Change is the constant

Research over 24 years shows developments in purchasing’s role

June 14, 2013
by By Michael Power

OTTAWA-Research done over a 24-year period and highlighted by Fraser Johnson during a June 14 session at the PMAC national conference in Ottawa showed developments in change management and the role purchasing and chief procurement officers.

The research was begun by CAPS research when that organization sent out a survey in 1987 focusing on purchasing organizational relationships, said Johnson, professor, operations management, faculty director, MBA program, The University of Western Ontario. Another survey was done in 1995, 2003 and again in 2011. The research addressed changes, how they’re occurring and how often. The methodology has been consistent since 1987, Johnson said, with surveys sent to large North American companies. The organizations weren’t randomly selected; rather, they targeted organizations in the manufacturing and service sectors. “These are very large organizations,” Johnson told the audience.

The 2011 survey saw 249 respondents and a response rate of 34 percent. That’s high, Johnson said, given the type of people the survey was sent to. The Canadian response rate was over 50 percent, with 65 Canadian firms surveyed among those 249 overall.

The survey looked at the organizational structure of respondents and whether those organizations were centralized or decentralized. Johnson said a hybrid structure was desirable, since it could incorporate the advantages of both models. Even as a chief purchasing officer doesn’t have control over an organizational structure; rather, the CEO decides whether an organization is centralized.

But the survey also shows that organizations move “all over the place,” he said, going up and down all the time between hybrid, centralized and decentralized structures. A total of 52 percent changed their organizational structure, with an even split between centralizing and decentralizing. “You see a significant number of firms changing,” he said, also noting that there are firms that don’t change much although they remain the minority.

In terms of CPO responsibilities, there is a move towards a strategic orientation of the purchasing function. “Not only are their structures changing but the responsibility of the purchasing organization is changing.”

There’s also an increased use of teams within purchasing organizations, with most organizations. The data show reporting line changes more frequently than structure changes, with the average tenure of about 4.5 years for a CPO.