The Value Added by the Purchasing Department to the Organization

Abstract: The role of purchasing has been evolving during the last years, increasing its strategic importance inside the organization. Traditionally viewed as a supportive function impacting only the bottom-line of the company, the main performance indicators for purchasing were cost-reduction and savings. Nowadays, organizations recognize the importance of the value added generated in the purchasing processes and they are broadening their vision of purchasing as a strategic contributor of value in both economical and intangible aspects.   One of the main intangible value contributions from the purchasing department (PD) of any company is the one provided to its internal customers; measured in the level of internal service quality and customer satisfaction. An adequate internal customer relationship management can translate into advantages for the PD, improving its strategic position in the organization, and in benefits for the company, increasing directly or indirectly its business performance.   The purpose of this research study was to understand how the purchasing department can create value inside an organization, how that value is measured and how it can be increased; being the central focus on the internal customers of the department. This research work was conducted as a single case study performed in a multinational company from the telecommunication industry. Qualitative data was gathered through structured interviews, formal and informal meetings with personnel from the company and a survey to triangulate the information. The objective was to determine the most important value adding factors for the internal customers of the purchasing department and evaluate their satisfaction level.   Two models for assessing the value contributed by the PD were the grounding for developing the tools used in the achievement of the objectives; one of them was based on the SERVQUAL model and the other one on the concept of meaningful involvement. Using inputs from both, a model for evaluating the value added to internal customer was proposed. In addition, the author identified improvement opportunities, related mainly with relationship management in the company and she suggested improvement measures accordingly. Finally, future courses of action were recommended, relating the value added concept with purchasing maturity models.