A knowledge-based view of analytics capability in purchasing and supply management

PurposeThe purpose of this study is to elaborate on how analytics capability develops within the PSM function. This study is an in-depth exploration of how analytics capability develops within the purchasing and supply management (PSM) function.Design/methodology/approachA multiple case study was conducted of the PSM function of six case firms, in which primary data were collected through semi-structured interviews with PSM analytics stakeholders. The data were analyzed based on an analytics capability framework derived from the literature. Cases were chosen based on them having advanced PSM practices and ongoing analytics projects in the PSM area.FindingsThe findings shed light on how the firms develop their analytics capability in the PSM functional area. While we identify several commonalities in this respect, the authors also observe differences in how firms organize for analytics, bringing analytics and PSM decision-makers together. Building on the knowledge-based view of the firm, The authors offer a theoretical explanation of our observations, highlighting the user-driven side of analytics development, which has largely been unrecognized by prior literature. The authors also offer an explanation of the observed dual role that analytics takes in cross-functional initiatives.Research limitations/implicationsThe exploratory nature of our study limits the generalizability of our results. Further, our limited number of cases and interviewees indicate that there is still much to explore in the phenomenon of developing analytics capability.Practical implicationsOur findings can help firms gain a better understanding of how they could develop their analytics capability and what issues they need to consider when seeking leveraging data through analytics for PSM decisions.Originality/valueThis paper is, to the best knowledge of the authors, the first empirical study of analytics capability in PSM.