Barriers to Customer-Friendly Behavior in Purchasing Organizations

Author(s):

Alvin J. Williams, Ph.D.
Alvin J. Williams, Ph.D., Chair and Professor of Marketing, University of Southern Mississippi, Hattiesburg, MS 39406, 601/266-4634, E-mail: alvin.williams@usm.edu
Kathy Dukes
Kathy Dukes, Buyer II, Emory University Hospital, Atlanta, GA 30322, 404/712-4734, E-mail: kathy_dukes@emory.org

83rd Annual International Conference Proceedings - 1998 

Abstract. The paper focuses on uncovering the barriers to customer-friendly behavior in purchasing organizations. Given the widespread attention aimed at customer-oriented actions, it is important to identify obstructions in organizations that impede responsiveness to both internal and external customers.

Introduction. Discussion abounds concerning the merits of customer-focused purchasing (Joag and Scheuing, 1995). However, minuscule attention is targeted toward identification of the substantive and subtle barriers to implementing a dynamic, customer-based purchasing organization. Sustained purchasing effectiveness is dependent upon removing obstacles that impede performance. Thus, it is significant to address methods of identifying performance barriers and strategies for reducing hurdles to a customer orientation. The current study is an exploratory attempt (pilot study) to uncover the wide-range of barriers, both real and perceived, constraining purchasing's interfaces with internal customers.

The study is the initial phase of a larger, more comprehensive analysis on the specific hurdles limiting internal customer relationships. Survey instruments were distributed and a dozen responded. The results reported provide some cursory notion of purchasers' perspectives on the topic.

Background and Study Rationale. Due to the quantity and variety of interfaces purchasers encounter, the probability of confronting barriers is much higher than incidents in other departments. The chances or opportunities to miscommunicate, misperceive, or misconstrue are thus greater for those in the supply management function. This is supported by the notion that purchasing is a boundary-spanning function." The boundary-spanning character of purchasing is connoted by processes that cross multiple areas and that involve sharing of information, decision-making and coordination of different activities (Monczka, Trent, and Handfield, 1998). In other words, purchasing has a much broader array of internal linkages or exchanges to manage and coordinate. Given this reality, it is incumbent upon purchasing professionals to be exceptionally mindful of the prospective minefields awaiting when engaging in interfunctional exchanges.

The criticality of relationships to supply management performance demands attention to roadblocks to developing and sustaining fruitful exchanges across functions. This makes it important for purchasers to understand the exchange process and how to better manage it. There are three types of exchange processes that purchasers must manage: restricted, generalized, and complex (Bagozzi, 1975). Restricted exchange deals with two-party reciprocal relationships, where A" gives to and receives from B". These exchanges attempt to maintain equality between the parties and generally have some quid pro quo component. If purchasing has a certain relationship with a given function or internal customer, restricted exchange dictates that something of equal value be shared between the two. Generalized exchange represents one-way reciprocal relationships with several groups involved. In this type of exchange, A" gives to B" and B" gives to C". This type of interfunctional relationship is not common in purchasing. A more representative type of exchange for internal relationships is that of complex exchange. In this case, a system of mutual relationships between at least three parties is involved. Here, A" and B" give to each other and B" and C" give to each other. This paradigm more clearly delineates purchasing's linkages with engineering, production, marketing, information systems, accounting, and other subunits of organizations. It is also quite consistent with all of the cross-functional configurations in organizations today.

Since the management of the internal exchange process is so critical to performance, regardless of the type of exchange, barriers impeding these efforts must be identified and overcome. Thus, the current study was undertaken to shed some light on the sources of barriers and some possible solutions.

Findings. Respondents were asked to indicate if they perceived barriers or roadblocks to internal customer-friendly behavior and to identify if the barriers were structural, functional, organizational, individual, or otherwise. Afterwards, the source of the barriers was requested from the following areas:

Engineering; Finance/Accounting; Human Resources; Information Systems; Legal Affairs; Marketing; Production/Operations; Purchasing; Safety; Sales; Other.

Respondents were also asked to indicate other sources of barriers from the following list:

Cross-functional teams; Personalities/egos; Policies; Poor planning; Procedures; Technology/ computers.

The results showed the following:

25% - perceived structural, functional, organizational, and individual barriers;

25% - perceived individual barriers;

16% - structural and organizational barriers;

16% - organizational and individual barriers; and

18% - some combination of the above four barriers.

78% - perceived Information Systems as a barrier;

50% - perceived Finance/Accounting as a barrier;

33% - perceived Engineering as a barrier.

Other barriers included: Personalities/egos (60%); Poor planning (90%); Technology/ computers (50%).

On open-ended questions, respondents were asked to identify the single biggest barrier to internal customer-friendly behavior. Comments included the following: ancient engineering; user not utilizing purchasing items; systems; communication; lack of information/feedback; information system; employees not understanding the effectiveness of team efforts; lack of planning and organization; and management's lack of knowledge about purchasing.

The majority of the respondents were from centralized purchasing organizations in both corporate and divisional locations.

Implications of Findings. The findings are instructive for purchasing professionals as they seek to minimize or remove barriers to effective exchange processes in organizations. Since many of the barriers are a combination of structural, functional, organizational, and individual variables, decision makers must ferret out the most dominant concerns and develop definitive action plans to solve the issues. As part of both organizational and functional analysis, team members could be asked to identify specific hurdles to customer-friendly behavior in their units and to prescribe alternative solutions. This encourages empowerment and involvement in both processes and outcomes. Twenty-five percent indicated individual barriers . These are more difficult, but nonetheless must be handled. Identify persons obstructing constructive exchanges and "market alternative solutions to them.

It appears that the technical areas of information systems, engineering, and finance pose the greatest concerns as barriers. Each of these functions is fraught with rules, policies, and procedures that may be unnecessary, but are traditional. All of these functions have a history of being overly driven by the need to control processes and individuals. Develop analysis groups to work to reduce some of these traditional barriers. A group of alternative solutions should be presented that represent varying levels of risk and probability of acceptance.

What are some of the cures for many of the problems indicated? As usual, most of these concerns can be remedied with focusing on some aspect of communications. In particular, the following suggestions might be useful:

* Let internal customers know the limitations and constraints confronting purchasing.

* Face-to-face meetings with purchasing on a regular basis. Allow representatives from other departments or functions have a short "internship in purchasing to facilitate better understanding of the complex nature of purchasing linkages and exchanges.

* Provide information on purchasing policies and procedures. Schedule information sessions for others to learn better what purchasing is all about.

* Meet regularly with purchasing manager/director/vice-president to ensure their understanding of the demands and needs of internal customers.

* Become a "strategic contributor in assisting plan customers' needs with early involvement and similar efforts.

* Continue focusing on cross-functional teams, both within and outside purchasing, as a mechanism to advance communication, coordination, and exchange processes.

Summary. Supply management is at a critical juncture in its development. This evolution involves both internal and external concerns. One of the most pressing internal concerns is the initiation and maintenance of substantive relationships and linkages across functions. Part of this relationship maintenance effort is identifying the hurdles influencing poor customer relations and executing workable solutions to improve exchanges.

World-class organizations work continuously to remove barriers in dynamic and fluid work environments. Those firms lacking the tenacity to grapple with the idiosyncrasies of internal customer relationships will never realize external opportunities. To that end, it is essential for firms to focus on the following as remedies for elevating internal exchange processes:

* Change existing processes

* Change reward and evaluation systems

* Increase the amount and degree of cross-training

* Improve both short- and long-term planning

* Develop and implement for customer-friendly and creative communication mechanisms.

With the above organizational adaptations, purchasing organizations can go beyond satisfying internal customers to the point of delighting them (Brandi, 1995). This level of satisfaction will become even more critical to supply management performance in the future.

REFERENCES

Bagozzi, Richard P. "Marketing as Exchange. Journal of Marketing, 39 (October 1975): 32-39.

Brandi, JoAnna. "Going Beyond Satisfaction to Delight. NAPM Insights, (December 1995): 4-5.

Joag, G. Shreekant and Eberhard E. Scheuing. "Purchasing's Relationships with Its Internal Customers. Proceedings for the First Worldwide Research Symposium on Purchasing and Supply Chain Management, sponsored by the National Association of Purchasing Management, (1995): 151-157.

Monczka, Robert, Robert Trent, and Robert Handfield. Purchasing and Supply Chain Management, Cincinnati, Ohio: South-Western College Publishing Company, 1998.


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