In a research that my co-authors and I had conducted, we examine how purchasing’s strategic participation influences supply management activities via the choice of appropriate operational and strategic criteria. Specifically, the study focuses on supplier selection and monitoring ongoing supplier performance evaluation based on operational and strategic criteria. A combination of choosing appropriate supplier selection criteria and monitoring supplier performance ensures that the benefits of purchasing’s participation in strategic planning translate into better purchasing performance of cost, quality, delivery, flexibility, and innovation. We test the hypotheses using survey data collected from manufacturing companies in the U.S. by means of a path model. Specifically, the following research model is tested in the paper:
Our results provide support for the tenet that purchasing’s participation in strategic planning influences purchasing performance directly as well as through the mediating effects of supplier selection criteria and supplier performance evaluation. The summary of our results is as follows:
The findings offer some managerial implications. It is expected that buyers that report low levels of strategic participation will experience lower levels of purchasing performance, since in theory; they would not have adequate insight on their roles and thus not be able to pick the right set of suppliers in their selection process nor be able to set up an appropriate supplier performance monitoring system. On the other hand, buyers that report higher levels of strategic participation should experience reduced buyer role ambiguity and enhanced buyer expectancy clarity.
Buyers that report higher levels of strategic participation adopt a strategic route which look at the long term viability of suppliers and ensure that the clarity stemming from involvement in strategic planning is ensured beyond supplier selection to include monitoring and evaluating supplier performance. Through a process of selection and ongoing monitoring of supplier performance, purchasing performance dimension of innovation is enhanced.
Another choice would be to opt for an operational route in that the supplier selection criteria include operational aspects of suppliers like ensuring good quality and timely deliveries for key suppliers. This would be critical in their influence on purchasing performance. We surmise that leading edge firms have different key suppliers for strategic criteria as opposed to operational criteria. Both strategic and operational alignment are important for better purchasing performance. To this extent, we suggest that there is a ‘translation recipe’ which converts purchasing’s strategic involvement into better purchasing performance. This takes place by taking the outputs of the strategic planning activities and using that to channel tactical supplier selection and supplier monitoring schemes. Albeit, this takes a near term approach to ensure that the purchasing performance on a day-to-day basis is optimal. In contrast, the strategic translation recipe involves aligning with corporate strategy and hence supplier selection and monitoring activities should reflect multidimensional dimensions of purchasing performance.
Source: Nair, A., Jayaram, J, and Das, A. 2015. "Strategic Purchasing Participation, Supplier Selection, Supplier Evaluation and Purchasing Performance," International Journal of Production Research. 53(20), 6263-6278.