The Influence of Collaboration in Procurement Relationships

TL;DR

This paper investigates how collaboration in procurement relationships affects supply chain performance, revealing that many firms underutilize collaborative strategies despite potential benefits.

Contribution

It identifies key factors influencing collaboration and demonstrates that current procurement practices do not fully leverage collaborative relationships.

Findings

Information sharing and trust significantly impact collaboration

Collaboration positively influences supply chain performance

Many firms still underutilize collaborative strategies

Abstract

Supply Chain Management often requires independent organizations to work together to achieve shared objectives. This collaboration is necessary when coordinated actions benefit the group more than the uncoordinated efforts of individual firms. Despite the commonly reported benefits that can be gained in close relationships, recent research has indicated that collaboration attempts between purchasing firms and their suppliers have not been as widespread as anticipated. Using a survey of procurement professionals, this research investigates how the purchasing function utilizes collaboration in its supply chain relationships. Structural equation modeling is used to identify how information sharing, decision synchronization, incentive alignment, collaborative communication, and trust impact collaboration, as well as how collaboration impacts performance. Results from 86 survey responses indicate that firms are still not fully utilizing collaborative relationships.