Organizing purchasing function with respect to its strategic role in multiunit organization



Year of publication 2017
Type Article in Proceedings
Conference 13th European Conference on Management, Leadership and Governance
MU Faculty or unit

Faculty of Economics and Administration

Keywords Purchasing; coordination; SBUs; centralization; purchasing maturity
Description The role of purchasing has evolved over the last fifty years. Purchasing gradually developed from a purely supportive administrative function for production over the concept of a company-coordinated function, to a function integrating not only the enterprise units but also other enterprises. Globally, the perception of the importance of purchasing has changed and is nowadays understood as a strategic activity. This change in approach to purchasing brings about changes in the way purchasing activities are coordinated and organized. The aim of this paper is to answer the question whether there is a relationship between the strategic role of purchasing in a company and the way of coordinating the purchasing function. The research is focused on multiunit enterprises, so the level of competition between strategic business units (SBUs) within the enterprise is also taken into account as a factor that can influence this relationship. The research was carried out using a questionnaire survey amongst 74 multiunit enterprises. The questionnaire contained questions concerning the dimensions of the organizational structure of purchasing (degree of centralization, formalization, integration), as well as the purchasing maturity of the enterprise. The results of the analyses confirm the assumption that the role purchasing plays in a company and purchasing maturity are strongly interrelated and affect the organizational structure of the purchasing function. Low autonomy and fragmentation in purchasing decisions, and high formalization and integration through personal meetings are associated with the degree of importance of purchasing. In the case of integrating the degree of competitiveness between the units into analyses, the relationship between strategy and maturity is not valid. Arguments about the interdependence of purchasing maturity and the organizational structure are valid only for enterprises where the SBUs are in a non-competitive relation. The degree of competition between SBUs thus becomes an important contingent variable in the case of organizing the purchasing function.
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