Purchasing and Customer Relation Practices Affect Firms' Performance

FOR RELEASE: August 14, 1998

Contact: Zenobia Daruwalla
NAPM, Media Relations
Tempe, Arizona
602/752-6276 ext. 3015

(Tempe, Arizona) — Research that analyzes purchasing practices, customer relation practices, and variables used to evaluate supplier performance is complete. The research concludes that the three subjects analyzed can impact the effectiveness of supply chain management strategy and can impact financial and market performance.

"Supply Chain Management: Supplier Performance and Firm Performance" is one of the featured articles in the Summer 1998 issue of the International Journal of Purchasing and Materials Management, published by the National Association of Purchasing Management (NAPM). Results from the research provide empirical evidence that selected purchasing practices and customer relation practices are strongly associated with the perceived financial and market success of firms responding to a survey.

The authors, Keah Choon Tan, Ph.D., Vijay R. Kannan, Ph.D., and Robert B. Handfield, Ph.D., compiled the results after sending out more than 1,400 surveys to various firms. "The research is important because it is what actual practitioners are doing. It is real empirical data. The results show that a firm's performance is impacted by their purchasing practices, customer relation practices, and the variables used to evaluate supplier performance," stated Keah Choon Tan, Ph.D., Assistant Professor, University of Nevada, Las Vegas.

The article lists 10 questions that were included on the survey regarding the use of specific purchasing practices. The top three widely used purchasing practices were: Use suppliers' technical support and test capabilities; individual plants source low-volume, low-cost items; and decentralized purchasing. Other tables throughout the study explore the supply chain management paradigm, use of specific customer relation practices, and correlation of purchasing practices with firm performance.

Co-author Robert Handfield, Ph.D., says the findings of the research have prompted further studies.

"I am currently studying different integration mechanisms. For example: locations and measures that fit different functions. All of which was brought about by the 'Supplier Performance and Firm Performance' research."

The International Journal of Purchasing and Materials Management is the quarterly research publication written specifically for and by purchasing and supply management practitioners and academicians. To order a subscription, call NAPM customer service at 800/888-6276 or 602/752-6276, extension 401. Or visit NAPM on the web at http://www.ism.ws.

The National Association of Purchasing Management is a not-for-profit association that provides national and international leadership in purchasing and supply management research and education. NAPM provides its more than 44,000 members in its 180 affiliated associations with opportunities to expand their professional skills and knowledge.

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