Assessing the Feasibility of Supply Chain Management within Purchasing and Procurement:

Results from U.S. Cities

Author(s): Ronnie Lacourse Korosec
Source: Public Performance & Management Review, Vol. 27, No. 2 (Dec., 2003), pp. 92-109
Published by: M.E. Sharpe, Inc.
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ASSESSINGTHE FEASIBILITYOF SUPPLY

CHAIN MANAGEMENTWITHIN
PURCHASINGAND PROCUREMENT
Resultsfrom U.S. Cities
RONNIELACOURSEKOROSEC
University of Central Florida
ABSTRACT:Althoughthereis constantpressurein thepublic sector to reformand
enhancepurchasingandprocurementactivities,there is little consensuson how this
could be accomplishedeffectively.One of the most recentinnovationsinproductivity
reformis to apply a widely successful private sector-based strategic tool, supply
chainmanagement(SCM),topublicsectorprocurement
activities.Notall governments
currentlyclaim to fully understandor actively use SCMas a means to decentralize
decision-makingand service delivery. However, many professional procurement
organizationsaresuggestingthatit couldbejust whatthedoctororderedforenhancing
procurementwithinthepublic sector Whatis supplychainmanagement?Canit work
as well in thepublic sector as it does in theprivate sector? Willit have a substantial
impactas a "bestpractice" in governmentaloperations,or is it merelyanotherfad
thatwillfade away over time?Thispaper identifiesthe criticalcomponentsof supply
chainmanagementand suggestshow and whenit can enhanceproductivityin public
procurementactivities.
KEYWORDS: Collaboration,informationtechnology,innovation,integrated
programmanagement,procurement,purchasing,supplychain management
New andevolvingmodelsof organizational
areprevamanagementandprocurement
lent in both the public and privatesectors.Todayit is often instructiveto look to the
privatesectorto see whatwill be new in the public sectortomorrow(Christensenand
Laegreid, 1997; Gianakis, 2002). A recent privatesector transplant,supply chain
management(SCM), is a procurementmanagementsystem that includesfour main
areas.First,it involvescapitalizingon the newestandbest formsof informationtechnology to enhancequalityconsiderationsand operatingcapabilitieswithinpurchasing andprocurement.Second,it encouragesa decentralizedmodelof decisionmaking
to promoteinnovativesolutions that more effectively meet clients' needs. Third,it
uses a collaborativemodel of partnership,with both internaland externalagents to
promotea morerepresentativeandcomprehensiveview of servicedelivery.Finally,it
focuses on integratedprojectmanagement"chains,"which allow individualsto be

92

Public Performance& ManagementReview,Vol. 27 No. 2, December2003, pp. 92-109.

C 2004 M.E. Sharpe,Inc. All rightsreserved.
1530-9576/2004$9.50 + 0.00.

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Korosec/ ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 93

more active in, accountablefor, and understandingof their actions from the startto
finish of each procurementprocess.
A surveyadministeredby LehmanBrothersin 2000 indicatedthatthe supplychain
managementmarketin private sector procurementwas expected to grow by a factor
of five times-from a $9 billion marketopportunityin 2000 to a $45 billion market
by the year 2005. Despite this 39% cumulativeannualgrowthin that sector,there is
little empiricalevidence of how SCM is being used in the Americanpublic sector.
The literaturethat does exist focuses primarilyon privatesector transactionsor on
internationalgovernmentsowing to the fact thatSCM has been used in both of these
arenasfor almost a decade. Still, many professionalgovernmentorganizationshave
indicatedthatsupplychain managementcould hold greatpromisein enhancingpublic
procurementsystemsin the UnitedStates.In thelate 1990s,the NationalAssociationof
StatePurchasingOfficers(NASPO, 1996, 1999;NASPO et al., 1998) andthe National
Associationof StateInformationResourceExecutives(NASIRE,1996) suggestedthat
public procurementand informationtechnology managerstake a closer look at the
merits of supply chain management.They cited "less than optimal past purchasing
decisions"andthe "needto transitionfromprocess-basedpurchasingto knowledgeand
accountabilitybasedprocurement"as justificationfor change (NASPO, 1996, 1998).
As customershave become more insistenton higher levels of quality and performance, there has been a realizationthat traditionalprocurementsystems focus too
heavily on costs alone to adequatelymeet these new needs (Talluri,2002). Although
traditionalprocurementmodels arenot especially integrated,decentralized,collaborative, or technology-driven,it has been recognized that they should be (NASPO,
1998). Supply managerscan no longer "passively sit back, receive requisitionsor
consolidatepurchaseorders"(Cavinato,2001). Instead,they must adopt"a managementrole embracingthe entireprocurementprocess fromthe initial identificationof
need throughthe terminationof the contract."Clearly,the emphasisis "shiftingrapidly fromjust buy transactionsto supply chain management"(NASPO, 1998). With
this in mind, the following questions must be considered:Can SCM be an effective
tool for public procurementin the United States?What are the majorbarriersto success with SCM?How can SCM be incorporatedwith public sectorvalues?This paper
will examine these and otherrelatedquestions.

What Is Supply Chain Management?

In simple terms,SCM is a procurementtool thatwas bornout of necessity.Demands
for newer and more innovativegoods and services, limits on resources, and the increasingly complex, interrelatednatureof the global marketplacehave each created
pressureon public managersto optimize new and innovativeprocess methodologies
to meet procurementneeds. SCM strategicallyintegratesthe whole procurementprocess, includingthe "identification,acquisition,access, positioning,and management
of resources"in a series of carefullyconsideredsteps, in orderto attainstatedobjectives (Duffy, 2002). The key componentsinclude
Advancedtechnology:Managers,staff, clients, and vendorsrely heavily on information
technology to enhance activities.

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/ December
2003
94 PPMR

* Decentralization:Supplymanagersshareauthoritywith staff, outsidesuppliers/vendors

and citizens to brainstormaboutemergingtechnologyand potentialnew products.
* Integratedproject management:Supply chain managersreach beyond the traditional
confines of an organizationto embracethe entire supply network,plan organizational
operationsstrategically,supportmutuallybeneficialgoals, sharerisks,andenhancebest
practices.This may involveconsolidatinggroups,simplifyingrules,andeliminatingdifferentlayersof management.
* Collaboration:Supplymanagerspartnerwith customersandotherstakeholdersto determine how services will be provided,as well as to see the "big picture"in consumer
consumptionpatterns,productivitylevels, satisfactionlevels, and expected trends.To
achieve this, SCM relies heavily on symbiotic alliances between internaland external
actors-through the delegationof authority,sharingof power, and decentralizeddecision making.

Because the managementcontrolfunctionin this model is heavily influencedby

both externaland internalenvironments,supply managersmust be concernedwith
not only client issues, but also the behaviorof internalmembers,informationsystems, culturalnorms, and funding providers(Anthonyand Young, 1999). This involves a change in both organizational culture and thinking. While traditional
bureaucraticorganizationsmay operatewithintheirown spheresof influence,complete tasksthatpertainonly to theirdirectinterests,andmeet limitedgoals, organizations that adopt supply chain management see the larger links, or "chains" of
connection,betweenthe service providerand recipients,and capitalizeon common
goals that they may share throughoutthe procurementprocess (New, Green, and
Morton,2002). In doing so, SCM allows supplymangersto enhancethe ownership,
integrity,and efficiency of the whole acquisitionprocess.

Related SCM Literature

INFORMATIONTECHNOLOGY

BalutisandKiviat(1997) have notedthatinformationtechnology(IT) has become so

importantto procurementoperationsthat it is the majorelement in the process of
selectingandaccomplishingmostobjectives.Usinginformationtechnologythroughout
the procurementsupply chain can help reengineerexisting work processes so that
therearefewerbreakdowns,bottlenecks,andredundancieson thejob (Bajjaly,1999;
Champy,1995;Hammer,1990).Presutti(2003), RobertsandMackay(1998), Kindler
(2003), and Davila, Gupta,and Palmer(2003) have indicatedthatthe importanceof
IT in SCMtransactionsis the "real-time"flow of informationthatresultsin enhanced
customerservice,lowercosts,andimprovedsupplierrelationships.Similarly,Sundarraj
(2003) andTalluri(2002) suggestthatIT is the catalystfor sharingand coordinating
informationacross the increasinglylargeand complex supplychains and thatit can
significantlyenhance the long-termperformanceof any organization.Information
exchangesand collaborativeplanning(via informationtechnology)are essentialfor
heightenedefficiencybetweenbusinesspartnersin the supplychain,as governments
areforcedto become morecompetitivewith outsideprovidersandsuppliers(Barratt,
2001).

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Korosec / ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 95

Holley, Dufner,andReed (2002) have suggestedthatIT is a useful tool to integrate

the activities of internaland externalorganizationalforces, as well as "end-users"in
the supply chain. Specifically, rapid advancementsin IT and related software have
createdopportunitiesfor procurementofficialsto makemoreinformeddecisionsabout
many issues, including:
*
*
*
*
*
*

Howto structure
purchasesandenhancebudgeting
Howto effectivelypartnerwithsuppliers
Howto managemultipleawardschedules
a mastercontactshouldbe developed
How/whether
Howto managelong-termcontracts
Howto advance"on-line"ordering.(NASPO,1998,2)

Still, cautionmust be exercised when consideringthe use of IT throughnew supply chains. Many of the currentprocurementprocesses used by state and local governmentsworkpoorly,or not at all, with the fast-paced,complex field of information
technology (NASPO, 1996, 1). Because we know that change is usually a gradual
process, one must consider the transitionphase to SCM. Bartle and Korosec (2001)
have suggestedthatthe use of informationtechnologyin procurementis unevenacross
and within states, and thatthe degree of use is sometimes hamperedby transitionsin
personnel,support,or training.
Any of these resultin "extracosts aroundthe corner"as less effective IT managers
struggle with implementingnew technology in forums that are not receptive to or
capable of change (Attaran,2001).
DECENTRALIZATION

Decentralizeddepartmentsare given maximumfeasible authorityto make decisions

along the supply chain with only minimumrestraints.This allows procurementprofessionals to betterunderstandthe "big picturesof the agencies (they) serve and perform strategicallyto drive results that achieve client agencies' missions" (Jones and
Thompson, 1999). The result is a proactivearrangementin which procurementstaff
and client agencies have relativelyequal statuson, and access to, teams that can develop the best acquisitionstrategies.The aim of these strategiesis to get "end-users"
what they need, when they need it, as well as to forecast these needs in advance,and
trackthis performanceas it happens(Choy and Lee, 2003). Effective, strategicplanning in this mannerwill enable procurementstaff to spend less time fixing problems
and more time developing and deliveringsolutions.This is the main intentof supply
chain systems.
GianakisandWang (2000) have indicatedthat "thewillingness to be accountable
for performanceis a prerequisiteof efforts to decentralize,"but that not all governments are open to this challenge. Bartle and Korosec (2001) note that weak agency
trainingcan also be a barrierto effective decentralizedprocurementand thatgovernments must be dedicatedto working with a combinationof groups that may have
differentproficienciesand skills. Because of the differentlevels of proficienciesthat
exist along the supplychain, Fung (1999) has suggestedthatincremental,long-range
planning is the best approachto implementing SCM. This would allow groups to

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96 PPMR/ December2003

leam the strategiesassociatedwith SCMandbecomemoreadeptat usingthem,while

continuingto meet currentprocurementneeds.
INTEGRATED(INTERNAL) PROJECT MANAGEMENT

SCM requiresprojectsto be viewed comprehensively-from startto finish. In order

for this to work,theremustbe a priorandenduringcommitmentfromall partiesthat
there will be an integratedinvestmentof efforts. Croom (2001) has indicatedthat
greaterinformationtransparencyamong SCM partnersis a crucial element in improvingprocurementefficiency.Withoutthis clarity,the goals, objectives,strategies,
and expectationsof the procurementmay be misrepresentedor misinterpreted.
Nissen (2001) suggeststhateven though"speedandresponsiveness"are criticalin
"today'shypercompetitiveproductandservicemarkets,"trulyeffectiveSCMmanagers must take commandof the procurementprocess and work to includeall related
parties-even if this adds moretime to the process. Failureto createand work with
partnersin the nameof savingtime mayresultin an inabilityto properlycapitalizeon
sharedgoals and resources(Thompson,1996).
COLLABORATION

Smith and Rupp (2002) suggest that organizationsthat are successfulin solidifying
throughsupplychainswill notonlysurvive,butalso thrive
"businesssolutionspartners"
and create competitiveadvantagesin the public/privatemarketplace.Theirresearch
indicatesthatmost service providersthatpartnerwith outsideorganizationscreatea
"valueadd"to the organization'soverallcompetitivestrategyand help reducecosts
withinthe valuechain.Effectivesupplierselectionis paramountto maintaininga level
of qualityandperformancewithinany organization(KannanandTan,2002).
Still others (Emiliani,2000; Quayle, 2003) suggest that most organizationsthat
implementsupplychainmanagementdo not trulyunderstandthe possible benefitsof
collaboration.To be fair, some governmentshave avoided partneringwith private
entities to discouragefavoritismand fraud(NASPO, 1998). Theoretically,a strong,
centralizedgovernmentmight be wise to insulate itself (and the public) from the
divergentinterestsof the privatesector.Feslerand Kettlhave notedthat:
Theinterrelationships
betweengovernmentandits proxiesareinherentlyproblem
filled.It is hardenoughfor a managerat thetopof an agencyto controltheactions
of subordinates
at thebottom.It is farharderfor the managerto controla program
restin thehandsof personsnotevenpartof
whenthedetailsof its implementation
thepublicandprivatesectorsbecome,withmore
theagency.Themoreinterrelated
activities,the harderit has
ambiguousboundariesbetween"public"and "private"
becometo implementprogramsefficientlyandresponsively.(1996,293)
MacManus(1992), however,has suggestedthatexpandingthe use of vendorsand
vendorpools can foster competition,fairness,efficiency,and openness.Clearly,the
challengeis to maintaina level of controlwithoutlimitingcreativeinputor opportunitiesfor partnering.Vendorsandgovernmentsmustbothhavea stakein the outcome
of the project(s)andbe willing to sharein the benefitsandrisks.Theymust maintain
the integrityof theseissues withinthe largerstrategicframeworkof the organization's

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Korosec / ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 97

Table1. TheSupplyChainManagementModel
Desiredresults:

Issue area:
Collaboration:

Moreopen communication
Enhancedrepresentation
Increasedinnovation
An increasein partieswith a vestedinterest
Improvedcustomersatisfaction
Improvedaccountabilityand trust
Sharedrisks

Decentralization:

Enhancedrepresentation
Increasedinnovation
An increasein partieswith a vestedinterest
More efficient/effectiveoperations
Enhancedmanagement
Improvedaccountabilityandtrust

InformationTechnology:

Increasedinnovation
Improvedefficiency
Enhancedeffectiveness
More/betteravenuesfor communication
performance
Increasedpotentialfor state-of-the-art
Greaterpotentialfor proactivemanagement
costs
Lowerprocurement
Access to new marketsandproducts

IntegratedProject
Management:

Streamlinedoperations
More efficient/effectiveoperations
Greateraccountability
Greaterpotentialfor internalcollaboration
Decreasedduplicationof services

mission, values, and goals. Suppliers and managersmust understandthe potential

needs of customersand be able to safeguardthem in the long run when makingsupply decisions (NASPO, 1999). Part of the success of SCM in the public sector is
based on the ability of governmentsto work with vendors toward common goals,
contractdeliverables,and identify measuresof success. Table 1 illustratesthe desired
result for each of the four SCM variables.

Objectivesand RelatedResearchQuestions
Supplychain managementis a majorprivatesectorinnovationthatis worthyof additional studyto determineits applicabilityanduse in public sectorprocurementactivities in the United States.While a greatdeal has been writtenaboutSCM in the private
sector,relativelylittle is knownaboutthe value of it in public procurementprocesses.
Although the basic tenets of SCM are used to varying degrees in the public sector,
most procurementmodels do not integratethem as a whole or to the extent that this
"newer"model does. This studywill attemptto obtaincurrentdataon levels of use of
SCM in municipalgovernmentsacross the United States and determinewhetherit is

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98 PPMR/ December2003

more applicablefor some types of procurementsthanfor others.It will also determine the value of SCM in helping municipalgovernmentssolve some of the traditional problemsassociated with procurement-including the need to enhance the
efficiency,quality,and timelinessassociatedwith the production,purchase,and deliveryof services.Finally,it will attemptto answerseveralkey researchquestions.Is
SCM useful for publicsectorprocurementsin the UnitedStates?Canit workas well
in the publicsectoras it does in the privatesector?Will it havea substantialimpactas
a "bestpractice"in governmentaloperations,or is it merelyanotherfad thatwill fade
away over time? Is SCM best suitedfor particularprocurementprocesses-such as
budgetingor planning?This studywill addressthese issues.

Methodology
The dataused in this studyare based on a nationalsurveyof governmentoperations
andaccountabilityin U.S. cities. In 1999,a surveywas mailedto the chief administrative officersin U.S. municipalitieswithpopulationsgreaterthan50,000 (Gianakisand
Wang,2000, 11). The instrumentwas mailedto 541 municipalities,and 249 returned
validresponses,yieldinga 46 percentresponserate.Respondentswereaskedto evaluate a wide rangeof issues relatingto the decentralization
of purchasingand procurement,theuse of developedinformationsystems,andaccountabilityin decision-making
processes.Answerswererecordedon a five-pointLikertscale, with5 = stronglyagree,
4 = agree,3 = neutral,2 = disagree,and 1 = stronglydisagree.A model was created
fromthe surveyto determinewhetherthe principlesof supplychainmanagementare
compatiblewithandcurrentlyusedin municipaloperations.Thespecificvariablesused
in this analysisare drawnfrom the model suggestedby the NationalAssociationof
StateProcurementOfficers.They includeintegratedprojectmanagement,collaborationbetweeninterestedparties,decentralization
of managementfunctions,andtheefficientuse of new technology-including informationtechnology.Foreachof thesefour
issue areas,severaldifferentquestionswereposedto measureresponses.Table2 summarizesthe questionsthatare used to assess each of the variableareas.Indiceswere
createdfor each of the four principalareasbased on these questions.
IT RESULTS

Cities face many differentchallenges in relationto informationtechnology.For the

purposesof this research,threechallengesin particulararenoted-developing information systems to access financialdata, developinginformationsystems to access
performancedata,andproducingperfornanceinformationin a timely,accurateway.
The responsesfor these issues follow the aforementionedformat(5 = stronglyagree,
4 = agree,3 = neutral,2 = disagree,1 = stronglydisagree,0 = don't know/can'tsay).
Table3 illustratesthe meanandstandarddeviationscoresfor the variablesrelatingto
informationtechnology.
The average score for the informationtechnology index is 3.92 on a five-point
scale. This suggests that the level of use of informationtechnology is moderately
high.The Cronbachalphafor this scale was .72, whichsuggeststhatthese items area

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Korosec/ ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 99

Table2. StudyQuestionsand RelatedVariables

Key of Variables:
COL = Collaboration
DEC = Decentralization
IPM = Integratedprojectmanagement
IT = Information
Technology
Variable: Question:
IT

"Inouradministration,
we have. . .
* developedinformationsystemsto access financialdata
* developedinformationsystemsto access performancedata
* used performanceinformationon a timelymanner

DEC

"Decisionmakingstructures"
* we allow departments
to move fundsamongline items
* we allowdepartments
to buy wheretheywant
* we allow departments
to purchasethrougha simplifiedprocess
* we delegateauthorityto departments
for purchaseinformation

COL

"Inourcity, citizensor citizenactivistsareinvolvedin the following. .."

* identifyingagency/program
goals andobjectives
* developingstrategiesto achieveagency/program
goals
* developingpolicy/programalternatives
* negotiationof agencybudgets
* determination
of city executivebudgets
* auditingserviceandprogramachievements
* modifyingprogramsandbudgets
* evaluatingpolicy/programachievement

COL

"Mostbusinessesandnonprofitorganizations. ..
* areactivein the budgetprocess
* areactivein the planningprocess
* arecooperativein budgetnegotiations

IPM

"Pleaseevaluatethe followingquestionsconcerning... restructuring

in your
city."(Wehavebeen):
* combiningagencyfunctions
* involvingeveryonein agencyactivities(e.g., decision-making
* process)
* simplifyingrules andprocedures
* eliminatingdifferentlayers

reliablemeasureof the conceptof the use of informationsystems in procurementand

purchasingsystems. Modal responses were also highly positive: 5 (strongly agree)
for developinginformationsystems to access financialdata,and4 (agree)for each of
the remainingissues of producingperformanceinformationin a timely, accurateway,
and for developing informationsystems to access performancedata.
In all, 93.3% of the respondentsagreed or strongly agreed that their cities use
informationsystems to access financialdata.Less thanhalf agreedor stronglyagreed
that they had developed informationsystems to access performancedata (46.6%) or
producedperformanceinformationin a timely manner(47.7%).The use of bivariate

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100 PPMR/ December2003

Table 3. Information TechnologyScores for Purchasing and Procurement Issues

Percent in
agreement

Mean

Standard
deviation

"In our administrationwe have...

developed information systems to
access financial data" (n = 249)

93.3

4.53

.65

developed information systems to

access performance data" (n = 249)

46.6

3.31

1.10

produced performance information in

a timely, accurate way" (n = 249)

47.0

3.36

1.06

Index average:

62.3

3.92

.94

Note: The respondentsto this questionwere asked to ratethe applicabilityof these statementsto
activitieswithin theirgovernmentusing a five-pointscale (5 = stronglyagree,4 = agree, 3 = neutral,
2 = disagree, 1= stronglydisagree).For the purposeof this research,"agreement"includesboth
"agree"and "stronglyagree"responses.

analysisis instructiveto show the associationbetweencities developinginformation

technology systems and purchasingand procurement.
The use of Pearson'scorrelationcoefficientindicateshigh levels of positivelinear
associationbetween producingperformanceinformationin a timely, accurateway
and developinginformationsystems to access performancedata (r = .735, p < .01).
This suggests that as cities upgradetheir informationtechnology to access performance data, they are able to work with this informationin a timelier manner.The
currentfocus on performanceenhancementwithinpublicmanagementmay indicate
why this is so.
The linearassociationbetweenusing informationsystemsto access financialdata
and developing information systems to access performance data is significant,
yet weak (r = .344, p < .0 1), as is the relationshipbetween accessing performance
informationin a timely mannerand using informationsystems to access financial
data (r =. 248, p < .01). Although many municipalities are using informationtechnology in financialsystems, it is not perceivedto be enhancingthe collection (accuracy,timeliness)of performancedata.These resultsare consistentwith the idea that
manymunicipalgovernmentsarestill creatingandimplementingnew IT systems.As
they become morecomfortablewiththe changesthatthis new technologybrings,it is
likely thatlevels of efficiency will increase.
DECENTRALIZATIONRESULTS

Table4 indicatesthe variablesused in, andthe relativepercentageof decentralization

associated with, purchasingand procurement.Again, the Cronbachalpha for this
index (.70) suggests that the variablesused in this scale are a reliable measureof
decentralization,andthe averageindex score (3.27) suggeststhatthe overalllevel of
decentralizationin purchasingis slightly above average.The mean scores for each
variableindicatemixedresults,however.Mostmunicipalities(80%)agreedor strongly
agreedthatthey allowed individualdepartmentsto move funds amonglines for pur-

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Korosec/ ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 101

Table 4. Decentralization Scores for Purchasing and Procurement Issues

Percent in
agreement

Mean

Standard
deviation

"Our city
delegates authority to departments
for purchasing information" (n = 249)

47.4

3.22

1.05

allows departments to purchase

through a simplified process" (n = 249)

55.4

3.41

1.01

allows departments to buy where

they want" (n = 249)

18.9

2.43

1.06

allows departments to move funds

among line items" (n = 248)

79.8

4.00

1.10

Index average:

50.4

3.27

1.06

Note: The respondentsto this question were asked to rate the applicabilityof these statementsto
activities within their governmentusing a five-point scale (5 = strongly agree, 4 = agree, 3 = neutral,
2 = disagree, 1= stronglydisagree).

chasing or procurement.Overhalf (55.4%) agreed or strongly agreedthat simplifying the procurementprocess was encouraged.Less than half (47.4%) indicatedthat
they were able to delegate purchasinginformation,and only 18.9% respondedthat
they were able to purchasegoods and services where they wanted.
The strongestrelationshipsindicatedthroughthe bivariateanalysis showed only a
moderatelevel of association. The relationshipsfor these variablesare indicatedin
Table 7. Pearson'scorrelationcoefficients for the ability to delegate purchaseinformationandpurchasingthrougha simplifiedprocess(r =.531, p < .01) show a slightly
higher than average,positive relationship.The association between delegating purchase information and allowing departmentsto buy where they want is average
(r =. 455, p < .01), yet the association between delegating purchaseinformationand
allowing departmentsto move funds is weak (r = .340, p < .0 1). Apparently,decentralizationis most prevalentwhen it relatesto informationor process-relatedissues.
When directbudgetingissues (purchasingor moving funds between lines) are introduced, thereis less likelihoodfor managersto delegate authorityto otherswithin the
organization.This supportsthe propositionthatwhile decentralizingin procurement
may be part of a large initiative, such as efforts to decentralizeadministrativesystems, in general,it is not stronglyassociatedwith budgeting.
INTEGRATED PROJECT MANAGEMENT RESULTS

Because integratedproject managementmay take place at different times and be

implementedto different degrees, the responses for this section vary slightly from
the previousones. Respondentswere asked to indicate whetherthe issues presented
were fully implemented (5), partially implemented (4), planned (3), considered
with no action yet (2), not considered (1), or if they didn't know/couldn't say (0).
The Cronbach alpha (.74) indicates that the model is a reliable measure of inte-

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102 PPMR/ December2003

Table 5. Integrated Project Management Scores for Purchasing

and Procurement Issues
Percent
implemented

Mean

Standard
deviation

58.7

3.39

1.33

"Please evaluate the following questions

concerningdownsizingandrestructuring
in yourcity . . . "
combiningagencyfunctions"(n = 247)
involvingeveryonein agencyactivities
process)"
(e.g. decision-making
(n = 245)

46.1

2.99

1.33

simplifyingrulesandprocedures"
(n = 246)
eliminatingdifferentlayers"(n = 244)

57.7

3.44

1.19

38.5

2.77

1.43

Indexaverage:

50.2

3.15

1.31

Note: The respondentsto this questionwere asked to rate the applicabilityof these statementsto
activities within their governmentusing a five-pointscale (5 = fully implemented,4 = implemented,
3 = actionsplanned,2 = no consideration,I = don't know/can'tsay). For the purposesof this research,
"percentimplemented"includes "fully implemented"and "implemented."

gratedprojectmanagement.The averageindex score for these variablesis 3.15 on a

five-point scale, which indicates a slightly higher than averageincidence of integratedprojectmanagement.
Almost60%of the respondentsnotedthatthey hadeitherfully or partiallyimplemented a combinationof agency functions(58.7%) or simplified rules and procedures (57.7%). A total of 46.1% of the respondents stated that they worked in
organizationsthathadfully or partiallyinvolvedeveryonein purchasingandprocurement issues. The resultsfor this analysis areshown in Table5.
The Pearson'scorrelationcoefficients providedonly averageto weak evidence
that municipalitiesare attemptingto simplify and/orintegrateprojectfunctionsand
involve more people in decision-makingprocesses.The highestcorrelationwas between involvingeveryonein the decision-makingprocess and simplifyingrules and
procedures(r = .458,p < .01). Combiningagencyfunctionsandinvolvingeveryonein
the decision-makingprocessalso receiveda slightlylower thanaveragelevel of association(r = .415,p < .01).Therelationshipbetweeninvolvingeveryoneandeliminating
differentlayersshowedonly weak levels of association(r = .350,p < .01). Whenmusystems,theyarenotactivelyseekpurchasingandprocurement
nicipalitiesrestructure
ing a wide rangeof individualsto helpthem.Whilethereis evidencethatthey areopen
to allowing more comprehensiveinputto review rules and procedures,thereis less
indicationthatoutsideadvice is soughtto downsizeor consolidateagency functions.
One explanationfor this is that municipalitiesare open to allowing review on policies-which may or may not ultimatelybe implemented.The effortto downsize or
consolidatehas a much more definitiveresult-which could have long-lastingand
far-reachingconsequencesfor an organization.

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Korosec/ ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 103

Table6. CollaborationScoresfor Purchasingand ProcurementIssues

Percent in
agreement

Mean

Standard
deviation

identifyingagency/program
goals or objectives"(n = 248)

33.3

2.90

1.06

developingstrategiesto achieve
agency/programgoals"(n = 248)

27.7

2.83

1.02

developingpolicy/program
alternatives"
(n = 248)

"Inour city, citizensor citizenactivistsare

involvedin ...

30.1

2.86

1.00

negotiationof agencybudgets"(n = 248)

7.3

2.12

.81

of city executivebudgets"
determination
(n = 248)

12.8

2.05

.79

auditingserviceand programachievements"
(n = 247)

11.2

2.28

.91

16.5

2.37

.90

24.9

2.69

1.00

are activein the budgetprocess"

(n = 248)

22.1

2.24

.86

areactivein the planningprocesses"(n = 248)

21.8

2.58

1.00

9.6

2.83

.90

19.75

2.52

.93

modifyingprogramsandbudgets"
(n = 248)

evaluationpolicy/program
achievement"(n = 248)
"Mostbusinessesandnonprofitorganizations...

arecooperativein budgetnegotiations"(n = 247)

Indexaverage:

Note: The respondentsto this question were asked to rate the applicabilityof these statementsto
activities within their governmentusing a five-point scale (5 = stronglyagree, 4 = agree, 3 = neutral,
2 = disagree, 1= strongly disagree).

RESULTS
COLLABORATION
The index and related scores for collaborationare presentedin Table 6. While the
Cronbacha suggesteda higherlevel of reliabilityfor this model (.88) thanany other,
the variablesstudiedin this section providedlittle evidence thatcitizens or businesses
are actively involved with governmentson purchasingor procurement.The average
index score was 2.52-well below the average (3.0) score. As Table 6 illustrates,
none of the eleven variables studied in this section had a mean score over 3.0. An
examinationof the relativefrequenciesshowed that, across the board,most respondents disagreedor strongly disagreedwith the idea that citizens or businesses were
encouragedto collaboratewith governmenton purchasingor procurementissues.
The highest levels of agreement(strongly agree or agree) on the issue of collaborationwere concentratedwithin the realm of policymaking:identifying agency/pro-

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104 PPMR/ December2003

Table 7. Bivariate Analysis of Variables Relating to Information Technology,

Decentralization, Collaboration, and ComprehensiveProject
Management in Purchasing and Procurement
InformationTechnology
variables:
Organizational
Timelyuse of IT to accessinformation:
Use of informationsystemsin
financialdata:

Associationwithuse of information
data:
technologyto produceperformance
.735**
.344**

Decentralization
variables:
Organizational

Associationwithallowingdepartments
to delegatepurchaseinformation:

Abilityto movefunds:
Purchasingthrougha simplifiedprocess:
Delegatingpurchasingauthority:

.340**
.455**
.531**

Collaboration
variables:
Organizational
Identifyingagencygoals/objectives:
alternatives:
Developingpolicy/program
Negotiationof agencybudgets:
Determination
of executivebudgets:
achievements:
Auditingservice/program
Modifyingprograms/budgets:
achievement:
Evaluatingpolicy/program
Businessesareactivein budgeting:
Businessesareactivein planning:
Businessesare cooperative
in budgetnegotiations:

Associationwithdevelopingpolicy
to achieveprogramgoals:
.770**
.704**
.388**
.346**
.464*
.415**
.466**
.254**
.284**
.288**

IntegratedProjectManagement
variables:
Organizational

Associationwith involvingeveryonein
agencyactivities:

Combiningagencyfunctions:
Simplifyingrulesandprocedures:
Eliminatingdifferentlayers:

.415**
.458**
.350**

Note:Themeasureof association
Correlation
coefficient,whichhasa rangefrom -1
usedis Pearson's
to 1 (perfectly
*p< .05, **p< .01.
positiveassociation).
(perfectlynegativeassociation)

gramgoals andobjectives(33.3%),developingpolicy/programalternatives(30.1%),
and developingstrategiesto achieve agency/programgoals (27.7%).Each received
supportfromroughlyone-thirdof the respondents.Interestingly,the lowest level of
agreementcame in relationto collaborationon budgetissues: 12.8%of the respondentsagreed/stronglyagreedthatcitizens were encouragedto be involvedin modifying programandbudgets,7.2%stronglyagreed/agreedthatthey were involvedin the

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Korosec / ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 105

negotiationof agency budgets,and only 9.6% agreed/stronglyagreedthatbusinesses

are active in the budgetprocess.
The bivariateanalysis indicates some interestingrelationships.There is a strong
associationbetween using citizens or citizen activiststo develop strategiesto achieve
agency/programgoals identifyingagencygoals/objectives(r = .770,p < .01). A strong
association also exists between citizens or citizen activists and developing policy/
programalternatives(r = .704, p < .01). A moderateassociation exists within the
realmof auditing,or evaluatingpolicies (r = .466,p < .01) or auditingprogramachievements (r = .464, v < .01) with citizens or citizen activistinput.Finally,thereis a much
weakerassociationbetweenusing citizensor citizen activitiesto help negotiateagency
budgets(r = .388, p < .01); determinecity executive budgets (r = .346, p < .01); and
modify programsor budgets (r = .415, p < .01). This suggests several things. First,
municipalitiesseem to be more interestedin havingcitizens provideinputin the early
stages of the supply chain-including settinggoals and suggestingalternatives.They
are less likely to ask for input during or after the policy has been initiated,such as
duringaudits or evaluationsof the programs.This may be attributablein partto the
fact thataudits are financial in natureand are not usually programoriented.Finally,
they are least likely to ask for citizen assistance in budgeting mattersat any stage
(proposal,negotiation,implementation,or modification).
Thereis even less associationbetweenbusinessesandmunicipalitieswhen it comes
to policy and budgeting issues. The highest level of association is between businesses being active in the planningprocess and in the budgetingprocess (r = .632,
p < .01). Businesses were not stronglyassociatedwith budgetnegotiationsand planning (r = .397, p < .01).
Overall,the level of collaborationbetween municipalitiesandbusinessandcitizen
groups is limited. Municipalities are more likely to have the business and citizen
groupsinvolvedin the planningor proposalstages of programsthanin directbudgeting. This suggests thatmunicipalitiesaremore sensitive to collaboratingwith outsiders when their organizationallifeblood (the budget) is at stake. The results of these
calculationsare shown in Table7.

Conclusions
These findingssuggest that,despite calls from manytheorists,professionalorganizations, and governments,SCM is not happeningin the procurementand purchasing
areasof most municipalities.Althoughthereis compellingevidence thatsupplychain
managementcould work (and, in fact, is working)in otherapplications,such as generaladministration,program,orpolicy development,the associationends when money
and purchasingquestions begin.
One must consider several issues here. First, supply chain managementrequires
not only a change in activities, but also an organizationalor culturalchange in the
way of thinkingabout service provision and delivery.This may requirea change in
mindsetsas well as a reframingof organizationalpriorities.Whiletechnologicalchange
may be seen as good and needed, the actual change in managementpractices may
take longer.This is more than"teachingan old dog a new trick"-it requiresa general

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106 PPMR/ December2003

change in orientationof many of the traditionalways of thinkingand behaving in

public organizations.The lapse in acknowledgingthe need for change and actually
implementingthatchange may accountfor the relativelylow scores reportedin this
paper.The perceivedimpactof managerson organizationaleffectiveness may also
play a role here, as the leadershipof some may not result in the most optimaloutcomes (Elmuti, 2002). Anthony and Young have noted "the focus on management
controlin an existing organizationmeansthatsome exciting topics arenot given the
attentionthattheirimportancemight otherwisewarrant"(1999).
In addition,supply chain managementinvolves many differenttypes of current
managementideas. It is difficult to assess if organizationsare at differentstages in
this restructuringprocess, or if some of the managementideals are easier to implement than others.Futureresearchshould explore these possibilities. It is clear that
while some organizationshave been able to effectively partnerwith others in the
supplychain, othershave not. This may be due more to theirinsularattitudethanto
inadequatetechnology (Poirier,2002). It may also be relatedto the size of the municipality,or theirabilityto provideneeded goods and services.
Effective partnershipshold the key to successful interactionswith others-both
inside and outside of the organization-but they are not in themselves a panacea.
Organizationsare often ineffectiveat partnering,for variousreasons-including the
pressureto protectone's turfandbudget,andthe stringentprocurementrequirements
(Reed andSwain, 1990). The resultsof this studysuggestthatthis is partlytrue.Still,
as we see the increasingpressureto work in a global community,the need to work
effectivelywith othersin a teamapproachis paramount.This researchhas foundthat
when municipalgovernmentsseek collaborationon purchasingand procurement,
they often look for internalpartnershipsratherthanfosteringrelationshipswith (external)businesses or citizens. When citizens are asked to provide input, it is most
often in relationto the beginningstages of policy or programmanagement-such as
developingstrategiesor identifyinggoals. This relationshipis especially pronounced
when it comes to budgeting-neither citizens nor business groups are actively involved in this stage. This resultmay be ascribedto the fact thatthe surveylooked at
"cityexecutivebudgets"ratherthanthe annualbudgetof the organizationas a whole,
and so some respondentsmay have interpretedthis as an issue thatpertainedto departmental-levelbudgetsonly. It may also be relatedto organizationsbelieving that
externalagents may representa risk of politicizingthis sensitive financialinformation (Reed and Swain, 1990).
In addition,municipalitiesarenot likely to decentralizebudgetingissues.Thegovernmentsin this studywere more likely to decentralizeinformationalor procedural
decisions withinthe realmof purchasingandprocurementthantheywere to delegate
directdecision-makingauthorityfor movingfundsor purchasinggoods/services.The
powerof the purseis an importantfunctionwithinorganizations.Municipalmanagers show little indicationof sharingthis authoritywith others in theircommandor
those outside of their organizations.This may be because many of these managers
feel thatthey havethe most pertinentknowledgerelatingto specific (budgetary)situationsandthatthey also have the higheststakein theiroutcomes(JonesandThompson, 1999).

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Korosec / ASSESSING THE FEASIBILITYOF SUPPLY CHAIN MANAGEMENT 107

Integratedprogrammanagementis perhapsthe stickiestof all the SCM principles.

In a nation where most governmentshave been organizedalong the lines of specialization and division of labor,the change to a more integratedformatmay not come
easily. The findings of this study indicatethat municipalmanagersare most likely to
seek internalinputon reviewing rules or procedures.They are less likely to open the
decision-makingprocess to everyonewhen it comes to issues thatrelateto changes in
organizationalsize or make-up.The lack of stewardshipfor SCM implementation
may be one reason the scores reportedin this model were relativelylow.
Finally, we cannotemphasize the importanceof informationtechnology enough.
As we enterthe twenty-firstcentury,new technologyis essentialto efficient, effective
operations.Governmentsappearto have noted this need and are workingto enhance
theirin-housesystems to accommodatenew technologiesandnew innovations.However, again, these changes are limited when it comes to financial issues. The most
significant use of informationtechnology in this analysis relates to the use, timeliness, and accuracyof performancedata.In orderto be trulycompetitivein the global
arena,municipalitiesmust look beyond the realm of performancedata and begin to
use informationtechnology in other,equally importantarenassuch as strategicmanagement or programforecasting.
Despite the calls for increaseduse of SCM from severalprofessionalgovernment
purchasingand procurementorganizations,supply chain managementis still in its
infancyin U.S. public procurementsystems. Its success in the privatesectorpossibly
stemsfromthe fact thatmanagersin the privatesectorhavemorecontrolanddiscretion
over the completebudgetingprocess.Althoughthe same observationcannotbe made
for the publicsector,municipalorganizationsaremakingstridestowardenhancingprocurementoutcomes. Supply chain managementcan play a role here, but it requiresa
changefromtraditionalmanagementprinciples.The increaseduse of SCM in the public sector hinges on additionalpractitionereducation,understandingthroughuse and
practice,andthe abilityto be moreflexible with budgetingissues.Althoughwe believe
thatSCM will play a formativerole in the managementof public sectororganizations,
we also understandthatthis transformationwill not take place overnight.

Note
The authorthanksDr. ShawnWang,at the Universityof CentralFlorida,for the use of the data
set used in this model, and Dr. John Bartle, at the University of Nebraskaat Omaha,for his
thoughtfulcommentson the original draftof this paper.

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Ronnie LaCourseKorosec is an assistant professor in the Departmentof Public Administration at the Universityof Central Florida. Her areas of interest include privatization,
public policy, strategicplanning, and governmentinnovationmodels.

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