Journal of Purchasing & Supply Management xxx (xxxx) xxx

Contents lists available at ScienceDirect

Journal of Purchasing and Supply Management

journal homepage: www.elsevier.com/locate/pursup

Evaluating the identity of purchasing & supply management: Roadblocks to

moving beyond a cost-focused identity
Monique L. Ueltschy Murfield a, *, Lisa M. Ellram b, Larry C. Giunipero c
a
Department of Management, Richard T. Farmer School of Business, Miami University, 100 East High Street, Oxford, OH, 45056, USA
b
Rees Distiniguished Professor of Supply Chain Management University Distinguished Professor, Department of Management, Richard T. Farmer School of Business,
Miami University, 100 East High Street, Oxford, OH, 45056, USA
c
Florida State University, College of Buiness, 821 Academic Way, Tallahassee, FL, 32306, USA

A R T I C L E I N F O A B S T R A C T

Keywords: Practitioners and researchers recognize that purchasing and supply management (PSM) contributes value to
Social identity business performance beyond reported cost reductions, though capturing and evaluating such contributions is
Purchasing and supply management often challenging. The goal of this research is to understand roadblocks impeding the recognition of PSM’s
Value
contributions beyond cost reduction, and suggest potential solutions to these challenges. Social identity theory
Cost reduction
Metrics
offers a conceptual framework to study PSM’s self-identity and how it is perceived by others in the organization.
Qualitative interviews Gaining acceptance for value-added metrics is critical to move perceptions of PSM’s contribution beyond cost
reduction and achieve its full potential. Social identity theory is used as a lens to assess the data and develop
propositions. Using a qualitative interview method, the researchers identified important roadblocks hindering
PSM’s attainment of a broader value-based perception. PSM’s identity is closely linked to cost-savings by itself,
other functions and upper management. These perceptions are further reinforced by PSM through excessive cost
reporting metrics. We provide two suggested solutions for PSM to expand its recognition beyond cost savings: 1)
PSM must change its narrative and associated self-identity; and 2) PSM needs to develop metrics that are
meaningful across multiple areas of the business.

1. Introduction
Researchers have recognized that the role of purchasing/supply
management (PSM) practitioners is substantially changing and evolving
over the last several decades (Johnson et al., 2014; Wynstra et al., 2019).
In today’s increasingly dynamic and uncertain environment, PSM can
and does contribute value to business success on many dimensions. In a
longitudinal comparison between 2003 and 2011, Johnson et al. (2014)
found that PSM professionals are increasingly responsible for corporate
objectives such as risk management, environmental sustainability,
capital investments planning, financial cash flow planning, facility
design and more. The literature supports that PSM has developed a
strategic role in many organizations. However, there is little evidence
that the way that PSM is evaluated within organizations has kept up with
this change (Pohl and Förstl, 2011). PSM is still stereotyped to focus
mainly on cost reduction in many organizations, and is therefore trap­
ped in a cost-focused identity.
Despite the fact that numerous researchers have observed that PSM
has moved from a transactional, cost reduction focused role to a stra­
tegic role (Johnson et al., 2002; Kocabasoglu and Suresh, 2006; Mon­
zcka et al., 2016), PSM continues to struggle with its identity (Ellram
et al., 2020a; Tchokogué et al., 2017). While cost reduction will always
be an important measure of PSM’s responsibility (Ellram et al., 2020b),
PSM would like to be recognized for more strategic value creation (Pohl
and Förstl, 2011; Schutz et al., 2020). Value creation encompasses
company-level business outcomes and goes beyond cost reduction
(Cousins et al., 2006; Schiele, 2007), including areas such as revenue
generation, working capital and cash flow, innovation, new product
development, risk mitigation, and supply continuity.
A recent article summarizes thoughts of leading PSM scholars on
issues surrounding a debate on PSM’s internal and external identity
(Ellram et al., 2020a). Scholars agreed that part of the reason the
identity of PSM has been questioned is because PSM has experienced
evolving roles and responsibilities, frequent changes in organizational
reporting, and changing job titles (Johnson et al., 2014). This “contin­
uous change makes it difficult to form identity coherence and gain the

* Corresponding author.
E-mail addresses: murfieml@miamioh.edu (M.L. Ueltschy Murfield), ellramlm@miamioh.edu (L.M. Ellram), lgiunip@business.fsu.edu (L.C. Giunipero).

https://doi.org/10.1016/j.pursup.2021.100687
Received 1 June 2020; Received in revised form 16 March 2021; Accepted 23 March 2021
Available online 30 March 2021
1478-4092/© 2021 Elsevier Ltd. All rights reserved.

Please cite this article as: Monique L. Ueltschy Murfield, Journal of Purchasing & Supply Management, https://doi.org/10.1016/j.pursup.2021.100687
M.L. Ueltschy Murfield et al.
support of organizational members in practice” (Ellram et al., 2020a,
p.3).
Part of the challenge in moving beyond a cost-focused identity is that
PSM performance measurement is often biased toward cost reduction
activities (Pohl and Förstl, 2011), and other areas of value contribution
(e.g. risk mitigation or innovation) may be more qualitative and difficult
to assess. Van Hoek et al. (2014) found PSM’s consensus mandate from
the C-Suite and peer functions was cost reduction. The problem is that
this strong cost orientation can encourage PSM to over-emphasize cost at
the expense of value (Ellram et al., 2020b), which can further reinforce
PSM’s strong cost identity and limit its ability to participate in other
value-focused ways (Van Hoek et al., 2014). This research explores
reasons for PSM’s persistent cost identity and how PSM can mature to
improve their overall identity. Focal research questions are:
1. What are the challenges or “roadblocks” to PSM moving beyond a
cost-focused identity?
2. What are possible solutions for PSM moving beyond a cost-focused
identity?
This research utilized in-depth qualitative interviews with 23 PSM
leaders and 3 CFO representatives at 20 large organizations. We use
social identity theory as a theoretical lens to interpret the results, better
understand some of the challenges, and discuss solutions for a way
forward in the evolution of PSM’s identity.
2. Literature review
2.1. The evolution of PSM in bringing value to the firm
2.1.1. The primacy of cost savings
Amner’s (1974) classic article on the role of PSM describes a gap
between what top management perceives as PSM’s identity and how the
PSM function sees its own identity. Those findings stated that the PSM
manager should balance pleasing the user with low price. In later
studies, Ellram (1992) found that a large majority (77%) of respondents
should be involved with cost reductions. She also found that the lack of
input into firms’ strategies and the lack of support from the C-Suite
limited PSM’s ability to justify these savings to management.
In response to a decade of relationship-focused articles, Kapoor and
Gupta (1997) suggested that purchasers needed to return to their roots
and re-establish tension in the buyer-supplier relationships by
leveraging the free market. Focusing on “indirect spend,” they believed
partnerships had sheltered suppliers from “rigorous competitive scru­
tiny” that could lead to large improvements in price without sacrificing
quality or functionality. More recently, Nollet et al. (2008) confirmed
that in many industries PSM measurement is driven by cost savings, and
that cost savings measurement systems often become too complex to be
useful. Van Hoek et al. (2014) found that perception of PSM as only a
cost-cutter limits its ability to participate in and influence more strategic
value-added activities within the organization. Finally, Schutz et al.
(2020) stressed how both scholars and practitioners consider cost sav­
ings as PSM’s main contribution. They found a significant relationship
between PSM knowledge and cost savings, and that PSM knowledge and
strategic involvement improves financial results.
2.1.2. PSM’s strategic emphasis
Despite the focus on cost savings, scholars have long asserted that
PSM must have a strategic emphasis within the firm (e.g. Giunipero
et al., 2006; Krajlic 1983; Paulraj et al., 2006), and that its strategic
contribution is multi-faceted (Carr and Smeltzer, 1997; Giunipero et al.,
2005; Tchokogue et al., 2017) and goes well beyond cost reduction
(Cousins et al., 2006; Schiele, 2007). Ellram and Carr (1994) point out
that PSM’s accountability for strategic goals is not synonymous with
playing a strategic role in the organization, and it is in the latter that
PSM has frequently come up short. Strategic supply management has
2
Journal of Purchasing and Supply Management xxx (xxxx) xxx
been associated with improved firm performance and a competitive
advantage (Yeung, 2008). Being recognized as strategic implies that
PSM adds value to the firm beyond its traditional cost reduction focus
(Kahkonen and Lintukangas, 2012).
Multiple research streams discuss the concept of value. This includes
relationship marketing (Gronroos, 1997; Lindgreen et al., 2012; Ritter
and Walter, 2012) and value gained from relational exchange in
buyer-supplier relationships (e.g. Chatain, 2010; Dyer and Singh, 1998;
Dwyer et al., 1987; Ulaga and Eggert, 2006; Walter et al., 2001).
Although value creation in PSM has been underemphasized, PSM’s po­
sition in the organization provides a “natural role to combine value
created by several firms” (Jaaskelainen et al., 2016, p.1), acting as a
boundary spanner and a bridge builder, both internally and externally
(Ellram et al., 2020a). Kahkonem and Lintukangas (2012) postulate that
if PSM is strategic and efficient it can generate many benefits and cost
savings, thereby creating more cost savings for the organization. Spe­
cifically examining PSM’s value contribution, Hartmann et al. (2012)
found that supplier management, cross functional integration, strategy
development/alignment, human resources management within PSM
and internal PSM measurement, tracking and accountability all lead to
superior PSM value creation, contributing to improved company out­
comes. Based on a review of two decades of literature (Terpend et al.,
2008), significant value is also derived from buyer-supplier relation­
ships, specifically: 1) operational performance; 2) innovation; 3) sup­
plier capabilities; and 4) financial performance. Despite the recognition
that companies are increasingly emphasizing PSM’s strategic value
streams, a recent practitioner study found price (negotiations and cost
savings) is still the primary area tied to bonus structure on PSM score­
cards (The Hackett Group, 2018a, 2018b), and still a primary goal,
despite PSM’s recognized contribution to value areas such as NPD (Ell­
ram et al., 2020b). This leads to questions around PSM’s identity and
how identity may contribute to its ability to be recognized beyond cost
savings within the organization.
2.2. Social identity theory foundations
Social identity theory provides a framework to understand why some
organizations focus more on PSM value while others struggle to gain
acceptance for measures beyond cost. Identity theory and social identity
theory address the fundamental question, “who am I, and how do I fit
into my surroundings?” (Ashforth and Schinoff, 2016). In both social
identity and identity theory, self-categorization effects the formation of
one’s identity. (Stryker, 1980). Self-categorization is a social compari­
son process (Brown, 2017). Persons who are similar to the self are
categorized with the self and are labeled the in-group; persons who
differ from the self are categorized as the out-group. “The consequence
of self-categorization is an accentuation of the perceived similarities
between the self and other in-group members, and an accentuation of
the perceived differences between the self and out-group members. This
accentuation occurs for all the attitudes, beliefs and values, affective
reactions, behavioral norms, styles of speech, and other properties that
are believed to be correlated with the relevant intergroup categoriza­
tion.” (Stets and Burke, 2000, p. 225).
More recently, researchers have recognized that the organizational
identification process is dynamic in nature, as individuals revisit their
relationships with organizations on an ongoing basis (Ashforth et al.,
2008; Brown, 2017). Identity theory is predicated on self-concept and
role identity. Alternatively, social identity theory consists of three parts:
1) the self-concept or how we see ourselves; 2) social identification
based on how others see us as members of groups; and 3) group identity,
or how we relate to other individuals, groups and functional areas in the
‘communities’ in which we operate.
First, self-concept is similarly derived and defined in both social
identity theory and identity theory (Stets and Burke, 2000). Self-concept
(how we see ourselves) is unique to our history and group membership
overtime (Hogg et al., 1995). Professional identity is one aspect of
M.L. Ueltschy Murfield et al.
self-identity and has been defined as “one’s professional self-concept
based on attributes, beliefs, values, motives, and experiences” (Slay
and Smith, 2011).
Second, social identification, how others see us (Ashforth and Mael,
1998), is our identity derived from our group membership. Social
identity theory predicts certain intergroup behaviors through observing
perceived group status differences, perceived legitimacy and the sta­
bility of those status differences (Tajfel and Turner, 1979). Social
identities, such as our professional identities, emerge from our work­
place roles and in-group versus out-group perceptions (Ashforth et al.,
2008).
The third dimension, group identity is about how we, in our orga­
nizations or communities, relate to other individuals, groups and func­
tional areas (Slay and Smith, 2011). These communities may include the
workplace, professional associations or other organizations in which we
participate. These ‘defining communities’ may include community tra­
ditions (MacIntyre, 1981) which members continue and which influence
individuals’ perceptions of their identities (Taylor, 1989).
Taken collectively, the identity of a function (PSM) is formed via
individual, in-group and out-group interactions under the umbrella of an
organization. Individual identity within an organization emerges from
the individual’s roles and the groups or functions to which it belongs
(Ashforth et al., 2008). Identity can exist at various levels in the work­
place, including department, function, cohort and hierarchy (Ashforth
and Mael, 1998). Group identity may impair group performance and
intergroup dynamics, as groups or functions compare themselves to
others and want to be viewed as somehow superior to outgroups (Tajfel
and Turner, 1986). However, research has shown that when groups
identify more with their ingroup than with the organization, dysfunc­
tional behaviors can occur that may optimize functional performance at
the expense of the organization (Ashforth et al., 2008).
In summary, according to identity and social identity theory, PSM’s
role(s) within an organization can combine the individual and social
identification perspectives of identity. Individuals create and internalize
meaning based on their roles (Stryker and Burke, 2000) and
self-perception in those roles (Brown and Lewis, 2011; Brown and
Toyoki, 2013). This internal self-perception affects their own behaviors
(Bergami and Bagozzi, 2000; Brown and Toyoki, 2013; Morrison 1994).
It occurs at the individual and group levels and affects the organization
they work for. Elements of identity theory and social identity theory are
increasingly combined in research today (Ashforth et al., 2008; Ashforth
and Schinoff, 2016; Stets and Burke, 2000).
In this paper, we take an interpretivist orientation towards identity
construction, which emphasizes how individuals interact in groups and
within the organization in constructing dynamic, yet fairly stable
identities (Ashforth and Mael, 1989; Ashforth and Schinoff, 2016).
Regarding PSM, prior studies indicate that PSM’s primary contribution
or identity is closely associated with saving money/reducing costs in the
organization (Nollett et al., 2008; Pohl and Förstl, 2013; Van Hoek et al.,
2014; Tchokogué et al., 2017; Ellram et al., 2020a, 2020b). This identity
dominates and persists despite the fact that PSM has other objectives and
makes additional value-adding contributions to the organization. Many
PSM organizations have to prove that they are legitimate contributors to
corporate success. This requires expanding their functional identity in
the eyes of other functions and top management (Tchokogué et al.,
2017).
2.2.1. Changing identity
Previous research has explored how individuals change the social
identities they hold, and the relations within the groups in which they
operate (Haslam, 2001). Further, changes within the job, group or or­
ganization, can potentially present both opportunities for and threats to
an individual’s sense of social identity (Hotho, 2008). If the social
identity is unsatisfactory, individuals seek to change that by joining a
group (function) with a more positive identity, or by working to change
the identity of their current group (Tajfel and Turner, 1979). Extending
3
Journal of Purchasing and Supply Management xxx (xxxx) xxx
this research to PSM, we could postulate that the function must evaluate
their perceived ability to change their identity, assess how can they
change the narrative (e.g. cost-focused to value-focused), and finally
enact behaviors to permit access to these higher-level groups.
3. Methodology
3.1. Sampling & data collection procedures
This research used in-depth semi-structured interviews to investigate
the phenomenon of interest (McCracken, 1988). This allowed us to
analyze a detailed level of dialogue (narrative) that is typically part of
identity research (e.g. Brown and Lewis 2011; Tajfel and Turner, 1979).
Fig. 1 provides an overview of the research process. A multi-stage
approach was used whereby the researchers first reviewed existing
literature on PSM identity and evolution. Additionally, preliminary
discussions were conducted with several CPOs and high-level finance
professionals in order to scope the research, identify critical issues and
develop the interview protocol (see Appendix A).
A convenience sample was used based on volunteers from a PSM
professional organization and graduates of a PSM Executive Master’s
program in Europe. We included participants from across industries,
service and manufacturing-oriented sectors, in order to observe the
phenomenon across multiple contexts (Pagell et al., 2010). All re­
spondents and companies that volunteered were interviewed between
April 2019 and September 2019. After the interview process, it was
determined that several were not able to provide in-depth insight into
PSM’s value-added contributions and metrics, and those were elimi­
nated. Target participants were CPOs and CFOs, or Director-level par­
ticipants when access to the C-Suite was not available. Primary
participants were in PSM roles, with other functions (e.g. finance) added
when access was available.
This research includes interviews with 26 executives (23 PSM di­
rector and above, and 3 CFO representatives) at 20 organizations, across
a broad range of industries consisting of: 1) electronics, 2) consumer
goods, 3) utilities, 4) financial services, 5) defense, 6) petroleum, 7)
transportation, 8) pharmaceuticals, 9) cosmetics, 10) packaging, 11)
telecommunications and 12) not for profit. Data collection and analysis
began before all cases were identified, as sampling continued until
theoretical saturation was reached for the PSM perspective, and addi­
tional interviews uncovered no new relevant information (Glaser,
1978). Perspectives outside PSM were obtained when possible. While
the researchers were not able to access a sufficient number of non-PSM
participants to reach theoretical saturation, these interviews were
included for their novel insights. Table 1 provides information on all
study participants, and Appendix B presents additional, anonymized
information on each organization.
The semi-structured interview protocol allowed for flexibility in
participant responses (McCracken, 1988; Miles and Huberman, 1994),
and open-ended questions were adjusted slightly for participation from
different functional areas and positions. The interviews included mul­
tiple researchers, and most interviews were audio recorded and then
transcribed, enabling capture of the participant’s narrative and context.
When recording was not possible, at least two researchers took notes.
Researchers compared and compiled notes as soon as possible after each
interview in order to track initial interpretations and topics for further
expansion (Bernard, 2006). Each interview lasted between 45 and 90
minutes, for a total of approximately 1600 minutes of recordings. This
resulted in over 400 pages of transcribed data for coding and analysis.
3.2. Data analysis and proposition development
Multiple researchers coded each interview, ensuring that if a
researcher was not present for an interview they were one of the re­
searchers coding the interview. Thus, each of the researchers were
exposed to and familiar with all of the interviews, which resulted in each
M.L. Ueltschy Murfield et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx

Fig. 1. Overview of research process.

Table 1
Study participants.
Company Company description Title of participant(s) Purchasing Reports to: Frequency of
Interaction with C-
Suite

Bank Financial services Company CPO–PSM (Country) Spend; Manager–PSM (Country) CFO None specified
Chip Semiconductor Company VP of World Wide PSM and Logistics CFO None specified
Conglomerate Conglomerate Company Manager of SC Center of Excellence SVP of Supply Chain Meet once per month
Contractor Electrical Manufacturing Director of strategic project PSM operations Chief Operating Officer Meet once per month
Company
Cosmetic Cosmetics Company Purchasing Innovation Manager Division Purchasing Director None specified
Courier Courier Company VP of Sourcing & PSM Chief Accounting Officer Meet once a year
CPG Consumer Goods Company Purchases Capability & Strategy; CPO None specified
Finance Director
Defense Defense Contractor Company Director, Supply Chain Management VP of Supply Chain None specified
EEEM Electrical & Electronic Equipment VP of Global Supply & CPO CFO direct/CEO dotted line Several times a year as
Company needed
Electric Electric Utility Company Director of Corporate PSM; Manager of Analytics & CPO None specified
Performance Management
Engineering Engineering Company Director, Commercial Strategies Chief Strategies Officer/SVP Meet daily or every 2
days
Hospitality Hospitality Company- Food Sr. VP of Supply Management for North America CEO of Service Operations/CPO Meet once per month
Service of Supply Management
Network Network Infrastructure Company VP of PSM, Americas COO None specified
Nonprofit Nonprofit Organization, VP and CPO; CFO Annually or as needed
humanitarian and health CFO
Oil Oil Industry Company GM transformation & development in PSM; SC Business VP of Contracting and PSM None specified
Advisor for EVP of PSM; Finance Manager PSM Downstream Finance
Packaging Packaging VP, Global Supply Management VP, Global Supply Management Meet once per month
Pharma Consumer Products Mfg. VP of Business Management CPO dotted line None specified
Company/Pharma
Refine Petroleum Refining Company Director of PSM CFO Meets once a year
Tele Telecommunications Company Head of Design to Cost CFO None specified
Utility Electric & Natural Gas Utility Director of Supply Chain CPO Meet twice per week

4
M.L. Ueltschy Murfield et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx

researcher coding approximately 20 interviews. The researchers used
NVivo qualitative data analysis software to first perform open coding,
starting with high-level codes based on the interview protocol. Re­
searchers each added open codes as needed and then discussed with
each other to ensure the consistent meaning across each person
analyzing the data. All coding differences were resolved through dis­
cussion. After discussing initial open codes to determine categories, the
researchers then used axial coding across the themes and main cate­
gories that emerged throughout the interviews (Glaser, 1978;
McCracken, 1988).
As part of the qualitative data analysis process, an iterative approach
was used whereby researchers consulted existing literature, discussed
and reconciled codes, and continued coding more interviews (Strauss
and Corbin, 1998; Miles and Huberman, 1994). If any critical informa­
tion was missing from specific interviews, the researchers followed up
with the participants to clarify concepts or seek out missing information.
After the researchers identified major categories and themes and dis­
cussed results at a high level, each researcher independently linked
themes to social identity theory. The researchers then discussed and
refined the research propositions based on the data, and consulted
existing literature for further development and theoretical support of the
propositions.
4. Results
Refine’s CPO emphasizes, “… Both the CFO and the CEO are numbers
guys. We have a very mature and well documented and audited value
capture program. They believe the numbers.” Table 2 provides a sum­
mary of some of the observations made by other participants regarding
the importance of cost and related financial measures.
A major reason for cost primacy is the lack of C-Suite acceptance of
non-financial measures. There is some fear that this may not change. As
noted by Refine, “I’ll tell you how I look at it, I think it’s easier if you
report to an operation’s leader to get away from true dollar driven or
financial driven targets, but as long as I report to the CFO, I don’t see it
happening.”
In the manufacturing sector, 55% of the spend goes through PSM,
with around 40–45% at many service sector firms (Monczka et al.,
2016). Thus, it is not surprising that PSM is strongly identified by the
C-Suite as a primary source of cost reduction. From a theoretical
perspective, this external identification of PSM with cost savings shapes
the C-Suites’ expectations of PSM. Some quotes related to the impor­
tance of cost savings in performance evaluation are included in the top
half of Table 2. Recall that social identity is based on how others
perceive us and our place as members of groups (Ashforth and Mael,
1998; Ashforth et al., 2008). The social identity PSM portrays to the
C-suite is closely associated with cost savings. This identity is further
reinforced by the organizational structure. In seven of the 20 companies
studied, PSM reports to the C-Suite through the Chief Financial or

Participants shared insights on roadblocks that inhibit PSM’s ability

to move beyond a cost focus in PSM within their respective companies.
Results show three major roadblocks to moving beyond a cost focus:
1) Primacy of cost
2) Difficulty with perceptions outside of PSM
3) Value adding areas of PSM are difficult to measure and limited by
data availability & accuracy
We provide two solutions for helping PSM expand its recognition
beyond cost savings:
1) PSM must change its narrative and associated self-identity
2) PSM must develop metrics that are meaningful across multiple areas
of the business
This section discusses the qualitative results supporting each of the
three roadblocks and associated solutions, develops research proposi­
tions based on the qualitative data, and frames each proposition within
existing literature and a social identity theory lens.
4.1. Roadblock #1 and #2–primacy of cost and difficulty with
perceptions outside PSM
As supported in the literature, cost savings is a primary, if not the
primary metric for all organizations participating in this research. It was
mentioned 175 times during the interviews. The next most frequently
mentioned area of contribution was risk management, mentioned 97
times. All companies in the study report cost savings metrics to the C-
suite. There is no other metric that is universally reported. In five of the
companies, cost savings was the only metric consistently reported to the
C-Suite, as summed up by Network’s CPO, “The things that matter:
Savings delivered, savings targeted, addressable spend, and the
compliance spend—those are the ones that matter, nothing else
matters.”
While not all participants expressed views this extreme, cost savings
is arguably purchasing’s strongest role (Deloitte, 2019; Pohl and Förstl,
2011; Van Hoek et al., 2014). EEEM’s CPO notes, “Anybody in this
space, if you don’t take cost on first, I think you’re crazy. You’re not
going to be long for the job.” The typical way of measuring cost savings
among all the companies studied was year-over-year cost reduction.
Table 2
PSM sample quotes on the importance of cost savings to out-groups.
How defined/measured
Importance of year-over-year cost
savings for evaluation by C-Suite
Importance of cost savings to
outgroups
Illustrative quotes
“Internally, the PSM team is rated on how
much savings they are bringing in by
negotiating.” (Engineering)
“So we’ve got a cost saving, cost avoidance.
It’s our KPIs … It’s [not about profit], but
doing more things with the same amount.”
(Utility)
“I mean I would say the number one thing is
total value. How much value did we deliver
through cost savings, through rebates.”
(Hospitality) (note—cost reduction
synonymous with value here)
“The things that matter: Savings delivered,
savings targeted, addressable spend, and the
compliance spend—those are the ones that
matter, nothing else matters.” (Network)
“All (of our metrics) are critical, cost savings
for obvious reasons is foremost in many areas
of the business.” (Courier)
“I think we’re still a little bit stuck in, I guess
that trap of we measure our performance a lot
based off of our cost savings. We track other
things, but I think if you asked some of our
analysts, they still probably lean towards cost
savings.” (Electric)
“I have independent resources come in from
accounting and we talk through each of (cost
savings calculations) … It’s our third-party
eyes and ears to say whether or not we are
measuring something in the right manner and
whether it passes the sniff test in terms of truly
delivering benefit for the organization.”
(Refine)
“Yes, (cost) is always the opener [with the
CFO]. And no matter how good you do at it,
you better be comfortable that you’re going to
be told you’re not doing good enough all the
time.” (EEEM)
“Yeah, we kind of have a saying that
everything we do, every metric we take on,
every goal we do, we have to relate it back to
booking, sales, profit, cash … culturally we
have found that to be very important.”
(Defense)

5
M.L. Ueltschy Murfield et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx

Accounting Officer (CFO), so the emphasis on cost and financial metrics around cost savings. He goes on to note, “[Changing perceptions of PSM]
is understandable. Thus, Proposition 1 states: … is more about a change in the narrative, evolving to one that’s much
more about [value], I don’t think we need any more measuring contracts
Proposition 1. The social identity of PSM at the C-Suite is primarily
and procurement performance or how good we are running the pro­
associated with quantitative cost reduction measures.
cesses that everyone uses.”
As stated above, cost reduction is viewed as both the primary metric As indicated in Table 3, PSM participants often indicate that their
of PSM and the main metric reported to the C-Suite. This sends a strong peers and top management don’t recognize their value-adding activities
message to PSM that its value or contribution to the organization comes and question their credibility. The non-PSM participants, while limited
largely through its cost reduction efforts. This does not mean that other to only three finance representatives, had a strong emphasis on the
activities are unimportant—as supplier quality, reliability and other concept of value, though that was not always clearly defined or clearly
internal operating performance outcomes are still expected. measurable. There is a view by both PSM participants and non-PSM
The bottom half of Table 2 highlights selected quotes from partici­ participants that cost savings should perhaps be framed differ­
pants expressing how specific out-groups, such as finance and ac­ ently—as contribution to profit, as money available for reinvestment,
counting, expect strong financial (especially cost reduction) money for new product development, acquisition, etc., so that cost
performance. This is a type of social identification, which shapes how savings results are viewed more strategically.
other functions in the organization, including the C-Suite, see PSM
Proposition 3. PSM’s self-identification with the primacy of cost savings
(Ashforth and Mael, 1998; Tajfel and Turner, 1979). According to social
may limit its recognition and credibility as a contributor in other areas.
identity theory (Brown 2017), identities can and do evolve. There must
be some noticeable change in behaviors or activities of the in-group to This is an important insight, and one that PSM participants in the
influence the views of the out-groups towards PSM (in-group). These study did not appear to recognize. They attributed the cost measurement
out-group views also impact PSM personnel’s self-identity. One of the focus to the C-suite and other outgroups, but overlooked PSM’s decision
biggest challenges participants discussed is the difficulty with outgroup to place heightened emphasis on cost through presenting multiple cost
perceptions of PSM, and the need to educate and get buy-in from ex­
ecutive teams and others in the organization to move beyond being
viewed as a cost-focused function. Courier noted that there is a “lack of Table 3
education regarding why other types of metrics are important, and we Perceptions of PSM with outgroups.
have responsibility for closing that gap.” Several participants empha­ Issues Representative Quotes
sized that their executive team and other areas do not recognize the •Lack of education or “buy-in” on why “… this is about education for a lot of the
value that PSM brings to the organization unless it is tied to bottom line other types of metrics important executive team. They’re not used to this.
impact. As expressed by Conglomerate: “Everything needs to have bot­ •Part of challenge is PSM often not They think it’s as simple as purchasing
tom line impact or it is a tough sell. We try to get around that by showing good at communicating role and talking about purchase price variant or
value beyond cost some tactical pricing improvement … and
where we should be taking price increases due to market changes. […]
•Executive team and other areas of it doesn’t have anything to do with
We do have an urgency to get other levers taken seriously, [such as] companies do not recognize value continuity of supply or how it actually
early PSM involvement, we need to push on softer metrics.” Contractor that PSM brings unless tied to bottom helps run the business better.” (Non-profit
echoed this sentiment, “The only thing we really get credit for are those line impact CFO)
things that we can put hard dollar values on, so that’s the cost •Perception of PSM is just tactical, “In all the industries I’ve worked in, I
many do not see strategic value bring would say one of the biggest impediments
reduction.”
to company I think procurement faces when we talk
Participants from Pharma, Nonprofit, Cosmetic, and Oil expressed about this stuff is being able to educate
frustration with the perception of others that PSM is very tactical, and the senior leadership of the organization
others within the company not seeing the strategic value that is deliv­ about what this [non-cost impact] and
why it matters … …I think to me, that’s
ered through PSM. Pharma’s executive explains, …the way PSM and
always been a barrier for procurement
purchasing is perceived is very conservative. Probably it’s because of us. and supply chain is to be able to do that.
Maybe we are not good salesmen, so we cannot sell ourselves into the We don’t do that very well typically. We
organization. Many people don’t know what PSM is doing. They believe just typically throw things out there and
we are just picking up the phone, calling a guy, getting a price, and expect people to get it, and they just
don’t.” (Non-profit CPO)
buying something. Perhaps make a contract. But they don’t have an idea
“In order to not lose credibility, we
of all what we need to do, also, in terms of risk mitigation, because this is decided to only report things that directly
also non-monetary, but we can make a lot in ensuring that we will be flow to the P&L and can be tied directly to
able to produce always. line items.” (Conglomerate)
“The image of purchasing is terrible.
Based on the discussion above, we propose:
[Many] people think that purchasing
Proposition 2. The social identity of PSM with outgroups such as other needs to focus only on cost and pressure
over the suppliers why they don’t deliver;
functions and business units is primarily associated with achieving quanti­
that’s terrible.” (Cosmetic)
tative, measurable cost reduction. “I don’t know how much you hear this
from some of the other folks you’ve talked
However, as much as PSM indicates that there is external pressure to
about, but it doesn’t take much to lose
achieve cost savings, there was also a sentiment by some of the non-PSM that credibility [with the CFO and CEO]
participants, that PSM emphasizes cost savings too much. As the finance and then folks laugh at you or they don’t
representative from Oil noted, “I think if procurement is hellbent on believe you.” (Refine)
“Metrics have to be credible—it’s a
sticking to the, ‘we are just the function that is the savings machine,’
struggle—credibility of the metric that
then that really needs some clear boundaries and ownership by way of really highlights the value that PSM
how that money then is recognized, who physically owns that.” The bringing to business—Top or bottom
finance representative from Oil questioned PSM’s self-concept and line.” (Oil CFO)
professional identity (Slay and Smith 2011) as being too tied up with As a result, many metrics are created within PSM to present the same cost sav­
cost. He explains how PSM “… is one of the only functions that has to ings data in different ways, as specified in Table 4. Cost savings is clearly an
defend its reason for being …”, by showing that it pays for itself in essential element of PSM’s self-identity. Thus, it seems to be a self-fulfilling, self-
savings many times over, and that PSM has, perhaps, too many metrics reinforcing prophesy and part of PSM’s self-identity to emphasize cost savings.

6
M.L. Ueltschy Murfield et al.
Table 4
PSM’s different approaches to measuring and reporting cost savings.
Different ways that cost savings is measured by PSM
•Year-over year cost saving
•Cost reduction and avoidance
•Contribution to gross margin (translating cost reduction into its impact on gross
margin)
•EBITA impact of PSM cost reduction by business unit
•Performance on cost vs. inflation
•Net food cost as a percentage of raw material cost
•Cost savings on specific projects
•Cost performance versus market benchmarks
•Value (savings) delivered against spend responsible for
•Return on PSM assets (PSM savings/PSM budget)
•ROI (purchasing savings versus budget)
•Rebates realized
•Impact on income statement (savings traceable to I/S)
•Material spending as a percentage of revenue
•Percentage of category spending where PSM has the most competitive (best cost-
value) contracts
Thus, Proposition 3 states.
measures. To summarize the discussion of the first two roadblocks for
PSM moving beyond a cost focus, Fig. 2 provides an overview of the
different aspects of social identity and group identity and the interaction
between PSM and different outgroups. The first two roadblocks high­
light how the primacy of cost influences the perceptions of PSM by both
the C-suite and other functions (P1 and P2). PSM’s self-identity is very
focused on cost because the C-suite wants to see financial impact of
PSM’s contribution, but the proliferation of cost-focused metrics by PSM
may limit its credibility in other areas (P3). As Fig. 2 shows, PSM must
consider how their self-identity informs the group identity, and the
perception of social identity from different outgroups. PSM’s social
identity is strongly influenced by perceptions from outgroups, including
the C-suite and other functions. PSM’s group identity is formed by how
they (the ingroup) and the outgroups interrelate. Part of the challenge in
moving beyond the cost focused identity is due to the difficulty in
measuring other areas of contribution, and data limitations in doing so.
This is discussed as the next roadblock.
4.2. Roadblock #3— value adding areas of PSM are difficult to measure
Participants have difficulty measuring and communicating what
Fig. 2. Levels of PSM identity: Self-identification, social identity, and group identity.
7
Journal of Purchasing and Supply Management xxx (xxxx) xxx
PSM contributes beyond quantitative financial measures. It is more
difficult to quantitatively measure PSM’s contribution to value-adding
areas such as innovation, new product development, and risk mitiga­
tion. Electric and Refine explained the difficulty in measuring the benefit
of PSM’s contribution to avoiding risk and subsequent costs. Refine
linked their risk program to cost avoidance and tried to publicize their
risk reduction activities. Utility knew their cost for fixing issues after a
supply disruption, such as locating a new supplier after supplier finan­
cial failure. However, they explained it was much more difficult to show
results of controlling risk and avoiding disruption, as illustrated in the
following comment from Utility: “So, we don’t really have a good idea of
what we want to measure on the risk mitigation side. But how do you
prove the negative, if you will, of nothing … We didn’t have any other
occurrences, so we must be great, right? We struggle with how you can
you frame that up.” Electric also struggles with value recognition
because its use of cost avoidance as a measure is not accepted as legit­
imate. Electric explained: “Through value engineering, we look at what
changes or different approaches we can use to reduce the amount of
project work, but it is viewed as a cost avoidance not cost reduction ….
so it really doesn’t count.” Table 5 provides additional insights into the
difficulty in providing quantitative measures for these value adding
measures.
Closely associated with the inability to quantify the more value-
adding metrics were both the lack of data and issues with the integrity
of data when it was available. Network explained that “the data supply
chain, which is the foundation for KPIs, is really difficult because of poor
data discipline, that includes incorrect coding and categories, poor
revision control and manual edits that are unauthorized.” Defense also
noted the importance of structuring data in a way that is easily
compiled, since “nobody wants to go mine Excel to get the information
you need to run your business.” Chip emphasized that its ultimate goal
and biggest measurement challenge is to get data to a stage that allows
for real time measures. An important part of changing identity is
changing self-identity, and changing the narrative around identity to
communicate the changed identity to different groups (Tajfel and
Turner, 1979). Yet, PSM unwittingly reinforces being trapped in a
cost-focused identity by reporting multiple cost savings measures. These
quantitative measures are generally viewed as credible, versus
non-quantitative metrics. This creates a challenge for PSM, since out­
groups have signaled that non-quantitative metrics lack credibility (see
Table 3), and PSM does not have good alternative measures. The
M.L. Ueltschy Murfield et al.
Table 5
Difficulty in measurement & data for value-added areas of PSM.
Value Category Issues Representative Quotes
Innovation/NPD is “We’ve attempted in the past to track the number of
subjective new initiatives in each business unit brings. Even that
Measuring risks is could be subjective. You post new product launch
difficult financial assessments as well and even that could be
Difficulty with data subjective.” (CPG)
quality & integrity “Actually, where the value then sits is about working
collaboratively with the suppliers, developing
technology, creating innovation. We’ve tried to
measure that in the past and found it super difficult.”
(Refine)
“When we look at what we do in the project
acquisition stage, where we’re really developing
avoidances and then trying to balance and looking at
what our risk level is within those types of avoidances,
and how are we mitigating that risk within the
supplier selection. (Electric)
“Data is a huge, huge problem. […] I think
organizations in the modern time and the digital age
accept that if you don’t have good data, then when we
talk about metrics of the future or creating a real-time
agile scorecard, you’ve got no chance.” (Oil CFO)
“You still have to let the data lead you, it can’t be just
something that feels good. The challenges is that we
are we are working with a lot of systems. Data has to
be normalized.” (Network)
collective analysis of data over the entire research sample leads to the
next research proposition:
Proposition 4. PSM’s reporting of qualitative value metrics lacks credi­
bility, creating difficulty in shifting its identity away from cost savings.
4.3. Solutions to moving PSM beyond a cost-focused identity
Through the discussion on roadblocks above, insights into potential
solutions emerged. Based on integrating interview data with social
identity theory, two proposed solutions are discussed next:
1) PSM must change its narrative and associated self-identity
2) PSM must develop metrics that are meaningful across multiple areas
of the business
4.3.1. PSM must change its narrative and associated self-identity
Participants emphasized the importance of PSM’s ability to capture
and communicate its value to others as a prerequisite to developing the
right metrics across the organization. Cost responsibilities shape an
essential part of the role of PSM’s ingroup and out-group that define its
responsibilities and create its identity (Brown and Lewis, 2011; Stryker
and Burke, 2000). This is compounded by the challenge of measuring
PSM’s contribution to organizations in other ways such as through
innovation, margin enhancement, risk management, and expertise in
negotiations and supplier management.
EEEM particularly stressed the need to better understand the PSM
value proposition and communicate that within the company first, and
then the right metrics can be developed and aligned across the company.
Hospitality also emphasized a change in perspective in order for others
to recognize PSM’s expertise: “Metrics are important but again, what
we’ve learned is they’re only important to people they’re important to.
[…] We need to change the service to the segments so they can see us for
not just category experts, but we have the business acumen of a lot of the
executives who they deal with on the client side of things as well. And
that’s a bit of a journey.” Finally, both Pharma and Oil explained the
need for PSM to better market themselves. Oil suggested using bench­
marking to show how PSM is competitive, and Pharma explained how
PSM is not always the best “marketer” of their expertise:
8
Journal of Purchasing and Supply Management xxx (xxxx) xxx
I think there are many things which could be done and which are not
[…]. There are many things which you could measure, more or less
easily, which are not. I guess this is because of us procurement people,
because we are not sufficiently marketing inside the company. We are
focusing on what we have to do. We know what we do, but, at the end,
the real impact is not always measured.
Ashforth and Schinoff (2016) draw on interpretivist research which
explains that identity is constructed and reconstructed through a
recursive process (Ashforth et al., 2008). Individuals attempt to
construct identities which are stable based on their understanding of
their surroundings and their role (Ashforth and Schinoff, 2016) but may
reconstruct them in order to align better with an outgroup for numerous
reasons (Ashforth and Schinoff, 2016). Our results suggest PSM may
need to work on recreating its self-identity within organizations in order
to “influence domains perceived as important” by those in the C-Suite
and other areas of the business (Ashford and Black 1996; Ashforth and
Schinoff, 2016, p. 114; Greenberger and Strasser, 1986). The next sec­
tion builds on this to address how joint metric development can be an
essential part of changing the identity narrative for PSM.
4.3.2. PSM must develop metrics that are meaningful across multiple areas
of the business
Participants emphasized the importance of creating metrics that are
meaningful to operations and across multiple areas of an organization,
not just for PSM. The Hospitality PSM executive stresses this with regard
to business unit support: “The operators of the business need impactful
metrics. Too often people have metrics to make themselves look good.
And toot their own horn. But the operators don’t want to see metrics
unless it benefits them. And quite honestly, there’s probably a good
argument there that supply management is there to support operations
not vice versa.” Electric explained that “the biggest challenge is that
there’s not many [metrics] that you can say cut across and that you can
easily report and extract”, especially for some of the non-traditional
areas of PSM contribution which may have non-financial measures of
success. More detailed examples from the interviews are provided in
Table 6.
Though they admit it is a challenge, other participants discussed the
importance of developing joint metrics across business units and across
the organization in order for PSM to build credibility beyond the
traditional cost reduction focus. Interestingly enough, two of the par­
ticipants that stressed this were from finance, at Electric and Oil. For Oil:
[Contracts and PSM need to] find a way to demonstrate that as a
fairly integrated business partner and those metrics which say, what is
important to you is important to me, and […] you move to a point where
you cannot physically have one overarching scorecard. Actually, each of
the business lines need to carry their own scorecard, and that’s okay
because that’s who you’re supporting.
Electric and Hospitality echo this sentiment, and Hospitality explains
why it must move beyond tracking cost savings so that everyone is not
trying to “claim” the same improvement:
I think the reality is they need to be shared [metrics] because ev­
eryone’s right. [It] wouldn’t happen without [everyone]. But because
everyone’s really focused on themselves, you can’t even get to an ac­
curate allocation of well how much of it was due to cost? How much of it
as due to operational efficiencies? How much of it was to lack of waste?
And so, we can’t even have that conversation with each other.
Two participating companies (Nonprofit and CPG) have realigned
their PSM organizations with strategic business units or spend categories
which they support so that they do not have conflicting scorecards.
Nonprofit said PSM performance is assessed solely based on KPIs shared
with functional owners: “I imagine in some industries there are separate
PSM objectives and or standalone objectives, [but] for us, it would
create conflict.” CPG makes sure that their PSM organization is aligned
with the business units:
Every SBU is working under the same corporate plan, but how they
executed what is needed to do that for their business is solely their own.
M.L. Ueltschy Murfield et al.
Table 6
Creating meaningful metrics across the business.
Challenges in Metric Alignment
•Metrics have to be meaningful to
operations, not just to show what
purchasing is doing well
•Can be difficult to create consistent
metrics that are meaningful because
each business unit needs different
things
•Cost “savings” does not always mean
the same thing across different areas
of the business
Insights into Solutions
•Importance of metrics that are credible
across the organization
•Involvement and feedback of
leadership from business units and
other functions
•Shared values between PSM and
internal customers (other functions,
business units) and the use of shared
scorecards
That’s what cascades down to the rest of the groups. Are they doing what
is required to help deliver in those areas? And I think that works its way
into purchasing. […] In that way, we literally are all pulling the rope in
the same direction.
In some participant organizations where complete business unit
Representative Quotes
“So if we’re collecting metrics that are
not important to our clients or our
business operators, then why are we
doing it? Just to make ourselves look
good? […] Now I came from operations,
but a lot of supply people don’t. And
they’ve got a history of building metrics
to put in front of a CEO to make
themselves look good and productivity
wise. What I’m trying to change here, but
what some of the roadblocks are is we
need to create metrics that enhance our
operations.” (Hospitality)
“Why do we have to report
anything—justify its existence? If you are
partnered with the business, delivering
business results, shouldn’t it be the same
metrics used by the business?” (Oil CFO)
“So, cost savings is nice because most
people understand it and every
procurement group and/or business unit
has some level of understanding of [it].
But when you get into some of the other
nonfinancial values they’re are unique,
sometimes down to the department level,
let alone cutting across the entire
corporation. […] In my mind that’s the
challenge is that it’s harder to identify the
nonfinancial stuff that a larger audience
would see as interesting or sign of
progress or value to their business.”
(Electric)
“When you try to elevate [cost savings]
through an organization, and in large
organizations, all of that seems to get lost
and diluted unto this artificial, inward-
looking, reason-for-being-type metric or
series of metrics, some of which are
important because they drive an agenda
that is about improvement […] but some
of it can actually be quite damaging, or
means nothing to me when you’re talking
to a business partner. If you say to a
business partner, ‘Well, my cost
improvement this year was a billion
dollars,’ they’ll turn around and say,
‘Well, I don’t see a billion dollars off my
P&L.’” (Oil CPO)
Representative Quotes
“Our profession is here to serve the
company so we want to be able to show
how we support company metrics. So if
we can apply a company metric directly
to what we do …” (Chip)
“Each time we do a purchase project, we
do [the survey] after we implemented the
project, the net promoter score comes
[from each] member of the
multifunctional team, and so for each
purchase project. […] It’s a KPI for us in
our organization.” (Utility)
“I would say that at a very high level,
we’ve set some strategic targets, but, to
me, an effective measure is a shared goal
among procurement and operations that
aligns towards the strategy. And I would
say we’re only now getting to that.”
(Nonprofit CPO)
9
Journal of Purchasing and Supply Management xxx (xxxx) xxx
alignment has not been attained, PSM is seeking input and feedback
from business unit leaders they support in order to ensure metrics are
meaningful to everyone involved. Packaging discussed collecting the
business unit GM’s feedback annually, sharing it with the PSM category
directors and then incorporating any gaps detected into their personal
plans for the next year. Oil uses a similar approach, but explained how
finance leadership is also involved in making the PSM evaluation pro­
cess development iterative in order for plans to be driven by the busi­
nesses they support.
These results lead to the third research proposition:
Proposition 5. PSM (ingroup) should leverage its areas of contribution to
establish joint metrics with other areas of the business (the outgroup) in order
to transform its self-identity and establish its contribution and credibility
outside of cost reduction.
PSM may attempt to transform its self-identity through the use of
joint metrics in order to align better with an outgroup (Ashforth and
Schinoff, 2016). Social identity theory suggests that PSM may seek to
leverage its other areas of contribution (e.g. innovation, risk manage­
ment, supporting supply continuity, quality, etc.) which help transform
its social identity and establish joint metrics with other areas of the
business. This could be driven by motives rooted in a need to belong, or
be accepted by others (Ashforth and Schinoff, 2016; Baumeister and
Leary, 1995; Vignoles et al., 2006), or in this case more likely the need to
better identify with a collective target (Ashforth and Schinoff, 2016;
Glynn, 1998; Mayhew et al., 2010; Pilarska, 2014). Establishing joint
metrics and common goals with the businesses they support will help
build credibility for PSM and mitigate ingroup bias (Gaertner and
Dovido, 2000), so that PSM is recognized across the organization for all
of the ways that they contribute to firms’ success.
The significant organizational contributions that PSM has made
during the global COVID-19 pandemic create a “window of opportunity”
for PSM to recreate their identity. In times of crisis, the role PSM plays in
supply continuity and other non-cost issues, provides an opportunity to
elevate its status. Packaging recounted a scenario of shortages and sharp
price increases for steel due to tariffs. This steel buyer was an experi­
enced expert. He lobbied Congress against implementing tariffs on his
particular steel category. When tariffs were implemented, he was pre­
pared and effectively limited the impact the company experienced
versus the market, managing the availability and the pricing/cost to
reduce the tariff’s impact on the company’s profit margins. This CPO
noted: “The thing that stands out most to me is the person that I’ve
gotten the most positive feedback about in my organization is a person
who had the absolute worst year in productivity (measured by cost
reduction), so there has to be another way to measure value …”. During
the pandemic, there has been increased attention on PSM as it has
played a critical role in many organizations in terms of supply continuity
as well as maintaining reasonable costs. This recognition creates an
opening, as the one described above, for PSM to shift the focus on its
performance to embrace non-cost issues. It is up to PSM to take the
initiative to do this. We suggest PSM emphasize its alignment with
business unit goals, and demonstrate how its performance directly
supports the success of the business unit. This will take some time and
effort, but it is a long-term investment in changing PSM’s identity. It
needs to begin somewhere. PSM is the one who is most vested in its
identity; it should lead the way.
5. Conclusions and implications
The current literature on PSM contribution focuses on the strategic
contributions made by PSM. There seems to be wide-spread consensus
that PSM plays an increasingly broad and strategic role in many orga­
nizations. Yet there is evidence in the literature (Pohl and Förstl, 2014;
Tchokogué et al., 2017; Schutz et al., 2020; Ellram et al., 2020b) and in
practice (Deloitte 2019; The Hackett Group 2020) that the recognition
that PSM receives has not kept up with these broader roles. The primary
M.L. Ueltschy Murfield et al.
way that PSM is measured and rewarded is still based on cost reduction.
This discrepancy between the broad and strategic nature of PSM’s
contribution and the narrow and operational nature of its metrics has
been largely overlooked in the literature.
This research addresses that important gap. Using middle-range
theorizing, this research applies social identity theory to provide
insight into the sticky problem of the domination of cost savings as
PSM’s primary objective. PSM is in a logical position to be burdened
with the responsibility of cost management, as it buys most of the
outside materials, goods and services in an organization. However, prior
research extolling PSM’s strategic contributions and the current case
studies indicate that a primary focus on cost appears to define PSM’s
contribution to organizational success too narrowly, and limit the
recognition of its potential contributions too closely to cost. This creates
an identity that most PSM professionals indicate they would like to move
beyond, to be recognized for and invited to contribute more fully to
other aspects of the organization’s success. This broader contribution is
important, as prior research indicates that PSM knowledge and strategic
involvement contribute to improved financial performance by PSM
(Schutz et al., 2020). Thus, expanding PSM’s identity, measurement and
recognition beyond cost savings can actually further enhance, rather
than detract from, the financial performance of the organization.
5.1. Contributions to theory
This research contributes to the literature and knowledge base by
providing insight into why others in the organization and PSM itself
identify so closely with cost savings, based on PSM’s historical role and
expertise in the area. More importantly, it provides previously lacking
insight into the stickiness of PSM’s cost identity, in spite of the broad
impact of PSM’s many contributions. As indicated above, PSM’s primary
social identity as the source of cost savings begins with the C-Suite,
where PSM cost savings performance receives high importance, and is
often the only metric PSM reports to the C-Suite. This is reinforced by the
fact that PSM often reports to the C-Suite through the Chief Financial
Officer, who has responsibility for monitoring the financial health of the
organization. This, in turn, reinforces the way that other functions,
outgroups, view PSM’s group identity.
Social identity theory also provides insight into why the PSM func­
tion itself identifies so closely with cost savings. With pressure from the
outgroups to achieve costs savings, PSM places an emphasis on cost-
savings, developing multiple measures to express the same savings. It
is part of PSM’s professional identity, part of its social identity (how
others see PSM), and part of its group identity—how it relates to others
in the workplace. This research contributes to the literature on PSM
performance by applying social identity theory to provide insight into
how the various types of identity relate to various players—with self-
identity and related professional identity issues surrounding PSM it­
self, social identity issues linking how the C-suite and other outgroups
relate to PSM, and group identity effecting the response of PSM to those
outgroups. This is illustrated in Fig. 2. For example, PSM’s response to
the focus on cost management by creating many additional cost metrics
can further reinforce and narrow the outgroups’ views of PSM’s poten­
tial contribution, and hurt its credibility as a contributor in other areas.
As noted by the CFO participant from Oil, PSM may report too many cost
savings-focused metrics.
Much of the current literature focuses on the positive spin that PSM
has an increasingly strategic role (e.g. Yeung, 2008; Kahkonen and
Lintukangas, 2012; Monzcka et al., 2016). It does not acknowledge that
this role has not been institutionalized in how PSM is recognized, which
is a source of frustration to PSM. As PSM struggles to gain broader
recognition and influence, Hospitality noted PSM must get away from
“metrics that make themselves look good,” and broaden its own identity
to embrace its role in supporting business success. This complicates
measurement, because different outgroups may have different priorities,
and it means that PSM will have to measure its success and contribution
10
Journal of Purchasing and Supply Management xxx (xxxx) xxx
across a variety of metrics that vary by constituent and over time. Social
identity theory warns that if the ingroup identifies more internally than
with the broader organization to which it belongs, performance could be
suboptimal (Gaertner and Dovidio, 2000). However, outgroups can be
united for a common cause, which is where joint metrics come into play.
We found only two organizations in this study where PSM fully shared
metrics with those businesses it supports rather than relying primarily
on its own, distinct metrics. CPG, a firm with a more mature PSM
function, has made significant progress over the past two decades in
moving its image away from a primary cost savings focus, toward that of
being an equal member of the business team. On the other hand,
Non-profit was working hard, with the support of the CFO, to educate
other functions that it could contribute much more than cost savings.
This finding adds to the current theory by shedding light on the potential
role of shared outgroup roles in transforming functional identity.
While CPG and Nonprofit were the only cases actively pursuing joint
goals, numerous participants identified goal conflict, or lack of goal
alignment as a problem, and saw development of joint goals where
contributions were not divided up among functions as a potential so­
lution to the conflict. Shared, over-arching goals are supported by social
identity theory to encourage identification with the larger group rather
than the ingroup (Ashforth et al., 2008).
This study contributes to theory and the current state of PSM
research by providing insights into the reality of how PSM is shaped by
its identity, and offers insights into how positive change can be made to
shift PSM’s identity and broaden its real and perceived contribution to
organizational success. It extends social identity theory to the specific
and unique context of PSM, who have long been pigeon-holed with a
cost-centric identity. The next section presents managerial
contributions.
5.2. Contributions to practice
This research explores the conundrum of how PSM might be able to
expand its identity beyond cost through identifying three major road­
blocks that impede its goal of becoming a more value-added contributor.
This research takes a holistic view of value-added contributions to
include all those areas beyond cost savings where PSM contributes to
broader business goals, and provides practical insights into PSM’s cost
identity, and how to broaden this identity into other areas of value.
While PSM itself understands the nature of these value contributions,
gaining acceptance of these contributions by the C-Suite is currently
tenuous at best. As a result, PSM managers need to select their areas of
value contribution beyond cost that they can quantify, directly link to
broader business goals, or both. These findings indicate that the C-Suite
is primarily concerned about results that can be directly linked to the
bottom line. Further, there is no one size fits all approach to PSM value
creation measures and C-Suite acceptance, as corporate culture and
priorities for PSM vary. Thus, each will have to emphasize their salient
issues and create plans to overcome them accordingly.
First, what the C-Suite is interested in about PSM—cost savings—sets
a tone from the top regarding expectations, which is deeply embedded
into many organizations. Some respondents even indicated it was the
only thing that the C-Suite valued from PSM. Because PSM reports
through the CFO in many organizations, this further emphasizes the
need to quantify metrics for other value-added areas if PSM is to be
viewed as a contributor beyond cost. This in turn drives the perception
of PSM’s primary value as a cost-cutter both by the C-Suite and with
other functions. As other functions (outgroups) interact with PSM, they
witness first-hand this cost-driven focus. PSM itself reinforces this by
overselling cost reduction or measuring it and reporting it in multiple
ways. This only exacerbates the situation.
An essential point here is that PSM managers need to understand that
changing this cost savings focused perception starts within the PSM
function. Multiple respondents felt PSM was not good at “selling” itself,
and was perceived primarily as a buyer and price-checker. A starting
M.L. Ueltschy Murfield et al.
point for the change in perceptions is to review and streamline the
number of cost-focused measures and improve the measurability of key
value measures. While many participants acknowledged PSM’s role in
supporting internal customers, the challenge is capturing and reporting
PSM’s value contributions. This is especially complex since different
areas of the business have differing priorities. While still limited in most
companies, there is a growing realization that PSM managers must strive
to align PSM measures with those of the business unit and reduce the
amount of scorecard conflict. Specific functional measures become
secondary to the ultimate priority that all functions contribute to
attaining business success. As CPG pointed out, cost reduction may take
a backseat to innovation for a given business unit.
Finally, the whole issue of value is difficult to address. Successfully
going beyond cost savings requires that PSM identify and communicate
credible value-adding measures that resonate with the C-Suite and
business units. Despite the numerous discussions of PSM value in the
literature (e.g. Terpend et al., 2008; Pohl and Förstl, 2011, Van Hoek
et al., 2014), value is interpreted very differently, as is illustrated above.
The complexity of defining value is compounded when PSM lacks access
to data and or the integrity of data is not confirmed. PSM organizations
are beginning to take steps toward becoming more accurate in reporting
various measures. For example, regarding risk management, Bank re­
ported the number of key suppliers safeguarded against serious risk.
EEEM and Chip reported the time it took to onboard new suppliers. In
the future, much of the acceptance of value measures will depend on the
ability to capture and report credible data and metrics in ways that show
direct impact on the results that business units value. PSM must lead the
way in changing this identity.
5.3. Limitations and future research
The organizations studied in this research were all medium-to-large,
global companies with professional PSM organizations that have a desire
to improve their status. Smaller organizations might not have the same
institutionalized performance reporting systems. This could contribute
to either a narrower or a broader focus for PSM. This is worth investi­
gating in another study. Another limitation was the relatively low
participation rate of CFOs. The researchers had contact with the CPO,
who had to invite the CFO or other high-level finance professional to
participate. The nature of their relationship may have impeded either
the invitation or the acceptance. Thus, the results provided by only three
CFOs are not generalizable, but provide an initial insight that should
pique further research into Finance perceptions of PSM’s contribution.
Nonetheless, identity is in the eyes of the beholder, so the perceptions
reported by PSM are a valid reflection of PSM’s identity, which is the
topic of this paper.
This research has shown that there is a real need to enhance PSM
identity. While previous research has indicated a more strategic role for
the function, this research has shown there are roadblocks to moving
beyond a cost-focused identity. Being fully accepted as a corporate
contributor is still a challenge for PSM. There are many areas of future
research that can lead to an improved understanding of this narrow
identity. First, studying a broad cross section of C-Suite level executives
(CFO, CEO, and COO) regarding their view of PSM’s identity, contri­
butions, shortcomings, and future direction could provide a useful
comparator for the results reported here and those of Van Hoek et al.
(2014). Second, extending this study to a larger sample of CPOs would
provide additional generalizability. Third, and directly opposite to a
larger sampling frame is to focus on specific industries (e.g. aggregate
SIC or NAICS categories) to study their identity improvement plans. For
example, we found two firms that had moved to adopt more
business-wide metrics and either had, or were in the process of
expanding their identity beyond cost. Developing an in-depth model of
how leading firms have transformed their PSM identity could serve as a
blueprint for other organizations to follow.
11
Journal of Purchasing and Supply Management xxx (xxxx) xxx
Funding source
This research was supported by CAPS Research.
Author contributions
Monique Murfield: Conceptualization; Formal analysis; Methodol­
ogy; Writing – original draft; Writing – review & editing; Visualization.
Lisa Ellram: Conceptualization; Project administration; Funding acqui­
sition; Formal analysis; Writing – original draft; Writing – review &
editing; Visualization. Larry Giunipero: Conceptualization; Formal
analysis; Writing – original draft; Writing – review & editing;
Visualization.
Declaration of competing interest
The authors have no competing interests to declare for this research.
Appendix A. Supplementary data
Supplementary data related to this article can be found at https
://doi.org/10.1016/j.pursup.2021.100687.
References
Ammer, D.S., 1974. Is your purchasing department a good buy. Harv. Bus. Rev. 52 (2),
36–42.
Ashford, S.J., Black, J.S., 1996. Proactivity during organizational entry: the role of desire
for control. J. Appl. Psychol. 81 (2), 199–214.
Ashforth, B.E., Harrison, S.H., Corley, K.G., 2008. Identification in organizations: an
examination of four fundamental questions. J. Manag. 34 (3), 325–374.
Ashforth, B.E., Mael, F.A., 1989. Social identity theory and the organization. Acad.
Manag. Rev. 14 (1), 20–39.
Ashforth, B.E., Mael, F.A., 1998. Sustaining valued identities. Power and influence in
organizations. Acad. Manag. Rev. 14 (1), 20–39.
Ashforth, B.E., Schinoff, B.S., 2016. Identity under construction: how individuals come to
define themselves in organizations. Annual Review of Organizational Psychology
and Organizational Behavior 3, 111–137.
Baumeister, R.F., Leary, M.R., 1995. The need to belong: desire for interpersonal
attachments as a fundamental human motivation. Psychol. Bull. 117 (3), 497–529.
Bergami, M., Bagozzi, R.P., 2000. Self-categorization, affective commitment and group
self-esteem as distinct aspects of social identity in the organization. Br. J. Soc.
Psychol. 39 (4), 555–577.
Bernard, H.R., 2006. Field Notes: How to Take Them, Code Them, Manage Them. In
Research Methods in Anthropology. AltaMira Press, Oxford.
Brown, A.D., 2017. Identity work and organizational identification. Int. J. Manag. Rev.
19, 296–317.
Brown, A.D., Lewis, M.A., 2011. Identities, discipline and routines. Organ. Stud. 32,
871–895.
Brown, A.D., Toyoki, S., 2013. Identity work and legitimacy. Organ. Stud. 34, 875–896.
Carr, A.S., Smeltzer, L.R., 1997. An empirically based operational definition of strategic
purchasing. Eur. J. Purch. Supply Manag. 3 (4), 199–207.
Chatain, O., 2010. Value creation, competition and performance in buyer-supplier
relationships. Strat. Manag. J. 32 (1), 76–102.
Cousins, P.D., Lawson, B., Squire, B., 2006. An empirical taxonomy of purchasing
functions. Int. J. Oper. Prod. Manag. 26 (7), 775–794.
Deloitte 2019, 2019. The deloitte global Chief procurement officer survey. https://
deloitte-nl-so-cpo-survey-2019-pdf.pdf. (Accessed 23 April 2020).
Dwyer, F.R., Schurr, P.H., Oh, S., 1987. Developing buyer-seller relationships. J. Market.
51 (2), 11–27.
Dyer, J.H., Singh, H., 1998. The relational view: cooperative strategy and sources of
interorganizational competitive advantage. Acad. Manag. Rev. 23 (4), 660–679.
Ellram, L.M., 1992. The role of purchasing in cost savings analysis. International Journal
of Purchasing and Materials Management, Winter 28 (1), 26–33.
Ellram, L.M., Carr, A., 1994. Strategic purchasing: a history and a review of the
literature. Int. J. Purch. Mater. Manag. 30 (2), 9–18.
Ellram, L.M., Harland, C.M., van Weele, A., Essig, M., Johnsen, T., Nassimbeni, G.,
Pagell, M., van Raaij, E., Rozemeijer, F., Tate, W., Wynstra, F., 2020a. Purchasing
and supply management: crisis? What crisis. J. Purch. Supply Manag. 26 (1) https://
doi.org/10.1016/J.PURSUP.2019.100583.
Ellram, L.E., Tate, W.L., Choi, T.Y., 2020b. The conflicted role of purchasing in new
product development costing. J. Supply Chain Manag. 56 (1), 3–32.
Gaertner, S.L., Dovidio, J.F., 2000. Reducing Intergroup Bias: the Common Ingroup
Identity Model. Psychology Press, Philadelphia.
Giunipero, L.C., Denslow, D., Eltantawy, R., 2005. Purchasing/supply chain management
flexibility: moving to an entrepreneurial skill set. Ind. Market. Manag. 34 (6),
602–613.
M.L. Ueltschy Murfield et al.
Giunipero, L.C., Handfield, R.B., Eltantawy, R., 2006. Supply management’s evolution:
key skill sets for the supply manager of the future. Int. J. Oper. Prod. Manag. 26 (7),
822–844.
Glaser, B.G., 1978. Theoretical Sampling. In Theoretical Sensitivity: Advances in the
Methodology of Grounded Theory. The Sociology Press, Mill Valley, CA, pp. 36–54.
Glynn, M.A., 1998. Individuals’ Need for Organizational Identification (nOID):
Speculations on Individual Differences in the Propensity to Identify. See Whetten &
Godfrey, pp. 238–244, 1998.
Greenberger, D.B., Strasser, S., 1986. Development and application of a model of
personal control in organizations. Acad. Manag. Rev. 11 (1), 164–177.
Gronroos, C., 1997. Value-driven relational marketing: from products to resources and
competencies. J. Market. Manag. 13 (5), 407–419.
Haslam, S.A., 2001. Psychology in Organizations. In: The Social Identity Approach. Sage,
London.
Hartmann, E., Kerkfeld, D., Henke, M., 2012. Top and bottom line relevance of
purchasing and supply management. J. Purch. Supply Manag. 18 (1), 22–34.
Hogg, M.A., Terry, D.J., White, K.M., 1995. A tale of two theories: a critical comparison
of identity theory with social identity theory. Soc. Psychol. Q. 58 (4), 255–269.
Hotho, S., 2008. Professional identity – product of structure, product of choice: linking
changing professional identity and changing professions. J. Organ. Change Manag.
21 (6), 721–742.
Jaaskelainen, A., Thitz, O., Heikkila, J., 2016. The Role of the Purchasing Function in
Non-financial Value Creation. In 25th Proceedings of IPSERA 2016 Conference.
Dortmund, Germany.
Johnson, F.P., Klassen, R.D., Leenders, M.R., Fearon, H.E., 2002. Determinants of
purchasing team usage in the supply chain. J. Oper. Manag. 20 (1), 77–89.
Johnson, P.F., Shafiq, A., Awaysheh, A., Leenders, M., 2014. Supply organizations in
North America: a 24-year perspective on roles and responsibilities, 1987–2011.
J. Purch. Supply Manag. 20 (2), 130–141.
Kahkonen, A.K., Lintukangas, K., 2012. The underlying potential of supply management
in value creation. J. Purch. Supply Manag. 18, 68–75.
Kapoor, V., Gupta, A., 1997. Aggressive sourcing: a free-market approach. Sloan Manag.
Rev. 21–31. Fall, 1997.
Kocabasoglu, C., Suresh, N.C., 2006. Strategic sourcing: an empirical investigation of the
concept and its practices in U.S. Manufacturing firms. J. Supply Chain Manag. 42 (2),
4–16.
Kraljic, P., 1983. Purchasing must become supply management. Harv. Bus. Rev. 61 (5),
109–117.
Lindgreen, A., Hingley, M.K., Grant, D.B., Morgan, R.E., 2012. Value in business and
industrial marketing: past present and future. Ind. Market. Manag. 41 (1), 207–214.
MacIntyre, A., 1981. After Virtue: A Study in Moral Theory, first ed. Duckworth, London.
Mayhew, M.G., Gardner, J., Ashkanasy, N.M., 2010. Measuring individuals’ need for
identification: scale development and validation. Pers. Indiv. Differ. 49 (5),
356–361.
McCracken, G., 1988. The Long Interview. Sage Publications, Beverly Hills, CA.
Miles, M.B., Huberman, A.M., 1994. Qualitative Data Analysis: an Expanded Sourcebook,
second ed. Sage Publications Inc, Thousand Oaks, CA.
Monczka, R., Handfield, R., Giunipero, R., Patterson, J., 2016. Purchasing and Supply
Chain Management, sixth ed. Cengage Learning.
Morrison, E.W., 1994. Role definitions and organizational citizenship behavior: the
importance of the employee’s perspective. Acad. Manag. J. 37 (6), 1543–1567.
Nollet, J., Calvi, R., Audet, E., Cote, M., 2008. When excessive cost savings measurement
drowns the objectives. J. Purch. Supply Manag. 14 (2), 125–135.
Pagell, M., Wu, Z., Wasserman, M.E., 2010. Thinking differently about purchasing
portfolios: an assessment of sustainable sourcing. J. Supply Chain Manag. 46 (1),
57–73.
Paulraj, A., Chen, I.J., Flynn, J., 2006. Levels of strategic purchasing: impact on supply
integration and performance. J. Purch. Supply Manag. 12 (3), 107–122.
Pilarska, A., 2014. Self-construal as a mediator between identity structure and subjective
well-being. Curr. Psychol. 33 (2), 130–154.
12
Journal of Purchasing and Supply Management xxx (xxxx) xxx
Pohl, M., Förstl, K., 2011. Achieving purchasing competence through purchasing
performance measurement system design—a multiple-case study analysis. J. Purch.
Supply Manag. 17 (4), 231–245.
Ritter, T., Walter, A., 2012. More is not always better: the impact of relationship
functions on customer-perceived relationship value. Ind. Market. Manag. 41 (1),
136–144.
Schiele, H., 2007. Supply-management maturity, cost savings and purchasing absorptive
capacity: testing the procurement–performance link. J. Purch. Supply Manag. 13 (4),
274–293.
Schutz, K., Kasser, M., Blome, C., Forstl, K., 2020. How to achieve cost savings and
strategic performance in purchasing simultaneously: a knowledge-based view.
J. Purch. Supply Manag. 26 (2), 100534.
Slay, H.S., Smith, D.A., 2011. Professional identity construction: using narrative to
understand the negotiation of professional and stigmatized cultural identities. Hum.
Relat. 64 (1), 85–107.
Stets, J.E., Burke, P.J., 2000. Identity theory and social identity theory. Soc. Psychol. Q.
63 (3), 224–237.
Strauss, Anselm L., Juliet, Corbin, 1998. Basics of Qualitative Research, second ed. Sage
Publications, Inc., Thousand Oaks, CA.
Stryker, S., Burke, P.J., 2000. The past, present, and future of an identity theory. Soc.
Psychol. Q. 284–297.
Taylor, C., 1989. Sources of the Self. The Making of the Modern Identity. Harvard
University Press, Massachusetts.
Tajfel, H., Turner, J.C., 1979. An Integrative Theory of Intergroup Conflict. In: Austin, W.
G., Worchel, S. (Eds.), The Social Psychology of Group Relations: 33-47. Brooks-Cole,
Monterey, CA.
Tajfel, H., Turner, J.C., 1986. The social identity theory of intergroup behavior. In:
Worchel, S., Austin, W.G. (Eds.), Psychology of Intergroup Relations, second ed.
Nelson-Hall, Chicago, pp. 7–24.
Tchokogué, A., Nollet, J., Robineau, J., 2017. Supply’s strategic contribution: an
empirical reality. J. Purch. Supply Manag. 23, 105–122.
Terpend, R., Tyler, B., Krause, D., Handfield, R., 2008. Buyer-supplier relationships:
derived value over two decades. J. Supply Chain Manag. 44 (2), 28–55.
The Hackett Group, 2018a. Procurement value—moving beyond price savings toward
strategic value recognition. Accessed. thehackettgroup.com. (Accessed 4 April
2019).
The Hackett Group, 2018b. The CPO agenda: expanding procurement’s influence
through change and innovation. Accessed. thehackettgroup.com. (Accessed 4 April
2019).
The Hackett Group, 2020. Achieving procurement excellence in the age of digital
disruption. Retrieved Accessed. https://links.imagerelay.com/cdn/2925/ql/bb5d
3f884b754cf2a2c2eea9df2d154e/Hackett-2020-Key-Issues-Procurement-1912.pdf.
(Accessed 23 April 2020).
Ulaga, W., Eggert, A., 2006. Value-based differentiation in business relationships:
gaining and sustaining key supplier status. J. Market. 70 (1), 119–136.
Van Hoek, R., Mena, C., Gattorna, J., 2014. Mind the gaps: exploring how value-creation
perceptions across the internal triad influence identity and impact. J. Bus. Logist. 35
(1), 44–51, 2014.
Vignoles, V.L., Regalia, C., Manzi, C., Golledge, J., Scabini, E., 2006. Beyond self-esteem:
influence of multiple motives on identity construction. J. Pers. Soc. Psychol. 90 (2),
308–333.
Walter, A., Ritter, T., Gemunden, H.G., 2001. Value creation in buyer-seller relationships:
theoretical considerations and empirical results from a supplier’s perspective. Ind.
Market. Manag. 30 (4), 365–377.
Wynstra, F., Suurmond, R., Nullmeier, F., 2019. Purchasing and supply management as a
multidisciplinary research field: unity in diversity? J. Purch. Supply Manag. 25 (5),
1–17.
Yeung, A.C.L., 2008. Strategic supply management, quality initiatives, and
organizational performance. J. Oper. Manag. 26 (4), 490–502.