Managing risks in organizational purchasing through adaptation of buying centre structure and the buying process

Purchasing Organization and Design: A Literature Review

“…Consequently, functional specialization in purchasing is beneficial in case only few interdependencies arise between different tasks and high efficiency improvements are expected in specializing on a small set of activities, whereas an object-oriented specialization is beneficial in the opposite case (Galbraith 1971;Daft 1992: 191). Spekman and Stern (1979) and Juha and Pentti (2008) further pointed out that specialization is an important measure to reduce risks in the purchasing process, as it enables individuals to react more quickly to changes in the environment. A further discussion of this variable can be found in Lau, Goh, and Phua (1999).…”

“…Dawes, Dowling, and Patterson (1992) hypothesized the same relationship, but were unable to confirm it empirically. Juha and Pentti (2008), in turn, studied the impact of the level of perceived risk on several structural variables of purchasing and found that a high level of perceived risk is associated with a high degree of centraliza- tion and a low degree of formalization and specialization. This may be an effort to increase the flexibility of the organization and to make generalist knowledge available, which is more important in a risky situation than specialist skills.…”

“…A fourth contextual variable in this group is the buyphase, which defines the decision process from problem recognition through intermediate steps, such as search for a supplier and contract award, to the post-purchase stage (Mattson 1988). As suggested by Juha and Pentti (2008), perceived risk and uncertainty increase in the course of the purchasing process, wherefore it is likely that the structure of the buying center is different for various stages of the purchasing process. Lynn (1987) and McWilliams, Naumann, and Scott (1992), for example, found in an empirical study that more individuals are involved in earlier stages of the buying process, while Johnston and Bonoma (1981b) were unable to identify systematic differences in buying center size along the stages of the purchasing process.…”

Development of a risk-oriented strategic sourcing (ROSS) framework for the construction and electronics manufacturing industries

“…(Harland et al, 2003;Hallikas et al, 2004;Jüttner, 2005;Tang, 2006;Wagner and Bode, 2006;Khan and Burnes, 2007;Schoenherr et al, 2008). Nevertheless, the focus on delivery and quality as the most important risks is in line with the research of Juha and Pentti (2008). In addition to this finding, the economic downturn and the financial crisis increased the risk of supplier bankruptcies.…”

“…However, compared with the well-developed risk management practices in the financial area, it "is less well understood and less well developed" (p. 211) in supply chain management. Juha and Pentti (2008) point out that risk management and toleration were often independent and varied across companies in a decentralised setting. The authors recommend that all potential risks should be considered and assessed instead of focusing merely on delivery and quality risks.…”