Improving start-ups' attractiveness as industrial customers by organising their purchasing activities
Juliano Tessaro (co-authors Dr Rainer Harms and Prof. Dr. habil. Holger Schiele)
EL-IPS, University of Twente
About the first author
Juliano Tessaro conducted his PhD research at the University of Twente, Netherlands. He has over twenty years of experience in purchasing and currently serves as Procurement Director at a Fortune Global 500 company in Amsterdam. He worked in automotive, Big4 consulting firms, start-ups and other Brazilian, American, and European companies and received several professional honours and awards for his contributions to the purchasing community. His research interests lie in the field of purchasing and entrepreneurship. He has published several papers at international conferences and well-known journals such as Industrial Marketing Management and the Journal of Global Operations and Strategic Sourcing. He was also a member of several professional associations and a guest speaker at many events.
Short abstract
Our study looked closely at how start-ups and young companies manage their purchases to become better customers of large suppliers. We interviewed people from different start-up companies and suppliers in eight countries to do this. We discovered that start-ups have five main ways of organising their purchasing activities: Partial outsourcing, Transactional-oriented, Strategic only, Outsourced purchasing, and Full department. In summary, some do it themselves, some are very strategic, and some even outsource the purchasing function. Each approach has its pros and cons.
So why does this matter? Well, for start-up founders and purchasing managers, our research offers a roadmap for organising their purchasing activities, including when it might make sense to outsource.
Extended abstract
The article "Designing Purchasing Organisational Types for Start-up Companies," published in the Journal of Global Operations and Strategic Sourcing, focuses on exploring purchasing organisational types tailored to start-ups. The article seeks to answer three research questions: 1) What are the possible organisational types for purchasing in start-ups? 2) When is each organisational type preferable? 3) What are each organisational type's success factors and possible pitfalls?
The authors conducted qualitative research with twenty start-up companies. The first step consisted of in-depth interviews that identified five design options for start-up purchasing organisational types. The design options range from the unstructured organisation through hybrid, outsourced and centralised into the more structured organisation. The unstructured organisation has the least formalisation, while the more structured organisation has the most.
After collecting the data, the authors used a World Café event (i.e. expert panel meeting) format to present the design options and elicit participant feedback. The outcome of the World Café event was used to refine the five design options. The authors found that the factors influencing purchasing organisation design in start-ups include the following: start-up development stage (early vs later stage), process formalisation needs, flexibility needs, industry, team size, and purchasing volume.
The study concludes that while start-up companies have different concerns regarding purchasing, their needs can be classified using five generic start-up purchasing organisational types. Furthermore, the five generic purchasing organisational types can be adjusted based on contextual factors, which the authors outline thoroughly. This article's significant contribution is identifying five purchasing organisational types for start-up companies, which could significantly improve the start-up's efficiency.
The article provides an important starting point for researchers to continue to explore more efficient purchasing organisational design solutions for start-up companies. Despite the sample size limitations of qualitative studies, such as the World Café and interviews, it provides an essential foundation for future research based on the identified purchasing organisational types tailored to start-ups.
Additional/further reading
· Link to the article (open access): https://www.emerald.com/insight/content/doi/10.1108/JGOSS-07-2022-0083/full/html
· LinkedIn: Click this link
· Website: https://www.utwente.nl/en/bms/el-ips/