When excessive cost savings measurement drowns the objectives

Nollet, Jean; Calvi, Richard; Audet, Estelle; Côté, Marjorie

doi:10.1016/j.pursup.2008.03.002

Cited by 36 publications

(33 citation statements)

References 18 publications

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“…Although there is a clear, face-valid rationale for the primary role of supply management to be a controller of costs (c.f. Nollet et al, 2008), our results confirm this activity impacts the financial performance of the organisation indirectly. This may be at odds with practices which place too much importance on directly measuring supply management capability predominantly using the financial performance of the business.…”

Section: Managerial Implicationssupporting

confidence: 81%

Supply management capabilities, routine bundles and their impact on firm performance

Day

Lichtenstein

Samouel

2015

International Journal of Production Economics

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a b s t r a c tDespite the generally positive contribution of supply management capabilities to firm performance their respective routines require more depth of assessment. Using the resource-based view we examine four routines bundles comprising ostensive and performative aspects of supply management capabilitysupply management integration, coordinated sourcing, collaboration management and performance assessment. Using structural equation modelling we measure supply management capability empirically as a second-order latent variable and estimate its effect on a series of financial and operational performance measures. The routines-based approach allows us to demonstrate a different, more finegrained approach for assessing consistent bundles of homogeneous patterns of activity across firms. The results suggest supply management capability is formed of internally consistent routine bundles, which are significantly related to financial performance, mediated by operational performance. Our results confirm an indirect effect of firm performance for 'core' routines forming the architecture of a supply management capability. Supply management capability primarily improves the operational performance of the business, which is subsequently translated into improved financial performance. The study is significant for practice as it offers a different view about the face-valid rationale of supply management directly influencing firm financial performance. We confound this assumption, prompting caution when placing too much importance on directly assessing supply management capability using financial performance of the business.

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Section: Managerial Implicationssupporting

confidence: 81%

Supply management capabilities, routine bundles and their impact on firm performance

Day

Lichtenstein

Samouel

2015

International Journal of Production Economics

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“…workers rights, health and safety and child labour). This approach is strongly in line with purchasing competitive priorities introduced by Krause et al's (2001), and emphasises that the purchasing function should not focus just on simple saving measures (Nollet et al 2008). …”

Section: Research Frameworkmentioning

confidence: 85%

Purchasing performance management systems: an empirical investigation

Caniato

Luzzini

Ronchi

2012

Production Planning & Control

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This article aims at further developing the purchasing performance management systems (PPMSs) body of knowledge, assuming the wider perspective of the adoption process rather than key performance indicators (KPIs) only. In particular, the research questions are focused on understanding what are the most adopted indicators, what are the key elements characterising the implementation process and what are the differences among different organisational levels and different purchasing categories. The literature provides a framework for classifying purchasing KPIs, identifying the implementation process and the PPMS architecture, thus supporting the empirical research protocol. Nine case studies of large multinationals belonging to different industries are conducted. Empirical evidence shows that companies are still adopting mainly an external perspective, by focusing on performance measurement efforts on suppliers. Widely adopted indicators mainly measure cost, time and quality. However, the purchasing department has acquired an important role within the organisation and new performance indicators have been created; flexibility, innovation and sustainability are becoming increasingly important

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“…Optimised variance structure These are hard yearly savings due to the fact the yearly price of the pressure piece is reduced compared to the price of the previous year (Nollet et al, 2008). The purchasing volume of two pressure pieces, which have the highest share, could be reduced about -450 k€/year due to the harmonisation of the O-ring material.…”

Section: Initial Variance Structurementioning

confidence: 99%

Purchasing manages and optimises existing product variance

Nabhani

Uhl

Kauf

et al. 2018

JMTM

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Purpose -The purpose of this paper is the presentation of a new optimisation approach for product variance from the purchasing perspective. Design/methodology/approach -The research is based on a case study of a collaboration with a global acting automotive Tier 1 supplier, who produces steering systems for cars and commercial vehicles. A total of 116 different variants of three components of a car automotive steering system were analysed and evaluated. The data was gathered from 13 sub suppliers for three different types of a steering system. Findings -Unnecessary time, money, quality and technology can be saved through a greater understanding of such product variances. The results of the case study lead to a general method to optimise existing product variance and present cost improvements and a new key performance indicator to manage product variance out of the purchasing department. Research limitations/implications -The research is based on a purchasing case study at a Tier 1 supplier of the automotive branch. The approach can be used for other company departments like e.g. logistics and for different industries than automotive. Practical implications -A company can be successful and competitive when it meets the customer needs with a maximum on satisfaction without generating of waste. Unnecessary existing product variance is a kind of waste. The insights of this article support the operative user and the strategic company management to reduce and improve unnecessary variance in different sections. Originality/value -The structured analysis of product variance from the purchasing perspective and the key performance indicator "variance share" are new to company management. The research focuses on the management of existing variance out of the purchasing department which is a segment that has received limited academic attention in research to date.

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When excessive cost savings measurement drowns the objectives

Cited by 36 publications

References 18 publications

Supply management capabilities, routine bundles and their impact on firm performance

Supply management capabilities, routine bundles and their impact on firm performance

Purchasing performance management systems: an empirical investigation

Purchasing manages and optimises existing product variance

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