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Journal of Purchasing & Supply Management 14 (2008) 55–68
www.elsevier.com/locate/pursup
The changing role of procurement:
Developing professional effectiveness
Rana Tassabehji
�
, Andrew Moorhouse
1
University of Bradford School of Management, Emm Lane,
Bradford BD9 4JL, UK

Received 2 August 2007; received in revised form 22 January
2008; accepted 24 January 2008
Abstract
The major objectives of this paper are to explore, from the
perspective of 18 senior procurement professionals interviewed,
the current
status of their role and identify the skills they need to develop,
in order to effectively manage the changes they are
experiencing. The
interviews revealed a schism in perception of the procurement
role between professionals (strategic) and their organisations
(transactional). Although skills have a direct impact on the
ability of procurement professionals to fulfil their role
proficiently, the degree
of organisational support and internal acknowledgement of the
role’s importance, were found to be a major barrier to the
development
and progress of procurement professionals. A Procurement
Skills Effectiveness Framework is presented to enable managers
to assess the
likely sophistication level of procurement and its impact, given
a set of procurement skills and the degree and type of internal
support for
the role.
r 2008 Elsevier Ltd. All rights reserved.
Keywords: Strategic procurement; Relationship management;

Skills development; Training; Procurement effectiveness; Skills
taxonomy
1. Introduction
The evolution of the procurement function is well
documented in the literature. There has been a recognised
shift away from the traditional administrative and trans-
actional role, towards one which involves strategic
partnerships, cooperative alliances and supply network
management (Carr and Smeltzer, 1997; Scheuing, 1997;
Ramsay, 1998; Lamming et al., 2000; Handfield and
Nichols, 2002; Knudsen, 2003). In the literature, procure-
ment is now deemed a core component of many organisa-
tions and considered to be of major strategic importance
(Humphreys, 2001; Paulraj et al., 2006). However, others
argue that the procurement role is still essentially a support
function and that as a tactical role, it performs essentially
low value adding activities (Kaufmann and Carter, 2004;
e front matter r 2008 Elsevier Ltd. All rights reserved.
rsup.2008.01.005
ing author. Tel.: +44 1274 233902; fax: +44 1274 546866.
esses: [email protected] (R. Tassabehji),
tinternet.com (A. Moorhouse).
ess. Huthwaite International, Hoober House, Wentwork,
e S62 7SA, UK. Tel.: +44 1709 710081;
10065.
Cox et al., 2005). Indeed, Ramsay (2004) highlights the fact
that sometimes academic papers do not represent the
reality of the context in which the practitioners operate and

contradicts his previous findings about co-operative rela-
tions in supply chains, as being more fictional than factual.
It is with this in mind that this paper aims to answer the
following research questions related to procurement
professionals:
(1)
How do procurement professionals perceive their role
within their organisations?
(2)
How has their role changed and what challenges have
they had to face as a result?
(3)
What portfolio of skills do they believe will enable them
to fulfil their role effectively?
The first part of the paper reviews different perspectives
on the changing role of procurement from the literature.
From this review, a new taxonomy for categorising
procurement skills in the current business climate is
introduced. The second part of the paper presents the
findings from 18 semi-structured interviews with senior
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ARTICLE IN PRESS
R. Tassabehji, A. Moorhouse / Journal of Purchasing & Supply
Management 14 (2008) 55–6856
procurement professionals across a number of different
industry sectors. A Procurement Skills Effectiveness
Framework is developed, enabling managers to identify

the knowledge, skills and level of support required in order
for the role of procurement to optimise its effectiveness in
achieving organisational objectives.
2. Literature review
Over the past decade, there have been notable changes in
macro-economic trends influencing the business environ-
ment. Increased globalisation, technological advances in
internet based systems, accessibility to complex computa-
tional programmes, increased demands by upper manage-
ment, changing consumer patterns, a shift towards
outsourcing and a greater awareness of corporate social
responsibility have all been influential factors driving this
change (Giunipero et al., 2005, 2006; Zheng et al., 2007).
These changes undoubtedly impact the procurement
function, and there is a widely recognised need for a
developmental shift to keep in line with these changes. Van
Weele and Rietveld (1998) identify six stages through
which the procurement function must develop: from
transaction and commercial orientation, to internal and
external integration, to the final stage where purchasing
strategy is focused on delivering value. Lamming et al.
(2005) also identified an emerging need for change in the
1990s when business began to accept inter-organisational
relationships, which evolved into value adding collabora-
tive relationships. It is now widely acknowledged that
proactive value-focussed rather than passive cost-focussed
procurement strategies are a means of achieving competi-
tive advantage and integral to long-term organisational
strategy (Leseure et al., 2004; Mehra and Inman, 2004;
Noonan and Wallace, 2004).
This dynamic environment and the call for a develop-
mental shift, have led to challenges for the procurement
function within organisations, which are well documented

in the literature (Zheng et al., 2007). These challenges
include increased specialisation, a move from purchasing
functions to processes and from transaction to relationship
management, an increased awareness of and need to
manage the supply chain (Carr and Smeltzer, 1997;
Lamming et al., 2000; Handfield and Nichols, 2002;
Knudsen, 2003). Some of the changes made to the
procurement role, to better cope with such challenges and
maintain organisational competitiveness, include: expand-
ing core processes such as supplier coordination; supplier
development and market research; cost analysis; strategy
formulation and planning; risk management and interna-
tional outsourcing (Giunipero et al., 2005, 2006; Cousins
et al., 2006). In addition new technology, such as e-pro-
curement and ERP systems, means that much of the paper-
based routine tasks have been automated. This allows more
time for procurement professionals to focus on new forms
of supplier relationships, supply management, advanced
planning and value adding activities (Humphreys et al.,
1998; Humphreys, 2001; Croom and Johnston, 2003;
Giunipero et al., 2005).
These trends have facilitated the necessary transforma-
tion of the role from a tactical to a more strategic level
(Giunipero and Pearcy, 2000; Cousins et al., 2006). Paulraj
et al. (2006) acknowledge that different firms might be at
different stages of strategic evolution, but that for
organisations to evolve to the final stage of development,
strategic procurement, they need to optimise their perfor-
mance. Unless organisations and their structures change
with the times to accommodate strategic procurement they
will become dysfunctional (Scheuing, 1997) and the impact
procurement can have on their competitive position will
remain unrealised (Carter and Narasimhan, 1996; Cousins
et al., 2006; Giunipero et al., 2006). However, the evolution
of procurement to the status of a strategic and critical

function is not yet complete in the real world (Cox et al.,
2005). Indeed, Ramsay (2006) maintains that senior
management, influenced by the current anti-clerical bias
in the literature, fail to understand the contribution the role
is making at the administrative level. Although the specific
details might be contested, the implicit message is that since
the procurement professional now operates in a changing
and dynamic environment, there is a subsequent imperative
for procurement professionals to update their existing
skills if they are to contribute effectively to the financial,
operational and strategic success of their organisation
(Reck et al., 1992; van Weele and Rietveld, 1998; Henke,
2000; Giunipero and Pearcy, 2000; Giunipero et al., 2005).
2.1. The organisational impact of procurement skills
Empirical research is emerging to demonstrate the
impact of specific procurement skills on firm performance.
In a study of the impact of strategic purchasing on supply
integration and performance, Paulraj et al. (2006) found
that: (1) a more strategic purchasing function leads to
better supply integration; (2) executives must understand
the key role that purchasing can play in integrating
buyer–supplier dyads by focusing on ‘‘process, relational,
information, and cross-organisational teams’’; (3) strategic
purchasing can create a win–win situation for both buyer
and supplier firms which impacts positively on overall
supply chain performance.
Taking a resource-based view of the firm, Carr and
Smeltzer (2000) found a relationship between specific skills
and overall organisational performance. Technical skills in
particular were found to be a predictor of firm perfor-
mance, while skills techniques (a rather vague term which
incorporates skills that are not purely technical or
behavioural, such as project management, time manage-

ment and communication) predict a strategic purchasing
approach, and behaviour skills predict supplier responsive-
ness. Cousins et al. (2006) also demonstrated the impact
of skills on organisational performance. They found
that purchasers with high skill levels and knowledge
have a significant impact on financial performance and
ARTICLE IN PRESS
Management 14 (2008) 55–68 57
operational efficiency in terms of quality improvement,
design and reduction of lead times.
2.2. Changing development needs
While the degree of transition towards strategic procure-
ment might be disputed, it is clear that the skills and
competencies required by professionals in the past are
not the same as those required today. There is overall
consensus that skills are essential to the productivity and
competitiveness of organisations (Thurow, 1994; Borghans
et al., 2001; Briscoe et al., 2001; Keep and Mayhew, 2001).
Show me an unskilled individual, company or country
and I will show you a failure in the 21st century y In
the economy ahead, there is only one source of
sustainable competitive advantage-skills. Everything
else is available to everyone on a more or less equal
access basis. (Thurow, 1994, p. 52)
There has been much research into the definition of
skills, where the concept of a skill is defined as ‘‘the ability
to carry out the tasks and duties of a job in a competent

manner’’ (Elias and McKnight, 2001, p. 511) and the ability
gained by practice or knowledge within the workplace
(Kolchin and Giunipero, 1993; Carr and Smeltzer, 2000).
Skills are seen to be multi dimensional and have been
categorised in several different ways that incorporate
educational qualifications, competence, work experience
and vocational training (Elias and McKnight, 2001).
Changes in the procurement function and the environment
in which it operates significantly affect the ideal skill set
required for the world-class procurement professional
(Giunipero and Pearcy, 2000). There is a need for
procurement personnel to update existing skills and
develop new perspectives and abilities if they are to
contribute effectively to the success of their organisations
(Henke, 2000; Giunipero et al., 2005, 2006; Cousins et al.,
2006). Van Weele and Rietveld (1998) have tracked the
changing skills needed at different stages in their procure-
ment evolution model, from the procurement specific to an
inclusion of broader business and management skills and
abilities.
Our review of the literature found that there is much
overlap in lists of skills compiled and used in empirical and
theoretical studies on the role and function of procurement
in organisations, over the past couple of decades. Here, we
have included the articles which have been highly cited in
studies focusing on this area of research. The studies
selected are empirical and include comprehensive lists
of procurement skills, grouped according to their generic
skill type, such as behavioural, strategic, etc. and are
summarised in Table 1. Despite the similarities, often the
same skills are grouped under different typologies and
given different nomenclatures, which can be somewhat
confusing. To simplify this, we have listed both the
individual skills and skill categories and have further
classified them according to whether they are procurement

specific or generic management skills. This summary forms
the basis of our literature consolidation and is the first
stage in the development of a new taxonomy of procure-
ment skills to deal with the challenges of the current
environment.
2.2.1. Consolidating procurement skills
The empirical findings of Kolchin and Giunipero (1993)
underpin a large number of procurement skills studies that
followed. Their main aim was to measure purchasing
education and training in US firms and to make predictions
for the future of procurement. Three of the skills groups
(management, interpersonal and individual), can be
broadly applied to other functions and organisational
settings and the technical skills group is mainly specific to
procurement.
Building on Kolchin and Giunipero (1993), Giunipero
and Pearcy (2000) progressed the research by gauging
perceptions of people that do the job rather than focusing
on recruitment selection criteria for the job which provides
a more accurate assessment of the skills required for world-
class purchasing professionals. This study introduced
strategic skills (not measured in Kolchin and Giunipero’s
(1993) study) into the procurement skills portfolio. To
demonstrate the development of the role into one with a
more strategic focus, skills such as managing change and
understanding business conditions, were found to have
increased in importance. The skill types focusing on generic
management, such as process management, team-building,
decision-making, behavioural, negotiation seem to be
growing in relation to procurement specific skills (strategic
and quantitative) reflecting the changes.
As a good comparison, Carr and Smeltzer (2000) collate

35 different procurement skills, believed essential to
enhance corporate competitiveness, directly from the
responses of 85 interviewees. This study was not based
on previous skills listings and was conducted in the
automotive sector, but still there is much overlap with
previous studies, despite skill categories having different
names. For instance, technical skills match Giunipero and
Pearcy’s (2000) quantitative and decision-making skills;
skills techniques map onto Giunipero and Pearcy’s
negotiation skills, process management, and team skills;
behaviour skills map onto Giunipero and Pearcy’s strategic
and behavioural skills. Of these, the technical skills in
particular relate most specifically to procurement. Despite
the similarities, the portfolio of requisite procurement skills
is incremented with the inclusion of skills related more to
the strategic approach.
Professional procurement skills listings, are sophisticated
further as Giunipero et al. (2005) argue the need for
flexibility in the procurement role, achieved by incorporat-
ing entrepreneurial qualities to their skill set. They
demonstrate that common characteristics already exist
between entrepreneurial and purchasing skills (18 out of 30
using Denslow and Giunipero’s (2003) more recent list),
and introduce new skills that can provide flexibility.
ARTICLE IN PRESS
Table 1
Summary of procurement skills in the literature
Source Categorisation of Procurement

Skills: 1, procurement specific; 2,
generic management
Individual skills
Kolchin and Giunipero
(1993) based on division of
18 skills
1. Technical � Cost analysis, product knowledge, computer
literacy, total quality
management and government legislation global sourcing
development
2. Management � Market analysis, negotiating with partners,
managing internal and external
relationships, change management and planning and
organisational skills,
risk taking, written and oral communication, conflict resolution,
influence
and persuasion, group dynamics, leadership, problem solving
and
international and cultural awareness
2. Interpersonal/group
2. Individual
Giunipero and Pearcy

(2000) based on a total of
29 skills including Kolchin
and Giunipero’s (1993)
skills
1. Strategic � Strategic thinking, supply base research
� Structuring supplier relationships, technology (planning),
supplier cost
targeting, risk taking/entrepreneurship, salesmanship,
computational,
technical, blueprint reading, specification development
1. Quantitative
2. Process management � Market analysis, negotiating with
partners, managing internal and external
relationships, change management and planning and
organisational skills
� Risk taking, written and oral communication, conflict
resolution, influence
and persuasion, group dynamics, leadership, problem solving,
and
international and cultural awareness
2. Team skills
2. Decision-making
2. Behavioural skills

2. Negotiation skills
Carr and Smeltzer (2000)
based on a total of 35 skills
1. Technical skills � Drafting CAD/computer skills, maths
skills, technical business writing,
blueprint reading, forecasting
� Understanding: tool capability, manufacturing processes,
MRP, materials,
inventory systems
2. Skills techniques � Analytical, communication, presentation,
co-ordination, negotiating (cost)
and issues, cost analysis, problem solving, quality management,
programme
management, organisational (paperwork) time management
� People skills (suppliers), internal customers and functions,
detail orientation,
proactivity, ability to follow up, flexibility, stress management,
team working,
patience, multi-tasking
2. Behaviour skills
Giunipero et al. (2005) Skills to achieve flexibility:
� Risk management
� Interpersonal communication
� Influencing and persuasion

� Planning
� Decision-making
� Internal motivation
� Creativity
Cousins et al. (2006) These procurement skills are a subset of
the study:
2. Supplier/product market monitoring and interpretation
2. Technical skills to improve products and processes
1. Cost analysis to improve total costs with suppliers
1. Behavioural skills such as perseverance, imagination
decisiveness and interpersonal skills
Giunipero et al. (2006) Skills to achieve strategic purchasing:
2. Team-building: leadership, decision-making, influencing;
compromising
2. Cross-functional strategic planning: project scoping, goal-
setting, execution
2. Communication: presentation, oral, listening, writing
1. Technical skill: web-based research, sourcing analysis
2. Broad financial: cost accounting, business case building
Large and Gimenez (2006) 2. Oral communication Based on
ability to:
� Pass on information
� Persuade

� Listen and understand
� Oral capability
Management 14 (2008) 55–6858
ARTICLE IN PRESS
Management 14 (2008) 55–68 59
Giunipero et al. (2006) emphasise the emergence of the
strategic procurement role and required skills, further
suggesting that the role might even be divided into
the strategic and tactical. The differentiation between
the strategic role focusing on building relationships and
lowering total costs and the tactical role dealing with day-
to-day activities, can be easily categorised into procure-
ment specific and management generic skills as applied in
Table 1. In a similar vein, Cousins et al.’s (2006)
recommendation for a set of procurement skills and
competencies to deal with an intensely competitive
environment, seems to focus mainly on developing generic
management skills and improving procurement specific
skills such as supplier coordination and research, sourcing
strategies, and sophisticated costs analysis. They do
however highlight the importance of procurement skills
and knowledge by demonstrating its impact on organisa-
tional performance, both financial and operational.
Here, Large and Gimenez’s (2006) study is included to
illustrate the application of generic skills to procurement.
They show the importance of oral and written commu-
nication for the procurement role and its impact on
improved efficiency and performance. Their study found
that the largest cluster of purchasing managers were poor

communicators who possessed a good oral communica-
tion capability but poor ability to listen and under-
stand, pass on information and persuade. This is one area
that demonstrably needs to be addressed and is thus
included.
3. Introducing a new taxonomy of procurement skills
From the review of the literature on development of
procurement skills, there is an obvious need to consolidate
the different taxonomies and nomenclatures into a single
consistent and coherent set of categories. Here, we present
a new taxonomy that classifies procurement skills into five
groupings that more accurately mirror the requirements of
modern day procurement professionals. Definitions of
these groupings are:
(1)
Technical skills (TS): These are fundamental and basic
administrative skills necessary for any procurement
professional in the 21st century. They include product
knowledge, computer literacy, total quality manage-
ment and government legislation. As part of technical
skills, we include advanced procurement process skills
(APP) such as category management, global sourcing
development, detailed cost driver analysis necessitating
advanced analytical capabilities essential to create
value. We include the need to utilise and manage e-
procurement technology and processes effectively; and
optimise supplier selection to ensure that they capitalise
on the opportunities e-procurement avails (Croom,
2005; Ogden et al., 2005; Tassabehji et al., 2006). It is
acknowledged in the literature (Carr and Smeltzer,
2000; Cousins et al., 2006; Giunipero et al., 2006) that
these basic procurement skills are the foundations for
building more strategic skills.

(2)
Interpersonal skills (IS): Necessary for interaction with
people in teams and on an individual level including
written and oral communication, conflict resolution,
influencing and persuasion, group dynamics, leader-
ship, problem solving and interpersonal and cultural
awareness. These skills are required at every level for
effective procurement management.
(3)
Internal enterprise skills (IE): These skills relate to the
overall business and how the different functions
interaction. IE skills will enable procurement profes-
sionals for example, to effectively conduct market
analysis, manage internal relationships, global sourcing
evaluation, internal change management and planning
and organisational skills.
(4)
External enterprise skills (EE): These skills relate to the
supply chain/network and its stakeholders. These skills
will enable for example, the management of external
relationships, and stakeholder change management.
(5)
Strategic business skills (SB): These skills relate to
broader strategic issues and how procurement can
impact on overall organisational value such as planning
and managing strategic partnerships and alliances, risk
management and adding value to the organisation.
The literature review highlighted the changing skills
requirements of the procurement professional, with an
increasing emphasis on skills that can be seen as more
generic and management oriented, applied in a procure-
ment context. This trend can be observed from Table 1, as

over a third of the skills listed in 1993 are procurement
specific, but the proportion of procurement:generic man-
agement skills has diminished over time as business
environments become more dynamic requiring different
skills. Applying the new taxonomy, Fig. 1 demonstrates
this differentiation. Procurement specific skills are a core
requirement for the procurement professional, surrounded
by a whole range of generic managerial skills specifically
honed for procurement, but applicable to other organisa-
tional functions.
4. Methodology
The main aims of this exploratory research were
threefold: (a) to determine procurement professionals’
perception of their role; (b) to identify how their role had
changed and the challenges they have had to face; (c) to
compile a portfolio of requisite skills to enable them to
fulfil their role effectively. In order to fulfil these aims, an
exploratory study was conducted by in-depth interviews
with procurement professionals to obtain details of
experiences, attitudes, needs and ideas relevant to their
organisation and position (Wright, 1996; Rubin and
Rubin, 2004). A less directive and semi-structured
approach was adopted to provide a richness of informa-
tion, which has previously been shown to be more effective
ARTICLE IN PRESS
Strategic
Business
Skills
(SB)

External
Enterprise
Skills
(EE)
Internal
Enterprise
Skills
(IE)
Interpersonal
Skills
(IS)
Technical
Skills
(TS)
Advanced
Procurement
Process Skills
(APP)
Procurement
Specific Skills
Managerial
Skills
Procurement
Function

Other Organisational
Functions
Fig. 1. New categorisation of skill types required for
procurement.
Table 2
Research participants
Sector Interviewees
Insurance Head of Procurement
Senior Purchasing Consultant
Financial Services Head of Procurement
Head of Procurement Performance
Improvement
Procurement Director
Professional Services Procurement Consultant
Government Department Procurement Manager (x2)
Fast Moving Consumer Goods
(FMCG)
Sector Head (retailing)
Network Manager (manufacturing)

Senior Procurement Manager
(manufacturing)
Public Health Service Senior Procurement Management
Telecommunications Head of Procurement
Global Chemicals Purchasing Manager
Aerospace Purchasing Manager
Manufacturing Procurement Director (Eastern Europe)
Procurement Director (UK)
Consumer Electronics Purchasing Manager
Management 14 (2008) 55–6860
when eliciting information from senior professionals
(Wright, 1996).
Purposive sampling was adopted to ensure that the views
of a specific profession were elicited about issues related to
their role (Saunders et al., 2003). Procurement Trade
Associations were contacted to forward invitations for
interviews to a random selection of their member database.
However, they were unable to co-operate due to prior
research commitments. A University post experience MBA
alumni database was then accessed for initial introductions
to procurement professionals, and in combination with a
snowball sampling strategy (Atkinson and Flint, 2001), a
total of 22 procurement professionals at senior manage-
ment or director level agreed to be interviewed after a
guarantee of anonymity and a copy of the research

findings. This pool of participants all worked for large
organisations from a range of multinational corporations
and industries, with candidates representing insurance,
financial services, professional services, local authorities,
FMCG, public health service, telecommunications, global
chemicals, aerospace and industrial manufacturing mostly
from the UK and Ireland, but some also represented
organisations in Europe, Africa and the Middle East and
the Pacific Rim (Table 2).
There are limitations by using this sampling strategy—
for instance, lack of generalisability and possible sample
bias. Notwithstanding these limitations, some extremely
valid trends and data can still be achieved for an
exploratory approach, by adopting this type of non-
random sampling (Remenyi et al., 1998) as participants
were readily available to contribute to the study (Robson,
2002).
Four pilot interviews were conducted to scope the
questions being asked followed by semi-structured depth
interviews with the remaining 18 respondents summarised
in Table 2. The semi-structured questions derived from the
literature review and this initial screening process is
included in Appendix. Eight interviews were conducted
over the telephone, while the remainder were face-to-face.
Studies examining the differences between these two media,
have either found no difference in the quality of responses
(Janofsky, 1971), or that these differences were mainly
ARTICLE IN PRESS
Management 14 (2008) 55–68 61
related to disenfranchised and socially vulnerable people

and response rates (Holbrook et al., 2003), none of which
are relevant in this case. To further mitigate any potential
differences, the telephone interviews were pre-arranged and
the subjects were aware of the topic to be discussed (but
not the questions). The interviewer was aware of the
potential issue of time pressure over the telephone leading
to respondent satisficing impacting on quality of responses
(Holbrook et al., 2003), and ensured plenty of time was
taken in posing questions and eliciting answers. In a review
of the responses, there was no discernable difference in
information quality or length of the interviews. The
interviews were recorded digitally with permission being
granted by all interviewees and full transcripts then made.
Notes were also taken during the interview. These sources
of data were analysed and major themes identified. Further
analysis sought to locate these themes within the text.
Meaning was then extracted from the text according to the
thematic coding in an iterative process (Saunders et al.,
2003). The resulting themes that emerged from this primary
data are presented in Section 5.
5. Findings
Having reviewed both the transcripts, audio recordings
and notes, the semi-structured interviews provided a wealth
and depth of information addressing the research questions
posed in this study. The participants expressed wide-
ranging views and salient quotations are used to illustrate
major themes that arose.
5.1. The perception of procurement in organisations
The interviewees expressed wide-ranging views on how
the procurement function is positioned and perceived
within their organisation. Some felt that procurement in
their organisations was still perceived as an administrative
function, which they were largely unhappy with:

The professional specialist dictates the specification,
which is passed on so procurement can buy. We can
only deal on price and are low down the priority line.
The salary for procurement indicates how unimportant
the role is.
(Senior Procurement Manager, Public Health Services)
We still feel we are viewed as the Procurement Police.
We negotiate contracts and are a major cost reducer but
are often simply viewed as a process that has to be
followed and perceived as intransigent and delay
causers. We certainly are not engaged at different stages
of purchasing decisions.
(Procurement Manager, Local Authority)
The organisation views procurement as an inconvenient
and possibly unnecessary step in the process of securing
the goods or services required.
(Head of Procurement, Financial Services)
Others acknowledged that the procurement function was
perceived to be strategic, adding value to the organisation.
However, even those deemed to have strategic roles with a
mandate to add value, still struggle to communicate the
value of their role throughout their organisation. In the one
instance where the role was reported to be held in high
regard within the organisation and seen as an integral and
core component, the procurement profession was repre-
sented at an executive board level (i.e. CPO):
Procurement’s remit is not to get a 10% discount year
on year, but to work towards a strategic/partnership
model where the price may be 5% more expensive but
you use y resources for competitive advantage. Our job
is all about added value. However, we are struggling
with the [businesses] misconception of our job. Some

stakeholders feel that we are there just to get the lowest
price. They come to us having just done a deal and state
‘‘will you now do the contract’’ our answer is no.
(Head of Procurement, UK Insurance Services)
Whilst procurement is now being seen as strategic by
our company, it is still an uphill battle to ensure early
involvement. It is this early involvement that will reduce
the risk to the business of inadequate contracts and
satisfy the shareholders by benefiting the bottom line.
(Procurement Manager, European Electronics Manu-
facturer)
It is the core of the business, as senior management are
from procurement. Effectively the most strategic part of
the organisation. If you can lower cost of procurement
the profit is incredible.
(Group Procurement Manager, FMCG Manufacturer)
The procurement professionals unanimously agreed that
what they did was strategic and did add value to the
organisation. On the whole, they were dissatisfied with the
way in which the rest of the organisation perceived their
role and their lack of involvement. The majority raised the
issue that the role demands internal recognition for it to
contribute to the organisation’s performance. Involvement
upstream via cross-functional teams appears, from respon-
dents, to be the most effective way to get involvement at
the initiation of ideas.
Not being used as an expert in commercial matters is
frustrating and costs more in terms of money and risk
because our role is not only to save money but mitigate

risk y If we are involved at the start y getting all the
departments working with you y then there is a better
chance of getting a better deal and on time delivery.
(Head of Procurement, Telecommunications)
Interestingly, some felt that the way procurement
performance is monitored and measured (for instance,
through inclusion in KPIs) within organisations, seems to
have an effect on how the function is perceived. If tangible
targets are not achieved, then the professionals are
ARTICLE IN PRESS
Management 14 (2008) 55–6862
considered to have failed impacting negatively on percep-
tions of their role them in the future:
We have targets to achieve and when there are tangible
results this is a good resource, but when it can’t be done,
then we lose favour and are challenged by internal
customers.
(Purchasing Manager, Aerospace)
5.2. The changing procurement role
On the whole respondents felt that change was occur-
ring, but that this was incremental rather than drastic and
seems to have been absorbed with very little impact on
them.
Changes aren’t drastic because our organisation is like
an oil tanker turning so you don’t feel the changes for a

long time.
(Senior Procurement Manager, Public Health Services)
The role is changing but the core values remain constant
whatever you are doing.
(Purchasing Manager, Global Pharmaceuticals)
The role hasn’t changed much y the basics never
change. We are trying to get the best deal in terms of
value for money but not the cheapest deal.
5.3. Challenges and issues created by the change
All respondents identified technology as one of the major
changes impacting their role. None, however, mentioned
technology or other technical issues as being problematic
or challenging. Here, change was seen to be related to new
ways of doing things and introduction of more and more
new techniques.
We are moving further way from previous techniques.
The old purchasing systems are redundant with infor-
mation of MRP.
Technology does change your initial approach and now
there is more meaningful data mining and collection.
(Procurement Director, Financial Services)
Most procurement professionals interviewed appear to

manage the implementation of e-procurement. They found
an improvement in negotiation time and relationships with
suppliers through the use of e-procurement applications,
such as e-auctions. However, many felt there was a need for
in-depth cost driver analysis of different e-procurement
applications to ensure that the right decisions were being
made in this new environment.
Negotiation was a skill which all procurement profes-
sionals were confident with and none identified any
problems or challenges related to this. No macro-environ-
mental issues were identified as being real challenges or
problems for procurement professionals. Some practi-
tioners highlighted issues relating to the lack of formal
supplier assessment tools; others identified training their
administrative staff to apply commercially sound business
decisions was a challenge. All except one practitioner
mentioned internal political struggles and a lack of power
to impact the organisation internally, as real issues. The
major challenges faced by the majority of procurement
professionals in their role can be grouped into four main
inter-related categories:
(1)
Being acknowledged internally: Many practitioners
highlighted the difficulties of being acknowledged by
the heads of other departments or sectors and being
involved in investment decisions.
We struggle with the concept of advising the senior
directors (budget holders) on where to direct their
funds. Nobody likes to be questioned or challenged
by procurement.
(Head of Procurement, Telecommunications)
People see spend is power—so we find it difficult to

get them to relinquish control.
(Senior Purchasing Consultant, Insurance)
(2)
Early involvement in the decision process: An over-
whelming majority complained that they were not
brought in early enough in the buying process to add
any real value. One practitioner demonstrated the low
strategic importance of procurement in their organisa-
tion when they were brought in to negotiation with a
supplier after the invoice had been received.
We need to get in right at the start. We need to get
procurement to the table and do things collabora-
tively—they (the business) should acknowledge that
procurement specialists can bring advice and some-
thing to the table.
(Purchasing Manager, Manufacturing)
(3)
Getting internal ‘Buy In’ to procurement strategy: Many
practitioners expressed difficulties getting their strategy
accepted by the rest of the company:
The challenge is to get other staff to buy in to our
strategy. The battle is getting in early enough to
make an impact to influence y alignment.
(Procurement Director, Financial Services)
The challenge is to get the business to engage with
your initiatives. There is no culture of ‘‘let the
specialist do their bit’’—we are not empowered or
being used as source of expertise. This ultimately
costs more with more risk. If we are allowed (to do
our bit), then we would save money and mitigate
risk.

(Procurement Manager, Local Authority)
ARTICLE IN PRESS
Management 14 (2008) 55–68 63
Cultural barriers and resistance to change: Even those
(4)
considered to be in a strategic role face challenges to
impose change on an intransigent corporation, both
within their own teams and those of other departments.
The walls of silos are huge obstacles and internal
communications are a big problem resulting in no
agreement on strategy.
(Procurement Director, Manufacturing)
We have Ivory Tower Syndrome y we are devolved
from the coal face. y Top level consultants hate us
because they are of the opinion that they are the
decision makers.
(Senior Procurement Manager, Public Health Ser-
vices)
Many respondents highlighted how they are struggling
with less commercially minded people with a closed
mindset of, ‘‘I know the market better than you, there is
no need for change.’’ Some spoke of their struggle to get
board level support for culture change. One individual
explained how their firm hired a large number of very
expensive commercially minded purchasing professionals
who struggled with the culture and subsequently all left the
organisation.

Overall, the major challenges faced by our professionals
were less focused on macro-economic factors and over-
whelmingly to do with internal role recognition and
politics.
5.4. Skills development for procurement professionals
Most procurement professionals felt they were strong on
‘‘bog standard’’ negotiation skills but an overarching trend
was to develop internal selling skills so they can commu-
nicate the value they can bring. Other skills mentioned
were:
(1)
‘‘A core value is influencing skills to get buy in
internally or there is zero adoption of strategy.’’
(2)
‘‘Stakeholder management and people management
skills to communicate and sell benefits of what you do,
to have joint synergy within the firm and create buy in
from different organisation departments.’’
(3)
‘‘Stakeholder mapping: How does the organisation feel
about procurement? Who should be included in
decisions and ensure contact is taken with relevant
stakeholders to find out early enough when things are
happening? Procurement must be proactive and not
wait for people to come to them for help.’’
(4)
Cost driver analysis: This featured heavily in develop-
ment discussions especially from the large financial and
insurance firms, without this analytical skill they feel
that have ‘‘zero leverage’’, as ‘‘only procurement know

what levers to pull’’ and that the organisation should
use procurement expertise to analyse market drivers
and estimate the supplier’s cost drivers.
Some practitioners, especially in the financial services
sector, believe that the best way to develop procurement
skills within the organisation is to hire new people with a
‘‘Best of Breed influx of talent’’ and have common
frameworks of tools and processes for measuring their
performance. For one practitioner, their organisation:
y maintain[s] greatness and standards by recruiting the
best people; high performing teams with a nucleus of
great people with performance metrics to hold them
accountable.
Some firms have adopted training programmes accre-
dited by prestigious Ivy League business schools or
specialist ‘‘world class’’ operations consulting firms.
The potential development areas for procurement
professionals, mentioned by many respondents are sum-
marised in Table 3 and grouped according to our new skills
taxonomy. We have included a comparison with the skills
identified earlier in the literature, to demonstrate the
overlap and clarify differences in skills nomenclature. We
also summarise the implications and impact of the groups
of skills for procurement professionals derived from the
interviews.
6. Discussion
In this section, we summarise the findings in response to
the study’s research questions.
6.1. How do leading procurement professionals perceive

their role within their organisations?
Overall, procurement professionals identified a schism
between their perception of their role within their
organisation, and the organisation’s perception of their
role. While the professionals unanimously agreed that their
role was strategic and added value, the organisations often
did not hold this view. It was widely acknowledged that
there seems to be an internal politico-cultural glass ceiling
preventing procurement professionals from being involved
in organisation-wide business strategic decision-making.
The main reasons are: (1) a lack of internal recognition of
the full impact a capable and skilled procurement profes-
sional can have on organisation-wide performance, and (2)
a lack of internal support for the role. It appears that even
when procurement professionals have acquired a highly
developed set of skills, their organisational status remained
fairly low. This leads to a deep sense of frustration and
ultimately disempowerment. If they are unable to demon-
strate their capabilities, then they will not be able to change
organisational perceptions. The only way of breaking
through this glass ceiling, according to the respondents,
was demonstrated when procurement professionals had a
champion and were represented at board level.
ARTICLE IN PRESS
Table 3
Development of requisite professional procurement skills
Competency required Skill reference Implication/impact

Technical skills (TS)
TS Technical knowledge: computing skills, tool capacity,
mathematical skills, blueprint reading, forecasting, e-
procurement applications
� Technical skills (Kolchin and
Giunipero, 1993)
� Quantitiative, decision-making,
negotiation skills (Giunipero and
Pearcy, 2000)
� Technical skills and skills techniques
(Carr and Smeltzer, 2000)
� Technical skills (Cousins et al., 2006)
� Technical, broad financial
(Giunipero et al., 2006)
Using new technology for effective
procurement decision-making
TS Basic administrative skills such as TQM, legislation, cost
analysis, product knowledge and negotiation, production
systems and processes
Undertaking negotiations and

discussions
TS Advanced procurement process skills (APP), e.g. category
management, global sourcing development, cost driver
analysis and strategic sourcing; project planning, project
management, technical writing, e-procurement, cost driver
analysis
Essential skills for creating value,
improved value focussed and
strategic decision-making
Interpersonal skills (IS)
IS Oral communication, listening, understanding, passing on
information, persuading and influencing
� Interpersonal, individual and
management skills (Kolchin and
Giunipero, 1993)
� Behavioural, team, process
management skills (Giunipero and
Pearcy, 2000; Giunipero et al. 2005)
� Behavioural skills (Cousins et al.,
2006)

� Technical skills and skills techniques
(Carr and Smeltzer, 2000)
� Oral communication (Large and
Gimenez, 2006)
Effective two-way communication
IS Recognise own strengths: creative thinking, analytical skills
Effective personal development,
awareness and managementInvestigation, research, problem-
solving, stress management,
time management
IS Leadership: conflict management, decision-making,
organisation, team-building, cross-cultural awareness
Building and managing cross-
functional teams and relationships
Internal enterprise skills (IE)
IE Organisation wide financial skills � Cost analysis skills
(Cousins et al.,
2006)
� Management, team skills (Giunipero
and Pearcy, 2000; Giunipero et al.,
2006)

Higher level business decision-
making
IE Change management skills and cultural awareness Managing
internal politics and
barriers
IE Manage internal customers, sales interface, internal
motivation
Resolving internal issues
IE Communicate and sell message/strategy internally Get ‘Buy
In’ from different
departments/groups
Relationship influencing skills
External enterprise skills (EE)
EE Work in cross-functional team � Cross-functional, team-
building
(Lamming et al., 2005)
� Strategic skills (Giunipero and
Pearcy, 2000)
� Supplier/product monitoring
(Cousins et al., 2006)
Early involvement in purchasing
decisions

EE Supplier relationship management skills, supply chain
management
Collaborating with value-adding
suppliers
EE Stakeholder mapping proficiency, supplier evaluation,
international buying
Effective supplier selection and
stakeholder involvement and
management
Strategic business skills (SB)
SB Demonstrate ability to add value throughout the
organisation
� Management (Kolchin and
Giunipero, 1993)
� Strategic skills (Giunipero and
Pearcy, 2000)
� Strategic planning (Giunipero et al.,
2006; Lamming et al., 2005)
� Flexibility (Giunipero et al., 2005)

Recognition of the value of
procurement
SB Manage strategic alliances/partnerships Takes role to the
strategic level of
procurementBusiness skills and risk management
Management 14 (2008) 55–6864
6.2. How has the role of procurement professionals changed
and what challenges have they had to face as a result?
All the respondents in our interviews agreed that the
procurement role was now very much more strategic than
operational. They implicitly recognised that their role
involved internal and external stakeholder interactions and
managing supply chain relationships rather than transac-
tion management, with a focus on processes rather than
functions. Technology was widely recognised as one of the
ARTICLE IN PRESS
Management 14 (2008) 55–68 65
major changes to the role, but there were no challenges or
problems related to this. On the contrary, it was felt to
release time for the professionals to focus on more value
adding tasks. In line with the findings of Lamming et al.
(2005), procurement professionals are aware of the need to
interact with other functional managers to develop
coherent and integrated strategies, but in practice this
seems to be difficult to do, largely because of the cultural

and political barriers that exist in organisations.
6.3. What portfolio of skills do procurement professionals
believe will enable them to fulfil their role effectively?
All the respondents identified an awareness for change
and further skills development. For example, more evalua-
tion tools to improve the effectiveness of the role, advanced
negotiation skills, change management, and sound business
decision-making skills. Some believed this could be achieved
by investing in training whilst others, notably the financial
firms, preferred to buy in the ‘best of breed’ talent.
Concerns about intra-organisation political challenges,
were prominent in identifying skills requirements for the
procurement role. Internal selling abilities were overwhel-
mingly felt to be the most important skill to increase the
effectiveness of the procurement role. Although procurement
professionals are perfectly aware of these needs, already
identified in the literature (Giunipero and Pearcy, 2000;
Vammen, 2005), it seems that these have not had the impact
expected, as it was proving nigh impossible for procurement
initiatives on wider business strategies, to be accepted.
7. The procurement skills effectiveness matrix
The findings from this study suggest that today’s
procurement professional must be a dynamic relationship
Fig. 2. Procurement ef
manager creating and developing cross-functional strate-
gies and must possess internal selling, change management,
supplier relationship and partnership management skills.
Empirical research has demonstrated (Cousins et al., 2006),
and this study confirms, that internal status and role
integration act as important precursors to achieving

strategic procurement. The role of procurement can only
achieve high status levels within the organisation, by
acquiring strong management support which impacts the
organisation’s attitude and consequent allocation of
resources. By the same token, unless procurement profes-
sionals have a highly developed skill set, they will be unable
to achieve high status levels irrespective of organisational
support. Without either of these two major factors, the
procurement role will have limited actual or perceived
effectiveness on organisational performance.
The extent of effectiveness of the mix of procurement skills
is illustrated in the matrix presented in Fig. 2. Before procure-
ment can be elevated to strategic, the professional first needs
to posses a strong set of these underlying skills and compe-
tencies (Carr and Smeltzer, 2000; Cousins et al., 2006). While
skills related to processes and technology (i.e. technical and
internal enterprise) are important, by themselves they are not
enough to improve a company’s procurement performance
(Reinecke et al., 2007). The list of skills on the horizontal axis
of the matrix, is based on the classification in Fig. 1, which is
largely cumulative where one builds on the core procurement
skills, to reach the ultimate level of skills to be able to operate
strategically. In order to optimise the role of procurement to
achieve added value and competitive advantage for the
organisation (top right square of the matrix), the procurement
professional must develop technical (including advanced
procurement process skills), interpersonal, internal and
external enterprise and strategic business skills coupled with
a high degree of support and internal recognition.
fectiveness matrix.
ARTICLE IN PRESS

Management 14 (2008) 55–6866
Skilled but disempowered procurement professionals are
unable to become truly strategic without board level
support. Conversely, a board level ‘strategic’ mandate does
not ensure that the firm acknowledges the value of
procurement if the procurement professionals cannot
demonstrate their value internally and have the appro-
priate skills to become strategic. To demonstrate a level of
validity of this framework, we can apply Cousins et al.’s
(2006) empirically derived categories of purchasing man-
agers to our procurement skills effectiveness matrix. This
reveals a consistent message in terms of the organisational
impact of procurement skills sets. Cousins et al.’s (2006)
‘‘strategic purchaser’’ contributes most to firm perfor-
mance and in our matrix has the full gamut of required
skills and internal recognition and support. The ‘‘celebrity
purchaser’’ contributes the least, because of the lack of
skills despite organisational support. The ‘‘capable pur-
chaser’’ has a range of skills, but lacks organisational
support with limited effectiveness and the ‘‘underdeveloped
purchaser’’ requires skills and organisational support to be
more effective.
8. Conclusions
This exploratory study has shown that senior procurement
professionals believe that their role is now strategic. However,
even today, one of the main problems remains that this
strategic role is not acknowledged internally and there are
political and organisational-culture barriers to achieving this
recognition, which is impacting procurement effectiveness.
Our procurement skills effectiveness matrix demonstrates the
impact these barriers can have on the efficacy of the role of
the procurement professional given a portfolio of certain
skills. The skills listed here are based on a consolidation of
past literature and responses collated from participants in this

study. They form the basis of a new procurement skills
taxonomy relevant for the current environment.
In order to be effective, not all procurement profes-
sionals will necessarily be operating on the same level, and
thus will not require all the skills highlighted in the matrix.
Organisations, however, need to ensure that they have all
the skills identified in this study and incorporated into the
procurement skills taxonomy and matrix, within their
procurement team to ensure that they can attain the degree
of effectiveness they require. Whether this will lead to the
role of procurement professionals evolving into a more
multi-disciplinary supply network management role, or be
divided into strategic and tactical with different procure-
ment professionals adopting different roles (Giunipero
et al., 2006), is still unclear. This is one area for future
observation and research.
One of the major limitations of this study is that it is
based on the perceptions of a small sample of procurement
professionals from mainly large corporations. Future
research can build on these findings by examining the
perception of the role of procurement in organisations
from different functional perspectives, such as operations,
supply chain management, finance, marketing and strategy
and different sizes of organisation. Murray (2003) criticises
the procurement literature as being too focused on the
private sector so further investigation of differences in
perception of procurement and its impact on performance
in the public sector may also be relevant.
The issue of cross-functional working was raised as being
important, thus further work can include documenting the
extent of cross-departmental working in organisations, the
practitioners’ skill level and quantifying this effect on the
actual performance of the firm. With a more comprehen-

sive and statistically robust study, these findings could be
used to explore the interaction of other variables on
acceptance of a strategic position and the performance of a
firm in future work.
Acknowledgements
The authors would like to acknowledge the constructive
and detailed feedback of both the anonymous reviewers
and the kind diligence and support of the guest editor. This
feedback has led to a much improved paper.
Appendix. Semi-structured Interview Template
Demographic information:
�
Company sector/industry
�
Annual turnover (if public)
�
Numbers of staff
(a)
Perception of procurement in the organisation
1. How do you think you are seen by your organisa-
tion?

2. How do you see your role in your organisation?
(b)
Involvement in the overall sales/purchase process
3. To what extent are you involved in decision-making
before the negotiation?
4. What prevents early involvement?
5. To what extent are you involved in post implemen-
tation negotiation?
(c)
Changes to the role and challenges faced
6. Do you feel your role is changing? (probe for
strategic purchasing) How and why?
7. What challenges do you face?
8. What is currently disrupting the way you would like
to work?
(d)
Procurement technology
9. What is the impact of technology on your role?
10. Do you currently engage in e-procurement?

11. Has e-procurement changed your role? (How?)
(e)
Portfolio of skills
12. What skills do you think are required by procure-
ment professionals today?
13. Is the level of training sufficient to cope with
changing role of job?
14. Is there anything you feel that is important that you
would like to add?
ARTICLE IN PRESS
Management 14 (2008) 55–68 67
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changing role of procurement: Developing professional
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TemplateReferences
Sheet1Question:Segment Number123456TotalsRevenuesSales-
External$68,443$228,517$105,279$328,131$244,521$297,223$
1,272,114Sales-
Internal$60,747$14,680$48,313$29,538$77,317$41,023$271,61
8Interest
Income$2,975$3,234$4,373$4,878$1,412$2,780$19,652Total
Revenues$132,165$246,431$157,965$362,547$323,250$341,02

6$1,563,384ExpensesCost of
Sales$7,496$1,780$7,465$4,988$12,901$8,138$42,768Marketin
g$5,959$2,488$3,704$4,207$6,774$8,042$31,174Interest
Expense$2,152$519$1,770$1,048$3,198$1,756$10,443Total
Expenses$15,607$4,787$12,939$10,243$22,873$17,936$84,385
Segment
Profit$116,558$241,644$145,026$352,304$300,377$323,090$1,
478,999Assets$136,886$228,517$210,558$656,262$489,042$29
7,223$2,018,488Answer:(Instruction)Page required: Half to one
page only. Please include 2 references
A multinational corporation based in the U.S. has divided its
operations into several segments. The financial information for
each segment is in the spreadsheet located at the bottom (Please
see below spreadsheet).
Review the information and discuss which segments are
reportable and why.
Electronic Commerce Research and Applications 4 (2005) 113–
123
www.elsevier.com/locate/ecra
B2B e-hubs in emerging landscape of knowledge
based economy
Alexander A. Shevchenko
a,*, Oleksandr O. Shevchenko
b
a
Faculty of Industrial Design Engineering, Delft University of
Technology, Delft, The Netherlands

b
Research Institute of Automatic Systems in Civil Engineering,
Ukraine
Received 28 April 2004; received in revised form 5 October
2004; accepted 11 October 2004
Available online 28 October 2004
Abstract
Knowledge gradually becomes a driving force for the economic
development. The progress of information and com-
munication technology facilitates sharing of technologically and
economically valuable knowledge and further integra-
tion of productive forces of humanity in emerging knowledge-
based economy. This process has already revealed
�dominant� structural formations and major approaches to the
organisation of industrial production. This paper con-
siders the development of e-Hubs for business-to-business
collaboration and links this development with the issues of
organisation of industrial production in future economy.
� 2004 Published by Elsevier B.V.
Keywords: Information and communication technology; e-
Commerce; Supply chain management; e-Hubs; B2B
collaboration;
e-Business models; Organisation of industrial production; Mass-
customisation
1. Introduction

With recent progress of information and com-
munication technology (ICT), knowledge gradu-
ally becomes a driving force for the economic
development. This fact is clearly illustrated by
1567-4223/$ - see front matter � 2004 Published by Elsevier
B.V.
doi:10.1016/j.elerap.2004.10.001
*
Corresponding author. Tel.: +31 15 278 7512; fax: +31 15
278 1839.
E-mail addresses: [email protected] (A.A.
Shevchenko), [email protected] (O.O. Shevchenko).
the economic results achieved in high-tech indus-
tries, e.g. electronic, personal computers (PCs),
software, telecommunication, mobile telephony,
and so on, as well as by the comparison of the
standards of life in the countries heavily investing
in research and development, e.g. Sweden, Japan,
USA and others and those, which have their assets
mostly in the production of row materials, e.g.
Russia, Ukraine, and countries of Arab world

and Latin America. Moreover, the advancements
of ICT have facilitated global sharing of valuable
114 A.A. Shevchenko, O.O. Shevchenko / Electronic Commerce
Research and Applications 4 (2005) 113–123
knowledge, which in turn has stimulated �compet-
itive collaboration� of producers and ongoing
structural changes in the world�s economy.
Remote trading of commodities with the use of
e-mail services was among the first businesses ben-
efited from the advantages of commercial applica-
tion of web technology. Buying online and
searching the web for something �suitable� among
the variety of proposed products, services and solu-
tions becomes more and more popular nowadays.
The availability of access to Internet for house-
holds has grown from 18% in 2000 to 43% in
November 2003 [1]. About 84% of small and med-
ium size enterprises (SMEs), i.e. those having 1–49
employees, have access to Internet, and approxi-
mately 70% of all European companies have their

web sites. ‘‘At present only about 12% of enter-
prises are selling online with tourism, financial
services, publishing and software being the leading
sectors, but their purchasing has developed much
faster’’. According to recent European Institutions
press release, about 54% of estimated 185 million
European Internet users are expected to shop on-
line by 2006. With e-commerce representing cur-
rently only 1–2% of retail sales in the EU, the
prospects for growth are very promising. For
example, ‘‘online Christmas shopping in 2002 saw
an increase of 86% over the previous year and total
business to consumer e-commerce is expected to in-
crease from €10 billion in 2000 to €70 billion in
2003’’ [1]. However, as noted in the European
Commissions expert group report on business-
to-business (B2B) trading platforms, ‘‘E-markets
have changed considerably since their invention.
However, the public understanding of e-markets

is still at the state of 1999. It is of crucial impor-
tance – especially for smaller companies – that they
understand Internet trading platforms better, so
that they can make optimal use of them’’ [2].
The goal of this paper is to outline important
trend(s) in the advancement of this rapidly grow-
ing area of economy, i.e. the transformation of
e-market, and to provide recommendations
regarding feasible structure of emerging integrated
industrial production/distribution chains, which
could be useful for businesses.
The results presented in the paper are partially
based on research carried out by the correspond-
ing co-author when he was working on European
Commission funded ‘‘e-Engineering enabled
by Holonomic and Universal Broker services’’
(e-HUBs) project in 2002–2004. The work as-
sumed the investigation of principles of formation
of and methods of management in web-based clus-
ters of self-governed (predominantly small) engi-

neering service providers. Few words about the
project are given in Section 3 below. More details
can be found in [3,4], as well as on the projects web
site www.e-hubs.org.
Another source of inspiration for writing this
paper came from our joint work on the analysis
and modelling of economic aspects of penetration
of the paradigm of mass-customisation into proc-
esses of industrial production and product distri-
bution stimulated by the advancements in ICT
(major results of this work are presented in [5,6]).
The results obtained proclaim that substantial
introduction of mass-customisation in industry is
associated with formation of distributed (presuma-
bly web-based) production/distribution value
added chains, which are considered by authors as
specific type of engineering clusters (ECs) of small,
medium sized and (potentially) large enterprises.
This paper combines the results from these two

complementary fields of research.
2. E-commerce, e-Hubs and the penetration of ICT
into the depth of a supply chain
Rapid booming of business-to-consumer ori-
ented e-commerce (B2C) in late 1990s in USA
was followed by the processes of consolidation of
e-services and restructuring of e-market, which re-
sulted with the development of new type business
leaders, i.e. web-based entities resembling tradi-
tional supermarkets. Due to amazing flexibility
of the customers in e-trade these leaders grew rap-
idly and in a short time have concentrated and
monopolised significant part of initially chaotic
and rapidly expanding market.
Investigating ‘‘quite revolution’’ in e-commerce
Kaplan and Sawhney [7] have identified these lead-
ers as e-Hubs. Their reasons for the name are like
that: ‘‘First, they do for e-commerce what a net-
work hub for bits – concentrating, routing, and
http://www.e-hubs.org

A.A. Shevchenko, O.O. Shevchenko / Electronic Commerce
Research and Applications 4 (2005) 113–123 115
switching. Second, they occupy a central position
between buyers and sellers’’ (more details on tech-
nologies associated with e-Hubs and the processes
of consolidation of e-commerce in USA can be
found in [7,8]).
According to Kaplan and Sawhney [7] ‘‘elec-
tronic hubs (e-Hubs) are third-party Internet
based intermediaries that focus on specific industry
verticals or specific business processes, host elec-
tronic marketplaces, and enable any-to-any trans-
actions among businesses’’. The two major types
of the e-Hubs were envisaged: ‘‘vertical’’ vHubs
specialized along specific industry or market, and
‘‘horizontal’’ fHubs specialized along specific func-
tion or business process.
Like the supermarkets in conventional com-
merce, the e-Hubs aggregate customers and pro-

ducers, and create added value through proposing:
� one-stop shopping, low prices and better quality
of products and services for the consumers; and
� increased marketplace liquidity, reduced trans-
action costs, well-structured and organized
market services, as well as high-quality stand-
ards and better competitive image, for the
producers.
Fig. 1. Conventional superm
Fig. 1 below illustrates the similarity between
the conventional supermarket and B2C e-market-
place, called e-Hub.
It should be noted, that �product delivery serv-
ices� and financial transactions associated with
the �bank� in Fig. 1 are typically outsourced to
external undertakers in both conventional super-
market and its �virtual� counterpart.
McKevie from Accenture and Simmond from
Yantra Corp. regard the eHub as ‘‘a web-enabled
platform for multiple trading parties to find, ex-
change, and prioritise information related buying
and selling. Also it automates all different transac-
tions that needed to occur in customer fulfilment,

both inbound and out bound’’ [9]. Considering dif-
ferent types of e-Hubs these authors have identi-
fied the following capabilities, which the eHub
should provide:
� information sharing
� automated execution of previously manual sup-
ply chain transactions, and
� value-added e-services.
According to them, the e-Hubs operate follow-
ing the principles of: ‘‘buyer-seller neutrality’’,
arket and B2C e-Hub.
‘‘standards-based’’, ‘‘security’’ and ‘‘deep func-
tionality’’. The ‘‘deep functionality’’ assumes
‘‘solely to support participants� information
requirements and to add value to participants�
planning and execution’’, however, it includes ‘‘or-
der management, dynamic sourcing, inventory
management, exception management, transaction

verification and modification, claims resolution,
reporting and analysis, reverse logistics, of course
billing and invoicing, and much more – all accord-
ing to the workflows, business rules, and customer
preferences related to customer transactions’’ [9].
From the point of view of ICT, the implementa-
tion of abovementioned e-Hubs can be considered
as global web-based integration of the outputs of
suppliers� enterprise resource planning (ERP) sys-
tems with automated online transaction and com-
modity advertising services into flexible unified
supply chain. However, the integration is not very
deep, as the commodities are typically produced
for and sold through several alternative channels,
and the influence of e-Hub on manufacturing
processes is fairly limited. Nevertheless, the con-
sumers accessing resources of this integrated chain
could benefit from high quality of services and
plenitude of proposed solutions, both the products
and services, available from a single vendor. Fur-

thermore, partnering with this type web-based �su-
permarket� is also beneficial for the producers, as
they gain access to a global open �virtual market�
having potentially unlimited capacity. Therefore,
the materialization and growth of e-Hubs in B2C
arena appears to be economically inevitable. This
fact is confirmed by several researchers [2,7–10]
and numerous examples of various type ‘‘B2B
Internet trading platforms’’ and e-Hubs, which
can be found elsewhere (see [2,7–9]).
3. e-Hubs in B2B collaboration
According to the report of the European Com-
mission Expert Group [2] ‘‘B2B Internet trading
platforms represent more advanced forms of e-
commerce compared to traditional web site based
e-commerce activities. Beyond the opportunities
of buying and selling online, B2B Internet trading
platforms can facilitate the internal re-organiza-
tion of companies, through the integration of
ICT into internal business processes. This offers
new possibilities to reduce operational costs and

to raise productivity’’. ‘‘. . .B2B Internet trading
platforms include, but are not limited, to transac-
tion-focused e-marketplaces. These are changing
in particular external business relations, by bring-
ing together new partners and creating new forms
of competition, as well as internal business organ-
ization, by changing the links between front and
back offices’’ [2].
On our opinion based on the analysis of the re-
port, despite important observations and growing
awareness of the processes in the development of
global e-market, the understanding of the nature
of these processes is not yet well established in
Europe. B2C with allied B2B commodity trading
is sometimes confused with processes of B2B col-
laboration in integrated product development
and supply. Yes, businesses buy and sell online,
like the customers do, and existing e-Hubs in the
form of B2C e-marketplaces can serve business
needs in these area of activity. However, the oper-

ation of existing marketplaces, like those shown in
Fig. 1, presents only a visible part of the iceberg of
facilitating processes hidden in the engineering and
manufacturing of commodities, functioning of
supply chain and financial systems, the industry
of related services, and so on. The suppliers pro-
ducing products for e-market places typically col-
laborate with each other in order to reduce
engineering, manufacturing and delivery costs.
According to Colin Leisk from IBM, about 60–
80% of product value, lies currently outside of
the direct control of any single player in the prod-
uct supply chain [11]. Manufacturing businesses,
which carry on engineering projects and buy com-
ponents and services in large quantities, typically
require quality supplies according to sophisticated
schedules. This is usually achieved through estab-
lishing long-term (strategic) customer–contractor
relations with cautiously negotiated contracts,

yeas of partnership and well-developed personal
relations. Existing e-Hubs are not prepared to
cope with this complexity of relations in distrib-
uted engineering collaboration at inter-organisa-
tional level. The explanation of the challenges of
this type relationship and presentation of the expe-
rience of using e-Hubs for enabling loosely cou-
pled collaboration in pre-established corporate
supply chains could be found, for example in
[10]. It should be noted, however, that the ap-
proach presented in [10] assumes tailoring the
functionality of eHub to the needs of existing cor-
porate supply chain with specific relations among
the participants. While this works for large corpo-
ration, the use of similar solution for SMEs, which
according to the European Commission�s Green
Paper on Innovation�95 constitute more than
99% of the enterprises in the European Union, is

rather questionable.
According to European Commission Expert
Group Report ‘‘Some forms of B2B Internet trad-
ing platforms offer significant benefits to all enter-
prises, whether large or small, by creating new
virtual communities of buyers and sellers and thus
facilitating the bringing together of enterprises
with complementary interests’’ [2]. A commission�s
communication on ‘‘Adapting e-business policies
in a changing environment’’ (March 2003) states
that: ‘‘Future policy discussion should therefore
focus on how best to help SMEs to transform their
businesses into ‘‘e-companies’’ rather than on how
to promote e-commerce’’. This complies with our
approach presented in [3,4], which is based on con-
sidering e-Hubs as potential organizers of diverse
‘‘e-companies’’ in the form of ECs of SMEs. In
this chapter we further consider several example
e-Hubs, which illustrate existing approaches to
the problems of development of B2B collabora-

tion. Extensive review of the literature on e-Hubs
can be found in [3].
3.1. IECOS
Practical development of new type business en-
tity – the virtual enterprise broker (VEB) is cur-
rently carried out by one of e-HUBs project
collaborators – Instituto Tecnológico y de Estu-
dios Superiores de Monterrey (ITESM) in Mon-
terrey, Mexico. Theoretical background of this
activity is based on the concept of virtual enter-
prise (VE) [12]. integration engineering and con-
struction systems (IECOS) is an engineering
company created as a part of incubation program
for technology-based companies in October of
2001 at Centro de Sistemas Integrados de Manu-
factura (CSIM) – ITESM, with the objective of
exploring different ways of development of new
business networks of industrial SMEs called vir-
tual industry clusters (VICs) in Monterrey within

the margins of the ‘‘Mexican-Industry.com’’ pro-
ject (the project web site: www.mexican-indus-
try.com). Created initially as a solution for the
problems of mediation between the client and
VE, as well as among the potential and actual
business partners constituting the VE, IECOS
has gradually evolved into sustainable business en-
tity, who selects partners for and manages the
activities of specific type VEs called VICs on Mon-
terrey�s soil. With limited own engineering capac-
ity, IECOS offers to its clients on international
arena engineering services and manufacturing
capabilities, which actually are covered by prop-
erly balanced combination of joint capacities of
individual partners arranged in the VIC [13].
Due to restrictions connected with the state of
the art of the development of ICT in Mexico, IE-
COS relies significantly on �human factor� in its
operations and tactics. The legacy of conceptual
development, which takes origin from the frame-

work of VE, also influences the development of
the IECOS practices. Nevertheless, with all these
limitations IECOS demonstrates in practice many
specific for e-HUBs features, including: sustaina-
ble development, hierarchical structure with lead-
ing role of IECOS in VIC, focusing on customer
relations development, searching for new business
opportunities outside initial VE establishment, as
well as introduction of advanced project prepara-
tion and management techniques, and so on.
3.2. e-HUBs
The idea of ‘‘conceptual development and imple-
mentation of e-Hubs, a novel concept for the reali-
zation of distant co-engineering’’ at the level of
international (European) project was first conceived
by Professor Godfried Augenbroe from Georgia
Institute of Technology. The European funded e-
HUBs project (IST-2001-34031) coordinated from
and partially carried out at Delft University of tech-

nology presents collective effort of multinational
team, including three academic and four industrial
http://www.mexican-industry.com
http://www.mexican-industry.com
core partners from the Netherlands, Germany, UK,
Greece, Italy and Belgium, with three additional
partners from Latin America (details can be found
at the project web site www. e-hubs.org).
The team led by Augenbroe, targets the devel-
opment of e-HUBs, which ‘‘are conceived to offer
a balanced combination of system based ap-
proaches to e-engineering cultures, trust building,
enterprise modeling and process sharing, SME
services hosting and re-engineering of collabora-
tive workflows’’. ‘‘The most advanced technologies
for Internet based communication and web hosted
collaborative engineering form the baseline of the
project. They will be positioned at the core of the

prototypical e-Hubs. On top of this core, incre-
mental layers of additional services will be built
in a holonomic systems sense. Each service system
offers dedicated e-engineering functions at increas-
ing subsystem scales: individual, collaborative
group, e-engineering team, and enterprise’’ (pro-
ject web site www.e-hubs.org). The concept, for-
mal specification and functional model of
operation of e-HUBs developed by the project
team from Delft University of Technology, the
Netherlands, can be found in [3].
The issues of aggregation of SMEs in ECs hav-
ing features of economies of scale, competitive in
rapidly developing global economy around engi-
neering service broker (ESB) e-Hubs are further
discussed in [4], where extra details about the struc-
ture, the functional implementation and operation
of ESB e-Hubs in processes of project preparation
and management are presented. The ESB e-Hub is

considered as a web-based business entity that cre-
ates the EC shaping and brokering complex engi-
neering services based on components contributed
by individual engineering service provider (ESP)
SMEs forming the EC around the e-Hub. The
e-Hub uses advanced technology of web-based col-
laborative project preparation and management in
order to achieve advantages over EC�s competitors
and produce added value. Engineering cluster with
ESB e-HUB combines the competence of the
e-HUB in technologies associated with e-com-
merce, partner finding, project preparation and
management with core competences of ESPs in spe-
cific areas of engineering, which are required for
customer satisfaction. Generic model allows tailor-
ing of basic functionality of e-HUBs to a range of
areas of collaborative engineering businesses, as
well as EC sizes and configurations [4].
3.3. HUBS
The HUBS movement targets to using the
advancements of ICT in order to catalyse the

transformation of the four-state region of Dela-
ware, Maryland, New Jersey and Pennsylvania,
and beyond, into the America�s first ’’smart re-
gion’’. The mission of the HUBS initiative can be
briefly represented as follows: ’’Building on exist-
ing infrastructures (network, computers and stor-
age capabilities) and technologies, the HUBS link
Hospitals, Universities, Businesses, Schools’’, as
well as government and military organization
plans and activities in order to take full advantage
of existing in the region ‘‘technological capabilities
and stimulate the development of new technology
concepts and applications’’.
Current and potential HUBS applications
include:
� medical applications, e.g. decease tracing, tele-
medicine, emergency medicine, bio-/health-
informatics, rational drug design, preventive
information dissemination, etc.;
� educational applications, e.g. distance learning,

digital library, it research school, home school-
ing, etc.;
� business applications, including: common infor-
mation infrastructure, virtual engineering office,
simulation and modelling, telecommuting;
� national defence applications, including: missile
defense technology, advanced virtual private
network technology, bio-terrorism defense and
reporting, telemaintenance.
The methodology used by HUBS movement as-
sumes mostly the exchange of and spreading out
the information about various initiatives, pro-
grams, business opportunities, potential business
partners, etc. in abovementioned areas of their
activity through projects web-portal (further de-
tails can be found on the web site http://
www.hubs.org).
http://www.hubs.org
http://www.hubs.org

3.4. CENNET
A China Europe Network on the NET (CEN-
NET ) projects mission is in establishing a tele-
communication bridge for the exchange of
knowledge and cooperation opportunities between
China and Europe on the net covering the follow-
ing areas of search for the partners: e-engineering,
e-enabled supply chain, e-maintenance, enterprise
modelling, integrated quality, and virtual
manufacturing.
The objective of the CENNET project is to de-
velop a strategic relationship between: the �AUTO-
MATION� initiative of the China High Tech 863
Programme issued by the Ministry of Science
and Technology of China and the Electronic Com-
merce Digital Business Activities (Key Action 2) of
the IST Programme of the European Commission.
Major project activities include:
� encouraging the cooperation in the domains of

e-manufacturing, e-business and digital enter-
prise through the stimulation of the develop-
ment of joint-projects at the research and
industrial levels,
� dissemination of information on R&D and
industrial activities,
� encouraging the exchange of students, indus-
trial researchers and engineers, etc.
A web-based �eWork� service, developed in the
project, presents an active way of distant search
for cooperation, facilitating the exchange of calls,
requests, proposals and other documents on struc-
tured private channels over the CENNET. After
having found a suitable partner the cooperation
work can start in its ’’own’’ virtual office. Detailed
information can be found on the project web site
(visit http://rpkkmap.mach.uni-karlsruhe.de/cen-
net/index3.html).
3.5. e-Hubs for B2B collaboration
As it can be seen from above, several teams of

researchers develop new type (web based) organi-
sations, which propose businesses technologies of
distant collaboration in joint engineering business.
While aspects of servicing of the needs of existing
businesses by e-Hubs dominate in most of above-
mentioned approaches, we (in our works [3–6])
conceive the e-Hubs as a new type entrepreneurial
technology, which allows someone to achieve their
goals, e.g. self-realisation or sustainable economi-
cal growth, using the needs of small and medium
sized business partners in services associated with
project preparation, web-based teamwork, engi-
neering collaboration of complimentary busi-
nesses, and so on. The authors consider eHub for
B2B collaboration as sustainable web-based busi-
ness entity, which attracts and aggregates ESPs
into ECs and uses inter-organisational engineering
collaboration for facilitating economic growth and
strengthening competitiveness of the EC. Of
course, specific services offered by e-Hub and cor-

responding technologies used for managing collab-
oration in e-Hub are of importance as these allow
reaching the goals.
Like e-market place, i.e. B2C eHub, which has
its conventional analogue in supermarket, the
B2B eHub can be considered as web-based exten-
sion of a conventional enterprise, namely as a sort
of �virtual� implementation of a large corporation
with specialised departments spread over the terri-
tory, e.g. city, region or country. The businesses
typically outsource their operations to external
undertakers, and eHub can be conceived as an
enterprise, which has outsourced the implementa-
tion of most or ultimately all its functions, except
for the management. Fig. 2 below illustrates the
structure of the EC built around eHub for B2B
collaboration.
ESB e-Hubs build their businesses attracting
self-governed ESP SMEs and aggregating them

into ECs, as a conventional enterprise does when
haring people possessing valuable skills and expe-
rience. As their conventional counterparts, the
e-Hubs pay the ESPs for the services they contribute
to the EC with the benefits and advantages of par-
ticipation in EC: share of profit in joint projects;
advanced management in project preparation
and execution; shared knowledge; high quality
standards and advanced services, e.g. web design
and hosting; groupware for engineering collabora-
tion; frameworks, workflows and templates for
project preparation; collective business insurance;
advanced financial management; etc.
http://rpkkmap.mach.uni-karlsruhe.de/cennet/index3.html
http://rpkkmap.mach.uni-karlsruhe.de/cennet/index3.html
Fig. 2. A structure of the engineering cluster with the eHub for
B2B collaboration.
Typically the ESPs constituting the EC are in-

volved in active actions on the �per-project� basis,
while the eHub itself carries out several projects
with different partners simultaneously. These al-
lows balancing a sustainable status for the eHub,
which is necessary for gaining knowledge, develop-
ing customer relations and improving operational
excellence of the EC, with flexible �loosely coupled�
partnering for ESPs, who are self-governed and
combine participation in EC projects with their
own business activities.
Like other businesses, in order to be successful
the e-Hubs should take active position, investing
their own and attracted intellectual and financial
resources into shaping and strengthening web-
based engineering collaboration and development
of customer relations. ESB e-Hubs exploit the
advantages offered by engineering collaboration
in EC through proposing for potential customers
via their marketing facilities advances products
and engineering services, which are produced with
joint efforts of the EC members. With vast capac-

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