Davide Luzzini

A transaction costs approach to purchasing portfolio management

Purpose – The purpose of this paper is to propose a theoretically sound and empirically tested classification system composed of purchasing strategic categories as a basis for purchasing portfolio models.Design/methodology/approach – An international, cross‐industry survey has been designed to assess the characteristics and corresponding strategies of the purchasing categories.Findings – The paper operationalises the constructs derived from previous scientific contributions related to purchasing portfolio management and transaction cost economics (TCE) to empirically test the purchasing portfolio. In total, four different types of strategic categories have been identified, and distinctive competitive priorities have been found.Research limitations/implications – Managers might be able to identify different types of purchasing strategic categories, whose characteristics drive specific purchasing strategies. Longitudinal data and more extensive tests of the characteristics of each category might contribute ...

Towards full integration: eProcurement implementation stages

Purpose – The purpose of this paper is to identify different maturity stages of eProcurement adoption. eProcurement (i.e. electronic purchase of indirect goods), is a growing reality and it is spreading among companies. However, even inside a growing trend, no and low adopters can still be found, and those already using eProcurement go through many intermediate levels. According to the literature, there can be many factors influencing eProcurement adoption but clear approaches and maturity stages are still not defined.Design/methodology/approach – This paper proposes a general framework in which eProcurement maturity is measured by three components: level of adoption, technology and organizational objectives. The framework was applied to 13 case studies of information technology purchases of companies in different sectors; thus, indentifying different approaches that have been clustered in three maturity stages.Findings – First of all, a quite strong relationship is found between eProcurement adoption and...

Purchasing performance management systems: an empirical investigation

This article aims at further developing the purchasing performance management systems (PPMSs) body of knowledge, assuming the wider perspective of the adoption process rather than key performance indicators (KPIs) only. In particular, the research questions are focused on understanding what are the most adopted indicators, what are the key elements characterising the implementation process and what are the differences among different organisational levels and different purchasing categories. The literature provides a framework for classifying purchasing KPIs, identifying the implementation process and the PPMS architecture, thus supporting the empirical research protocol. Nine case studies of large multinationals belonging to different industries are conducted. Empirical evidence shows that companies are still adopting mainly an external perspective, by focusing on performance measurement efforts on suppliers. Widely adopted indicators mainly measure cost, time and quality. However, the purchasing department has acquired an important role within the organisation and new performance indicators have been created; flexibility, innovation and sustainability are becoming increasingly important.

A comprehensive assessment of measurement equivalence in operations management

This paper provides a comprehensive framework for treating equivalence both prior to data collection and during subsequent analyses, and assesses the extent to which equivalence is considered in survey research in six leading empirical Operations Management (OM) journals (Decision Sciences, International Journal of Operations & Production Management, International Journal of Production Research, Journal of Operations Management, Management Science and Production and Operations Management). Measurement equivalence of latent variables in survey data is an important condition that should be met in order to meaningfully pool and/or compare data stemming from apparently heterogeneous sub-groups. We assess 465 survey articles from a six-year period from 2006 to 2011 and document these articles in relation to the four main stages of our comprehensive framework: identifying sources of heterogeneity; maximising equivalence prior to data collection; testing measurement equivalence after data collection; and dealing with partial and non-equivalence. We conclude that pooling of data from heterogeneous sub-groups is common practice in OM, but that awareness and testing of equivalence remains limited. Given these findings, we further elaborate the best practices detected in those few OM studies that do address equivalence in some way. We conclude that to improve the quality of OM survey research, authors, editors and reviewers should pay greater attention to equivalence, and we provide a pragmatic checklist of measurement equivalence issues across the four stages.

Cinderella purchasing transformation: linking purchasing status to purchasing practices and business performance

Abstract This paper contributes to the on-going debate about the relevance of the purchasing function for the firm value creation. We empirically examine the role of the purchasing function in improving business performance through an international survey based on 653 responses. Results suggest that purchasing practices related to spend rationalisation have a positive impact on the overall business performance, whereas supplier development & integration and sustainable purchasing have not. Moreover, the purchasing recognition by top managers and other organisational units emerge as a powerful antecedent of all purchasing practices. Instead, pure formal authority provided by the position in the organisation chart (i.e. the report level) does not have any influence on purchasing practices adoption.

Total Cost of Ownership Along the Supply Chain: A Model Applied to the Tinting Industry

Total Cost of Ownership (TCO) is a consolidated purchasing tool applied across different industries. However, in some cases, existing models are not satisfactory. The paper analyses the tinting industry, where manufacturers of colourant dispensing machines sell products and related services to paint producers, who install them in retail stores to sell the colour paints to the final consumers. Authors develop a TCO model integrating those existing in literature and including the following specifications: (i) all relevant costs along the product life cycle are considered; (ii) both goods and service-related costs are considered; (iii) both explicit and hidden costs are considered; (iv) the model adapts to the perspectives of various actors in the supply chain. The TCO model is tested with real data and provides useful insights on real costs sustained by each actor.

Supply Chain Coordination: the problem of risk and benefit sharing

Every firm has to manage its strategic relationships to reach a distinctive competitive advantage. In practice, collaboration is much less adopted than predicated. Especially when a leading actor is missing and mutual trust is lacking, it all becomes a matter of bargaining power. Thus, full collaboration and integration is often far from realized, the two largest barriers being the lack of availability of a supply chain performance measurement system (PMS) and not effectively sharing the risks and benefits derived from collaboration. Within this framework, the contract design plays a relevant role because contracts are primarily seen as a means of coordination. The aim of this article is twofold: to classify risk- and benefit-sharing tools initiating from contract typologies and to identify the drivers in order to choose the most appropriate form of coordination. In order to develop their theory, the authors reviewed evidence that derived from multiple in-depth case studies from different industries. Relevant data and information were collected through direct interviews with operations and supply chain managers and through secondary sources.

Evaluating the Effectiveness of Public Procurement Performance Management Systems in Local Governments

ABSTRACT Increasing the effectiveness, efficiency, and compliance of public procurement (PP) has become an ongoing concern for governments. Public administrations at different levels are realising that – in order for PP to fulfil its mission – appropriate control and diagnostic systems must be put in place. This study aims to investigate the architecture of PP performance measurement systems (PP-PMSs) in local governments, drawing on four case studies from Italy and four from Wales. The theoretical background is provided by the emerging literature on procurement PMSs in the private context as well as the specific literature on the public sector. PP-PMSs are specifically analysed with respect to performance areas covered (i.e., cost, quality, time, compliance, innovation, sustainability). Results show that performance dimensions should be extended beyond traditional cost measures, with KPIs not limited to those imposed by national/regional regulation. Furthermore, we show that this is likely to happen where the procurement function is recognised as strategic in the public institution.

Designing a public procurement strategy: lessons from local governments

Public sector procurement faces competing priorities, such as cost-efficiency, legal conformity, the advancement of environmental protection and the promotion of innovation. In addition, procurement departments are moving away from being mere organizational servants to having a strategic function. This paper looks at current public procurement strategy research, revealing neglected aspects. The authors propose a new analytical framework and suggest avenues for future research.

Risks and governance modes in offshoring decisions: linking supply chain management and international business perspectives

ABSTRACT Governing offshoring has become a major challenge for firms that run operations outside the home country. International business (IB) and supply chain management (SCM) literature offer different insights on the topic, focusing especially on possible governance modes and the drivers of this choice, with different perspectives. Grounding the discussion at the intersection between these two research fields, the present study first proposes a taxonomy of offshoring risks (i.e. tasks, operational, reputational and institutional), with corresponding risk factors in each category; then, a set of research propositions are formulated, in order to link these categories to the governance-mode choice. Furthermore, we argue that the risk–governance link is moderated by two relevant factors, that is, the offshoring firm size and the strategic relevance of the outsourced activity. As a result, we elaborate on the interrelation between IB and SCM theories, emphasising the impact of risk management and contingent factors in offshoring governance modes configurations.