Purchasing as an organizational design problem: the case of non-product-related items and services

This paper discusses the problems and challenges that arise if a firm tries to concentrate purchasing activities in a separate organisational unit. For a variety of reasons, only a – small – part of all purchasing activities in an organisation is actually carried out by a purchasing department or a specialist. In particular, the purchasing of so-called non-product-related (NPR) items and services often takes place without the involvement of a purchasing department. In addition, despite the sometimes huge savings that reportedly are possible by involving a purchasing department, many managers and boards pay only modest attention to such opportunities. In this paper, a conceptual model is proposed that serves, in particular, to explain the Purchasing department’s limited and problematic involvement in a firm’s tactical NPR-purchasing activities. Based on these explanations and results from a small empirical study, we draw conclusions and formulate implications for managers and purchasing specialists. Research implications are formulated as well.