Empowering the Purchasing Function: Moving to Team Decisions

INTRODUCTION The 1990s have been witness to many new trends in organizations, particularly with regard to people and quality. Organizations have sought to become more efficient by reducing staff through layoffs and early retirements, shedding peripheral businesses, and outsourcing activities previously performed internally. The remaining work has been accomplished with fewer people while product/service quality has been maintained or increased. Employee reductions have particularly affected middle-level managers and created flatter organizations. In such environments people are given more responsibility and increasingly expected to work in teams. These changes have also significantly affected the purchasing function by requiring the adoption of team approaches to doing business. Examples of these team approaches include both Early Supplier Involvement (ESI) in design and commodity sourcing teams. The primary drivers of the team approach are the pace of change and the need to enhance quality. Team performance varies greatly in organizations. In many cases teams act as surrogates for traditional individual decision making and are merely a collection of individuals who view team decision making as a hindrance. Meanwhile, in other organizations teams have become primary instigators of change. Competition is drastically changing the way effective purchasing departments conduct business. In today's environment, firms require expertise, flexibility, speed and low cost - maintaining the status quo means losing ground to the competition. Additionally, rapid and frequent change may result in confusion about purchasing department goals and how to best attain them. The result of this confusion is often a lot of action that leads nowhere. To accommodate this need to react effectively, some organizations have designed new organizational structures. For example many companies have formed a sourcing council consisting of representatives from many functions, to ensure that all major procurements of products and services are handled on a competitive basis while considering important inputs from key functions and users.[1] Purchasing is a critical link in the entire value-added process, having both internal and external customers. Internal customers include engineering, maintenance, marketing, and other users; external customers include all the suppliers from which the firm buys its goods and services. Purchasing's placement in the process makes it an ideal candidate for using empowered teams in contributing to overall organizational effectiveness. Empowerment is a philosophy congruent with the goals of Total Quality Management (TQM) and continuous improvement. TQM principles require total employee involvement in order to meet or exceed customer needs and expectations. The TQM process extends from development of goods and services to serving the customer after the sale. Purchasing is expected to continually assess and improve quality through the use of statistical and process improvement techniques.[2] To achieve these results, the TQM environment fosters employee empowerment. Part of empowerment is maintaining one's positive self-esteem and connectedness to others and to the organization. One of the methods used by organizations to reinforce connection is the use of teams. As a result, this research, while focused on empowerment, also addresses issues of teaming, TQM, and continuous improvement. THE EMPOWERMENT PROCESS Empowerment means to enable, to allow, or to permit, and can be either self-initiated or initiated by others.[3] It is a method for creating and redistributing power.[4] In the traditional sense, power is one's ability to control or change another's behavior. Empowerment occurs when power goes to the employees, who then experience a sense of ownership and control over their jobs.[5] The empowerment process starts with a self-assessment by participants of their own relative position regarding empowerment. …