Integration barriers for purchasing organisation in a large construction company: towards requisite disintegration

Journal article, 2013

Developing the purchasing organisation is an ongoing challenge for large contractors where internal and external perspectives need to interplay. The aim of this paper is two-fold: firstly, the development of a theoretical framework to characterise the purchasing organisation and secondly, to analyse the limited adoption of integrated purchasing through an analysis of barriers to integration. The theoretical standpoint is underpinned by purchasing organisation theory and by literature on internal and external integration as well as barriers to integration. Based on a two-year case study, the paper presents the status of the purchasing organisation and the barriers to further integration as originating from the strategic purchasers of the contractor. The perceived barriers question full integration internally and externally. The perceived barriers encompass low framework agreement status compared to orders, inconsistent ways of working in the projects and dispersed geographical location and sub-markets. The barriers to integration stem from both attitudinal and industrial matters, whilst institutional barriers are not identified. The paper therefore proposes a differentiated, requisitely disintegrated, purchasing organisation designed to manage the diverse supplier population. In contrast to those advocating a tighter internal and external integration, this paper suggests a requisite balance between integration and specialisation of the purchasing activities.