The Shift from Cost Cutting to Value Creation: A Paradigm for Integrating Procurement Strategy in Dufil Company, Port Harcourt
Abstract
The study examines the shift from cost cutting to value creation through an integrated procurement strategy framework, using Dufil Industries, Port Harcourt as a case context. Procurement strategy was conceptualised through three dimensions, namely strategic sourcing, supplier relationship management, and procurement integration, while value creation was treated as a composite dependent variable. Three hypotheses were formulated and tested using Spearman's rank correlation coefficient, given the ordinal nature of the perception-based data obtained through a structured questionnaire administered to 152 staff of the procurement, supply chain, and production departments. Descriptive results showed generally favourable perceptions of procurement practice, with strategic sourcing recording the highest mean score (M = 3.74), followed by value creation (M = 3.68) and supplier relationship management (M = 3.61), while procurement integration recorded the lowest, though still moderately high, mean score (M = 3.42). The correlation results showed that strategic sourcing (rho = 0.612, p < 0.05), supplier relationship management (rho = 0.587, p < 0.05), and procurement integration (rho = 0.493, p < 0.05) each had a positive and statistically significant relationship with value creation, leading to the rejection of all three null hypotheses, with strategic sourcing exerting the strongest association and procurement integration the weakest. The study is anchored on the Resource-Based View and Dynamic Capabilities Theory, which jointly explain how procurement-related resources and capabilities can be configured to create and sustain competitive advantage, and the findings are consistent with prior empirical studies linking sourcing, supplier relationships and functional integration to firm performance and value outcomes. The study concludes that procurement strategy, taken as a whole, significantly drives value creation in Dufil Company, Port Harcourt. It is recommended that procurement units in manufacturing firms such as Dufil Company be repositioned from transactional cost centres to strategic value-creating units.
Downloads
References
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Carr, A. S., & Pearson, J. N. (2002). The impact of purchasing and supplier involvement on strategic purchasing and its impact on firm's performance. International Journal of Operations & Production Management, 22(9), 1032–1053.
Chen, I. J., & Paulraj, A. (2004). Towards a theory of supply chain management: The constructs and measurements. Journal of Operations Management, 22(2), 119–150.
Cousins, P. D. (2005). The alignment of appropriate firm and supply strategy for competitive advantage. International Journal of Operations & Production Management, 25(5), 403–428.
Cox, A. (1999). Power, value and supply chain management. Supply Chain Management: An International Journal, 4(4), 167–175.
Ellram, L. M. (1990). The supplier selection decision in strategic partnerships. Journal of Purchasing and Materials Management, 26(4), 8–14.
Gonzalez-Benito, J. (2007). A theory of purchasing's contribution to business performance: A contingency approach. Journal of Operations Management, 25(4), 901–917.
Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2–24.
Kraljic, P. (1983). Purchasing must become supply management. Harvard Business Review, 61(5), 109–117.
Lambert, D. M., & Cooper, M. C. (2000). Issues in supply chain management. Industrial Marketing Management, 29(1), 65–83.
Lysons, K., & Farrington, B. (2020). Procurement and supply chain management (10th ed.). Pearson Education.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2020). Purchasing and supply chain management (7th ed.). Cengage Learning.
Narasimhan, R., & Das, A. (2001). The impact of purchasing integration and practices on manufacturing performance. Journal of Operations Management, 19(5), 593–609.
Ogbo, A. I., Ezeobi, J. C., & Victoritte, U. C. (2018). Strategic procurement practices and operational efficiency of manufacturing firms in Nigeria. International Journal of Business and Management Review, 6(3), 1–15.
Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
Sheskin, D. J. (2011). Handbook of parametric and nonparametric statistical procedures (5th ed.). CRC Press.
Spekman, R. E., Kamauff, J. W., & Myhr, N. (1998). An empirical investigation into supply chain management: A perspective on partnerships. International Journal of Physical Distribution & Logistics Management, 28(8), 630–650.
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.
van Weele, A. J. (2018). Purchasing and supply chain management: Analysis, strategy, planning and practice (7th ed.). Cengage Learning.
The authors and co-authors warrant that the article is their original work, does not infringe any copyright, and has not been published elsewhere. By submitting the article to GPH-International Journal of Social Science and Humanities Research, the authors agree that the journal has the right to retract or remove the article in case of proven ethical misconduct.
