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Few executives would argue against the notion that their firms are under intense pressure to manage costs. Unfortunately, in an effort to enhance their financial position industrial customers have pursued financial strategies that can affect supplier-buyer relationships quickly and sometimes irreparably. This article focuses on the negative outcomes that can result when industrial customers take actions that affect adversely the financial standing of their suppliers. Research findings presented here will show that strategies that are financially myopic not only reduce the probability of receiving preferential treatment from suppliers, they can also affect other important dimensions of the supplier-buyer relationship.

Since teams continue to be an important part of an organization's design, understanding how to enhance their success should be a primary objective. Research consistently shows that team leaders exert a disproportionate effect on the success or failure of organizational work teams, making leadership an area that managers cannot ignore. While creating an organizational vision or inspiring others to follow are important leadership traits when viewing leadership at a very high level, the reality is that most team leaders work at a demanding operational level, which requires specific knowledge and skills. This article presents the topic of team leadership by discussing why team leadership should be of interest to organizational managers, presenting various knowledge and skill areas where leaders should demonstrate proficiency, and providing an assessment tool that helps organizations evaluate leader effectiveness.

SUMMARY This article presents findings from a study examining organizational design features used by organizations in pursuing their procurement and supply objectives. The research purpose was to gain a better understanding of the organizational 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 management effectiveness. Given the dynamics of the current competitive global supply landscape, organizational design concerns are critical to sustained organizational success.

SUMMARY As organizations think about the best way to respond to competitive demands, the development of global strategies and approaches, including global sourcing strategies, will become an increasingly attractive option. Since most organizations do not have in place well-developed global sourcing strategies, improvement opportunities are indeed attractive and largely unrealized. Realizing these opportunities requires a detailed understanding of global sourcing. Achieving this understanding demands replacing anecdotal perceptions and accounts of global sourcing with research-based findings. These findings will help supply managers better understand what it takes to shift from basic international purchasing to integrated global sourcing strategies and approaches.

The ability to satisfy customer demands while responding to relentless competitive pressure requires creative and often complex approaches to managing a firm's supply chain. Perhaps more than any other area, executive managers increasingly believe that a concept called globalization offers the best opportunity to achieve major performance gains. One area where many companies can begin to capture the benefits of globalization is global sourcing, which involves the worldwide integration of engineering, operations, and procurement centers within the upstream portion of a firm's supply chain. Unfortunately, capturing the benefits potentially offered by globalization is often limited by a lack of understanding concerning how to pursue this important topic. To help overcome this limitation this article presents a five‐level continuum that illustrates the differences between international purchasing and global sourcing, examines the factors that are the most critical to global success, and concludes with a brief discussion of future global sourcing directions.

Few studies have definitively established a clear connection between teaming and higher performance, and even fewer have quantitatively assessed the impact of teaming on corporate performance. If using work teams is not a guarantee of greater effectiveness, then the challenge becomes one of creating an environment that increases the likelihood that teams will be successful. This article presents a work team planning guide that identifies the critical issues and topics that organizations should consider when planning to use work teams effectively. Primary research, training and development experience, and an integration of team‐based literature all contribute to the ideas presented here.

Competing successfully on a worldwide basis demands new and innovative ways to identify and reduce supply chain costs. Buyers and sellers who view each other as strategically important must consider non-traditional pricing practices in their pursuit of competitive market advantages. This discussion presents cost-driven pricing as an innovative approach for managing the costs of selected items over the life of a purchase contract. Without creative cost management approaches and techniques, supply-chain members risk losing ground to those companies that truly understand how to cooperate to succeed. This article discusses when to apply cost versus price analytic techniques, develops the concept of cost-driven-pricing and contracting, presents a best-practice example that illustrates the cost-driven pricing concept, and identifies the potential risks that must be managed within cost-driven agreements.

Most firms compete in industries that demand continuous, and often dramatic, improvement across a variety of performance areas, including cost, quality, delivery, and cycle time. Exceeding customer demands requires creative and often complex approaches to managing a firm’s supply chain. One area where many companies can begin to realize a new source of benefits is global sourcing, which involves the worldwide integration of engineering, operations, and procurement centers within the upstream portion of a firm’s supply chain. For executive leaders who are under intense pressure to achieve continuous improvement, the development of global sourcing processes and approaches may well offer the next generation of performance breakthroughs.Capturing the benefits potentially offered by globalization is often limited by a lack of understanding concerning how to pursue global sourcing. To help overcome this limitation this article summarizes the international purchasing and global sourcing literature, defines the d...

Not long ago, most North American and European companies believed that how they influenced and managed suppliers made little diff erence in their overall performance. This perception changed, however, when global competitors showed that working with suppliers could create competitive market advantages in cost and cycle time reduction, on-time delivery, and access to product and process technology. Nowhere has the benefit of progressive supply chain practices become more evident than in supporting product and service quality, which remains a core requirement for competing successfully on a global basis. This article addresses the increasing importance of suppliers, particularly in supporting product and service quality requirements, and presents a series of questions concerning how well purchasing and sourcing activities contribute to total quality. It also provides a profile of organizations that are best positioned across four enabling areas to pursue advanced supplier qualityrelated activities.

Understanding the changes and trends affecting purchasing requires replacing anecdotal evidence with research-based observations. Using data collected annually from leading firms worldwide, this article details the real and projected changes and trends that have affected and will continue to affect purchasing and sourcing professionals. These changes and trends appear within seven areas: (1) performance improvement requirements, (2) supplier and purchasing/sourcing importance, (3) organization, (4) systems development, (5) performance measurement, (6) supply base management, and (7) purchasing responsibilities and activities. A lack of awareness concerning these trends by purchasing professionals limits their ability to anticipate change and respond in a way that will create competitive advantage for their organization.

INTRODUCTION There is little question that firms worldwide are experiencing relentless pressure to innovate and improve. Many are responding to this pressure by creating organizational structures designed to promote cross-functional and cross-company communication, coordination, and collaboration. To support this effort, cross-functional sourcing teams have become increasingly important, particularly as firms attempt to develop leading-edge sourcing strategies and practices.[1] While 80 percent of the major U.S. firms surveyed plan to emphasize the use of sourcing teams through the remainder of the 1990s, the success of this approach will vary widely from company to company and team to team, even across teams within the same business.[2] When executed properly, the cross-functional team approach can bring together the knowledge and resources required for responding to new sourcing demands, something traditional functional structures are often incapable of doing. However, in a classic work 35 years ago, Likert noted that groups and teams can accomplish much that is good, or they can do great harm. There is nothing implicitly good or bad, weak or strong, about teams, regardless of where an organization uses them.[3] Because most firms expect to use teams to support procurement and sourcing decision making, it is important to understand how to effectively manage the cross-functional sourcing team process. Unfortunately, researchers who study teams rarely reach the same conclusions about the key factors affecting team success. The study of teams is complex because no two teams or organizations are the same. A factor affecting one team may have little impact on another. Each team is a unique entity displaying its own behavior and nuances. There is one variable, however, that exerts an unusually strong and consistent impact on team success - the effectiveness of the formal team leader. The purpose of this article is to examine the critical role that team leaders play and the challenges they face in a cross-functional sourcing team environment.[4] First, the article outlines the important relationship between leadership and other variables critical to the sourcing team process. Second, the specific responsibilities and requirements that sourcing team leaders must satisfy to be effective are discussed. The final section details three assessment scales used to help identify a sourcing team leader's behavioral style and ability to satisfy critical leadership requirements. The use of these scales highlights opportunities for development and growth at the team leader level. LINKAGE BETWEEN SOURCING TEAM LEADERSHIP AND TEAM SUCCESS Why should organizations concern themselves with team leadership? Does it really make that much difference? While many variables potentially affect cross-functional team success, the influence of the team leader is particularly important.[5] The team leader can affect a team's effort, cohesion, goal selection, and goal attainment. Further, only a formal team leader can perform many of the responsibilities associated with team leadership.[6] For example, the formal team leader almost always serves as the primary link between the team and the rest of the organization. Previous research relating leadership to team performance points out the absolute need for carefully selecting individuals who have the ability to satisfy the requirements and responsibilities of formal sourcing team leadership. Of all the variables potentially affecting a team, few exert as strong an influence on team performance as team leadership. This is true in part because the team leader is in a position to influence so many other variables that affect performance. An earlier study of sourcing teams identified a direct link between sourcing team leadership and other variables critical to team interaction and performance.[7] Overall, effective leadership demonstrates a strong and positive relationship to team performance. …

After years of experience and research, one might conclude that organizations are confident in their ability to optimize the use of teams. In reality, we do not have to look far to find instances where team performance falls disappointingly short. This article examines the reasons for the success or failure of three organizational work teams. Using information gained from structured interviews involving team members, team leaders, and managers, a set of value-added findings are reached that explain why a particular team was or was not successful. This paper also presents original quantitative research that examined a variety of factors that affect work team success. It presents insights into a set of important factors that can affect team performance, particularly new findings regarding team size as well as the kind of organizational team model employed. The article concludes with a set of recommendationsand policy implications derived from the research.

INTRODUCTION Within the United States, the organizational model featuring narrow, functional middle managers operating within a rigid, vertical, and functional alignment is rapidly becoming obsolete.[1] Firms can now benefit from an organizational structure that features suppliers, customers, and managers from different specialties crossing functional barriers and moving horizontally throughout the organization. If firms are to respond to changing competitive business conditions, they must change the way they think about organizations and their structures. Cross-functional and cross-boundary communication, coordination, and alignment have become critical components of this new way of thinking. Within the procurement process, cross-functional sourcing teams have become a major part of the new organizational structure. Cross-functional sourcing teams, as discussed here, consist of personnel from at least three functions brought together to achieve a purchasing or material's related assignment. This includes assignments where the team must consider purchasing goals or decisions involving supply base management. When managed properly, the cross-functional sourcing team approach can provide flexibility, multifunctional knowledge, and control and coordination mechanisms for fast responses to new competitive demands--responses that traditional structures or approaches usually cannot achieve.[2] A recent study revealed that almost 70 percent of the firms surveyed planned to stress the use of cross-functional teams to support sourcing decisions through 1997.[3] Furthermore, finns expect the use of cross-functional teams to have one of the highest positive impacts over the next several years of any planned sourcing strategy, procurement management approach, or process. There is little question that U.S. firms are moving toward increased cross-functional (i.e., horizontal) integration and that teams are the primary vehicle to achieve this integration. Within procurement, cross-functional teams are increasingly looked on as an important way to enhance sourcing processes and effectiveness. While the cross-functional team concept is simple in theory, practical implementation is often difficult. Most firms must overcome decades of established business practices and formal functional reporting structures. True cross-functional integration requires a corporate culture of participative teamwork throughout all levels and across defined functional boundaries.[4] The need to develop teamwork and cooperation is a major challenge when developing a cross-functional organization. This article addresses the need for an increased understanding of the factors affecting the success of an important organizational work team--the cross-functional sourcing team. Because negative outcomes from team interaction are as possible as positive outcomes, organizations must have an understanding of the factors contributing to cross-functional sourcing team effectiveness. This article discusses the factors and other key findings, as identified during a major research project, that relate directly to cross-functional sourcing team effectiveness. CROSS-FUNCTIONAL SOURCING TEAM EFFECTIVENESS RESEARCH PROJECT Researchers at Michigan State University conducted a study during 1992-1993 that evaluated a number of factors potentially affecting cross-functional sourcing team performance. The study, titled the Cross-Functional Sourcing Team Effectiveness Research Project, collected data from 107 cross-functional sourcing teams at 18 U.S.-based corporations, with more than 700 individuals participating.[5] The motivation for this study was a recognition that the use of cross-functional sourcing teams, in itself, is no guarantee of improved purchasing or organizational effectiveness. A critical need existed to replace anecdotal accounts of team effectiveness with research-based answers. The primary goal of this project was to expand the knowledge and understanding of cross-functional sourcing team interaction and effectiveness. …

Competing in the mid‐to‐late 1990s will require world‐class firms to rely increasingly on their suppliers while at the same time developing more aggressive and executive supported purchasing, supply base and sourcing strategies, because suppliers′ performance is not meeting expectations of purchasers. This finding was one result of a research effort with over 100 different firms over a five‐year period to determine the importance of the supply base, current supplier performance and emerging supply base/sourcing strategies being used by leading firms to contribute to competitive advantage. It was further determined that significant opportunities exist to accelerate development of supplier capabilities and performance. Identifies and discusses continuous improvement and breakthrough supply base and sourcing strategies to achieve supply base improvement.

Robert M. Monczka is Professor of Strategic Sourcing and The National Association of Purchasing Management Professor at Michigan State University, where he also earned his doctoral degree. Dr. Monczka has authored a number of articles and books, and has conducted research and consulting work in the areas of procurement management and sourcing strategy. Robert J. Trent is currently a Ph.D. candidate in purchasing at Michigan State University. His research interests include the impact of global competition on the purchasing function. Prior to his return to Michigan State University, he held various purchasing and materials positions at Chrysler Motors. There is a need to develop an understanding of functional globalization requirements in purchasing, at both the firm and industry levels. Since this issue has not been addressed, functional purchasing executives may be wondering what the appropriate worldwide sourcing strategy should be for their firm. This article presents a framework that can be used to help identify the worldwide sourcing strategy that best supports a firm's competitive requirements. It recognizes that not all industries require the same level of worldwide sourcing for a firm to be a leading edge competitor. This framework guides managers through an evaluation of the factors that impact a firm's worldwide sourcing strategy development as well as the requirements to pursue an appropriate sourcing strategy. If executive management can identify the strategy response necessary to meet the competitive challenges of the 1990s, it can develop the structure and the systems to support that strategy. This provides a major contribution toward the attainment of a firm's strategic performance objectives. The 1980s witnessed the rise of the global corporation. Firms in many industries developed worldwide strategies to support economies of scale and to develop a presence in markets throughout the world. Throughout the discussions of globalization, it appeared that to be a global firm was good and to not be global was bad--without much in between. Unfortunately, two important areas are usually neglected when discussing the global corporation. First, contrary to popular belief, all companies do not compete in global industries. A global industry is one in which there is some competitive advantage gained by coordinating and integrating activities on a worldwide basis.|1~ Developing production economies of scale or using relatively uniform corporate strategies for entire regions of the world are characteristics of global industries. Some industries, however, do not currently require a global perspective. The second area of neglect is that global discussions often occur at a company-wide strategic level and not at the functional strategy level, which has its own needs relating to different levels of globalization. There is a need to develop an understanding of functional globalization requirements in purchasing at the firm level. Since this issue has not been addressed, purchasing executives may be wondering what the appropriate worldwide strategy should be for the purchasing function within their industry. There is little doubt that competitive pressures during the 1990s will force firms in a wide variety of industries to take actions described as "global." We must recognize, however, that globalization does not simply take on two extremes--either your firm is global or it is not. Furthermore, the level of global pressure across various functions can be different within the same firm. Executives and top management require a systematic approach to address this important issue within purchasing. Top management people in purchasing must decide to what extent their function should embrace worldwide sourcing--and develop strategies accordingly. To compete in some industries, it is possible that purchasing will require an even stronger worldwide perspective than will marketing. There are different degrees of international and global involvement that characterize a firm's worldwide sourcing strategy. …

Evolving purchasing/sourcing strategies necessary for competitive success during the 1990s are identified. The strategies, identified by purchasing executives of leading‐edge Fortune 100 firms during field interviews and a Delphi process, reflect purchasing′s growing contribution to firms′ overall competitive performance. Also included is a discussion of supply base optimisation and total quality management at the supplier as necessary prerequisites for the implementation of increasingly sophisticated strategies which follow a progression to achieving an integrated set of purchasing strategies. There is also a discussion of the linkage between corporate and purchasing strategy.

The 1980s witnessed rapid competitive changes globally. As U.S. firms struggled to maintain world market share, they relied increasingly on international part sourcing to sustain competitiveness. As many U.S. firms became more experienced with international procurement, worldwide sourcing shifted from a reactive to a proactive strategy intended to provide a competitive advantage. This article analyzes the growth of international sourcing within the firm as a four-phase development process. It also presents a hierarchical progression of international to global sourcing strategies and the characteristics associated with each strategy.