ARTICLE IN PRESS

Journal of Purchasing & Supply Management 14 (2008) 205– 207

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Journal of Purchasing & Supply Management

1478-40

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Notes and Debates

Purchasing myopia revisited again?

Frank Rozemeijer �

Faculty of Economics and Business Administration, Department of Marketing, University of Maastricht, PO Box 616, 6200 MDMaastricht, Netherlands

a r t i c l e i n f o

Article history:

Received 9 June 2008

Accepted 9 June 2008

Keywords:

Purchasing

Strategy

Evolution

Development

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a b s t r a c t

This paper is a response to a recent study of Ramsay and Croom. Based on their study these authors

claim that both practitioners and academics regard purchasing mainly as a set of strategic activities and

thereby overlook the fundamental importance of operational purchasing activities. Also they state that

purchasing development models are unhelpful. In reaction to these provoking statements, this paper

describes the evolution of the purchasing profession and stresses the relevance of purchasing

development models for the purchasing profession. However, it is recognised that these purchasing

development models should be used with great care and that further research is needed to test them

empirically.

& 2008 Elsevier Ltd. All rights reserved.

1. Purchasing myopia revisited again?

It was with great interest that I have read the critical article ofRamsay and Croom (2008). To make my position clear from thestart, I must state that since the late 1990s, I am working withthese so-called purchasing development models both in myacademic and in my consulting work and I use them with greatpleasure. I would like to focus my reaction on three elements inthe article of Ramsay and Croom:

(1)

Differentiating between clerical and strategic activities ismisleading.

(2)

Purchasing development models are unhelpful. (3) Pilot study research.

2. Differentiating between clerical and strategic activities ismisleading

The early groundwork in establishing a strategic view onpurchasing was carried out mainly in the 1970s. Purchasing theoristslike David Farmer (1974) stated that purchasing was a significantfunction, which needed to be considered as part of the corporatestrategy planning process to ensure that supply conditions arereflected in it. However, many of the strategic management authorsof the 1970s (e.g. Ansoff) did not share this opinion, as expressed bythe lack of attention for purchasing in their publications. Theysuffered from what Farmer called ‘Purchasing myopia’: while thefundamental importance of a pro-active purchasing function was at

ll rights reserved.

least as valid as it is today, in the 1970s both the business communityand the academics regarded purchasing as administrative clericalactivity rather than a strategic function (Farmer, 1974, 1997). As the1980s proceeded, further developments in purchasing tended tostress the theme of competitive advantage (Leenders et al., 1985). Asa function, purchasing was claimed to be capable of being a source ofcompetitive advantage, according to Michael Porter (1985). Growingstrategic recognition that firms do not exist in isolation, but are partof value chains, also gave greater strategic recognition to purchasing.Purchasing was no longer viewed as an area concerned with makingrelatively low-level administrative decisions, as depicted by well-known strategist Ansoff (1968) at one time.

Ramsay and Croom spent a big part of the paper on reiteratingthe message that Purchasing encompasses both strategic and non-strategic activities, and that the term ‘operational’ is mainly beingused as a negative term.

I do not share this ‘digital’ view on purchasing activities. In myview there are purchasing operational, tactical and strategicactivities (see also Van Weele, 2005). The strategic level coversthose purchase activities that directly influences the competitiveposition of the company on customer and supply markets. Thetactical level encompasses the involvement of purchasing inproduct, process and supplier selection and contracting (i.e.sourcing). Operational activities are related to the ordering andexpediting function. This level of activities incorporates theordering of materials, monitoring the deliveries and settlingquality disputes on incoming materials. Which of these opera-tional, tactical and operational activities contribute most to thecompetitive advantage depends fully on the specific context of acompany (i.e. size, purchasing quote, industry, strategy, organisa-tion, management style, systems, etc.).

I agree with Ramsay and Croom that there is a lot of mis-understanding about the term strategic, both among practitioners

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and academics. Following their line of thinking, strategic canmean two things in practice: high intra-organisational statusand/or contributing to competitive advantage. However, it mustbe said that in reality these two definitions very often occur atthe same time, so the question is what we gain by making thisdistinction.

Based on the paper of Ramsay and Croom, I get the impressionthat they blame practitioners and academics to suffer, again, frompurchasing myopia. They claim that both business community andacademia regard purchasing mainly as a strategic activity, whilethe fundamental importance of operational purchasing activitiesis at least as valid as it was yesterday. Conventional wisdom isanti-administrative, according to Ramsay and Croom. It almostsounds like purchasing myopia revisited again!

I do not fully agree with their observation. It is not either or, itis both! operational purchasing activities are at the core of thefunction, and I do not agree with the statement that there isconsensus on getting rid of these activities. On the contrary, let meexplain my view by showing the importance of operationalpurchasing activities for collaborating with key suppliers.

Based on a sample of 221 manufacturing firms, Chena et al.(2004) argue that strategic purchasing can create sustainablecompetitive advantage by enabling firms to: (a) foster closeworking relationships with a limited number of suppliers;(b) promote open communication among supply-chain partners;and (c) develop long-term strategic relationships orientated toachieve mutual gains. In my view, the more firms concentrate onthese strategic relationships, the more operational purchasingbecomes a strategic enabler. To illustrate this point one could lookat the so-called supplier satisfaction surveys that a number ofcompanies that are regarded as highly advanced in theirpurchasing and supply management practices (e.g. Honda, AtlasCopco, Nokia, IKEA, IBM, BP) use to improve their relationshipswith key suppliers. Typically, these surveys pay a lot of attentionto what can be regarded as operational purchasing activities;paying invoices within agreed payment terms, providing feedbackto suppliers, communication, etc. (Rozemeijer et al., 2002).Customers that do not pay their invoices in time, that cannotprovide their supplier with a reliable forecast, that are not able toincrease contract compliance and live up their promises tosuppliers with regard to spend volume, that have many rushorders, in other words customers that are not in control of theiroperational processes, are not perceived as attractive customersby suppliers and will have great difficulties in realising thepotential collaborative benefits. Operational activities do play acritical role in realising competitive advantage through closerbuyer–supplier relationships, we should not get rid of them andliterature has acknowledged this (see amongst others Cordon andVollmann, 2005; Ellegaard and Ritter, 2006; Rozemeijer and VanWeele, 2002).

3. Purchasing development models are unhelpful

Ramsay and Croom claim that purchasing development modelsare unhelpful. I do not agree with their view. The idea of adevelopment model might be relatively new in purchasingdiscipline but it is not new if we look at organisationaldevelopment (OD) theory. OD usually encompasses a complexchange and educational strategy intended to change the beliefs,attitudes, values and structure of organisations so that they canbetter adapt to new technologies, markets and challenges (Childet al., 1981). Early 1970s, Greiner (1972) introduced the organisa-tional life cycle model, which suggests that organisations are born,grow older, and eventually die, or revitalise. In this model,organisation structure, leadership style and systems follow a

fairly predictable pattern through different sequential stages. Alsoin other academic disciplines like Psychology, Biology, Economyand Sociology, these so-called development models are part of thebody of knowledge and widely used by academics. I do not seewhy a development model with different stages of developmentcould not also be helpful in the area of purchasing and supplymanagement. Of course under the condition that such a model isbased on sound academic research.

In his classic HBR article, Kraljic (1983) stressed that a change isneeded from purchasing towards supply management. Reck andLong (1988) were amongst the first to come with a coherentdevelopment model describing different development stagesbetween purchasing and a more integrated strategic function (e.g.supply management). Since the first purchasing developmentmodel of Reck and Long (1988) there has been a steady flow ofideas from academics and consultants regarding the stage-likedevelopment of purchasing toward a strategic business function(Syson, 1989, 1989; Bhote, 1989; Freeman and Cavinato, 1990;Cammish and Keough, 1991; Van Weele, 2005; Keough, 1993; Burtand Doyle, 1993; Monczka et al., 1998; Chadwick and Rajagopal,1995; Barry et al., 1996). During the IPSERA conference of 1998, wepresented a similar, six-staged purchasing development model thatwas developed based on literature review (Van Weele et al., 1998).

Development models are helpful not only in terms ofclassifying organisations in terms of their current position, butare especially relevant for determining in a systematic way thepossible directions for strategic change. What should the nextgrowth step be given the specific industry and company context?How could a firm develop from stage 1 to 2 or from 4 to 5? Whatmeasures need to be taken? What barriers need to be overcome?What potential improvements are to be harvested?

Let us be fair, it is easy to come with academic critique onpurchasing development models. The simplicity of the modelsbelies the complexities associated with the change process. Eachcompany is different, which dictates a different approach tochange initiatives depending on the climate and culture. Purchas-ing development models can help to guide thinking, but are notsubstitutes for the degree of strategic thinking, influencing andproblem solving required in each unique situation. I agree withRamsay and Croom that this notion is lacking in purchasingdevelopment literature. Purchasing development models shouldbe regarded as basically conceptual even though they have beenutilised as instruments for diagnosis by many practitioners andconsultants. Academics should become more explicit in commu-nicating that these models have some important drawbacks. Themost important one is that they have never been thoroughlytested empirically. It is important to question and test the validityand reliability of these models. The papers and books from whichthese models are derived from are, without exception, conceptualand based on literature study. But does that mean that there is novalue in these models, as Ramsay and Croom claim? I do not thinkso. However, I agree with the authors that there is still a lot ofwork to do before we can claim general validity of these models.

It would have been great if Ramsay and Croom took up thechallenge and selected one of the purchasing development modelsand decided to test it empirically to support their critique. Thereare many interesting research questions that they could haveasked themselves. For example, does purchasing developmentreally take place as a process of continuous change (as suggestedby most of the models described) or is it characterised more bystep-changes? And if so, do all organisations follow all the stagesthat were identified? The development models suggest that allpurchasing organisations follow the same sequence of stages indevelopment towards greater complexity and successive integra-tion of the accomplishments of earlier stages. It may appear,however, that the process of purchasing development is not a

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smooth, continuous process, but implies abrupt and discretechanges in policies, contexts and structures.

To me that seemed like a better approach to show that thesemodels do not reflect reality than the approach they have chosennow. Instead they also have taken a conceptual approach based ona wide-ranging literature survey of models of strategic develop-ments and their relations with purchasing activities.

4. Pilot study research

In their paper, Ramsay and Croom state that the treatment in theliterature of purchasing development models is a vivid illustration ofthe dangers of generalising from small atypical samples. In my view,the paper of Ramsay and Croom suffers from the same. The authorswant to provide us with convincing results for their claims. However,the empirical part of their study is too small (n ¼ 21) to derivegeneral and/or strong conclusions. Also, their sample is atypicalbecause 75% of their respondents come from large companies.

Reliability of findings improves if data are collected frommultiple respondents within an organisation. In the pilot study,we only have the perception of the purchasing managers. Whenanalysing the effect of purchasing on the competitive advantage itis dangerous to rely solely on the perception of the purchasingmanagers because the chances are high that top management,financial directors or marketing directors will have a differentopinion about the contribution of certain purchasing activities tocompetitive advantage of the company.

More importantly, there is very little information about thebackground of the respondents. Given the topic under investiga-tion it would be very helpful to know what the level of purchasingmaturity is of the respondents. That will help us to betterunderstand their responses to the questions. When a respondentis part of an organisation where the purchasing functionstruggling for existence and/or not (yet) in control of operationalprocesses, the respondent might regard operational purchasingactivities as more critical than a respondent from a highlyadvanced purchasing organisation, and vice versa.

Another bias can be found in the seven purchasing activitiesthat the respondents were asked to evaluate. It is not clear basedon what criteria the authors selected these seven activities andhow they exactly relate to competitive advantage. In myobservation, the seven are rather operationally biased. Accordingto the respondents, cost control, negotiation and supplierselection contribute most to the competitive advantage, which isfair and makes sense. However, the question is what therespondents would have answered when they could also choosefrom purchasing activities like supply market monitoring, cate-gory sourcing, capturing purchasing synergies, supply riskmanagement, early supplier involvement in product development,performance measurement, outsourcing, supplier development,aligning procurement strategies to business strategies, etc.

I agree with the authors that further research is needed and Iwould welcome it very much. There is still so much to learn aboutthe development of a purchasing function and how it relates tothe specific company context.

5. Conclusion

I consider the article by Ramsay and Croom as a valuable paperbecause it evokes discussion about an important aspect of our

profession. It is good to critically assess the value of purchasingdevelopment models. I still see great value in these purchasingdevelopment models because they help us systematically organiseand make sense of the large body of knowledge in purchasing.They also provide great guidance to purchasing managers in theirday-to-day work and deliver a shared reference framework forpurchasing managers when discussing with general management.However, I agree with Ramsay and Croom that these developmentmodels should be used with great care and academics should do abetter job in explaining how to use them. Further research isneeded in this area, especially on the contingencies thatdetermine when a company should be in a certain stage ofdevelopment. As I see it, it is necessary to conduct timeconsuming empirical, longitudinal research in order to validatethe assumptions underlying purchasing developmental models inorder to guide (purchasing) managers better in their journey topurchasing professionalism.

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