a framework for purchasing and integrated product teams

David Murphy is an Assistant Professor ofContracting Management at the Air ForceInstitute of Technology (AFIT). He received hisPh.D. degree from Arizona State University.Dr. Murphy’s research interests includeperformance evaluation, purchasingcontributions to corporate strategy, and defense and environmental acquisitionstrategy.

Michael Heberling is a Senior Policy andBusiness Analyst with Anteon Corporation. Hereceived his Ph.D. degree in Production andOperations Management from Michigan StateUniversity. Dr. Heberling’s research interestsinclude environmental purchasing andapplying commercial practices to governmentpurchasing.

Multi-disciplinary teams have become essential to success in today’svolatile business environment. However, many organizations have not been successful in implementing the team concept. This articlediscusses a group of case studies that examine the obstacles organiza-tions encounter as they implement integrated product teams. Based onresults of the case studies, the authors offer a suggested approach fororganizing successful cross-functional teams — and for developingthe skills required of purchasing professionals for successful teammembership.

THE SETTING

A re teaming and empowerment simply two more short-lived man-agement techniques? In the case of many new management ini-tiatives, workers are saying, “Stop with the fads. No more

posters, seminars, and training classes.”1 The trend to date suggests thatteaming and empowerment are here to stay. Today the United Statesfinds itself in an era of intense international competition and businessupheaval, with rapid advances in technology and reduced product lifecycles. In response, firms are reassessing their traditional ways of doingbusiness.

Revolutionary changes have already occurred in production philoso-phies and the treatment of inventories — witness the growth of just-in-timeapplications. Improving the process dimension of organizations has beenthe goal of total quality management (TQM) initiatives. The logical nextstep is to improve the human resource side of the operations. This is one ofthe few remaining untapped opportunities for American industry. In thefuture, world-class performance will be a function of how well industry isable to manage its human resources.

Firms have made extensive investments in new technology and capitalequipment, while attempts to improve the human side have been minimalat best. Ironically, this is the only resource that appreciates with time. Intoday’s environment, technology can become obsolete overnight and

11

A Framework for Purchasing and Integrated Product Teams

BY

David J. Murphy and Michael E. Heberling

IN BRIEF

International Journal of Purchasing and MaterialsManagement © Copyright August 1996, by theNational Association of Purchasing Management, Inc.Module 4

capital equipment can depreciate rapidly.2 M a n ybelieve that the best way to capitalize on a firm’shuman resources is through the use of teamingand empowerment.

Teams can be created that include workers withdifferent skills from different departments. Advo-cates claim that teams should be given the power todevelop a product, manage a business, improve asystem, or plan their own work schedules. Theorysays that when employees gain this level of control,they will work faster and smarter, with an eyetoward profitability. Such teams tend to managethemselves and may become the foundation of thenew organization. Unfortunately, although manyfirms have tried this team approach during the pastdecade, most are still struggling to reap the adver-tised benefits of the teaming concept.

This article is based on nine case studies of com-mercial and government organizations that haveimplemented the cross-functional teamingapproach. These case studies provide significantinsight into a broad range of organizations:

• A chemical and manufacturing firm• A large computer/communications firm• A large paper products firm• Three firms that provide environmental

remediation services• A federal government agency• A medium-sized municipality• A public utility

The study examines how these organizationshave tried to implement teaming arrangements inthe past and it highlights the obstacles encoun-tered. In the final analysis, the research has led theauthors to a new approach in viewing the organi-zation — one that uses integrated product teams toovercome shortcomings of past approaches and toprovide for the integral role of purchasing in thecorporate mission. The latter part of the articleoffers some implementation guidelines that tend tominimize potential obstacles to success.

HOW THE STUDY WAS CONDUCTED

With the objective of obtaining as diverse a sampleas possible, numerous organizations were contactedto determine whether they employed cross-func-tional teams and whether they would be willing toparticipate in the study. The nine organizationsfinally included in the study represent a variedcross-section of both government and commercialorganizations, as previously noted. The level ofexperience each organization previously had withusing teams also varied widely. The federal agencyhad been using the team concept for over five yearsand had considerable experience with both largeand small teams. One of the environmental remedia-tion firms had begun testing the teaming approachonly within the previous six months. The experience

level of other organizations was spread fairly evenlybetween these two extremes.

Several visits were made to each organization tobecome acquainted with their approach to teamingand to identify successes and failures. Personnelcontacted within each organization varied,depending on the size of the organization, theextent of teaming, and the reporting structure. Asa minimum, team leaders were contacted, as wereother members within the teams. Where possible,the CEO or a top-level manager was also con-tacted. The primary result of these interviews wasa description of how the teaming process workedat each organization — along with a list of lessonslearned, highlighting problem areas and sugges-tions for improvement.

WHAT IS INTEGRATED PRODUCTDEVELOPMENT?

Traditionally, there has been a tendency in firmstoward optimization of functional results, to theexclusion of corporate goals. A classic example isseen in the traditional relationship between engi-neering and purchasing. In the past, the two func-tions have not understood each other well, withengineering working on designs and specifica-tions, then passing them on to purchasing in a ser-ial fashion. As can be seen in Table I, the two areashave had different functional goals. These differ-ences must be reconciled early, or valuable timecan be lost because designs and specifications mayhave to be reworked. The functionally isolated,serial approach further damages the relationshipbetween the two departments.3

Firms currently seek to improve their operationsby empowering their employees. This simplymeans placing decision-making authority, respon-sibility, and accountability in the hands of thosewho:

• have direct knowledge of the problems• will have to implement solutions• will ultimately have to live with the

consequencesTeaming is considered by many to be the best

way of achieving organizational empowerment.Teaming brings together employees from multiple

functional areas to form self-directed work teams.It seeks to maximize the contributions of eachemployee and minimize the duplication of effort.Rather than performing activities in a time-con-suming serial fashion, many tasks can now bedone simultaneously.

Integrated product development (or concurrentengineering) is a philosophy that systematicallyemploys the teaming of functional disciplines inorder to integrate and concurrently apply all neces-sary processes to produce an effective and efficient

International Journal of Purchasing and Materials Management, Summer 1996

12 A Framework for Purchasing and Integrated Product Teams

product. The concept focuses on satisfying the cus-tomer’s needs rather than on a specific function.This approach attempts to maximize the advan-tages of other approaches, while minimizing anydisadvantages.

The organizations in the study that have success-fully implemented multi-disciplinary teams wereable to do so because they closely followed thebasic tenants of integrated product development:

1. There was a cultural change throughout theorganization, from top management to theindividual worker.

2. They were product, or goal focused, orga-nized for customer satisfaction rather thanfunctional success.

3. Up-front planning involved all functionalareas from the start.

4. They put the right people (right qualifica-tions), in the right place (on a team thatneeded their skills), at the right time ( w h e nthose skills were needed).

5 . They relied upon t e a m w o r k, creating a sense ofbelonging to something special, and a high levelof communication between functional areas.

6. They successfully used e m p o w e r m e n t, withdecisions being delegated and made at theappropriate level.

7. They used seamless management tools, withall functional members included as integralteam members and project leaders responsi-ble for the life of the entire project.

8. They achieved integration among all func-tional areas and various teams t h r o u g h o u tthe project life cycle.

The teaming of functional disciplines is accom-plished through an “integrated product team”(IPT). An IPT has five key characteristics:

1. The team is set up to produce a specific prod-uct or service; it is multi-disciplinary, with allteam members working together toward acommon goal.

2. Members have mutual, as well as individual,accountability.

3. There is integrated, concurrent decision making.

4. The team is empowered to make decisions.5. There is planned integration among teams

toward the system goal.Membership of the IPT will vary depending on

the specific objectives or requirements of the indi-vidual project. The key is to include representa-tives from each functional discipline involved witha given project. The membership will change asthe project objectives change and evolve. The lifeof a team may vary as well; some smaller projectsmay last only months, while larger or more com-plex projects may last years. The ultimate goal is todisband the team when objectives of the project aremet.

Functional ContributionsIt is now widely agreed that purchasing profes-sionals bring valuable insights and information tothe strategic planning process. Research has shownthat there are certain steps purchasers should taketo increase their credibility in cross-functionalactivities:4

1. Purchasing must be proactive.2. Purchasing must be located physically

close to the customer to have ready access to information.

3. Research and development teams should be armed with a relatively high degree of relevant technical expertise.

4. Team members in high-involvement firms should discuss their role in terms of client satisfaction, mutual objectives, and team membership.

This research revealed that when meaningfulinvolvement was high (empowerment), client sat-isfaction and quantifiable benefits were also high.

ORGANIZATIONAL APPROACHES TO TEAMIMPLEMENTATION

The firms examined in this study used several differ-ent organizational structures while implementingIPTs; some were more successful than others. Theability of an organization to successfully implementcross-functional teams is affected significantly by thestructure of the organization. That structure canaffect, both positively and negatively, the flexibility,responsiveness, communications, and morale of thefirm. Two classical structures commonly used in thefirms studied are the functional and the project o r g a-nization structures. Each had advantages and disad-vantages with respect to the teaming concept. Afteranalyzing the strengths and weaknesses of thesestructures in the firms studied, the authors proposea new hybrid approach to organization for theimplementation of successful IPTs.


A Framework for Purchasing and Integrated Product Teams 13

FUNCTIONAL GOALS

Engineering Purchasing

• Use Ideal Materials • Use Adequate Materials

• Limited Concern for Cost • Lowest “Total Cost”

• Near-Perfect Specifications • Practical and Economic

Specifications

• Little Concern for Supplier • High Regard for Supplier

Availability Availability

• Limited Concern for Delivery • High Concern for Delivery

• Limited Concern for Supplier • High Regard for Supplier

Relations Relations

TABLE I

Functional OrganizationThe functional organization is the classical approach,which has been used for many years. It is character-ized by the strict separation of each functional specialty into its own department or operating unit.Figure 1 illustrates the functional organization concept applied to a research and developmentgroup. In this structure, the functional departmentreports to the technical director and all formal com-munication flows through the director. Those com-munication channels are vertical and well under-stood. This structure also enables management toemphasize a technical focus and to attain the benefitsof specialization. The functional specialists aregrouped to share knowledge and experience, allow-ing for growth and continuity in disciplines, policies,and procedures.

This organization is highly structured, with rigidhierarchical reporting rules. As a result, in a rela-tive sense the organization may be less flexible,less integrated, and less responsive to change.Response to customer requirements may be slow.In addition, cross-functional coordination can becomplex. The formal structure provides for no hor-izontal communication and ideas tend to be func-tionally oriented, without regard for the systemsperspective.

Project OrientationA pure project organization, as depicted in Figure 2,has also been in use for years in certain types offirms. In this type of organization, a project managerhas direct line authority over the total project. Func-tional personnel work directly for the project man-ager, and resources are dedicated to the accomplish-ment of the project’s objectives. This structureprovides for rapid reaction, and is extremely flexibleand responsive to changing goals and environments.This also reduces communication problems sincethere is a stronger horizontal integration betweenthe functional specialties.

In its purest state, a skeleton group of seniorexecutives exists at the top of the organization insuch traditional support functions as finance andhuman resources. But virtually everyone else in the organization works together in multi-functional teams that perform core processes, suchas product development or sales generation. Inindustries such as electronics, customers often pro-vide many of the innovative ideas for new prod-ucts. In other industries, such as textiles, materialor equipment suppliers are key innovators. In stillothers, such as biotechnology, universities oftenplay a dominant role.5

The major drawback to this type of teamingapproach is its cost. In multi-project organizationsthere is a duplication of effort and facilitiesrequirements as each team becomes fully opera-tional. For example, the purchasing workload on asmaller project may not require a full-time pur-chasing manager and requisite staff. Application ofresources is generally inefficient, with little cross-utilization, or sharing, between projects. As aresult, technology can suffer. Without strong func-tional groups, there is less emphasis on developingand maintaining functional expertise.

Integrated Product TeamsFigure 3 shoes how the purchasing function canparticipate in the IPT concept. IPTs include repre-sentatives from each group that has a stake in theoutcome or product of the team. Involving keysuppliers and customers as members of the teamas early in the team’s formation as possible isessential. Successful applications of integratedproduct development rely heavily on the ability tobuild, empower, and nurture these multi-discipli-nary teams. Each IPT should focus on its specificproduct or process. Collectively, the team mem-bers should possess the know-how needed to getthe job done.

The use of IPTs offers the flexibility required toobtain the advantages of both the functional andproject types of organization, while attempting tominimize the disadvantages of each. Each teamreports to the executive level of the organization and isheld accountable for satisfying customer require-ments that are agreed on in advance. Dependingon the size of the project, the team leader mayhave completely “dedicated” personnel from eachof the identified functional disciplines. Each ofthese functional specialists typically reportsdirectly to the team leader.

On smaller projects, only part-time support maybe required from some of the functional special-ties. In this case, these people report through theirfunctional chain, similar to the situation in amatrix organization. However, they are still heldresponsible for meeting the customer requirementsof projects to which they are assigned.



ILLUSTRATION OF A FUNCTIONAL ORGANIZATION

FIGURE 1

Systems

Engineering

Production

Engineering

Technical

Director

Purchasing

Quality

Control

Mechanical

DesignTest

Electrical

Design



ILLUSTRATION OF A PROJECT ORGANIZATION

FIGURE 2

Technical

Director

Project A Project CProject B Project D

Mechanical

Design

Systems

Engineering

Electrical

Design

Production

Engineering

Electrical

Design

Quality

Control

Production

EngineeringTest

PurchasingPurchasing PurchasingPurchasing

ILLUSTRATION OF AN INTEGRATED PRODUCT TEAMS ORGANIZATION

FIGURE 3

PURCHASING

Project Mgr.Engineering

DesignTest

Project Mgr.Support Equip.Technical DataSite Activation

Project Mgr.Reliability EngineeringManufacturing Design

Quality Control

Project Mgr.Mechanical Design

AccountingQA

Project Mgr.Electrical DesignProduction Eng.Test

Project Mgr.Systems EngineeringMarketingReliability

For example, a purchasing representative maysupport two or three smaller projects. On a largerproject, there may be one full-time purchasingmanager, usually located physically with the pro-ject team. The decision concerning the extent ofinvolvement is based solely on the level of effortrequired from each functional discipline. Thesedecisions are made jointly by the project teamleader and the purchasing department head.

Depending on the risk associated with each prod-uct, additional layers of sub-product IPTs may becreated. For example, a product that possesses ahigh degree of risk may justify the creation of sub-product IPTs, each focusing on one area of productdevelopment. Each IPT is responsible and account-able for delivering the product to its customer. In thecase of lower-level IPTs, their customer is the next-higher-level IPT.

The team involvement and project focus allow thepurchasing professional more exposure to differentissues and different viewpoints in other functionalareas. At the same time, the strong functional tiesallow for the sharing of purchasing expertise, bothamong projects and within the department. Thisenables purchasing to build and maintain theimportant skills required in a complex function.Informal functional cross-training occurs, whereone can get an idea of what others do and possiblyhelp or “backup” other team members.

OBSTACLES AND LESSONS LEARNED INIPT IMPLEMENTATION

At the outset of the study, five of the participantsused a functional type of organization, while theother four used a project type of organization. Allwere attempting to implement some form of IPTstructure for specific projects or products. The fed-eral agency, for example, had organized almost allits divisions into IPT structures. Success at this pointwas not related to the original structure of the orga-nization. In fact, all participants considered theirefforts at teaming to be a success, although someclearly were further along in their implementationand had experienced greater degrees of success.

This study has shown that without question, evenin firms that have fully embraced the integratedteam concept, there are usually significant obstaclesto successful implementation of the concept. In spiteof the benefits, management can become more com-plex. With both horizontal and vertical communica-tion lines, reporting procedures can become mud-dled. Balance of power between team and functionalinterests becomes a concern, producing conflictsregarding priorities and resources. Purchasing per-sonnel at times may feel as though they must servetwo masters, thus producing some confusion andfrustration. The other side of the coin, however,shows some genuine successes — and ensuing bene-fits. One purchasing executive, from a large aircraft

engine manufacturer, attributed the firm’s successfulcycle-time reduction of a large engine program inlarge part to the use of IPTs.

Certain cautions clearly are associated with IPTimplementation. Care must be exercised whenallocating human resources to the teams. Placing aperson with unique skills on a team that does notuse those skills obviously would be ineffective andwasteful. It is also important to integrate across therest of the company. As is the case with a pureproject organization, there is still the potential forduplication of effort between IPTs. And, as withany new management philosophy, the organiza-tion must have the support of top management toachieve real success.

Depending on the size and duration of a project,the purchasing manager for the project may be sepa-rated physically from the purchasing department.This makes it difficult to have ready access to spe-cialized information and support. While purchasingpeople see the other functional perspectives, thismay in time create a group of generalists rather thanstate-of-the-art specialists. This can create a problemin training new people entering the profession, andthe mentoring in a given area may get pushed aside.The informal observation and brainstorming ses-sions with other purchasing people can also bereduced or lost as a result of the physical separation.

Internal training shortfalls are also barriers toIPT implementation. If IPT is to become the newway of doing business, then education and train-ing must support the change. The focus of thetraining should be in providing the skills to workmore effectively as a team to produce better prod-ucts. Types of required training include functionaland technical knowledge specific to the purchasingarea of expertise. Additionally, training is requiredin the use of interpersonal skills to enhance teamcooperation and communication.

Communication must be open and free-flowingwithin teams as well as among teams. Each teammember needs to understand his or her role, theroles of the other members, and the constraintsunder which other team members operate. All teammembers must look at issues from a broad perspec-tive, not just from a functional point of view. Prop-erly done, this leads to group synergy. Each teammember must know enough about the roles andpotential contributions of other team members tointegrate them effectively into the final product ofthe group. Without some knowledge of other func-tional areas, individuals are limited in their abilityto work with and understand the constraints ofteam members from the other functional areas.

Cross-functional training is needed to broadenteam members’ understanding of each function’scritical role in the IPT process. This type of trainingwas lacking in all of the organizations studied. Inpart, this was the case because cross-functional



training is expensive and difficult to accomplish.As a result, cross-functional training was oftenseen as a luxury in the organizations studied, andfew opportunities existed.

One of the most critical problems experiencedwas the assignment of inexperienced people toIPTs. A full-time team member must have theexpertise and authority to make decisions in his orher functional area. If this capability is inadequate,the individual may be bypassed in the decision-making process, and the function represented maylose respect. In such cases, both the function andthe corporation are damaged by this improper useof the IPT concept.

THE DEVELOPMENT OF A TEAM

Skilled team players are not born that way: theymust be trained. To gain the major benefits of theIPT concept, the professional skills of purchasingpersonnel must be well developed. Only in this waycan purchasing professionals effectively participatein and become integral members of the IPT. Allthese case studies point to the need for training andprofessional development to help overcome theobstacles encountered in IPT operation.

The organizational dilemma is whether to locatepurchasing people physically with the team or tokeep them together in a separate department. Thelatter option provides interaction among purchasingspecialists that, over time, provides a broadenedpurchasing experience base. The purchasing peoplewho were collocated with IPTs experienced somefeeling of isolation stemming from a lack of interac-tion with other purchasing professionals. At thesame time, individuals assigned to multiple IPTsexperienced some confusion and conflict in deter-mining priorities. One approach to minimizing thesedifficulties is the use of a three-stage trainingprocess, as shown in Figure 4.

In this situation, a centralized purchasing depart-ment is maintained in order to train new purchasingpersonnel. Internal purchasing IPTs can be formedto tackle specific purchasing issues. This will givenew buyers the training needed to contribute as full-time members of a company-level IPT, where directsupervision is not as feasible.

After attaining a certain level of experience, purchasing professionals can then participate onintermediate-level IPTs that would not require afull-time purchasing manager or physical separationfrom the purchasing department. In this situation,continued growth and professional developmentcan be stimulated through interaction with depart-mental colleagues.

Finally, only those personnel with many years of broad experience should be assigned as full-time members of IPTs. This will provide high-quality personnel with the requisite knowledge

and experience to handle highly complex purchas-ing issues, capable of collocating with IPTs. Theseprofessionals will enhance the image of the pur-chasing profession and facilitate full participationof purchasing in strategic company issues.

Many purchasing-related areas can benefit fromthe teaming approach and the internal purchasingIPT. A good example comes from Motorola’s Codexsubsidiary in Mansfield, Massachusetts. This firm’steaming effort eliminated $13 million in inventorycarrying costs, and cut the average time it takes toget its materials from eight weeks to three. The self-imposed challenge was to eliminate much of thepaperwork in the supply chain by automaticallyexchanging electronic forecasts, orders, and invoiceswith customers, and making payment by computerwithout human intervention.6

Another illustration exists at a large transporta-tion company. To purchase a vehicle for leasingpurposes required some 14 to 17 hand-offs as thedocuments wended their way from one functionaldepartment to another at a local, and then anational, level. The company passed the baton somany times that the chances of dropping it weregreat. By viewing this paperwork flow as a singleprocess, from purchasing the vehicle to providingit to a customer, the firm reduced the number ofhand-offs by over 50 percent. By redesigning thework, weeding out unnecessary approvals, anddelegating more authority to lower levels in theorganization, the company cut its purchasing cycleby approximately one third.

Other potential teaming projects for purchasinginclude:

• early involvement in product design anddevelopment



TEAM DEVELOPMENT

FIGURE 4

Internal

Purchasing

Teams

Part-time

Team Member

Integrated

Product

Teams

High

Low

EXPERIENCE LEVEL

• analysis and reduction of the expeditingproblem

• a study of the various types of inventory, tar-geting those areas that show the mostpromise for improvement

GENERAL GUIDELINES FORIMPLEMENTING THE TEAMING CONCEPT

Along with the results of the case study research,and the resulting three-stage implementationprocess specific to the IPT concept, there are sev-eral additional general guidelines that are impor-tant when designing a team strategy.

A number of misconceptions surround teamingand empowerment. The case studies revealed atendency toward a proliferation of teams. Severalfirms were rushing to organize teams for a multi-tude of projects, without tying them to corporategoals. Simply turning employees loose on a cru-sade to “fix” everything in sight is not the inten-tion of teaming and empowerment. When teamsare free to solve problems of their own choosing,they sometimes “solve” non-problems or, at best,trivial ones. Solving the parking problem orimproving the cafeteria food may be important toindividual team members, but the importance ofthese activities typically pales in comparison withmajor operating or strategic issues. Consequently,there must be a certain level of structure and direc-tion for the process.7 The guidelines outlined inTable II recognize this requirement.

Several key elements must be considered whenprogressing through these steps. First, it is essen-tial to obtain the support of top management.Without that support, the effort usually flounders.Second, rather than organizing around the task athand, the firm should organize around its majorprocesses. Traditionally, most firms have created astructure around f u n c t i o n s. Instead they shouldorganize the company around its core processes andestablish specific performance goals for each; perhaps three to five processes are manageable.An “owner” should be established for eachprocess. Simply defining the processes of a givencorporation may prove to be a mind-boggling and

time-consuming exercise. However, the processesmust be refined and unnecessary work driven out,or it will be back tomorrow. So — rather thanorganizing around functional areas, the key is tostructure around “market-driven businessprocesses,” from product development to productsourcing and distribution.

The processes should be streamlined to reducesupervision requirements. To aid the streamliningeffort, fragmented tasks can be combined, cuttingprocess activities to a minimum. And tasks thatfail to add value should be eliminated wheneverpossible. Teams can become the building blocks ofthe entire organization, although as few teams aspossible should be used to perform an entireprocess. To obtain the most effective results, teamsshould be given a specific purpose and allowed tomanage themselves. Each team must be heldaccountable for achieving measurable performancecriteria. In addition to achieving performanceresults, this requirement also tends to limit super-visory roles in the organization

The performance criteria should be team ori-ented, so that the performance appraisal and com-pensation systems reward team results, as well asindividual performance. Customer satisfactionshould be the primary performance measure.Employees in staff positions should be rewardedfor developing a diversified set of skills, ratherthan only functionally specific expertise.

Key supplier and customer representativesshould be included as full members of any team towhich they can make significant productive contri-butions. This serves to focus results on customersatisfaction by bringing team members, includingsupplier representatives, into regular direct contactwith the customer.

Training and access to information is critical forall employees. Staff personnel should be trained inhow to use the raw data they have access to, ratherthan requiring management to control access toinformation. Employees can then analyze informa-tion and make decisions at the appropriate levelswithin the organization.

Team SizeDevelopment teams normally include only six orseven key people. This number seems to constitutea critical mass of skills, while fostering maximumcommunication and commitment among mem-bers. The number of communication channelsincreases at an exponential rate, according to thenumber of team members. Figure 5 illustrates how,as team size increases, one can quickly lose theability to effectively manage those channels ofcommunication.

Many innovative companies also try to keep theiroperating divisions and total technical units fairly



TEAMING AND EMPOWERMENT GUIDELINES

1. Provide a desired end-result or goal for a specific activity in

general terms.

2. Do not specify how to accomplish the goal.

3. Provide latitude to encourage unorthodox approaches.

4. Provide the necessary resources to achieve the objective.

5. A team must have authority, responsibility, and accountability.

6. Establish tangible rewards for success (and failure).

TABLE II

small — often below 400 or 500 people. Up to thisnumber, only two layers of management typicallyare required to maintain a span of control overapproximately 7 people. In units much larger thanthis, people quickly lose touch with the concept oftheir product or process, staffs and bureaucraciestend to grow, and projects may go through toomany formal screens to survive. Since it takes morethan one “yes” and only one “no” to kill a project,jeopardy multiplies as management layers increase.8

TEAMING AND THE FUTURE OFPURCHASING

How well purchasing personnel respond to theteaming challenge will determine the ultimate fateof their profession. Successful adoption of and par-ticipation on teams will lead to more influence inthe strategic decision-making process. At the sametime, this will increase the stature of the professionin the eyes of both peers and senior management.

Teaming and empowerment bring both opportu-nity and risk. The teaming and empowermentphilosophies may place the functional departmentin a quandary. Failure to embrace the teaming con-cept could result in the erosion of the roles andresponsibilities of the function. Purchasing profes-sionals continually say that their activities make a major contribution to the process; however, thoseoutside the function sometimes view purchasing’sefforts differently. They may see the function as more of an obstacle in the process, rather thanan asset.

Teaming provides an opportunity for any func-tional discipline to show that it can add value tothe process; however, this is also a risky venture.The purchasing profession can no longer hidebehind specialized knowledge of regulations andprocedures as justification for its existence. Can thepurchasing profession deliver — and bring some-thing more than bureaucracy and red tape to theteaming table?

How will purchasing professionals respond tothese new management philosophies? They caneither watch the teaming and empowerment phe-nomena from the sidelines, or they can supportthem productively and enthusiastically. The firstoption assumes that teaming and empowermentwill be just two more short-lived, trendy manage-ment styles. This cavalier attitude can be danger-ous. The revolutionary changes in business, char-acterized by restructuring and downsizing, clearlyindicate an end to the era of “business as usual.”

REFERENCES1. Fred R. Bleakley, “Many Companies Try Management

Fads, Only to See Them Flop,” Wall Street Journal, July 6,1993.

2. John Rhea, “Total Quality Management: Myths andRealities,” National Defense (January 1990), pp. 2-5.

3. Shad Dowlatshahi, “Purchasing’s Role in a ConcurrentEngineering Environment,” International Journal of Pur -chasing and Materials Management, vol. 28, no. 1 (Winter1992), pp. 21-25.

4. F. Ian Stuart, “Purchasing in an R&D Environment:Effective Teamwork in Business,” International Journal ofPurchasing and Materials Management, vol. 27, no. 4 (Fall1991), pp. 29-34.

5. James Brian Quinn, “Managing Innovation: ControlledChaos,” Harvard Business Review, (May-June 1985), pp.78-79.

6. Barnaby J. Feder, “At Motorola, Quality is a TeamSport,” The New York Times, January 21, 1993.

7. John A. Byrne, “The Horizontal Corporation,” B u s i n e s sWeek (Dec. 20, 1993), pp. 76-81.

8. Quinn, op. cit.



TEAM SIZE AND COMMUNICATION

FIGURE 5

Team Size (Number of Individuals)

Optimum team size

a framework for purchasing and integrated product teams

Documents