The Influence of Collaboration in Procurement Relationships

📝 Abstract

Supply Chain Management often requires independent organizations to work together to achieve shared objectives. This collaboration is necessary when coordinated actions benefit the group more than the uncoordinated efforts of individual firms. Despite the commonly reported benefits that can be gained in close relationships, recent research has indicated that collaboration attempts between purchasing firms and their suppliers have not been as widespread as anticipated. Using a survey of procurement professionals, this research investigates how the purchasing function utilizes collaboration in its supply chain relationships. Structural equation modeling is used to identify how information sharing, decision synchronization, incentive alignment, collaborative communication, and trust impact collaboration, as well as how collaboration impacts performance. Results from 86 survey responses indicate that firms are still not fully utilizing collaborative relationships.

💡 Analysis

Supply Chain Management often requires independent organizations to work together to achieve shared objectives. This collaboration is necessary when coordinated actions benefit the group more than the uncoordinated efforts of individual firms. Despite the commonly reported benefits that can be gained in close relationships, recent research has indicated that collaboration attempts between purchasing firms and their suppliers have not been as widespread as anticipated. Using a survey of procurement professionals, this research investigates how the purchasing function utilizes collaboration in its supply chain relationships. Structural equation modeling is used to identify how information sharing, decision synchronization, incentive alignment, collaborative communication, and trust impact collaboration, as well as how collaboration impacts performance. Results from 86 survey responses indicate that firms are still not fully utilizing collaborative relationships.

📄 Content

International Journal of Managing Value and Supply Chains (IJMVSC) Vol. 7, No. 3, September 2016 DOI: 10.5121/ijmvsc.2016.7301 1

THE INFLUENCE OF COLLABORATION IN PROCUREMENT RELATIONSHIPS

Wesley S. Boyce1, Haim Mano2 and John L. Kent3

1Department of Management Sciences, University of Iowa, Iowa City, Iowa 2Marketing Department, University of Missouri – St. Louis, St. Louis, Missouri 3Department of Supply Chain Management, University of Arkansas, Fayetteville, Arkansas

ABSTRACT

Supply Chain Management often requires independent organizations to work together to achieve shared objectives. This collaboration is necessary when coordinated actions benefit the group more than the uncoordinated efforts of individual firms. Despite the commonly reported benefits that can be gained in close relationships, recent research has indicated that collaboration attempts between purchasing firms and their suppliers have not been as widespread as anticipated. Using a survey of procurement professionals, this research investigates how the purchasing function utilizes collaboration in its supply chain relationships. Structural equation modeling is used to identify how information sharing, decision synchronization, incentive alignment, collaborative communication, and trust impact collaboration, as well as how collaboration impacts performance. Results from 86 survey responses indicate that firms are still not fully utilizing collaborative relationships.

KEYWORDS

Collaboration, supply chain relationships, procurement, purchasing, structural equation modeling

1. INTRODUCTION

Supply chain management (SCM) has evolved to a point where collaboration is common practice for firms to achieve shared objectives. This has evolved from a time when firms expressed concern only about their own interests and other firms were leveraged rather than cooperated with. As noted by Mentzer et al (2001), many definitions exist that try to capture the essence of SCM, and a majority of these definitions incorporate or even require supply chain collaboration (SCC) as a key component. As a result, many firms are now making an effort to collaborate with supply chain partners.

Purchasing firms have utilized numerous tools in their efforts to work more closely with suppliers. Key to these efforts are dimensions of collaboration that facilitate close relationships. These include information sharing (Simaputang and Sridharan, 2004), decision synchronization (Stank et al, 2001; Simaputang and Sridharan, 2004), incentive alignment (Manthou et al, 2004; Simaputang and Sridharan, 2004), goal congruence, resource sharing, joint knowledge creation, and collaborative communication (Cao and Zhang, 2011). These dimensions are often interrelated, and causal relationships may exist between them (Cao and Zhang, 2011). International Journal of Managing Value and Supply Chains (IJMVSC) Vol. 7, No. 3, September 2016 2 Collaboration is enhanced by utilizing these dimensions since they bring the interest of the supply chain to the forefront rather than that of any individual firm.

Numerous benefits have been outlined in the literature that rationalize the choice to engage in collaborative relationships. Firms participating in collaboration have an opportunity to be more efficient (Kalwani and Narayandas, 1995), more customer focused by exchanging information about customer needs (Myers and Cheung, 2008), and more successful overall than those not participating (Kalwani and Narayandas, 1995; Simatupang and Sridharan, 2004). Sales growth, market share, and satisfaction often increase, and working closely together makes firms more likely to extend their partnerships into the future (Ramanathan and Gunasekaran, 2014). Supply chains may even become more resilient by managing risk as a network rather than at the firm level (Christopher and Peck, 2004). Despite these benefits, many firms have struggled to engage in collaboration due to struggles with partner selection and matching the needs and goals of independent organizations (Daugherty et al, 2006). Firms have also struggled to identify who to collaborate with, and a lack of trust between partners has been an issue (Barratt, 2004). Additionally, the decision to engage in a collaborative relationship requires commitment from all involved parties since collaboration efforts can lose momentum when faced with resistance (Fawcett et al, 2015).

Although close supply chain relationships may have major potential benefits, it is important to note that not all relationships should be collaborative in nature and collaboration is not appropriate in all situations (Lambert et al, 1996). For example, previous literature has indicated that integrating with suppliers may lead to poorer quality outputs or stifle innovation for some firms

This content is AI-processed based on ArXiv data.