From Purchasing to Supply Management: A Study of the Benefits and Critical Factors of Evolution to Best Practice

219 Pages·2008·1.856 MB·English

by  Michael A. Stolle (auth.)

Michael A.Stolle
From Purchasing to Supply Management
GABLER EDITION WISSENSCHAFT
Einkauf, Logistik und
Supply Chain Management
Herausgegeben von
Professor Dr. Christopher Jahns
Die Schriftenreihe stellt den State-of-the-art betriebswirtschaftlicher
Forschung am Supply Management Institute SMI™ im Bereich Ein-
kauf, Logistik und Supply Chain Management dar. Die Verbindung von
Theorie und Praxis steht dabei ebenso im Vordergrund wie die inter-
nationale Ausrichtung und die unmittelbare Verknüpfung der Themen
Einkauf, Logistik und Supply Chain Management.
Michael A.Stolle
From Purchasing to
Supply Management
A Study of the Benefits
and Critical Factors of Evolution
to Best Practice
With a foreword by Prof. Dr. Christopher Jahns
GABLER EDITION WISSENSCHAFT
Bibliographic information published by Die Deutsche Nationalbibliothek
Die Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie;
detailed bibliographic data is available in the Internet at <http://dnb.d-nb.de>.
Dissertation European Business School Oestrich-Winkel, 2007
D 1540
1st Edition 2008
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Foreword
Supply management has received increased attention both in research and practice
only recently. For decades, purchasing management was considered one of the least
complex business functions. However, in a world of decreasing in-house value add in
nearly all industries, it has become strategically critical for most companies to pay
closer attention to purchasing spend. Many companies found that there is a lot more
to have from suppliers than "the right goods at the right place at the right time".
Several researchers investigating the transition from traditional purchasing to
strategic supply management found a discrepancy between the general discussion of
strategic supply management and reality in most companies. Given the well-known
examples of high-performing purchasing organizations and the myriade of books
both by researchers and practitioners on what good practices in supply management
look like, this is an interesting observation.
This dissertation investigates reasons for this discrepancy to help companies
overcome the barriers of purchasing evolution. Michael Stolle combines
organizational theories on organizational learning, resource-based view, and
principal-agent conflicts to explain the challenges such a profound change of
mindsets and culture presents. He develops a theoretical framework of purchasing
evolution that shows the complex interactions of different driving factors that have to
go together to make a successful transition possible. Finally, an interview-based
empirical study is used to verify this framework empirically.
To research, this thesis is a significant contribution in two distinct ways: On the one
hand, Michael Stolle is the first to present a comprehensive and empirically verified
framework of purchasing evolution. Prior research has always been limited to either
partial problems or conceptual frameworks only. On the other hand, the evaluation of
interview-based survey data using Partial Least Squares structural equation
modeling provides researchers across business research disciplines with an
interesting alternative to questionnaire-based empirical research.
Practitioners who want to understand what it takes to make a real difference in their
purchasing organization, will find this book particularly helpful. Michael Stolle
describes the critical building blocks of successful supply management in detail.
More important though, his empirical research shows how these building blocks
VI Foreword
interact and influence each other. It becomes clear that implementation of individual
"best practices" is not effective, maybe even impossible. Purchasing organizations
have to go through a holistic evolution.
Univ.-Prof. Dr. Christopher Jahns
Acknowledgements
This dissertation could not have been written without continuoued support and
contributions by several people. The research this book is based upon resulted from
a research cooperation between the Purchasing and Supply Management Practice of
McKinsey & Company, Inc. and Supply Management Institute of ebs European
Business School. Many researchers and practitioners from both organizations have
contributed significantly to the findings presented in the following.
First of all, I would like to thank Dr. Nicolas Reinecke with McKinsey & Company,
Inc., for providing me with the unique opportunity to participate in this research effort
as part of my professional career and for allowing to use the findings for my doctoral
thesis. His practical experience, intellectual curiosity, and valuable guidance made
this research effort possible and successful.
I am also deeply grateful to Prof. Dr. Christopher Jahns, the Executive Director of
Supply Management Institute and my doctoral supervisor, both for the great
contributions he and his team made to our research cooperation and the support
provided for my doctoral thesis. I appreciate his open and honest feedback.
I thank Prof. Dr. Jean-Paul Thommen for the fast and positive review in his role as
2nd supervisor for this doctoral thesis.
Many researchers and practitioners have been involved in the research effort this
doctoral thesis is based upon and I appreciate their contributions. For significant
contributions, I owe special thanks to Prof. Dr. Evi Hartmann, Prof. Dr. Roger Moser,
Julia Wolf, and Dr. Handik Widiarta with Supply Management Institute; Peter Spiller,
Christian Herge, and Christian Baier with McKinsey & Company, Inc., and all the
McKinsey partners who helped us by inviting their clients for our empirical study.
Moreover, I would like to thank all Chief Purchasing Officers who took the time to
participate in our interview-based empirical study. I really do hope that the feedback
and insights we were able to provide were found to be helpful in practice.
Finally, a big thank you goes to my wife Stefanie, my family, and friends. They made
the time of my doctoral studies a special period in life for me.
Michael A. Stolle
Table of contents
Table of figures XIII
Table of tables XV
List of abbreviations XVII
1 Introduction 1
1.1 Problem definition 1
1.1.1 Well-described "best practices" in research literature 2
1.1.2 Many companies struggling with transformation 3
1.1.3 Little prior research on how to manage PSM evolution 4
1.2 Research objectives 6
1.3 Study outline 8
2 A brief overview of the status quo in PSM evolution research 11
2.1 Purchasing and supply management – Claim and reality 11
2.1.1 Historic review of purchasing and supply management
in literature 11
2.1.2 Indication on the current status in practice 13
2.1.3 Differentiation and definition of purchasing and supply
management 15
2.2 Theoretical models of purchasing evolution 19
2.2.1 Prior purchasing evolution models in literature 19
2.2.2 Models of purchasing and supply management in
literature 22
2.3 Empirical evidence on the benefits of PSM evolution 27
2.3.1 Systematization of studies 27
X Table of contents
2.3.2 Empirical studies using first generation evaluation
methods 30
2.3.3 Empirical studies using structural equation modeling 37
2.4 Interim summary 41
3 Organization theories perspectives on PSM evolution 45
3.1 PSM evolution as a source of sustained competitive
advantage 45
3.1.1 Introduction to resource-based view theory 46
3.1.2 Introduction to dynamic capabilities theory 49
3.1.3 Discussion of implications for the potential impact of
PSM evolution efforts 52
3.2 The PSM evolution process from an organizational learning
perspective 53
3.2.1 Introduction to organizational learning theory 53
3.2.2 Discussion of implications for a dynamic model of the
PSM evolution process 61
3.3 PSM value creation as a principal-agents conflict 62
3.3.1 Introduction to agency theory 62
3.3.2 Discussion of implications for the management of PSM
evolution efforts 64
3.4 Interim summary 65
4 A new conceptual model of drivers of PSM evolution 67
4.1 Enablers of PSM evolution 68
4.1.1 Mindsets and aspirations 69
4.1.2 People management 73
4.1.3 Structures and systems 77
4.2 PSM value creation 81
Table of contents XI
4.2.1 Category value creation strategies 82
4.2.2 Strategy implementation 86
4.2.3 PSM performance contribution 91
4.3 Development of hypothesized relationships 94
4.3.1 Influence of enablers on PSM value creation 95
4.3.2 Influence of PSM value creation practices on
performance 99
4.3.3 A dynamic model of PSM evolution 102
4.4 Interim summary 106
5 An empirical analysis of drivers of PSM evolution 107
5.1 An interview-based survey approach 107
5.1.1 Scale development and operationalization of constructs 108
5.1.2 Data collection approach 116
5.1.3 Population and sample 126
5.2 Evaluation approach 130
5.2.1 Evaluation concept 130
5.2.2 Data hygiene and control for noise 137
5.2.3 Validation of interview-based data collection approach 153
5.3 Results of PLS model estimation 158
5.3.1 Validation of PLS measurement model 158
5.3.2 Validation of PLS structural model 164
5.3.3 Discussion of empirical findings 170
5.4 Interim summary 182
6 Summary and conclusions 185
6.1 Contributions to management research 185