Purchasing and supply management practices in customer value creation

Abstract

Purpose How do purchasing and supply management (PSM) practices create value for the business customers of a focal company? The purpose of this study is to approach the question by investigating the delivery of value over three tiers in the supply chain, that is, from suppliers to the focal company, and further to the focal company’s customers following value chain logic. Design/methodology/approach The study is carried out as a qualitative interview study in four focal companies operating in business-to-business markets. A total of 32 interviews are conducted targeted to managers and directors of sales and marketing, purchasing, product/service development and business units. Findings The study unveils the characteristics and interplay of supplier-oriented and cross-functional PSM practices in customer value creation. The findings indicate that cross-functional integration between purchasing and the other functions of a focal firm is most beneficial in improving supply flexibility to fulfill customer preferences, identifying new supplier offerings for the customer and facilitating time-to-market of new products. Research limitations/implications This study enhances managers’ understanding of the characteristics of the non-financial benefits of purchasing and the role of PSM practices in customer value creation and business success. The findings are indicative of potentially successful practices in the contexts studied. Originality/value This study contributes to the supply chain management literature on the benefits of the purchasing function by highlighting the value created for the customer of a focal company. It also extends the discussion in the supply chain management literature on customer value creating interaction processes in business relationships by focusing on PSM practices.