Why Teams are Hot

By By James P. Morgan -- Purchasing, 4/5/2001

Team buying is up! Ask any business consultant.

Indeed, most of them can produce detailed studies to prove this point: Multifunctional sourcing and/or buying teams are wildly popular and in wide use across the U.S. Further, they note that multifunctional team problem-solving continues to win the broad support of top management in companies across the country. For example, PURCHASING Magazine has just completed a survey that shows that nearly 70% of companies sampled are using or are extremely interested in using team-buying and sourcing techniques.

Paradoxically the same study indicates that the actual job of implementing sourcing/buying teams and councils is proving to be more of a struggle than many companies bargained for. What hasn't been measured very well up to here are depth of team-buying usage and effectiveness of that usage. To wit: While almost 70% of companies polled by PURCHASING expressed great interest, even enthusiasm, for team buying, follow-up interviewing produced somewhat contradictory findings. Cross-functional team buying at the company level appears to be hovering at around 40% of what theoretically could be done. What's more, of those interviewed many readily admit that their use of cross-functional buying teams is highly selective. In plain language, every company that announces it is involved in cross-functional team buying is not necessarily employing it on every buy or with complete acquiescence of all concerned.

What is it?

One of the complicating factors in talking about cross-functional team buying is that it doesn't mean exactly the same thing from company to company. In championing cross-functional team buying the emphasis for many (maybe most) companies is on "cross-functional" rather than "buying" teams. Rather than a bunch of people getting together to buy things, teams organized around products consider all of the factors involved in sourcing and buying for that product. In most firms this usually means focusing on such factors as procurement, design, manufacturability, quality and styling.

In any case, cross-functional team buying got its start in the late 1980s when companies began readjusting organizational structures to make them more flexible and competitive. By prodding such functions as purchasing, manufacturing, quality assurance, marketing and product design into working more closely in teams, it was reasoned that companies would be better able to deal with information, technology, leadership and personnel issues early in product development. A key part of this teaming effort was the inclusion of key suppliers at a very early stage.

Cross-functional team buying was originally developed with highly competitive, manufacturing-oriented, sophisticated product developing companies in mind. Many of these companies were already deeply involved in developing supply chain strategies that integrate company and supplier skills and knowledge to deal with competitiveness problems. But early in the history of team buying, cross-functional buying theories began to be expanded to include those of companies where sourcing decisions revolve more around pricing competitiveness than such factors as manufacturability, new product research and development, or cycle time.

Disappointments

For many early champions of team buying and cross-functional teaming, current efforts in the field have been disappointing. Some, for instance, suggest that while interest in cross-functional buying teams is up, actual implementation of team buying is stagnant or down. In our telephone interviewing a fair number of interviewees cite instances where companies' multifunctional sourcing teams have not really supplanted traditional functional organizations. Others give instances of firms where individual decision-making continues to override team decision-making. Still others suggest that on many multifunction sourcing teams there is a distinct line between the work done for the team and the work done for their departments.

One factor that surfaced frequently in survey follow-up was the matter of company size. Many survey participants suggest that their companies are too small for the formality of team buying and especially cross-functional team buying.

Who's to walk the talk?

While size probably does account for some recent disappointments with team-buying implementation, it's hardly the only or even a main reason for disappointing team-buying performance. Unfortunately, in many firms today, cross-functional teaming is still more the exception than the norm. In many companies, in fact, product technologies are being developed for new products, while the purchasing function is blithely developing a supply base and sourcing strategies for an old technology. Inappropriate technologies are still getting specified by technical groups because of inadequate consideration of alternatives taking place in the supply market and at specific suppliers.

Heard most often from study participants were complaints about a shortage of consensus building and project management skills among the members of the sourcing team, poor understanding by team members of the functional responsibilities of their colleagues, lack of experience in working with people in other functional areas, and the tendency on the part of many team members to procrastinate and defer responsibility for decisions.

What's not working

In the eyes of survey participants, these have been the major failings of cross-functional teaming initiatives over the past year or so:

• Top management buy-in. Besides some perfunctory words of encouragement, many survey respondents feel top management in their companies is far too passive in their support of team buying and cross-functional team building. In some companies upper management apparently does not grasp the significance of teaming.

• Information sharing. Perhaps the most crucial development in cross-functional teaming is the sharing of information with all those who are affected by it. In many cases functions that traditionally had sole or principal responsibility for information are reluctant to share key information with other functions and suppliers.

• Turf wars. In many cases survey participants claim that there is too much infighting between departments that do not have parallel goals. In some cases, they suggest, the warring parties can become so shrill that suppliers are scared off.

• Training. Too often working teams lack the training needed to step up into places where they are most needed. In many cases the cause can be laid on senior managers who appear to be waiting for empowerment before arranging for the required training.

• Time. In many firms the major charge is that not enough time is devoted to team building. As a result wrong members are selected for the team, one or few persons dominate team decisions, and the team lacks understanding of direction or purpose.

• Trivialization. In many cases the major problem for cross-functional teaming is a collection of all the above complaints. A purchasing manager for a Midwest electrical products producer puts it this way: "Those who don't really want change (high level or low level) spend most of their efforts promoting petty points aimed at eventually undermining teaming efforts."

Reason for optimism

Still, despite the lack of instant success for many companies, the outlook is quite optimistic for the future of cross-functional sourcing teams. In defense of this optimism the PURCHASING study notes that somewhere around 50% of the teams studied make "truly significant sourcing decisions" in such areas as choosing suppliers, negotiating supplier contracts, and enforcing corporate contract commitments. Especially important, indicates director of purchasing and materials at a small Chicago-based automotive parts producer, is the fact that growing numbers of internal users are beginning to feel that they have a voice in the sourcing process.

Perhaps most encouraging of all is the fact that among the companies best known for their competitiveness, cross-functional team buying is strong and growing. Many smaller companies, often strapped for resources, nevertheless, are working hard to develop management strategies that make heavy use of cross-functional team buying.