On the effects of supply strategy on business performancedo the relationships among generic competitive objectives matter?

Resumen

The aim of this work is to analyze the effect of purchasing and supply strategies on business performance. Our approach introduces two innovative elements. First, strategy is conceived of as a profile of generic competitive objectives, not as a set of practices deployed by the purchasing function. Second, this study introduces the concept of the relative importance of a competitive objective, rather than the absolute importance of that objective, which enables an analysis of the effect of the interrelationships among the different competitive objectives. An empirical analysis based on 180 Spanish industrial firms, show that an organization’s commercial and financial performance increases when it increases the relative importance of flexibility and decreases the relative importance of reductions in stock levels and purchasing prices in its supply strategy. The best performing firms are those that combine quality, dependability, and flexibility as priority objectives and relegate cost reductions to secondary importance.