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Unintended responses to a traditional purchasing performance metric

M.L. Emiliani (Central Connecticut State University, School of Technology, New Britain, Connecticut, USA)
D.J. Stec (Central Connecticut State University, School of Technology, New Britain, Connecticut, USA)
L.P. Grasso (Central Connecticut State University, School of Business, New Britain, Connecticut, USA)

Supply Chain Management

ISSN: 1359-8546

Article publication date: 1 July 2005

Abstract

Purpose

To describe the tactics that buyers often use to avoid unfavorable purchase price variance (PPV) and identify alternate approaches that will improve purchasing performance and also help achieve company objectives.

Design/methodology/approach

Descriptive: presents for the first time 12 dysfunctional tactics used by buyers of industrial goods use to avoid unfavorable PPV.

Findings

The tactics are shown to increase costs rather than decrease costs and lead to organizational dysfunction. Findings are broadly applicable to large corporations that use legacy software systems or newer enterprise requirement planning (ERP) software systems to track purchasing costs and transactions, and also have a strong management focus on price‐based purchasing performance.

Research limitations/implications

Findings are limited to organizations that measure the success of purchasing and supply management activities using price‐based metrics.

Practical implications

Should propel managers to identify alternative metrics or processes for managing purchasing performance, reduce system‐wide costs, and improve day‐to‐day work in purchasing organizations.

Originality/value

This paper will be helpful to academics researching operational or behavioral aspects of purchasing, practitioners managing supply chains, auditors assessing the integrity of material cost reporting and management controls, and persons concerned about ethics in business.

Keywords

Citation

Emiliani, M.L., Stec, D.J. and Grasso, L.P. (2005), "Unintended responses to a traditional purchasing performance metric", Supply Chain Management, Vol. 10 No. 3, pp. 150-156. https://doi.org/10.1108/13598540510606197

Publisher

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Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited