Centralized Purchasing of Complex Products: a case study in organizational structure of purchasing departments when sourcing complex products
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
With much effort put into optimizing production during the last century focus has begun to shift towards optimizing purchasing, which has led to purchasing being considered more as a strategic function rather than an operative one. Therefore, many organizations have decided to adopt a centralized purchasing strategy to increase efficiency in purchasing and decrease expenses. This study examines the suitability of centralization of purchasing in the special case of complex products by testing a purchasing portfolio management (PPM) framework in the context of complex products. The PPM framework was judged to be a valuable tool for a first assessment of the suitability for centralization but that a number of other factors play a vital role when deciding on purchasing organizational structure for complex products. Other factors, important when deciding on organizational structure, that was encountered during the study was supplier market, assembly process, relationship to other parts, environmental factors and specific product characteristics. The study further examines to what extent it is possible to coordinate purchasing of complex products between multiple companies within the same group. To establish efficient coordination between the companies, interviews have shown that setting similar standards and transparency of information are key factors. Barriers that hinder such cooperation, also shown through interviews with key personnel at two different companies in the group, was claimed to be different purchasing processes, different product requirements, vast geographical distances and differing sourcing strategies.
Place, publisher, year, edition, pages
2015. , 74 p.
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-190842OAI: oai:DiVA.org:kth-190842DiVA: diva2:953256