The Information Systems/Purchasing Interface: A Cross-Cultural Analysis of Customer Focus

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
Ake Sall
Ake Sall, Area Director, Purchasing, Telia AB, Stockholm, Sweden, / 46 8 7136278, E-mail: ake.s.sall@telia.se

84th Annual International Conference Proceedings - 1999 

Abstract. The complexity of internal linkages purchasing encounters has escalated dramatically. Nowhere is this more conspicuous than information systems (IS). Given that information management is such an integral part of supply management effectiveness, it is essential that working relationships between the two are harmonious and mutually beneficial. The session is based on results of surveys submitted to purchasing managers in the U.S. and Sweden that identify barriers between IS and purchasing.

Introduction. Organizations are in constant pursuit of means to attain and sustain performance excellence. Quality performance is a function of myriad variables, both internally and externally. None is more of a strategic contributor than information. In fact, major firms recognize that best-in-class supply chain performance requires integrated information systems. (Karoway, 1998). Integrated, cohesive, well-conceptualized information systems are in and of themselves value-adding. Thus, it is fundamentally critical for each aspect of the organization to be "properly wired" into this goldmine of opportunity and potential. Given the emerging criticality of the supply management function, it is even more significant for supply managers to take full advantage of the IS unit. In order for this harmony to become reality, purchasing and IS should identify areas of conflict between them and develop solutions that encourage stronger, more unified actions.

To that end, the current research effort was undertaken to uncover the conflicts, problems, and concerns between purchasing and information systems in organizations in the United States and Sweden. This cross-national comparative study of IS-purchasing relationships is an exploratory effort designed to identify areas of both challenge and opportunity requiring attention and focus. Survey instruments were distributed and about 75 were received, with a more or less equal response rate from both countries. The study is the initial phase of a larger, more comprehensive analysis on the specific concerns impacting IS-purchasing interfaces.

Background and Study Rationale. Success in organizations is predicated on some degree of unanimity among each of the functional teams and operating groups. Thus, it is critically important for the goals and motives of each area to be as consistent as possible. This oneness stems in part from the overall business strategy. Purchasing and IS strategies must be integrated within the fabric of organizational strategy. According to Singh (1998), "aligning IS strategies and business goals requires well-rounded knowledge of the organization's action plans and goals, as well as IS capabilities." In addition, Singh states "supporting business goals requires a clear view of the organization's current and future plans, determining an IS strategy to best support those, and acquiring the proper skills, tools, and resources." Part of this integration of effort involves the supply management function. Purchasing and IS goals must be synchronized for maximum effect.

Since the complexity of organizations has increased the number and frequency of linkages among functions and teams have escalated accordingly. This increases the probability of problems across functions, in particular the IS and purchasing functions. With the expansive role of supply management in organizations and its growing dependence on IS, relationships must be stronger and more solid than ever. Supply management cannot afford valueless encounters with IS and related functions in meaningless turf wars, miscommunication, and other areas that prove counterproductive.

Given the supreme importance of the working relationships between supply management and IS, it is essential to scrutinize and pinpoint areas of conflict and concern in both functions, so that the pitfalls can be avoided and/or solved. Without attention to these problems, dysfunctional relations may continue and contribute to lackluster performance over time. The current study addresses the aforementioned issues.

Methodology. A convenience sample of several hundred questionnaires were sent to members of the National Association of Purchasing Management and the Swedish Purchasing and Logistics Association. The survey instrument included the following areas: perceived conflicts/barriers between purchasing and IS; identification of specific conflict areas; IS areas that appear to be problems for purchasing; purchasing areas that are most affected by IS conflicts; resolving conflicts between purchasing and IS; and open-ended and classification-type questions. Approximately 72 surveys were completed and returned, with 54% of respondents from the U.S. and 46% from Sweden.

Selected Findings. Respondents identified the barriers or conflicts between purchasing and IS as: structural (33%); functional (51%); organizational (44%); individual/personal (26%); other (14%). They were asked to check as many of the above that applied to their organization. Most saw major barriers concerning the structure of the organization, organizational policies, procedures, and issues peculiar to the functions of IS and purchasing. Rank ordering of the barriers was not requested.

Selected responses from the open-ended question "What is the biggest problem between purchasing and IS in your company?" are shown in Table 1 (U.S. responses) and Table 2 (responses from Sweden).

TABLE 1: What Is the Biggest Problem between IS and Purchasing? (U.S. responses)

  • Purchasing needs are not a priority
  • Attitudes - people are not willing to learn or to help
  • Communication (mentioned 4 times)
  • Not having proper security clearance
  • Updated system data
  • Lack of commitment to purchasing
  • Time between when a problem is reported and solution to problem
  • IS is too busy to address purchasing needs; lack of respect for purchasing
  • Lack of qualified individuals with knowledge of software systems
  • Availability of IS staff when problems occur
  • Department power
  • Turf issues
  • Understanding user requirements
  • Up-front involvement
  • Definition of responsibilities and roles
  • Informing purchasing of its major goals and projects
  • Failure of IS to follow purchasing procedures and management's failure to enforce procedures
  • Ability to integrate the available information databases

TABLE 2: What is the Biggest Problem between IS and Purchasing? (Responses from Sweden)

  • Appropriate systems do not exist
  • No deadlines from IS when they should be ready with a project
  • System management
  • Not enough solutions
  • Supplier management and system administration
  • Lack of understanding of each other's requirements
  • Lack of information
  • Lack of personnel
  • Follow-up systems and speed of change
  • Usefulness of software
  • Structural
  • Access
  • Technology resources
  • Introducing new systems
  • Knowledge about the information system
  • Not enough information in existing system
  • Complexity
  • None (7 respondents had no big problems with IS)

TABLES 1 and 2 revolve around the following key factors: lack of communication between purchasing and IS; misunderstandings associated with goals and operations of each area; data accessibility in a timely, useable manner; and structural aspects of IS and its components. All of the problems mentioned, in some way relate to the above factors. Thus, it is incumbent upon purchasers to identify solutions in these basic areas.

Alternative solutions to IS/purchasing conflict were presented. Some of the options included changes in processes, changes in reward systems, additional training, improved communications, and better long-range planning. Selected responses indicated the following: Respondents in firms employing more than 500 people indicated changes in processes as the best option. Centralized purchasing organizations also ranked changes in processes as the first solution. Likewise, those representing corporate and divisional purchasing units, ranked process changes as the number one solution. Improved communication ranked second, regardless of firm size.

More centralized purchasing organizations ranked "better long-range planning" as a solution than did those in decentralized purchasing units. Firms purchasing up to $500 million annually ranked "better long-range planning" higher than those purchasing larger dollar amounts.

Respondent demographics also provide some insight regarding the answers. The breakdown was as follows:

  • Years experience: average - 14; range 1 - 38 years.
  • Gender: 19% female; 81% male.
  • Buying level: 49% corporate; 28% divisional; 23% plant.
  • Centralized purchasing - 57%; decentralized 43%.
  • Company sales: 31% - less than $100 million; 25% - $100 - $499 million; 13% - $500 - 999 million; and 31% - billion or more.

Implications of Findings. What does all of this mean and why is it important? Purchasing and IS have emerged as critical components in the organizational success equation. Each function has considerable latent potential concerning respective contributions to enhanced performance. Given this scenario, it is unquestionably imperative that these two areas mesh their operations, procedures, and policies.

The findings suggest varying options for remedying the concerns between purchasing and IS. Below is a sample of some of the things that might be considered.

  • Streamline processes connected with purchasing/IS relationships. Do the processes fit or match the situation or circumstances? Several comments indicated a lack of clarity processwise in the purchasing/IS interface. Some processes are tradition-bound and are inconsistent with the needs of the parties or functions involved.

  • Identify clear lines of information authority and accountability. Determine what specific types of information will be needed by both functions to get the job done. Given the criticality of information in most organizations, the tug-of-war and/or power struggles that ensue can be avoided by clearly specifying what is needed, by whom, and for what purposes.

  • Develop specific, unambiguous communication mechanisms and tools to convey concerns, issues, etc. Direct and honest communication must be the hallmark of IS-purchasing relationships.

  • Develop substantive, customer-focused perspectives for both IS and purchasing. If both functions view each other as valued customers to be nurtured over the longhaul, interactions would have a totally different tone and style.

  • Determine the exact nature and root causes of problems between purchasing and IS. Quite often the symptoms of problems are addressed rather than the central concern. Focusing effort on the core, fundamental reasons underlying purchasing-IS barriers is the only genuine path to sustainable relationships.

  • Include supply management as an integral part of the information systems planning process. In particular, this includes early involvement in the development of new systems or in major alterations of existing systems.

The findings also suggested some slight differences cross-culturally. IS-purchasing relationships in Sweden appear to parallel those in the U.S. Preliminary analyses of data do not reveal overly significant differences in the nature of the IS-purchasing relationship. However, in the open-ended questions, Swedish respondents were less likely to mention status differentials between IS and purchasing. Even though differences were expressed, there appeared to be more of a collaborative spirit among the Swedish in working with the IS function as partners. In addition, a larger percentage of Swedish respondents indicated no problems at all between purchasing and IS.

In general, the findings from this exploratory study uncover avenues for additional research and study. Given the limited nature of the pilot study, it is difficult and awfully presumptuous to draw broadbased conclusions. However, the findings do open wider research windows in studying cross-functional and cross-cultural relationships.

Summary. As the IS area plays an increasingly visible role in organizations, relationships with all other functions become more critical, especially in the case of supply management. Supply management is now evolving into an area that top management is becoming dependent upon for enhanced value-added behavior. To execute the heightened supply management charter mandated by executives, supply managers must have the utmost cooperation from IS and related areas. At a broader level, supply managers require this information to perform their role within the context of the entire supply chain. Thus, a complete network of exchanges is totally reliant upon the substantive, timely, and focused output of IS. Anything less than stellar performance between IS and purchasing will retard the capacity of supply managers to be the real guardians of value-laden behavior in organizations.

REFERENCES

Duffy, Robert J. "Intertwined, Integrated, and in the Spotlight." Purchasing Today ®, July 1998, p. 38.

Karoway, Cherish. "Superior Supply Chains Pack Plenty of Byte." Purchasing Today ®, November 1997.

Singh, Brijinder. "IT Strategy: Align and Conquer." Purchasing Today®, July 1998, p.22.


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