Measuring Purchasing and Supply Management Efficiency

As a result of various strategic sourcing initiatives, many enterprises feature a very low degree of vertical integration, and in turn, are often highly dependent on their primary material suppliers. Especially in such business environments, the practices of the corporate procurement function have a major impact on the purchasing performance and, ultimately, on the competitiveness of a business.

Motivated by a case study in the defensive missile systems industry, this work presents a new, innovative, and widely applicable approach to address the problem of measuring Purchasing and Supply Management (PSM) efficiency. The approach is evaluated using the example of a previously published case study in the telecommunications industry.

Additionally, the work summarizes extant scientific work related to PSM practices, providing a comprehensive overview of possible design options and corresponding best practice recommendations, in so far as is possible. A respective design-oriented research agenda is detailed.