Exploring The Implementation Of CentralisedSourcing And Procurement Process
A Case Study On A Multinational Wire Manufacturer
Siew Kuan Koay, Dr Maria Argyropoulou, Dr Peter Wilkins20th EurOMA Conference 2013 Dublin, Ireland
The Agenda
• The Purpose
• The Research
• Key Concepts and Definitions
• Literature Gap and the Research Motivation
• Leading Research Questions
• Research Methodology and Data Collection
• Data Analysis and Results
• Limitations and Future Research Directions
The Purpose
• To explore whether the implementation of the centralised sourcing and procurement process can improve organisational performance.
Essential Essential factorsfactors
Potential Potential BarriersBarriers
BenefitsBenefits
The Research
Key concepts and definitions (1)
• Centralised approach of sourcing and procurement aims at:
- Harmonising the needs of a company and its subsidiaries to obtain stronger buying power in the supply market (Trent, 2004).
- Coordinating the sourcing and procurement decisions (Faes, Matthyssens and Vandenbempt, 2000).
Key concepts and definitions (2)
• The main reasons to centralise the procurement function are (Rudzki and Trent, 2011; Dumond, 1996):
- Concentration of the purchasing power to a single department- Stronger negotiating position - Improved ability to work with larger suppliers - Better control of inventory - Group sourcing and procurement strategy
Literature gap and the research motivation
• Most studies on sourcing and procurement process are focused mainly on the formation of the process and not on the essential steps prior to forming the process (Faes, Matthyssens & Vandenbempt,
2000).
• This study explores the critical success factors for strategic sourcing and contributes to existing knowledge on the importance of a centralised sourcing and procurement function in a company.
Leading research questions
• What are the steps to form a centralised sourcing and procurement process?
• What are the barriers to the implementation of a centralised sourcing and procurement process?
• What are the benefits of a centralised sourcing and procurement process on organisational performance?
Research methodology and data collection
• Case Study Approach:
- Eight interviews were conducted with:
Personnel involved in sourcing and procurement activities-twenty open ended questions were asked.
- Pilot interview was employed to test and assess the relevance and clarity of the twenty open ended questions.
- Supplementary documentary evidence was collected.
Data analysis
• Thematic analysis was used to analyse the interview transcripts.
• The analysis followed the criteria set out for a good thematic analysis by Braun and Clarke (2006).
Themes that emerged from interview data (1)
• For RQ1_the steps/actions - Commitment from top management
- Categorisation of purchases
- Execution of a spend analysis
- Separation of the strategic from the operational roles and activities
- Redesign of organisational structure
- Standardisation of processes, procedures and purchase specifications
Themes that emerged from interview data (2)
• For RQ2_the barriers
- Low development level of the procurement organisation
- Nonexistence of sourcing strategy
- Inadequate procurement process - procurement did not consider a strategic process
- Lack of knowledge and skills
- Poor procurement information system
Themes that emerged from interview data (3)
• For RQ3_the benefits
- Improvement of the procurement function
- Stronger buying power
- Cost savings
Limitations
• Lack of ability to generalise the findings
• Number of interviews
• Time constraints
• Author’s rather limited interviewer experience
Future research directions
• The findings can be used by future researchers to:
- explore further the centralised procurement by employing a constructivist approach.
- develop the themes identified from the research in others studies/industries in the field of strategic supply chain management.
Thank you for your attention!
Any questions?
