Sourcing Team Success
Sourcing Team Success: Team-studies in a Purchasing and Supply Management Context
Boudewijn Driedonks, PhD
Sourcing teams have become an increasingly popular form of organization in purchasing and supply management. Sourcing teams, also referred to as category or commodity teams, are assigned the task of finding, selecting, and managing suppliers for a category of products or services across businesses, functions and disciplines. Typically, sourcing teams are staffed by people from different business units, and with different functional backgrounds. Sourcing teams have a boundary-spanning role and have to deal with a wide range of internal and external stakeholders. Despite high expectations, many companies that implement sourcing teams appear to face decreased levels of ambition within months after start-up as motivation and cohesiveness among team members flag. Rigorous empirical research which provides managers with meaningful insights for increasing the chances of sourcing team success in today’s organizations is scarce, however. Sourcing teams’ activitiesare conducted across functional and divisional borders. Investigating sourcing teams contributes to literature by providing deeper insights into team processes and success of sourcing teams, which can be applicable to other teams that share these characteristics. The central research question of this dissertation therefore is: How to improve sourcing team success?
Three empirical studies in this dissertation address this overall question; each serving a different objective. The first study aims to identify the critical success factors for sourcing teams. The second study’s objective is to investigate whether team members and managers consider cross-functional sourcing team compositions beneficial for team success. Finally, the third study focuses on the collaboration between team members and other stakeholders, and aims to integrate teams’ internal and external processes over time into one model. The first two studies build on data from two cross-sectional surveys. The third study is a qualitative multiple case study.
Study 1: Success factors for sourcing teams
Chapter 2 presents the results of a large-scale field survey addressing the effectiveness of sourcing teams. The study translates implications from prior team effectiveness research with other types of teams into hypotheses for sourcing teams in order to identify critical success factors. Next, the study provides insight into the relationships between these factors, team processes, and key dimensions of sourcing team performance. The research framework, based on the input-process-output (IPO) model, acknowledged that different success factors drive different team outcomes.
The empirical findings revealed a new dimension of sourcing team effectiveness. The ability of sourcing teams to cooperate effectively with internal stakeholders appeared to be a unique and critical dimension of sourcing team effectiveness, besides general overall team effectiveness and supply base management effectiveness. These three dimensions of sourcing team effectiveness served as points of departure in suggesting managerial interventions to improve sourcing team performance. For every effectiveness dimension, we showed how certain input factors enhance performance. Overall, our research results point to team internal authority as the most important success factor. A remarkable finding, which we investigated in the second study, was that team members associate functional diversity with higher performance, whereas management ratings indicated decreased performance. In conclusion, the outcomes of this study provide purchasing managers with detailed insights for assessing and improving the performance of their sourcing teams.
Study 2: Management’s blind spot
The aim of the second study, reported in chapter 3, was to determine how team members and managers value functional diversity in sourcing teams. This study’s research framework was based on the input-mediation-output-input (IMOI) model, which suggests that the outputs of one performance cycle serve as inputs for the next episode. We investigated how team members’ and team managers’ perceptions of team performance (defined as achieved cost savings) and teamwork quality affected perceptions of both groups of respondents regarding the appropriateness of the team’s cross-functional composition, i.e., whether team members and managers believe that the right functions are represented.
The empirical results showed that perceptions of functional diversity appropriateness differ between team members and managers. This discrepancy may lead to situations where managers intervene in team structures to reduce cross-functionality. Such an action may be perceived by team members, as our results show, to be a step back rather than forward. Similarly, our results also showed that when current performance meets management expectations, managers are satisfied with the existing team composition, even if poor teamwork behavior has jeopardized team members’ faith in the appropriateness of the team’s composition. Differences in perceptions of both groups of respondents appeared to originate from the fact that team members, unlike managers, take the quality of teamwork behavior into consideration when evaluating the appropriateness of their team’s diversity. Managers’ perceptions of functional diversity appropriateness were largely based on the financial outcomes of a team’s work. Managers did not include teamwork behavior in their judgments, likely because managers have little insight into these behaviors.
Additionally, some remarkable unexpected findings surfaced in this study. First, purchasing managers appeared to be more reluctant to move to more formal cross-functional collaborations in purchasing and supply management than the team members who actually have to do the job. Second, the team members with the poorest perceptions of functional diversity appropriateness were not from poorly performing teams, but were in fact from well performing teams. Additional analyses suggested that this may be due to goal incongruence among cross functional team members. Overall, this study indicated that under conditions of poor performance, managers should first focus on improving teamwork behavior. Moreover, managers should not be misled by current performance alone; high performance may have been achieved at the cost of a team’s motivation to address future challenges in their current composition.
Study 3: Towards a holistic view on team performance
Whereas the studies reported in the second and third chapter built on existing team performance models, the aim in the fourth chapter was to develop a new theoretical framework. Different theoretical streams in team research have developed in parallel, and, unfortunately, lack an integrated perspective. Insights from IPO, boundary spanning, and timing research only partly address the complexities of contemporary team arrangements, in which diverse teams with changing part-time members strongly depend on external interactions and go through different stages of development over time. In this study, we aimed to consolidate and extend these perspectives on the IPO-model, which was used a an initial research framework, boundary spanning, and timing in team research. Based upon our research we propose an integrated model: the Dynamic Embeddedness Model (DEM).
As part of this model, we proposed a new concept, ‘team embeddedness’, i.e., the extent to which team members effectively interact with all key stakeholders which surround them. We grouped stakeholders in an upstream and a downstream network. The upstream network was defined as the power structure formed by a team’s stakeholders of a higher hierarchical level, who control resources, and supervise team activities. The downstream network, on the other hand, relates to people in the workflow structure who possess information necessary for successful task execution by the team. The downstream network also includes relationships with stakeholders whose activities must be coordinated by the team for successful task completion and implementation. A second part of the Dynamic Embeddedness Model concerns time. We suggested that teams go through three subsequent stages of team behavior: 1) the ‘forming’ phase, 2) the ‘functioning’ phase, and 3) the ‘finishing’ phase. Interactions with the upstream and downstream network change when teams move from one stage to the other.
Using a multiple case study approach, we validated the Dynamic Embeddedness Model in practice. First, based upon the empirical results, we derived three distinct dimensions of team embeddedness: 1) the extent to which the upstream network is connected and informed, 2) the connectedness between the team and the downstream network, and 3) the extent to which the upstream network influences the downstream network. Second, the case studies showed that teams may not go through the three phases of forming, functioning and finishing in an orderly sequence. Teams with low team embeddedness appeared to be pulled back to the previous phase when they tried to push the project further. We included this phenomenon in the Dynamic Embeddedness Model by adding iterative loops between the phases. Third, the apparent gradual buildup of performance shows that failing to get things right at the start makes it difficult to compensate at later stages. Unlike previous team performance models, we explicitly included team performance as a product of performance in each stage in the Dynamic Embeddedness Model.
The three empirical studies uniquely contribute to answering the overall research question: How to improve sourcing team success? First, in order to improve sourcing team success, managers should acknowledge that there are three unique dimensions to sourcing team effectiveness: general overall team effectiveness, supply base management effectiveness and external cooperation effectiveness. For improving sourcing team effectiveness, it makes sense to review performance on each of these dimensions and to determine which performance area needs improvement. Chapter 2 provides an overview of the factors (e.g. leadership styles, functional diversity and formalization) that managers should turn their attention to in order to enhance performance on respective dimensions of sourcing team effectiveness.
Second, this dissertation points at a risk in managing sourcing teams if collaborative processes are insufficiently recognized. Although achieved cost savings may be satisfactory, these results may be obtained at the detriment of team motivation. Team members generally perceive a cross-functional approach to be a necessity for future performance, and may have different views about the appropriateness of functional diversity in teams than managers. The cause for this perceptual discrepancy lies in the quality of teamwork behavior. Intervening in a team’s functional composition based on performance outcomes only may not improve team success, and may not reach at the heart of the problem. Rather, it is important for managers to develop a sharp eye for teamwork processes, and to stimulate effective teamwork behavior by ensuring adequate reward structures and by ensuring sufficient team autonomy.
Finally, our research showed that just focusing on what happens within the team is not sufficient for sourcing team success. A team’s embeddedness in its upstream and downstream network highly impacts team success. Effective sourcing team management thus involves considering a team’s embeddedness when composing a team, managing the team’s external activities, and managing the context in which the team must operate. Moreover, team embeddedness should be assessed in the early stages of any performance loop, to prevent the team from running into problems at later stages.
Contributions to academic research
The contributions of this dissertation lie both in introducing rigorous team research in the field of purchasing and supply management as well as in advancing existing team theories. We can distinguish at least three theoretical contributions of this dissertation to the team literature, which provide
First, we introduced a new dimension of team effectiveness: external cooperation effectiveness. This effectiveness dimension extends existing IPO research models by acknowledging a unique part of team success. Moreover, we provided more in-depth insights into how different input factors affect this and other performance dimensions.
Second, this dissertation is among the first studies which applied the IMOI model. In particular, we investigated how outcomes are subsequently related to inputs. Teamwork behavior appeared to be not only an antecedent to team performance, but also appeared to act as a moderator in the relationship between team performance and functional diversity appropriateness. The insights provide a theoretical explanation for why team members and managers see different needs for ensuring future team performance.
Finally, the Dynamic Embeddedness Model combined and extended existing team theories into a new, more holistic theoretical framework for team performance. We introduced the theoretical concept of team embeddedness, and theorized on the relationships between team embeddedness, task progress over time and team performance.
Implications for practitioners
The implications of our research center around three essential aspects of team management. The 3C model, which is presented in chapter 5, provides an intuitive overview of those three elements, being: 1) Who should be on the team (Composition), 2) How to foster teamwork (Collaboration), and 3) How to embed the team in the wider organization (Contacts). These three Cs reflect three possible levels of analysis in team research: the individuals within the team, the team itself, and the organization in which the team operates. A team’s composition, collaboration and contacts are interrelated and reinforce each other. In chapter 5, we frame this dissertation’s managerial implications in the 3C model.
In terms of Composition, functional diversity proves to enhance team success, but team members who consider wider intra-organizational team collaboration crucial may first have to overcome management’s reservations. Engaging in evaluating the process that led to the final team outcomes is a powerful managerial tool for developing a shared understanding of what composition is actually most adequate. Secondly, managers should consider team members’ social capital in their decisions on team composition. Cross-business unit and cross-departmental teams are intended to overcome organizational boundaries. Team members who are able to build bridges with key stakeholders should be selected to ensure a high level of team embeddedness.
As today’s team arrangements become more complex, the challenge to effectively manage internal Collaboration also increases. For teams that are most in need of effective team management -because they are virtual, diverse and span different departments- it is, paradoxically, especially hard to fulfill that need. To align team management in terms of, for instance, reward structures and team authority is beyond the direct span of control of individual team managers. We concluded that for sourcing teams at least three factors are crucial for the development of effective internal collaboration. First, since team members have different backgrounds, teams need a clear briefing, outlining the objectives, expectations and boundaries for task execution. After that, teams need a ‘license to act’. Finally, different interests and knowledge bases among team members put high demands on the team leader, whose capabilities to coach, inspire and motivate team members are key drivers for effective internal team processes, whereas their ability to structure activities clearly enhances their effectiveness in working with managers outside the team.
Finally, a team’s external Contacts must be managed effectively to ensure a high level of team embeddedness in its upstream and downstream network. Of course, staffing a team with members who can easily bridge gaps with stakeholders is one critical step for creating team embeddedness. Monitoring teams’ externally directed behavior is another. Our research shows that when diverse team members form a coherent team, the team is more likely to explicitly discuss the need for involving stakeholders. A pitfall in this perspective may lie in performance assessments. Most teams are requested to self-report their results straight after task completion, but the extent to which a team’s objective is achieved may not be very distinct at this point as this often depends on external commitment and follow-up actions by non-team members after the team has finished its primary tasks.
In conclusion, in today’s business context, teams are increasingly installed to achieve functional and cross-business integration in complex multinational organizations, to achieve superior results. Sourcing teams are a typical example of such teams. This dissertation aimed to provide deeper theoretical insight into sourcing team success, and extends and consolidates best practices for improving team management and, hence , team success.