Transcript Slide 1

CURRENT STATE OF
PURCHASING AND SUPPLY
MANAGEMENT IN FINLAND AND
IN RUSSIA - A CROSS COUNTRY
SURVEY
Jari Jumpponen, Sergei Kouchtch,
Katrina Lintukangas, Maria Smirnova,
Veli-Matti Virolainen
Background
• The purchasing and supply management (PSM)
literature has strongly emphasized the strategic role
of PSM and empirically showed that strategic PSM
has influence to the business performance
• The focus of PSM activities has moved towards to
the strategic development of value chain and value
networks in order to improve the competitiveness of
the firms.
• Different views from Finnish and Russian business
Objectives of the study
• The overall objective of this study is to clarify the
current state and future directions of purchasing and
supply management in Finland and in Russia
• Different views from Finnish and Russian business:
- Finland is ranked high in rather many conventional
international competitiveness rankings, whereas Russia’s
ranking has been rather modest. This combination of two
neighboring countries provides interesting context to analyze
and compare the enterprises purchasing and supply
management practices between Finland and Russia.
Strategic Alignment Model
(Cousins, Spekman, 2000)
Desired Level of Strategic Attainment
Corporate Strategy
Supply Strategy
Performance Measures
Skills and Competences
Actual Level of Strategic Attainment
Finland and Russia as Business Environments
Indicator
GDP (PPP) USD per capita (2005)
GDP growth index (2000-2006)
FDI stock, USD per capita (2005)
Share of SMEs in employment (2005)
Finland
Russia
31.590
11.070
119,5
143,7
10.360
930
62%
13%
General features of Russian and Finnish
business management
Finland
Russia
Source
Leadership
• Interaction and
encouraging to
participate to
decison-making
• Authoritarian style
• Role clarifying
• Visions
Suutari and Bolotow
(1996)
Fey et al. (2001)
Cultural
differences
• Low power distance
• Individualistic
• Low masculinity
• Low uncertainty
avoidance
• High power distance
• Collectivism
• Low masculinity
• Low long-term orientation
• General Equality between men and
women
Hofstede
(1984, 1991, 1993)
Bollinger (1994)
Supplier
relationships
• Intention towards
collaborative
relationships
• Value net
• Weak link between suppliers and buyers
• Importance of personal networks
• Transactional and adversial relationships
Johanson and Johanson
(1999)
McCarthy and Puffer
(2002)
Tretyak and Sheresheva
(2005)
Description of national samples
• Finland
• Russia
• self-administered
questionnaires
• fully-structured interviews
• N = 100
• N = 208
• 17 regions
• 6 industry groups
(metallurgy, machinery,
wholesale and retailing, ICT,
forest and woodworking
industries, light industry)
• 8 industry groups
(metallurgy, chemical industry,
construction, wholesale and
retailing, ICT, forest industry,
power engineering)
The research propositions
1) In Finnish companies PSM is considered to be
more often strategic than in Russian companies
2) In Finnish companies collaborative supplier
relationships are more common than in Russian
companies
3) Finnish companies use more PSM and supplier
performance analyzing tools and measurements
4) Finnish companies pay more attention to the
purchasing capabilities than Russian companies
The strategic meaning of supply
Strategic Status and Role
The planning of purchasing
strategy is conducted in
collaboration with other
functions
Purchasing has a significant
role in improving the business
of organization
Russia
Finland
Corporate management
regards purchasing equally
with other functions
Corporate management
participates in the planning of
purchasing strategy
0
1
2
3
4
5
Planning of the future
Long-term Planning
Purchasing has an official
long-range plan (5-10 years)
The long-range plan of
purchasing includes
information of materials and
services to be acquired
Russia
Finland
The long-range plan of
purchasing is revised and
adjusted to meet the strategic
objectives of whole
organization
0
1
2
3
4
5
The financial importance of supply
Financial Importance
Purchasing defines cost
objectives for existing
products and services
Purchasing defines cost
objectives for new products
and services
The total costs of purchasing
are monitored in the
organization
Russia
Finland
The objectives of purchasing
are understood all around in
the organization
Purchasing is responsible for
measurable objectives
0,00
1,00
2,00
3,00
4,00
5,00
Supply capabilities
• Russia: organizational capabilities are
documented
– Reluctance to share information between
companies
– Aligned system
• Finland: benchmarking
Supplier performance monitoring
Supplier performance monitoring methods
5
4,5
4
3,5
3
Finnish firms
2,5
Russian firms
2
1,5
1
0,5
0
Value
analysis
Traget
costing
Cost
analysis
Supplier
auditing
Quality
control
system
Supplier's
service level
Product
quality
Delivery
accuracy
Delivery
reliability
Supply Chain Development
Supply Chain Development
120 %
100 %
80 %
Finnish firms
60 %
Russian firms
40 %
20 %
0%
Outsourcing
Participation in
R&D
Time management Operative actions
Process
development
Supplier
relationships
Conclusion
• We drew together the theories of PSM and cultural
differences in business management between Finland
and Russia and conducted a country comparison of four
elements of PSM. Significant differences were found in
measured items.
• In Russia PSM is not yet seen as a strategic function.
The findings support also earlier studies about cultural
differences in Russia such as collectivism and low longterm orientation
• Intensifying competition forces companies to improve
their performance also in Russia,
Conclusion
• One of surprising results: Russian firms are
more ready to exchange information
electronically
• PSM may become a driver of improvement of
managerial technologies in Russian firms,
aligning overall strategy and contributing to
business development
Thank you for your attention!
• Contact information:
• Jari Jumpponen
• Veli-Matti Virolainen
[email protected]
•