The Use of Organizational Design
Features in Purchasing and Supply
Management
AUTHOR
Robert J. Trent
is the Eugene Mercy associate professor of management and the
supply chain management program director at Lehigh University
in Bethlehem, Pennsylvania.
This article presents findings from a study exam-
ining organizational design features used by organi-
zations in pursuing their procurement and supply
objectives. The research purpose was to gain a better
understanding of the organizational
SUMMARY design features that firms currently
use or may use in the future. The
results should encourage organizations to address
design issues as they relate to overall supply man-
agement effectiveness. Given the dynamics of the
current competitive global supply landscape, organi-
zational design concerns are critical to sustained
organizational success.
The Journal of Supply Chain
Management: A Global
Review of Purchasing and
Supply Copyright © August
2004, by the Institute for
Supply Management, Inc. ™
4 The Journal of Supply Chain Management | Summer 2004
Of the myriad ways organizations pursue competitive
advantage in their supply management efforts, the most
common are outsourcing, supplier development or
strategic alliances and partnerships. Rarely mentioned,
however, is the more mundane topic of organizational
design. Except for cross-functional teaming, organiza-
tional design has received limited attention from supply
management researchers.
Organizational design is a broad concept referring to
the process of assessing and selecting the structure and
formal system of communication, division of labor, coor-
dination, control, authority and responsibility required
to achieve an organization’s goals (Hamel and Pralahad
1994). One way to think about an organization’s design
is as a complex web reflecting the pattern of interactions
and coordination of technology, tasks and human com-
ponents (Silvestri 1997). Although design is often thought
of in terms of organizational structure, an organization’s
design is much more complex and detailed than the
lines and boxes that appear on an organizational chart
(Champoux 2000).
The current research examines organizational design
features companies use or expect to use when pursuing
procurement and supply objectives. Initially, the paper
summarizes the literature and concludes that minimal
research has focused on the specific design features used
in procurement and supply management. The second
section describes the research and methodology that
support the reported findings. Research questions and
findings appear next, and the fourth section presents
the conclusions and managerial implications that arise
from those findings. The article concludes with an indi-
cation of study limitations and future opportunities as
they relate to organizational design research.
A REVIEW OF THE ORGANIZATIONAL DESIGN
LITERATURE
A comprehensive review of the organizational design
literature covers hundreds of citations and studies, which
is far beyond the scope of this article. We can, however,
suggest that three major streams of research emerge from
this literature. The first examines the ongoing debate

between strategy and structure and incorporates an exten-
sive discussion of mechanistic versus organic organiza-
tional designs. A second research stream examines factors
that influence an organization’s design or cause an orga-
nization to change its design. A third stream examines
the broad types of designs or structures organizations put
in place, including functional, place, product or multi-
divisional designs. Obviously, organizational design
encompasses much more than purchasing and supply
management, but this article focuses on design research
specifically relevant to purchasing and supply management.
Fearon (1988), in a study of purchasing organizational
relationships, extensively examined the characteristics of
the chief purchasing officer, the average size of the pro-
fessional purchasing staff, the reporting level of purchasing,
purchasing responsibilities and other factors related to
organizational design. Fearon and Leenders (1996) per-
formed a follow-up to Fearon’s 1988 study, which afforded
a unique opportunity to trace longitudinal changes
involving 118 firms that participated in the 1988 and
1995 research. Johnson, Leenders and Fearon (1998) and
Johnson and Leenders (2001) presented further exten-
sions of the 1988 and 1995 studies.
Other organizational research related to purchasing and
supply management includes Cavinato (1992), who argued
that most procurement organizations are described and
analyzed with reference to seven basic organizational
models. Germain and Droge (1998) examined whether
the internal organizational designs of JIT buying firms
differ from non-JIT buying firms in terms of formaliza-
tion, integration and decentralization. Giunipero and
Monczka (1990) examined the organizational structures
used by multinational corporations to conduct interna-
tional purchasing activities; Pooley and Dunn (1994)
completed a longitudinal study of purchasing positions
from 1960 to 1989. Finally, Pearson, Ellram and Carter
(1996), in their study of the electronics industry, exam-
ined the organizational standing of purchasing compared
to other functional groups, the strategic versus clerical
nature of purchasing tasks, and the status and recogni-
tion of purchasing within the firm.
Several studies have focused on various trends and
changes and their implications for organizational design.
Carter and Narasimhan (1996) identified future directions
in purchasing and supply management, several of which
related to design. They posit that management of the
“white space” (i.e., the interfaces between purchasing and
other units across the supply chain) will become increas-
ingly important for supply executives. Furthermore, Carter
and Narasimhan predicted a flattening of organizational
structures through the expanded use of self-managed teams.
In their longitudinal study of trends and changes
throughout the 1990s, Monczka and Trent (1998) con-
cluded that the number of purchasing groups organized
by commodity will continue to decrease gradually, while
the number of purchasing groups organized by end item
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The Use of Organizational Design Features in Purchasing and Supply Management
or hybrid structures will increase. This reflects a growing
need for purchasing to integrate with other parts of the
organization, particularly technical groups during new
product development.
A discussion of specific organizational design features
occurs mainly within two areas — in case analyses reported
in CAPS focus studies and in practitioner publications.
Leenders and Johnson (2000, 2002) provide many case
examples that address organizational design issues. Their
case studies examine changes in supply chain responsi-
bilities and structural changes in supply organizations. On
the practitioner side, Purchasing magazine presents its
Medal of Excellence Award annually to a company the
editors feel demonstrates leading supply management
practices. The article that accompanies the award usually
provides insight into the winner’s organizational design.
Although they provide interesting and practical perspec-
tives, these articles are usually anecdotal and represent
best practices at select firms.
Researchers have investigated specific design topics (i.e.,
JIT or international sourcing structures) and examined
broad changes and trends (i.e., flattening of structures
or managing the “white space”), but no research has
focused on evaluating a comprehensive set of design
features or how these features may support supply man-
agement effectiveness. This research attempts to fill this
void by evaluating specific design features within pur-
chasing and supply management.
RESEARCH METHODOLOGY AND SAMPLE
This research, which is exploratory in nature, collected
survey data on the use of specific organizational design
features within procurement and supply management.
Respondents were supply professionals from manufac-
turing firms selected randomly from the membership
database of the Institute for Supply Management™.
The design features included in the survey were selected
on the basis of executive focus groups (primarily with
manufacturing firms), firsthand experiences, case studies
and literature reviews. Qualitative research helped iden-
tify a list of features upon which firms rely. A series of
a priori research questions, described later, provided
guidance during survey design.
Two supply managers and two academicians reviewed
a preliminary version of the survey for clarity and com-
pleteness before wide-scale distribution. Their comments
resulted in minor modifications and several additions to
the final survey. Of the approximately 1,000 ISM members
in the United States who received surveys, 173 returned
responses, yielding just over a 17 percent response rate.
During survey distribution, the researcher excluded any
mailing label that did not have a company name, reducing
the possibility that retired ISM members received a survey.
Care was also taken to avoid sending multiple surveys
to the same organization.
The Journal of Supply Chain Management | Summer 2004 5
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The Use of Organizational Design Features in Purchasing and Supply Management

The 17 percent response rate, while somewhat low, is their current organizational design supported the attain-
comparable to other supply chain research that relied ment of procurement and supply objectives. Although
on mail surveys. Min and Emam (2003) cite a number achieving these objectives may enhance firm performance,
of studies, including their own, revealing that response this research did not focus on that linkage.
rates of less than 20 percent for mail surveys are not Data analysis involved the use of descriptive statistics,
uncommon in the supply chain literature (see Mentzer, correlations and t-tests between groups. Factor analysis
Shuster and Roberts 1992; Murphy and Daley 1994; involving all the features that respondents evaluated failed
Carter and Narasimhan 1996a, 1996b; Pedersen and Gray to converge on a clear set of clusters or factors. This pro-
1988; and Sum, Teo and Ng 2001). hibited data simplification or reduction into a smaller
Nonresponse bias can be also an issue. A test for non- set of factors.
response bias compared the first 60 and the last 60 sur-
veys received; it revealed no statistically different responses RESEARCH QUESTIONS
or characteristics between the two groups. Furthermore, This study investigated a number of a priori research
these 60 firm subsamples did not differ statistically from questions related to current and future design features
the combined sample of 173 firms. A bias regarding sur- within procurement and supply management, and to a
veys returned later rather than earlier over the data col- lesser degree in supply chain management. This research
lection period is not a concern. also investigated the relationship between perceived design
effectiveness and (1) the features that firms emphasize,
As expected when using the ISM database, responding
(2) firm size, (3) the reporting level of the highest pro-
companies showed a wide variance in terms of size (as
curement office and (4) the placement of decision-making
measured by annual revenue). This variability provided
authority. This section presents the findings for the
a hoped-for opportunity to divide the responding firms
research questions.
into segments.1 The distribution based on sales revealed
three groupings: smaller (56), medium (46) and larger
Research Question 1: What Design Features Do
(65) firms. These groupings formed the basis for seg-
Procurement and Supply Organizations Currently
menting the sample. These segments result from logical
Rely On?
breaks in terms of sales rather than a U.S. government
Table V presents the highest-rated organizational
designation of small, medium or large. Segmenting the
design features that firms currently use or rely on, seg-
sample by size allows for meaningful comparisons across
mented by size. This table reveals that the size of firm
the data. Tables I-IV provide insight into the 173 par-
affects the design features relied on or emphasized as
ticipants in this research. Attempts to compare demo-
well as the overall level of reliance. Across the 29 design
graphic profiles of respondents against an overall
features evaluated by respondents, smaller firms average
demographic profile of ISM companies in SIC 20-38
2.59 in total average use, medium firms average 3.48,
(manufacturing firms) were unsuccessful due to the
and larger firms average 3.98 (all averages are on a
unavailability of such data.
seven-point scale).
The survey included demographic data and other
Larger firms differ from smaller firms in terms of scope,
questions of interest but focused primarily on the cur-
complexity and available resources. They are much more
rent and expected use of specific design features in pur-
likely to have operations that are worldwide rather than
chasing and supply management, which the Appendix
local or regional (scope) with more organizational levels
identifies. Tables presented throughout this article abbre-
covering a wider array of business and product lines (com-
viate the descriptions of these items to conserve space.
plexity). These firms emphasize certain design features
Most of the design features in the Appendix relate to
in order to coordinate and integrate a globally complex
supply management but several relate to supply chain
organization. Larger firms are also more likely to have
management.
greater access to the human and financial resources that
This research did not attempt to assess the overall effect allow them to put in place certain features.
of organizational design on firm performance. Too many
Table V shows that each segment emphasizes collocation
factors, including factors that are external to supply man-
of purchasing and other organizational members, partic-
agement, determine a firm’s success. Positive relationships
ularly internal customers (such as operations or tech-
between organizational design features and overall firm
nical personnel). Physical collocation of purchasing and
performance might result in spurious conclusions. Instead,
marketing is not highly emphasized. Since purchasing
respondents evaluated the degree to which they perceived
resides as a support function within the value chain,
collocation offers a way to integrate with internal cus-
1
tomers, understand their requirements and respond to
For this article, the firms were segmented according to annual sales
revenue. For a white paper detailing the complete findings for the
their needs (Porter 1985).
study, a presentation that details many of the design features Teams are an important element of current organiza-
included in the survey, or a copy of the survey instrument, please tional design. Each segment, for example, emphasizes
send a request to rjt2@lehigh.edu.

6 The Journal of Supply Chain Management | Summer 2004

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The Use of Organizational Design Features in Purchasing and Supply Management

Table I
SIZE OF PARTICIPATING FIRMS BASED ON SALES
Total Sample Smaller Firms Medium Firms Larger Firms
Number of Firms 167 56 46 65
Average Sales $6,008,800,000 $56,122,400 $813,711,100 $14,734,070,000
Standard Deviation $14,641,370,000 $42,883,500 $416,968,500 $20,621,570,000
Median Sales $850,000,000 $46,000,000 $800,000,000 $6,500,000,000
Range $500,000- $500,000- $200,000,000- $2,000,000,000-
$126,000,000,000 $160,000,000 $1,700,000,000 $126,000,000,000
Note: Total sample size is 173 firms. Six firms are not included in this table because they did not provide sales data due to confidentiality reasons.

Table II
PROFESSIONAL LEVEL OF RESPONDENT
Total Sample Smaller Firms Medium Firms Larger Firms
Buyer or Operational Level 26.2% 32.1% 22.2% 21.5%
Manager 40.7% 48.2% 37.8% 38.5%
Director 26.7% 16.1% 35.6% 29.2%
Vice President 6.4% 3.6% 4.4% 10.8%
Executive Vice President 0.0% 0.0% 0.0% 0.0%
President or CEO 0.0% 0.0% 0.0% 0.0%

Table III
TYPE OF INDUSTRY WHERE RESPONDING COMPANIES COMPETE
Total Sample Smaller Firms Medium Firms Larger Firms
Consumer Durable Goods Mfg. 17.0% 21.4% 22.2% 9.2%
Consumer Non-Durable Goods Mfg. 15.0% 8.9% 11.2% 23.2%
Distribution or Wholesaling 1.2% 1.8% 2.2% 0.0%
Gas or Oil Production/Distribution 1.2% 1.8% 2.2% 0.0%
Healthcare Provider or Services 1.2% 1.8% 0.0% 1.5%
Industrial Capital Goods Mfg. 21.1% 21.4% 22.3% 18.5%
Industrial Non-Capital Goods Mfg. 22.2% 21.4% 24.4% 21.5%
Industrial or Contract Services 4.1% 5.4% 2.2% 4.6%
Raw Material Production/Mining 4.1% 5.4% 2.2% 4.6%
Telecommunications 6.4% 7.1% 2.2% 9.2%
Tourism and Related Services 0.6% 1.8% 0.0% 0.0%
Transportation and Related Services 4.1% 1.8% 6.7% 4.6%
Utility or Energy Provider 1.8% 0.0% 2.2% 3.1%

Table IV
TOTAL PURCHASES AS A PERCENT OF SALES REVENUE
Total Sample Smaller Firms Medium Firms Larger Firms
1-20% 14.2% 20.0% 13.6% 7.7%
21-40% 26.1% 25.5% 25.0% 25.0%
41-60% 36.7% 40.0% 36.3% 36.0%
61-80% 21.3% 12.7% 18.2% 29.7%
81-100% 1.7% 1.8% 6.9% 1.6%
Average 41-50% 41-50% 41-50% 51-60%

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The Use of Organizational Design Features in Purchasing and Supply Management

product development teams that include procurement and
supply representatives. This is consistent with earlier
research that revealed three-fourths of companies relied
on cross-functional teams to support product development
(Griffin 1997). Although only 20 percent of the design
features evaluated in this research involved teams, three
of the seven most widely used features at larger firms
are team related. Two of the seven most widely used fea-
tures at smaller and medium-size firms are team related.
Overall, the use of teams is a popular design option.
A number of other features are common to all three
segments. These include specific individuals assigned respon-
sibility for managing key supplier relationships, including supply
chain alliances; lead buyers or site-based experts designated
to manage non-commodity or non-centrally coordinated items
or services; and regular strategy/performance presentations by
the CPO to the president or CEO. Related to presentations
by the CPO is a higher-level CPO who has a procurement
and supply-related title, which is rated highly by medium
and larger firms.
Several features are unique to each segment. Smaller
firms, perhaps in their effort to overcome volume disad-
vantages, rate membership and participation with a recognized
purchase consortium as a top-10 design feature. Larger firms,
perhaps in an effort to overcome inefficiencies and dupli-
cation, rate highly a shared services model and structure
that coordinates common activities or processes across busi-
ness units or locations.
Research Question 2: What Design Features Will
Procurement and Supply Organizations Rely On
Over the Next Three to Five Years?
Table VI presents the 10 highest-rated design features
that firms expect to put in place over the next three to
five years. Shaded items represent features that are part
of Table VI but not part of Table V (highest-rated current
features). Non-shaded items appear in both tables. Each
of the 29 design features shows an increase in expected
usage over the next three to five years, which is common
when asking respondents to project forward.
New items appearing in Table VI for larger firms include
formal strategy coordination and review sessions between
functional groups and formal procurement and supply
strategy coordination and review sessions between busi-
ness units or divisions. Medium-size firms expect to con-
tinue their emphasis on formal strategy coordination

Table V
RESEARCH QUESTION 1: CURRENT ORGANIZATIONAL DESIGN FEATURES
Smaller Firms
Physical collocation between
procurement personnel and key
internal customers
Specific individuals assigned
responsibility for managing key
supplier relationships
Physical collocation between
procurement and technical
personnel
Formal strategy coordination and
review sessions between functional
groups
New product and/or process
development teams that formally
include procurement and supply
representatives
Lead buyers or site-based experts
designated to manage non-
commodity or non-centrally
coordinated items or services
Cross-functional or self-managed
teamsthat manage some or all of
the procurement and supply
process
On-site suppliers to perform
inventory management activities
Regular strategy/performance
review presentations by the CPO
to the president or CEO
Membership and participation with a
recognized purchase consortium
Average across 29 design features
N = 56
1 = Do not use, rely on or feature; 4 = Somewhat use, rely on or feature; 7 = Extensively use, rely on or feature.
Avg Medium-Size Firms Avg Larger Firms Avg
4.36 Specific individuals assigned 4.77 Specific individuals assigned 5.09
responsibility for managing key responsibility for managing key supplier
supplier relationships relationships
3.87 Physical collocation between 4.30 Centrally coordinated commodity 4.89
procurement personnel and key teams that develop and implement
internal customers companywide supply strategies
3.86 Centrally coordinated commodity 4.22 Cross-functional or self-managed 4.75
teams that develop and implement teams that manage some or all of the
companywide supply strategies procurement and supply process
3.45 Lead buyers or site-based experts 4.18 Lead buyers or site-based experts to 4.68
tomanage non-commodity or manage non-commodity or non-
non-centrally coordinated items or centrally coordinated items or services
3.36 services A higher-level chief procurement officer 4.56
Regular strategy/performance review 4.18 who has a procurement and supply-
presentations by the CPO to the related title
president or CEO Physical collocation between 4.55
3.29 Physical collocation between 4.05 procurement personnel and key
procurement and technical personnel internal customers
New product and/or process 4.02 New product and/or process 4.47
development teams that formally development teams that formally
3.14 include procurement and supply include procurement and supply
representatives representatives
A higher-level chief procurement 4.02 Regular strategy/performance review 4.45
officer who has a procurement and presentations by the CPO to the
2.91 supply-related title president or CEO
A corporate level steering committee 3.89 A shared-services model and structure 4.38
2.84 that oversees companywide supply that coordinates common activities or
initiatives processes across business units or
Formal strategy coordination and 3.71 locations
reviewsessions between functional Physical collocation between 4.35
2.82 groups procurement and technical personnel
2.59 Average across 29 design features 3.48 Average across 29 design features 3.98
N = 46 N = 65

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The Use of Organizational Design Features in Purchasing and Supply Management

and review sessions between functional groups and
between business units or divisions. Smaller firms also
expect to stress strategy coordination and review sessions,
although at lower usage levels. An emphasis on these
features points out the important role that organizational
design plays in coordinating procurement and supply
activities and supporting integration across functional
groups and locations.
Table VI reveals a continued reliance on teams, partic-
ularly to support product development. Three of the 10
items for medium and larger firms listed in this table are
team related. Both segments expect a higher reliance on
project teams that work on specific procurement and supply
tasks.
Probably the most significant change between current
and expected design features is the anticipated increase
in new product and/or process development teams that include
suppliers as members or participants. For larger firms, this
item moved from a rank order of 19th for current design
features to 11th for expected design features, for medium-
size firms it moved from 22nd to eighth, and for smaller
firms it moved from 13th to eighth. The Conclusions
and Managerial Implications section discusses this
important trend in more detail.
An additional item of interest for larger firms relates to
an expected increase in formal separation of strategic and
tactical procurement and supply responsibilities, personnel,
positions and structure. Larger firms indicate that the
decision-making authority is decentralized, with some
controlled procurement (average 4.00/6 where 1 = highly
decentralized and 6 = highly centralized). This segment
expects a shift toward moderate centralization over the
next three to five years (to 4.46/6). This trend is consis-
tent with earlier research revealing a gradual shift toward
centrally led purchasing (Monczka and Trent 1998; Carter
and Narasimhan 1996a). Separation of responsibilities
should become more common as firms develop a cen-
trally coordinated or centrally led supply organization.
The Conclusions and Managerial Implications section
cites research by Leenders and Johnson (2000) that pre-
sents a different perspective on this finding.

Table VI
RESEARCH QUESTION 2: EXPECTED ORGANIZATIONAL DESIGN FEATURES
Smaller Firms
Physical collocation between
procurement personnel and key
internal customers
Specific individuals assigned
responsibility for managing key
supplier relationships
Physical collocation between
procurement and technical personnel
Formal strategy coordination and
review sessions between functional
groups
New product and/or process
development teams that formally
include procurement and supply
representatives
New product and/or process
development teams that include
suppliers as members or participants
Lead buyers or site-based experts to
manage non-commodity or non-
centrally coordinated items or services
On-site suppliers to perform
inventory management activities
Regular strategy/performance
review presentations by the CPO to
the president or CEO
Formal strategy coordination and
review sessions between units or
divisions
Average across 29 design features
N = 56
1 = Do not expect to use, rely on or feature; 4 = Expect to somewhat use, rely on or feature; 7 = Expect to extensively use, rely on or feature.
Avg Medium-Size Firms Avg Larger Firms Avg
4.67 Specific individuals assigned 5.27 Specific individuals assigned 5.38
responsibility for managing key responsibility for managing key
supplier relationships supplier relationships
4.35 Centrally coordinated commodity 5.16 Centrally coordinated commodity 5.35
teams that develop and implement teams that develop and implement
companywide supply strategies companywide supply strategies
New product and/or process 5.17
4.22 Lead buyers or site-based experts to 5.11 development teams that formally
manage non-commodity or non- include procurement and supply
centrally coordinated items or services representatives
4.06
Formal strategy coordination and 4.86 A higher-level chief procurement 5.16
review sessions between functional officer who has a procurement and
groups supply-related title
3.85
Regular strategy/performance review 4.75 Regular strategy/performance review 5.09
presentations by the CPO to the presentations by the CPO to the
president or CEO president or CEO
Formal procurement and supply 4.98
3.85 Project teams that work on specific 4.70
strategy coordination and review
procurement and supply tasks
sessions between units or divisions
Physical collocation between 4.70 Formal separation of strategic and 4.98
3.67 procurement personnel and key tactical procurement and supply
internal customers responsibilities, personnel, positions
and structure
Formal strategy coordination and 4.68
3.65 review sessions between functional A shared-services model and 4.97
groups structure that coordinates common
activities or processes across business
3.58 New product and/or process 4.68 units or locations
development teams that include
Formal strategy coordination and 4.95
suppliers as members or participants
review sessions between functional
3.45 A higher-level chief procurement 4.68 groups
officer who has a procurement and Project teams that work on specific 4.89
supply-related title procurement and supply tasks
3.28 Average across 29 design features 4.27 Average across 29 design features 4.63
N = 46 N = 65

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The Use of Organizational Design Features in Purchasing and Supply Management

Research Question 3: What Design Features Should
Show the Greatest Increase in Expected Usage
Over the Next Three to Five Years?
This question identifies the areas where growth in design
characteristics and features are expected to occur across
the total sample. Consensus exists concerning the design
features that each segment believes will show expected
growth over the next three to five years. In fact, the first
seven out of eight items in Table VII are each included
as higher-growth items for the smaller, medium and larger
segments. The primary difference across segments is the
average rating each design feature receives within each
segment.
Many of the design characteristics and features that
show expected growth support integration across the
supply chain. In fact, it is safe to conclude that firms
expect to use organizational design features to achieve
greater integration, both internally and externally, over
the next three to five years. Design features that promote
internal and external integration and are expected to
show increased usage include:
• Formal value analysis/value engineering groups
• New product teams that include suppliers
• A virtual procurement organizational design fea-
turing individuals, groups and/or departments
linked through IT systems
• On-site suppliers to perform inventory manage-
ment activities
• A formal cross-functional group or team respon-
sible for demand and supply planning
• An organization designed around procurement
and supply processes
• A shared services model and structure that coordi-
nates common activities or processes across busi-
ness units or locations
• Formal strategy coordination and review sessions
between functional groups
Other features support an expected shift toward central
coordination across the procurement and supply func-
tion. This is consistent with the desire of most firms to
evolve toward a higher level of central coordination
within procurement and supply. Firms indicate that
they expect to increase use of the following design fea-
tures that promote central and cross-locational coordi-
nation within procurement and supply.

Table VII
RESEARCH QUESTION 3: ANTICIPATED ORGANIZATIONAL DESIGN FEATURE GROWTH
Current Expected
Design Characteristic or Feature Use Use Growth
Formal value analysis/value engineering groups 2.95 4.10 +39%
New product and/or process development teams that include suppliers 3.29 4.49 +37%
as members or participants
A virtual procurement organizational design featuring individuals, groups 2.91 3.94 +35%
and/or departments linked through IT systems
On-site suppliers to perform inventory management activities 3.25 4.29 +32%
Project teams that work on specific procurement and supply tasks 3.39 4.33 +28%
A formal cross-functional group or team responsible for demand and 3.27 4.04 +27%
supply planning
An organization designed around procurement and supply processes 3.23 4.07 +26%
rather than a functional or vertical perspective
Formal procurement and supply strategy coordination and review sessions 3.55 4.43 +25%
between business units or divisions
A shared-services model and structure that coordinates common 3.39 4.16 +23%
activities or processes across business units or locations
Formal separation of strategic and tactical procurement and supply 3.40 4.10 +21%
responsibilities, personnel, positions and structure
An executive position responsible for coordinating and integrating key 3.25 3.89 +20%
supply chain activities
Formal strategy coordination and review sessions between functional groups 3.87 4.62 +19%
Centrally coordinated commodity teams that develop and implement 3.89 4.62 +19%
companywide supply strategies
A corporate-level steering committee that oversees companywide procurement 3.38 3.98 +18%
and supply initiatives
Regular strategy/performance review presentations by the CPO to the 3.86 4.51 +17%
president or CEO
N = 173
Scale: 1 = Do not (expect to) use, rely on or feature; 4 = (Expect to) somewhat use, rely on or feature; 7 = (Expect to) extensively use, rely on or feature.

10 The Journal of Supply Chain Management | Summer 2004


• Formal procurement and supply strategy coordina-
tion and review sessions between units or divisions
• Centrally coordinated commodity teams that
develop and implement companywide supply
strategies
• A corporate-level steering committee that oversees
companywide procurement and supply initiatives
• Regular strategy/performance review presentations
by the CPO to the president or CEO
The survey showed conclusively that future organiza-
tional design changes support cross-functional and cross-
organizational integration as well as the coordination of
procurement and supply activities across the enterprise.
Research Question 4: What Is the Relationship
Between Organizational Designs That Promote the
Attainment of Supply Objectives and the Design
Features That Firms Emphasize?
This question examines the relationship between two
important variables: the activities firms currently empha-
size and the respondents’ overall perception of the effec-
tiveness of their organizational design. It moves beyond
Research Questions 1 and 2, which simply reported on
the features that firms have or expect to have in place
without considering the effectiveness of an organization’s
design. For this question participants responded to the
statement, “Please indicate the degree to which your
current organizational design promotes or impedes the
achievement of your procurement and supply objectives.”
Responses to this question were correlated against the
current usage of the 29 design features included in the
survey.
Table VIII, which includes only medium-size and larger
firms, presents those features that correlate the highest
with firms that indicate their current design supports the
attainment of supply objectives. Although 17 design fea-
tures for medium-size firms and 19 design features for
larger firms correlate at a non-zero level with design
effectiveness, Table VIII reports only the highest 13 cor-
relations. A logical break in the value of the correlations
occurred between items 13 and 14 for both segments.
Smaller firms do not rely on or use the features evalu-
ated during this study at levels comparable to the medium-
size and larger firms. Therefore, few features correlated
at any meaningful level with smaller firms that indicate
their current design promotes the attainment of procure-
ment and supply objectives. Smaller firms do indicate
that regular strategy/performance review presentations by the
chief procurement officer to the president or CEO/board of
directors are an important part of design effectiveness.
Physical collocation between procurement and marketing per-
sonnel is also important to smaller firms that view their
current organizational design positively.
The shaded features in Table VIII represent areas of
agreement between medium-size and larger firms
regarding the features that correlate the highest with
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The Use of Organizational Design Features in Purchasing and Supply Management
design effectiveness. Respondents perceive regular strategy/
performance review presentations by the CPO to the president
or CEO/board of directors and formal procurement and supply
strategy coordination and review sessions between business
units or divisions as critical components of an effective
design. Both segments also acknowledge the value of a
shared-services model and structure that coordinates common
activities or processes across business units or locations. The
two segments agree that cross-functional or self-managed
teams that manage some or all of the procurement and supply
process and new product and/or process development teams
that include suppliers as members or participants are impor-
tant design features. Finally, the two segments agree on
the importance of lead buyers or site-based experts des-
ignated to manage non-commodity or non-centrally
coordinated items or services.
The two segments differ in their perception of the fea-
tures that correlate with design effectiveness. For medium-
size firms, physical collocation between procurement personnel
and key internal customers/marketing/technical personnel cor-
relates much more closely to perceived design effective-
ness than it does for larger firms. Specific individuals assigned
responsibility for managing key supplier relationships, including
supply chain alliances; formal procurement and supply strategy
coordination and review sessions between units or divisions
and cross-functional or self-managed teams that manage some
or all of the procurement and supply process also correlate
more closely with design effectiveness at medium-size
firms than at larger firms.
Larger firms perceive the importance of several features
relevant to the broader topic of supply chain management.
This segment perceives an executive position responsible for
coordinating and integrating key supply chain activities from
supplier through customer and an executive buyer-supplier
council or committee that coordinates supply chain activities
between your firm and your key suppliers as important parts
of an effective organizational design. This segment also
values features that relate to centrally led purchasing,
including centrally coordinated commodity teams that develop
and implement companywide supply strategies and a higher-
level chief procurement officer who has a procurement and
supply-related title. Larger firms also perceive that an orga-
nization designed around procurement and supply processes
rather than a functional or vertical perspective and project
teams that work on specific procurement and supply tasks
help define an effective design.
An important point here is that not all of the items in
Table V, which highlights the features with highest usage,
appear in Table VIII. Higher usage or reliance on a fea-
ture does not necessarily equate to the perceived effec-
tiveness of that feature. Another important point is that
size influences the features that are perceived as most
important to effective design.
The Journal of Supply Chain Management | Summer 2004 11

The Use of Organizational Design Features in Purchasing and Supply Management
Table VIII
RESEARCH QUESTION 4: CORRELATION BETWEEN DESIGN FEATURES AND DESIGN EFFECTIVENESS
Medium Firms
Regular strategy/performance review presentations by 0.661
the CPO to the president or CEO
Physical collocation between procurement personnel 0.604
and key internal customers
Cross-functional or self-managed teams that manage 0.515
some or all of the procurement and supply process
Lead buyers or site-based experts to manage 0.485
non-commodity or non-centrally coordinated
items or services
Regular strategy/performance review presentations 0.483
by the CPO to the board of directors
Formal procurement and supply strategy coordination 0.479
and review sessions between business units or divisions
Formal strategy coordination and review sessions 0.469
between functional groups
New product and/or process development teams that 0.458
formally include procurement and supply representatives
A formal cross-functional group or team responsible
for demand and supply planning 0.432
A shared-services model and structure that 0.427
coordinates common activities or processes across
business units or locations
Specific individuals assigned responsibility for 0.426
managing key supplier relationships
Physical collocation between procurement and 0.424
marketing personnel
Physical collocation between procurement and 0.402
technical personnel
N = 46
All correlations presented in this table are significant at the 0.05 level or lower.
Shaded areas represent common items between the medium-size and larger segment.
Research Question 5: What Is the Relationship
Between Organizational Designs That Promote
the Attainment of Supply Objectives and (1) the
Placement of Decision Authority, (2) the Reporting
Level of the Highest Procurement Officer and (3)
Company Size?
Results of the survey indicate that a positive (although
not strong) relationship exists between firms indicating
that their current organizational design promotes the
attainment of supply objectives and centrally coordi-
nated decision authority (see Table IX). In other words,
centralized firms are more likely to believe their current
design promotes the attainment of procurement and
supply objectives than are less centralized firms. Recall
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Larger Firms
Regular strategy/performance review presentations 0.561
by the CPO to the president or CEO
Centrally coordinated commodity teams that develop 0.498
and implement companywide supply strategies
An executive position responsible for coordinating 0.493
supply chain activities
Cross-functional or self-managed teams that manage 0.491
some or all of the procurement and supply process
Formal procurement and supply strategy coordination 0.481
and review sessions between business units or divisions
An executive buyer-supplier council or committee that 0.418
coordinates supply chain activities between your firm
and your key suppliers
Regular strategy/performance review presentations 0.405
by the CPO to the board of directors
A higher-level chief procurement officer who has a 0.401
procurement and supply-related title
Project teams that work on specific procurement and 0.382
supply tasks
A shared-services model and structure that coordinates 0.367
common activities or processes across business units
or locations
An organization designed around procurement and 0.364
supply processes rather than a functional or vertical
perspective
New product and/or process development teams that 0.349
formally include procurement and supply representatives
Lead buyers or site-based experts to manage 0.342
non-commodity or non-centrally coordinated items
or services
N = 65
that respondents expect a continued shift toward cen-
tral coordination over the next three to five years.
A positive (although not strong) relationship also exists
between firms that believe their current design promotes
the attainment of supply objectives and the reporting
level of the highest procurement or supply officer. Firms
whose procurement and supply officers report to levels
closer to the highest executive of the business are more
likely to believe their current organizational design is
effective. As indicated under Research Question 4, the
use of regular strategy/performance review presentations by
the CPO to the president or CEO correlates most closely
with respondents who indicate that their current design
supports the realization of supply objectives.

Finally, no statistical relationship exists between a firm’s
size and the perception of how well a firm’s current orga-
nizational design promotes the attainment of procure-
ment and supply objectives. Smaller firms are as likely as
larger firms to perceive that their current organizational
design is effective, even though fewer smaller firms per-
ceive their design as leading-edge or innovative. Responses
to a separate question indicate that only 17 percent of
smaller firms consider any part of their organizational
design as leading-edge or innovative. Nearly 23 percent of
medium firms and over 45 percent of larger firms consider
some part of their organizational design to be leading-edge
or innovative. Innovation in organizational design likely
represents a different construct from effectiveness in
design.
Research Question 6: What Is the Relationship
Between the Reporting Level of the Highest
Procurement or Supply Management Officer
and Current and Expected Design Features?
The a priori intent of this question was to investigate
whether higher reporting levels correlate to a specific
set of organizational design features. The correlations
between the reporting level of the highest procurement
or supply management officer and current and expected
organizational design features demonstrate no statistical
relationships. This is because the three segments (smaller,
medium and larger) indicate a comparable reporting level
for the highest procurement officer. In fact, smaller firms
are actually more likely to have the highest procurement
officer reporting one level from or directly to the highest
executive in the firm than are medium-size and larger
firms. This is not surprising given the simpler structures
maintained by smaller firms. Limited variability across
the reporting level of the highest procurement or supply
management officer prevents any meaningful compar-
ison against organizational design characteristics and
features.
CONCLUSIONS AND MANAGERIAL
IMPLICATIONS
This section extends the findings just presented to
draw conclusions and, where appropriate, discusses the
managerial implications of those conclusions. Readers
should bear in mind that the data presented here relied
on responses from industrial firms based in the United
States. These implications may not apply across cultures
or for non-industrial organizations.
1. A Higher-Level Procurement Officer Is Critical to
Organizational Design Effectiveness.
The importance of a higher-level chief procurement
officer who has access to the highest executive levels is
evident throughout this research, particularly for medium
and larger firms. Furthermore, regular strategy and per-
formance review presentations by the chief procurement
officer (CPO) to the president, CEO or board of directors
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The Use of Organizational Design Features in Purchasing and Supply Management
Table IX
RESEARCH QUESTION 5: RELATIONSHIP BETWEEN
EFFECTIVE DESIGNS AND PLACEMENT OF AUTHORITY,
REPORTING LEVELS AND SIZE
Current design promotes
the achievement of supply
objectives
Correlation: 0.235
Current placement of
Sig. (2-tailed): 0.002
decision-making authority
N: 171
Current reporting level of Correlation: 0.229
highest procurement or Sig. (2-tailed): 0.003
supply officer N: 171
Correlation: 0.053
Firms size based on sales Sig. (2-tailed): 0.497
N: 165
is also an essential component of effective designs. For
larger firms, five of the top 10 features that correlate with
an effective design (Table VIII) relate to executive posi-
tions and higher reporting levels.
It is not the formal supply position that makes this design
feature important. Rather, the visibility and resources asso-
ciated with such a position in the corporate hierarchy,
on a par with other functional executives, are critical. Of
course, every functional group within a firm can make
this same point regarding its need for an executive
reporting to the highest organizational levels. Purchasing
executives must make the business case why they should
have a senior executive who is on a par with other func-
tional executives.
It is not likely that many of the design features pre-
sented here (or other progressive supply strategies) will
become a reality without an executive champion who
has the authority and resources to make necessary changes.
The research evidence presented here is quite clear —
companies that seek advantages from their organiza-
tional design must consider the importance of a higher-
level procurement officer as well the reporting level of
that position.
2. Firm Size Affects the Type and Intensity of the
Design Features Put in Place.
Firms that differ widely in terms of size also tend to
differ in terms of scope, complexity and available resources.
As a result, each segment viewed the need to put in place
certain design features differently. The partitioning of
the total sample based on size allowed meaningful com-
parisons and contrasts between the segments. Supply
managers should review those activities that correspond
to their particular segment rather than thinking in terms
The Journal of Supply Chain Management | Summer 2004 13

The Use of Organizational Design Features in Purchasing and Supply Management
of a combined sample or what firms in a different seg-
ment plan to do. Some features that larger firms plan
to emphasize, for example, simply are not applicable
to smaller firms.
Although the segments have a number of design fea-
tures in common, they also emphasize features that sup-
port their unique requirements. For medium-size and
larger firms, this means relying on features that support
coordination and integration across the supply chain.
On the other hand, some features are common to both
smaller and larger firms. In particular, an expected
emphasis on including suppliers on product develop-
ment teams is a common design feature for all three
segments.
3. A Gradual Shift Toward Centrally Coordinated
or Centrally Led Purchasing Should Continue.
Throughout purchasing history, purchasing authority
has shifted between centralization and decentralization.
The data from this study reveal that many supply man-
agers, but certainly not all, will witness a shift toward cen-
trally led purchasing control or coordination, at least for
some decisions and activities. What distinguishes this
period from others is the intense cost pressure brought
about by global competition. An inability to raise prices
promotes the coordination of worldwide purchasing activ-
ities and the consolidation of purchase volumes in an
effort to minimize total supply costs.
Progressive supply managers should think about orga-
nizational design as a way to coordinate purchasing
activities without necessarily having to group purchasing
personnel in a central location or to sacrifice responsive-
ness to individual locations or sites. In fact, some pur-
chasing activities should remain at a decentralized level,
particularly those involved with day-to-day materials and
supplier management. Some researchers refer to this as a
hybrid approach to decision-making authority (Leenders
and Johnson 2000).
Centrally led does not necessarily mean central con-
trol at the corporate level. Centrally led initiatives and
leadership can also take place at the business unit level.
Furthermore, some researchers are not convinced that a
shift toward central control will necessarily occur. Leenders
and Johnson (2000, 2002) document organizational moves
in both directions. They observe that for many purchasers
the decentralized state is the stable one, and the hybrid
and centralized modes are counter to their personal
preference.
Firms that expect to move toward centrally led or cen-
trally coordinated purchasing should consider features
that support this type of model. These include:
• Centrally coordinated commodity teams
• Formal positions that separate strategic and tac-
tical supply responsibilities
• Lead buyers to manage non-centrally coordi-
nated items
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• Strategy review and coordination sessions
between functional groups and locations
• Higher-level chief procurement officers
These features should enable organizations to capture
the benefits of central coordination while avoiding the
negative perception that internal users or sites often
associate with central control.
Other design features that should become more widely
used focus on providing a centrally coordinated view of
supply chain management. These include an executive
buyer-supplier council to coordinate supply chain activi-
ties with suppliers and an executive position responsible
for coordinating supply chain activities. These features
correlate closely with larger firms that say their current
design promotes the attainment of procurement and
supply objectives.
4. The Use of Teams Will Remain a Popular and
Even Growing Design Option.
A continued reliance on teams supports Carter and
Narasimhan’s (1996a) proposition that a flattening of
organizations will continue through the increased use of
self-managed teams. While the use of teams as a design
feature will remain popular, few studies have established
a clear connection between teaming and higher perfor-
mance, and even fewer have assessed the impact of
teaming on corporate performance (Wisner and Feist
2001). Although groups (i.e., teams) can yield the kinds
of benefits envisioned by their builders, they also poten-
tially have a less desirable side. They can waste the time
and energy of members, enforce lower rather than higher
performance norms, create patterns of destructive con-
flict within and between groups and make notoriously
bad decisions. Groups can also exploit, stress and frustrate
members — sometimes all at the same time (Hackman
1987). Supply managers should plan for and use teams
selectively, remembering the barriers to their effective
use as well as the factors affecting team success (Trent
2004). For a discussion specific to the use of purchasing
teams and the role they play in enhancing overall firm
competitiveness, see Johnson, Klassen, Leenders and
Fearon (2002).
5. If Coordination and Integration Across the
Supply Chain Remains a Challenge, Then
Organizational Design May Be Part of the Answer.
The objectives a firm hopes to achieve will certainly
influence its organizational design. If supply managers
wish to achieve increased coordination and integration
within and across the supply chain, they may select design
features that support this goal. In fact, a review of Table
VII suggests that many of the design features that show
expected growth and usage over the next several years
appear to relate to coordination and integration. Organi-
zational design supports three kinds of integration —
cross-functional, cross-locational and cross-organizational
(Monczka 1997).

Coordination across functions and organizations is
becoming increasingly important to supply managers.
Carter and Narasimhan (1996a) noted this trend when
they said the focus in purchasing and supply management
will shift from functional coordination to managing the
interfaces of purchasing and supply management with
other functional units, thus leading to “management of
the white space.” Purchasing and supply managers will
increasingly rely on organizational design features to help
them manage the strategic connections with other func-
tional groups as well as connections across organizational
boundaries.
6. Collocation of Procurement Personnel Will
Become an Important Part of the Organizational
Design Model.
This conclusion supports an observation made by
Pearson, Ellram and Carter (1996), who noted that a closer
working relationship with research and development,
marketing and engineering would clearly enhance the
purchasing function’s reputation. Smaller, medium-size
and larger firms all rate the physical collocation of pur-
chasing personnel with other organizational groups as
an important design feature. Collocation with operations,
an important internal customer, can provide insight into
supplier performance; awareness of supply requirements
in terms of cost, quality, delivery and cycle time; and an
understanding of external capacity, material and service
needs. Collocation with technical personnel yields insight
into material specifications, product and process tech-
nology requirements and new product requirements.
While collocation has not evolved as highly with the
demand side of the supply chain, some firms will likely
conclude that collocation with marketing supports the
integration of demand and supply planning. Collocation
with marketing may also offer early insight into new
product ideas as well as planned demand shifts due to
product promotions or price changes.
Supply managers must consider a number of issues
relating to collocation. First, collocation is not about
simply working in the physical presence of other groups.
Rather, it is about embedding the purchasing professional
into the planning systems of the other group. Second,
supply managers must determine the amount of time to
allocate to collocation. Will purchasing professionals
collocate full-time or part-time? Finally, what reporting
relationships best support collocation? In a typical collo-
cation model, the purchasing professional maintains a
dotted-line reporting relationship to the collocation group
with a solid-line reporting relationship to purchasing.
7. Supply Organizations Will Shift Gradually From
a Vertical to a Horizontal Perspective.
A process-orientated organization is designed around
supply chain processes, such as supplier evaluation and
selection, new product development, demand and supply
planning or customer order fulfillment. The extensive
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The Use of Organizational Design Features in Purchasing and Supply Management
use of cross-functional teams, particularly teams that fea-
ture full-time members, is one indication of a shift toward
a process orientation. An expected growth in organizations
designed around procurement and supply processes (see
Table VII) is another indication of this shift. When orga-
nizing around processes, cross-functional team partici-
pants work concurrently in an environment that features
the horizontal (i.e., cross-functional) flow of information
across the supply chain.
An expected movement toward horizontal or process
design features supports Carter and Narasimhan’s (1996a)
proposition that companies would increasingly structure
themselves along “key business processes” that extend
from suppliers, across functional boundaries and into a
firm’s customer base. Evidence from this research reveals
that this change is underway, particularly for medium-
size and larger firms.
In the shift from a functional to a process orientation,
the process rather than the functional group becomes
the focal point of an organization’s design. It is unlikely
that firms will ever move totally away from functional
groupings. The distribution of functional resources into
full-time process units or teams would dilute the functional
expertise and knowledge required to manage a business
effectively. The need to maintain a critical mass of func-
tional knowledge ensures that some functional structure,
albeit a diminished one, will remain. Moreover, the dra-
matic changes surrounding a shift from a functional to
a process orientation ensure that any changes will be
gradual.
8. New Product Development Teams Will
Increasingly Include Purchasing and Supplier
Representatives.
An expected shift toward a process orientation as well as
collocation of purchasing with technical personnel pro-
motes increased purchasing involvement with new
product development teams. Many companies are dis-
covering that, when it comes to product design and
development, linkages between engineering, purchasing,
manufacturing and key suppliers strengthen the design
and development process (Milligan 2000). In the best
scenarios, development teams can rely on purchasing to
identify suppliers for early design involvement or for
production needs, monitor supply markets and trends,
question specifications and help the producer meet its
target costs.
A step beyond purchasing involvement in new product
development is supplier involvement. North American
firms have traditionally lagged Asian and some European
counterparts in their involvement of suppliers during
new product development (Womack, Jones and Roos
1990; Monczka et al. 2000). Although supplier involve-
ment sounds easy, widespread implementation can be
quite a different matter. Earlier research revealed that
confidentiality of information is a major concern to
The Journal of Supply Chain Management | Summer 2004 15

The Use of Organizational Design Features in Purchasing and Supply Management
most purchasers (Monczka and Trent 1998). Other barriers
include not knowing how to pursue early involvement,
maintaining too many suppliers for a given commodity
and relationships that are adversarial rather than coop-
erative. Given the expected importance of new product
teams that include suppliers, overcoming these barriers
must become a managerial priority.
LIMITATIONS AND SUGGESTIONS FOR
FUTURE RESEARCH
Like most research projects, this one has its share of
limitations. One limitation that affects the generaliz-
ability of the research results relates to the use of U.S.
respondents from the industrial sector. Some countries
practice very different supply management techniques
compared to their U.S. counterparts, which could affect
the kinds of organizational design features they put in
place. Furthermore, non-industrial firms, a large segment
of the economy excluded from this research, may per-
ceive organizational design issues differently than man-
ufacturing firms.
A second limitation involves the use of cross-sectional
data, which prevents the identification of changes that
preceded data collection or changes that will occur after
data collection. The use of cross-sectional data makes it
difficult to validate the expected organizational design
changes reported here or to speculate on the causes that
drive an organization to select a certain design feature.
A third limitation is one that affects most survey research.
Since individuals rather than groups typically complete
surveys, can one individual speak for an entire organiza-
tion? Does that individual have the insight to evaluate
the survey questions accurately? Ideally, individuals who
are not comfortable with the questions asked would self-
select out of the sample by not responding, collaborate
with others who have the necessary insight or forward
the survey to someone who is capable of responding
correctly.
A final limitation concerns the database that provided
respondent names. While the Institute for Supply
Management™ membership roster provides a comprehen-
sive directory of U.S. supply professionals, by no means
does it include all members of the profession or all orga-
nizations that have purchasing and supply groups. This
research was limited to members of a specific professional
organization, many of whom work for companies that
are likely quite sophisticated in purchasing and supply
management.
This research topic also offers opportunities for a
future stream of work related to organizational design.
First, organizational design is not a topic limited to U.S.
firms. Similar research involving non-U.S. firms could
provide interesting insights and comparisons. Design
research involving non-industrial organizations would
allow for meaningful comparisons against industrial
organizations.
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Research opportunities also exist to explore the impact
that organizational design has on supply effectiveness.
It is important to broaden the scope of future research
to identify the effect of various predictors on supply effec-
tiveness, including the effect of organizational design.
Future research could also study a narrower list of design
features in an attempt to identify those features that
relate most strongly to supply effectiveness.
Case studies can also play an important role in future
research. This study evaluated 29 design features as line
items in a survey. Qualitative studies involving a cross-
section of firms can provide detail about those features
that will be the most relevant over the next three to five
years. For example, if the separation of strategic and tac-
tical responsibilities increases, what tasks do supply man-
agers consider strategic? If supplier councils become
more important, how do leading companies structure
and manage them?
Next, a longitudinal approach to data collection could
validate trends and changes affecting organizational
design. Because respondents may be overly optimistic
or uninformed when projecting from a point in time, the
projections they make are of dubious accuracy (Monczka
and Trent 1995).
This research did not consider the impact of procure-
ment outsourcing as it relates to organizational design.
Future research should consider the emerging trend of
procurement outsourcing and its design implications.
Finally, this research did not develop procurement orga-
nizational models and the guidelines for selecting a model
or structure based on firm strategy, size, industry, pro-
duction methods or technology. Research opportunities
exist to develop robust models of organizational design
that consider a variety of factors beyond those included
in this research.
CONCLUSION
In 2001, the Corporate Executive Board published a
report that said purchasing executives, to be successful,
must consider how their organizational structure can
enable substantial improvements in performance and
operational excellence. Additionally, a research study has
proposed that firms must excel within four enabling areas
before they can pursue complex and progressive supply
strategies (Monczka 1997). These areas include measure-
ment and evaluation, information technology, human
resource management and organizational design. An
effective design helps provide the foundation upon which
firms can pursue progressive supply strategies.
While other supply management topics may generate
more excitement than does organizational design, man-
agers should not overlook the role that an effective
design can play in enhancing supply management per-
formance. In today’s globally competitive environment,
managers cannot afford to overlook any area that has
the potential to improve performance.

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The Use of Organizational Design Features in Purchasing and Supply Management

Appendix
ORGANIZATIONAL DESIGN FEATURES EVALUATED BY RESPONDENTS
• Cross-functional or self-managed teams that manage some or all of the procurement and supply process
• Physical collocation between procurement and marketing personnel
• A corporate-level steering committee that oversees companywide procurement and supply initiatives
• Formal procurement and supply strategy coordination and review sessions between business units or
divisions
• Centrally coordinated commodity teams that develop and implement companywide supply strategies
• An executive buyer-supplier council or committee that coordinates supply chain activities between your firm and
your key suppliers
• International procurement offices (IPOs) that perform or support various international duties
• Specific individuals assigned responsibility for managing key supplier relationships, including supply chain alliances
• Lead buyers or site-based experts designated to manage non-commodity or non-centrally coordinated items or
services
• Physical collocation between procurement and technical personnel
• Physical collocation between procurement personnel and key internal customers (such as operations)
• Regular strategy/performance review presentations by the chief procurement officer to the president or CEO
• Regular strategy/performance review presentations by the chief procurement officer to the board of directors
• A formal cross-functional group or team responsible for demand and supply planning
• An executive position responsible for coordinating and integrating key supply chain activities from supplier
through customer
• A shared-services model and structure that coordinates common activities or processes across business units or
locations
• On-site suppliers to perform inventory management activities such as ordering, replenishment and inventory
control
• A formal business advisory board that includes your company, your key customers and your key suppliers
• Formal separation of strategic and tactical procurement and supply responsibilities, personnel, positions and
structure
• A higher-level chief procurement officer who has a procurement and supply-related title
• A matrix reporting structure that features procurement and supply professionals reporting to more than one busi-
ness, region or manager
• An organization designed around procurement and supply processes (such as supplier development) rather than
a functional or vertical perspective
• Formal value analysis/value engineering groups
• New product and/or process development teams that formally include procurement and supply
representatives
• Membership and participation with a recognized purchase consortium
• Formal strategy coordination and review sessions between functional groups
• New product and/or process development teams that include suppliers as members or participants
• A virtual procurement organizational design featuring individuals, groups and/or departments linked through IT
systems
• Project teams that work on specific procurement and supply tasks (rather than teams with continuous
assignments)

18 The Journal of Supply Chain Management | Summer 2004