Development of a Purchasing and Supply Management Maturity Framework


Author: Jörg Schweiger
Department of Industrial Management, University of Applied Sciences JOANNEUM, 8605 Kapfenberg, Austria
Department of Electrical, Managerial and Mechanical Engineering, University of Udine, 33100 Udine, Italy


Content

The goal of this contribution is to present a Purchasing and Supply Management Maturity Framework based on the findings of a comprehensive literature and empirical research and a comparative analysis of maturity models published between 1983 and 2014 as well as (management) frameworks published between 1998 and 2014 in Purchasing and Supply Management (PSM). In total 20 maturity models published from authors with an academic or scientific background, 18 maturity models offered from consulting firms and 19 management frameworks of purchasing management were examined. In this research the following eight modules that contribute to a mature and professional PSM were detected: (1) strategy & plans, (2) controlling & performance management, (3) organization & internal interfaces, (4) supplier management & external interfaces, (5) process excellence & information and communication technology (ICT), (6) talents & skills, (7) innovation & methods and (8) sustainability & ethics. Based on these findings, the concept of an original Purchasing Maturity Framework will be presented. Contrary to the large part of the published maturity models in PSM, this model is rather designed as a management model for (I) the assessment of the PSM maturity in a company and (II) the display of standard improvement paths that should lead to higher maturity than an assessment tool for evaluating the maturity at a certain point in time. Moreover, aspects of professional project and change management will be addressed that are necessary for an effective and efficient advancement of the PSM function in a company.

Keywords: purchasing maturity, purchasing framework, maturity models purchasing excellence

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Purchasing and Supply Management is an important and crucial function in a company. One main cause is the leverage effect of PSM on the operating result: With an up to 60 percent share of total revenue, the costs for purchased parts have a tremendous effect on the bottom line in the main industries like metal, automotive or electronics al., (Arnolds et al., 2013; Wallner and Schweiger, 2012; Klein, 2012; BME, 2011; Ortner et al., 2011; Ballou, 1998). performance. Besides this economic impact, the PSM function in a company is directly affected by major internationally driven business trends like globalization, short product life-cycles, Excellence by Monczka et al high volatility and risks on the (raw material) market, complex supply chain structures, sustainability issues or (Schweiger, 2014; Rozemeijer et al., 2003). In this context it is interesting for both academics and practitioners to answer the following question: What is a professional and strategic oriented PSM department? In this respect, purchasing (PMM) can be applied. Over the last decades several scientific as well as practical oriented PMM have been developed, that describe “several stages an organization is expected to go through in its quest for greater sophistication” (Schiele, 2007, p.274). These models offer many suggestions what a company – and in this specific context the PSM department – should do to reach the next maturity level. The hypothesis is that mature purchasing organizations apply best practices, while unsophisticated organizations fail to employ them (Ellram et 2002; Chiesa et al., 1996). The assumption is that greater maturity is associated with better (business) Parallel to that, (management) frameworks in PSM (e.g. Four Pillars of Purchasing and Supply Chain (2010); Framework for Managing External Resources by EFQM (2006); House of Sourcing and Supply Management by Eßig (2004)) also Schweiger : Development of a Purchasing and Supply Management Maturity Framework deliver some helpful aspects and a theoretical systemization of holistic and structured purchasing management (Ortner and Schweiger, 2010; Baier, 2008), why the analysis of these frameworks also helps to answer the raised question above. Up to know, a consistent, current and transparent overview and substantial alignment of purchasing maturity models (scientific and practical oriented) as well as management frameworks in Purchasing and Supply Management (PSMF) is still missing (research gap), but Operations and Supply Chain Management 8(1) pp. 11 – 21 © 2015 sized companies with limited organizational resources as well as an operational focus on getting the materials to a good price, in the defined quality and in time (Sollish and Semanik, 2012).

Based on the facts above, it appears crucial to continue the research about the critical aspects of high PSM maturity, and to develop a supportive management framework for assessing and interpreting the PSM maturity in a company until the realization of the improvement initiatives that should lead to higher sophistication. necessary to rank the most important issues of maturity in PSM as a guideline for PSM professionals.

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The main goal of this contribution is to present an overview of the published maturity models in scientific literature as well as management-oriented models offered from specialized consulting companies in this field over the last three decades. The focus lies on the areas of maturity assessment covered in these models. Parallel (management) frameworks in PSM will be analyzed and the findings of both will be aligned (Table 1). area of purchasing maturity models as well as in the area of management frameworks in PSM over the last decades. That is why the exploratory research approach was chosen. The goal is rather to create new insights and knowledge in the area of holistic Purchasing and Supply Management than to an empirical verification or falsification of a single aspect of PSM.

In order to give a critical, objective and transparent overview of the existing models and frameworks in PSM, a literature review was conducted (Rousseau et al., 2008). By analyzing the relevant literature, patterns, themes and critical issues concerning the research question can be identified (Seuring et al., 2005). Therefore, the list with the most important peer-reviewed journals in PSM, analytically derived from Wynstra (2010), was taken as a basis and was extended with other scientific journals and databases in the PSM area (Table 2).

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The goal of this contribution was to present a concept of an original Purchasing and Supply Management Maturity Framework based on the findings of a comprehensive literature and empirical research in form of expert interviews and an extensive online research and a comparative analysis of maturity models as well as (management) frameworks in Purchasing and Supply Management (PSM). In total 20 maturity models published from authors with an academic or scientific background, 18 maturity models offered from consulting firms and 19 management frameworks of purchasing management were examined. Based on these preliminary findings the Purchasing and Supply Management Maturity Framework (PSM2F) was designed as a management framework including the assessment and interpretation of the PSM maturity in a company as well as concrete suggestions for the realization of the improvement initiatives that should lead to higher sophistication. The presented results extend the scientific discussion about maturity in Purchasing and Supply Management by giving a comprehensive summary and critical appraisal of the published models and academic movements in this context. Even though it was not the goal to empirically verify or falsify the impact of single aspects of maturity in PSM to the overall corporate performance, the research results are offering a scientifically sound basis for such indepth empirical investigations. Moreover, the research work offers concrete managerial implications. By clustering the main areas and indicators of high maturity in PSM, this paper answers the question “What are the main levers of a professional and strategic oriented PSM department?”. This is a helpful guideline and orientation for purchasing executives, who focus on a continuous advancement of professionalism and innovation in the purchasing function.

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About Author

Jörg Schweiger (M.Sc. in International Supply Management and M.Sc. in Industrial Management) is a Doctoral Researcher in the Department of Electrical, Managerial and Mechanical Engineering at the University of Udine in Italy. His research interests are in the areas of maturity in purchasing and supply management and the change process within purchasing departments. He has published on these topics in numerous conference in Europe and the USA and academic as well as managerial books. Next to his scientific career in researching and teaching in different universities, he is also responsible for the strategic purchasing department of an Austrian high-tech company.