In light of the fact that purchasing is directly linked to overall organizational success Carter & Narasimhan, 1996, Ellram et al., 2002, Goh et al., 1999 and Tan et al., 1998, senior management directives pertaining to a firm's procurement activity have become increasingly commonplace in today's organization (Poirier & Bauer, 2001). Much of this attention is driven by the understanding that initiatives focusing on the inbound supply chain can assist the firm in reducing costs Ojo & Lamb, 2001 and Shirouzu, 2002, increasing velocity to market Davis et al., 2002, Griffin, 2002, Stalk, 1988 and Suri, 1998, and enhancing the value proposition to the end user Day, 1999, Magretta, 1998 and Porter, 2001. Thus, previous writings have clearly articulated that attending to the organizational buying activity can provide a basis for securing a competitive advantage.
In an attempt to harness the gains that attending to the inbound supply chain can yield, progressive buying organizations are systematically managing their supplier base by monitoring critical operational (task-related) metrics (Giunipero & Brewer, 1993). A recent study reports that 85% of the firms surveyed have implemented a formal monitoring system to track supplier performance so as to realize cost, time, and quality improvements (Trent & Monczka, 1998). The same study also mentions that 90% of the CEOs and presidents at these firms expressed interest in reviewing and evaluating purchasing performance measures on a regular basis. As such, the question has become one of identifying the metrics that a firm must track in order to realize the full range of benefits that can accrue from effectively managing its supplier portfolio.
The supplier selection (or organizational buying) literature has long held that product quality, delivery, price, and service are the key attributes that are used to assess the performance capabilities of vendors Dempsey, 1978, Dickson, 1966, Evans, 1981, Lehmann & O'Shaughnessy, 1974, Lehmann & O'Shaughnessy, 1982, Matthyssens & Faes, 1985 and Wilson, 1994. This body of knowledge has readily established that the “key buying criteria” used by a business customer to evaluate a supplier will vary across product categories (e.g., the content and structure of the choice criteria utilized by firms to acquire forklifts will differ in relation to the factors that will influence the purchase of MROs). Whether the content and structure of the decision criteria used to evaluate a supplier hold within a given product category, however, remains largely unexplored. To this point, some academics have suggested that it may be necessary to develop a theory for each of the various product classes (Choffray & Lilien, 1978). Thus, the aim of this manuscript is to answer this call by investigating whether differences exist within the decision criteria used by manufacturers to evaluate suppliers from whom they purchase an array of component parts ranging from commodities (e.g., fasteners or capacitors) to highly customized inputs (e.g., printed circuit boards).
In light of the possibility that the decision criteria used by business customers in evaluating their component parts’ suppliers may vary by industry Bennion & Redmond, 1994, Giunipero & Brewer, 1993, Jackson, 1985, Oliver, 1997 and Sharma & Achabal, 1982, it is necessary to select a homogenous setting so as to reduce the unnecessary noise that may arise from situational idiosyncrasies (Cook & Campbell, 1979). Since electronics manufacturers spend anywhere from 22% to 53% of their annual sales revenues on the procurement of goods and services from suppliers Anderson et al., 1987 and Killen & Kamauff, 1995, this effort seeks to advance a purchase evaluation theory for the procurement of component parts within this context.
