Effective Cross-Functional Sourcing Teams: Critical Success Factors

INTRODUCTION Within the United States, the organizational model featuring narrow, functional middle managers operating within a rigid, vertical, and functional alignment is rapidly becoming obsolete.[1] Firms can now benefit from an organizational structure that features suppliers, customers, and managers from different specialties crossing functional barriers and moving horizontally throughout the organization. If firms are to respond to changing competitive business conditions, they must change the way they think about organizations and their structures. Cross-functional and cross-boundary communication, coordination, and alignment have become critical components of this new way of thinking. Within the procurement process, cross-functional sourcing teams have become a major part of the new organizational structure. Cross-functional sourcing teams, as discussed here, consist of personnel from at least three functions brought together to achieve a purchasing or material's related assignment. This includes assignments where the team must consider purchasing goals or decisions involving supply base management. When managed properly, the cross-functional sourcing team approach can provide flexibility, multifunctional knowledge, and control and coordination mechanisms for fast responses to new competitive demands--responses that traditional structures or approaches usually cannot achieve.[2] A recent study revealed that almost 70 percent of the firms surveyed planned to stress the use of cross-functional teams to support sourcing decisions through 1997.[3] Furthermore, finns expect the use of cross-functional teams to have one of the highest positive impacts over the next several years of any planned sourcing strategy, procurement management approach, or process. There is little question that U.S. firms are moving toward increased cross-functional (i.e., horizontal) integration and that teams are the primary vehicle to achieve this integration. Within procurement, cross-functional teams are increasingly looked on as an important way to enhance sourcing processes and effectiveness. While the cross-functional team concept is simple in theory, practical implementation is often difficult. Most firms must overcome decades of established business practices and formal functional reporting structures. True cross-functional integration requires a corporate culture of participative teamwork throughout all levels and across defined functional boundaries.[4] The need to develop teamwork and cooperation is a major challenge when developing a cross-functional organization. This article addresses the need for an increased understanding of the factors affecting the success of an important organizational work team--the cross-functional sourcing team. Because negative outcomes from team interaction are as possible as positive outcomes, organizations must have an understanding of the factors contributing to cross-functional sourcing team effectiveness. This article discusses the factors and other key findings, as identified during a major research project, that relate directly to cross-functional sourcing team effectiveness. CROSS-FUNCTIONAL SOURCING TEAM EFFECTIVENESS RESEARCH PROJECT Researchers at Michigan State University conducted a study during 1992-1993 that evaluated a number of factors potentially affecting cross-functional sourcing team performance. The study, titled the Cross-Functional Sourcing Team Effectiveness Research Project, collected data from 107 cross-functional sourcing teams at 18 U.S.-based corporations, with more than 700 individuals participating.[5] The motivation for this study was a recognition that the use of cross-functional sourcing teams, in itself, is no guarantee of improved purchasing or organizational effectiveness. A critical need existed to replace anecdotal accounts of team effectiveness with research-based answers. The primary goal of this project was to expand the knowledge and understanding of cross-functional sourcing team interaction and effectiveness. …