Corporate Strategic Procurement Mechanism And Applied Research

Purchasing has been changed from a managerial function to a strategic one during the past thirty years. As a new and effective strategic tool, strategic purchasing plays an important role on undergoing management innovation Chinese firms, especially on Chinese manufacturing firms. This study introduced capability and benefits into Transaction Cost Analysis framework, thus advanced it as a transaction costs/transaction benefits bilateral dynamic analysis method. Basing on this transaction costs/transaction benefits bilateral dynamic analyzes, the mechanism of strategic purchasing was explored from the two dimensions of the horizontal functions and the vertical process. On the operational level, this study advanced four operational patterns of strategic purchasing corresponding to various subject and object and analysis and tested the four influencing factors of strategic purchasing of Chinese firms, using sample of 121 manufacturing firms.Chapterl introduced the research background, pointed out the unsolved questions of theoretical research and remained problem of practice, and brought forewords the meaning of explaining strategic purchasing from a combined theory. Research questions put foreword followed by briefly introducing the research objective, research methodology, content and the main creative points.Chapter 2 made an introduction of related literature about strategic purchasing from three aspects. Firstly, researches about strategic purchasing in lately thirty years were reviewed categorically as initial research of strategic purchasing, conceptual framework of strategic purchasing, researches on level of strategic purchasing, influencing factors, researches on integrating the purchasing function and the corporate strategy, as well as empirical research on the relationship of strategic purchasing and firm's long-term performance. Secondly, several existing explains of purchasing's strategic mechanism were reviewed. Lastly, the contribution and limitation of Transaction Cost Theory(TCE) were commented followed by appraising several bilateral dynamic advancements of TCE basing on integration of multiple theory. The necessity of further theoretical integration was brought foreword.Based on the combination of the Langlios's transaction costs/capability bilateral dynamic analysis and the Dietrich's transaction costs/benefits bilateral dynamic analysis, transaction costs / transaction benefits bilateral dynamic analysis was advanced in chapter 3. Government structure had bilateral effect because of themultiple nature of the firm, while it also had dynamic effect because of the duple nature of Economic institute. The bilateral dynamic transaction costs/transaction benefits analyzes of three basic government structures, namely, firm, market and network, were presented. The alternation and evolution of government structure were also brought forth.The mechanism of sustainable competitive advantage improved by strategic purchasing was explored from two dimensions of the horizontal functions as well as the vertical process. Setting off from characters of information flow and knowledge flow, Chapter 4 figured out the distinctive aims and functions between traditional purchasing and strategic purchasing. Traditional purchasing aims at bringing-in capabilities to satisfy internal costumer. The "8" shape cycle information flow and the two-way knowledge flow indicated the network transaction nature of strategic purchasing. Functional model as well as function-based definition of Strategic purchasing were developed. Strategic purchasing comprised of bringing-in capabilities function and creating capabilities function, aiming at providing the firm capabilities which contributing the sustainable competitive advantage. The government structure of strategic purchasing had features of long-term contract, efficiency communication, and bilateral trust. By applying network restrict and inspirit actions, the transaction costs of bringing-in capabilities and create capabilities are continuously reduced, while the transaction benefits are continuously induced.A process model as well as process-based definition of strategic purchasing was developed. Strategic purchasing is been redefined as a process comprising of four aspects, namely, replacement of firms by market, optimization of network nodes, solidification of network linkage, integration of network capability. Each aspect corresponds to a strategic purchasing decision, which are outsourcing un-core capability, designing supplier base, purchasing integration and developing long-term and cooperative transaction relationship. Transaction costs continuously reduced, while transaction benefits continuously induced during the process of alternating the government structure from firm or market to network.Combining the horizontal functional model and the vertical process model, strategic purchasing is a process of accelerating firm and market to network and eventually utilizing network to bring-in as well as to create capabilities to gain the bilateral dynamic effects of continuous transaction costs reduction and continuous transaction benefits. To test the results of theoretic analysis, Chapter 5 developed ahypothesis structure equation model, which include the relationships of all of the four strategic purchasing decisions and firm's long-term performance. The hypothesis structure equation model was tested using data of 121 Chinese manufacturing firms.Chapter 6 and Chapter 7 studied the status and influencing factors of strategic purchasing in an operational level. The subjects and object of transaction were not considered in functional model and process model. Competitive advantage of buyer vs. supplier and the inseparable of capability to buyer have influences on bilateral dynamic effects of government structure. The influencing effects can be modified setting up proper network structure. Chapter 6 analyzed these two influencing effects and advances four strategic purchasing operational patterns, namely, simple linkage network, switching linkage network, extroverted exploration of network, and divergent alliance network corresponding to various combinations of subjection and objection.Regarding the current practice in China, Chapter 7 invested current problems purchasing managers encountered, the recognizing and the implementing status as well as influencing factors of strategic purchasing of Chinese firms. The importance of strategic purchasing in build-up of firm's reputation and collaboration and the firm's culture, pointing out the opportunities and strategies for Chinese firms to practice the theory was figured out.Chapter 8 summarized the whole study. Further researches on strategic purchasing were also discussed.