presentation purchasing groups
TRANSCRIPT
University of Twente Initiative for Purchasing Studies (UTIPS) 1/16
PresenterFredo Schotanus
Co-authorsJan TelgenLuitzen de Boer
University of Twente Initiative for Purchasing Studies (UTIPS) 2/16
Definitions
Buyer Buyer Buyer
Supplier
ver
tic
al
alli
an
ce
horizontal purchasing group
SupplierSupplier
Introduction 1 / 19
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An example of a purchasing group
Buyer B Buyer CBuyer A
x 4
Introduction 2 / 19
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Sounds nice, but problems may occur (‘bears on the road’)
Small and intensive groups do not always flourish
It’d help if we know what factors influence success
Introduction 3 / 19
University of Twente Initiative for Purchasing Studies (UTIPS) 5/16
Earlier work
General– A lot of literature on (forming) alliances
– No comprehensive theory exists– Some study success factors, but hardly any study a broad set
(Hoffmann & Schlosser, 2001)
Specifically– 1 study deals with quite a broad set for purchasing groups (Hendrick, 1997)
– Not fully consistent with the general literature
Introduction 4 / 19
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Identify success factors formanaging purchasing groups
Contributes by a broad empiricalinvestigation into success factors for
purchasing groups
Agenda
Objective & contribution
Introduction 5 / 19
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– Allocation of savings
– Member influence
– Enforcement of cooperation
– Member cooperation
– Commitment & support
Potential success factors
Several theories explain cooperation We build on
– TCE (general rationale)
– Social exchange theory (individual fair rationale)
19 success factors categorized by– Trust
– Formality
– Member uniformity
– Common goals
– Communication
Literature review 6 / 19
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Perhaps the most discussed success factor (e.g., Bakker et al., 2006; Polychronakis and Syntetos, 2007;Vangen and Huxham, 2003)
Several empirical studies confirm its importance
Reasoning from TCE– costs are lower when there is trust
– as less monitoring & agreements are necessary
Potential success factors– Members are honest and loyal
– Members like each other personally
– Members meet one's commitments
Category: Interorganizational trust
Literature review 7 / 19
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1. Perceived importance of factors (Hendrick, 1997)
2. Compare differences between (un)successful groups (Hoffmann & Schlosser, 2001)
Method 2– Not yet used for studying purchasing groups
– Need to define ‘success’ (no consensus in the literature)
– We measure it as the perceived success of the group
Two methods
Literature review 8 / 19
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Activities
Group with x members
O1 …
Properties:……
Overall performance
Advantages Disadvantages
Scores:……
Potential success factors
Scores:……
Ox
Method
The survey
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NEVI newsletter (797 org.)
Ovia newsletter (620 org.)
active
not active (low response)
Sampling
Method
The numbers– 16% ‘worst case’ response rate– 224 respondents– 115 groups – 74 small and intensive groups (81% successful)
Early & late response almost the same (p < .05)
We knew most responding groups Data seems to be representative
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Data analysis (based on Hoffmann & Schlosser; 2001)
Method
1. T-tests to identify potential success factors
2. Discriminant analysis to the factors identified in step 1
All assumptions are met Assumptions tested with
– QQ-plots for normality
– Levene’s (1960) test (p ≤ .05) and the variance ratio for equality of variances (< 2.5)
– Box’s (1950) test (p ≤ .05) for equality of covariance matrices
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Identified potential success factors (t-tests; p ≤ .05; discriminant analysis; 89.3% classified correctly)
Findings and discussion
Enforcement of cooperation1. No enforced participation
Member cooperation2. Members contribute unique knowledge
3. Sufficient total contribution of efforts
Commitment and support4. Members rarely change representatives
5. Members have internal support Communication
6. Communication (current projects)7. Communication (new projects)
Member influence 8. Members have similar influence
Common objectives9. Members have similar objectives
Allocation of savings10.Fair allocation of savings
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Categories without success factors
Findings and discussion
Trust and formality (consistent with Hoffmann & Schlosser, 2001)
– Inconsistent with a.o. Schotanus (2005)
– Important when establishing, but prerequisites for managing a group
– Explanation by awareness and the methods used
Member uniformity– Inconsistent with a.o. Hendrick (1997)
– Groups with member with (dis)similar cultures and procedures can be (un)successful
– Similar explanations as for trust plus the specific context
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Categories with success factors (1/3)
Findings and discussion
Enforcement of cooperation (consistent with Brockhoff, 1992)
– Participation should bring savings and attract without enforcement
– Still, if a member cooperates, it needs to commit
– Enforcement & influence problems are typical for BU groups
Member cooperation (consistent with Hoffmann & Schlosser (2001) and communication (consistent with Laing & Cotton, 1997)
– Factors such as sufficient total contribution of efforts show that success doesn’t occur as a matter of course
– Some knowledge and efforts are necessary to coordinate, communicate, etc.
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Categories with success factors (2/3)
Findings and discussion
Commitment (consistent with Doucette, 1997) and support– If members often change representatives, this may hamper learning
effects + not a sign of commitment– If a member isn’t committed, then the others may also reduce their
commitment (Doucette, 1997)
Common objectives (consistent with Laing and Cotton, 1997) and influence of the group members– Factors identified are similar goals & all have a similar influence
– Without similar goals, it costs more to synchronize
– Without influence, members’ interests may be ‘forgotten’
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Categories with success factors (3/3)
Findings and discussion
Allocation of savings– Fair allocation is important, but difficult for purchasing groups
– It may prevent conflicts and members leaving the group
Allocation of gains– 87% uses Equal Price
– 13% uses methods that are more beneficial to large members
Allocation of costs– 30% uses no formal method
– 29% uses a proportional method
– 29% uses Equal Amount or a fixed membership fee
What’s a fair and successful combination?
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University of Twente Initiative for Purchasing Studies (UTIPS) 18/16
Combinations of allocation methods
Equal Price (EP) + no formal cost method
EP + Proportional cost method
EP + Equal Amount cost method
total %uniformity of contr.uniformity of vol.
successful %
27%2,72,5
76%
24%2,31,9
79%
26%2,72,2
90%
Findings and discussion 17 / 19
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Limitations and further research
Focus on small and intensive groups Difficult to assess ‘success’ Low response rate No distinction between (very) successful Not enough data for method combinations
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Quantitative empirical evidence using TCE and SET Found no success factors related to trust, formality, and uniformity Inconsistencies explained by method or context differences Main success factors are
– No enforcement– Sufficient total contribution of efforts– All contribute unique knowledge– All rarely change representatives – Fair allocation of savings– Communication– (No large differences in motives & efforts)
Prediction value of the discrimination analysis is 89.3%
Conclusions on managing purchasing groups
Fredo [email protected]://www.utips.eu
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