a1 - journal the changing role of procurement
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Journal of Purchasing & Supply Management 14 (2008) 55–68
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The changing role of procurement:Developing professional effectiveness
Rana Tassabehji�, Andrew Moorhouse1
University of Bradford School of Management, Emm Lane, Bradford BD9 4JL, UK
Received 2 August 2007; received in revised form 22 January 2008; accepted 24 January 2008
Abstract
The major objectives of this paper are to explore, from the perspective of 18 senior procurement professionals interviewed, the current
status of their role and identify the skills they need to develop, in order to effectively manage the changes they are experiencing. The
interviews revealed a schism in perception of the procurement role between professionals (strategic) and their organisations
(transactional). Although skills have a direct impact on the ability of procurement professionals to fulfil their role proficiently, the degree
of organisational support and internal acknowledgement of the role’s importance, were found to be a major barrier to the development
and progress of procurement professionals. A Procurement Skills Effectiveness Framework is presented to enable managers to assess the
likely sophistication level of procurement and its impact, given a set of procurement skills and the degree and type of internal support for
the role.
r 2008 Elsevier Ltd. All rights reserved.
Keywords: Strategic procurement; Relationship management; Skills development; Training; Procurement effectiveness; Skills taxonomy
1. Introduction
The evolution of the procurement function is welldocumented in the literature. There has been a recognisedshift away from the traditional administrative and trans-actional role, towards one which involves strategicpartnerships, cooperative alliances and supply networkmanagement (Carr and Smeltzer, 1997; Scheuing, 1997;Ramsay, 1998; Lamming et al., 2000; Handfield andNichols, 2002; Knudsen, 2003). In the literature, procure-ment is now deemed a core component of many organisa-tions and considered to be of major strategic importance(Humphreys, 2001; Paulraj et al., 2006). However, othersargue that the procurement role is still essentially a supportfunction and that as a tactical role, it performs essentiallylow value adding activities (Kaufmann and Carter, 2004;
e front matter r 2008 Elsevier Ltd. All rights reserved.
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ing author. Tel.: +441274 233902; fax: +44 1274 546866.
esses: [email protected] (R. Tassabehji),
tinternet.com (A. Moorhouse).
ess. Huthwaite International, Hoober House, Wentwork,
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Cox et al., 2005). Indeed, Ramsay (2004) highlights the factthat sometimes academic papers do not represent thereality of the context in which the practitioners operate andcontradicts his previous findings about co-operative rela-tions in supply chains, as being more fictional than factual.It is with this in mind that this paper aims to answer thefollowing research questions related to procurementprofessionals:
(1)
How do procurement professionals perceive their rolewithin their organisations?(2)
How has their role changed and what challenges havethey had to face as a result?(3)
What portfolio of skills do they believe will enable themto fulfil their role effectively?The first part of the paper reviews different perspectiveson the changing role of procurement from the literature.From this review, a new taxonomy for categorisingprocurement skills in the current business climate isintroduced. The second part of the paper presents thefindings from 18 semi-structured interviews with senior
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procurement professionals across a number of differentindustry sectors. A Procurement Skills EffectivenessFramework is developed, enabling managers to identifythe knowledge, skills and level of support required in orderfor the role of procurement to optimise its effectiveness inachieving organisational objectives.
2. Literature review
Over the past decade, there have been notable changes inmacro-economic trends influencing the business environ-ment. Increased globalisation, technological advances ininternet based systems, accessibility to complex computa-tional programmes, increased demands by upper manage-ment, changing consumer patterns, a shift towardsoutsourcing and a greater awareness of corporate socialresponsibility have all been influential factors driving thischange (Giunipero et al., 2005, 2006; Zheng et al., 2007).These changes undoubtedly impact the procurementfunction, and there is a widely recognised need for adevelopmental shift to keep in line with these changes. VanWeele and Rietveld (1998) identify six stages throughwhich the procurement function must develop: fromtransaction and commercial orientation, to internal andexternal integration, to the final stage where purchasingstrategy is focused on delivering value. Lamming et al.(2005) also identified an emerging need for change in the1990s when business began to accept inter-organisationalrelationships, which evolved into value adding collabora-tive relationships. It is now widely acknowledged thatproactive value-focussed rather than passive cost-focussedprocurement strategies are a means of achieving competi-tive advantage and integral to long-term organisationalstrategy (Leseure et al., 2004; Mehra and Inman, 2004;Noonan and Wallace, 2004).
This dynamic environment and the call for a develop-mental shift, have led to challenges for the procurementfunction within organisations, which are well documentedin the literature (Zheng et al., 2007). These challengesinclude increased specialisation, a move from purchasingfunctions to processes and from transaction to relationshipmanagement, an increased awareness of and need tomanage the supply chain (Carr and Smeltzer, 1997;Lamming et al., 2000; Handfield and Nichols, 2002;Knudsen, 2003). Some of the changes made to theprocurement role, to better cope with such challenges andmaintain organisational competitiveness, include: expand-ing core processes such as supplier coordination; supplierdevelopment and market research; cost analysis; strategyformulation and planning; risk management and interna-tional outsourcing (Giunipero et al., 2005, 2006; Cousinset al., 2006). In addition new technology, such as e-pro-curement and ERP systems, means that much of the paper-based routine tasks have been automated. This allows moretime for procurement professionals to focus on new formsof supplier relationships, supply management, advancedplanning and value adding activities (Humphreys et al.,
1998; Humphreys, 2001; Croom and Johnston, 2003;Giunipero et al., 2005).These trends have facilitated the necessary transforma-
tion of the role from a tactical to a more strategic level(Giunipero and Pearcy, 2000; Cousins et al., 2006). Paulrajet al. (2006) acknowledge that different firms might be atdifferent stages of strategic evolution, but that fororganisations to evolve to the final stage of development,strategic procurement, they need to optimise their perfor-mance. Unless organisations and their structures changewith the times to accommodate strategic procurement theywill become dysfunctional (Scheuing, 1997) and the impactprocurement can have on their competitive position willremain unrealised (Carter and Narasimhan, 1996; Cousinset al., 2006; Giunipero et al., 2006). However, the evolutionof procurement to the status of a strategic and criticalfunction is not yet complete in the real world (Cox et al.,2005). Indeed, Ramsay (2006) maintains that seniormanagement, influenced by the current anti-clerical biasin the literature, fail to understand the contribution the roleis making at the administrative level. Although the specificdetails might be contested, the implicit message is that sincethe procurement professional now operates in a changingand dynamic environment, there is a subsequent imperativefor procurement professionals to update their existingskills if they are to contribute effectively to the financial,operational and strategic success of their organisation(Reck et al., 1992; van Weele and Rietveld, 1998; Henke,2000; Giunipero and Pearcy, 2000; Giunipero et al., 2005).
2.1. The organisational impact of procurement skills
Empirical research is emerging to demonstrate theimpact of specific procurement skills on firm performance.In a study of the impact of strategic purchasing on supplyintegration and performance, Paulraj et al. (2006) foundthat: (1) a more strategic purchasing function leads tobetter supply integration; (2) executives must understandthe key role that purchasing can play in integratingbuyer–supplier dyads by focusing on ‘‘process, relational,information, and cross-organisational teams’’; (3) strategicpurchasing can create a win–win situation for both buyerand supplier firms which impacts positively on overallsupply chain performance.Taking a resource-based view of the firm, Carr and
Smeltzer (2000) found a relationship between specific skillsand overall organisational performance. Technical skills inparticular were found to be a predictor of firm perfor-mance, while skills techniques (a rather vague term whichincorporates skills that are not purely technical orbehavioural, such as project management, time manage-ment and communication) predict a strategic purchasingapproach, and behaviour skills predict supplier responsive-ness. Cousins et al. (2006) also demonstrated the impactof skills on organisational performance. They foundthat purchasers with high skill levels and knowledgehave a significant impact on financial performance and
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operational efficiency in terms of quality improvement,design and reduction of lead times.
2.2. Changing development needs
While the degree of transition towards strategic procure-ment might be disputed, it is clear that the skills andcompetencies required by professionals in the past arenot the same as those required today. There is overallconsensus that skills are essential to the productivity andcompetitiveness of organisations (Thurow, 1994; Borghanset al., 2001; Briscoe et al., 2001; Keep and Mayhew, 2001).
Show me an unskilled individual, company or countryand I will show you a failure in the 21st century y Inthe economy ahead, there is only one source ofsustainable competitive advantage-skills. Everythingelse is available to everyone on a more or less equalaccess basis. (Thurow, 1994, p. 52)
There has been much research into the definition ofskills, where the concept of a skill is defined as ‘‘the ability
to carry out the tasks and duties of a job in a competent
manner’’ (Elias and McKnight, 2001, p. 511) and the abilitygained by practice or knowledge within the workplace(Kolchin and Giunipero, 1993; Carr and Smeltzer, 2000).Skills are seen to be multi dimensional and have beencategorised in several different ways that incorporateeducational qualifications, competence, work experienceand vocational training (Elias and McKnight, 2001).Changes in the procurement function and the environmentin which it operates significantly affect the ideal skill setrequired for the world-class procurement professional(Giunipero and Pearcy, 2000). There is a need forprocurement personnel to update existing skills anddevelop new perspectives and abilities if they are tocontribute effectively to the success of their organisations(Henke, 2000; Giunipero et al., 2005, 2006; Cousins et al.,2006). Van Weele and Rietveld (1998) have tracked thechanging skills needed at different stages in their procure-ment evolution model, from the procurement specific to aninclusion of broader business and management skills andabilities.
Our review of the literature found that there is muchoverlap in lists of skills compiled and used in empirical andtheoretical studies on the role and function of procurementin organisations, over the past couple of decades. Here, wehave included the articles which have been highly cited instudies focusing on this area of research. The studiesselected are empirical and include comprehensive listsof procurement skills, grouped according to their genericskill type, such as behavioural, strategic, etc. and aresummarised in Table 1. Despite the similarities, often thesame skills are grouped under different typologies andgiven different nomenclatures, which can be somewhatconfusing. To simplify this, we have listed both theindividual skills and skill categories and have furtherclassified them according to whether they are procurement
specific or generic management skills. This summary formsthe basis of our literature consolidation and is the firststage in the development of a new taxonomy of procure-ment skills to deal with the challenges of the currentenvironment.
2.2.1. Consolidating procurement skills
The empirical findings of Kolchin and Giunipero (1993)underpin a large number of procurement skills studies thatfollowed. Their main aim was to measure purchasingeducation and training in US firms and to make predictionsfor the future of procurement. Three of the skills groups(management, interpersonal and individual), can bebroadly applied to other functions and organisationalsettings and the technical skills group is mainly specific toprocurement.Building on Kolchin and Giunipero (1993), Giunipero
and Pearcy (2000) progressed the research by gaugingperceptions of people that do the job rather than focusingon recruitment selection criteria for the job which providesa more accurate assessment of the skills required for world-class purchasing professionals. This study introducedstrategic skills (not measured in Kolchin and Giunipero’s(1993) study) into the procurement skills portfolio. Todemonstrate the development of the role into one with amore strategic focus, skills such as managing change andunderstanding business conditions, were found to haveincreased in importance. The skill types focusing on genericmanagement, such as process management, team-building,decision-making, behavioural, negotiation seem to begrowing in relation to procurement specific skills (strategicand quantitative) reflecting the changes.As a good comparison, Carr and Smeltzer (2000) collate
35 different procurement skills, believed essential toenhance corporate competitiveness, directly from theresponses of 85 interviewees. This study was not basedon previous skills listings and was conducted in theautomotive sector, but still there is much overlap withprevious studies, despite skill categories having differentnames. For instance, technical skills match Giunipero andPearcy’s (2000) quantitative and decision-making skills;skills techniques map onto Giunipero and Pearcy’snegotiation skills, process management, and team skills;behaviour skills map onto Giunipero and Pearcy’s strategicand behavioural skills. Of these, the technical skills inparticular relate most specifically to procurement. Despitethe similarities, the portfolio of requisite procurement skillsis incremented with the inclusion of skills related more tothe strategic approach.Professional procurement skills listings, are sophisticated
further as Giunipero et al. (2005) argue the need forflexibility in the procurement role, achieved by incorporat-ing entrepreneurial qualities to their skill set. Theydemonstrate that common characteristics already existbetween entrepreneurial and purchasing skills (18 out of 30using Denslow and Giunipero’s (2003) more recent list),and introduce new skills that can provide flexibility.
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Table 1
Summary of procurement skills in the literature
Source Categorisation of Procurement
Skills: 1, procurement specific; 2,
generic management
Individual skills
Kolchin and Giunipero
(1993) based on division of
18 skills
1. Technical � Cost analysis, product knowledge, computer literacy, total quality
management and government legislation global sourcing development
2. Management � Market analysis, negotiating with partners, managing internal and external
relationships, change management and planning and organisational skills,
risk taking, written and oral communication, conflict resolution, influence
and persuasion, group dynamics, leadership, problem solving and
international and cultural awareness
2. Interpersonal/group
2. Individual
Giunipero and Pearcy
(2000) based on a total of
29 skills including Kolchin
and Giunipero’s (1993)
skills
1. Strategic � Strategic thinking, supply base research
� Structuring supplier relationships, technology (planning), supplier cost
targeting, risk taking/entrepreneurship, salesmanship, computational,
technical, blueprint reading, specification development
1. Quantitative
2. Process management � Market analysis, negotiating with partners, managing internal and external
relationships, change management and planning and organisational skills
� Risk taking, written and oral communication, conflict resolution, influence
and persuasion, group dynamics, leadership, problem solving, and
international and cultural awareness
2. Team skills
2. Decision-making
2. Behavioural skills
2. Negotiation skills
Carr and Smeltzer (2000)
based on a total of 35 skills
1. Technical skills � Drafting CAD/computer skills, maths skills, technical business writing,
blueprint reading, forecasting
� Understanding: tool capability, manufacturing processes, MRP, materials,
inventory systems
2. Skills techniques � Analytical, communication, presentation, co-ordination, negotiating (cost)
and issues, cost analysis, problem solving, quality management, programme
management, organisational (paperwork) time management
� People skills (suppliers), internal customers and functions, detail orientation,
proactivity, ability to follow up, flexibility, stress management, team working,
patience, multi-tasking
2. Behaviour skills
Giunipero et al. (2005) Skills to achieve flexibility:
� Risk management
� Interpersonal communication
� Influencing and persuasion
� Planning
� Decision-making
� Internal motivation
� Creativity
Cousins et al. (2006) These procurement skills are a subset of the study:
2. Supplier/product market monitoring and interpretation
2. Technical skills to improve products and processes
1. Cost analysis to improve total costs with suppliers
1. Behavioural skills such as perseverance, imagination decisiveness and interpersonal skills
Giunipero et al. (2006) Skills to achieve strategic purchasing:
2. Team-building: leadership, decision-making, influencing; compromising
2. Cross-functional strategic planning: project scoping, goal-setting, execution
2. Communication: presentation, oral, listening, writing
1. Technical skill: web-based research, sourcing analysis
2. Broad financial: cost accounting, business case building
Large and Gimenez (2006) 2. Oral communication Based on ability to:
� Pass on information
� Persuade
� Listen and understand
� Oral capability
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Giunipero et al. (2006) emphasise the emergence of thestrategic procurement role and required skills, furthersuggesting that the role might even be divided intothe strategic and tactical. The differentiation betweenthe strategic role focusing on building relationships andlowering total costs and the tactical role dealing with day-to-day activities, can be easily categorised into procure-ment specific and management generic skills as applied inTable 1. In a similar vein, Cousins et al.’s (2006)recommendation for a set of procurement skills andcompetencies to deal with an intensely competitiveenvironment, seems to focus mainly on developing genericmanagement skills and improving procurement specificskills such as supplier coordination and research, sourcingstrategies, and sophisticated costs analysis. They dohowever highlight the importance of procurement skillsand knowledge by demonstrating its impact on organisa-tional performance, both financial and operational.
Here, Large and Gimenez’s (2006) study is included toillustrate the application of generic skills to procurement.They show the importance of oral and written commu-nication for the procurement role and its impact onimproved efficiency and performance. Their study foundthat the largest cluster of purchasing managers were poorcommunicators who possessed a good oral communica-tion capability but poor ability to listen and under-stand, pass on information and persuade. This is one areathat demonstrably needs to be addressed and is thusincluded.
3. Introducing a new taxonomy of procurement skills
From the review of the literature on development ofprocurement skills, there is an obvious need to consolidatethe different taxonomies and nomenclatures into a singleconsistent and coherent set of categories. Here, we presenta new taxonomy that classifies procurement skills into fivegroupings that more accurately mirror the requirements ofmodern day procurement professionals. Definitions ofthese groupings are:
(1)
Technical skills (TS): These are fundamental and basicadministrative skills necessary for any procurementprofessional in the 21st century. They include productknowledge, computer literacy, total quality manage-ment and government legislation. As part of technicalskills, we include advanced procurement process skills(APP) such as category management, global sourcingdevelopment, detailed cost driver analysis necessitatingadvanced analytical capabilities essential to createvalue. We include the need to utilise and manage e-procurement technology and processes effectively; andoptimise supplier selection to ensure that they capitaliseon the opportunities e-procurement avails (Croom,2005; Ogden et al., 2005; Tassabehji et al., 2006). It isacknowledged in the literature (Carr and Smeltzer,2000; Cousins et al., 2006; Giunipero et al., 2006) that
these basic procurement skills are the foundations forbuilding more strategic skills.
(2)
Interpersonal skills (IS): Necessary for interaction withpeople in teams and on an individual level includingwritten and oral communication, conflict resolution,influencing and persuasion, group dynamics, leader-ship, problem solving and interpersonal and culturalawareness. These skills are required at every level foreffective procurement management.(3)
Internal enterprise skills (IE): These skills relate to theoverall business and how the different functionsinteraction. IE skills will enable procurement profes-sionals for example, to effectively conduct marketanalysis, manage internal relationships, global sourcingevaluation, internal change management and planningand organisational skills.(4)
External enterprise skills (EE): These skills relate to thesupply chain/network and its stakeholders. These skillswill enable for example, the management of externalrelationships, and stakeholder change management.(5)
Strategic business skills (SB): These skills relate tobroader strategic issues and how procurement canimpact on overall organisational value such as planningand managing strategic partnerships and alliances, riskmanagement and adding value to the organisation.The literature review highlighted the changing skillsrequirements of the procurement professional, with anincreasing emphasis on skills that can be seen as moregeneric and management oriented, applied in a procure-ment context. This trend can be observed from Table 1, asover a third of the skills listed in 1993 are procurementspecific, but the proportion of procurement:generic man-agement skills has diminished over time as businessenvironments become more dynamic requiring differentskills. Applying the new taxonomy, Fig. 1 demonstratesthis differentiation. Procurement specific skills are a corerequirement for the procurement professional, surroundedby a whole range of generic managerial skills specificallyhoned for procurement, but applicable to other organisa-tional functions.
4. Methodology
The main aims of this exploratory research werethreefold: (a) to determine procurement professionals’perception of their role; (b) to identify how their role hadchanged and the challenges they have had to face; (c) tocompile a portfolio of requisite skills to enable them tofulfil their role effectively. In order to fulfil these aims, anexploratory study was conducted by in-depth interviewswith procurement professionals to obtain details ofexperiences, attitudes, needs and ideas relevant to theirorganisation and position (Wright, 1996; Rubin andRubin, 2004). A less directive and semi-structuredapproach was adopted to provide a richness of informa-tion, which has previously been shown to be more effective
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StrategicBusiness
Skills(SB)
ExternalEnterprise
Skills(EE)
InternalEnterprise
Skills(IE)
InterpersonalSkills(IS)
TechnicalSkills(TS)
Advanced Procurement
Process Skills(APP)
ProcurementSpecific Skills
ManagerialSkills
ProcurementFunction
Other OrganisationalFunctions
Fig. 1. New categorisation of skill types required for procurement.
Table 2
Research participants
Sector Interviewees
Insurance Head of Procurement
Senior Purchasing Consultant
Financial Services Head of Procurement
Head of Procurement Performance
Improvement
Procurement Director
Professional Services Procurement Consultant
Government Department Procurement Manager (x2)
Fast Moving Consumer Goods
(FMCG)
Sector Head (retailing)
Network Manager (manufacturing)
Senior Procurement Manager
(manufacturing)
Public Health Service Senior Procurement Management
Telecommunications Head of Procurement
Global Chemicals Purchasing Manager
Aerospace Purchasing Manager
Manufacturing Procurement Director (Eastern Europe)
Procurement Director (UK)
Consumer Electronics Purchasing Manager
R. Tassabehji, A. Moorhouse / Journal of Purchasing & Supply Management 14 (2008) 55–6860
when eliciting information from senior professionals(Wright, 1996).
Purposive sampling was adopted to ensure that the viewsof a specific profession were elicited about issues related totheir role (Saunders et al., 2003). Procurement TradeAssociations were contacted to forward invitations forinterviews to a random selection of their member database.However, they were unable to co-operate due to priorresearch commitments. A University post experience MBAalumni database was then accessed for initial introductionsto procurement professionals, and in combination with asnowball sampling strategy (Atkinson and Flint, 2001), atotal of 22 procurement professionals at senior manage-ment or director level agreed to be interviewed after aguarantee of anonymity and a copy of the researchfindings. This pool of participants all worked for largeorganisations from a range of multinational corporationsand industries, with candidates representing insurance,financial services, professional services, local authorities,FMCG, public health service, telecommunications, globalchemicals, aerospace and industrial manufacturing mostlyfrom the UK and Ireland, but some also representedorganisations in Europe, Africa and the Middle East andthe Pacific Rim (Table 2).
There are limitations by using this sampling strategy—for instance, lack of generalisability and possible samplebias. Notwithstanding these limitations, some extremelyvalid trends and data can still be achieved for anexploratory approach, by adopting this type of non-random sampling (Remenyi et al., 1998) as participantswere readily available to contribute to the study (Robson,2002).
Four pilot interviews were conducted to scope thequestions being asked followed by semi-structured depthinterviews with the remaining 18 respondents summarised
in Table 2. The semi-structured questions derived from theliterature review and this initial screening process isincluded in Appendix. Eight interviews were conductedover the telephone, while the remainder were face-to-face.Studies examining the differences between these two media,have either found no difference in the quality of responses(Janofsky, 1971), or that these differences were mainly
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related to disenfranchised and socially vulnerable peopleand response rates (Holbrook et al., 2003), none of whichare relevant in this case. To further mitigate any potentialdifferences, the telephone interviews were pre-arranged andthe subjects were aware of the topic to be discussed (butnot the questions). The interviewer was aware of thepotential issue of time pressure over the telephone leadingto respondent satisficing impacting on quality of responses(Holbrook et al., 2003), and ensured plenty of time wastaken in posing questions and eliciting answers. In a reviewof the responses, there was no discernable difference ininformation quality or length of the interviews. Theinterviews were recorded digitally with permission beinggranted by all interviewees and full transcripts then made.Notes were also taken during the interview. These sourcesof data were analysed and major themes identified. Furtheranalysis sought to locate these themes within the text.Meaning was then extracted from the text according to thethematic coding in an iterative process (Saunders et al.,2003). The resulting themes that emerged from this primarydata are presented in Section 5.
5. Findings
Having reviewed both the transcripts, audio recordingsand notes, the semi-structured interviews provided a wealthand depth of information addressing the research questionsposed in this study. The participants expressed wide-ranging views and salient quotations are used to illustratemajor themes that arose.
5.1. The perception of procurement in organisations
The interviewees expressed wide-ranging views on howthe procurement function is positioned and perceivedwithin their organisation. Some felt that procurement intheir organisations was still perceived as an administrativefunction, which they were largely unhappy with:
The professional specialist dictates the specification,which is passed on so procurement can buy. We canonly deal on price and are low down the priority line.The salary for procurement indicates how unimportantthe role is.(Senior Procurement Manager, Public Health Services)
We still feel we are viewed as the Procurement Police.We negotiate contracts and are a major cost reducer butare often simply viewed as a process that has to befollowed and perceived as intransigent and delaycausers. We certainly are not engaged at different stagesof purchasing decisions.(Procurement Manager, Local Authority)
The organisation views procurement as an inconvenientand possibly unnecessary step in the process of securingthe goods or services required.(Head of Procurement, Financial Services)
Others acknowledged that the procurement function wasperceived to be strategic, adding value to the organisation.However, even those deemed to have strategic roles with amandate to add value, still struggle to communicate thevalue of their role throughout their organisation. In the oneinstance where the role was reported to be held in highregard within the organisation and seen as an integral andcore component, the procurement profession was repre-sented at an executive board level (i.e. CPO):
Procurement’s remit is not to get a 10% discount yearon year, but to work towards a strategic/partnershipmodel where the price may be 5% more expensive butyou usey resources for competitive advantage. Our jobis all about added value. However, we are strugglingwith the [businesses] misconception of our job. Somestakeholders feel that we are there just to get the lowestprice. They come to us having just done a deal and state‘‘will you now do the contract’’ our answer is no.
(Head of Procurement, UK Insurance Services)
Whilst procurement is now being seen as strategic byour company, it is still an uphill battle to ensure earlyinvolvement. It is this early involvement that will reducethe risk to the business of inadequate contracts andsatisfy the shareholders by benefiting the bottom line.
(Procurement Manager, European Electronics Manu-facturer)
It is the core of the business, as senior management arefrom procurement. Effectively the most strategic part ofthe organisation. If you can lower cost of procurementthe profit is incredible.
(Group Procurement Manager, FMCG Manufacturer)
The procurement professionals unanimously agreed thatwhat they did was strategic and did add value to theorganisation. On the whole, they were dissatisfied with theway in which the rest of the organisation perceived theirrole and their lack of involvement. The majority raised theissue that the role demands internal recognition for it tocontribute to the organisation’s performance. Involvementupstream via cross-functional teams appears, from respon-dents, to be the most effective way to get involvement atthe initiation of ideas.
Not being used as an expert in commercial matters isfrustrating and costs more in terms of money and riskbecause our role is not only to save money but mitigaterisk y If we are involved at the start y getting all thedepartments working with you y then there is a betterchance of getting a better deal and on time delivery.
(Head of Procurement, Telecommunications)
Interestingly, some felt that the way procurementperformance is monitored and measured (for instance,through inclusion in KPIs) within organisations, seems tohave an effect on how the function is perceived. If tangibletargets are not achieved, then the professionals are
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considered to have failed impacting negatively on percep-tions of their role them in the future:
We have targets to achieve and when there are tangibleresults this is a good resource, but when it can’t be done,then we lose favour and are challenged by internalcustomers.
(Purchasing Manager, Aerospace)
5.2. The changing procurement role
On the whole respondents felt that change was occur-ring, but that this was incremental rather than drastic andseems to have been absorbed with very little impact onthem.
Changes aren’t drastic because our organisation is likean oil tanker turning so you don’t feel the changes for along time.
(Senior Procurement Manager, Public Health Services)
The role is changing but the core values remain constantwhatever you are doing.
(Purchasing Manager, Global Pharmaceuticals)
The role hasn’t changed much y the basics neverchange. We are trying to get the best deal in terms ofvalue for money but not the cheapest deal.
(Purchasing Manager, Aerospace)
5.3. Challenges and issues created by the change
All respondents identified technology as one of the majorchanges impacting their role. None, however, mentionedtechnology or other technical issues as being problematicor challenging. Here, change was seen to be related to newways of doing things and introduction of more and morenew techniques.
We are moving further way from previous techniques.The old purchasing systems are redundant with infor-mation of MRP.
(Purchasing Manager, Aerospace)
Technology does change your initial approach and nowthere is more meaningful data mining and collection.
(Procurement Director, Financial Services)
Most procurement professionals interviewed appear tomanage the implementation of e-procurement. They foundan improvement in negotiation time and relationships withsuppliers through the use of e-procurement applications,such as e-auctions. However, many felt there was a need forin-depth cost driver analysis of different e-procurementapplications to ensure that the right decisions were beingmade in this new environment.
Negotiation was a skill which all procurement profes-sionals were confident with and none identified anyproblems or challenges related to this. No macro-environ-mental issues were identified as being real challenges or
problems for procurement professionals. Some practi-tioners highlighted issues relating to the lack of formalsupplier assessment tools; others identified training theiradministrative staff to apply commercially sound businessdecisions was a challenge. All except one practitionermentioned internal political struggles and a lack of powerto impact the organisation internally, as real issues. Themajor challenges faced by the majority of procurementprofessionals in their role can be grouped into four maininter-related categories:
(1)
Being acknowledged internally: Many practitionershighlighted the difficulties of being acknowledged bythe heads of other departments or sectors and beinginvolved in investment decisions.We struggle with the concept of advising the seniordirectors (budget holders) on where to direct theirfunds. Nobody likes to be questioned or challengedby procurement.(Head of Procurement, Telecommunications)
People see spend is power—so we find it difficult toget them to relinquish control.(Senior Purchasing Consultant, Insurance)
(2)
Early involvement in the decision process: An over-whelming majority complained that they were notbrought in early enough in the buying process to addany real value. One practitioner demonstrated the lowstrategic importance of procurement in their organisa-tion when they were brought in to negotiation with asupplier after the invoice had been received.We need to get in right at the start. We need to getprocurement to the table and do things collabora-tively—they (the business) should acknowledge thatprocurement specialists can bring advice and some-thing to the table.(Purchasing Manager, Manufacturing)
(3)
Getting internal ‘Buy In’ to procurement strategy: Manypractitioners expressed difficulties getting their strategyaccepted by the rest of the company:The challenge is to get other staff to buy in to ourstrategy. The battle is getting in early enough tomake an impact to influence y alignment.(Procurement Director, Financial Services)
The challenge is to get the business to engage withyour initiatives. There is no culture of ‘‘let thespecialist do their bit’’—we are not empowered orbeing used as source of expertise. This ultimatelycosts more with more risk. If we are allowed (to doour bit), then we would save money and mitigaterisk.(Procurement Manager, Local Authority)
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Cultural barriers and resistance to change: Even those
(4) considered to be in a strategic role face challenges toimpose change on an intransigent corporation, bothwithin their own teams and those of other departments.The walls of silos are huge obstacles and internalcommunications are a big problem resulting in noagreement on strategy.(Procurement Director, Manufacturing)
We have Ivory Tower Syndrome y we are devolvedfrom the coal face. y Top level consultants hate usbecause they are of the opinion that they are thedecision makers.(Senior Procurement Manager, Public Health Ser-vices)
Many respondents highlighted how they are strugglingwith less commercially minded people with a closedmindset of, ‘‘I know the market better than you, there is
no need for change.’’ Some spoke of their struggle to getboard level support for culture change. One individualexplained how their firm hired a large number of veryexpensive commercially minded purchasing professionalswho struggled with the culture and subsequently all left theorganisation.
Overall, the major challenges faced by our professionalswere less focused on macro-economic factors and over-whelmingly to do with internal role recognition andpolitics.
5.4. Skills development for procurement professionals
Most procurement professionals felt they were strong on‘‘bog standard’’ negotiation skills but an overarching trendwas to develop internal selling skills so they can commu-nicate the value they can bring. Other skills mentionedwere:
(1)
‘‘A core value is influencing skills to get buy ininternally or there is zero adoption of strategy.’’(2)
‘‘Stakeholder management and people managementskills to communicate and sell benefits of what you do,to have joint synergy within the firm and create buy infrom different organisation departments.’’(3)
‘‘Stakeholder mapping: How does the organisation feelabout procurement? Who should be included indecisions and ensure contact is taken with relevantstakeholders to find out early enough when things arehappening? Procurement must be proactive and notwait for people to come to them for help.’’(4)
Cost driver analysis: This featured heavily in develop-ment discussions especially from the large financial andinsurance firms, without this analytical skill they feelthat have ‘‘zero leverage’’, as ‘‘only procurement knowwhat levers to pull’’ and that the organisation should
use procurement expertise to analyse market driversand estimate the supplier’s cost drivers.
Some practitioners, especially in the financial servicessector, believe that the best way to develop procurementskills within the organisation is to hire new people with a‘‘Best of Breed influx of talent’’ and have commonframeworks of tools and processes for measuring theirperformance. For one practitioner, their organisation:
y maintain[s] greatness and standards by recruiting thebest people; high performing teams with a nucleus ofgreat people with performance metrics to hold themaccountable.
Some firms have adopted training programmes accre-dited by prestigious Ivy League business schools orspecialist ‘‘world class’’ operations consulting firms.The potential development areas for procurement
professionals, mentioned by many respondents are sum-marised in Table 3 and grouped according to our new skillstaxonomy. We have included a comparison with the skillsidentified earlier in the literature, to demonstrate theoverlap and clarify differences in skills nomenclature. Wealso summarise the implications and impact of the groupsof skills for procurement professionals derived from theinterviews.
6. Discussion
In this section, we summarise the findings in response tothe study’s research questions.
6.1. How do leading procurement professionals perceive
their role within their organisations?
Overall, procurement professionals identified a schismbetween their perception of their role within theirorganisation, and the organisation’s perception of theirrole. While the professionals unanimously agreed that theirrole was strategic and added value, the organisations oftendid not hold this view. It was widely acknowledged thatthere seems to be an internal politico-cultural glass ceilingpreventing procurement professionals from being involvedin organisation-wide business strategic decision-making.The main reasons are: (1) a lack of internal recognition ofthe full impact a capable and skilled procurement profes-sional can have on organisation-wide performance, and (2)a lack of internal support for the role. It appears that evenwhen procurement professionals have acquired a highlydeveloped set of skills, their organisational status remainedfairly low. This leads to a deep sense of frustration andultimately disempowerment. If they are unable to demon-strate their capabilities, then they will not be able to changeorganisational perceptions. The only way of breakingthrough this glass ceiling, according to the respondents,was demonstrated when procurement professionals had achampion and were represented at board level.
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Table 3
Development of requisite professional procurement skills
Competency required Skill reference Implication/impact
Technical skills (TS)
TS Technical knowledge: computing skills, tool capacity,
mathematical skills, blueprint reading, forecasting, e-
procurement applications
� Technical skills (Kolchin and
Giunipero, 1993)
� Quantitiative, decision-making,
negotiation skills (Giunipero and
Pearcy, 2000)
� Technical skills and skills techniques
(Carr and Smeltzer, 2000)
� Technical skills (Cousins et al., 2006)
� Technical, broad financial
(Giunipero et al., 2006)
Using new technology for effective
procurement decision-making
TS Basic administrative skills such as TQM, legislation, cost
analysis, product knowledge and negotiation, production
systems and processes
Undertaking negotiations and
discussions
TS Advanced procurement process skills (APP), e.g. category
management, global sourcing development, cost driver
analysis and strategic sourcing; project planning, project
management, technical writing, e-procurement, cost driver
analysis
Essential skills for creating value,
improved value focussed and
strategic decision-making
Interpersonal skills (IS)
IS Oral communication, listening, understanding, passing on
information, persuading and influencing
� Interpersonal, individual and
management skills (Kolchin and
Giunipero, 1993)
� Behavioural, team, process
management skills (Giunipero and
Pearcy, 2000; Giunipero et al. 2005)
� Behavioural skills (Cousins et al.,
2006)
� Technical skills and skills techniques
(Carr and Smeltzer, 2000)
� Oral communication (Large and
Gimenez, 2006)
Effective two-way communication
IS Recognise own strengths: creative thinking, analytical skills Effective personal development,
awareness and managementInvestigation, research, problem-solving, stress management,
time management
IS Leadership: conflict management, decision-making,
organisation, team-building, cross-cultural awareness
Building and managing cross-
functional teams and relationships
Internal enterprise skills (IE)
IE Organisation wide financial skills � Cost analysis skills (Cousins et al.,
2006)
� Management, team skills (Giunipero
and Pearcy, 2000; Giunipero et al.,
2006)
Higher level business decision-
making
IE Change management skills and cultural awareness Managing internal politics and
barriers
IE Manage internal customers, sales interface, internal
motivation
Resolving internal issues
IE Communicate and sell message/strategy internally Get ‘Buy In’ from different
departments/groupsRelationship influencing skills
External enterprise skills (EE)
EE Work in cross-functional team � Cross-functional, team-building
(Lamming et al., 2005)
� Strategic skills (Giunipero and
Pearcy, 2000)
� Supplier/product monitoring
(Cousins et al., 2006)
Early involvement in purchasing
decisions
EE Supplier relationship management skills, supply chain
management
Collaborating with value-adding
suppliers
EE Stakeholder mapping proficiency, supplier evaluation,
international buying
Effective supplier selection and
stakeholder involvement and
management
Strategic business skills (SB)
SB Demonstrate ability to add value throughout the
organisation
� Management (Kolchin and
Giunipero, 1993)
� Strategic skills (Giunipero and
Pearcy, 2000)
� Strategic planning (Giunipero et al.,
2006; Lamming et al., 2005)
� Flexibility (Giunipero et al., 2005)
Recognition of the value of
procurement
SB Manage strategic alliances/partnerships Takes role to the strategic level of
procurementBusiness skills and risk management
R. Tassabehji, A. Moorhouse / Journal of Purchasing & Supply Management 14 (2008) 55–6864
6.2. How has the role of procurement professionals changed
and what challenges have they had to face as a result?
All the respondents in our interviews agreed that theprocurement role was now very much more strategic than
operational. They implicitly recognised that their roleinvolved internal and external stakeholder interactions andmanaging supply chain relationships rather than transac-tion management, with a focus on processes rather thanfunctions. Technology was widely recognised as one of the
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major changes to the role, but there were no challenges orproblems related to this. On the contrary, it was felt torelease time for the professionals to focus on more valueadding tasks. In line with the findings of Lamming et al.(2005), procurement professionals are aware of the need tointeract with other functional managers to developcoherent and integrated strategies, but in practice thisseems to be difficult to do, largely because of the culturaland political barriers that exist in organisations.
6.3. What portfolio of skills do procurement professionals
believe will enable them to fulfil their role effectively?
All the respondents identified an awareness for changeand further skills development. For example, more evalua-tion tools to improve the effectiveness of the role, advancednegotiation skills, change management, and sound businessdecision-making skills. Some believed this could be achievedby investing in training whilst others, notably the financialfirms, preferred to buy in the ‘best of breed’ talent.
Concerns about intra-organisation political challenges,were prominent in identifying skills requirements for theprocurement role. Internal selling abilities were overwhel-mingly felt to be the most important skill to increase theeffectiveness of the procurement role. Although procurementprofessionals are perfectly aware of these needs, alreadyidentified in the literature (Giunipero and Pearcy, 2000;Vammen, 2005), it seems that these have not had the impactexpected, as it was proving nigh impossible for procurementinitiatives on wider business strategies, to be accepted.
7. The procurement skills effectiveness matrix
The findings from this study suggest that today’sprocurement professional must be a dynamic relationship
Fig. 2. Procurement ef
manager creating and developing cross-functional strate-gies and must possess internal selling, change management,supplier relationship and partnership management skills.Empirical research has demonstrated (Cousins et al., 2006),and this study confirms, that internal status and roleintegration act as important precursors to achievingstrategic procurement. The role of procurement can onlyachieve high status levels within the organisation, byacquiring strong management support which impacts theorganisation’s attitude and consequent allocation ofresources. By the same token, unless procurement profes-sionals have a highly developed skill set, they will be unableto achieve high status levels irrespective of organisationalsupport. Without either of these two major factors, theprocurement role will have limited actual or perceivedeffectiveness on organisational performance.The extent of effectiveness of the mix of procurement skills
is illustrated in the matrix presented in Fig. 2. Before procure-ment can be elevated to strategic, the professional first needsto posses a strong set of these underlying skills and compe-tencies (Carr and Smeltzer, 2000; Cousins et al., 2006). Whileskills related to processes and technology (i.e. technical andinternal enterprise) are important, by themselves they are notenough to improve a company’s procurement performance(Reinecke et al., 2007). The list of skills on the horizontal axisof the matrix, is based on the classification in Fig. 1, which islargely cumulative where one builds on the core procurementskills, to reach the ultimate level of skills to be able to operatestrategically. In order to optimise the role of procurement toachieve added value and competitive advantage for theorganisation (top right square of the matrix), the procurementprofessional must develop technical (including advancedprocurement process skills), interpersonal, internal andexternal enterprise and strategic business skills coupled witha high degree of support and internal recognition.
fectiveness matrix.
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Skilled but disempowered procurement professionals areunable to become truly strategic without board levelsupport. Conversely, a board level ‘strategic’ mandate doesnot ensure that the firm acknowledges the value ofprocurement if the procurement professionals cannotdemonstrate their value internally and have the appro-priate skills to become strategic. To demonstrate a level ofvalidity of this framework, we can apply Cousins et al.’s(2006) empirically derived categories of purchasing man-agers to our procurement skills effectiveness matrix. Thisreveals a consistent message in terms of the organisationalimpact of procurement skills sets. Cousins et al.’s (2006)‘‘strategic purchaser’’ contributes most to firm perfor-mance and in our matrix has the full gamut of requiredskills and internal recognition and support. The ‘‘celebritypurchaser’’ contributes the least, because of the lack ofskills despite organisational support. The ‘‘capable pur-chaser’’ has a range of skills, but lacks organisationalsupport with limited effectiveness and the ‘‘underdevelopedpurchaser’’ requires skills and organisational support to bemore effective.
8. Conclusions
This exploratory study has shown that senior procurementprofessionals believe that their role is now strategic. However,even today, one of the main problems remains that thisstrategic role is not acknowledged internally and there arepolitical and organisational-culture barriers to achieving thisrecognition, which is impacting procurement effectiveness.Our procurement skills effectiveness matrix demonstrates theimpact these barriers can have on the efficacy of the role ofthe procurement professional given a portfolio of certainskills. The skills listed here are based on a consolidation ofpast literature and responses collated from participants in thisstudy. They form the basis of a new procurement skillstaxonomy relevant for the current environment.
In order to be effective, not all procurement profes-sionals will necessarily be operating on the same level, andthus will not require all the skills highlighted in the matrix.Organisations, however, need to ensure that they have allthe skills identified in this study and incorporated into theprocurement skills taxonomy and matrix, within theirprocurement team to ensure that they can attain the degreeof effectiveness they require. Whether this will lead to therole of procurement professionals evolving into a moremulti-disciplinary supply network management role, or bedivided into strategic and tactical with different procure-ment professionals adopting different roles (Giuniperoet al., 2006), is still unclear. This is one area for futureobservation and research.
One of the major limitations of this study is that it isbased on the perceptions of a small sample of procurementprofessionals from mainly large corporations. Futureresearch can build on these findings by examining theperception of the role of procurement in organisationsfrom different functional perspectives, such as operations,
supply chain management, finance, marketing and strategyand different sizes of organisation. Murray (2003) criticisesthe procurement literature as being too focused on theprivate sector so further investigation of differences inperception of procurement and its impact on performancein the public sector may also be relevant.The issue of cross-functional working was raised as being
important, thus further work can include documenting theextent of cross-departmental working in organisations, thepractitioners’ skill level and quantifying this effect on theactual performance of the firm. With a more comprehen-sive and statistically robust study, these findings could beused to explore the interaction of other variables onacceptance of a strategic position and the performance of afirm in future work.
Acknowledgements
The authors would like to acknowledge the constructiveand detailed feedback of both the anonymous reviewersand the kind diligence and support of the guest editor. Thisfeedback has led to a much improved paper.
Appendix. Semi-structured Interview Template
Demographic information:
�
Company sector/industry � Annual turnover (if public) � Numbers of staff (a) Perception of procurement in the organisation1. How do you think you are seen by your organisa-tion?
2. How do you see your role in your organisation?
(b) Involvement in the overall sales/purchase process3. To what extent are you involved in decision-makingbefore the negotiation?
4. What prevents early involvement?5. To what extent are you involved in post implemen-
tation negotiation?
(c) Changes to the role and challenges faced6. Do you feel your role is changing? (probe forstrategic purchasing) How and why?
7. What challenges do you face?8. What is currently disrupting the way you would like
to work?
(d) Procurement technology9. What is the impact of technology on your role?10. Do you currently engage in e-procurement?11. Has e-procurement changed your role? (How?)
(e)
Portfolio of skills12. What skills do you think are required by procure-ment professionals today?13. Is the level of training sufficient to cope with
changing role of job?14. Is there anything you feel that is important that you
would like to add?
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