Tactics at the category level of purchasing and supply management: sourcing levers, contingencies and performance

For the ‘front-line’ purchasing agent, it is obvious that not all categories of products and supplier relationships should be managed in the same way. Rather, in a modern category management approach, firms group similar products into ‘sourcing categories’ forming coherent supply markets (e.g., ‘metal sheets’, ‘leather’, ‘displays’, ‘cables’, etc.). Thus, to achieve cost reduction targets, a tailored mix of tactical sourcing levers for each sourcing category may be required. The fundamental question is: Which tactical sourcing levers and activities, under which conditions, yield the highest cost savings? This study provides practical recommendations regarding what sourcing activities should be selected with respect to the characteristics of a particular sourcing category. The research builds on strong collaboration with ‘front-line’ purchasing agents and provides guidelines that can be adopted to verify whether the targeted tactical sourcing levers are actually beneficial for the sourcing conditions faced.