Purchasing and supply management: trends and changes throughout the 1990s.

The functional area called purchasing is experiencing dramatic change within U.S. industry. Once regarded as a reactive activity capable only of neutral or negative contribution, the procurement and sourcing process at leading firms is at the forefront of responding to and creating change. The ability of purchasing, often in collaboration with other functional groups, to affect cost, quality, time, technology, and, ultimately, customer satisfaction is substantial. As AT&T's executive vice-president for telephone products remarked, "Purchasing is by far the largest single function at AT&T. Nothing we do is more important."[1] Market success demands that organizations maximize benefits of world-class supply management practices. The once minor function called purchasing has come of age.

Understanding the changes and trends affecting purchasing requires replacing anecdotal evidence with research-based observations. Each year the Eli Broad Graduate School of Management at Michigan State University conducts a five-day seminar attended by executive managers from a broad range of industries and geographic locations. Before each seminar, participating companies complete The Purchasing and Sourcing Executive Research Survey, which focuses on a variety of purchasing and sourcing issues. Executive managers (1) provide a detailed evaluation of current purchasing and sourcing strategies, practices, and concerns, (2) identify changes that have taken place within the last five years, and (3) project supply management practices and changes through some future period. Responding to the survey often requires a collaborative effort by different managers within the same business unit. While the samples are not random, participating firms are generally larger and often recognized as progressive in their purchasing and supply management practices.

Annual data collection has allowed researchers to identify the procurement and sourcing trends and changes that have taken place throughout the 1990s. This article outlines the real and projected changes and trends that have affected and will continue to affect purchasing professionals. A real change or trend is one where the data show an actual shift in perception or behavior over the last several years. A projected change or trend involves an anticipated or expected change by some future date. The 1997 sample projected purchasing and sourcing changes through the year 2000. These changes and trends appear within seven areas:

1. Performance improvement requirements

2. Supplier and purchasing/sourcing importance

3. Organization

4. Systems development