ARTICLE IN PRESS

Journal of Purchasing & Supply Management 14 (2008) 15–27

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Commodity team motivation and performance

Linda Englysta,, Frances Jørgensenb, John Johansena, Ole S. Mikkelsenc
a
Center for Industrial Production, Aalborg University, Fibigerstraede 16, 9200 Aalborg East, Denmark
b
Aarhus School of Business, Aarhus University, Haslegaardsvej 10, Aarhus 8210, Denmark
c
Mads Clausen Department, University of Southern Denmark, Alsion, 6400 Sønderborg, Denmark
Received 7 August 2007; received in revised form 24 January 2008; accepted 24 January 2008

Abstract

In this article, an in-depth single case study is presented in order to explore and discuss the functioning of commodity teams in a global
sourcing context. Specifically, the study aimed at identifying factors that may influence team members’ motivation to participate in
activities that create opportunities for synergy and coordination of purchasing. In the teams studied, motivation appeared to be
influenced to some degree by a number of factors, including rewards, leadership behaviours, goal setting, and the career goals of the
commodity team members. In some cases, inconsistencies between these factors and the objectives of the commodity teams were
associated with lower performance. The paper contributes theoretically by providing a rich description of how commodity teams
function, and to practice by bringing attention to a number of managerial issues that should be considered when implementing
commodity teams.
r 2008 Elsevier Ltd. All rights reserved.

Keywords: Commodity teams; Group purchasing organisation; Global sourcing

1. Introduction volume, and bundling negotiation power are some of the

As competition becomes more intense, and companies
are specialising in their supply chain, companies seek
synergies especially in their overall global purchasing effort
across business units (Rozemeijer et al., 2003). For any
large multinational organisation, purchasing creates a
central and continuing concern, as the organisation has
to ensure that its various business units act so as to achieve
corporate-wide synergies. The specialisation of worldwide
strategic business units requires an advanced purchasing
system to bind them together into an operational whole
(Cray, 1984). The organisation needs to maintain an
integrated purchasing system that emphasises the value of
shared interest and helps leverage synergies, while granting
each business unit the necessary flexibility to adapt to their
particular environments. The potential for sourcing glob-
ally, reducing the supplier base, consolidating purchasing
Corresponding author.
E-mail addresses: lieng@vestas.com (L. Englyst), fraj@asb.dk
(F. Jørgensen), jj@production.aau.dk (J. Johansen).
benefits that are clearly prioritised in companies today.
However, leveraging synergies in global purchasing is
not a straightforward task and encompasses far more than
just centralising the purchasing function. One needs a
balanced approach which takes into consideration the need
for having problem-solving capabilities close to where
problems occur, cost containment in each profit centre, and
close relationships with suppliers (Gadde and Håkansson,
1994). In a small or single-site firm, purchasing power and
knowledge is concentrated in proximity to production,
sales, and product development activities. In a larger or
more diversified company, obtaining advantages of a
concentrated and cross-functional effort simultaneously is
not physically possible. Trade-offs may be necessary
regarding whether to have centralised purchasing activities
for purposes of synergy within purchasing, or to decen-
tralise activities for purposes of cross-functional synergies.
A decentralised structure is generally attractive to con-
glomerates that have a business unit structure where each
unit produces products that are unique or markedly
different from those of other units. On the other hand, a

1478-4092/$ - see front matter r 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.pursup.2008.01.006
 ARTICLE IN PRESS
16 L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
centralised structure is preferable where several business
units buy the same or similar goods, which are of strategic
importance to them (Van Weele, 2005). In other words,
organisational design is largely dependent on the potential
product-related synergies. Most companies organise pur-
chasing and sourcing activities in some centralisation/
decentralisation hybrid. Furthermore, to increase oppor-
tunities for creating synergy within purchasing and
sourcing, and to aid in coordination of the variety of
activities involved, companies may choose to adopt what
are referred to as commodity teams (e.g. Trent, 2004).
Essentially, a commodity team is a centrally coordinated
team that develops and implements company-wide strate-
gies for a given commodity. The term commodity is used
not to focus on low-value or low-risk items, but to indicate
that there is some level of basic standard, market or
material homogeneity to enable pooling and negotiation
across business units. While Monczka and Trent (1998)
concluded that the number of purchasing groups organised
by commodity would continue to decrease gradually, Trent
(2004) found that it was still amongst the most common
ways of organising in medium–large firms.
Thus, the concept of commodity teams encompasses the
same opportunities and challenges inherent to teams used
in other contexts (e.g. new product development teams).
However to date, there are no in-depth empirical studies
found in the literature that describe the functioning of such
commodity teams, the opportunities they provide nor the
challenges they face. The overall objective of this paper is
to begin to explore the concept and practice of commodity
teams, with particular interest on identifying factors that
may encourage or restrict opportunities for creating the
synergy for which the commodity teams are designed.
In the following sections of the paper, a brief introduc-
tion to the concept of commodity teams is presented.
Thereafter, the paper provides a review of the work team
literature considered relevant to understanding the func-
tioning of commodity teams.
2. Commodity teams
Daft (2004) argues that sourcing activities across product
lines and business units of a diversified company are likely
to be relatively independent. They are only interdependent
due to the potential synergies, not due to any sequential or
reciprocal dependencies. There is not necessarily any flow
of work between units, and units are only interdependent
due to a sense of corporate linkage and responsibility,
where the success of each unit contributes to the success of
the whole organisation (Daft, 2004). In spite of the very
low degree of interdependence, there has been a tendency
towards more and more coordination of purchasing
activities (Van Weele, 2005). The degree of coordination
tends to increase, but the frequency of pure centralisation is
descending (Fearon and Leenders, 1995). Coordination
and pursuit of synergies is taking place even between units
where no corporate interdependence or sense of corporate
responsibility exists, as companies engage in buying
consortia. This pursuit indicates that expected synergies
are substantial, but also means that it is essential to ensure
mutual benefit. Essig (2000) argued that parasite relation-
ships or relationships where only one party benefits do not
suffice in purchasing consortia. Within a company,
imbalances may be tolerated due to the sense of corporate
responsibility, but the situation is not far from that of a
consortium, as business unit managers are primarily
responsible for own financial results (Van Weele, 2005).
Trent (2004) reviewed organisational design features
across a large number of the US companies, and revealed
that a formal separation of strategic and tactical pro-
curement, supply activities, personnel, positions, and
structure was not common. In most companies, strategic
and tactical activities appear not to be separated, but
maintained in proximity with internal customers. This
choice is logical in light of interdependencies in relation to
product development and daily operations (Daft, 2004),
but offers some challenges for the achievement of synergies
across business units. To accommodate such challenges,
many companies appear to make use of centrally coordi-
nated commodity teams that develop and implement
company-wide supply strategies (Faes et al., 2000; Fearon
and Leenders, 1995).
Commodity teams provide one example of a coordina-
tion or pooling structure within a larger firm, typically
multinational and consisting of a number of individual
business units. Pooling structures are invisible in most
organisation charts, as they build upon the existing
hierarchy or line organisation, but join people together
in, for example, teams and committees, or distribute
responsibilities through lead buyer assignments. A centra-
lised coordinator, on the other hand, is likely to appear on
formal charts, and have people dedicated to tasks of
coordination and corporate purchasing (Cavinato, 1992;
Van Weele, 2005).
A commodity team generally consists of purchasing
professionals alone, but joins actors across business units
or operational units with the objective of improving the
leverage of the company in order to reduce overall
materials cost and/or to improve the service obtained from
outside suppliers (Van Weele, 2005). Members of a com-
modity team are often assigned only part time, and are
expected to support team assignments along with respon-
sibilities within the local units, which they represent.
However, other constellations are also possible. Fig. 1
shows teams segmented across two variables, namely time
frame of the teams’ assignment and the personal time
commitment of each member. This figure relates to
sourcing teams in general, and is therefore applicable also
to the particular type of sourcing team referred to as a
commodity team. Commodity teams generally have a
continuous assignment pursued by part time members,
but might also have dedicated full-time resources and
might be able to draw on additional project resources for
limited periods of time.
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L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27 17

Time frame
Finite Continuous

Members assigned permanently

Members move from project to to a cross-functional sourcing
Full time project team with evolving or changing
responsibilities

Personal commitment
Continuous support of team
Members support a specific team
assignments in addition to
assignment or project in addition
regular responsibilities
to regular job responsibilities
Part time
Members most likely report to
Team usually disbands after
both a functional area and the
completing project or assignment
team

Fig. 1. Segmenting sourcing teams by commitment and time frame (adopted from Trent, 1998).

Typical assignments of commodity teams are to establish
and pursue cost-reduction strategies, to evaluate and select
suppliers, and to support sourcing for selected items
(Guinipero and Vogt, 1997). These assignments are related
to economies of scale. Further synergies can however be
achieved due to economics of information and learning and
economics of process (Faes et al., 2000), as well as
innovative problem solving. Economies of information
and learning result from knowledge and information
sharing, whereas economies of process result from stan-
dardisation of, for example, benchmarking and sourcing
procedures, joint training and development; economies of
scale are the product of pooling volumes to enforce
purchasing power and reducing the number of global
suppliers.
In order for commodity teams to provide an organisa-
tion with cost reduction and sourcing opportunities, the
team itself must function effectively. In Section 3, a brief
review of literature relevant to understanding team
effectiveness in a more general sense (i.e. not necessarily
related to commodity teams) is presented.
3. Team effectiveness
Teams occur more often than not in today’s organisa-
tions and there appears to be little doubt that their use
will continue to grow (Trent, 2003). Organisations choose
team structures because, when effective, they may offer
numerous advantages, including increased opportunities
for innovation (Goodall, 1990), increased flexibility and
quality due to greater breadth and depth of knowledge
and skills, and greater willingness to take risks (Rothwell,
1992). Teams are especially appropriate for developing
complex solutions that involve numerous functions or
disciplines and multiple stakeholders (Trent, 1998).
On the other hand, establishing and maintaining effec-
tive teams can be quite challenging for organisations, as
both individual and group issues must be addressed. This
challenge is often seen in relation to compensation and
reward systems that are used to motivate employees,
because the same types of incentives that appeal to
individuals may hinder teamwork (Clark, 2003). Further,
when rewards are based on functional activities, as with
traditional compensation systems, teams may actually be
penalised for efforts that enhance collaboration and
innovation (Sarin and Mahajan, 2001). Bullock and Lawler
(1984) emphasised the importance of developing pay
policies that directly link team effort and performance to
increase the likelihood of team success, as the team’s
success functions as a powerful motivator of future
individual and team behaviour. Moreover, rewards serve
as a form of performance feedback to the teams, indicating
to them that they are achieving the organisational goals
and objectives, which in turn is also highly motivating
(Trent, 1998).
The difficulty here for organisations is that defining and
measuring team success may not be as straightforward as
when measuring individual performance. For instance,
expectancy theory (Vroom, 1964) proposes that individuals
will be motivated to exert effort when they feel those efforts
will be rewarded appropriately. If performance measures
are misaligned, both the goals and efforts will be reduced
(Pagell et al., 1996). When performance is measured at the
individual level, the link between effort and performance
may be relatively clear. However, when performance is
measured for a team comprised of individuals exerting
varying levels of effort or with different levels of skill and
experience, this link may become much less obvious and
thus less motivating. If the team believes that one or two
members of the team are responsible for the team’s failure
to receive rewards for high performance, motivation falls
and conflict may arise (Clark, 2003). Furthermore,
compensation and rewards pit teams within an organisa-
tion against one another, as detrimental forms of competi-
tion can reduce motivation for teams and cause internal
conflict within the company (Druckman and Bjork, 1994).
The type of leadership that is appropriate and effective
for teams may also differ significantly from that used with
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18 L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
individuals; according to Zenger (1994), teams with poorly
equipped leaders are highly susceptible to failure. Trent
(1998) also reported a strong relationship between team
leader effectiveness and team effectiveness. Teams should
be given some degree of autonomy and decision-making
authority (Hackman, 1987), which may confuse the role of
the traditional manager/leader within the organisation.
Monzcka and Trent (1993) suggested that teams with
higher decision-making authority regarding internal group
process issues tend to accomplish their performance
objectives; thus it may be preferable for the leader to
assume more of an advisor or coaching role when the teams
is dealing with such matters. This does not in any way
mean that the role of the team leader is obsolete once teams
are functioning with some degree of autonomy. The leader
is still critical in a number of ways. For instance, while a
team is likely to be more motivated to exert effort to
achieve performance goals for which they have participated
in setting (Hackman, 1987), the team leader can be
instrumental in linking team goals to the organisational
strategy.
In addition, the team leader should be in a position to
ensure an appropriate team composition. As already
stated, motivation and performance may suffer if some of
the team members perceive an inequality with respect to
individual contribution from either differences in effort or
knowledge and skills. According to Hackman (1987), all
team members should have experience and be knowledge-
able about the task to be performed, possess good
interpersonal skills, have the capacity to assume a broad
organisational perspective, and be willing and able to
commit time and resources to the team. The team leader
should also be in a position to support selection of tasks
appropriate for the team. Trent (1998) explained that when
task difficulty, complexity, and meaningfulness are com-
patible with the team’s resources, the team is likely to be
motivated to exert effort because they feel challenged but
also capable of succeeding.
The team leader role may also represent an important
lever for the team in acquiring access to necessary resources
such as training and development and the time to complete
tasks and projects. Time constraints as well and lack of
other resources have been shown to have a detrimental im-
pact on team motivation and performance, partly because
the team perceives lacking resources as a sign of low
management commitment (Monzcka and Trent, 1994).
Another valuable resource that effective leaders can
provide for teams, and especially teams involved in cross-
functional projects, is access to external contacts (e.g.
customers, suppliers, other departments, or divisions).
Trent (1998) discovered that cross-functional sourcing
teams working collaboratively with suppliers tend to
outperform and be more satisfied than teams working
without this external contact.
Commodity teams are often subject to some kind of
corporate leadership, as they may be formed, sponsored or
supported by a corporate buying centre or corporate
purchasing committee. Transformational leadership beha-
viours in the central unit have been found to positively
affect team orientation and performance (Hult and
Nichols, 1999). Transformational leadership is facilitative
and focuses on mutual needs, aspirations and values, and
aims to raise the awareness of the importance and value of
desired outcomes. In an international sample, inspira-
tional/transformational leadership was found particularly
significant in positively affecting team orientation. Trans-
actional leadership is more focused on ‘‘getting things
done’’, and is generally more effective in a centralised
purchasing process or where the frequency of interaction
between central and local units is high (Hult and Ferrell,
1997).
In addition to needing effective leadership, the appro-
priate competencies to complete required tasks within a
team structure and goals and rewards that are well-aligned
with performance measures and strategic goals, teams
should have a sense of team identity and cohesion in order
to perform successfully as a team (Cartwright and Zander,
1968; Katz and Kahn, 1978; Mullen and Cooper, 1994).
Both cohesion and team identity keep teams together and
committed to the tasks at hand because the team members
feel a sense of responsibility to support the individual team
members and the team as a whole (Mullen and Cooper,
1994; Ellemers et al., 1999). Cohesiveness and team identity
are derived from a shared, clear understanding of the
team’s purpose and mission and why these are central to
the organisation. Further, research has demonstrated a
positive relationship between team empowerment and team
performance (e.g. Hyatt and Ruddy, 1997; Kirkman and
Rosen, 1999). Team empowerment, which is conceptually
based on Hackman and Oldman’s (1980) job character-
istics model, is an increased task motivation due to team
members’ collective psychological and cognitive assessment
of the tasks for which the team is expected to fulfil
(Kirkman and Rosen, 2000). Empowerment is experienced
by the team according to four dimensions: potency, which
is the group’s shared belief in its capacity to be effective,
meaningfulness, or the degree to which members achieve
intrinsic rewards for completing the tasks; autonomy,
where the team perceives itself as having decision-making
freedom; and impact, which relates to whether the team
feels tasks have organisational significance (Kirkman and
Rosen, 1997). Interestingly, the actual level of formal
authority within the team does not seem to be critical for
team empowerment, only that the team feels that together,
they can succeed at tasks that contribute to the success of
their organisation.
Some of the theory reviewed above has been derived
from investigations within purchasing, while a large part is
based on research in other contexts, but is assumed to have
wide applicability. In summary, the reviewed theory
suggests that there are a number of factors that may
influence team effectiveness such as leadership behaviour
and effectiveness, compensation and rewards systems,
performance measurement and feedback, resource and
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L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
task compatibility, and access to resources. Furthermore,
the literature proposes that team cohesion and identity may
be intermediary constructs that are influenced by the level
of team empowerment. Although no causal relationships
are assumed, a recurring theme in the team literature
presented here is that these factors seem to impact the team
members’ motivation to perform and to perform as a team.
It is therefore important to identify and understand the
factors that influence team members’ motivation and
motivation to perform as a group, if commodity teams
are to be implemented for the purpose of increasing
opportunities for synergy and coordination of purchasing
tasks. In Section 4 of this paper, the research approach
used to conduct a case study aimed at exploring the
functioning of commodity teams is described.
4. Methods
The overall objective of the study described in this paper
is to explore the functioning of commodity teams. Of
particular interest is identification of organisational and/or
team characteristics that may influence commodity teams
as they perform their purchasing and sourcing tasks.
Further, on the basis of the literature previously presented,
the study focuses on factors that may enhance or restrict
motivation of commodity team members’ to perform as a
team, thus providing opportunities for creating synergies
and improved coordination of purchasing activities. The
research question underpinning the study can thus be
formulated as the following:
Which factors influence commodity team members’
motivation to perform effectively as a team that seeks
to create synergies and improve coordination of
purchasing tasks?
In order to explore the functioning of commodity teams
at an in-depth level, a single case study design was chosen.
Although a single case study does not allow for general-
isations based on findings, this research design provides the
opportunity to develop a richer picture of how commodity
teams function in practice that would not be possible
through, for example, a large-scale survey (Yin, 2002;
Flyvbjerg, 2006). Still, it would be difficult to begin to draw
even tentative conclusions by examining only one com-
modity team, even if data collection were extended over
longer periods of time. Thus, this study includes a
comparative analysis of several commodity teams within
one organisation. A distinct advantage of this type of
comparative analysis is that the organisational context is
fixed for all of the teams from and for which data are
collected. A brief description of the company is provided
below for transparency of contextual factors.
Owing to the desire to capture a rich descriptive picture
of the teams functioning that includes identification of
factors that may influence the team members’ motivation
to perform as a team, a series of semi-structured, open-
ended interviews were conducted. Motivation to perform
19
as a team, as well as the factors which potentially
contributed to or restricted motivation, are thus based on
the subjective evaluations of the commodity team members
themselves and key persons associated with the commodity
teams. Quantitative data derived from annual status
reports are also included as a measure of the teams’
operational performance. In the following, the procedure
for conducting the interviews and using the interview data
to conduct the analysis presented later is outlined.
4.1. Case company background
The case company is one of the largest industrial
companies in Denmark, employing more than 18,500
people worldwide. The company was, until 1971, char-
acterised as a flat and centralised organisation with a high
degree of formalisation. In 1971, it was split up in three
product groups with a set of common corporate functions,
among these a central purchasing department. In order to
increase competitiveness, the company further decentra-
lised in the late 1980s, when purchasing was decentralised
as well. All purchasing activities and responsibilities of
sourcing raw materials and semi-manufactured goods were
deployed to today’s business units. The idea behind this
decentralisation was to have the sourcing decisions closer
to the internal customers and thereby obtain better
adoption to local conditions.
According to management, the informal network among
purchasing people across business units worked well in
the early 1990s, despite the formal separation. However,
due to job changes, new people employed and the
acquisition of new companies, the potential volume
advantages became more and more arbitrary over time,
with suppliers exploiting the lack of internal coordination.
In order to counteract this negative development a central
purchasing committee (CPC) was established. The CPC
consists of a purchasing director from each of the 12
business units in the company, and is chaired by a member
of the executive committee. The CPC is authorised from
top management to be the internal forum for developing
corporate purchasing strategies. Due to the size of the
committee, however, the practical work on goals, strategy,
and follows up is in the hands of the vice chairman and a
small development and support office, which has been
established to coordinate and further develop group
purchasing.
In 1997, the CPC established a set of cross-divisional
commodity teams with the task of coordinating the
sourcing of chosen material groups. The company pooling
currently includes nine commodity teams steered by the
CPC. Together, they account for more than 75% of
corporate direct expenditures on BOM material. In other
words, the team tasks and responsibilities have high
financial impact. The teams are authorised to decide on
the group commodity sourcing strategy, e.g. on preferred
suppliers, supply base optimisation, etc. The implementa-
tion as well as the day-to-day interaction with suppliers,
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20 L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27

however, is executed in the business units and at the local
sites.
The commodity teams are staffed with part time
resources from the local business units. It is voluntary for
the business units to participate in the team’s work, but the
business units must in principle, follow team decisions.
Therefore, business units with a high purchasing budget in
a given commodity group are encouraged to participate in
the team’s work.
Normally, the teams have 4–10 members. Each team is
organised with a manager, lead buyer(s) and members. It is
the responsibility of the manager to staff the team with
sufficient people, and only purchasers are members of the
team. The team manager is a member of the CPC, and is
also a director of purchasing within a business unit. This is
to secure the link to and commitment from local
purchasing management. The manager is typically from
the business unit, which has the highest expenditure in a
commodity group, or he has specific knowledge of the
commodity area in question. The lead buyers are respon-
sible for the commercial issues and the agreements
with suppliers on a group level, and members are re-
sponsible for the local implementation of commodity
strategies. The overall belief is that being member of a
team should be seen as a lever to improve the results of
local business units.
At the end of 2000 extra focus was set on the
coordination, as the CPC, in dialogue with top manage-
ment, set some ambitious goals and strategies. The main
goals to be attained between 2001 and 2003 (inclusive) were
5% annual price reductions, and a 75% reduction of
suppliers at the corporate level. The price development was
measured by the development of annual average price of
each specific item, and team performance was evaluated by
weighting the price development of each item-by-item
volume. The CPC vice chairman and the commodity team
managers together broke down the goals for each team,
focusing on performance across business units. In order to
stress the focus on the cross business unit cooperation, top
management implemented a bonus, which was directly
related to the goals. In this way, the business units had
the opportunity to honour members of the corporate
team structure by paying the bonus earned through the
teamwork.
4.2. Data collection
The qualitative data presented in this paper were derived
from a series of 14 multiple-researcher interviews with key
senior purchasing professionals, conducted in 2003–2004.
Interviewees were selected such as to represent different
commodity teams, different geographical locations, and
different business units. The commodity teams include
casting, plastics, non-ferrous, packaging materials, steel,
pressed parts, turned parts, electronics, and electromecha-
nical systems. However, only six teams have been
sufficiently represented to be subject of analysis, and two
of these were found to be functioning as one, meaning that
five teams are included in the analysis. The interviews have
been summarised in Table 1 below. Most interviewees,
including a former employee, were seniors in the commod-
ity team context, while a few were new commodity team
members and lead buyers.
Interviewees range from commodity team members to
lead buyers, commodity team managers and members of
the company executive purchasing committee. All com-
modity team managers, marked CPC in Table 1, are part of
the CPC, LB indicates team leadbuyership, and M
indicates team membership. When there are two persons
from the same business unit, there is a manager–employee
relationship. For example, person 7 reports to person 8,
and person 5 reports to person 6. Person number 3 has
previously been employed in business unit C, where he was
lead buyer in the steel team, but is now lead buyer of
electronics with base in business unit B.
Two to three researchers participated in each interview,
which generally lasted approximately an hour and was
guided by an interview framework that was based loosely
on the factors related to team motivation and team
effectiveness identified in the literature and presented
previously in the paper. Specifically, this involved asking
the interviewed persons to describe the commodity team-
work in his own terms, and to gain a subjective evaluation
of team motivation and performance as they related to

Table 1
Overview of interviewed persons, teams, and business units

Person ID 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Casting M M M M
Plastics LB CPC M
Non-ferrous M CPC LB
Packaging CPC
Steel M/LB (LB) M/LB M CPC
Pressed parts CPC
Turned parts
Electronics M LB CPC M
EMS LB M CPC M

Business unit A A B(C) C D D E E F F G H I J

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L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
leadership, compensation, resources, and characteristics of
the team in which the individual belonged. Below, a
summary of the more general responses to the open-ended
questions concerning the overall functioning of the
teams is presented. Data relevant to the analysis of factors
specifically influencing team motivation are discussed
later.
To supplement the subjective evaluation made by team
members, annual status reports linked directly to team
goals were obtained from the director of the central
purchasing support office. These were also the reports on
which annual team bonus was awarded.
In Section 4.3 of this paper, the individual commodity
teams included in the study are described in detail.
4.3. The electronics team—components and EMS
The commodity teams for electronics and electromecha-
nical systems share the same team manager and work
closely together. In fact, the team manager sees the two as
one team, but with a lead buyer for components and a lead
buyer for electro mechanical systems. The lead buyers
describe positive synergy between the two groups within
the team, particularly because the component lead buyer
offers valuable insights for the purchasing of electrome-
chanical systems concerning component cost develop-
ments. Also, a member states that volume consolidation
in the electronics commodity team is one of the largest
success stories he has seen.
The lead buyers represent the largest business units in
terms of purchasing volume/budget, and the lead buyers
both explained that they have succeeded in aligning team
goals with goals and interests in their business units. Both,
independently of each other, reported that they did not
distinguish between their tasks in the divisional and
corporate setting. One explains that he leads an electronics
purchasing team in the business unit, and that the whole
team acts as a corporate team. Therefore, the corporate
commodity team effectively has access to many resources,
and the smaller business units (in terms of electronics
component purchasing) benefit from the negotiations made
here. The lead buyers expressed that the commodity
teamwork did not really increase their workload, and they
both benefited personally from the work. One of the lead
buyers said that he valued the leadership and personal
profiling, and the other supplemented in saying that the
global/corporate perspective was part of the reason why he
took a job in the company in the first place.
Members of the team like to mention the previous team
manager, who was apparently a very visible and strong
leader. The current team manager says he believes in the
commodity team structure, but is unaware of targets and
misses strategic orientation and leadership from the CPC.
The team manager introduced a meeting schedule where
the whole team of about ten persons meets five times a
year, and the team manager and lead buyers meet an
additional five times. Furthermore, one lead buyer reports
21
to the team manager also in the business unit, and this all
means that the level of feedback is very high.
4.4. Casting
The casting team admits that it has a poor history in
terms of projects and obtained synergies. One member of
this team says there is no synergy; another says that to him
it is no real organisation, but just a series of meetings. They
claim that team cohesion and team identity are low, as are
motivation and efforts to work as a team.
The team manager and lead buyer are from the same
business unit, which accounts for approximately 80% of
the corporate expenditure of cast iron. This business unit
buys relatively few item numbers in great volumes. The
other business units represented in the team are in the
opposite situation, buying a wide range of items in low
volume. One member explained that many of these items
cannot be obtained from the large suppliers to the
dominating business unit, which makes pooling impossible.
More than one member of the team is of the opinion that
synergies should be sought amongst the smaller business
units, excluding the now leading business unit. In fact,
volume consolidation on cast items is beginning to be
organised outside of the commodity team.
The team meets quarterly and has little if any contact in
between meetings due to geographical distance. The level
of feedback is thus relatively low, and one member argued,
‘‘a lead buyer must bring you something—a newsletter
would be the least’’. Several members of the team call for
targets and leadership, which they feel should have come
from the CPC.
4.5. Plastics
The commodity team dealing with plastics is con-
cerned both with sourcing of plastics granulate and with
sourcing of component manufacturing. The case company
is itself a plastics component manufacturer, and therefore
sources granulate both for own production and supplier
production.
The plastics team has achieved price reductions both
concerning granulate and component sourcing. On the
granulate side, price reductions are a result of scale
synergies as purchasing volumes were pooled. Plastics
team members report that volume pooling on a corporate
scale has been beneficial to the extent that the purchasers
would have pooled volume whether there was a commodity
team or not. However, pooling was not realised without
difficulties, as it meant that granulate specification needed
to be changed for a range of products. Product develop-
ment departments were involved, tests were made and new
processing tools designed. The plastic team found great
difficulty in having the project prioritised by the local
development departments, and members asked if product
development should somehow be obliged to or rewarded
for taking part in the teamwork. The selection of preferred
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22 L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
suppliers and standard granulate types seems key to avoid
future projects of this type, and team members say that
they feel obliged to use preferred vendors in new product
development projects.
Concerning components, the case company is a large
customer relative to its suppliers. Several team members
report that it therefore makes a difference to select
preferred suppliers and negotiate with a corporate mandate
even when no actual volume is transferred from one
supplier to another. The effect is mainly psychological,
they say. It is relatively easy to switch suppliers as the case
company specifies and sources the plastic granulate and
typically specifies/designs and owns processing tools.
However, actually doing this has not been deemed
necessary as price reductions were achieved without
switching suppliers, and thus without incurring additional
logistics costs.
The team manager thinks the teams has functioned
extremely well and achieved a great deal. However, the
team appears somewhat drained by the granulate project
and is still struggling with the establishment of a preferred
vendor list. The manager has also faced a lot of changes in
personnel. One person left the team because ‘‘everybody
went their own way’’ and another left the company
entirely. The team manager needs a lot of resources in
the team now, but this message seems to have come
through with the contradictory result that the business
units have drawn their most experienced purchasers out,
and sent new, young purchasers in. The team therefore has
a resource problem. In the opinion of the team manager,
the team is furthermore burdened with administrative
work, which is, in his words, killing teamwork. The team
manager and lead buyer, who represent the largest business
unit in terms of purchased volume, find that it is somewhat
contradictory that they have to create the savings for the
smaller business units, who do not want to do the work.
4.6. Steel
As in the casting team, the steel team has also faced the
situation that a dominating business unit purchases a high
volume on a few item numbers, whereas the others buy a
larger range of items in low volume. Therefore, team
decisions are not enforced or complied with. The team
manager and members expressed that the value of the team
lies in knowledge exchange concerning the steel market.
The team also values joint training programs initiated by
the CPC, but members question the value of the team, and
one calls the corporate purchasing organisation a shadow
organisation.
The team has met every 3 months. The team has several
lead buyers who report on the market situation at the
meetings. Also, projects were discussed in terms of
progress, problems, and expected savings. The team has
members from across Europe, but meetings are usually
held in Northern Germany/Southern Denmark. This
means that members and business units from, for example
southern Europe, spend the largest costs in terms of time
and money, and one does state that it is not always
worthwhile to go. Further, a team member explained that
tasks in the team differ largely from tasks in the business
units, meaning that goals differ and are even in opposition,
and that resource conflicts arise.
4.7. Non-ferrous
This commodity team has met once or twice each year.
The team has two lead buyers with no synergy between
their item groups of copper wire, copper band, and brass
rods. The lead buyer of brass rods represents a business
unit, which buys approximately 90% of the corporate
volume on these items. The remaining 10% are purchased
by one other business unit, and the lead buyer feels that he
would cooperate with the purchaser in this business unit
whether there was a team or not. The purchasers of both
business units follow the copper market closely, and
individually lock their raw material prices when favour-
able. Each business unit returns material to the compo-
nents suppliers, and they each have a pile of material for
reprocessing at the supplier sites. As each business unit
must account for their own material, the suppliers needs to
maintain two piles and two customer accounts. The
reprocessing price has however been negotiated collec-
tively. In a joint effort, the number of suppliers has also
been reduced from 5 to 3, and the logistics have been
improved.
The same lead buyer is responsible for the purchasing of
copper band, where a couple of other business units also
require material. Here, the total volume is insignificant, yet
the lead buyer believes that there is a psychological effect of
corporate purchasing, which might yield some benefit with
the suppliers. He says that negotiations are very time
consuming relative to the actual benefit of a joint process,
and that in his opinion, the alignment of specifications,
procedures, etc. take too much time. The three business
units requiring copper band are approximately equal in
expenditures, and the commodity team manager believes
that this item group has achieved good synergies. There are
joint supplier agreements, and the team members indicate a
sense of duty with respect to using the preferred suppliers.
The members also express that learning and knowledge
sharing has been valuable, but do not really feel that the
team is a necessary construct, and that some of the work is
inefficient.
5. Analysis
As suggested by the literature reviewed previously in
the paper, a number of organisational and/or team charac-
teristics may influence team members’ motivation to
perform and to perform as a team. These factors have
been summarised and then used to construct a simple
framework to be used in conducting a comparative analysis
of the teams, based on the team members’ own subjective
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L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27 23

evaluations. Specifically, the factors that were analysed for
each of the teams included leadership behaviours and
effectiveness, compensation and benefits, resource and task
compatibility, and team characteristics. Interview data
related to these factors were first coded and then compared
across the teams (see Table 2). In addition, responses to the
open ended questions are included in the analysis, as are
performance data for the teams that was derived from
annual status reports obtained from the director of the
central purchasing support office.
5.1. Team performance
Analysis of the data summarised in Tables 2 and 3
suggests that the electronics team worked very well, and
was successful both in terms of operational performance
and motivation to work on a corporate level. But
performance and motivation do not necessarily go
together. In the non-ferrous team, there was no relation-
ship between performance and motivation, as the team was
performing very well in 2003 while the team motivation

Table 2
Summary and comparison of team motivation factors and characteristics

Electronics Casting Plastics Steel Non-ferrous

Leadership (+) Effective and ( ) Little if any ( ) Central ( ) Manager finds (+) Active manager and lead
behaviour and visible lead buyers contact between committee with too the central leadership buyer with transactional focus
effectiveness and manager meetings much politics, and too transactional
( ) Lack of central ( ) Missing targets too little power
leadership and and leadership from
strategic orientation central committee
Compensation (+) High frequency (+) Collective (+) Collective (+) Collective (+) Collective reward system
and reward of meetings, and level reward system reward system reward system
systems of feedback.
(+) Collective ( ) Travel expenses
rewards and time not
compensated

Resource and (+) Willingness and (+) Appropriate ( ) Lack of resource (+) Appropriate ( ) The team has very limited
task ability to commit skills to meet tasks availability. Inability skills to meet tasks resources, and seems burdened
compatibility resources and fulfil to ensure appropriate by administrative work
team assignments team composition
(+) Good alignment ( ) Lacking ( ) Tasks in team
with BU tasks commitment from and business unit
technology differ largely, and
departments give rise to
organisational
conflicts related to
resources and goals
Team (+) Sense of ( ) Low cohesion ( ) Declining belief (+) Meaningful (+) Autonomy due to formal
characteristics potency/success, and identity, and in the capacity to be knowledge exchange mandate
meaningfulness and limited achieved effective and training
synergies synergies
(+) Lead buyers ( ) Fragmentation ( ) Targets met but ( ) Low perceived (+) Some cohesion and a
empowered through based on obstacles with limited actual project success and sense of duty
formal mandate for joint goal impact impact
achievement
(+) High cohesion (+) Belief in potency (+) Autonomy due ( ) Team necessity is
and identity of corporate to formal mandate questioned
negotiations
(+) Manager feels (+) Has achieved synergies
empowered by related to scale, process, and
formal mandate information

Table 3
Commodity team operational performance

Electronics Casting Plastics Steel Non-ferrous

2003 On target On target Below target Below target Above target

2004 Above target On target On target Below target Below target
2005 On target Below target On target Below target Below target
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24 L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
was relatively low. Team members explained that there was
a sense of duty to comply with team decisions, and a clear
intent to seek synergies on a corporate level, but that the
team structure was unnecessary for obtaining synergies,
and inferred excessive administrative work. On the other
hand, the steel team has experienced below target
performance, due partly if not entirely to increasing prices
on raw materials, but indicated that they value the team for
synergies of knowledge exchange and training.
5.2. Empowerment, leadership, and team cohesion
Team cohesion and sense of empowerment were medium
to high in the electronics, plastics and non-ferrous com-
modity teams. In these teams, there was a sense of duty to
comply with team decisions, and this cohesiveness
appeared to be based on a shared and clear understanding
of the teams’ purpose, mission and tasks, and why these are
important. The team members did not necessarily feel that
the team organisation was right, but the mission, purpose
and tasks made sense to them. Strong and visible lead
buyers and managers had successfully linked team goals to
the organisational strategy. The commodity teams gener-
ally lacked central leadership from the CPC and inspiring,
transformative leadership behaviours within the team
therefore seems to have played a significant role. In
contrast, the managers of the steel and casting teams did
not enforce or even encourage team members to comply
with decisions Here, the leadership was rather loose, and
the team cohesiveness relatively low.
5.3. Resource and task compatibility
The resource and task compatibility is generally med-
ium–high in the commodity teams, as the teams are
equipped with skilled purchasers who are certainly able
to pursue the dimensions of the set goals; price develop-
ment, savings compared with external benchmarks, sup-
plier reduction, and supplier consolidation on spend. The
plastics team, however, would have benefited from a cross-
functional composition. In retrospect, it seems that the lack
of cross-functional representation has largely influenced
the team motivation and effort, and begun to undermine a
team which has been extremely well functioning. But a
permanent cross-functional team composition combined
with a cross business unit composition would result in very
large teams, and more flexible structures are needed.
Therefore, the case company is now establishing a pool
of project resources with a cross-functional competence
base.
Alignment of team and business unit tasks and goals has
come across as a key issue mentioned by many team
members. In the successful electronics team, the alignment
has been exceptional, and meant that local purchasing
teams have worked as part of the corporate team. They
have not distinguished between local and corporate
assignments. In the steel team, in contrast, the alignment
has not been good, and the manager even expressed that
the team tasks and goals were in direct conflict with
business unit tasks and goals. Therefore, the unsatisfactory
performance as a corporate team might have occurred as a
result of prioritising local business unit interests. The
manager took part in defining team goals, but only in terms
of targets; the nature or dimensions of the goals were given
by the CPC, and were identical for all teams.
5.4. Compensation and rewards systems
While the lead buyers in the most successful team saw
the teamwork as an opportunity for personal promotion
and influence, the general picture is that team members find
that their personal development and career opportunities
are created in the business units, and not in the commodity
teams. In fact, some team members speculated that being
part of a commodity team might set their career back,
because results achieved in the teams are not valued in the
business unit, where the career moves are to be made.
There is no promotion ladder in the corporate structure, as
long as it is only a coordination structure with no central
organisation. Advancement in the business unit would
actually be necessary for anyone striving to become part of
the CPC, as the committee is by definition composed of
purchasing managers.
The electronics team performing on or above target has a
special meeting structure and organisation, which means
that there is a high degree of communication and feedback.
Embedding of the commodity team in the line organisation
and a high frequency of meetings are special features,
which might help explain why this team has performed very
well both in terms of operational performance and team
motivation.
6. Discussion
In spite of the shared organisational framework, tasks
and goal dimensions, reward structure and central leader-
ship, the five teams of this case study function very
differently, and with varying success. The electronics and
non-ferrous teams appear to be well established and
integrated in the daily operations, whereas the casting,
plastics and steel commodity teams seem more detached
from the line organisation. Having conducted the inter-
views, one of the most striking observations was that the
commodity teams barely functioned as teams, but rather as
collections of individuals. This is surprising, given the
efforts made by the company to motivate and direct
teamwork. For instance, the teams were formally empow-
ered to make decisions, a leadership structure was
established, and top management attention ensured. Team
managers took part in formulating team goals, and the
teams could, at least partly, define own strategies towards
the achievement of these goals. A collective rewards system
was established, and a support function established to
provide service in form of methods, training, and more.
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L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
Given all this and according to the literature presented in
the beginning of this paper, the teams should have been
performing effectively. One explanation for the relatively
low level of effective teamwork might be the lack of
leadership, which many team members clearly felt was
missing, although this would be difficult to conclude with
any confidence on the data available in this study.
Other explanations for the low level of team effectiveness
may be found in looking more closely at some of the
mechanisms the company had put into place to support
teamwork. For instance, while the teams had participated
in setting explicit, clear and shared goals they considered
meaningful, these often conflicted with other goals, which
were often given priority. This appeared to be the case with
the commodity team goal of reducing the total number of
suppliers, when there were distinct advantages for some of
the individual team members to maintain relationships
with select suppliers. In pure centralisation, such dilemmas
might be avoided, but at the same time potentially create a
severe conflict between business units and a detached
central purchasing department enforcing decisions. In the
case, commodity teams were actually given a mandate to
enforce decisions, but this was rarely done. This may have
been because goals were formulated and logical but not
entirely believed in. The team goal setting was a breakdown
or operationalisation of goals defined in the purchasing
committee, and not something coming from the teams
themselves. Neither teams nor the committee seemed to
really take responsibility for the goals; and while perfor-
mance was evaluated relative to goals, there was no real
consequence of performing below target. In addition, it
seemed that team members did not find transparency in the
annual evaluations. Performance was not related directly
to team activities, and therefore did not really contribute to
a sense of team success and achievement.
Team members could of course miss out on a bonus if
performing below target. As mentioned previously, Vroom
(1964) proposed that individuals will be motivated to exert
effort when they feel those efforts will be rewarded
appropriately. In the case investigated here, the bonus
system was structured to encourage teamwork. Specifically,
when a commodity team meets the set targets on cost
savings, each team member is rewarded regardless of which
business units save money. This should enhance collabora-
tion and serve as performance feedback to the team
members. However, problems develop because it is the
individual business unit that pays the bonus to its
employees. The corporate purchasing structure has no
budget, but leans entirely on resources from the local
business units. It is the business units that must cover all
expenses from travel costs to wages and bonus payments. It
is problematic because both the workload and savings are
unevenly distributed among business units, and it is not
necessarily those that put in the work who benefit from the
savings. In effect, some business units pay a bonus to
purchasers that have been largely absent from the local
work as they were creating savings for other business units.
25
One commodity team member even reported an example
where a business unit had accepted higher costs in the
perspective of corporate savings, and at the same time had
to pay a bonus. When business units are only interdepen-
dent due to a sense of corporate linkage and responsibility,
it does not seem sensible to stretch the sense of corporate
responsibility this far. It enhances the built in dilemma of
the matrix structure: it can be difficult enough to serve two
lords, and there is no need to underline the conflicts of
interest. Moreover, the rewards established for one part of
the organisation—in this case the commodity teams—
should not conflict with the reward structure or practices
in another parts of the company (i.e. the business units).
This problem may however have been alleviated at least
partly if bonuses had been paid from a central purchasing
budget.
The lacking team identity and poor team organisation,
conflicting and/or misaligned goals, and rewards that were
not directly related to team performance may have
negatively impacted the team members’ motivation to
work as a team, as suggested by the literature (e.g. Clark,
2003; Sarin and Mahajan, 2001; Bullock and Lawler, 1984;
Trent, 1998; Vroom, 1964; Pagell et al., 1996). However,
the analysis conducted here does not point to a direct
relationship between motivation to work as a team and
operational performance. Rather, it seems that motivation
to work as a team is linked to synergies requiring
socialisation; in particular synergies of knowledge ex-
change and training. Further, members of both the plastics
and electronics teams explained that it had been highly
motivating to join together purchasers of raw material and
components, as both groups had benefited largely form the
knowledge exchange taking place. Thus, learning and
knowledge sharing appear to be (more) important motiva-
tors of teamwork in this particular type of team.
The evaluation of team performance has been very
strongly linked to synergies of scale in the case company; to
supplier reduction and cost savings. Still, the potential and
difficulty of obtaining such synergies varies across teams.
In the plastics team, for example, it was becoming
increasingly difficult to pool volumes, as it required deep
involvement of product development end production
engineering departments. Specifications of materials, pro-
ducts, and tooling were subject to change, and the
technological complexity of pooling projects therefore very
high. Prioritising such projects was difficult and perhaps
unreasonable as compared with other business unit tasks
and projects. The local investment could be relatively high,
and with little if any local benefit. In other teams, market
conditions largely influenced the potential for obtaining
synergies. When the ‘‘low hanging fruits’’ had been picked,
the hard work began, and this work did not really seem to
be appreciated locally. Here, it is important to realise that
it is still the local organisation and colleagues with whom
team members would spend most of their time, and
therefore also here they would feel a need to be appreciated
and valued as colleagues.
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26 L. Englyst et al. / Journal of Purchasing & Supply Management 14 (2008) 15–27
Ideally, a team should be valuable especially when
further cost reductions are difficult to obtain. However, it
was difficult to staff the teams in such situations. Line
managers could obstruct the participation of their ‘‘best
people’’. The idea is that team members and lead buyers
should integrate the corporate work in what they already
did, and that the time spent in a commodity team should
mean less local work with respect to this commodity.
Further, the purchasers are given an opportunity to
specialise in a commodity or material category and be
released from covering everything in their local business
units. While it might be true that team members and lead
buyers were not ‘‘overloaded’’, the team manager role
generally represented additional overtime. With scarce
resources on the team manager side, a low frequency of
meetings is a natural consequence. Here, it is worth noting
that the one team that introduced an efficient high-
frequency meeting structure was also the best performing
and most highly motivated team.
7. Summary and conclusion
At the outset of this research, we assumed a link between
team motivation and team performance. This simple
relationship has been challenged in the above analysis
and discussion, as it seems quite possible that a team can
perform well in terms of, for example savings, without
being motivated to function as a team. Team members
expressed the view that the time and money spent to
participate actively in the team outweigh the benefit, partly
because of the administrative burden associated with the
teamwork, and because of geographical distance. The
motivation to achieve corporate synergies appeared to be
more meaningful than the motivation to work as a team;
thus, it is not certain that teams are the most appropriate
organisational form for achieving corporate-wide purchas-
ing synergies, especially when shared team goals are second
to business unit goals.
This research has identified several problems that are
somehow a result of the matrix organisation composed of
the business unit and commodity team structure. One such
problem is concerned with monetary rewards. It is not
uncommon that corporate purchasing structures are
invisible in organisation charts, and have no or little
operational budget. Therefore, and in order to enhance
local attention to the corporate work, rewards are often
paid by the local business units. It was however found that
such a constellation may influence motivation and team
effort negatively, especially where business units are only
interdependent due to a sense of corporate linkage and
responsibility. Another problem concerns the personal
development and advancement opportunities in the matrix
organisation. Personal pursuits of leadership responsibil-
ities and global learning opportunities can be a potential
lever of team motivation and effort; yet it has also been
indicated that the devotion of time to commodity team-
work can negatively affect one’s career. The case here
clearly suggests the need to develop goals and rewards that
are aligned with the individual team member’s career
objectives, for example, knowledge sharing and learning.
The case company has been on a journey from
centralisation to decentralisation, and then towards cen-
tralised coordination. This tendency, with the pendulum
shifting from centralisation to business unit independence,
and then back towards coordinated processes, is also
observed in many other companies (Rozemeijer, 2000). In
the case explored here, it seems that the next step is to
centralise some commodity management further, while
other commodities are managed locally, in a differentiated
matrix structure. This indicates that the choice of
organisational form is not just a matter of the pendulum
swinging for the sake of change itself, nor is it a matter of
organisational size and business diversity alone. Rather,
there are commodity specific constraints to be considered.
We have seen that for some requirements, the pursuit of
synergies might not make sense as the technological
complexity demands unreasonably high cross-functional
involvement and local investments, or because the supply
market situation does not make pooling possible. In those
situations, it is questionable whether a team should still try
to achieve synergies of scale, or rather focus on synergies
related to knowledge and information sharing. The
potential for knowledge sharing and learning that may
only exist in a team structure should not be minimised.
A number of authors have emphasised the importance of
integration and distribution of knowledge throughout an
organisation as being critical in terms of gaining compe-
titive advantage (e.g. Alvesson, 2001; Purvis et al., 2001;
Lei et al., 1999).
The paper contributes to theory and practice by
providing a unique in-depth description of some of the
challenges that may be present when organisations attempt
to implement a team structure in which there are
continuous goals but only part-time membership. Specifi-
cally, the issue of motivation must be considered on both a
theoretical and practical level: how can the goals for team
members within the commodity team be aligned with other
goals, including a team member’s own career aspirations,
so that they are motivated to participate in the purchasing
and sourcing activities? Barker (1999) and Sewell (1998)
both suggested that in some situations, due to peer pressure
to perform, team members may seek ways in which to
intensify their own behaviour without concern for the team
as a whole. Further, the experiences reported here suggest
that a company may need to weigh up whether teams are
the most appropriate structure for creating purchasing and
sourcing synergies when policies and practices in that area
often rely more on one-on-one relationships between
individuals within the company and their suppliers.
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