The development of a time-based construct and its impact on departmental design and structure.

While "time is money" is an age-old concept, it seems to have been rediscovered by many organizations in the mid-1980s as an overlooked strategy for becoming and remaining competitive, and perhaps surviving. Sluggish turnover of assets requires elevated pricing to achieve acceptable margins; rapid asset turnover allows slimmer margins and thus lower prices. In addition, product life cycles have been decreasing in many industries, including aerospace, computers, manufactured foods, personal products, and durable goods.[1] Likewise, customers, both internal and external have come to expect more flexibility and responsiveness from all who serve them.[2] Finally, with regard to the importance of purchasing activities to these strategies, this function is positioned at the front end of the supply chain, and can have a significant impact on a firm's total cycle time.[3] Time-related mistakes here cause dysfunctional ripples throughout the remainder of the manufacturing and supply chain.[4]

This article reports a portion of the results of a comprehensive focus study that was performed for the Center for Advanced Purchasing Studies (CAPS).[5] The purpose of this article is to develop a reliable and valid scale which captures the activities that comprise purchasing's involvement in cycle-time reduction efforts, and to examine how the adoption of these activities impacts the purchasing and supply chain management department's structure and design.

Time-based strategies and tactics (TBST) are defined as activities which reduce cycle time and/or improve the synchronization of materials flowing through a company and its supply chain. Empirical research has shown that timeliness is a key dimension of logistics strategy.[6] In addition, one of the primary strategic logistics capabilities is the ability to continually reduce lead times.[7] Researchers also note that a disproportionate effort has been placed on reducing manufacturing cycle time, which generally accounts for less than one-half of total cycle time.[8] Purchasing can play a critical role in reducing cycle time by acting as a liaison between engineering and suppliers to reduce the design and development cycle;[9] facilitating concurrent engineering and early supplier involvement;[10] working jointly with suppliers to reduce cycle time;[11] and through a variety of activities and tools such as eliminating non-value added activities,[12] using EDI,[13] process mapping,[14] and various TQM techniques.[15]

Despite the potential contribution that purchasing can make to TBST, most prior research has been descriptive and anecdotal, or has concentrated on more specific areas of cycle time reduction, such as product development or general team participation.[16] While a recent study found that the use of TBST by purchasing is wide-spread, the same study found several significant gaps between purchasing's current versus desired use and involvement in TBST.[17]

None of the existing studies empirically developed a scale to measure the activities that comprise purchasing's involvement in TBST. Thus, one significant gap in the current state of knowledge involves a lack of an established scale to measure TBST. This led to the first objective of this research: