Status and Recognition of the Purchasing Function in the Electronics Industry

IN BRIEF This article examines the status and recognition of the purchasing function in the electronics industry. Issues also investigated are the perception of purchasing as a strategic or a clerical function; recognition as an equal partner on the top management team; access to information and participation in decision making; and the nature of other functions' reporting relationships to purchasing. The results confirm previous research that indicates purchasing is viewed increasingly as a strategic contributor to the firm. Further, there appears to be evidence that purchasing participates as a team member in many decision-making processes of the firm. However, the purchasing function still lacks the status and recognition that should be accorded to a critical strategic function. BACKGROUND A review of the purchasing strategy literature reveals the need for purchasing to be viewed as a strategic rather than a clerical function, if it is going to significantly impact the overall performance of a firm. Some years ago, a study in Great Britain found that most organizations viewed purchasing as a clerical function and did not expect or allow the purchasing function to make strategic contributions. [1] This status was found to stem from the attitudes of top management and other functional areas, and more importantly from purchasing personnel's own view of themselves. A Dutch researcher later found that management's view of purchasing ranged from one end of the scale to the other - from being regarded as a clerical function to being perceived as a strategic business function. [2] He found that when purchasing was viewed strategically, it was integrated into the strategic planning process, noting that there were both external and internal factors that affected how purchasing was perceived. Examples of external factors included product availability and pricing problems, while internal factors consisted of management style, the extent of additional responsibilities allocated to purchasing, and internal power distribution and politics. [3] In 1988, two American researchers provided a significant contribution to understanding the evolution of purchasing from a clerical to a strategic function, by conducting a series of case studies. [4] Based on these studies, the authors identified successive stages of the strategic development of the purchasing function, beginning with the situation in which purchasing provides no strategic direction, and culminating with the scenario in which purchasing strategy is completely integrated with a firm's overall competitive strategy. While the studies noted above provide useful insights into purchasing's status and involvement in strategy development, none of them provides statistical support for their findings. In addition to the studies cited, two American researchers recently conducted a review of the purchasing strategy literature and found that most of the reported research is either conceptual or based on case studies. [5] They also found that of those studies that did use empirical data, most did not base their conclusions on statistical analyses of that data. It seems clear, then, that there is a real need for an empirical examination of purchasing's strategic role. This study addresses this need by empirically pursuing the following research objectives: 1. Examine whether purchasing is perceived as a clerical or a strategic function - and how purchasing is perceived in relation to other functions. 2. Determine how perceptions of the purchasing function impact purchasing's access to information, participation in decision making, and reporting relationships to other functions. The following section introduces the research questions derived from these objectives, and describes the methodology used to answer the questions. HOW THE STUDY WAS CONDUCTED The Research Issues The following research questions were developed to investigate the objectives of this study: 1. …