Supply Chain Management and

Its Impact on Purchasing

AUTHORS

Joel D. Wisner INTRODUCTION

The term supply chain management (SCM) was initially
is an associate professor of management at the University of Nevada used in wholesaling and retailing to describe the integra-
in Las Vegas, Nevada. tion of logistics and physical distribution functions with
the goal of reducing delivery leadtimes. Manufacturers
Keah Choon Tan and service providers have used the same term to describe
is an assistant professor of operations management at the University integration and partnership efforts with first- and second-
of Nevada in Las Vegas, Nevada. tier suppliers to reduce cost and improve quality and
delivery timing. Terms such as integrated purchasing
strategy, integrated logistics, supplier integration, value
chain management, supply base management, strategic
supplier alliances, lean production, Just-In-Time (JIT)
logistics, and supply chain synchronization have been
used in the literature to address certain elements or
stages of this new management philosophy (see, for
The term “supply chain management” has been used instance, Tan et al. (1998) and La Londe and Masters
(1994)). SCM services are offered by various transporta-
to denote the integration of logistics and physical
tion companies, SCM courses and programs are offered
distribution activities by wholesalers and retailers
by a number of universities, and a number of articles on
and manufacturers’ efforts to effectively integrate
SCM have appeared in business and academic publications.
purchasing and supply with other functions in the
Despite the popularity of the term, there exists no prac-
firm. The concept is still evolving. There is no gener-
tical, explicit, widely accepted description of SCM or its
ally accepted definition of supply
activities. Conceptually, SCM includes all value-adding
SUMMARY chain management or general activities from the extraction of raw materials through
understanding of how supply chain the transformation processes and through delivery to
management impacts organizational characteristics the end user. SCM spans organizational boundaries and
and practices. This article presents exploratory find- treats the organizations within the value chain as a uni-
ings from a comprehensive survey regarding supply fied virtual business entity (Scott and Westbrook 1991;
chain management. The objectives of this study were New and Payne 1995). Baatz (1995) further expanded
to study the impact of supply chain management on SCM to include recycling or reuse activities. However,
purchasing practices, to further define and develop in the SCM literature, there has been little discussion
on identifying supply chain participants, which processes
the supply chain model from various perspectives,
are integrated, or how to successfully manage supply
and to identify problems associated with supply
chains (Lambert et al. 1998).
chain management, particularly from the purchasing
This exploratory research had the overall objectives of
The Journal of Supply Chain perspective.
Management: A Global
describing supply chains and identifying current practices
Review of Purchasing and problems associated with supply chain management.
and Supply Copyright To achieve these goals, a group of senior supply and
© November 2000, by the
National Association of materials management professionals from manufacturing
Purchasing Management, Inc. industries in the United States was surveyed. The survey
EXAM Through 2000: Module 4
Beginning 2001: Module 2
The authors wish to thank the reviewers for their many helpful com-
ments and suggestions.

The Journal of Supply Chain Management | Fall 2000 33

Supply Chain Management and Its Impact on Purchasing

investigated the breadth of SCM, the impact of SCM on a manage the movement and transformation of materials,
wide variety of purchasing practices and firm characteris- components, products, and services along the supply
tics, and the operating problems specifically related to chain until final delivery to the end user. Thus, SCM
SCM. Based on the research findings, a clearer picture of integrates a number of key functions, including pur-
SCM practice emerged, with implications for both practi- chasing, demand management, distribution planning,
tioners and researchers. quality management, manufacturing planning, and
The following section reviews the SCM literature. materials management, throughout the supply chain.
Subsequent sections present the research methodology, The short-term objective of SCM is primarily to
demographic characteristics of the respondents, a working increase productivity and reduce inventory and cycle
description of industrial supply chains, organizational and time. Its long-term strategic goal is to increase customer
purchasing strategies and their relationship to SCM, a satisfaction, market share, and profits for all members of
description of SCM problems, supplier issues and their the virtual organization. To realize these objectives, all
relationship to SCM, and, finally, the managerial impli- strategic partners must recognize that the purchasing
cations of the results. Future research directions are sug- function, with its boundary-spanning activities, is a cru-
gested and discussed. cial link between the sources of supply and the organiza-
tion. Early involvement of suppliers in product design,
THE SUPPLY CHAIN MANAGEMENT LITERATURE for instance, allows manufacturers to develop alternative
The intense global competition of the past decade has solutions; to select the best and most affordable compo-
led many organizations to create cooperative, mutually nents, materials, and technologies; and to receive help
beneficial partnerships with suppliers, distributors, in design assessment (Burt and Soukup 1985). Supplier
retailers, and other firms within the supply chain. The involvement in product and process design and contin-
objective of those partnerships has been to offer lower- uous improvement activities has been shown to have a
cost, higher-quality products and services with greater positive impact on competitive advantage and perfor-
design flexibility. The partnerships are particularly critical mance (McGinnis and Vallopra 1999; Vonderembse and
in JIT manufacturing where there is little inventory to Tracey 1999). In general, SCM seeks improved perfor-
cushion production, scheduling, and usage problems. mance through elimination of waste and better use of
Manufacturers and service organizations have experi- internal and external supplier capabilities and technolo-
mented with strategic partnerships with suppliers and gies (Morgan and Monczka 1996).
transportation and warehousing providers. Manufacturers
The retailing industry has focused on different aspects
have utilized supplier strengths and technologies to sup-
of SCM, namely, location, transportation, and logistics
port new product development efforts (Morgan and
issues. Indeed, the origin of supply chain management
Monczka 1995) and have drastically reduced supply bases
can be traced back to efforts to better manage the trans-
to a handful of certified suppliers (Inman and Hubler
portation and logistics functions (Fisher 1997; Lamb
1992). Retailers have seamlessly integrated their logistics
1995; Whiteoak 1994; Turner 1993; MacDonald 1991;
functions with transportation partners to achieve direct
Stock and Lambert 1987). The wholesaling and retailing
store deliveries or cross-docking without the need for
industries incorporate a logistics focus within their
incoming inspections (St. Onge 1996).
strategic decisions. SCM would allow channel members
Supply chain management has been used to denote to compete as a unified entity instead of just pushing
these attempts to integrate and partner with suppliers inventories down the supply chain to end customers.
and to integrate logistics functions and transportation Thus, the benefits of vertical integration could be obtained
providers to efficiently and effectively manage the value by coordinating the logistics functions of independent
chain. More recently, SCM has focused on integration, firms in the chain (La Londe and Masters 1994). In this
customer satisfaction, and business results. Most of the respect, SCM is synonymous with integrated logistics sys-
recent literature on SCM focuses on manufacturers’ tems that control the movement of goods from the sup-
attempts to integrate processes and form alliances with pliers to end customers without waste (Ellram 1991).
suppliers to more efficiently and effectively manage the
Integrated logistics systems seek to manage inventories
purchasing and supply function. Carter et al. (2000)
through close relationships with suppliers and trans-
forecast that supplier selection will increasingly be based
portation, distribution, and delivery services. A goal is
on strategic contribution to the supply chain and will
to replace inventory with frequent communication and
extend beyond first-tier suppliers.
sophisticated information systems to provide visibility
The SCM philosophy expands the internally focused and coordination. In this way, merchandise can be
integrating activities of logistics by bringing multiple replenished quickly in small lot size and arrive where
organizations along the supply chain together with the and when it is needed (Handfield 1994; Shapiro et al.
common goals of efficiency and end-customer satisfac- 1993). Firms that use advanced process technology to
tion (Harwick 1997). SCM creates a virtual organization increase flexibility and involve manufacturing managers
of independent entities to efficiently and effectively in strategic decisionmaking alter the role of logistics in

34 The Journal of Supply Chain Management | Fall 2000

 Supply Chain Management and Its Impact on Purchasing

firm success (Tracey 1998). Quick, frequent, and accu- were from Standard Industrial Classification codes 20 to
rate information transfer among members of the supply 39 (manufacturing firms). Care was taken to delete mul-
chain can counteract the distortion of information (known tiple listings for firms with more than one NAPM member
as the bullwhip effect) as it passes up the supply chain listing. Two complete survey mailings, with one reminder
from the end customer (Metters 1997). A supply chain postcard after the first mailing, resulted in 101 usable
can reduce overall inventory while maximizing cus- returned surveys. The 6.7 percent response rate was con-
tomer service by efficiently redistributing stock within sidered reasonable, given the subject’s complexity and the
the supply chain using effective postponement and length of the survey.
speculation strategies (Pagh and Cooper 1998; Davis To investigate the possibility of non-response bias in
1993; Scott and Westbrook 1991). the data, a test for statistically significant differences in
Despite its importance, theoretical development, and the responses of early and late waves of returned surveys
popularity in the business and academic press, there is was performed (Armstrong and Overton 1977; Lambert
little empirical research that clearly defines SCM and its and Harrington 1990). The last wave of surveys received
impact on the firm and its trading partners. This research were considered to be representative of non-respondents.
addresses these issues, with particular attention paid to The sample was split into two groups on the basis of
the purchasing function and its role in SCM. early and late survey return times and t-tests were per-
formed on the responses of the two groups. The groups
RESEARCH METHODOLOGY represented the first 74 and last 27 responses of the 101
To gauge the current understanding and use of supply responses received. The t-tests yielded no statistically
chain management practices, a survey was designed and significant differences among the survey items tested.
sent to 1,500 randomly selected U.S. purchasing and These results suggest that non-response bias did not
materials managers from the National Association of significantly impact this study.
Purchasing Management (NAPM) membership list. A
Finally, because much of the data presented in the tables
review of the supply chain management and related liter-
was generated using scaled responses, it was deemed nec-
ature revealed a number of commonly cited practices and
essary to test for internal consistency. Table VII contains
concerns associated with SCM, which were incorporated
this information. Cronbach-Alpha tests were performed
into the survey. The survey included sections regarding
on the scaled data shown in the tables. Based on the coef-
SCM strategies, supply and materials management, opera-
ficient values, the measures tested were deemed reliable
tions, information technology and sharing, and customer
for this type of exploratory research (Nunnally 1978).
service/distribution. Additionally, a number of potential
SCM concerns or problems were also identified and RESPONDENT FIRM DEMOGRAPHICS
included in the survey. These concerns included coopera- General demographic information of the respondent
tion and trust among supply chain members, informa- firms is presented in Table I. Most of the firms were either
tion-sharing capability, competition, and geographical final product or component manufacturers with regional
proximity between supply chain members. The survey U.S. or global market coverage. A large percentage of the
instrument also included a number of general questions respondents (over 78 percent) stated they practiced some
regarding SCM and its relationship to various elements form of supply chain management, based on the defini-
within the firm. tion provided in the survey (shown in Table I). A wide
For many of the survey questions, respondents were range of firm sizes was represented in the sample as indi-
asked to indicate, using a five-point Likert scale (where 1 cated by number of employees and annual sales. Tables II
= low and 5 = high), the importance, impact, or success through VI summarize the SCM practices and concerns of
of the various SCM practices, issues, and terms. Tables the 79 respondents whose firms practiced some form of
III through VI contain summary information of actual SCM.
questions asked in the survey. A number of other ques-
tions required simple yes or no answers, and several A DESCRIPTION OF RESPONDENTS’ SUPPLY
demographic questions were also included in the CHAINS
questionnaire. To explore the breadth of respondents’ supply chain
The survey instrument was pretested for content practices, respondents actively practicing supply chain
validity using 30 purchasing managers. Where neces- management were asked to describe the various partici-
sary, questions were reworded, added, or discarded to pants in their supply chains. The findings are summa-
improve validity and clarity. The pretest questionnaires rized in Table II. Respondents were shown a schematic
were not used for subsequent analyses. The revised of an extensive supply chain encompassing raw material
survey instrument was then sent to 1,500 supply and extractors, raw material manufacturers, component
materials managers of U.S. manufacturing companies, manufacturers, final product manufacturers, whole-
using a modified version of Dillman’s (1978) total salers, retailers, final consumers, physical distribution,
design method. Firms represented by these individuals and product recycling. They were instructed to circle the
elements included in their SCM efforts.

The Journal of Supply Chain Management | Fall 2000 35

Supply Chain Management and Its Impact on Purchasing

Table I Based on the responses to this question, a picture of

the respondents’ supply chains emerged. Supply chain
DEMOGRAPHICS OF THE RESPONDENT FIRMS
breadth varied widely, from a single-firm logistics view
Business Description Percent Number of Employees Percent (12.7 percent said their supply chain included just their
firm or their firm and transportation/distribution ser-
Final Product Manuf. 58.4 250 or Fewer 28.7
vices only) to a fully developed effort including multiple
Component Manuf. 23.8 251-500 21.8 tiers of both suppliers and customers and physical distri-
Raw Mat’l. Manuf. 5.9 501-1,000 13.9 bution services (17.7 percent indicated a fully developed
Wholesaler 1.0 Over 1,000 23.8 supply chain both upstream and downstream of the
Other 8.9 No Response 11.9 responding firm). Over 31 percent of the respondents
indicated their supply chain practices concentrated only
No Response 2.0
on the incoming supply side, while only 10.2 percent
Market Coverage Annual Sales
indicated an outgoing distribution side supply chain
Local U.S. Market 4.0 $25MM or Less 17.8 concentration. Over 40 percent of the respondents stated
Regional U.S. Market 27.7 $25MM - $100MM 25.7 their SCM efforts were balanced, to include some level of
Global Market 65.3 $100MM - $1B 19.8 SCM development in both the supply and distribution
No Response 3.0 Over $1B 12.9 sides of the firm. Over 25 percent of the respondents
included the final consumer in their SCM efforts, and 19
No Response 23.8
percent indicated an emphasis on recycling throughout
Respondent Firms
their supply chain.
Practicing SCM 78.2a
Based on these results, it appeared that most of the
a
Based on the following definition supplied in the survey: “The integration of firms were not attempting to integrate broadly the efforts
all or part of the value-creating activities linking each element of the manu
facturing and supply process from raw materials extraction through to the of their supply chain members, preferring instead to
end product user, encompassing several organizational boundaries.” Three localize partnership efforts to include first-tier suppliers
percent of the surveys had no response. and/or first-tier customers and immediate distribution
services or customers. It was somewhat surprising that
only one-quarter of the respondents included contact
with final or end product consumers in their SCM efforts.

Table II
BREADTH OF SUPPLY CHAIN MANAGEMENT EFFORTS

Breadth of SCMa Percent Percent

Respondent firm only 7.6 Resp. firm + 1st tier supp. + 1st tier cust. 8.9
Respondent firm + transp. 5.1 Resp. firm + 1st tier supp. + 1st tier cust. + transp. 5.1
Resp. firm + 1st tier supp. 2.5 Resp. firm + > [1st tier supp. + 1st tier cust.] 8.9
Resp. firm + 1st tier supp. + transp. 11.4 Resp. firm + > [1st tier supp. + 1st tier cust.] + transp. 17.7
Resp. firm + > 1st tier supp. 6.3 Balanced (supply + distribution sides) 40.6
Resp. firm + > 1st tier supp. + transp. 11.4 No response 7.6
Supply side only 31.6 Total 100%
Resp. firm + 1st tier cust. 1.3 Other SCM elements
Resp. firm + 1st tier cust. + transp. 1.3 Emphasis on final consumer or end user 25.3
Resp. firm + > 1st tier cust. 2.5 Emphasis on recycling 19.0
Resp. firm + > 1st tier cust. + transp. 5.1
Distribution side only 10.2
a
Respondents were shown an illustration of a complete supply chain, showing each element of the chain from raw material extraction through
to the end customers (including recycling), and linked by physical distribution. They were asked to circle the elements included in their firm’s
SCM efforts.

36 The Journal of Supply Chain Management | Fall 2000

 Supply Chain Management and Its Impact on Purchasing

STRATEGIC ELEMENTS OF SUPPLY CHAIN Table III

MANAGEMENT ORGANIZATIONAL STRATEGIES AND THEIR IMPORTANCE
Table III presents a number of organizational and pur- TO SUCCESSFUL SUPPLY CHAIN MANAGEMENTa
chasing department strategies and their importance to
successful SCM. Respondents were asked to signify the Interdepartmental Strategies SCM Std.
importance of a number of purchasing-oriented strategic That Include Purchasing Importanceb,c Dev.
activities, based on a five-point Likert scale response Reducing response time across the
(1 = low importance and 5 = high importance). supply chain 4.30 0.74
Organizational strategies viewed by the respondents as Increasing trust among supply chain
being important determinants of SCM success were: members 4.09 0.81
• Reducing response time across the supply chain Improving activity integration across the
• Increasing trust among supply chain members
supply chain 4.04 0.90
• Improving activity integration across the supply Searching for new ways to integrate supply
chain and searching for new ways to integrate
chain activities 3.91 1.03
these activities Establishing more frequent contact among
• Establishing more frequent contact among supply
supply chain members 3.90 0.77
chain members Increasing the firm’s JIT capabilities 3.86 0.95
• Increasing the firm’s JIT capabilities Communicating your customers’ future
Thus, important SCM strategies involve speed, trust, strategic needs throughout the supply chain 3.70 0.97
and activity integration across the supply chain’s mem- Informally sharing information with suppliers
bers. Evidently, instituting JIT practices was seen as a and customers 3.64 0.94
means of incorporating these strategies into the firm. Creating a compatible information/
Other organizational strategies deemed important to the communication system with suppliers
firm were, for the most part, concerned with communi- and customers 3.63 1.09
cation capabilities and sharing information among supply Formally sharing information with suppliers
chain members. Strategies seen as significantly less impor- and customers 3.61 1.02
tant to the respondents were extending supply chains Extending your supply chain beyond first-tier
beyond first-tier participants and creating interorganiza- suppliers and customers 2.86 1.08
tional SCM teams. Creating supply chain management teams
With respect to strategic activities in purchasing, with members from different companies 2.79 1.13
respondents considered on-time delivery of materials Purchasing Department Strategies
directly to points of use and communicating the firm’s
On-time delivery of materials directly to
future strategic needs to suppliers as important to suc-
point of use 4.45 0.89
cessful SCM. The respondents assigned a moderate level
Communicating your firm’s future strategic
of importance to aiding suppliers to increase their JIT
needs to suppliers 4.06 0.83
capabilities and participating in the sourcing decisions
Aiding suppliers to increase their JIT
of the firm’s suppliers. Significantly less important was
capabilities 3.56 1.12
requiring suppliers to locate closer to the firm.
Participating in the sourcing decisions of
Thus, when considering the relationship between
your firm’s suppliers 3.09 1.32
strategic activities and SCM success, respondents clearly
Requiring suppliers to locate closer to
are interested in the integration of buyer-supplier activi-
your firm 2.03 1.01
ties, improving trust among supply chain members, and
creating a more responsive supply chain. Improving JIT a
The information shown is compiled from the 79 respondents stating they
capabilities both within the firm and among suppliers practiced supply chain management.
is evidently seen as one way to improve supply chain
b
Scale: 1 = low importance, 3 = moderate importance, 5 = high importance.
responsiveness. Interestingly, the lack of importance in
c
The vertical lines indicate insignificant response differences using Bonferroni
multiple comparison tests at the 0.05 significance level.
extending the supply chain beyond first-tier members
is once again highlighted in the findings.

PROBLEMS AND CONCERNS IN SUPPLY CHAIN number of practitioners. Respondents practicing SCM
MANAGEMENT were asked to assess the severity of each of the potential
Table IV reports on a number of potential problem areas problems with respect to their firms, based on a five-point
that prevented the respondent firms from achieving their Likert scale (1 = low severity and 5 = high severity). Based
supply chain management objectives. These problem areas on the mean responses, none of the potential problems
were cited in many of the articles reviewed for this research surfaced as being extremely severe; all were judged to be
project, as well as identified through conversations with a moderately to less-than-moderately severe. Problems

The Journal of Supply Chain Management | Fall 2000 37

Supply Chain Management and Its Impact on Purchasing

concerning information systems, information sharing, defined in the survey and in Table V) decreased by over 3
cooperation, and trust appeared to be the most percent, and the purchase dollars attributed to these sup-
troublesome. pliers declined similarly.
Another issue is the supplier management methods
SUPPLIER ISSUES IN SUPPLY CHAIN
used to ensure supplier conformance to specifications.
MANAGEMENT Respondents were asked to assess, on a five-point Likert
Reducing or reevaluating the supply base is commonly scale, the importance of a number of supplier confor-
mentioned in the JIT and SCM literature as a means of mance issues. Items found to be most important included
creating closer, interdependent buyer-supplier relation- ensuring that:
ships. Thus, exploring the recent changes in the supply
• Suppliers’ purchases adequately conformed to their
base of the respondents could provide some insights
(the respondent firm’s) purchase specifications
into the value of these activities relative to the practice
• Suppliers investigated nonconformance causes
of SCM. (Indeed, a number of respondents were only
and took corrective actions
concerned with this aspect of SCM, as reported in Table
II.) Information regarding these issues appears in Table V. • Suppliers implemented quality policies
• Suppliers established and documented their
For the prior three-year period, the respondents prac-
quality systems
ticing SCM experienced an increase in outsourcing
activity of over 13 percent. During the same time period, • Suppliers maintained adequate inspection and
the respondents increased the number of “distinguished” testing equipment
and “key” suppliers by 13.5 percent and 8.7 percent, Performance evaluation and selection criteria for the
respectively. Definitions of these terms were provided distinguished and key suppliers were addressed in the
in the survey and are shown in Table V. In short, distin- survey. When periodically evaluating existing suppliers,
guished and key suppliers were described as having more respondents practicing SCM placed a high level of impor-
strategic value and better quality systems than general or tance on product quality, customer service, on-time
provisional suppliers. Expenditures with these suppliers delivery, response time, and delivery flexibility. Criteria
increased by nearly 15 percent and 9 percent, respectively. such as product price, communication capabilities, and
The number of “general” and “provisional” suppliers (also supplier certification were seen as significantly less impor-
tant to this group. When selecting distinguished and key
suppliers, respondents placed a high level of importance
Table IV on the ability to meet due dates, the commitment to
quality, suppliers’ technical expertise, the commitment
SUPPLY CHAIN MANAGEMENT PROBLEMSa to continuous improvement, and product prices.

Std. Based on this survey, it appears that firms practicing

Elements Causing Problems Severityb,c Dev. SCM are actively increasing their purchasing activity with
distinguished and key suppliers, while decreasing the use
Lack of adequate information system/
information sharing among supply chain of general and provisional suppliers. Additionally, they
members 3.25 1.15 are strongly committed to ensuring that suppliers con-
form to their quality requirements. Quality and customer
Poor inventory management throughout
supply chain 3.08 1.14 service issues are seen as the most important supplier
selection and evaluation concerns.
Lack of cooperation among supply
chain members 2.89 0.97 STRATEGIC ALLIANCE AND SUPPLIER
Lack of trust among supply chain members 2.88 1.08 CERTIFICATION PROGRAMS
Lack of interest by suppliers/customers to Concerted, formal efforts to create strategic alliances
participate in the supply chain 2.85 1.12 with a firm’s best suppliers and to certify their quality
Respondent’s lack of leverage in the capabilities frequently have been cited as crucial to the
supply chain 2.84 1.20 ongoing success of SCM programs. Information about
Geographical distance from suppliers to these efforts appears in Table VI.
respondent firm 2.77 1.19 Most of the respondents practicing SCM (over 60
Competition from other supply chains 2.55 1.04 percent) stated they did have a formal partnership or
Geographical distance from respondent strategic alliance program. Over the past three years,
firm to customers 2.52 1.25 there has been an average increase of over 22 percent
in the number of strategic alliances created with sup-
a
The information shown is compiled from the 79 respondents stating they
practiced supply chain management. pliers. Because instituting partnership programs creates
b
Scale: 1 = low severity, 3 = moderate severity, 5 = high severity. an expectation of increased supplier performance, ques-
c
The vertical lines indicate insignificant response differences using Bonferroni tions about performance were included in the survey.
multiple comparison tests at the 0.05 significance level. Based on the responses, the partnerships had met with

38 The Journal of Supply Chain Management | Fall 2000

 Supply Chain Management and Its Impact on Purchasing

moderate-to-high success on all of the performance A number of important supplier issues emerged from
measures (see Table VI). this study. The respondents utilized an increasing
Supplier certification programs were also common among number of distinguished or key suppliers; outsourced
the respondents practicing SCM. The vast majority (nearly more frequently over time; developed strategic alliance
76 percent) stated that they required suppliers to be certi- and supplier certification programs; involved their per-
fied. The most popular certifications were ISO 9000 certifi- sonnel in their suppliers’ quality improvement and pur-
cation (65 percent of the respondents) and the respondent’s chasing practices; and selected and evaluated suppliers
own certification program (approximately 58 percent). based on quality, customer service, and flexibility.

Table V
SUPPLIER ISSUES AND CHARACTERISTICSa

Changes in the Supply Base Percent Distinguished/Key Supplier Std.

Over the Past Three Years Change Performance Evaluation Criteria Importancef,g Dev.
Outsourcing change +13.6 Product quality 4.88 0.36
Number of distinguished suppliersb +13.5 Customer service 4.71 0.51
Number of key suppliers c
+8.7 On-time delivery 4.71 0.56
Number of general suppliersd -3.6 Response time 4.59 0.57
Number of provisional supplierse -3.2 Delivery flexibility 4.46 0.70
Purchase $ from distinguished suppliers +14.9 Correct quantity delivered 4.28 0.83
Purchase $ from key suppliers +6.3 Willingness to change product/service to
Purchase $ from general suppliers -1.7 meet our firm’s changing needs 4.23 0.85
Purchase $ from provisional suppliers -3.5 Product price 4.13 0.94
Std. Willingness to participate in new product
Supplier Conformance Issues Importancef,g Dev. development and value analysis 4.03 0.94
Suppliers need to: Communication capabilities 3.87 0.87
Assure that their purchases conform Supplier certification 3.75 1.04
to their specifications 4.62 0.61 Willingness to share sensitive information 3.33 1.13
Investigate nonconformance causes
and take corrective actions 4.56 0.66 Distinguished/Key Supplier Std.
Ensure quality policies are implemented 4.45 0.70 Selection Factors Importancef,g Dev.
Establish and document quality systems 4.42 0.77 Ability to meet due dates 4.75 0.50
Maintain adequate inspection and Commitment to quality 4.65 0.60
testing equipment 4.37 0.92 Technical expertise 4.48 0.64
Comply with all our requirements 4.32 0.73 Commitment to continuous improvement 4.42 0.82
Maintain inspection/testing records 4.31 0.94 Product prices 4.35 0.80
Assure that statistical control techniques Financial stability 4.32 0.68
are used on a daily basis 4.04 1.05 Ability to satisfy changing requirements 4.31 0.76
Have an internal quality audit system 4.00 0.95 Industry knowledge 4.28 0.76
Process capabilities 4.27 0.80
Testing capabilities 4.12 0.88
Strategic importance of supplier 4.03 0.91
a
The information shown is compiled from the 79 respondents stating they practiced supply chain management.
b
Defined as “suppliers with strategic value to the firm, who have demonstrated a high level of commitment to our firm.”
c
Defined as “suppliers with comprehensive quality systems, who have provided excellent products for at least one year.”
d
Defined as “suppliers successfully meeting our requirements.”
e
Defined as “all other suppliers.”
f
Defined as 1 = low importance, 3 = moderate importance, 5 = high importance.
g
The vertical lines indicate insignificant response differences using Bonferroni multiple comparison tests at the 0.05 significance level.

The Journal of Supply Chain Management | Fall 2000 39

Supply Chain Management and Its Impact on Purchasing

Table VI
STRATEGIC ALLIANCE AND SUPPLIER CERTIFICATION PROGRAMSa

Strategic Alliance Program Percent Sig.b Supplier Certification Program Percent Sig.b
Yes 60.8 0.000 Yes 75.9 0.000
No 34.2 No 20.3
Missing 5.1 Missing 3.8
3 yr. change in strategic alliances 22.5
Std. Type of Supplier Certificationd,e
Strategic Alliance Prog. Perf. Success c,d
Dev. ISO 9000 certification 65.0
Increased cooperation/commun. 4.21 0.75 In-house certification 58.3
Reduced total costs 4.11 0.89 Self-reported certification 30.0
Increased product quality 4.00 0.78 Others 16.7
Increased customer service 3.91 1.16
Increased profits 3.87 0.77 Certification of Respondent Firmsf
Reduced new prod. devel. time 3.74 1.13 ISO 9000 certified 60.8
Becoming ISO 9000 certified 16.5
ISO 14000 certified 3.8
Becoming ISO 14000 certified 21.5
a
The information shown is compiled from the 79 respondents stating they practiced supply chain management.
b
Significance level is based on a t-test of equal yes/no response rates.
c
Defined as 1 = low success, 3 = moderate success, 5 = high success.
d
The vertical lines indicate insignificant response differences using Bonferroni multiple comparison tests at the 0.05 significance level.
e
Some of the respondents selected several certification methods.
f
Some of the respondents had obtained, or were obtaining, both certifications.

responding firms concentrated their SCM efforts primarily

Table VII
on the supply side. Further, only one-fourth of the respon-
SUMMARY OF RELIABILITY ANALYSES dents included end product user needs in their SCM prac-
tices. This is seen as a potential weakness in current supply
No. Cronbach’s Alpha chain management practice. A number of organizational
Scale Questions Reliability Coefficient
and purchasing department strategies were also identified
Interdepartmental Strategies as key contributors to SCM success. These included strate-
That Include Purchasing 12 0.8732 gies to increase trust, the integration of activities, and
Purchasing Department Strategies 5 0.6628 communication among supply chain members.
Elements Causing Problems 9 0.7835 This study also identified a number of supplier issues
Supplier Conformance Issues 9 0.8808 related to SCM. Firms practicing SCM are outsourcing
Distinguished/Key Supplier more today than in the past and are using suppliers that
Performance Evaluation Criteria 12 0.8184 are capable of providing a strategic benefit to the firm in
Distinguished/Key Supplier terms of product quality, delivery response, and flexi-
Selection Factors 11 0.7962 bility. As a result, second-tier supplier capabilities and
Strategic Alliance Program conformance has become an extremely important issue.
Performance 6 0.6986 The implication is that purchasing managers should
take an active role in identifying first- and second-tier
supplier linkages and become involved in the manage-
ment of these relationships. With respect to supplier
CONCLUSIONS selection and evaluation, this study supported a number
This study endeavored to identify current supply chain of earlier research findings that quality, customer service,
management issues and practices for manufacturing firms and delivery criteria are more important than product
operating in the United States. One of the important con- price.
tributions of this study is the revelation of the limited Finally, a large number of the respondents practicing
reach of supply chain management activities. Many SCM are forming strategic alliances with suppliers, a

40 The Journal of Supply Chain Management | Fall 2000

 Supply Chain Management and Its Impact on Purchasing

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2. Sales Through Dealers and Carriers, Street Vendors,
and Counter Sales
0 0
C. Total paid and/or requested circulation
2,031 1,941
D. Free distribution by mail (samples, complimentary,
and other free copies)
371 152
E. Free distribution outside the mail (carriers or other means)
0 0
F. Total Free Distribution
371 152
G. Total Distribution
2,402 2,093
H. Copies not distributed
603 157
I. Total
3,005 2,250
J. Percent paid and/or requested circulation
85% 92%
I certify that the statements made by me above are correct
and complete.
Julia K. Ogden
Vice President – Communication

42 The Journal of Supply Chain Management | Fall 2000