Purchasing Performance Measurement Systems: A Contingent Approach

As highlighted by Bititci et al.(2005), both academics and practitioners have developed models that aim to define and measure the overall performance of an organization and cover various business areas and processes, including, for example, performance measures for production planning and control (Kochhar et al., 1996), performance measurement for the product development process (O’Donnel and Duffy, 2002), performance measurement for human resources (Kelly and Gennard, 2001), performance measurement for service management (Wilson, 2000) and performance measurement for supply chain management (Beamon, 1999; Gunasekaran et al., 2001 and 2004; Sanchez-Rodriduez et al., 2003). However, although there have been many contributions to the debate on performance measurement systems, there is little in the literature regarding performance measurement for the purchasing process and, more in general, for the purchasing function (Kumar et al., 2005). This appears strange in the light of the increasing importance of the role covered by the purchasing function in the achievement of the organization’s goals (Lamming, 1993). This evolution has led to recognise the important role that the purchasing function can play within an organization being recognised, i.e. its potential for enhancing the overall performances of the firm. Leenders et al. (2002) asserts that these are exiting times for those concerned with an effective and efficient purchasing and supply management process. Actual business context, characterised by an increasing competition among organizations, purchasing function is recognise as a strategic weapon in enhancing firm competitive advantage. Changing context in supply market and the introduction of new approaches to manage purchasing activities have increased the complexity related to the management of purchasing activities. In this perspective PPMS should support the employees management and the whole firm in the management of the function especially in the new roles played so far from the clerical one that have characterised the past of the purchasing function. From past work experience PPMS could play a role in making purchasing contribution more visible, especially for those activities characterised as intangible, resulting in a greater recognition of the purchasing department within the firm. From the review of PPMS literature and in comparison between PMS and PPMS literatures the following research gaps have been identified: - Few empirical researches on design, implementation and use of PMS in the purchasing function. - Lack of a global approach to performance measurement considering all the purchasing activities undertaken and its role within the organization. - There is no clear link to the purchasing strategy and organization’s strategy. - There is no clear link to purchasing market maturity. Some contributions found in this context have dealt with the measurement of purchasing function, however, in the majority of cases, this contributions have proposed some models that could be applied in the measurement of the purchasing function but there is no contribution that systematically classifies what is already done in literature or proposes guidelines highlighting proprieties of PPMS useful during the implementation of the measurement system. In the literature review only Carter et al. (2005) and Fant and Panizzolo (2006) have proposed a list of proprieties. The firsts related to performance measures, whereas the latter to measurement system. Another important consideration is that nobody has taken in consideration to identify contingent factors affecting the design, implementation and use of PPMS. The aim of this research is to fill this gap, identifying organizational and operational factors affecting the adoption of a PPMS.