Is Perception reality?

by Dr Paul Joesbury

A brief review of some of the older academic literature pertaining to procurement perception within organisations.... Have things changed!

The perception of procurement has, for a long time, been one of poor relation. Even with its early beginnings the profession still lacks the confidence to take its rightful position within the enterprise. Stronger relationships and understanding between procurement and the rest of the business, especially the CEO and CFO is key to procurement being recognised for the contribution that it can make. This point is explored at some length within this review of the academic literature on perception, as a poor perception of procurement may be instrumental in limiting its potential to be effective in terms of acceptance and in its ability to attract the best talent.

According to Kraljic (1983), one big international company vastly improved the status of the purchasing division by promoting a dynamic sales executive with broad international expertise to head it. This is a recurring theme in that the purchasing “professionalism” and specialist knowledge is often not recognised as it is frequently the case that a non-procurement professional is appointed to lead the function. It would be an interesting comparison to see how many CFO’s are appointed without the specialised knowledge of finance and accounting!

Ferguson et al., (1995), postulated that purchasing must continue to demonstrate its ability to positively impact on organisation financial effectiveness. The obvious inference here is that a positive perception of procurement is not being effectively delivered or received, Thompson (1996), states that while the strategic changes needed inside businesses are not necessarily very complex, they are hindered by an inherent lack of expertise and understanding of purchasing. Top managers rarely put purchasing at the top of the agenda and only a very few chief executives have actually come from the purchasing function. Dumond (1996), comments that both General Electric Company and Tektronix found in their operations that the interaction process among team members was more effective if the team members operated at the same level of authority. Consequently, both of these organisations had to elevate procurement to a level consistent with its counterpart functions. This assertion is also supported by Cox (1997), who comments that the opportunities to raise the profession’s profile are rarely stimulated by the purchasing professional per se. They tend to be created by the decisions and actions of other senior colleagues and functions within the reporting hierarchy. This also raises the question of whether there are inherent skills lacking within the profession with regard to self-marketing, communications and promotion, an assertion that is tested within this research.

Quale (1998), refer to Carter and Narasimhan (1996), and suggest the status accorded the purchasing function in an organisation frequently is determined by the image the function projects to personnel outside purchasing. Unfortunately, most non-purchasing personnel have a very simplistic view of the purchasing function, and they understandably demonstrate little regard for internal purchasing performance measures which they view as mainly tactical (Cavinato, 1987). Carter and Narasimhan also suggest the linkage between purchasing strategies and organisational performance began to be established when organisations started to realise the impact that the purchasing function can have on their competitive position and they are now gradually shifting the role of purchasing from tactical to strategic.

The concept of preconceived ideas about purchasing is discussed by Hult and Nichols (1999), who comment that often great purchasing ideas fail to be translated into practice because they conflict with deeply held internal images of how purchasing systems work i.e., mental models and images that limit the purchasing practitioner to familiar ways of thinking and acting (Senge, 1990). Some of the mental models include: -

  • Purchasing decision are made solely on the basis of purchase price

  • The purchasing process involves too many rules and regulations, requires too much time and adds too little value

  • Purchasing does not keep users informed regarding the status of materials and/or services requests

  • Purchasing personnel really do not understand user requirements

  • Purchasing personnel would prefer to do business with their favourite suppliers rather than those that can best serve the requirements of the user

Callender and Mathews (2000), suggest that today’s purchasing professionals are beginning to be viewed as top level executives and programme managers instead of “those generally unglamorous individuals” (Stewart, 1994