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Keywords Supplier relations, Purchasing, Supply, Costs, Alliances
Abstract Many firms have experienced significant benefits from engaging in supplier alliances. However, alliance relationships do not evolve in isolation. Support factors for supplier alliances include purchasing's accountability for their actions, the use of information technology, the perceived importance of the purchasing and supply management (PSM) function, and the degree of participation in strategic purchasing activities. In addition, PSM engages in cost and price-- related activities associated with supplier alliances, including total cost of ownership, understanding specific supplier costs, target costing, and market monitoring. Empirical results from a survey indicate that significant relationships exist between support factors, cost and price activities, and supplier alliance involvement by the PSM function. The exploratory findings suggest that support factors must be in place and continually improved to facilitate purchasing's involvement in alliances. PSM involvement in cost and price activities is also strongly related to supplier alliance participation. For purchasing firms to obtain long-term benefits from alliances with suppliers, purchasing professionals must continually provide valuable input into these relationships through their corporate influence, use of information technology, and participation in various proactive purchasing activities.
Introduction
Purchasing and supply management (PSn has been increasingly recognized as a critical element in effective supply chain management (Leenders and Fearon, 1997). Organizations purchase a large variety of goods and services, from production parts to transportation services to office supplies. In some cases, an organization's performance can be improved by closely aligning with strategic or key suppliers (Carter et al., 1998; Stuart, 1993). Purchasing organizations choose to pursue supplier alliances for a variety of reasons. Included among the drivers of purchasing alliances are cost reduction, service improvement and increased competitive advantage (Lambert et al., 1996).
The purpose of this exploratory study is to provide insights into PSM activities that are related to supplier alliance involvement. Support factors tested for their relationship with supplier alliances are accountability to management, information technology implementation, the perceived importance of the purchasing function, and strategic purchasing. Cost and price activities examined for their correlation with supplier alliance involvement are using total cost of ownership (TCO), understanding supplier costs, target costing, and market monitoring. First, prior studies in supplier alliances are presented. Next, support factors and cost and price activities are...