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?

Siew Kuan Koaysk.gwerder@gmail.com

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