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Assessing the Feasibility of Supply Chain Management within Purchasing and Procurement:Results from U.S. Cities Author(s): Ronnie Lacourse Korosec Source: Public Performance & Management Review, Vol. 27, No. 2 (Dec., 2003), pp. 92-109Published by: M.E. Sharpe, Inc.Stable URL: http://www.jstor.org/stable/3381183Accessed: 16-08-2014 14:33 UTC

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ASSESSING THE FEASIBILITY OF SUPPLY CHAIN MANAGEMENT WITHIN

PURCHASING AND PROCUREMENT Results from U.S. Cities

RONNIE LACOURSE KOROSEC University of Central Florida

ABSTRACT: Although there is constant pressure in the public sector to reform and enhance purchasing and procurement activities, there is little consensus on how this could be accomplished effectively. One of the most recent innovations in productivity reform is to apply a widely successful private sector-based strategic tool, supply chain management (SCM), to public sectorprocurement activities. Not all governments currently claim to fully understand or actively use SCM as a means to decentralize decision-making and service delivery. However, many professional procurement organizations are suggesting that it could be just what the doctor orderedfor enhancing procurement within the public sector What is supply chain management? Can it work as well in the public sector as it does in the private sector? Will it have a substantial impact as a "best practice" in governmental operations, or is it merely anotherfad that willfade away over time? This paper identifies the critical components of supply chain management and suggests how and when it can enhance productivity in public procurement activities.

KEYWORDS: Collaboration, information technology, innovation, integrated program management, procurement, purchasing, supply chain management

New and evolving models of organizational management and procurement are prevalent in both the public and private sectors. Today it is often instructive to look to the private sector to see what will be new in the public sector tomorrow (Christensen and Laegreid, 1997; Gianakis, 2002). A recent private sector transplant, supply chain management (SCM), is a procurement management system that includes four main areas. First, it involves capitalizing on the newest and best forms of information technology to enhance quality considerations and operating capabilities within purchasing and procurement. Second, it encourages a decentralized model of decision making to promote innovative solutions that more effectively meet clients' needs. Third, it uses a collaborative model of partnership, with both internal and external agents to promote a more representative and comprehensive view of service delivery. Finally, it focuses on integrated project management "chains," which allow individuals to be

Public Performance & Management Review, Vol. 27 No. 2, December 2003, pp. 92-109. C 2004 M.E. Sharpe, Inc. All rights reserved.

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Korosec / ASSESSING THE FEASIBILITY OF SUPPLY CHAIN MANAGEMENT 93

more active in, accountable for, and understanding of their actions from the start to finish of each procurement process.

A survey administered by Lehman Brothers in 2000 indicated that the supply chain management market in private sector procurement was expected to grow by a factor of five times-from a $9 billion market opportunity in 2000 to a $45 billion market by the year 2005. Despite this 39% cumulative annual growth in that sector, there is little empirical evidence of how SCM is being used in the American public sector. The literature that does exist focuses primarily on private sector transactions or on international governments owing to the fact that SCM has been used in both of these arenas for almost a decade. Still, many professional government organizations have indicated that supply chain management could hold great promise in enhancing public procurement systems in the United States. In the late 1990s, the National Association of State Purchasing Officers (NASPO, 1996, 1999; NASPO et al., 1998) and the National Association of State Information Resource Executives (NASIRE, 1996) suggested that public procurement and information technology managers take a closer look at the merits of supply chain management. They cited "less than optimal past purchasing decisions" and the "need to transition from process-based purchasing to knowledge and accountability based procurement" as justification for change (NASPO, 1996, 1998).

As customers have become more insistent on higher levels of quality and performance, there has been a realization that traditional procurement systems focus too heavily on costs alone to adequately meet these new needs (Talluri, 2002). Although traditional procurement models are not especially integrated, decentralized, collaborative, or technology-driven, it has been recognized that they should be (NASPO, 1998). Supply managers can no longer "passively sit back, receive requisitions or consolidate purchase orders" (Cavinato, 2001). Instead, they must adopt "a management role embracing the entire procurement process from the initial identification of need through the termination of the contract." Clearly, the emphasis is "shifting rap- idly from just buy transactions to supply chain management" (NASPO, 1998). With this in mind, the following questions must be considered: Can SCM be an effective tool for public procurement in the United States? What are the major barriers to success with SCM? How can SCM be incorporated with public sector values? This paper will examine these and other related questions.

What Is Supply Chain Management? In simple terms, SCM is a procurement tool that was born out of necessity. Demands for newer and more innovative goods and services, limits on resources, and the increasingly complex, interrelated nature of the global marketplace have each created pressure on public managers to optimize new and innovative process methodologies to meet procurement needs. SCM strategically integrates the whole procurement process, including the "identification, acquisition, access, positioning, and management of resources" in a series of carefully considered steps, in order to attain stated objectives (Duffy, 2002). The key components include

Advanced technology: Managers, staff, clients, and vendors rely heavily on information technology to enhance activities.


94 PPMR / December 2003

* Decentralization: Supply managers share authority with staff, outside suppliers/vendors and citizens to brainstorm about emerging technology and potential new products.

* Integrated project management: Supply chain managers reach beyond the traditional confines of an organization to embrace the entire supply network, plan organizational operations strategically, support mutually beneficial goals, share risks, and enhance best practices. This may involve consolidating groups, simplifying rules, and eliminating different layers of management.

* Collaboration: Supply managers partner with customers and other stakeholders to determine how services will be provided, as well as to see the "big picture" in consumer consumption patterns, productivity levels, satisfaction levels, and expected trends. To achieve this, SCM relies heavily on symbiotic alliances between internal and external actors-through the delegation of authority, sharing of power, and decentralized decision making.

Because the management control function in this model is heavily influenced by both external and internal environments, supply managers must be concerned with not only client issues, but also the behavior of internal members, information systems, cultural norms, and funding providers (Anthony and Young, 1999). This involves a change in both organizational culture and thinking. While traditional bureaucratic organizations may operate within their own spheres of influence, complete tasks that pertain only to their direct interests, and meet limited goals, organizations that adopt supply chain management see the larger links, or "chains" of connection, between the service provider and recipients, and capitalize on common goals that they may share throughout the procurement process (New, Green, and Morton, 2002). In doing so, SCM allows supply mangers to enhance the ownership, integrity, and efficiency of the whole acquisition process.

Related SCM Literature

INFORMATION TECHNOLOGY

Balutis and Kiviat (1997) have noted that information technology (IT) has become so important to procurement operations that it is the major element in the process of selecting and accomplishing most objectives. Using information technology throughout the procurement supply chain can help reengineer existing work processes so that there are fewer breakdowns, bottlenecks, and redundancies on the job (Bajjaly, 1999; Champy, 1995; Hammer, 1990). Presutti (2003), Roberts and Mackay (1998), Kindler (2003), and Davila, Gupta, and Palmer (2003) have indicated that the importance of IT in SCM transactions is the "real-time" flow of information that results in enhanced customer service, lower costs, and improved supplier relationships. Similarly, Sundarraj (2003) and Talluri (2002) suggest that IT is the catalyst for sharing and coordinating information across the increasingly large and complex supply chains and that it can significantly enhance the long-term performance of any organization. Information exchanges and collaborative planning (via information technology) are essential for heightened efficiency between business partners in the supply chain, as governments are forced to become more competitive with outside providers and suppliers (Barratt, 2001).



Holley, Dufner, and Reed (2002) have suggested that IT is a useful tool to integrate the activities of internal and external organizational forces, as well as "end-users" in the supply chain. Specifically, rapid advancements in IT and related software have created opportunities for procurement officials to make more informed decisions about many issues, including:

* How to structure purchases and enhance budgeting * How to effectively partner with suppliers * How to manage multiple award schedules * How/whether a master contact should be developed * How to manage long-term contracts * How to advance "on-line" ordering. (NASPO, 1998, 2) Still, caution must be exercised when considering the use of IT through new sup-

ply chains. Many of the current procurement processes used by state and local governments work poorly, or not at all, with the fast-paced, complex field of information technology (NASPO, 1996, 1). Because we know that change is usually a gradual process, one must consider the transition phase to SCM. Bartle and Korosec (2001) have suggested that the use of information technology in procurement is uneven across and within states, and that the degree of use is sometimes hampered by transitions in personnel, support, or training.

Any of these result in "extra costs around the corner" as less effective IT managers struggle with implementing new technology in forums that are not receptive to or capable of change (Attaran, 2001).

DECENTRALIZATION

Decentralized departments are given maximum feasible authority to make decisions along the supply chain with only minimum restraints. This allows procurement pro- fessionals to better understand the "big pictures of the agencies (they) serve and per- form strategically to drive results that achieve client agencies' missions" (Jones and Thompson, 1999). The result is a proactive arrangement in which procurement staff and client agencies have relatively equal status on, and access to, teams that can develop the best acquisition strategies. The aim of these strategies is to get "end-users" what they need, when they need it, as well as to forecast these needs in advance,and track this performance as it happens (Choy and Lee, 2003). Effective, strategic planning in this manner will enable procurement staff to spend less time fixing problems and more time developing and delivering solutions. This is the main intent of supply chain systems.

Gianakis and Wang (2000) have indicated that "the willingness to be accountable for performance is a prerequisite of efforts to decentralize," but that not all governments are open to this challenge. Bartle and Korosec (2001) note that weak agency training can also be a barrier to effective decentralized procurement and that governments must be dedicated to working with a combination of groups that may have different proficiencies and skills. Because of the different levels of proficiencies that exist along the supply chain, Fung (1999) has suggested that incremental, long-range planning is the best approach to implementing SCM. This would allow groups to



leam the strategies associated with SCM and become more adept at using them, while continuing to meet current procurement needs.

INTEGRATED (INTERNAL) PROJECT MANAGEMENT SCM requires projects to be viewed comprehensively-from start to finish. In order for this to work, there must be a prior and enduring commitment from all parties that there will be an integrated investment of efforts. Croom (2001) has indicated that greater information transparency among SCM partners is a crucial element in improving procurement efficiency. Without this clarity, the goals, objectives, strategies, and expectations of the procurement may be misrepresented or misinterpreted.

Nissen (2001) suggests that even though "speed and responsiveness" are critical in "today's hypercompetitive product and service markets," truly effective SCM managers must take command of the procurement process and work to include all related parties-even if this adds more time to the process. Failure to create and work with partners in the name of saving time may result in an inability to properly capitalize on shared goals and resources (Thompson, 1996).

COLLABORATION

Smith and Rupp (2002) suggest that organizations that are successful in solidifying "business solutions partners" through supply chains will not only survive, but also thrive and create competitive advantages in the public/private marketplace. Their research indicates that most service providers that partner with outside organizations create a "value add" to the organization's overall competitive strategy and help reduce costs within the value chain. Effective supplier selection is paramount to maintaining a level of quality and performance within any organization (Kannan and Tan, 2002).

Still others (Emiliani, 2000; Quayle, 2003) suggest that most organizations that implement supply chain management do not truly understand the possible benefits of collaboration. To be fair, some governments have avoided partnering with private entities to discourage favoritism and fraud (NASPO, 1998). Theoretically, a strong, centralized government might be wise to insulate itself (and the public) from the divergent interests of the private sector. Fesler and Kettl have noted that:

The interrelationships between government and its proxies are inherently problem filled. It is hard enough for a manager at the top of an agency to control the actions of subordinates at the bottom. It is far harder for the manager to control a program when the details of its implementation rest in the hands of persons not even part of the agency. The more interrelated the public and private sectors become, with more ambiguous boundaries between "public" and "private" activities, the harder it has become to implement programs efficiently and responsively. (1996, 293)

MacManus (1992), however, has suggested that expanding the use of vendors and vendor pools can foster competition, fairness, efficiency, and openness. Clearly, the challenge is to maintain a level of control without limiting creative input or opportunities for partnering. Vendors and governments must both have a stake in the outcome of the project(s) and be willing to share in the benefits and risks. They must maintain the integrity of these issues within the larger strategic framework of the organization's



Table 1. The Supply Chain Management Model

Issue area: Desired results:

Collaboration: More open communication Enhanced representation Increased innovation An increase in parties with a vested interest Improved customer satisfaction Improved accountability and trust Shared risks

Decentralization: Enhanced representation Increased innovation An increase in parties with a vested interest More efficient/effective operations Enhanced management Improved accountability and trust

Information Technology: Increased innovation Improved efficiency Enhanced effectiveness More/better avenues for communication Increased potential for state-of-the-art performance Greater potential for proactive management Lower procurement costs Access to new markets and products

Integrated Project Streamlined operations Management: More efficient/effective operations

Greater accountability Greater potential for internal collaboration Decreased duplication of services

mission, values, and goals. Suppliers and managers must understand the potential needs of customers and be able to safeguard them in the long run when making supply decisions (NASPO, 1999). Part of the success of SCM in the public sector is based on the ability of governments to work with vendors toward common goals, contract deliverables, and identify measures of success. Table 1 illustrates the desired result for each of the four SCM variables.

Objectives and Related Research Questions Supply chain management is a major private sector innovation that is worthy of additional study to determine its applicability and use in public sector procurement activities in the United States. While a great deal has been written about SCM in the private sector, relatively little is known about the value of it in public procurement processes. Although the basic tenets of SCM are used to varying degrees in the public sector, most procurement models do not integrate them as a whole or to the extent that this "newer" model does. This study will attempt to obtain current data on levels of use of SCM in municipal governments across the United States and determine whether it is



more applicable for some types of procurements than for others. It will also determine the value of SCM in helping municipal governments solve some of the traditional problems associated with procurement-including the need to enhance the efficiency, quality, and timeliness associated with the production, purchase, and delivery of services. Finally, it will attempt to answer several key research questions. Is SCM useful for public sector procurements in the United States? Can it work as well in the public sector as it does in the private sector? Will it have a substantial impact as a "best practice" in governmental operations, or is it merely another fad that will fade away over time? Is SCM best suited for particular procurement processes-such as budgeting or planning? This study will address these issues.

Methodology The data used in this study are based on a national survey of government operations and accountability in U.S. cities. In 1999, a survey was mailed to the chief administrative officers in U.S. municipalities with populations greater than 50,000 (Gianakis and Wang, 2000, 1 1). The instrument was mailed to 541 municipalities, and 249 returned valid responses, yielding a 46 percent response rate. Respondents were asked to evaluate a wide range of issues relating to the decentralization of purchasing and procurement, the use of developed information systems, and accountability in decision-making processes. Answers were recorded on a five-point Likert scale, with 5 = strongly agree, 4 = agree, 3 = neutral, 2 = disagree, and 1 = strongly disagree. A model was created from the survey to determine whether the principles of supply chain management are compatible with and currently used in municipal operations. The specific variables used in this analysis are drawn from the model suggested by the National Association of State Procurement Officers. They include integrated project management, collaboration between interested parties, decentralization of management functions, and the efficient use of new technology-including information technology. For each of these four issue areas, several different questions were posed to measure responses. Table 2 sum- marizes the questions that are used to assess each of the variable areas. Indices were created for each of the four principal areas based on these questions.

IT RESULTS

Cities face many different challenges in relation to information technology. For the purposes of this research, three challenges in particular are noted-developing information systems to access financial data, developing information systems to access performance data, and producing perfornance information in a timely, accurate way. The responses for these issues follow the aforementioned format (5 = strongly agree, 4 = agree, 3 = neutral, 2 = disagree, 1 = strongly disagree, 0 = don't know/can't say). Table 3 illustrates the mean and standard deviation scores for the variables relating to information technology.

The average score for the information technology index is 3.92 on a five-point scale. This suggests that the level of use of information technology is moderately high. The Cronbach alpha for this scale was .72, which suggests that these items are a



Table 2. Study Questions and Related Variables Key of Variables: COL = Collaboration DEC = Decentralization IPM = Integrated project management IT = Information Technology

Variable: Question: IT "In our administration, we have. . .

* developed information systems to access financial data * developed information systems to access performance data * used performance information on a timely manner

DEC "Decision making structures" * we allow departments to move funds among line items * we allow departments to buy where they want * we allow departments to purchase through a simplified process * we delegate authority to departments for purchase information

COL "In our city, citizens or citizen activists are involved in the following . .." * identifying agency/program goals and objectives * developing strategies to achieve agency/program goals * developing policy/program alternatives * negotiation of agency budgets * determination of city executive budgets * auditing service and program achievements * modifying programs and budgets * evaluating policy/program achievement

COL "Most businesses and nonprofit organizations . .. * are active in the budget process * are active in the planning process * are cooperative in budget negotiations

IPM "Please evaluate the following questions concerning ... restructuring in your city." (We have been):

* combining agency functions * involving everyone in agency activities (e.g., decision-making * process) * simplifying rules and procedures * eliminating different layers

reliable measure of the concept of the use of information systems in procurement and purchasing systems. Modal responses were also highly positive: 5 (strongly agree) for developing information systems to access financial data, and 4 (agree) for each of the remaining issues of producing performance information in a timely, accurate way, and for developing information systems to access performance data.

In all, 93.3% of the respondents agreed or strongly agreed that their cities use information systems to access financial data. Less than half agreed or strongly agreed that they had developed information systems to access performance data (46.6%) or produced performance information in a timely manner (47.7%). The use of bivariate



Table 3. Information Technology Scores for Purchasing and Procurement Issues

Percent in Standard agreement Mean deviation

"In our administration we have...

developed information systems to access financial data" (n = 249) 93.3 4.53 .65

developed information systems to access performance data" (n = 249) 46.6 3.31 1.10

produced performance information in a timely, accurate way" (n = 249) 47.0 3.36 1.06

Index average: 62.3 3.92 .94

Note: The respondents to this question were asked to rate the applicability of these statements to activities within their government using a five-point scale (5 = strongly agree, 4 = agree, 3 = neutral, 2 = disagree, 1= strongly disagree). For the purpose of this research, "agreement" includes both "agree" and "strongly agree" responses.

analysis is instructive to show the association between cities developing information technology systems and purchasing and procurement.

The use of Pearson's correlation coefficient indicates high levels of positive linear association between producing performance information in a timely, accurate way and developing information systems to access performance data (r = .735, p < .01). This suggests that as cities upgrade their information technology to access performance data, they are able to work with this information in a timelier manner. The current focus on performance enhancement within public management may indicate why this is so.

The linear association between using information systems to access financial data and developing information systems to access performance data is significant, yet weak (r = .344, p < .0 1), as is the relationship between accessing performance information in a timely manner and using information systems to access financial data (r =. 248, p < .01). Although many municipalities are using information technology in financial systems, it is not perceived to be enhancing the collection (accuracy, timeliness) of performance data. These results are consistent with the idea that many municipal governments are still creating and implementing new IT systems. As they become more comfortable with the changes that this new technology brings, it is likely that levels of efficiency will increase.

DECENTRALIZATION RESULTS

Table 4 indicates the variables used in, and the relative percentage of decentralization associated with, purchasing and procurement. Again, the Cronbach alpha for this index (.70) suggests that the variables used in this scale are a reliable measure of decentralization, and the average index score (3.27) suggests that the overall level of decentralization in purchasing is slightly above average. The mean scores for each variable indicate mixed results, however. Most municipalities (80%) agreed or strongly agreed that they allowed individual departments to move funds among lines for pur-



Table 4. Decentralization Scores for Purchasing and Procurement Issues


"Our city delegates authority to departments for purchasing information" (n = 249) 47.4 3.22 1.05 allows departments to purchase through a simplified process" (n = 249) 55.4 3.41 1.01 allows departments to buy where they want" (n = 249) 18.9 2.43 1.06 allows departments to move funds among line items" (n = 248) 79.8 4.00 1.10 Index average: 50.4 3.27 1.06

Note: The respondents to this question were asked to rate the applicability of these statements to activities within their government using a five-point scale (5 = strongly agree, 4 = agree, 3 = neutral, 2 = disagree, 1= strongly disagree).

chasing or procurement. Over half (55.4%) agreed or strongly agreed that simplifying the procurement process was encouraged. Less than half (47.4%) indicated that they were able to delegate purchasing information, and only 18.9% responded that they were able to purchase goods and services where they wanted.

The strongest relationships indicated through the bivariate analysis showed only a moderate level of association. The relationships for these variables are indicated in Table 7. Pearson's correlation coefficients for the ability to delegate purchase information and purchasing through a simplified process (r =.531, p < .01) show a slightly higher than average, positive relationship. The association between delegating purchase information and allowing departments to buy where they want is average (r =. 455, p < .01), yet the association between delegating purchase information and allowing departments to move funds is weak (r = .340, p < .0 1). Apparently, decentralization is most prevalent when it relates to information or process-related issues. When direct budgeting issues (purchasing or moving funds between lines) are intro- duced, there is less likelihood for managers to delegate authority to others within the organization. This supports the proposition that while decentralizing in procurement may be part of a large initiative, such as efforts to decentralize administrative systems, in general, it is not strongly associated with budgeting.

INTEGRATED PROJECT MANAGEMENT RESULTS Because integrated project management may take place at different times and be implemented to different degrees, the responses for this section vary slightly from the previous ones. Respondents were asked to indicate whether the issues presented were fully implemented (5), partially implemented (4), planned (3), considered with no action yet (2), not considered (1), or if they didn't know/couldn't say (0). The Cronbach alpha (.74) indicates that the model is a reliable measure of inte-



Table 5. Integrated Project Management Scores for Purchasing and Procurement Issues

Percent Standard implemented Mean deviation

"Please evaluate the following questions concerning downsizing and restructuring in your city . . . " combining agency functions" (n = 247) 58.7 3.39 1.33 involving everyone in agency activities

(e.g. decision-making process)" (n = 245) 46.1 2.99 1.33

simplifying rules and procedures" (n = 246) 57.7 3.44 1.19

eliminating different layers" (n = 244) 38.5 2.77 1.43 Index average: 50.2 3.15 1.31

Note: The respondents to this question were asked to rate the applicability of these statements to activities within their government using a five-point scale (5 = fully implemented, 4 = implemented, 3 = actions planned, 2 = no consideration, I = don't know/can't say). For the purposes of this research, "percent implemented" includes "fully implemented" and "implemented."

grated project management. The average index score for these variables is 3.15 on a five-point scale, which indicates a slightly higher than average incidence of integrated project management.

Almost 60% of the respondents noted that they had either fully or partially implemented a combination of agency functions (58.7%) or simplified rules and procedures (57.7%). A total of 46.1% of the respondents stated that they worked in organizations that had fully or partially involved everyone in purchasing and procurement issues. The results for this analysis are shown in Table 5.

The Pearson's correlation coefficients provided only average to weak evidence that municipalities are attempting to simplify and/or integrate project functions and involve more people in decision-making processes. The highest correlation was between involving everyone in the decision-making process and simplifying rules and procedures (r = .458, p < .0 1). Combining agency functions and involving everyone in the decision-making process also received a slightly lower than average level of association (r = .415,p < .0 1). The relationship between involving everyone and eliminating different layers showed only weak levels of association (r = .350, p < .0 1). When municipalities restructure purchasing and procurement systems, they are not actively seek- ing a wide range of individuals to help them. While there is evidence that they are open to allowing more comprehensive input to review rules and procedures, there is less indication that outside advice is sought to downsize or consolidate agency functions. One explanation for this is that municipalities are open to allowing review on policies-which may or may not ultimately be implemented. The effort to downsize or consolidate has a much more definitive result-which could have long-lasting and far-reaching consequences for an organization.



Table 6. Collaboration Scores for Purchasing and Procurement Issues


"In our city, citizens or citizen activists are involved in ... identifying agency/program

goals or objectives" (n = 248) 33.3 2.90 1.06 developing strategies to achieve

agency/ program goals" (n = 248) 27.7 2.83 1.02 developing policy/program

alternatives" (n = 248) 30.1 2.86 1.00 negotiation of agency budgets" (n = 248) 7.3 2.12 .81 determination of city executive budgets"

(n = 248) 12.8 2.05 .79 auditing service and program achievements"

(n = 247) 11.2 2.28 .91 modifying programs and budgets"

(n = 248) 16.5 2.37 .90 evaluation policy/program

achievement" (n = 248) 24.9 2.69 1.00 "Most businesses and nonprofit organizations ... are active in the budget process"

(n = 248) 22.1 2.24 .86 are active in the planning processes" (n = 248) 21.8 2.58 1.00 are cooperative in budget negotiations" (n = 247) 9.6 2.83 .90 Index average: 19.75 2.52 .93

Note: The respondents to this question were asked to rate the applicability of these statements to activities within their government using a five-point scale (5 = strongly agree, 4 = agree, 3 = neutral, 2 = disagree, 1= strongly disagree).

COLLABORATION RESULTS

The index and related scores for collaboration are presented in Table 6. While the Cronbach a suggested a higher level of reliability for this model (.88) than any other, the variables studied in this section provided little evidence that citizens or businesses are actively involved with governments on purchasing or procurement. The average index score was 2.52-well below the average (3.0) score. As Table 6 illustrates, none of the eleven variables studied in this section had a mean score over 3.0. An examination of the relative frequencies showed that, across the board, most respondents disagreed or strongly disagreed with the idea that citizens or businesses were encouraged to collaborate with government on purchasing or procurement issues.

The highest levels of agreement (strongly agree or agree) on the issue of collaboration were concentrated within the realm of policymaking: identifying agency/pro-



Table 7. Bivariate Analysis of Variables Relating to Information Technology, Decentralization, Collaboration, and Comprehensive Project

Management in Purchasing and Procurement

Information Technology Association with use of information

Organizational variables: technology to produce performance data:

Timely use of IT to access information: .735** Use of information systems in financial data: .344**

Decentralization Association with allowing departments

Organizational variables: to delegate purchase information:

Ability to move funds: .340** Purchasing through a simplified process: .455** Delegating purchasing authority: .531**

Collaboration Association with developing policy

Organizational variables: to achieve program goals:

Identifying agency goals/objectives: .770** Developing policy/program alternatives: .704** Negotiation of agency budgets: .388** Determination of executive budgets: .346** Auditing service/program achievements: .464 * Modifying programs/budgets: .415 ** Evaluating policy/program achievement: .466** Businesses are active in budgeting: .254** Businesses are active in planning: .284** Businesses are cooperative in budget negotiations: .288**

Integrated Project Management Association with involving everyone in

Organizational variables: agency activities:

Combining agency functions: .415** Simplifying rules and procedures: .458** Eliminating different layers: .350**

Note: The measure of association used is Pearson's Correlation coefficient, which has a range from -1 (perfectly negative association) to 1 (perfectly positive association). *p < .05, **p < .01.

gram goals and objectives (33.3%), developing policy/program alternatives (30.1%), and developing strategies to achieve agency/program goals (27.7%). Each received support from roughly one-third of the respondents. Interestingly, the lowest level of agreement came in relation to collaboration on budget issues: 12.8% of the respondents agreed/strongly agreed that citizens were encouraged to be involved in modifying program and budgets, 7.2% strongly agreed/agreed that they were involved in the



negotiation of agency budgets, and only 9.6% agreed/strongly agreed that businesses are active in the budget process.

The bivariate analysis indicates some interesting relationships. There is a strong association between using citizens or citizen activists to develop strategies to achieve agency/program goals identifying agency goals/objectives (r = .770, p < .01). A strong association also exists between citizens or citizen activists and developing policy/ program alternatives (r = .704, p < .01). A moderate association exists within the realm of auditing, or evaluating policies (r = .466,p < .01) or auditing program achievements (r = .464, v < .01) with citizens or citizen activist input. Finally, there is a much weaker association between using citizens or citizen activities to help negotiate agency budgets (r = .388, p < .01); determine city executive budgets (r = .346, p < .01); and modify programs or budgets (r = .415, p < .01). This suggests several things. First, municipalities seem to be more interested in having citizens provide input in the early stages of the supply chain-including setting goals and suggesting alternatives. They are less likely to ask for input during or after the policy has been initiated, such as during audits or evaluations of the programs. This may be attributable in part to the fact that audits are financial in nature and are not usually program oriented. Finally, they are least likely to ask for citizen assistance in budgeting matters at any stage (proposal, negotiation, implementation, or modification).

There is even less association between businesses and municipalities when it comes to policy and budgeting issues. The highest level of association is between businesses being active in the planning process and in the budgeting process (r = .632, p < .01). Businesses were not strongly associated with budget negotiations and planning (r = .397, p < .01).

Overall, the level of collaboration between municipalities and business and citizen groups is limited. Municipalities are more likely to have the business and citizen groups involved in the planning or proposal stages of programs than in direct budgeting. This suggests that municipalities are more sensitive to collaborating with outsid- ers when their organizational lifeblood (the budget) is at stake. The results of these calculations are shown in Table 7.

Conclusions These findings suggest that, despite calls from many theorists, professional organizations, and governments, SCM is not happening in the procurement and purchasing areas of most municipalities. Although there is compelling evidence that supply chain management could work (and, in fact, is working) in other applications, such as general administration, program, or policy development, the association ends when money and purchasing questions begin.

One must consider several issues here. First, supply chain management requires not only a change in activities, but also an organizational or cultural change in the way of thinking about service provision and delivery. This may require a change in mindsets as well as a reframing of organizational priorities. While technological change may be seen as good and needed, the actual change in management practices may take longer. This is more than "teaching an old dog a new trick"-it requires a general



change in orientation of many of the traditional ways of thinking and behaving in public organizations. The lapse in acknowledging the need for change and actually implementing that change may account for the relatively low scores reported in this paper. The perceived impact of managers on organizational effectiveness may also play a role here, as the leadership of some may not result in the most optimal outcomes (Elmuti, 2002). Anthony and Young have noted "the focus on management control in an existing organization means that some exciting topics are not given the attention that their importance might otherwise warrant" (1999).

In addition, supply chain management involves many different types of current management ideas. It is difficult to assess if organizations are at different stages in this restructuring process, or if some of the management ideals are easier to implement than others. Future research should explore these possibilities. It is clear that while some organizations have been able to effectively partner with others in the supply chain, others have not. This may be due more to their insular attitude than to inadequate technology (Poirier, 2002). It may also be related to the size of the mu- nicipality, or their ability to provide needed goods and services.

Effective partnerships hold the key to successful interactions with others-both inside and outside of the organization-but they are not in themselves a panacea. Organizations are often ineffective at partnering, for various reasons-including the pressure to protect one's turf and budget, and the stringent procurement requirements (Reed and Swain, 1990). The results of this study suggest that this is partly true. Still, as we see the increasing pressure to work in a global community, the need to work effectively with others in a team approach is paramount. This research has found that when municipal governments seek collaboration on purchasing and procurement, they often look for internal partnerships rather than fostering relationships with (external) businesses or citizens. When citizens are asked to provide input, it is most often in relation to the beginning stages of policy or program management-such as developing strategies or identifying goals. This relationship is especially pronounced when it comes to budgeting-neither citizens nor business groups are actively involved in this stage. This result may be ascribed to the fact that the survey looked at "city executive budgets" rather than the annual budget of the organization as a whole, and so some respondents may have interpreted this as an issue that pertained to de- partmental-level budgets only. It may also be related to organizations believing that external agents may represent a risk of politicizing this sensitive financial information (Reed and Swain, 1990).

In addition, municipalities are not likely to decentralize budgeting issues. The governments in this study were more likely to decentralize informational or procedural decisions within the realm of purchasing and procurement than they were to delegate direct decision-making authority for moving funds or purchasing goods/services. The power of the purse is an important function within organizations. Municipal managers show little indication of sharing this authority with others in their command or those outside of their organizations. This may be because many of these managers feel that they have the most pertinent knowledge relating to specific (budgetary) situ- ations and that they also have the highest stake in their outcomes (Jones and Thomp- son, 1999).



Integrated program management is perhaps the stickiest of all the SCM principles. In a nation where most governments have been organized along the lines of special- ization and division of labor, the change to a more integrated format may not come easily. The findings of this study indicate that municipal managers are most likely to seek internal input on reviewing rules or procedures. They are less likely to open the decision-making process to everyone when it comes to issues that relate to changes in organizational size or make-up. The lack of stewardship for SCM implementation may be one reason the scores reported in this model were relatively low.

Finally, we cannot emphasize the importance of information technology enough. As we enter the twenty-first century, new technology is essential to efficient, effective operations. Governments appear to have noted this need and are working to enhance their in-house systems to accommodate new technologies and new innovations. How- ever, again, these changes are limited when it comes to financial issues. The most significant use of information technology in this analysis relates to the use, timeliness, and accuracy of performance data. In order to be truly competitive in the global arena, municipalities must look beyond the realm of performance data and begin to use information technology in other, equally important arenas such as strategic management or program forecasting.

Despite the calls for increased use of SCM from several professional government purchasing and procurement organizations, supply chain management is still in its infancy in U.S. public procurement systems. Its success in the private sector possibly stems from the fact that managers in the private sector have more control and discretion over the complete budgeting process. Although the same observation cannot be made for the public sector, municipal organizations are making strides toward enhancing procurement outcomes. Supply chain management can play a role here, but it requires a change from traditional management principles. The increased use of SCM in the public sector hinges on additional practitioner education, understanding through use and practice, and the ability to be more flexible with budgeting issues. Although we believe that SCM will play a formative role in the management of public sector organizations, we also understand that this transformation will not take place overnight.

Note The author thanks Dr. Shawn Wang, at the University of Central Florida, for the use of the data set used in this model, and Dr. John Bartle, at the University of Nebraska at Omaha, for his thoughtful comments on the original draft of this paper.

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Ronnie LaCourse Korosec is an assistant professor in the Department of Public Adminis- tration at the University of Central Florida. Her areas of interest include privatization, public policy, strategic planning, and government innovation models.


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Issue Table of ContentsPublic Performance & Management Review, Vol. 27, No. 2, Dec., 2003Front Matter [pp. 1 - 5]Editorial Notes [pp. 7 - 8]What Is Managerial Mediocrity? Definition, Prevalence, and Negative Impact (Part 1) [pp. 9 - 29]Solutions to the Problem of Managerial Mediocrity: Moving up to Excellence (Part 2) [pp. 30 - 52]A Report Card on Report Cards [pp. 53 - 76]Is Local Government Efficiency Measurement in Australia Adequate? An Analysis of the Evidence [pp. 77 - 91]Assessing the Feasibility of Supply Chain Management within Purchasing and Procurement: Results from U.S. Cities [pp. 92 - 109]Self-Designed Teams in Improving Public Sector Performance and Quality of Working Life [pp. 110 - 122]Cases and CommentsAccountability at a Distance [pp. 123 - 125]What's Wrong and What Should Be Done?: Comments on the Case Study [pp. 126 - 131]

Book ReviewsGovernance in Public Administration [pp. 132 - 137]

Back Matter

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