IDEAS home Printed from https://ideas.repec.org/a/inm/orinte/v36y2006i3p209-219.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/inte.1060.0209
    Download Restriction: no
    File URL: https://libkey.io/10.1287/inte.1060.0209?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Banker, Rd & Datar, Sm, 1989. "Sensitivity, Precision, And Linear Aggregation Of Signals For Performance Evaluation," Journal of Accounting Research, Wiley Blackwell, vol. 27(1), pages 21-39.
    2. Stanley Baiman & Paul E. Fischer & Madhav V. Rajan, 2000. "Information, Contracting, and Quality Costs," Management Science, INFORMS, vol. 46(6), pages 776-789, June.
    3. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Engel, Ellen & Hayes, Rachel M. & Wang, Xue, 2003. "CEO turnover and properties of accounting information," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 197-226, December.
    2. Jan Bouwens & Laurence Van Lent, 2007. "Assessing the Performance of Business Unit Managers," Journal of Accounting Research, Wiley Blackwell, vol. 45(4), pages 667-697, September.
    3. Bushman, Robert M. & Smith, Abbie J., 2001. "Financial accounting information and corporate governance," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 237-333, December.
    4. Maximilian Focke, 2022. "Do sustainable institutional investors influence senior executive compensation structures according to their preferences? Empirical evidence from Europe," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1109-1121, September.
    5. Henry Eyring & V. G. Narayanan, 2018. "Performance Effects of Setting a High Reference Point for Peer‐Performance Comparison," Journal of Accounting Research, Wiley Blackwell, vol. 56(2), pages 581-615, May.
    6. Ikram, Atif & Li, Zhichuan (Frank) & Minor, Dylan, 2023. "CSR-contingent executive compensation contracts," Journal of Banking & Finance, Elsevier, vol. 151(C).
    7. Bol, Jasmijn C. & Kramer, Stephan & Maas, Victor S., 2016. "How control system design affects performance evaluation compression: The role of information accuracy and outcome transparency," Accounting, Organizations and Society, Elsevier, vol. 51(C), pages 64-73.
    8. Gibbs, Michael & Merchant, Kenneth A. & Van der Stede, Wim A. & Vargus, Mark A., 2004. "Performance Measure Properties and Incentives," IZA Discussion Papers 1356, Institute of Labor Economics (IZA).
    9. Joanna Shuang Wu & Ivy Xiying Zhang, 2019. "Mandatory IFRS Adoption and the Role of Accounting Earnings in CEO Turnover," Contemporary Accounting Research, John Wiley & Sons, vol. 36(1), pages 168-197, March.
    10. Lambert, Richard A., 2001. "Contracting theory and accounting," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 3-87, December.
    11. Kroos, P., 2009. "The incentive effects of performance measures and target setting," Other publications TiSEM 944001f9-198b-4b81-8824-3, Tilburg University, School of Economics and Management.
    12. Michael J. Petersen, 2007. "Using Downstream Revenue in a Performance Measurement System," Contemporary Accounting Research, John Wiley & Sons, vol. 24(4), pages 1193-1215, December.
    13. Madhav V. Rajan & Stefan Reichelstein, 2006. "Subjective Performance Indicators and Discretionary Bonus Pools," Journal of Accounting Research, Wiley Blackwell, vol. 44(3), pages 585-618, June.
    14. Hu, Jinshuai & Kim, Jeong-Bon, 2019. "The relative usefulness of cash flows versus accrual earnings for CEO turnover decisions across countries: The role of investor protection," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 34(C), pages 91-107.
    15. Cecchini, Mark & Ecker, Joseph & Kupferschmid, Michael & Leitch, Robert, 2013. "Solving nonlinear principal-agent problems using bilevel programming," European Journal of Operational Research, Elsevier, vol. 230(2), pages 364-373.
    16. Shane Dikolli & Igor Vaysman, 2006. "Contracting on the Stock Price and Forward-Looking Performance Measures," European Accounting Review, Taylor & Francis Journals, vol. 15(4), pages 445-464.
    17. Clarkson, Peter M. & Walker, Julie & Nicholls, Shannon, 2011. "Disclosure, shareholder oversight and the pay–performance link," Journal of Contemporary Accounting and Economics, Elsevier, vol. 7(2), pages 47-64.
    18. Livne, Gilad & Markarian, Garen & Milne, Alistair, 2011. "Bankers' compensation and fair value accounting," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1096-1115, September.
    19. Armstrong, Christopher S. & Blouin, Jennifer L. & Larcker, David F., 2012. "The incentives for tax planning," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 391-411.
    20. Gerald J. Lobo & Michael Neel & Adrienne Rhodes, 2018. "Accounting comparability and relative performance evaluation in CEO compensation," Review of Accounting Studies, Springer, vol. 23(3), pages 1137-1176, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orinte:v:36:y:2006:i:3:p:209-219. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.