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Measuring Supply Management's Budget Effects Introduction of Return on Spend as an Indicator of Supply Management's Financial Effectiveness

:	Anna Quitt
:	Measuring Supply Management's Budget Effects Introduction of Return on Spend as an Indicator of Supply Management's Financial Effectiveness
:	Gabler Verlag
:	9783834984906
:	1
:	CHF 47.50
:

:	Management
:	English

:	250
:	Wasserzeichen/DRM
:	PC/MAC/eReader/Tablet
:	PDF

Based on practice-oriented and practice-relevant research methods, Anna Quitt, designs an integrated process for measuring supply management's budget effects and develops Return on Spend as an innovative financial effectiveness indicator.

Dr. Anna Quitt was a research assistant at the Chair of Financial Supply Management of Prof. Dr. Michael Henke and obtained her doctoral degree at the European Business School EBS in Oestrich-Winkel.

4 Measurement Process Design: Measuring Supply Management’s Budget Effects– A Qualitative Approach (S. 92-93)

Finding creative problem solutions and thereby acting future-oriented as a vehicle for change, as discussed by several authors (e.g. Borja de Mozota, 2007; Lojacono& Zaccai, 2004; Michlewski, 2008; Ravasi& Lojacono, 2005; Romme, 2003), has been the reason for selecting design sciences as the research strategy for this thesis. The second draft of the savings measurement framework has already been detailed and incorporates the literature as well as practice perspective.

However, it remains theoretical; or as Mintzberg (1979, p. 587) says:“It is the anecdotal data that enable us to do the building. Theory building seems to require rich description, the richness that comes from anecdote.” The existence and relevance of the problem of measuring supply management’s RoS and budget effects has been proven.

A generic measurement approach has been designed, expressed through six design propositions. However, to advance theory building and to provide more specific answers to more specific practice problems– to be more concrete– the framework must be validated and substantiated through qualitative data from practice. Thereby, it is the objective to substantiate the six so far developed design propositions and turn them into general design rules by achieving a higher degree of detail. The following research questions hence need to be investigated:

- Which contextual issues influence the budget effects measurement process in practice?
- How do the single measurement process steps have to be designed to take care of these contextual issues and to achieve reliable measurement results?

To answer these research questions, an exploratory research approach was selected. Yin (2003, p. 23) compares exploratory case studies with an exploration itself, which requires preparation and direction. This rationale is provided through the pre-defined measurement framework and the design propositions. By means of five different case companies, which were analysed with different methodologies, the practice context is investigated in 4.1. Which challenges companies face when trying to measure bottom line effective savings and which deficiencies occur are explored. The different contextual issues were allocated to the respective design proposition to approach those problem-focused.

Thereby, it became obvious that there are process-related as well as organisational-related contextual issues. Since the latter apparently played a significant role in implementing the budget effects measurement process successfully in the long term, they are treated separately in detail in Chapter 5. In 4.2 and 4.3, which are dedicated to the first five design propositions, the entire budget effects measurement process is designed based on experiences and best practice obtained from discussions with practitioners and observations within the case companies.

Each proposition is advanced into a design rule, which lists several possible interventions for supply managers to approach the contextual issue in order to reach their particular measurement objective. By applying this structure, the CIMO-logic is maintained throughout the entire design process. In summary, the design rules can be considered as guidelines for supply managers when setting up and eventually implementing a corporate measurement process for supply management’s budget effects.

	Foreword	6
	Preface	8
	Overview	9
	Table of Contents	11
	Index of Appendixes	14
	List of Figures	15
	List of Tables	18
	List of Abbreviations	19
	1 Problem Set and Course of Investigation	21
	1.1 Supply Management’s Bottom Line Impact – A Never Ending Issue?	21
	1.2 Objectives and Research Questions of his hesis	25
	1.3 Course of Investigation	26
	2 Supply Management’s Financial Effectiveness – ‘The Story Behind it’	29
	2.1 Supply Management’s Role and Corporate Value Contribution	29
	2.1.1 Effective Supply Management – Key for Becoming an Equal Business Partner	30
	2.1.2 Purchasing Performance Versus Performance of Purchasing – A Modified Understanding of Supply Management’s Value Contributi	33
	2.1.3 Different Issue, Participants, and Interests – A Principal Agent Perspective	37
	2.2 Supply Management’s Financial Effectiveness – Return on Spend	40
	2.2.1 Discussion of Different Performance Management Systems as Potential Role Models for Supply Management’s Effectiveness Indicator	40
	2.2.2 Discussion of Different Financial Performance Indicators as Potential Role Models for Supply Management’s Financial Effectiveness Indicator	45
	2.2.3 Supply Management’s Budget Effects as Refined Savings and Basis for Financial Effectiveness Measurement – An Integrated Budgeting Approach	55
	2.3 Design Implications for Measuring Supply Management’s Budget Effects	64
	2.3.1 Process-Related Implications – A First Draft of an Integrated Budget Effects Measurement Process	64
	2.3.2 Organisational Implications – The Consideration of Soft Factors Within the Context of Change	69
	2.3.3 Research Design and Process from the Design Sciences Perspective	71
	2.4 Interim Result: Return on Spend as Newly Defined Indicator of Supply Management’s Financial Effectiveness	80
	3 Measurement of Supply Management’s Bottom Line Impact: Status Quo and Future Requirements	82
	3.1 Quantitative Methodology	82
	3.1.1 Questionnaire Design	83
	3.1.2 Data Collection	85
	3.1.3 Sampling	86
	3.2 Status Quo of Savings Measurement Practices	87
	3.2.1 Sample Characteristics	88
	3.2.2 The Relevance of Measuring Supply Management’s Bottom Line Impact	89
	3.2.3 Current Savings Measurement Practices	91
	3.3 Requirements for Supply Management’s Budget Effects Measurement	98
	3.3.1 Components’ Relevance for an Adequate Measurement Approach	99
	3.3.2 Dependence of Measurement Certainty on Specific Measurement Components	102
	3.3.3 Desig