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Maturity model of procurement Maturity


model
and supply management in small
and medium-size enterprises
A benchmarking of hospitals and 315
metal-mechanic companies Received 26 April 2016
Accepted 10 July 2016
Gérson Tontini
Department of Business Administration,
Regional University of Blumenau – FURB, Blumenau, Brazil
Luciano Castro de Carvalho
Regional University of Blumenau – FURB, Blumenau, Brazil
Nair Fernandes da Costa Schlindwein
Department of Supply Chain, Hospital Santa Catarina, Blumenau, Brazil, and
Victor Tomarevski
Regional University of Blumenau – FURB, Blumenau, Brazil

Abstract
Purpose – The purpose of this paper is to present a practical instrument for self-evaluation of maturity
in the processes of procurement and supply management, applicable to small and medium-size
companies, as well as to show how the use of this evaluation tool may help companies to decide what to
improve in these processes.
Design/methodology/approach – Based on an empirical and theoretical framework, the instrument
developed measures the maturity of procurement and supply management activities in four
macro-processes: materials management, purchase process, supplier evaluation process and process of
procurement planning. For testing the self-evaluation instrument, the authors evaluated the maturity of
48 hospitals and 37 metal-mechanic manufacturing companies located in the southern region of Brazil.
To show how to use this tool to decide what to improve in procurement and supply processes, the
authors conducted a comparative analysis of a hospital and a metal-mechanic company, in relation to
the sample of the same segment.
Findings – The results show that the instrument is reliable for practical application. Metal-mechanic
industries have a greater maturity in the purchase process than in the other three macro-processes. The
management of materials is the most mature macro-process in hospitals. Comparing hospitals to
metal-mechanic companies, the present research shows that, between 20 and 99 employees, hospitals
tend to have a higher level of maturity in the purchase process than metal-mechanic companies. With
100 employees or more, metal-mechanic companies are more mature than hospitals in procurement
planning and in selection/evaluation of suppliers.
Originality/value – Presenting a useful self-evaluation instrument, this work demonstrates that the
measurement of the maturity level, and benchmarking it with other companies, may help a firm to
International Journal of Quality
decide what to improve in its processes of procurement and materials management, showing how an and Service Sciences
Vol. 8 No. 3, 2016
pp. 315-333
Research supported by National Research Council of Brasil – CNPq and Foundation for Research © Emerald Group Publishing Limited
1756-669X
and Innovation of the State of Santa Catarina, FAPESC. DOI 10.1108/IJQSS-04-2016-0036
IJQSS economic sector can understand itself better. Few scientific studies have practical application to the
assessment of the degree of maturity of procurement and supply management processes. Besides that
8,3 the authors did not find other papers presenting a comparison of different segments.
Keywords Maturity model, Benchmarking, Hospitals, Metal-mechanic companies,
Procurement process, Small and medium-size companies
Paper type Research paper
316
Introduction
Nowadays, competition between organizations is a reality in all economic areas. This
competition does not occur only between companies but also between supply chains
(Christopher, 2005; Lambert and Cooper, 2000). More specifically, in recent years, the
purchasing volume (percentage of an organization’s total turnover) has grown
substantially. Under these circumstances, a better performance by the procurement
function may make a considerable contribution to the overall performance of a firm
(Schiele, 2007). According to Weele (2005), most of the cost of goods is raw materials,
components and services acquired. Procurement and supply efficiency can therefore
lead to substantial competitive advantage (Langley and Coyle, 2012). However, how can
an organization improve the performance of its procurement and supply processes?
One of the aspects is its maturity level, which affects a company’s performance
(Batenburg and Versendaal, 2008). According to Becker et al. (2009):
[…] a maturity model consists of a sequence of maturity levels for a class of objects. It
represents a typical evolution path of these objects in the form of discrete stages. Typically,
these objects are organizations or processes.
Having expanded strongly in the past two decades, the concept of maturity
management arose from the concept of quality management. Based on the principles of
quality, the first to propose a maturity framework was Crosby (1979), in his book Quality
Is Free. The maturity grid of quality management (Crosby, 1979) describes five
evolutionary stages of adopting practices of quality: uncertainty, awakening,
enlightenment, wisdom and certainty. To evaluate the maturity of the company as a
whole, different aspects, or dimensions, evaluate these stages of maturity. These aspects
are understanding and attitude of management, organization status, handling of
problems, cost of quality, improvement actions and characteristics report. Based on
Crosby’s model, the Software Engineering Institute developed a model of five levels,
known as the Capability Maturity Model (CMM), for software development (Paulk et al.,
1993). This model guides the improvement of the software-development process
through optimum management practices. Nevertheless, although it is widely applied,
the model has several limitations, particularly for small companies.
Brodman and Johnson (1994, p. 335), interviewing 190 software companies, found
that the major concerns and difficulties for small companies in implementing CMM
models are:
[…] the cost of implementing specific aspects of a process improvement program, the difficult
(if not impossible) hurdle of satisfying CMM practices within a small organization, and
problems with the CMM as a basic guide.
Another problem for implementing the CMM in small companies is that many of the
practices within the CMM are not applicable to these organizations (Saiedian and Carr,
1997). In addition, Staplesa et al. (2007), contacting 274 Australian organizations, found Maturity
that “small organizations that do not adopt CMMI tend to say that adopting it would be model
infeasible”. Thus, it is necessary to develop CMMs aligned with companies’ size and
segments and with which aspects of maturity are measured.
Particularly related to maturity models in supply management, most have worked on
the management of the chain as a whole, involving suppliers and customers (Stevens,
1989; Ayers and Malmberg, 2002; McCormack and Lockamy, 2004; Liu and Wang, 2006; 317
Garcia, 2008). These works seek to identify strategic aspects of supply-chain
management, mainly applying to large companies that are capable of managing it in an
integrated manner. For small businesses, the integration of this chain is low and
difficult, it being necessary first to improve the company’s own maturity. In addition,
supply-chain management maturity models are usually related to manufacturing
companies. Thus, developing a maturity model in procurement and supply
management for small and medium-size companies is still a problem to solve.
According to Schiele (2007), there is a highly significant relationship between
procurement’s maturity level and the results of cost-reduction efforts. In this sense,
Foerstl et al. (2013) identify how different practices of procurement have an impact on
purchasing performance and, indirectly, on financial performance. Paulraj et al. (2006),
Schiele (2007) and Batenburg and Versendaal (2008) found that a higher maturity level
has a positive impact on the performance of the organization.
Although there is confirmation of the relevance of maturity in procurement and
supply management, there are concerns about the practical application of maturity
models in this field. As shown by Koivisto (2013), the problem with the models that have
been developed is that most of them are just conceptual and are not fully tested. Making
a bibliographic review, Schweiger (2014) shows only seven models that have been
empirically tested. Therefore, we should explore the practical applications of maturity
models, demonstrating how companies can use self-assessment to improve their
management.
Schweiger (2014, p. 544) also states that:
[…] it is highly unlikely and almost impossible to apply a single model of maturity for all types
of businesses and branches; however, this is what most of these models do.
The author suggests that some aspects are different if dealing with large or small
companies. Therefore, it is important to develop distinct models, adapted depending on
the size of the companies. In addition, it is important that the assessment of the degree of
maturity of a given company is not individual but makes a comparison between
companies in the same segment and sizes, or “benchmarking”.
As maturity models are difficult to implement in small and medium-size enterprises
(Brodman and Johnson, 1994; Saiedian and Carr, 1997; Staplesa et al., 2007), because of
the demands and needs of these companies being different to those of large ones
(Schweiger, 2014) and also because most models of maturity in supply management are
conceptual and untested (Koivisto, 2013), this paper has the following aim:
To present a practical instrument for self-evaluation of procurement management maturity,
applicable to small and medium-size companies, showing how the use of this evaluation tool
may help an organization to decide what improve in its procurement management processes.
To do this, the present paper first shows the origins and evolution of maturity models,
showing that they are founded in quality management concepts. Then, it shows the
IJQSS dimensions of procurement processes and supply management and how to measure the
8,3 degree of maturity of these processes. It then shows the profile of the organizations
where the present maturity assessment tool was tested: 48 hospitals and 37
metal-mechanic manufacturing companies, located in the southern region of Brazil.
Subsequently, it shows the level of maturity of the companies researched. It also shows
that some aspects are not different between the two segments but others are. Finally,
318 two examples show how hospitals and metal-mechanic companies could use this tool to
conduct benchmarking, deciding what to improve in their supply management
processes.
We apply the present research to hospitals and metal-mechanic companies because
of the relevance of materials management for these organizations. Concerning hospitals,
although labor costs make up the bulk of total costs, still there is potential for
improvement in the processes of procurement and materials management (Mettler,
2013). For metal-mechanic companies, where lean manufacturing has been key to
strategic competitiveness, materials and supply management are so relevant that
concepts such as “lean procurement” have been developed (Kaynak, 2005; Wilson and
Roy, 2009).

Defining maturity levels of procurement and supply management


According to Schweiger (2014), existing models to evaluate the maturity of processes for
procurement have from three to ten levels but mostly address four. Thus, because the
present model aims to identify the degree of maturity of the procurement and supply
management processes in an organization, it has four distinct maturity stages, based on
the levels of knowledge, formalization and management (Schiele, 2007; Koivisto, 2013):
(1) Level 4: This indicates that the organization has adequate management of
procurement and supply, resulting in the optimization of resources, maximizing
results and characterizing the institution as “state of the art”.
(2) Level 3: This indicates that the organization applies the concepts of procurement
and supply management broadly but not in a comprehensive or integrated way.
The institution is undergoing adjustments and is developing management
models and is therefore generating lower than optimal levels of results.
(3) Level 2: This indicates that the organization is aware of the models for
procurement and supply management but only applies some of these concepts in
a disconnected form, without effective control of results. It features
implementation without integration and control of the management of
procurement activities, resulting in inappropriate use of resources and
generating a potential loss of economic gains.
(4) Level 1: This indicates that the organization is unaware of, or does not apply,
structured activities for procurement and supply management.

Assessment of the maturity of procurement and supply management


Dimensions evaluated
Following the basic principles of contract and supply management (Arnold et al., 2008;
Monczka et al., 2009), this model evaluates procurement and supply management in four
macro-processes classified as:
(1) management of materials; Maturity
(2) purchase process; model
(3) process of evaluating suppliers; and
(4) procurement planning process.

Materials management is a set of activities ranging from materials procurement to


inventory policy, including transport of materials from the supplier to the company, 319
internal distribution, storage and identification of material (Elzarka and Bell, 1995;
Thomas et al., 2005). These activities, when executed effectively, have a positive and
significant impact on the performance of the company’s schedule and productivity
(Thomas et al., 1989). As shown in Table I, the instrument developed here evaluates the
maturity of materials management under different aspects, including management of
the supply area, inventory policy, standardization of products, process of receiving,
storage process and internal distribution process.
The purchase process refers to the provision of the means of production and materials
that meet the required specifications. It includes the quotation process and the
specification of requirements through financial and inspection approval (Jones, 1994).
The present research measures the purchase process through the analysis of the
quotation process, structure and formalization. It is also measured by the degree of
urgency with which purchases are planned and carried out.
The supplier evaluation process, in turn, plays a critical role in the firm’s performance
because of the risks incurred in the buyer–supplier relationship (Petersen et al., 2003;
Ragatz et al., 2002). Supplier evaluation includes the selection process (Jones, 1994), the
degree of familiarity with the supplier, the supplier’s skills, the potential to conduct
entrepreneurial marketing, the involvement in innovation and the interest in
committing financial resources to the relationship with the buyer (Lettice et al., 2010;
Monczka et al., 1998). Although the evaluation process does not guarantee that the
supplier will not behave opportunistically, a detailed evaluation may minimize the
chances of it occurring, mainly when it is directly related to product quality, delivery
capability and cost (Stump and Heide, 1996). To do so, the present model measures the
supplier evaluation process through supplier qualification and accreditation, including
the use of formal indicators and feedback.
Process of procurement planning, which was considered as a secondary function in
the past, nowadays is critical to the competitiveness of enterprises. Inefficiency in its
management can bring high overall costs, arising from uncoordinated purchases
(Balakrishnan and Natarajan, 2014). According to the McKinsey Global Survey Results
(2008), firms have become more aware of the importance of purchasing activities and the
results obtained via them. The observation of purchasing practices leads companies to
align sourcing decisions with significant discounts from suppliers, minimizing the total
cost of procurement, logistics and inventory (Balakrishnan and Natarajan, 2014). In the
instrument proposed in the present research, we considered the following as indicators
of the procurement planning process: demand forecast and planning, inventory
turnover control and planning of buying/restocking.

Measuring maturity-level aspects


To evaluate the organization’s maturity, an important issue to address is how to
measure its degree of maturity or the levels at which the organization is at. In addition
8,3

320
IJQSS

Table I.

measured
Factors and aspects
Factor description Aspects Factor loading Cronbach’s alpha Composite reliability Item weight

Materials management
Activities’ scope Structure of the supply process 0.90 0.83 0.90 0.34
Formalizing responsibilities 0.85 0.33
Centralizing responsibilities 0.84 0.33
Process of materials’ standardization Product standardization process 0.88 0.88 0.92 0.26
Review of standardization 0.86 0.25
Economic analysis 0.84 0.25
Multidisciplinary team 0.84 0.24
Receiving process Control of differences 0.92 0.88 0.93 0.34
Receiving warranty 0.90 0.33
Process analysis 0.89 0.33
Storage process Organization of materials area 0.87 0.88 0.92 0.21
Preservation of materials quality 0.86 0.21
Storage centralization 0.84 0.20
First in, first out 0.82 0.20
Restricted access 0.74 0.18
Distribution process Computerization and control 0.89 0.75 0.88 0.50
Traceability 0.89 0.50
Inventory policy Assessment of divergences 0.89 0.72 0.84 0.37
Periodic count 0.87 0.37
Legislation audit 0.61 0.26

Procurement planning process


Inventory turnover control Monthly control 0.89 0.66 0.81 0.39
Indicator 0.89 0.39
Goals 0.48 0.22
Demand forecasting Historical evaluation 0.93 0.87 0.93 0.50
Forecast demand 0.93 0.50
Buying and restocking planning Control of inventory levels 0.86 0.83 0.89 0.26
Minimum or economic lot 0.82 0.25
Rating importance by product 0.81 0.25
Demand forecasting methods 0.77 0.24
Buying lead-time Based on historical purchases 0.89 0.72 0.89 0.50
Long-term contract formalization 0.89 0.50
(continued)
Factor description Aspects Factor loading Cronbach’s alpha Composite reliability Item weight

Purchase process
Process of quotation and budget Electronic system of quotation 0.88 0.80 0.24
Large number of suppliers 0.86 0.23
Technical and commercial evaluation 0.84 0.87 0.23
Evaluation of budgets 0.83 0.23
Participation in buying groups 0.25 0.07
Process for urgent purchases Urgent purchases monitoring 0.88 0.73 0.37
Formalized process for urgent purchases 0.88 0.85 0.37
Price guarantee 0.64 0.27

Suppliers evaluation
Supplier selection and qualification process Formal evaluation process 0.88 0.75 0.86 0.36
Check on formal regulations 0.84 0.34
Initial approval audit 0.75 0.30
Supplier evaluation process Indicators analysis 0.92 0.89 0.94 0.34
Periodical evaluation process 0.91 0.33
Feedback to the supplier 0.90 0.33

Table I.
321
model
Maturity
IJQSS to the different dimensions measured (Schweiger, 2014), one needs to identify how each
8,3 aspect to be measured should be evaluated. In this sense, models to assess procurement
and supply management propose different ways to measure the maturity level of each
question or characteristic. Some use a Likert scale, ranging from “strongly disagree” to
“strongly agree” (Plomp and Batenburg, 2009; Batenburg and Versendaal, 2008). A
problem of this type of scale is that the measurement ends up being subjective,
322 depending on the degree of the respondent’s knowledge and the manner in which he/she
analyzes to define the level of agreement. Other works propose predefined scenarios,
describing each level of maturity of each aspect (Schiele, 2007) or also descriptors of
some points of scale (1 – Basic Practice, 3 – Medium Practice, 5 – Advanced Practice;
Foerstl et al., 2013). In this case, the interviewee should understand the theory and the
commonly used practices (Koivisto, 2013). In addition, the questionnaire becomes too
long for the respondent to answer. Another way is related to answering just “yes/no” for
each situation described (Reyes and Giachetti, 2010). In this case, although with
objective responses, there is uncertainty about the aspects that are started but not
completed. For example, if a process is formally under implementation, what would be
the answer to the following question: “Are procurement procedures standardized”? In
addition, questions must be specific, which makes the evaluation questionnaire very
long.
This paper proposes the assessment of the degree of formality and of
implementation. As shown in Figure 1, to assess the degree of maturity of the variable
“Process of budgeting”, the questionnaire has a sequence of questions, from basic to
advanced aspects of the measured variable. The evaluation of the maturity level is
consistent and not subjective because it objectively evaluates the implementation stage
(not implemented, under implementation and implemented) and the formalization level
(informal, formal).
The questionnaire has 14 factors and, as shown in Table I, each factor measures
different aspects. The weight used for weighting the importance of each aspect is based
on the factorial load of each aspect in its respective factor, obtained by Varimax rotation.
As can be seen in Table I, the aspect of “participation in purchasing groups” had less

Formalization and
implementation stage
=================== 
implementing

deployed and
implemented
or started to
Do not have
implement

Effectively
informally
Formally

Formally

running

The price and budget process includes:


Prioritization of the participation of the largest number of participants
in the quote/budgeting process
Basic == Advanced

Adoption of formal quotation and budget that aim to identify the best
proposals of the market and guide the purchasing system
Evaluation of proposals based on clearly defined commercial and
Figure 1. technical criteria, aided by a computerized system
Measurement of the Adoption of electronic quotation tools in order to optimize and
streamline the buying process
degree of maturity of
Company participation in buying groups, aiming to reduce the total
the factors cost of purchase
weight in relation to other aspects of factor 11, the process of quotation and budgeting. Maturity
This procedure defines the weight of every aspect in each dimension. model
To confirm the investigated dimensions, we carried out a factorial Varimax rotation
of the 14 surveyed factors, grouping them into four dimensions (Table II) or
macro-processes:
(1) materials management;
(2) purchase process; 323
(3) process of supplier selection and evaluation; and
(4) procurement planning process.

These dimensions explain 78.8 per cent of the variance. With Cronbach’s alpha and
composite reliability greater than 0.7, all dimensions are considered satisfactory
(Koufteros, 1999; Stratman and Roth, 2002). The materials management process
encompasses factors related to the internal management of the company, such as the
definition of products to be used, inventory control, storage and materials handling.
The purchase process includes factors related to pricing quotation and urgent supplies.
The process of selection and evaluation of suppliers measures the external aspects of the
company, related to accreditation, evaluation and feedback to suppliers. The
procurement planning process involves inventory turnover control and demand
forecasting for acquisitions, including long-term planning.

Researched organizations
The present research was carried out in Santa Catarina State, Brazil. This state has
small, medium-size and large hospitals but with no more than 500 beds. Of the 221

Component
Surveyed factors 1 2 3 4

Inventory policy 0.745


Product standardization process 0.710
Receiving process 0.707
Scope of activities of the supply area 0.701
Storage process 0.691
Distribution process 0.653
Demand forecast 0.757
Buying lead time 0.746
Inventory turnover control 0.714
Buying and restocking planning 0.672
Supplier evaluation process 0.823
Supplier selection and qualification process Suppliers 0.795
Process of quotation 0.714
Process for urgent purchases 0.676
% Variance extracted 27.93 49.73 65.57 78.81
Cronbach’s alpha 0.92 0.91 0.88 0.70
Table II.
Notes: Extraction method: principal component analysis; rotation method: varimax with Kaiser Rotated component
normalization matrix
IJQSS hospitals in the state, two of them are closed. Thus, the research considered 219 active
8,3 hospitals. After contacting these hospitals by telephone, ten refused formally to
participate, considering the sensitivity of the data. Furthermore, it was not possible to
formalize contact with the managers of 17 hospitals. We sent the research instrument by
mail and e-mail to the 192 hospitals that agreed to respond the research. We received
formal answers from 48 hospitals, representing 21.9 per cent of the surveyed population.
324 Of the hospitals, 9 per cent (4) have fewer than 20 employees, 34 per cent (16) from 20
to 99, 36 per cent from 100 to 500 and 10 more than 500 employees, including in this
number technical staff, administrative staff and medical doctors. Regarding juridical
profile, 4 are private, 7 are public and 37 are nonprofit organizations; 37 hospitals (75 per
cent) are general clinics and 25 per cent (12) include specialties. Respondents to the
research are managers of the organization’s supply area.
Regarding the metal-mechanic sector, the definition of companies to answer this
survey was conducted through contact with industry associations with which the
companies of the Itajaí Valley, Santa Catarina State, Brazil, were registered. The
questionnaire was submitted for a pre-test to five companies for general evaluation. It
was considered appropriate regarding both the clarity of the questions and in relation to
the objectivity of possible answers. After this test, the research instrument was sent to
all the other companies. The number of firms in the metal-mechanic industry in the
middle Itajaí Valley was 66; 37 answered the survey, resulting in a 56 per cent response
rate, all being valid. Of these companies, 24 (50 per cent) are manufacturers of parts and
25 per cent (12) produce complete machines; 15 per cent (6) make foundry products; and
15 per cent (6) also provide machining services, welding, etc. Related to their age, 5 per
cent (2) have less than five years since foundation, and 41 per cent (15) are more than 30
years old. Regarding size, 14 per cent (5) are considered micro-companies, with fewer
than 19 employees; 30 per cent (11) have between 20 and 99 employees (small); 41 per
cent (15) between 100 and 500 employees (middle); and only six (16 per cent) have more
than 500 employees. Respondents to the research are managers of the organization’s
supply area.

Maturity of the procurement and supply processes


To show the applicability of the maturity assessment tool, the following sections of the
paper examine its application to 48 hospitals and 37 companies in the metal-mechanic
sector.

Maturity of procurement and supply processes of hospitals


Among the 48 hospitals researched, 20 (42 per cent) had level three maturity, with
supply management under development. Of these, only one is small (fewer than 100
employees) and all others are medium-size or large. Most of the hospitals surveyed had
disconnected procurement and supply management, with level two maturity (46 per
cent). Four hospitals (8 per cent) did not have a structure of procurement and supply
management, of which just one is of medium size. All the others are small. Only two
hospitals (4 per cent) have an advanced maturity level.
Figure 2 shows that there is an increase in the degree of maturity for each
macro-process, according to the number of employees. It is interesting to notice that the
evolution of maturity in procurement planning is significantly higher than for the other
macro-processes but only when hospitals have more than 500 employees. Regarding the
Employees Maturity
<20 20-99 100-500 >500 model
=====================
Materials management a a,b b,c
2.15 2.61 3.11 3.33c
Procurement planning a a a b
2.13 2.35 2.65 3.28
Supplier selection and evaluation a a,b a,b b
2.03 2.30 2.58 3.03 325
Procurement process a a,b b b,c
2.00 2.53 2.78 2.92

Notes: Values in the same row and sub-table not sharing the same
superscript are significantly different at p < 0.1 in the two-sided test of
equality for column means. Cells with no superscript are not included in the Figure 2.
test. Tests assume equal variances; tests adjusted for all pairwise Maturity level of
comparisons within a row of each innermost sub-table using the Bonferroni hospitals, according
correction to size

degree of maturity of hospitals with different legal forms, we did not find significant
dissimilarities in the evaluated macro-processes.
Figure 3 seeks to identify whether there are differences in maturity between the
evaluated dimensions, depending on the number of employees. In general, it appears
that materials management has a significantly higher degree of maturity than the other
three (Procurement planning, p-value ⫽ 0.03; Evaluation and selection of suppliers,
p-value ⫽ 0.01; Purchase process, p-value ⫽ 0.032). Hospitals with from 20 to 99
employees are more mature in the management of materials, and in the procurement
process, than in procurement planning and in the process of evaluation and selection of
suppliers. Hospitals with 500 or more employees have significantly more mature
purchase planning than the procurement process. This may be because of the planning
process facilitating the purchasing process. There are no dissimilarities between
dimensions of hospitals with different legal profiles.
Further, we evaluated the maturity in the level of factors (Figure 4), checking
dissimilarities between hospitals of different sizes and legal profiles. It is interesting to
notice the evolution of the degree of maturity according to the size of hospitals. As we
can see in Figure 5, there is an evolution of each factor, depending on size. We can also
see that “storage process” tends to have a level of maturity highlighted in relation to the
other factors in hospitals with fewer than 20 employees but no difference if compared
with larger hospitals (p-value ⬎ 0.10). However, the process of quotation is significantly
different (less mature) in hospitals with fewer than 20 employees if compared to the
others (p-value ⬍ 0.10). The demand forecast is meaningfully higher only for large

Materials Procurement Supplier Procurement


management planning selection/ process
evaluation
=================================== Figure 3.
a b b b Differences in factor
General 2.82 2.58 2.49 2.59
Employees <20 2.15 2.13 2.03 2.00 maturity, depending
a b b a,b
20-99 2.61 2.35 2.30 2.53 on the profile and
a b b b
100-500 3.11 2.65 2.58 2.78 size of hospitals
a,b b a,b a
>500 3.33 3.28 3.03 2.92
IJQSS

2 - Materials standardization
8,3

13 - Supplier selection and


11 - Process of quotation
1 - Scope of activities of

14 - Supplier evaluation
5 - Distribution process

12 - Process for urgent


7 - Inventory turnover

10 - Buying lead-time
9 - Buying/restocking
3 - Receiving process

8 - Demand forecast
6 - Inventory policy
4 - Storage process

qualification
supply area
326

purchases
planning
control
Factor 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Private 2.69 2.69 2.67a 3.08 2.13 3.32 1.94a 2.25 2.69 2.88a 2.97 2.8 2.78 2.26
Type

Private 2.58 2.81 2.83a 3.26 2.43 2.87 2.50a 2.77 2.69 2.22b 2.75 2.28 2.55 2.23
nonprofit
Public 2.37 2.85 3.48b 3.39 2.36 3.26 2.78 b
3.21 2.53 2.86a 2.81 2.87 3.10 2.76
<20 2.26 2.00a 2.34a 2.82 1.36a 2.13a 1.97a 2.21a 2.21a 2.14a,b 1.95a 2.05 2.26 1.81a
Employees

Figure 4. 20-99 2.3 2.62a,b 2.57a 3.18 2.28a,b 2.70a 2.31a 2.66a,b 2.46a 1.97a 2.80b 2.26 2.49 2.10a,b
Differences in factor 100-500 2.8 3.17b 3.19a,b 3.47 2.72b 3.31b 2.56a,b 2.78a,b 2.76a,b 2.50a,b 3.02b 2.54 2.82 2.35a,b
maturity, depending >500 2.92 3.31b,c 3.62b 3.5 3.00b,c 3.68b 3.14b 3.56b 3.28b 3.13b 3.12b 2.72 2.98 3.00b
on the profile and
size of hospitals Note: a, b, c: p-value < 0.10

Figure 5.
(a) Maturity of
hospitals according
to number of
employees; (b)
Maturity of hospitals
with different
profiles

hospitals. Although there are differences between the averages of maturity, there are no
statistically significant differences between the factors of “scope of supply area”,
“storage process”, “process for urgent purchases” and “selection/qualification of
suppliers”.
Observing Figure 5(b) and Figure 4, we see that there are few differences between the
legal profiles of the institutions now analyzed. Public hospitals are more mature than
private hospitals (profit and nonprofit) in the processes of receiving materials and
inventory turnover control. On the other hand, nonprofit hospitals are less mature in
buying lead-time.

Maturity of procurement and supply processes of metal-mechanic companies


Figure 6 shows whether there are significant differences in maturity between the
macro-processes studied. Overall, it appears that metal-mechanic industries have a
lower degree of maturity in the quotation process than in other dimensions. Unfolding Maturity
this assessment, considering the size of companies, it appears that the maturity of model
materials management evolves as the level of employees grows, being statistically
different in companies with more than 100 employees. The same is true for purchase
planning and evaluation/selection of suppliers. For the purchasing process, there is a
spread in the results.
Figures 7 and 8 show the degree of maturity of each factor. As we can see, except for 327
the process of urgent purchases, the degree of maturity of all other evaluated factors
evolves as the companies’ size increases. For the process for urgent purchases, although
the maturity level seems to evolve depending on firm size, there are no statistically
significant differences. This may happen because of differences in the markets or
situations of each company.

Macro-processes
Materials Procurement Selection/ Purchase
management planning evaluation process
===================================
a a a
General 2.82 2.68 2.79 2.50b
Number of employees
<20 20-99 100-500 >500
Materials management 1.91a 2.31a 3.30b 3.63b
Procurement planning 1.81a 1.96a 3.17b 3.84b
a a b
Supplier selection and evaluation 1.49 2.16 3.35 3.83b
a,b a b
Purchase process 1.81 1.96 2.94 3.10a,b
Figure 6.
Note: Values in the same row and sub-table not sharing the same superscript are Maturity of
significantly different at p < 0.1 in the two-sided test of equality for column macro-processes of
means. Cells with no superscript are not included in the test. Tests assume equal metal-mechanical
variances 14 - Supplier evaluation companies
5 - Distribution process

12 - Process for urgent

13 - Supplier selection
7 - Inventory turnover

10 - Buying lead-time
9 - Buying/restocking
1 - Scope of activities

3 - Receiving process

8 - Demand forecast
6 - Inventory policy
4 - Storage process

and qualification
standardization

11 - Process of
of supply area
2 - Materials

purchases
quotation
planning
control

<20 1.88a 1.65a 1.94a 2.06a 1.80a,b 2.15a 1.94a 2.10a 1.81a 1.40a 1.95a,b 1.67a 1.39a 1.60a
Employees

20-99 2.62a,b 2.30a,b 2.47a 2.54a,b 1.55a 2.40a 1.84a 1.85a 2.35a 1.80a 1.95a 1.97a 2.45a,b 1.87a
100- Figure 7.
3.38b,c 3.18b 3.65b 3.37b 2.75b,c 3.39b 3.12b,c 3.40b 3.03a,b 3.13b 3.13b 2.76a 3.31b,c 3.38b Evaluation of the
500
>500 4.00c 3.15a,b 3.93b 3.55b,c 3.60c 3.52a,b 3.76c 3.80b 3.90b 3.90b 3.07a,b 3.12a 3.66c 4.00b differences in the
maturity of factors,
Note: Values in the same row and sub-table not sharing the same superscript are significantly depending on the size
different at p < 0.1 in the two-sided test of equality for column means. Cells with no of metal-mechanic
superscript are not included in the test. Tests assume equal variances companies
IJQSS Comparing hospitals with metal-mechanic companies
8,3 Figure 9 shows whether there are significant differences in maturity between the
studied macro-processes, comparing metal-mechanic companies with hospitals.
Metal-mechanic industries have a greater maturity in the purchase process (p-value ⬍
0.10). Regarding hospitals, it appears that the management of materials is more mature
than the other three dimensions (Procurement planning, p-value ⫽ 0.03; Evaluation and
328 selection of suppliers, p-value ⫽ 0.01; Purchase process, p-value ⫽ 0.032). The difference
between the two segments (hospitals and industries) is that the industries also worry
about aspects of selecting suppliers. This difference may be because of hospitals having
large companies as suppliers and being at their mercy. Indeed, looking in terms of
averages, it turns out that in hospitals the process of evaluating and selecting suppliers
is the one with the lowest level of maturity.
Figure 10 shows a comparison between hospitals and metal-mechanic companies, for
each level of size (number of employees). With fewer than 20 employees, we cannot say
that there is a difference of maturity between these two segments. From 20 to 99
employees, hospitals tend to have a higher level of maturity in relation to the purchase
process. In the case of hospitals, this may be because of how critical this process is in
relation to materials costs. With 100 employees or more, metal-mechanic companies are
more mature than hospitals in procurement planning and selection/evaluation of
suppliers.

Practical use of the maturity assessment model in procurement and


supply management
Companies should assess their state of maturity in relation to other companies in the
same segment. This comparison may enable an organization to decide what to improve
in order to become more competitive. While this process, called benchmarking, is highly
advocated, there are difficulties in comparing a company with other companies in the
same industry or even in different segments. The access to information is a problem.

Figure 8.
Maturity of
metal-mechanic
enterprises,
depending on
number of employees

Figure 9.
Macro-processes
Comparison of
Materials Procurement Selection/ Purchase
macro-process
management planning evaluation process
maturity: hospitals
==========================
and metal-mechanic Hospitals 2.82a 2.58b 2.49b 2.59b
industries Metal-mechanic 2.82 a
2.68 a
2.79 a
2.50b
To show how an organization could decide what to improve in its materials Maturity
management, we selected for analysis a company in the metal-mechanic sector and one model
of the hospitals, comparing each one with the others of the same size.
We call the metal-mechanic company “Company A”. It is more than 30 years old and
has between 100 and 500 employees. Figure 11 shows that Company A has a lower level
of maturity in relation to the other researched companies in supply area (Dim 1,
p-value ⫽ 0.000), product standardization (Dim 2, p-value ⫽ 0.000), process of 329
distribution (Dim 5, p-value ⫽ 0.000), process of quotation and budgeting (Dim 11,
p-value ⫽ 0.000), process of urgent procurement (Dim 12, p-value ⫽ 0:02), selection/
qualification of suppliers (Dim 13, p-value ⫽ 0.002) and supplier evaluation (Dim 14,
p-value ⫽ 0.003). It is close to its competitors in relation to the other factors.
Among the hospitals, Figure 11 shows the situation of “Hospital A” relative to the
others. This hospital has around 250 employees, including 120 doctors. It has specialties
in gynecology, obstetrics, neonatology and orthopedics. In this case, we are also
comparing it with hospitals of same size (100-500 employees).
Figure 11 shows that Hospital A is below the level of other hospitals regarding
inventory turnover control (Dim 7, p-value ⫽ 0.000). That is followed by demand
forecasting (Dim 8, p-value ⫽ 0.001), storage process (Dim 4, p-value ⫽ 0.009),
standardization process (Dim 2, p-value ⫽ 0.025) and receiving process (Dim 3,

Number of employees
<20 20-99 100-500 >500

Hospital Metal Hospital Metal Hospital Metal Hospital Metal


======= ======= ======= =======
a a a a a a
Materials management 2.15 1.91 2.61 2.31 3.11 3.30 3.33a 3.63a
a a a a a b a
Procurement planning 2.13 1.81 2.35 1.96 2.65 3.17 3.28 3.84b
Supplier selection and 2.03 a
1.49 a
2.30 a
2.16 a
2.58 a
3.35b
3.03 a
3.83b
evaluation
Purchase process 2.00a 1.81a 2.53a 1.96b 2.78a 2.94a 2.92a 3.10a Figure 10.
Comparison of
Note: Values in the same row and sub-table not sharing the same superscript are significantly hospitals with
different at p < 0.1 in the two-sided test of equality for column means. Cells with no superscript metal-mechanic
are not included in the test. Tests assume equal variances companies

Figure 11.
(a) Benchmarking
maturity of
metal-mechanic
Company A; (b)
Benchmarking
maturity of Hospital
A
IJQSS p-value ⫽ 0.006). It is also less mature in selection and qualification of suppliers (Dim 13,
8,3 p-value ⫽ 0.003) and in evaluation of suppliers (Dim 14, p-value ⫽ 0.006). On the other
hand, Hospital A is better in the process of distribution (Dim 5, p-value ⫽ 0.004) and in
inventory policy (Dim 6, p-value ⫽ 0.000).

Final considerations
330 The function of procurement and supply management, and its activities, are relevant to
the overall performance of a company. Thus, it is very important for companies to
improve how they deal with different aspects of these activities. Evaluating and
developing the maturity of this function’s activities are relevant for cost reduction and
reliability improvement.
In this paper, we have developed a practical instrument for companies’
self-evaluation of procurement and supply management maturity, applicable to small
and medium-size companies. This instrument evaluates the maturity of four
macro-processes: materials management, purchase process, supplier evaluation process
and procurement planning process. To test and show how companies can use it to
evaluate and take actions, we applied the instrument to 48 hospitals and 37
metal-mechanic companies, located in the southern region of Brazil. With statistical
tests, the results show that the instrument is reliable for practical application.
Metal-mechanic industries have a greater maturity in the purchase process than in the
other evaluated macro-processes. Regarding hospitals, the management of materials is
more mature than the three other macro-processes.
Another relevant aspect to know better what to improve is that a company should
compare its maturity level with other companies in its specific market segment and size.
As stated by Schweiger (2014, p. 544):
[…] the assessment of the degree of maturity of a given company should not be performed in
solo fashion, but make comparisons between companies in the same segment and sizes, or
benchmarking.
Showing the relevance of benchmarking, this paper presents a comparative analysis of
one hospital and one metal-mechanic company to the others in the same segment. The
results show more specifically what to improve, reducing efforts and costs for
improving competitiveness.
We understand that researchers should allow the practical dissemination of
knowledge. Thus, to help hospitals and metal-mechanic organizations improve their
maturity level and help researchers to use and test the instrument hereby developed, the
self-evaluation instrument is available on contacting the first author of this paper.

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About the authors


Gérson Tontini obtained PhD in Mechanical Engineering from Federal University of Santa
Catarina, Brazil (1995), and post-doctorate in Business Administration from California State
University (2003) and Halmstad University, Sweden (2014). Gérson Tontini was a Visiting
Professor at California State University and Halmstad University, Sweden, during the Post-doc.
Gérson Tontini won the “Sion Raveed” award at Conference on Business Association of Latin
American Studies, BALAS 2005 in Madrid, Spain, “Claude Machline” award for the best paper,
SIMPOI 2013 – Getúlio Vargas Foundation – FGV and Kano award by Japan Standards
Association, Japan, in 1993. Research topics include quality of services and products, customers’
needs, incremental innovations, university management. Gérson Tontini is a Full Professor of the
PhD Program in Accounting and Business Management, Regional University of Blumenau –
FURB, Brazil. Gérson Tontini received Research Productivity Incentive from National Research
Council of Brazil (2010-present). Gérson Tontini is the corresponding author and can be contacted
at: gersontontini@gmail.com
Luciano Castro de Carvalho obtained PhD in Business Administration, with focus on
Industrial Operations Management, from São Paulo Business School, of Getúlio Vargas
Foundation (EAESP/FGV – Brazil). Luciano Castro de Carvalho has done doctoral internship at
University of Indianapolis (IUPUI – USA). Currently, Luciano Castro de Carvalho is a Professor at
Universidade Regional de Blumenau (FURB), a Member of Innovation Forum (FGV – Brazil) and
a Member of the Global Project named High Performance Manufacturing. The researches
performed are related to social capital and absorptive capacity in the supply chain integration,
collaborative activities and innovation.
Nair Fernandes da Costa Schlindwein obtained master’s degree (Licentiate Level) from
Regional University of Blumenau – FURB (2009). Nair Fernandes Costa Schlindwein has done
MBA in Business Management (2004) by the Getúlio Vargas Foundation of Rio de Janeiro and a
degree in Business Administration from the Regional University of Blumenau (1999). Nair
Fernandes Costa Schlindwein has received the “Claude Machline” award, SIMPOI, in 2013.
Professional experience includes acting in materials management, hospital logistics,
administration, production and logistics and sales and international negotiations. Nair Fernandes
Costa Schlindwein is currently in charge of Procurement and Materials Management, Hospital de
Santa Catarina, Brazil.
Victor Tomarevski obtained a bachelor’s degree in Production Engineering from Regional
University of Blumenau (Furb) in 2013. Victor Tomarevski’s working experience has been in
indirect material, engineering purchase, procurement of materials, quality area, helping internal
auditing process and implementation of PPAP reports.

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