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RESEARCH ISSUES

SHAWNEE VICKERY, Feature Editor, Eli Broad Graduate School of Management, Michigan State University

The Center for Advanced Purchasing Studies

by Phillip L. Carter, Director at the Center for Advanced Purchasing Studies, Harold E. Fearon Eminent Scholar Chair of Purchasing Management, Arizona State University

The Center for Advanced Purchasing Studies (CAPS) is an innovative research center that serves the interests of academia, major corporations and the purchasing profession. Established in 1986 as the result of an affiliation agreement between the National Association of Purchasing Management (NAPM) and Arizona State University's College of Business, CAPS' mission is to "contribute competitive advantage to organizations by providing leading-edge research to support the evolution of strategic purchasing/supply management."

The founding director of CAPS was Dr. Harold E. Fearon, Professor Emeritus at the College of Business at Arizona State University and a leading academic and consultant in the field of purchasing and supply management. Dr. Fearon, along with Mr. Jerry Baker, Executive Vice President of NAPM, and several purchasing executives provided the leadership to launch and the vision to sustain CAPS during the early years.

From the start, purchasing executives were included as key players with CAPS. A board of trustees was established with a majority of the members business executives. This helped to interest the business community in CAPS and to focus CAPS on the interests of the business community. The CAPS Board of Trustees, made up of purchasing executives and academics, is responsible for determining overall CAPS policies and research direction. Companies currently represented on the Board of Trustees include: Cyprus Amax Minerals Company; AT&T; IBM Corp; Eastman Kodak Co.; The Dial Corporation; Lucent, Lockheed-Martin Corporation; Nortel; AlliedSignal, Inc.; Coca-Cola USA; Honda of America Mfg., Inc.; Bayer Corporation; The Quaker Oats Company; General Mills, Inc. and American Express. In addition, serving on the Board of Trustees are the President and the Executive Vice President of NAPM, the Director and Director-Emeritus of CAPS, the Chair of the NAPM Academic Resources Committee and the Chair of the Supply Chain Management Program at Arizona State University.

It is certainly no secret in recent years that management has placed increasing importance on achieving increased efficiency and cost savings while improving product quality and customer service. Purchasing professionals have responded to this challenge by providing management with recommendations about supplier development, cost modeling, new approaches to buying and other innovative purchasing practices. CAPS has provided the purchasing professionals with the critical research data necessary to provide a solid basis for their recommendations.

As an independent research organization, CAPS provides companies and purchasing professionals with research and data from a perspective outside the normal business realm. By making this information available to all, including faculty and students, at nominal cost, CAPS' research benefits the widest audience over the long run. By distributing this information widely, CAPS enables organizations to avoid duplicating research activities across the profession.

Funding

Corporations provide more than 80% of the annual budget for CAPS. Virtually all of the corporate funds are used to support the research programs, while NAPM covers the majority of the administrative and fund-raising expenses. NAPM-affiliated associations and organizations, as well as purchasing professionals, also provide significant support.

The director of CAPS also holds the Harold E. Fearon Eminent Scholar Chair of Purchasing Management in the College of Business at Arizona State University. The $1,000,000 endowment for this chair was provided by corporations, by significant contributions from NAPM and NAPM-affiliated organizations, and by contributions from many purchasing professionals. The State of Arizona has matched this endowment through its Eminent Scholars program.

Major Research Activities

CAPS has four main areas of activity which are briefly described below.

Focus Studies

CAPS refers to its major research projects as "focus studies." Focus studies are commissioned by CAPS to answer the research priorities established by purchasing executives at our Roundtables (described below). Some of the research projects are conducted by the CAPS' staff, but increasingly CAPS is funding researchers from universities around the country and around the world to conduct our major research studies.

CAPS publishes a research report for each funded study. These reports are made available at a nominal cost to all who request a copy. Additionally, copies of all CAPS studies are sent to the corporations which provide the research funds. Since 1986, CAPS has published 26 focus studies and currently has eight additional studies in various stages of completion.

A complete list of finished reports and studies underway is available from CAPS. A Call from Proposals which outlines the process for applying for CAPS funding is also available upon request.

Executive Purchasing Roundtables

CAPS organizes Executive Purchasing Roundtables in four regions of the world: North America, Europe, Japan, and Asia. Expansion to South America is planned for 1999. Senior purchasing executives are invited to attend these annual three-day forums.

Each Executive Purchasing Roundtable includes an overview of CAPS' recently completed but not-yet published research studies. These reports are usually presented by the researcher(s) who conducted the study. In addition to the research reports, selected participants will discuss best practices from their own organizations.

One of the chief benefits of the Executive Purchasing Roundtables is the opportunity they provide for participants to interact with purchasing professionals from industries different from their own. At any given Roundtable an executive from a telecommunications company may have the opportunity to learn from colleagues in aerospace or chemicals.

Finally, Roundtable participants are invited to help establish the research priorities for CAPS for the coming year. This activity benefits CAPS by providing us with input from professionals who have a keen understanding of the most pressing research needs within the purchasing field. Additionally, this exercise affords Roundtable executives the opportunity to ensure that their financial support of CAPS is targeted at research efforts that will yield relevant, practical information.

Attendance at the North American Executive Purchasing Roundtable is reserved for representatives of companies whose annual financial support of CAPS equals or exceeds $10,000. More than 70 major corporations were represented at the North American Roundtable in Phoenix, Arizona in 1997. Approximately 40 executives participated in the Asian Roundtable in June 1996 and in the European Roundtable in October 1996.

Benchmarking

Our benchmarking research consists of compiling and publishing benchmark reports for 26 separate industries, from aerospace to telecommunications services. These reports, published on an annual or bi-annual basis, include the performance metrics of greatest interest to purchasing professionals in each industry.

In order to collect reliable purchasing performance data, our researchers meet regularly with purchasing professionals at leading firms in each industry. The benchmarks for which data are collected are arrived at by collaboration with purchasing managers and executives. The published benchmarks are a compromise between what data are feasible to collect via mail questionnaires and the broad questions on which the managers would like to see industry data. Typically CAPS is the only source of this data.

In June 1996, at a Washington, D.C. presentation, CAPS received the Vice President Gore Hammer Award for helping to develop benchmarking studies for the federal government.

In 1997, CAPS began benchmarking activities in Australia in conjunction with the Royal Melbourne Institute of Technology and the Victoria Government Purchasing Board.

Best Practices

This activity is just getting started at CAPS. After publishing each benchmarking study, CAPS applies a methodology to the data to identify which companies within each industry are "Best-in-Class" on the various metrics.

Following the identification of the "Best-in-Class" companies CAPS will send researchers on visits to those companies to study the processes by which they achieve their industry-leading results. Ultimately, CAPS will publish reports on the best practices for each industry.

Opportunities for Faculty Involvement

CAPS is actively seeking faculty members to help us with our research agenda and encourages proposals on topics that have been given high priority by purchasing/ supply chain management executives. (A list of high-priority research topics may be obtained from CAPS.)

CAPS generally funds proposals in the following three categories:

  1. Research that identifies the current state of the practice. This research documents what firms are doing, how this has changed over time, and why the changes have occurred. Research in this category may be updates of previous CAPS studies or of studies published elsewhere.
  2. Research that identifies the leading edge of current practice and applications. This research identifies and evaluates what the best firms are doing now and what other firms likely will be doing in the next few years. Implementation strategies, based on the experience of leading firms, need to be addressed. This research generally reports "best practices."
  3. Research that identifies concepts, ideas, practices, techniques, tools, and technologies, that are now in the early development stage. This research identifies and evaluates concepts that likely will have a major impact on purchasing and supply chain management in the future. Leading-edge firms may be currently evaluating some of these ideas.

    In general we like to fund studies that can be completed in one year. (This is a time frame strongly suggested by our Board of Trustees). Our most successful projects include case studies plus practical recommendations for implementation of the research findings.

    Most faculty have a need and desire to turn research into publications. While CAPS reports are not blind refereed, they do get a thorough review by CAPS and industry reviewers before publication. Many of our researchers have been able to generate refereed articles from the research, which CAPS actively encourages. Because the CAPS research reports typically do not include all the statistical analysis which might be wrung from the data, opportunities exist for further analysis and reporting of the research in academic journals. Furthermore, CAPS research projects can provide access to organizations and data beyond the study at hand.

    Best practice research is another area where faculty from around the country have the opportunity to get involved with CAPS. After identifying the best-in-class companies, CAPS will identify a faculty member to visit each company and to collect information on their superior processes. CAPS will pay the faculty member a stipend for conducting the best practices research and writing the report and will reimburse them for all expenses. Additionally, CAPS encourages the faculty member to take a graduate student on the visit to help with recording the conversations and compiling the information. CAPS also pays the expenses for the graduate student. We feel this is a great learning opportunity for faculty members and students.

    Future Activities

    Their are many exciting new projects underway at CAPS. Several of these revolve around our growing international activities in support of our global customers. In addition to our international roundtables, we have a joint research project underway in five European countries, Canada and the United States. We are in early discussions about participating in a major research project in South Africa. We started a benchmarking project in Australia this year, are working with several firms to start a benchmarking project in the United Kingdom, and are planning a benchmarking study of a major industry on a global basis.

    In conjunction with NAPM, Michigan State University, Arizona State University, and ATKearney, CAPS has just started a major study to forecast the future environment for purchasing and supply five and ten years into the future. This study will be completed by about the second quarter of 1998 and will be repeated every three to four years. Our objective is to provide visibility for purchasing executives as they plan strategic directions for their organizations.

    Last February at CAPS' 10th year anniversary celebration, many were surprised and delighted at what had been accomplished in ten years. The next ten years promises to be equally challenging and exciting.

    Located in the Arizona State University Research Park, CAPS can be reached at:

    CAPS
    2055 E. Centennial Circle
    P.O. Box 22160
    Tempe, Arizona 85285-2160
    602-752-2277
    602-491-7885 (fax)

    Our Web site is under construction, but this summer look for us at:

    http://www.capsresearch.org

    In the meantime, you can find us on at the NAPM Web site at:

    www.napm.org