Intra - Organizational Purchasing Synergy : Reengineering of Periodic Price Adjustment (PPA) Process

Abstract: Purpose: The purpose is to investigate and analyse the impact of intra-organizational purchasing synergy on periodic price adjustment (PPA) process. Specifically, paper provides a view on how  purchasing process synergy through an operational IT platform can increase process reengineering opportunities within PPA.  Methodology: So, to fulfil the purpose of the research, the in-depth case study approach is chosen as a strategy that goes along with exploratory nature of the study, aimed at gaining rich insights in the context in which the phenomenon happens. Findings: The findings emphasize the importance of global process standardization and balanced governance among regional affiliates in successful implementation of PPA process synergy. We also identify a set of specific process reengineering needs  in PPA such as company wide information sharing,  standardization of part specifications and cost bases, and joint world-wide cost reduction activity within global buyer community (BGC). Then it is observed that all these process reengineering initiatives will not be possible without solid and flexible IT infrastructure  to improve buyer productivity and support their further development.   Research limitations/implications: Primarily, this study was conducted on single in-depth case study which makes it difficult to completely generalize the findings. Next, there are many factors impacting intra-organizational pricing processes besides global synergy projects. In fact, regional and organizational contexts are of high importance, which are addressed but not analysed in detail in the current study.   Practical implications: Together, the findings contribute to our understanding of the step-by-step pricing activity from industrial customer perspective and how buyers can improve cost competitiveness through various tangible and commercial part cost reduction activities.   Originality/value: Current study has addressed the pricing process from industrial customer perspective. It has two main theoretical contributions: (1) Detailed step-by-step description of PPA process between OEMs and their suppliers happening after SOP; and (2) groundwork for implementation guidance on intra-organizational price revision process synergy.