The measures for "Purchasing Function's Integration with Other Functions" were based on Rajagopal and Bernard's (1993) work. As the integration of purchasing with other functions generally means contributing or adding value to other functions, scales were developed to measure the extent to which the purchasing function adds value to the other functions.

The scales used to measure "Purchasing-Supplier Partnership" were developed after reviewing Stuart's (1993) research on supplier partnership, Gentry's (1993) study on strategic alliances in purchasing, and a study on maintaining buyer-supplier partnerships by Landeros, Reck, and Plank (1995).

Six-item scales for measuring "Purchasing Function's Involvement in Team Decisions" were developed based on the work of Giunipero and Vogt (1997) and research on the role of the purchasing function toward team participation by Ellram and Pearson (1993).

Subjective measures were used to measure "Business Performance." There are two reasons why subjective measures were chosen. First, subjective measures of performance are commonly used in research on private companies and on business units of large companies. Previous studies have found a strong correlation between subjective assessments and their objective counterparts (Narver and Slater slat·er  
1. One employed to lay slate surfaces, as on roofs.

2. See pill bug.

3. See sow bug.

Noun 1.
 1990). Second, some respondents may not know or are unwilling to divulge certain information on the actual performance of their firms. They may, therefore, feel less threatened in answering questions that use subjective measures. Consequently, this may also increase the proportion of fully answered questionnaires among those returned. The subjective measures used here were adapted from Jaworski and Kohli (1992).

Questionnaire Design and Pre-Test

For consistency and easy completion, most of the scales used in this study are standardized standardized

pertaining to data that have been submitted to standardization procedures.

standardized morbidity rate
see morbidity rate.

standardized mortality rate
see mortality rate.
 5-point and 7-point Likert scales Likert scale A subjective scoring system that allows a person being surveyed to quantify likes and preferences on a 5-point scale, with 1 being the least important, relevant, interesting, most ho-hum, or other, and 5 being most excellent, yeehah important, etc . To reduce response bias, the measures for various constructs were mixed randomly and some of the questions were reversed scored.

The questionnaire was pre-tested on 10 key management personnel from 10 different organizations. The pre-test was used to assess issues such as face validity face validity (fāsˑ v·liˑ·di·tē),
, statement clarity and precision, response format, sensitivity of questions, and questionnaire layout and length. The questionnaire was refined based on the respondents' comments. Certain commercially sensitive questions were rephrased to add clarity and certain questions (for example, sales volume) were taken out because they were deemed sensitive and would thus lower the response rate.

Field Procedure and Response

A letter explaining the nature and purpose of the research as well as a copy of the questionnaire was sent to the firms. To encourage quick and easy response, respondents were also allowed to fax their responses to the SIPMM, or return them via regular mail.

Of the 800 questionnaires sent, 65 were returned due to a change in address of the designated firms and other reasons. Thus, only 735 firms received the survey questionnaire, of which 89 companies replied. This yields a response rate of 12.1 percent. Discarding all incomplete and inconsistent responses, the final number of usable USable is a special idea contest to transfer US American ideas into practice in Germany. USable is initiated by the German Körber-Stiftung (foundation Körber). It is doted with 150,000 Euro and awarded every two years.  questionnaires was 71. A telephone check was made to determine the reasons for non-response. The lack of time, shortage of human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , and sensitivity of certain questions were cited as reasons for nonparticipation nonparticipation The nonacceptance by a physician of the fees paid by Medicaid, or less commonly by Medicare. See Medicaid. Cf Participation. .

The responding firms come from a wide range of industries, including electronic, computer parts, plastics, semiconductors, engineering, printing, restaurants, and the hospitality sector. This sample is appropriate for measuring the role and contributions of the purchasing function in Singapore firms in general. Also, the responding companies consisted of both small and large firms (66 percent were small and medium-sized firms with fixed assets fixed assets nplactivo sg fijo

fixed assets nplimmobilisations fpl

fixed assets fix npl
 of less than $15 million), as well as locally owned and foreign-owned firms (40.9 percent were locally owned firms). Table I presents the characteristics of the responding firms.


The Statistical Package for the Social Sciences (statistics, tool) Statistical Package for the Social Sciences - (SPSS) The flagship program of SPSS, Inc., written in the late 1960s.

["SPSS X User's Guide", SPSS, Inc. 1986].
 (SPSS-X) was employed for the data analysis. As most of the data were collected using Likert scales, and tabulation tab·u·late  
tr.v. tab·u·lat·ed, tab·u·lat·ing, tab·u·lates
1. To arrange in tabular form; condense and list.

2. To cut or form with a plane surface.

Having a plane surface.
 was straightforward, missing data were not a problem as all incomplete returns had been removed.

Exploratory Factor Analysis

A factor analysis was performed for all the scale items to explore the underlying factors of the measures used. The results revealed that the underlying factors for the measures were, in most instances, consistent with the proposed constructs (see Table II). A factor loading of at least 0.30 was used as a guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines.  to determine whether a variable was part of a factor (Nunnally 1978). For measures with loading less than 0.30, the items were examined carefully to assess if the questions or statements used really tapped the constructs. Where there were doubts regarding the face validity of the measures, the items were dropped from further analysis.

The Cronback alpha values for the constructs used in this study are also shown in Table II.

Means and Standard Deviations In statistics, the average amount a number varies from the average number in a series of numbers.

(statistics) standard deviation - (SD) A measure of the range of values in a set of numbers.

The overall means and standard deviations of the constructs are shown in Tables III and IV. The two extreme means are 5.9190 for "Strategy -- Cost" and 6.2911 for "Strategy -- Differentiation". The smallest standard deviation in this study is 0.3605 for "Importance in Purchasing". This, however, is not small considering that four of the items in this construct are based on 3-point scales. Table III reveals that the degree of purchasing-supplier partnerships for Singapore-based firms is relatively high. Also, purchasing has an active role in team decisions. The purchasing function is, however, viewed as relatively unimportant and it has poor integration with other functions.

Table IV shows that purchasing participates actively in the buying of raw materials, vendor assessment and selection, contract negotiation and administration, and international sourcing. These are the traditional activities performed by the purchasing function. The purchasing function seems to be relatively uninvolved un·in·volved  
Feeling or showing no interest or involvement; unconcerned: an uninvolved bystander.

Adj. 1.
 in the purchase of accounting systems, information systems, services, and rental of buildings.

Chi-Square Test chi-square test: see statistics.  

Chi-square tests were also performed to determine if differences exist among some variables, such as the importance of purchasing as perceived by the CEOs, the purchasing function's integration with other functions, the purchasing-supplier partnership, and the purchasing function's involvement in team decisions, across Small and Medium Enterprises (SMEs) versus non-SMEs, and across locally owned firms versus foreign-owned firms.

The test results presented in Table V reveal that non-SMEs regard the purchasing function as more important than SMEs ([x.sup.2] = 4.78898, p = 0.05). This differs from Tan's (1990) study on the electronics industry where it was reported that top management commitment to the purchasing function was independent of firm size.

Pearson Correlation Analysis

The hypotheses were tested using the Pearson's Correlation test. The correlation coefficient Correlation Coefficient

A measure that determines the degree to which two variable's movements are associated.

The correlation coefficient is calculated as:
 matrix is shown in Table VI. The significant findings are reported below.

First, it was found that a firm that emphasizes cost leadership for its competitive strategy tends to have more cost-focused purchasing objectives, supporting H1a (r = 0.51, p [less than]0.01). Second, the more an organization emphasis differentiation in its competitive strategy, the more quality-focused are the purchasing objectives, supporting H1b (r = 0.28, p [less than]0.05). This supports Watts et al.'s (1992) proposal that functional goals must be congruent with corporate goals and objectives. Killen and Kamauff (1995) also maintain that purchasing objectives must be congruent with organizational goals and values.

There is a positive and significant (r = 0.32, p[less than]0.01) correlation between Strategy-Cost Leadership and Objectives-Quality, and as such, H1c is not supported. Thus, It appears that when firms use cost-leadership as a corporate strategy, they may have the purchasing function focus on quality as the purchasing objective as well. This may not prove to be productive as the purchasing function may not be synchronized syn·chro·nize  
v. syn·chro·nized, syn·chro·niz·ing, syn·chro·niz·es

1. To occur at the same time; be simultaneous.

2. To operate in unison.
 with corporate strategy. There is also a positive and significant (r 0.46, p [less than]0.01) correlation between Strategy-Differentiation and Objectives-Cost. As such, H1d is not supported. It appears that when firms use differentiation as a corporate strategy, they may have the purchasing function focus on cost as the purchasing objective as well. Again, this may not be productive and may reflect differences between purchasing and top management.

Third, a significant relationship was found between the importance of purchasing and the extent of the purchasing-supplier partnership, supporting H2 (r = 0.33, p [less than]0.01). Fourth, there is no significant relationship between the importance of purchasing and purchasing's involvement in team decisionmaking; H3 is not supported. It, thus, appears that even when the purchasing function is considered important, it may not necessarily be included in team decisions. Fifth, there is no significant relationship between the importance of purchasing and purchasing's integration with other functions, thus H4 is not supported. This suggests that even when the purchasing function is considered important, it may not necessarily be properly integrated with the other functions.

Sixth, the extent of the purchasing-supplier partnership was found to improve business performance, thus supporting H5a (r = 0.28, p [less than] 0.05). This is consistent with Stuart's (1993) findings that supplier partnerships can affect the competitive advantage, growth, long-term Long-term

Three or more years. In the context of accounting, more than 1 year.


1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term.
 profitability, customer retention, and sales of the firm, and with Rajagopal and Bernard's (1993) proposal that good buyer-seller relationships facilitate superior business performance.

Seventh, it was found that the extent of the purchasing function's involvement in team decisionmaking led positively to better business performance for the firm, supporting H5b (r = 0.28, p [less than] 0.05). Finally, the test results show that the extent of the purchasing function's integration with other functions is positively correlated cor·re·late  
v. cor·re·lat·ed, cor·re·lat·ing, cor·re·lates
1. To put or bring into causal, complementary, parallel, or reciprocal relation.

 with better business performance, supporting H5c (r = 0.28, p [less than] 0.05).

It is interesting to note that the three constructs -- purchasing's involvement in team decisions, purchasing's integration with other functions, and the purchasing-supplier partnership -- are highly correlated with one another (see Tables II and VI). This suggests that when a firm is able to integrate purchasing with other functions, it also involves purchasing in team decisions and engages in purchasing-supplier partnerships. The high correlation (r = 0.54, p [less than] 0.01) between team decisions and the purchasing-supplier partnership suggests that when a firm chooses to form partnerships with suppliers, purchasing then becomes a necessary participant in team decisions since it is in the best position to facilitate the partnership.


Practical Implications for General Managers

The results show that pursuing close knit supplier partnerships, involving purchasing extensively in team decisionmaking, and encouraging the purchasing function's integration with other corporate functions can lead to improved business performance.

As the extent of supplier partnership is affected by the CEO's perceptions of the importance of purchasing, general managers should discard the notion that purchasing is just another clerical function. With the trend toward global sourcing, coupled with rapid changes in technology and increased competition, it is vital that the purchasing function be viewed as a strategic function and as a contributor to the strategic planning process. It is, therefore, essential for top management to provide support and commitment to the purchasing function. This means viewing purchasing strategy as part of the corporate strategy.

Since supplier partnerships can improve business performance, it is important that the firm employ purchasing professionals whose attitudes match appropriately the form of supplier relationship it wishes to develop over the long term. Managing supplier partnerships requires a high level of analytical skills, problem-solving skills, creativity, and knowledge of the supplier's production and distribution processes. Suppliers play a critical role too. Firms should actively select only suppliers who are capable of, and willing to maintain mutually beneficial Adj. 1. mutually beneficial - mutually dependent
interdependent, mutualist

dependent - relying on or requiring a person or thing for support, supply, or what is needed; "dependent children"; "dependent on moisture"

The purchasing function's involvement in team decisions is shown to lead to improved business performance. The purchasing function should thus be asked to contribute to team projects whenever possible. The performance criteria should be team oriented o·ri·ent  
1. Orient The countries of Asia, especially of eastern Asia.

a. The luster characteristic of a pearl of high quality.

b. A pearl having exceptional luster.

, so that performance appraisal Performance appraisal, also known as employee appraisal, is a method by which the performance of an employee is evaluated (generally in terms of quality, quantity, cost and time).  and compensation systems reward team results and not departmental results. Key supplier and customer representatives should also be included as full members of any team to which they can make significant productive contributions. This can further improve the team's performance.

The integration of purchasing with other functions is also essential. Top managers must constantly foster this integration by having more cross-functional meetings or, perhaps, job rotation 17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)~~×≥ An approach to management development is job rotation  to promote a better understanding of the conflicting objectives of different departments and of the potential contributions one department or function can make to the others.

This study has also revealed that smaller firms tend to regard the purchasing function as being relatively less important compared to larger firms. Since the purchasing function can contribute to business performance regardless of firm size, the relevant government agencies should educate top managers on the importance of the purchasing function to improved corporate performance.

Practical Implications for Purchasing Managers

Various aspects of the purchasing operation have been shown to lead to better corporate performance. Purchasing managers should derive greater confidence and assert their influence in the corporate strategic planning and implementation process. They should also seek to improve their abilities to participate in team decisionmaking and in integrating with other functions of the firm. They should strive to contribute to the success of corporate competitive strategy by pursuing internally consistent objectives, that is, focusing on cost in purchasing objectives when the firm is pursuing cost-leadership in the market and focusing on quality in purchasing objectives when the firm seeks to achieve differentiation in the market.

Purchasing managers should also view the role of suppliers in the right light. Suppliers should not be viewed as adversaries, but as pivotal partners in a demand value chain. Purchasing managers must, therefore, develop good negotiation skills to work closely with suppliers.


Purchasing needs to evolve and grow in strategic posture posture /pos·ture/ (pos´choor) the attitude of the body.pos´tural

1. A position of the body or of body parts.

 within the firm. This evolution requires the purchasing function to develop new skills and be recognized by top management as a key contributor to corporate strategy. As with almost all other business functions today, integrating purchasing with other corporate functions and integrating purchasing into strategic management is necessary for superior business performance into the next millennium. A prerequisite pre·req·ui·site  
Required or necessary as a prior condition: Competence is prerequisite to promotion.

 would be to change the attitude of purchasing managers and top management. It is imperative for firms to realize that purchasing must be proactive and operate at a strategic level to achieve and maintain sustainable competitive advantage into the next millennium. Changing the view of management in this regard, however, has been a slow process. It is hoped that this piece of empirical research can help to redefine Verb 1. redefine - give a new or different definition to; "She redefined his duties"
define, delimit, delimitate, delineate, specify - determine the essential quality of

 and reinvent re·in·vent  
tr.v. re·in·vent·ed, re·in·vent·ing, re·in·vents
1. To make over completely: "She reinvented Indian cooking to fit a Western kitchen and a Western larder" 
 the various dimensions of purchasing needed to achieve corporate success.

Mark Goh is an Associate Professor in the Department of Decision Sciences at The National University of Singapore The National University of Singapore (Abbreviation: NUS) is Singapore's oldest university. It is the largest university in the country in terms of student enrollment and curriculum offered. . Dr. Goh earned his Ph.D. degree from the University of Adelaide Its main campus is located on the cultural boulevard of North Terrace in the city-centre alongside prominent institutions such as the Art Gallery of South Australia, the South Australian Museum and the State Library of South Australia.  in Australia. His research interests include logistics strategy and supply chain management.

Geok Theng Lau is a Senior Lecturer senior lecturer
n. Chiefly British
A university teacher, especially one ranking next below a reader.
 in the Department of Marketing at The National University of Singapore. Dr. Lau earned his Ph.D. degree from the of Western Ontario. His research interests include purchasing management and buyer/seller relationships.

Lillian Neo is a Marketing Executive for Tianpo Jewelry jewelry, personal adornments worn for ornament or utility, to show rank or wealth, or to follow superstitious custom or fashion.

The most universal forms of jewelry are the necklace, bracelet, ring, pin, and earring.
 of Singapore. Ms. Neo earned her BBA BBA
Bachelor of Business Administration
 degree from The National University of Singapore.


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A lengthy, formal treatise, especially one written by a candidate for the doctoral degree at a university; a thesis.


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American anatomist who isolated four pituitary hormones and discovered vitamin E (1922).
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NAPM National Association of Photographic Manufacturers
NAPM National Association of Punch Manufacturers
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n. (used with a sing. verb)
The branch of psychology that deals with the design, administration, and interpretation of quantitative tests for the measurement of psychological variables such as intelligence, aptitude, and
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New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of
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1. A carpenter, especially a cabinetmaker.

2. Informal A person given to joining groups, organizations, or causes.
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                        Frequency Percentage
Locally owned              29       40.85
Foreign owned              42       59.15
Firm Size
SMEs                       24       33.80
Non-SMEs                   47       66.20
Number of Employees
Less than 100 employees    21       29.58
100 to 600 employees       35       49.30
More than 600 employees    15       21.12
                          FACTOR ANALYSIS RESULTS
Factor variable (Percentage of                Factor Cronbach's
variance explained)                           Score    alpha
Competitive strategy -- Cost (6.66%)                   0.7813
Cost leadership                               0.789
Customer savings                              0.742
Large market share                            0.710
Efficiency in production                      0.572
Competitive strategy -- Differentiation
(4.05%)                                                0.7180
Product innovation/uniqueness                 0.773
Product/service quality                       0.630
Purchasing objectives -- Cost (3.41%)                  0.7078
Ensure available supply of materials          0.810
Contain material costs                        0.794
Purchasing objectives -- Quality (8.37%)               0.8184
Important to internal
customer satisfaction                         0.748
Important to external
customer satisfaction                         0.743
Important to improve/maintain
material quality                              0.730
Develop good supplier partnership
to maintain quality                           0.696
Affects bottomline                            0.544
CEO's perception of importance of purchasing
(3.00%)                                                0.6748
Instrumental in competitive
strategy formulation                          0.792
Critical in reducing prices for firm          0.639
Affects operations of firm                    0.609
Purchasing's integration with other functions
(10.11%)                                               0.8483
Legal                                         0.870
Research and development                      0.822
Advertising/Marketing                         0.788
Engineering                                   0.727
Accounting/Finance                            0.529
Purchasing-supplier partnership (6.16%)                0.7757
Evaluate supplier extensively
before partnership                            0.741
Work closely with supplier to
increase profits                              0.712
Has large influence on supplier's
systems                                       0.679
Engages in joint problem solving
with supplier                                 0.649
Involvement of purchasing in team decisions
(26.44%)                                               0.8498
Develop procurement strategy in
matrix teams                                  0.794
Integrate information well with
other functions                        0.719
Always asked to contribute to teams    0.692
Always included in cross-functional
project teams                          0.678
Usually helps to make important
team decisions                         0.565
Thoroughly involved in all
organizational teams                   0.536
Business performance (4.61%)                 0.8757
Able to perform well relative to
industry leader                        0.912
Reports superior overall performance   0.878
Maintains good long-term profitability 0.820
Variable                              Mean  Standard Deviation
Strategy - Differentiation           6.2911       0.8046
Stragey - Cost                       5.9190       0.9541
Supplier Partnership                 5.7254       0.8775
Business Performance                 5.5049       0.7889
Involvement in Team Decisions        5.0094       1.1187
Objectives - Cost [1]                4.3662       0.7744
Objectives - Quality [1]             4.0563       0.7490
Importance of Purchasing [2]         2.4356       0.3605
Integration with other Functions [3] 2.4696       0.9886
(1.)Variables are measured on 5-point scale. Larger numbers indicate
greater importance.
(2.)Construct is measured by 14 items, 10 of which are based on 3-point
scales while the other 4 are based on 5-point scales. Larger numbers
indicate greater importance.
(3.)Construct is measured on 5-point scale. Larger numbers signify greater
integration of purchasing with other functions.
Decision Area                           Mean  Deviation
Vendor Selection                       4.0000  0.9168
Vendor Assessment                      3.9714  1.0764
Purchase Raw Materials                 3.8857  1.6020
Contract Negotiation                   3.7429  1.1879
Contract Administration                3.5714  1.3030
International Sourcing                 3.5429  1.6033
Purchase Maintenance, Repair, Supplies 3.3714  1.2646
Appointment of Contractors             3.3714  1.2415
Purchase Transport and Freight         3.3429  1.5500
Total Quality Management               3.2429  1.2903
Purchase Capital Equipment             3.0000  1.2626
Purchase of Resale Items               2.1714  1.7108
Purchase of Information Systems        2.0571  1.4435
Purchase of Services                   1.9857  1.2683
Purchase Rental of Building            1.6571  1.4831
Purchase of Accounting Systems         1.6286  1.3744
Note: All items are based on 5-point scales.
                            CHI-SQUARE ANALYSIS
                            View Purchasing As
         Important Not Important Total
SMEs       7           18        24
           63.6        29.5      33.8
Non-SMEs   4           43        47
           36.4        70.5      66.2
Column     10          61        71
Total      14.08       85.92     100%
                            CORRELATION MATRIX
                   Strategy-     Strategy-    Objectives- Objectives-
                     Cost     Differentiation    Cost       Quality
Model I
Strategy-Cost        1.00
Differentiation      0.65 [1]    1.00
Objectives-Cost      0.51 [1]    0.46 [1]        1.00
Objectives-Quality   0.32 [1]    0.28 [+]        0.27 [+]    1.00
(1.)p [less than] 0.01,
(+.)p [less than] 0.05
               Importance of Integration of  Partnership    Team
                Purchasing     Purchasing   with Supplier Decisions
Model II
Importance of
Purchasing         1.00
Integration of
Purchasing         0.20         1.00
with Supplier      0.33 [1]     0.30 [+]        1.00
Decisions          0.16         0.41 [1]        0.54 [1]    1.00
Performance        0.23         0.28 [+]        0.28 [+]    0.28 [+]
Model II
Importance of
Integration of
with Supplier
Performance       1 .00
(1.)p [less than] 0.01,
(+.)p [less than] 0.05
COPYRIGHT 1999 National Association of Purchasing Management, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999 Gale, Cengage Learning. All rights reserved.

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Author:Goh, Mark; Lau, Goek Theng; Neo, Lillian
Publication:Journal of Supply Chain Management
Geographic Code:9SING
Date:Sep 22, 1999
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Next Article:The Year 2000 Problem in the Supply Chain: A Managerial Perspective.

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