Factors that drive purchasing and supply management's use of information technology

Abstract

Purchasing and supply leaders continually search for ways to improve the quality, delivery, and cost of production inputs. Their participation in these proactive supply chain activities can be a significant driver of purchasing and supply management's use of information technology (IT). Using a transaction cost analysis perspective, we surveyed purchasing and supply professionals at the director level or above from the Institute for Supply Management database to determine whether five common purchasing activities increase the need for purchasing professionals to use IT. The purchasing activities studied are (1) supplier alliance; (2) market monitoring; and (3) cost management (including cost analysis, total cost of ownership, and target costing). Of these activities, supplier alliances and cost analysis were found to significantly influence purchasing and supply management use of IT. In addition, industry effects were also discovered, where purchasing professionals in organizations that focus on producing high technology products and services utilize IT to a greater extent than purchasing professionals in traditional manufacturing and service organizations. The findings suggest that while there is evidence of a relationship between purchasing and supply management's participation in proactive activities and actual use of IT, more research is needed to understand how information and technology can better facilitate purchasing and supply management activities.

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