How to manage corporate purchasing synergy in a decentralised company? Towards design rules for managing and organising purchasing synergy in decentralised companies

European Journal of Purchasing & Supply Management 6 (2000) 5}12

How to manage corporate purchasing synergy in a decentralisedcompany? Towards design rules for managing and

organising purchasing synergy in decentralised companies

Frank Rozemeijer*Eindhoven University of Technology, Faculty of Technology Management, Institute for Purchasing & Supply Development, P.O. Box 513,

5600 MB Eindhoven, Netherlands

Abstract

More and more organisations are showing interest in how purchasing strategy and structures may support their overall businessstrategies. More and more, therefore, the question prevails how to get organised at a corporate level to capture the potentialpurchasing synergies. The challenge is to generate knowledge regarding how to structure and manage e!ectively purchasing synergiesbetween business units. This paper deals with the concept of purchasing synergy or more speci"cally: the management of value-addinglinkages in the area of purchasing between di!erent business units in a multi-business company. It summarises the intermediate resultsfrom Ph.D. research currently conducted at Eindhoven University of Technology. Based on the "ndings derived from in-depth casestudies at three large multinational companies, we propose a model, which may support management by formulating the rightstrategy and designing the right structure aimed at capturing the potential synergies. ( 2000 Elsevier Science Ltd. All rightsreserved.

Keywords: Purchasing and supply management; Corporate synergy; Strategic management; Organisational structure

1. Introduction

It appears that during the past few years purchasinghas begun to play an ever more important role in thestrategy of the "rm than was true in the past (Carter andNarasimhan, 1996; Spekman et al., 1994; Tully, 1995;Ellram and Carr, 1994; Brandes, 1994; Gadde andHakansson, 1994). This trend cannot be viewed in isola-tion, but is related to the competitive challenges going onin the international business environment (Weele andRozemeijer, 1996). In order to survive, managers rethinktheir competitive priorities and rethink their value chain.As they do this, they cannot but rethink the current roleand position of their purchasing and supply operationsand strategies. As the scope and importance of purchas-ing increases, "rms increasingly recognise the necessity ofco-ordination of their overall purchasing e!orts. Driven

*Corresponding author. Tel.: #31-40-2472423; fax: #31-40-2465949.

E-mail address: [email protected] (F. Rozemeijer)

by the competitive pressures and the importance of pur-chasing, especially in the Retail, Automotive, Computer,and Electronics sectors companies have implementedstrategies and structures aimed at capturing purchasingsynergies (Keough, 1993).

This paper concentrates on the initiatives taken tocapture potential synergies in the area of purchasing.Capturing these synergies is a way of getting extra perfor-mance, or creating extra (shareholder) value, from anexisting situation (e.g. &doing more with less'). Purchasingsynergies can yield signi"cant bene"ts and even playa vital role in some companies' corporate strategies (seethe example of DaimlerChrysler below).

`The DaimlerChrysler merger is considered tohave great potential for synergy. By spreadingChrysler's production expertise to Daimler opera-tions and merging both product development for-ces, the new company could cut costs by up to $3billion annually * including $1.1 billion in pur-chasing costs, analysts say. Apart from increasednegotiation power due to the bundling of demands,

0969-7012/00/$ - see front matter ( 2000 Elsevier Science Ltd. All rights reserved.PII: S 0 9 6 9 - 7 0 1 2 ( 9 9 ) 0 0 0 3 4 - 9

they can share their best-practices in the area ofpurchasing. Chrysler, for its part, has the industry'sbest supplier relations, while Daimler still relies onstrong-arm techniques to get lower prices from itssuppliers (Anonymous, 1998).

Although it is generally recognised as one of the keyissues today, the debate about the organisation and man-agement of corporate purchasing synergy is somewhatneglected in current purchasing literature. Strategies andstructures aimed at capturing synergies, as currently im-plemented in several large companies (Weele andRozemeijer, 1996), have not yet been the topic of scienti"cresearch.

2. Objective

Both in the literature and in practice there is stilllimited knowledge on how to realise sustainable purchas-ing synergy on a corporate level, while maintaining theadvantages of decentralisation. That is the major reasonwhy we have initiated a Ph.D. research project aimed atgenerating knowledge on this subject. Based on research,this paper takes a close-in look at how purchasingsynergy can be de"ned and what di!erent approaches areused in theory and practice to capture the synergy. Thispaper tries to answer whether there is a link betweendi!erent forms of synergy and di!erent kinds of mecha-nisms, and whether purchasing synergy initiatives needto be crafted to meet the speci"cs of each situation.Eventually, this paper aims at delivering practical guide-lines that help management to choose workable interven-tions to address particular opportunities for purchasingsynergy.

3. Methodology

We started this research project with a literaturestudy. Further, we conducted in-depth case research.Empirical validation of the insights presented in thispaper is limited to three companies from the FinancialServices, Electronics and Pharmaceutical sectors. Thisvalidation was carried out by reviewing existing anddeveloping purchasing synergy initiatives. We have car-ried out this "eld research over a period of about oneyear. The three participating companies were examinedthrough:f the use of semi-structured interviewsf interviews with large number (10}15) of people from

di!erent functions and di!erent hierarchical levels(general management and the management of pur-chasing, production, product development, and"nance and accounting)

f direct observation of company behaviourf examination of purchasing reports, notes from meet-

ings, project documentation and other (general) com-pany documentation

Additionally, a number of roundtables were organised inwhich the ideas presented here were tested and developedfurther in close collaboration with the representativesfrom the participating companies.

4. Theoretical 5ndings

Our "rst research question for theoretical study wasaimed at "nding a proper de"nition for purchasingsynergy. According to Goold and Campbell (1998)synergy is derived from the Greek word &synergos',which literally means &working together'. In businessusage, synergy refers to `the ability of two or moreunits to generate greater value working together thaneach of them could by working aparta. Often thisis illustrated with the equation: 1#1"3. Scanningour library system on the keyword `synergya, wecame across a large number of articles and books de-scribing initiatives to capture (purchasing) synergies.Based on the work of Goold and Campbell (1998) westate that most business synergies take one of six forms(see below).

Pooled negotiation power (buying together): By combin-ing their purchases, di!erent units can gain greater lever-age over suppliers, reducing the cost or even improvingthe quality of the goods they buy. Companies can alsogain similar bene"ts by negotiating jointly with otherstakeholders, such as other companies, competitors, cus-tomers, governments, or universities. A lot of referencesto pooled negotiation power with other stakeholders canbe found. The terms used for these kinds of co-operationdi!er with the business sector: Co-operative purchasing(public sector), Consortium purchasing (industrial com-panies), Group purchasing (health care) and Buying of-"ce (Retail) (Essig, 1998).

Sharing intangible resources (knowledge and informa-tion): Firstly, business units (BU) can improve their re-sults by pooling their insights into a particular process(e.g. formulating purchasing strategies, applying state-of-the-art purchasing tools and techniques, developingpurchasing skills and competencies, gaining access toworld-class suppliers), function, or geographic area.Value can be created simply by exposing one set ofpeople to another. The emphasis that many companiesplace on leveraging core competencies and sharing bestpractices re#ects the importance attributed to sharingknowledge. Secondly, business units can improve theirposition by exchanging and sharing information aboutproduct speci"cations, company wide contracts, productprices, suppliers, purchasing procedures, and supplymarket developments.

6 F. Rozemeijer / European Journal of Purchasing & Supply Management 6 (2000) 5}12

Shared tangible resources: Units can gain economies ofscale and avoid duplicated e!ort by pooling (corporate)purchasing specialists, purchasing information and com-munication systems, a corporate management group(overhead), and/or o$ce space and other facilities.

Vertical integration: Co-ordinating the #ow of productsor services from one unit to another can reduce inven-tory, speed product development, or increase capacityutilisation. By integrating and co-ordinating the totalchain from suppliers to customers (supply chain manage-ment) signi"cant synergies can be captured. An exampleof this synergy is Renault's &Synergy 500 programme'. Theinitial idea behind this program was to generate ideasfrom suppliers for a FF 500 million cost reduction, buttoday it has become the core of the company's relation-ship with suppliers (Larkin, 1996).

Co-ordinated strategies: Aligning the strategies of twoor more business units can be an important source ofsynergy, but di$cult to achieve. Striking the right bal-ance between corporate intervention and business unitautonomy is not easy.

Combined business creation: Can be facilitated by com-bining know-how from di!erent units in a new unit, or byestablishing internal joint ventures.

Applied to our "eld of study we observe that purchas-ing synergy can be de"ned as: the value that is addedwhen two or more business units (or purchasing depart-ments) join their forces (e.g. combined buying) and/or shareresources, information, and/or knowledge in the area ofpurchasing.

This implies that we concentrate on the intra-companysynergies. Often it seems that these intra-company syner-gies should exist, yet are very di$cult or even fail tomaterialise. For example, it took PepsiCo CorporatePurchasing Group more than a year to decide onjointly to purchase toilet paper for their restaurants TacoBell, Pizza Hut, and KFC, and save several hundredthousand dollars per year by (Collins and Montgomery,1998).

The research project, of which some of the results arediscussed in this paper, tries to answer the question: howto manage and organise for sustainable purchasingsynergy on a corporate level, without losing the e!ec-tiveness and e$ciency of decentralised purchasing? Toanswer this question we should "rst get an answer onquestions like: `What are the driving factors and man-agement motives underlying strategies aimed at captur-ing this synergy?a and `What are the di!erent possibleapproaches to capture this synergy?a There is some liter-ature available that discusses these questions. Somepublications presents successfully implemented newpractices, or suggest standardised solutions for improv-ing current practices (Essig, 1998; Arnold and Essig,1997; Hughes et al., 1998; Jones, 1997; Weele andRozemeijer, 1996). However, very little publications illus-trate why certain practices are implemented or under

which conditions a certain approach will be successful.Based on research at some large US companies, Corey(1978) summarised four driving factors that motivatedcompanies to establish stronger purchasing functionsand move away from complete decentralisation of pur-chasing:(1) coping with supply shortages and assuring long-term

availability,(2) responding e!ectively to a changing business context

(e.g. internationalisation, developments in ICT tech-nology, government regulations and public attentionto the way companies do business),

(3) seeking improved pro"t performance through re-duced costs of supply, and

(4) responding to a need for increased professional de-velopment in purchasing, and for more e$cient useof scarce human resources in its several functionsand business units.

Based on our observations from today, we think thesefactors are still relevant more than 20 years later. How-ever, we would describe factors (1) and (2) as &Businesscontext', and the other two as &Strategic focus' and &Pur-chasing maturity', the latter being expressed in di!erentstages of development as in the model of Keough (1992).Further we like to add &Organisational context' as a driv-ing factor, since the corporate structure also determinesthe scope of opportunities for realising purchasingsynergy (Rozemeijer, 1998).

What are the motives for organising and managingpurchasing synergy? Based on some European case ob-servations, Matthijssens and Faes (1996) describedthe usefulness of a co-ordinated purchasing approachas a strategic weapon. Not only to reach a strongernegotiation position by pooling the volumes purchasedin the various units, but also to prevent mutually incom-patible negotiating strategies. Faes and Matthijssens(1998) summarise, based on a survey, the top "veperceived bene"ts of a co-ordinated purchasingapproach:(1) Better internal exchange of information,(2) Improved market negotiation strategy,(3) Signi"cant cost savings,(4) More impact on monopolistic supply markets, and(5) Improved insight in market and cost structures.Based on the results of case studies at four large Germancompanies, Arnold (1997) stated that the bene"ts ofintra-company purchasing consortia are signi"cant andcan be realised without high(er) co-ordination costs. Es-sig (1998) examines how you organise for purchasingsynergy; he developed the concept of &Co-operativeSourcing' indicating horizontal co-operation to bundledemand (purchasing consortia). Based on theoretical re-search combined with action research at a buying con-sortium existing of 13 small- and medium-sized Germanindustrial companies, he developed recommendationsand instruments for realising co-operative sourcing in an

F. Rozemeijer / European Journal of Purchasing & Supply Management 6 (2000) 5}12 7

optimal way. The "ve major recommendations for pur-chasing managers wanting to establish &Co-operativeSourcing' in their companies according to Essig (1998)are:1. Find the right consortium partners and adopt a com-

patible target system2. Develop contractual (working) rules for the consor-

tium3. Determine the organisational structure of the consor-

tium, and its operations4. Develop a cooperative corporate identity to avoid

sta! problems5. Try to avoid an imbalance of incentives and contribu-

tions of members.Based on a survey, Faes and Matthijssens (1998) de-"ned some additional guidelines for the implementationof an e!ective co-ordinated purchasing approach. Firstly,they state that intra-company co-ordination is built upstep-by-step (incrementally) and not by a revolution.Secondly, con"dence building performance measures areneeded to motivate the people involved. Thirdly, buildtrust by keeping one's word to suppliers and internalcustomers. Finally, clear communication lines are neededbetween the people involved. Hughes et al. (1998) statethat a structured (top}down) process for cross-businesscollaboration needs to be tailored to each business. Inother words, the context determines the approach thatcan be used. They distinguish the following approaches:full centralisation, managed collaborative sourcing, andinformal networking and loose collaboration. While in-formal networking has a role to play, successful captur-ing of purchasing synergies requires an explicit and well-structured implementation path. According to Hughes etal. (1998) there are some preconditions that need to be inplace. Based on a case study at a US-based company,they state that there seems to be a close correlationbetween the potential value delivered and the level ofactive executive support. Senior management needs to beprepared to invest time and resources in ensuring thatcollaboration projects are de"ned, prioritised, selected,and driven forward. Expectations, outputs and resultsshould be made explicit, and a manageable and agreednumber of projects should be fully supported by manage-ment of each unit (business mandate). Teams are respon-sible for planning, organising and implementinga strategy incorporating the individual needs of eachbusiness. Progress should be reviewed by the teams andtop management. Finally, training and developmentshould be available and networking should be facilitatedto enhance teamwork.

To summarise the insights derived from theory, thepre-conditions for successful management of purchasingsynergy (in random order) should be:f top management involvementf appointment of a senior management problem

owner

f setting of a clear and measurable target (based ondetailed purchasing information)

f explicit synergy projects should be identi"ed, priori-tised and decided on

f implementation of a well-designed organisation struc-ture (working rules, clear communication and report-ing lines, balance between incentives and contribution,etc.)

f allocation of all the necessary resources over the di!er-ent teams

f teams formulating and implementing the strategy fortheir speci"c projects

f teams are supported with training, networking andproper ICT systemsimplementation is monitored andimprovements are initiated where necessary

It is our observation that though these pre-conditions arevaluable in themselves, they are not linked with a speci"ccontext. The di!erent authors present them as generalsuccess factors for managing purchasing synergy. By con-ducting in-depth case studies we try to "nd out whetherthese pre-conditions are in place in practice, and to whatextent they are determined by the di!erent contextualfactors.

5. Empirical 5ndings

In this section we would like to describe the resultsfrom our empirical research. Within the scope of thispaper we will only highlight our key observations. In thetable below we describe the three cases along the dimen-sions: Business context, Strategic focus, Organisationalcontext and Purchasing maturity.

We think that the main drivers behind the di!erencesin approach are the contextual factors described inTable 1. The business context di!ers over the three cases.In the cases of Financial services and Pharmaceuticals,competitive pressure is limited (low-price erosion) anddue to the fact that both are still very pro"table, pressureto reduce costs is also rather low. In the Electronics casehowever, competitive pressure to reduce costs is veryhigh (annual price erosion amounts more than 10%). Inthe corporate context we also observed di!erences. Boththe Financial services and Pharmaceuticals companiesare in the midst of a company-wide decentralisationprocess in which business units gain more autonomy andcorporate involvement in day-to-day business is reduced.The Electronics company is also restructuring, but in theopposite direction. They are working towards increasedintegration of the three regional business units on a glo-bal scale.

Concerning corporate synergy initiatives in general,we observe that all companies look for synergies in theareas of human resources, "nancial management andcorporate support sta!. However, the Financial servicescompany is actively searching for synergies in the areas of


Table 1Contextual factors

Financial Pharma Electronics

Business context} Products Banking and insurance Pharmaceutical ingredients Lighting electronics} Customers Consumers#Business Business-to-business Business-to-business} Competition Limited Limited Fierce} Business stage Mature Mature Growth} Price erosion Low Low Very High

Strategic focus Customer value; di!erentiation Customer value and diversi"cation Lowest cost, innovation speed andstandardisation

Organisational context} Structure Bureaucratic and centralised structure Business unit structure Matrix structure with cross functional

teams} Trends Decentralisation Decentralisation Globalisation

Purchasing maturity} Status function Low Medium High} Orientation Transactional and commercial Transactional, commercial and some

coordinationCross functional process and supplychain management

} Purchasing quote Low Medium High} Organisation Central group combined with

purchasing by internal usersCorporate group, business unit-andsite purchasing

Global competence centre with CPOcombined with regional groups

} Main spend category General expenses Raw materials and general expenses Bill of material (components, IC's)

marketing and sales, information technology, new prod-uct development. The Pharmaceuticals company concen-trates mainly on corporate synergies in research anddevelopment, and issues related to health, safety andenvironment. Finally, the Electronics company concen-trates on realising synergies in purchasing, manufactur-ing, engineering and development. We think thesedi!erent priorities can be explained to a large extent bywhat is needed to stay competitive. In the Financialservices company, customer relationships and trust (cus-tomer intimacy) are the keys to company success, andmarketing and sales are instruments to increase or main-tain customer intimacy. In the Pharmaceuticals com-pany, developing new and improved drugs (productexcellence) is the main road to company success,making research and development very important. Inthe Electronics company, operational e$ciency andinnovation speed (operational excellence) are the keysto company success, which increases the importance ofsupply base management (a cross functional e!ortof purchasing, manufacturing, engineering anddevelopment).

If we take a closer look at the purchasing synergyinitiatives, we see that they also di!er over the three cases(see Table 2). In the Financial services case, they formeda corporate sourcing platform aimed at exchanging in-formation and look for opportunities for professionalimprovement and cost savings. However, after one yearthe results are very poor (no costs saved or value created).

It is very di$cult for the Financial services company'scentral purchasing group to gain more recognition be-cause of the functionally oriented corporate structure,and the undervalued position of purchasing in it. Theinitiatives taken by the purchasing director resulted inpolitical turf wars between the divisions. In the &Elec-tronics' case, we found that the high-price erosion at salesmarkets forced the company to manage purchasingsynergies to increase buying power. This buying powerwas also needed to motivate their most important sup-pliers into partnership relations aimed at speedy innova-tion and lowest cost. The Electronics company appointeda Chief Purchasing O$cer with global responsibility forSupply Base Management issues and implemented a verycommunication intensive (cross-hierarchical, cross-re-gional and cross-functional) team structure. The resultsof the purchasing synergy initiatives are signi"cant, re-sulting in measurable cost savings and better partneringwith suppliers. Based on these two cases there seems to bea correlation between the contextual factors and thepurchasing synergy initiatives. It further seems that thepurchasing synergy initiatives need to be crafted to meetthe speci"c situation. If the strategic urgency to capturepurchasing synergies is not experienced by all the stake-holders, it is very di$cult to realise it. In Table 2, wesummarise the major similarities and di!erences of thesynergy initiatives studied.

We found three areas that the companies look for tostimulate co-operation and realise purchasing synergy:


Table 2Characteristics of purchasing synergy

Financial Pharma Electronics

Synergy initiative Corporate sourcing platform (Corporate) working groups Global competence centre with CPO

Goal Exchange of information and lookfor opportunities for professionalimprovement and cost savings

Exchange of information andopportunities on speci"c spendcategories

Global supply base management onBill of materials and non-BOM spend

Scope Synergy within and over Divisions inthe Netherlands

Synergy within and over Divisionsand BU's in the Netherlands

Synergy within and over the fourRegions of the global BU

Synergy form Exchange of information no concreteactions

Pooled negotiation power sharinginformation

Pooled negotiation power and sharingbest practices and information

Synergy management Poor (voluntary, no clear targets,no planning, etc)

Medium (voluntary, no targets, butfacilitated by corporate group)

Strong (mandatory, clear targets,performance measurement, etc)

People involved Only non-purchasing Only purchasing Cross functional

Involvement of:} CEO Low Low High} CPO n.a. Medium High} BU mgt. Low Medium High} BU purchasing Low Medium High

Perceived success Poor results Varying results Signi"cant results

(1) Structural designs, (2) Networks of people and(3) Information and communication infrastructure. Asindicated earlier there are a large number of di!erentstructural designs companies implement to stimulateintra-company co-operation: Corporate sourcing plat-form, Executive steering board, Chief Purchasing O$cer,Central purchasing group, Commodity team, Cross-functional team, Competence team, Working group,Task force and Leadbuyership. All these structural mech-anisms can be single-unit or multi-unit, and can havea national, regional or global scope. At "rst hand, onewould expect that a corporate purchasing group operatesglobally. However, in two of our three case companiesthe Corporate purchasing group was mainly negotiatingcontracts only for the Netherlands. The structural designalso seems to vary between on the one hand co-operationthat is voluntary, informal, and initiated from the bot-tom-up, and on the other co-operation that is manda-tory, formal and initiated from the top}down. Apart fromstructural instruments we have found that networks ofpeople stimulate intra-company co-operation and team-work. Instruments that are used to facilitate the formingof these networks are company events, corporate trainingcourses and conferences, job-rotation across businessunits, management development programs, group ident-ity programs (e.g. survival weekend), co-location and allkinds of social events. On one occasion purchasers fromdi!erent divisions set up co-operation not because of

procedures, strategy or rules, but just because they kneweach other and saw bene"ts in working together. If theyhad not decided to co-operate, nobody would have saidanything about it. Because of this, we think that facilitat-ing networking can be a useful instrument for stimulatingintra-company synergies. Finally, we found that Internettechnology (e.g. Intranet), electronic communication sys-tems (e.g. E-mail), conferencing systems (e.g. videocon-ferencing), electronic bulleting boards, group decisionsupport systems and information sharing systems (e.g.Lotus Notes, corporate databases with information oncomponents, suppliers, and contracts) facilitates co-op-eration. For example, Intranet can be used to communic-ate corporate agreements to internal users, but also tocommunicate best practice examples of implementinga certain purchasing process.

6. Towards a model for managing purchasing synergy

Based on our theoretical and empirical research wehave come up with a hypothetical model indicating theapproach to purchasing synergy that can best be used,given the level of business unit homogeneity and pur-chasing maturity in a speci"c company situation. Arnold(1997) states that to establish a successful intra-companypurchasing consortium, there has to be a minimum ofhomogeneity in demand between the several business


Fig. 1. Purchasing maturity versus Business Unit homogenity Matrix. Fig. 2. Relationship assessment diagram.

units. The degree of this homogenity he called &procure-ment "t'. The higher this procurement "t, the higher thepossible degree of centralisation. With little homogenitythe best approach is the X-model (a hybrid structurebetween decentralised and centralised) which only makesuse of sharing information and process knowledge (e.g.best-practices), and focuses on how to purchase e!ec-tively. If there is a high degree of procurement "t, the bestapproach is the Y-model (the last step before centralpurchasing). This Y-model does not only refer to sharingprocess knowledge and information, but also to joiningforces in negotiating contracts (economies of scale). Essig(1998) makes the distinction between purchasing co-op-eration with a strategic focus (Co-operative sourcing) andco-operation with a tactical focus (Classical purchasingconsortium). Our research also suggests that homo-geneity on the one hand, and the level of maturity ofthe purchasing function on the other, have a greatimpact on the approach that can (or should) be used (seeFig. 1).

With high business unit (BU) Homogenity and lowPurchasing maturity we suggest that a central buyinggroup captures the purchasing synergies (often mainlybundling of volumes). This approach does not "t ina situation of high homogeneity and high purchasingmaturity. Here, the decentralised groups will not accepta central purchasing group, because they are able to dothe (initial) purchasing themselves. In this quadrant wesuggest a (cross-functional) team approach. If BU Homo-geneity is low, purchasing synergies are mainly found insharing best practices and information. With low hom-ogenity and low purchasing maturity, there are not somany best practices to share. In this situation we suggestfacilitating sharing information on prices, suppliers,product features by use of working groups. In the situ-ation of low homogenity and high purchasing maturitythe focus should be on facilitating sharing best practices.Another example can be joint investment in a procure-ment transaction system.

7. Who is responsible for managing purchasing synergy?

One of the most important issues in managing pur-chasing synergy is the issue of responsibility. Is it mainlythe responsibility of the Chief Purchasing O$cer (CPO)or comparable corporate purchasing director? Withouta strong CPO capturing corporate synergies is seemsalmost impossible. However, we have evidence that it isvery di$cult for a CPO to change the behaviour of BUmanagement without the mandate of the Chief ExecutiveO$cer (CEO). So there is also a role for the CEO. Thisrole is mainly supportive, but can also be initiating andmonitoring. Is it the responsibility for the CEO? Wethink that in the end the CEO should be responsible, butthere are other stakeholders. In the discussions we havehad in the roundtables, we designed a diagram to addressthis issue (see Fig. 2). For managing purchasing synergythere are four parties that are important: CEO, CPO,Business Unit management and Business Unit purchas-ing management. They all have their speci"c roles andresponsibilities. But are they committed? The question iswhether or not the four parties all show the highestpossible interest and spend a signi"cant amount of timeon issues related to purchasing synergy. Our cases showthat there are large di!erences in this respect. The arrowsindicate the nature of the relationships between the fourparties. Are these relationships formally structured? Doall parties interact very frequently to discuss issues re-lated to purchasing synergy? Do they jointly conducttasks with regard to managing purchasing synergy? Inthe "gure all relationships are two-way and have thesame intensity (line thickness). However, in practice wehave found some lines to be one-way, and/or more inten-sive in terms of involvement and communication(e.g. CPO'BU Management) than the other (e.g.CEO'BU Purchasing). We state that the better therelationships are formally and informally structured, themore successful the purchasing synergy initiative will be.

8. Conclusions

Our paper presents in a coherent way some of theinsights derived from our ("eld) research. Firstly, the


three companies show us a wide variety in approaches tocapture purchasing synergy. Approaches range from in-formal and based on voluntary co-operation (Pharma-ceuticals), to formal (managed) structures integrated inthe business (Electronics). Secondly, there seems to bea correlation between the approach used to capture pur-chasing synergy and the four context factors: develop-ments in the business context, strategic focus,organisational context and the level of purchasing ma-turity in the business units. This hypothesis will beworked out in more detail and tested with a large survey.Based on literature and research we suggest a modelindicating that the type of approach seems related to thelevel of purchasing maturity in the business units and thelevel of business-unit homogeneity. Finally, we presentedan assessment diagram, which can be helpful to deter-mine the role and responsibility of the key players inmanaging purchasing synergy. At this moment we canonly present the insights from three cases. The modelsoutlined will be tested in the coming year in two morein-depth cases, and a large survey.

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Documents

How to manage corporate purchasing synergy in a decentralised company? Towards design rules for managing and organising purchasing synergy in decentralised companies