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Using Organizational Control Mechanisms to Enhance Procurement Efficiency: How GlaxoSmithKline Improved the Effectiveness of E-Procurement

Author

Listed:
  • Susan L. Kulp

    (Harvard Business School, Soldiers Field Road, Morgan Hall Room 369, Boston, Massachusetts 02163)

  • Taylor Randall

    (David Eccles School of Business, University of Utah, Salt Lake City, Utah 84112)

  • Gregg Brandyberry

    (GlaxoSmithKline plc, One Franklin Plaza, Philadelphia, Pennsylvania 19101)

  • Kevin Potts

    (Emptoris, 200 Wheeler Road, Burlington, Massachusetts 01803)

Abstract

Like many organizations, GlaxoSmithKline (GSK) implemented e-sourcing tools only to find that the realized savings fell below predicted levels due to an abundance of noncompliant purchases (purchases made outside contractual arrangements). GSK estimates that it loses between $80 and $120 million dollars of procurement savings because of noncompliance. GSK changed its information and compliance systems and obtained various benefits. Its implementation of compliance techniques improved purchase compliance by 50 percent in some areas of GSK. Companies can use a three-phase process for solving problems of noncompliance: (1) gathering data, (2) identifying causes of noncompliance, and (3) designing conformance mechanisms. Organizational control mechanisms misaligned with supply chain strategy caused friction.

Suggested Citation

  • Susan L. Kulp & Taylor Randall & Gregg Brandyberry & Kevin Potts, 2006. "Using Organizational Control Mechanisms to Enhance Procurement Efficiency: How GlaxoSmithKline Improved the Effectiveness of E-Procurement," Interfaces, INFORMS, vol. 36(3), pages 209-219, June.
    • Handle: RePEc:inm:orinte:v:36:y:2006:i:3:p:209-219
    DOI: 10.1287/inte.1060.0209
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    References listed on IDEAS

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    Cited by:

    1. Katri Karjalainen & Katariina Kemppainen & Erik Raaij, 2009. "Non-Compliant Work Behaviour in Purchasing: An Exploration of Reasons Behind Maverick Buying," Journal of Business Ethics, Springer, vol. 85(2), pages 245-261, March.
    2. Holma, Anne-Maria & Bask, Anu & Kauppi, Katri, 2015. "Ensuring corporate travel compliance – Control vs. commitment strategies," Tourism Management, Elsevier, vol. 51(C), pages 60-74.

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