The role of purchasing in the management and performance of supplier relationships: an empirical investigation in service organisations

Abstract

This thesis investigates the role of purchasing managers (and departments) in supplier relationships( SRs) and assesses the impact of their role on SRs' performance. Driven by the importance of outsourcing in organisations, there is an intense interest in academia in the study of SRs and an increased awareness that purchasing has an important role to play in their management. In the literature however there appears to be an incoherent view of the actual role of purchasing in SRs, which is limited to anecdotal accounts that take the vague assumption that purchasing managers and departments, by virtue of their position in organisations, manage the SRs. The aim of this thesis is to push theory forward by exploring this role in a systematic way and to investigate whether and how it varies across SRs that involve the exchange of products/services with certain structural characteristics.I n that way it generates insights about how the purchasing function can be leveraged to better manage SRs. A multiple case study research design is employed in order to achieve a deeper and greater understanding of the processes that define the actual role of purchasing. Empirical research is conducted in two large service organisations in the UK (a financial organisation and an airport operator), examining seven diverse SRs that involve the exchange of products and services with different levels of asset specificity and criticality. An integrated framework of various activities that purchasing managers are involved in for the management of SRs is developed initially. The way that purchasing managers conduct these activities in the different SRs is then examined to generate insights about the actual role of purchasing in the individual SRs that is defined in terms of four variables (level of contribution to the development of trust in the SR, level of power in the SRs, level of involvement in the SR and level of contribution to the development of commitment in the SR). With the use of a gap analysis model to assess the performance of the individual SRs, the impact of the role of purchasing on SRs performance is finally extrapolated. The results provide support for the following primary conclusion. The widely held assumption that purchasing managers are in effect supply chain managers is tempered by the findings of this research, which observed a far more limited role for purchasing managers (and a negative impact) in the management of SRs relating to products/services which have high levels of criticality and asset specificity. Their negative impact in such SRs was also observed to have implications for the dyadic relationship of the purchasing department with the internal (customer) departments, which under certain conditions can create problems of coordination in the organisations. From a managerial point of view this thesis demonstrates in a systematic way the contribution and role of purchasing to SRs. The framework of activities that is developed may provide a useful reference point for the auditing and improvement initiatives of purchasing professionals in SRs. From this, guidance about the types of situation in which certain activities may be more important than others will provide a useful guide to how purchasing departments may be involved in an effective and efficient way. Academically, this thesis utilises an innovative conceptual method in evaluating SRs by incorporating two major theoretical frameworks and provides with insights in delineating the actual role of the purchasing function in SRs. Finally, the thesis contributes to the ongoing debate of the establishment of a contiguous Supply Chain Management discipline, by investigating its problem domain