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EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
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UDK 351.712.2.043:614.8
Original scientific paper
PARTNERSHIPS IN MODERN PROCUREMENT
SYSTEMS AS THE BASIS FOR COMPANIES’
STABILITY AND GROWTH IN CRISIS AND
UNPREDICTABLE CIRCUMSTANCES
Matej Galić, PhD, Research Associate
e University of Applied Sciences Baltazar
Vladimira Novaka 23, Zaprešić, Croatia
mgalic@bak.hr
Ivan Ružić, PhD, Senior Research Associate
e University of Applied Sciences Baltazar
Vladimira Novaka 23, Zaprešić, Croatia
iruzic@bak.hr
Tomislav Horvat, MSc in Economics
Belje plus d.o.o.
Sv. Ivana Krstitelja 1a, 31326 Darda, Croatia
tomislav.horvat@belje.hr
ABSTRACT
All functions within the company, regardless of its size and activity, meet with an extremely
dynamic economy and an environment in which they perform many day-to-day activities. In
that sense, procurement is no dierent. It no longer serves only the purpose of ordering goods or
services at the request of production at the lowest possible prices. Today’s modern procurement
systems oer solutions, improvements and thoughts on all aspects of business operations in
which they are involved. ere is a special emphasis on the dynamic resolution of challenging
situations, which lies in unpredictable circumstances and crisis. e procurement department
always works closely with other functions that directly aect production, and this is where ex-
tremely dynamic, high-quality and timely communication is expected. Communication with
functions within the company is followed by communication with partners, where procure-
ment becomes a sort of link between production and suppliers.
Members of the procurement team are in most cases representatives of their companies, and it
is based on their communication skills, behaviour and decisions that the image of the company
is created among partners. Quality and timely communication of procurement team members
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 747
with partners can play a key role for the continuation of production in turbulent market
situations. Managers must organize all procurement processes in a quality manner, as well as
motivate, educate and reward members of the procurement department. With their comments,
opinions, advice and experience, partners oer an additional perspective, solution and an
alternative path in the further planning of steps which would help achieve all of company’s
objectives. Experienced management, especially in times of crisis, use all possible information
to make quality decisions, but also learn from these situations in order to make all possible
preparations in regular business operations to minimize the shock that a new crisis could cause.
e theoretical part of the paper will present a description of the concept of procurement busi-
ness, management and crisis management, business and crisis communication, creating part-
nerships, and maintaining the company’s image. e empirical research, conducted through
questionnaires which were lled in by employees from the procurement department in the
Republic of Croatia, provides us with answers about the importance of partnerships, with a
special emphasis on the current coronavirus pandemic. In conclusion, we have explained pro-
posals for improving and maintaining partnerships in the procurement business during crisis,
as well as in regular business situations.
Keywords: communication, crisis management, modern business, partnership, procurement.
1. INTRODUCTION
Purchasing business in times of crisis and unpredictability shows its exceptional
importance for any company, regardless of its size, activity or market orienta-
tion. In such conditions, procurement is by no means exclusively responsible only
for negotiations with the suppliers, i.e., the procurement of required goods and
services. From the procurement employees are required to have highly developed
emotional intelligence and problem-solving mindset. Crisis situations usually
come quickly and suddenly, and the procurement becomes a function in charge
of solving challenges and obtaining solutions to the current problem. At no time
should the business, production or performance of services be stopped or slowed
down, especially in times of crisis, and this is a great burden that is born by every
employee in the purchasing business. is paper is divided into a theoretical part
that includes previous research done through scientific papers and a review of
conclusions on crisis management from the expert literature. It is difficult to come
to a conclusion without detailed research on how employees of the procurement
business react to times of crisis, and it is difficult to confirm with certainty what
factors have most affected and hindered business activities. Consequently, with
the use of a questionnaire, the procurement employees were investigated that were
based on the territory of the Republic of Croatia. In advance were set the hy-
potheses that were the basis for writing of the entire paper, and especially for the
conducted research, and those are:
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
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H1. Investing time in the activity of creating and maintaining partnerships is cru-
cial during unpredictable crisis situations on the market.
H2. To the procurement employees, during the crisis situations are more impor-
tant delivery dates, quality cooperation and supplier assistance when finding alter-
native solutions, than the lowest price and payment terms.
H3. Awareness of the importance of education about internal training on cri-
sis management and the importance of team building activities is highly present
among procurement staff.
2. PREVIOUS RESEARCH
Filipović, Krišto and Podrug conducted an empirical survey with questionnaires
during the period from June 2016 to January 2017, and they included large com-
panies in the Republic of Croatia therefore 106 companies participated in the
survey. It was concluded that the correlation between external crisis situations and
business continuity management development is positive and of medium strength,
meaning that the increase in the risk of a crisis situation will increase the degree
of development of business continuity management. Prediction of crisis situations
is the initial step in business continuity management planning. Active enterprises
predict and prevent the crisis situations, while, in passive ones, the establishment
of business continuity management model is mediated by the intensity of recur-
rence of crisis situation.1
Mikušová and Horváthová have investigated the reactions of small business man-
agers to crisis management in the Czech Republic. e survey was conducted dur-
ing 2009, 2011 and 2016. Research dated from 2011 and 2016 were conducted
to show changes and conclusions compared to the 2009 results. A total of between
925 and 1026 respondents participated in the surveys each year. e main con-
clusion is that small business managers simply did not know how they can and
should prepare for crisis, and another reason is the cost of additional preparations
during the times of a crisis due to the lack of financial experts. e answers var-
ied with age, but it can be drawn the same conclusions. e authors believe that
little time has passed since the 1990s, when the Czech Republic switched from a
planned economy to an open market and thence managers had too little time and
1 Filipović, D.; Krišto, M.; Podrug, N., Impact of crisis situations on development of business continuity
management in Croatia, Management : Journal of Contemporary Management Issues, Vol. 23 No. 1,
2018, pp. 99-122.
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 749
opportunities to gain experience related to crisis periods.2 e need to manage
uncertainties indicates that quality risk management is the best crisis management
and that primary a culture of crisis management is an understanding of manage-
ment as a process leading to crisis avoidance.3
It turned out that crisis management is always connected with the planning pro-
cess, so it can be a planning process before the crisis (preparation for crisis times),
during the crisis (how to eliminate the crisis) and after the crisis (planning re-
sponses to future, similar crises). Operational and strategic management must be
linked together in planning and executing planned tasks, and no level of manage-
ment can function separately.
e basic function of any crisis plan is to define procedures and human and ma-
terial resources and also to inform and guide participants towards the execution of
the plan.4 When any of the crisis breaks out, the most important thing is to face
the consequences and establish crisis communication. Such communication must
be with both the external and internal public, i.e., with all publics involved in the
crisis.5
Planning is associated with the concept of communication, especially commu-
nication that is professional, timely, tangible and fast. Regular meetings on crisis
communication bring many steps for the improvement of the crisis planning and
process execution, cohesion within teams is developed, solutions are discovered
and without difficulty is coming up with the new proposals to address any of the
challenging situations.
Crisis managers have a duty to timely and accurately inform employees about the
nature of problems, internal and external causes of business crisis, how to over-
come and manage the business crisis, all with the aim of limiting opportunities for
resistance, misunderstandings and unnecessary speculation.6
2 Mikušová, M.; Horváthová, P., Prepared for a crisis? Basic elements of crisis management in an Organisa-
tion, Economic research - Ekonomska istraživanja, Vol. 32 No. 1, 2019, pp. 1844-1868.
3 Funda, D., Doprinos međunarodnih norma u rješavanju poslovnih kriza, Visoka škola za poslovanje i
upravljanje s pravom javnosti «Baltazar Adam Krčelić» Zaprešić, Hrvatska, Tranzicija, Vol. 13 No. 27,
2011, pp. 98-109.
4 Lujanac, D.; Mihalinčić, M.; Markotić, I.; Kožul, I., Krizni menadžment zdravstva, Journal of Applied
Health Sciences = Časopis za primijenjene zdravstvene znanosti, Vol. 4 No. 1, 2018, pp. 115-120.
5 Tomić, Z.; Sapunar, J., Krizno komuniciranje, časopis Filozofskog fakulteta Sveučilišta u Mostaru, No.
1, 2006, pp. 298-310.
6 Brčić, R.; Malbašić, I.; Đukes, S., Uloga i ponašanje zaposlenika u kriznom menadžmentu, Ekonomski
pregled, Vol. 64 No. 3, 2013, pp. 279-296.
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
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Never in history has it been possible to predict the exact beginning of a particular
crisis, its intensity, duration and methods of behaviour of the company to success-
fully survive the crisis. Previous crises can be great for analysing and structuring
processes to deal more successfully with the future crises. All employees should
observe the market closely and look for early signs of future crisis periods. is is
exactly one great preventative method.
Structured business process management provides real early indicators of crisis
that appear well before the numerical values are expressed in financial business
reports (which are today considered as early indicators of crisis) and to give space
for managers to take the necessary actions in time.7
3. THE IMPORTANCE OF PARTNERSHIPS IN CRISIS
COMMUNICATION
Partnerships for any business entity are exclusively a positive factor for success-
ful and efficient doing business, regardless of activity, size and market orienta-
tion. Crisis situations especially show the importance of mutually regulated part-
nerships, regardless of whether they were legally regulated partnerships or informal
partnerships based on daily business. Representatives of the company with their
behaviour, attitudes, manner of communication, degree of professionalism create
a certain image of the company in public, which can attract potential partners or
make them restrained in terms of cooperation with the observed company.
One of the basic needs of every businessman or individual in prominent social
functions can separate the need to project of a favourable image into different
target groups. By this we understood associates, superiors, business partners, cus-
tomers.8 e development of technology, especially the use of numerous electron-
ic messaging systems has affected on the volume and dynamics of business meet-
ings. Work in practice shows that a quality meeting between partners can remove
many doubts in a short period of time, an agreement can be reached on future
strategic projects and to create additional connections between partners. Partner-
ships are also created through informal communication, where purchasing and
sales share their personal experiences and where employees connect on a profes-
sional and personal level.
7 Kruljac, Ž.; Knežević, D., Prevencija ili evidencija: prepoznati rane simptome krize ili evidentirati gubitke
u poslovanju?, Obrazovanje za poduzetništvo - E4E : znanstveno stručni časopis o obrazovanju za po-
duzetništvo, Vol. 10 No. 2, 2020, pp. 155-168.
8 Leinert-Novosel, S., Komunikacijski kompas, Plejada, Zagreb, 2012, p. 58.
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 751
Good meetings will bring together people with similar expectations, whose com-
pliance can have a positive impact on most group members. It will create influence
and will attract other individuals who will incline as on the same, like-minded
people and people of the same tendencies for the development of the group and
the whole company9. Professional public purchasers and private organizations
must take note of how collaborative their contracting practices are and how they
may influence partnering so that they can create strong basis for further part-
nering during procurement implementation.10 Complaints should be approached
like with any other negotiating situation in which there is a certain conflict of
interest, so we shall prepare well and in accordance with the win-win philosophy
try to remove sources of customer concern and offer solutions that are in the best
interest of the both stakeholders11.
Many managers share the opinion that the crisis cannot happen to them. ey are
too convinced of their own power, so they do not think about the possible dan-
gers, and even less about the preparation of a crisis plan.12 False self-confidence in
one›s own knowledge and abilities without experience and regular market research
can be disastrous during the first and most severe blows of a new crisis. Employees
without management cannot make important and strategic decisions; there, man-
agement seek for calmness, knowledge and creativity that are required through
making important decisions, quick adjustment of business processes and creation
of alternatives. In a crisis, management must work with partners and with all other
entities that directly and indirectly affect the company.
e challenge, however, lies in developing a management philosophy or corpo-
rate culture in which independent and autonomous trading parties can relinquish
some sovereignty and control, while also engaging in planning and organizing
which takes into account the needs of the other party.13 By means of direct strikes,
company management can improve the creation or further development of part-
nerships between its own employees and longstanding or future partners. A simple
step is to invest in your employees, especially in the area of developing commu-
9 Petar, S., Sastankom do cilja : vještina vođenja uspješnih sastanaka, Školska knjiga, Zagreb, 2013, p. 54.
10 Keränen, O., Dynamics of the transition process towards partnership thinking in centralized public procure-
ment, Industrial Marketing Management, Vol. 65, 2017, p. 86-99.
11 Tomašević Lišanin, M., Profesionalna prodaja i pregovaranje, Hrvatska udruga profesionalaca u prodaji,
Zagreb, 2010, p. 298.
12 Novak, B., Krizno komuniciranje i upravljanje opasnostima : priručnik za krizne odnose s javnošću, Bino-
za press Zagreb, 2001, p. 132.
13 Mohr, J.; Spekman, R., Characteristics of partnership success: partnership attributes, communication be-
havior, and conict resolution techniques, Strategic management journal, Vol. 15, No. 2, 1994, p. 135-
152.
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
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nication and presentation skills. An important item of education is conflict man-
agement and education that is related to people’s personality types. In particular,
this conclusion applies to new, young employees without previous experience in
negotiations. ose employees with longer work service and numerous meetings
held may have gained experience, but this may not be the rule.
Mastering communication in order to improve business performance, especially
in management and trade, where communication with associates and customer
relations means business success or failure, is one of the priorities of every busi-
nessman.14 Dealing with difficult people is the most demanding. ey have fierce
feelings or are hostile to others, so the other side often loses confidence. is is
a challenge even for the most skilled negotiators, due to negative, disarming and
manipulative behaviour.15 e problem of communication during and after the
crisis is that no two crises are the same. Some incidents require an immediate and
aggressive communication with important stakeholders - consumers, customers,
clients, government officials, the judiciary - and if this has not been done, the
crisis may deepen and turn into a real disaster for the organization.16 e right cul-
ture in both the customer and supplier organizations must exist to facilitate and
encourage joint problem solving and decisionmaking across internal functions.17
Face-to-face communication mediates the relationship between intra-organiza-
tional task interdependence and cognitive congruence. 18
Communicating and creating partnerships in normal market conditions is chal-
lenging, but additional pressure on procurement staff creates communication in
the conditions of crisis situations. Procurement is never a separate function, but
communicates dynamically with all employees within the company, specifically
with the production, marketing and finance departments. Procurement employ-
ees collect communication inputs from other functions, requests, compliments,
complaints or negative reactions and have the task of shaping the correct commu-
nication messages towards partner. In times of crisis, procurement staff have the
task of mitigating all the negative messages due to possible non-delivery of goods,
14 Vodopija, Š., Opća i poslovna komunikacija : priručnik i savjetnik za uspješnu komunikaciju, Naklada
Žagar, Rijeka, 2006, p. 53.
15 Biondić Vince, D., Kako uspješno pregovarati i povećati svoju vrijednost, napredovati, te zaraditi više!,
vodič za vrhunske pregovarače, Biondi, Zagreb, 2012, p. 63.
16 Tafra-Vlahović, M., Upravljanje krizom : procjene, planovi, komunikacija, Visoka škola za poslovanje i
upravljanje s pravom javnosti “Baltazar Adam Krčelić”, Zaprešić, 2011, p. 193.
17 McIvor, R.; McHugh, M., Partnership sourcing: an organization change management perspective, Journal
of Supply Chain Management, Vol. 36, No. 2, 2000, p. 12-20.
18 Grawe, S.J.; Ralston, P.M., Intra-organizational communication, understanding, and process diusion in
logistics service providers, International Journal of Physical Distribution & Logistics Management, Vol.
6, 2019, pp. 662-678.
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 753
delays in deliveries or deviations in quality. Here, the experience and development
of emotional intelligence is crucial.
Crisis communication can be defined as a dialogue between an organization
and its public immediately before, during and after a negative event.19 Destructive
negotiations are processes in which one or both parties try to win even when there
is a danger of losing while formally one of the parties’ may have won.20 e factors
that best model strategic performance are different from those that best model op-
erational performance. Having joint partnership management and relation-specif-
ic assets goes hand-in-hand with enhancing the company’s competitive position,
and is therefore of strategic importance to the partners.21 It can be concluded that
destructive negotiations cannot bring good results to either side in the long run
and it can occur as the illusion of victory to one or the other negotiating party. If
no agreement can be reached, scheduling a new meeting at another time may yield
better results than to accept destructive conclusions from one of the meetings.
4. RESEARCH METHODOLOGY AND ITS LIMITATIONS
e specificity of the topic of the paper required a targeted survey of procurement
employees, while the survey questionnaire was developed through the Google
forms platform. e authors sent surveys to procurement employees they know
personally, and others were contacted via social media. In the survey were partic-
ipated the procurement employees from the territory of the Republic of Croatia.
A total of 48 procurement staff responded. After the survey and data collection,
data processing was performed. Basic statistical parameters were calculated and
descriptive data (frequencies, percentages, arithmetic means and standard devia-
tions) were presented. e obtained results are presented in tables and graphs. Sta-
tistical processing of the collected data was performed using the statistical program
IBM SPSS Statistics 20. e aim of the study was to make known the opinions of
procurement staff in the Republic of Croatia related to procurement operations
during the COVID-19 pandemic in 2020, which were the biggest challenges, and
on which way the procurement business and operations of the company in general
can prepare for future periods of crisis.
It was difficult to find the same number of employees in the procurement business
from different sectors of the economy; to find the same number of employees
19 Jugo, D., Menadžment kriznog komuniciranja, Školska knjiga, Zagreb, 2017, p. 29.
20 Rouse, M. et al., Poslovne komunikacije : kulturološki i strateški pristup, Zagreb, 2005, p. 194.
21 Sodhi, M. S.; Son, B. G., Supply-chain partnership performance, Transportation Research Part E: Logis-
tics and Transportation Review, Vol. 45, No. 6, 2009, p. 937-945.
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
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according to different age groups and length of service. A conclusion could not be
reached by a direct comparison of procurement employees by their activity, age
and length of service, which would be otherwise an extremely interesting contri-
bution to the research of procurement operations. Previous procurement business
researches have not focused insofar on targeted survey of procurement employees,
- especially was absent the lack of research related to crisis procurement manage-
ment. In Table 1 is shown the structure of employees and the total number of
respondents who responded to the survey questionnaire.
Table 1.Sample structure (N= 48)
N Percentage
Gender Male 27 56.3%
Female 21 43.7%
Age
25-34 15 31.3%
35-44 23 47.9%
45-54 10 20.8%
Length of service
0 - 10 years 15 31.3%
11-20 years 26 54.2%
21-40 and higher 7 14.5%
Education
Elementary School 1 2.1%
Secondary education (SSS) 5 10.4%
Higher education / professional study 8 16.7%
University degree / university study 31 64.6%
MSc / PhD 3 6.2%
Source: authors.
e research was conducted on the sample of 48 employees employed in the pro-
curement sector of various companies (56.3% of male and 43.7% of female) aged
25 to 54 years. Most of those employees have 11 to 20 years of work experience
(54.2%) and have a university degree (graduated, 64.6%). Attempts were made to
reach procurement employees who are about to retire (55-65 years old), however
it was exceptionally hard to find employees of that age through direct contacts or
through social networks. On the other hand, there were no respondents younger
than 25 years of age. It is possible that most procurement jobs require a complet-
ed academic degree (bacc. Oec or titles from other social sciences) and it is more
difficult for younger people to get the opportunity to work in procurement before
they reach 25 years of age. On Figure 1 is shown the total number of respondents
who responded to the survey questionnaire given the size of the company.
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 755
5. RESULTS AND DISCUSSION
Most of the employees who participated in the survey, work in companies with
total of 51 and 250 employees and the companies with the more than 251 em-
ployees (a total of 72.9%). e goal was to examine an equal number of employees
from all sizes of companies in order to draw better conclusions. More potential
respondents were found from companies with a minimum of 51 employees. It
would be interesting to compare the results of an equal number of surveyed pro-
curement employees from micro and large enterprises. As a rule, the procurement
function is more developed as there are more employees within the procurement
team in larger companies due to the complexity of the procurement business.
Figure 1.e size of the enterprise
25 years of age. On Figure 1 is shown the total number of respondents who responded to the
survey questionnaire given the size of the company.
5. Results and discussion
Most of the employees who participated in the survey, work in companies with total of 51 and
250 employees and the companies with the more than 251 employees (a total of 72.9%). The
goal was to examine an equal number of employees from all sizes of companies in order to
draw better conclusions. More potential respondents were found from companies with a
minimum of 51 employees. It would be interesting to compare the results of an equal number
of surveyed procurement employees from micro and large enterprises. As a rule, the
procurement function is more developed as there are more employees within the procurement
team in larger companies due to the complexity of the procurement business.
Figure 1. The size of the enterprise
Source: authors
The distribution of procurement employees who responded to the survey questionnaire
according to the activity of the company they come from is shown in Figure 2.
Figure 2. Company activity
6,3%
20,8%
35,4%
37,5%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
From 0 to 10 employees From 11 to 50
employees
Between 51 and 250
employees
More than 251
employees
Source: authors.
e distribution of procurement employees who responded to the survey ques-
tionnaire according to the activity of the company they come from is shown in
Figure 2.
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
756
Figure 2.Company activity
Source: authors
If we look at the results based on the activities of the company, most of the employees work
in the production and processing (39.6%) and agricultural and food industries (35.4%). As
stated in the research methodology, employees were targeted through personal contacts and
social networks. The agricultural activity and the manufacturing and processing industry in
general are the two most represented industries according to the structure of the
respondents. The procurement function in these industries is extremely developed due to the
complex business and the importance of procurement, especially in dynamic, crisis
situations. IT companies, tourism and catering and similar service activities often do not have
a developed procurement function, but the responsible person in addition with other
obligations performs the function of ordering, i.e., procurement. In Table 2 is explained in
detail the importance of factors for creating partnerships according to the responses of
procurement employees.
Table 2. The importance of factors for creating partnerships in the procurement sector
It doesn't
matter at
all
It doesn't
matter to
some
extent
It is neither
important
nor
unimportant
It's
somewhat
important
It is
extremely
important M SD
f % f % f % f % f %
Regular
communication 0 0 0 0 1 2,1 7 14,6 40 83,3 4,81 0,445
Professional
approach to
communication
0 0 1 2,1 3 6,3 13 27,1 31 64,6 4,54 0,713
Holding regular
meetings 0 0 1 2,1 10 20,8 16 33,3 21 43,8 4,19 0,842
As low as
possible prices
of the offered
products /
services
0 0 4 8,3 9 18,8 18 37,5 17 35,4 4 0,945
Timely response
to a complaint 0 0 1 2,1 1 2,1 8 16,7 38 79,2 4,73 0,61
35,4%
39,6%
2,1%
10,4%
2,1% 4,2% 4,2% 2,1%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
45,0%
Agricultural and food
industry
Manufacturing and
processing industry
Tourism and catering
Commerce
IT Sector
Other service activities
Other manufacturing
industries
Other
Source: authors.
If we look at the results based on the activities of the company, most of the em-
ployees work in the production and processing (39.6%) and agricultural and food
industries (35.4%). As stated in the research methodology, employees were tar-
geted through personal contacts and social networks. e agricultural activity and
the manufacturing and processing industry in general are the two most repre-
sented industries according to the structure of the respondents. e procurement
function in these industries is extremely developed due to the complex business
and the importance of procurement, especially in dynamic, crisis situations. IT
companies, tourism and catering and similar service activities often do not have
a developed procurement function, but the responsible person in addition with
other obligations performs the function of ordering, i.e., procurement. In Table 2
is explained in detail the importance of factors for creating partnerships according
to the responses of procurement employees.
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 757
Table 2.e importance of factors for creating partnerships in the procurement sector
It doesn’t mat-
ter at all
It doesn’t mat-
ter to some
extent
It is neither
important nor
unimportant
It’s somewhat
important
It is extremely
important
M SD
f%f%f%f%f%
Regular communication 0 0 0 0 1 2,1 7 14,6 40 83,3 4,81 0,445
Professional approach to
communication 0 0 1 2,1 3 6,3 13 27,1 31 64,6 4,54 0,713
Holding regular meet-
ings 0 0 1 2,1 10 20,8 16 33,3 21 43,8 4,19 0,842
As low as possible prices
of the offered products
/ services
0 0 4 8,3 9 18,8 18 37,5 17 35,4 4 0,945
Timely response to a
complaint 0 0 1 2,1 1 2,1 8 16,7 38 79,2 4,73 0,61
Shortening the delivery
time in emergency situ-
ations
0 0 0 0 1 2,1 15 31,3 32 66,7 4,65 0,526
Currency of payment
(advance payment,
deferred payment)
0 0 5 10,4 11 22,9 11 22,9 21 43,8 4 1,052
Quality logistical sup-
port during delivery 0 0 1 2,1 3 6,3 15 31,3 29 60,4 4,5 0,715
Gifts and attention
signs for holidays /
birthdays
14 29,2 14 29,2 9 18,8 7 14,6 4 8,3 2,44 1,287
Quick replies to
emails 0 0 0 0 4 8,3 15 31,3 29 60,4 4,52 0,652
Free help / advice
on product / service
development
2 4,2 0 0 9 18,8 17 35,4 20 41,7 4,1 0,994
Constant reminder of
expanding collabora-
tion and new orders
3 6,3 7 14,6 16 33,3 7 14,6 15 31,3 3,5 1,255
Pointing out the
negative sides of com-
peting companies
14 29,2 14 29,2 10 20,8 5 10,4 5 10,4 2,44 1,303
Source: authors.
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
758
Employees in the procurement sector as the most important factors assess reg-
ular communications (M = 4.81), timely responses to complaints (M = 4.73),
shortening the delivery time in emergency situations (M = 65), quick responses
to e-mails (M = 4.52) and the quality logistical support during deliveries (M =
4.50). It is not necessarily a matter of crisis communication, but regular com-
munication of day-to-day business can build strong and stable partnerships that
can last for a long period of time. Procurement representatives and supplier rep-
resentatives (often two individuals) directly influence on the turnover between
the two companies, building relationships, the way of resolving complaints, but
also the partnership resolution of crisis situations. Respondents of the procure-
ment business confirmed that regular communication is the most important and
thus influenced on the confirmation of hypothesis H1. ey consider gifts and
signs of attention for holidays / birthdays and also pointing out the negative sides
of competing companies, both as the least important factors (M = 2.44). Both
statements are marked as equally unimportant in creating partnerships. Pointing
out to the negative sides of competing companies is not only undesirable, but it’s
also not professional to negatively comment on other businesses without evidence
and based only on insinuations. Procurement employees may get the impression
that a supplier who negatively comments on a competition through manipulative
data wants to reject a competitor. e ethics of such a way of communicating is
highly questionable. Gifts and signs of attention should never be important, and
at least crucial factors for creating a great partnership. ere are numerous ex-
amples where expensive gifts are characterized as decisive factors for the selection
of suppliers, which are by no means non-ethical, and in particular are not law-
ful actions in state-owned companies. Selection of procurement suppliers should
work according to the well-established commercial criteria and quality criteria,
and everything else would raise doubts about the ethics of such business. To the
respondents were offered claims related to the supplier assistance in times of crisis,
and which answers were selected by procurement staff are shown in Figure 3.
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 759
Figure 3.Supplier assistance during times of crisis
that regular communication is the most important and thus influenced on the confirmation of
hypothesis H1. They consider gifts and signs of attention for holidays / birthdays and also
pointing out the negative sides of competing companies, both as the least important factors (M
= 2.44). Both statements are marked as equally unimportant in creating partnerships. Pointing
out to the negative sides of competing companies is not only undesirable, but it’s also
not professional to negatively comment on other businesses without evidence and based only
on insinuations. Procurement employees may get the impression that a supplier who
negatively comments on a competition through manipulative data wants to reject a
competitor. The ethics of such a way of communicating is highly questionable. Gifts and
signs of attention should never be important, and at least crucial factors for creating a great
partnership. There are numerous examples where expensive gifts are characterized as decisive
factors for the selection of suppliers, which are by no means non-ethical, and in particular are
not lawful actions in state-owned companies. Selection of procurement suppliers should work
according to the well-established commercial criteria and quality criteria, and everything else
would raise doubts about the ethics of such business. To the respondents were offered claims
related to the supplier assistance in times of crisis, and which answers were selected by
procurement staff are shown in Figure 3.
Figure 3. Supplier assistance during times of crisis
Source: authors
Participants cite compliance with delivery deadlines and assistance in finding alternatives in
crisis situations as the best ways for giving help to the suppliers during the course of
crisis. The task of procurement in normal market conditions is to provide the required goods
and services for uninterrupted business and business development. This task is especially
pronounced during market instability, regardless of whether it was because of an increase in
prices, a shortage of raw materials, war or pandemics. When creating a need for a particular
good or service by production, sale or procurement itself, the estimated delivery time set by
the selected supplier is taken into account at the outset. The production plan is based on the
sales plan, and in the case of consumer goods, the logistical conditions and exact delivery
dates to customers have certainly already been agreed. If the company's business is organized
in this way, procurement has an easier job in crisis situations, because at least it has available
information’s related to the production needs for inputs or services. On the Figure 4 is shown
which factors, according to the respondents' answers, had the greatest impact on business
difficulties at the beginning of the COVID-19 pandemic.
0 10 20 30 40 50
Help with finding alternatives in crisis situations
Delaying price increases
Calls and support emails
Tips and suggestions about regular business
Faster delivery times
Taking into account delays with payments of overdue
invoices
Warning of late payment and switching payment
deferral to advance
Adherence to delivery deadlines
Source: authors.
Participants cite compliance with delivery deadlines and assistance in finding al-
ternatives in crisis situations as the best ways for giving help to the suppliers dur-
ing the course of crisis. e task of procurement in normal market conditions is to
provide the required goods and services for uninterrupted business and business
development. is task is especially pronounced during market instability, regard-
less of whether it was because of an increase in prices, a shortage of raw materials,
war or pandemics. When creating a need for a particular good or service by pro-
duction, sale or procurement itself, the estimated delivery time set by the selected
supplier is taken into account at the outset. e production plan is based on the
sales plan, and in the case of consumer goods, the logistical conditions and exact
delivery dates to customers have certainly already been agreed. If the company’s
business is organized in this way, procurement has an easier job in crisis situa-
tions, because at least it has available information’s related to the production needs
for inputs or services. On the Figure 4 is shown which factors, according to the
respondents’ answers, had the greatest impact on business difficulties at the begin-
ning of the COVID-19 pandemic.
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
760
Figure 4.Factors that caused the most problems at the onset of the Covid-19
pandemic
Figure 4. Factors that caused the most problems at the onset of the Covid-19 pandemic
Source: authors.
Most of the problems at the beginning of the Covid-19 pandemic were caused by longer
delivery times of suppliers, logistical problems with delivery delays and the inability to
deliver the requested goods. The absence of employees during that period was not a key
problem, as the pandemic still did not affect a large number of people as it did a year
later. There was a crisis and market disturbance, initially even the borders between the
Republic of Croatia and neighbouring countries were closed. After a few days of tension, the
traffic of goods across the border was regulated, but the drivers were still under great
pressure. For all of the above said resulted in delays in deliveries, the inability to find carriers
and, in general, the inability to deliver goods. In Table 3 are shown the results of a survey of
procurement staff related to activities to better prepare for the future crisis periods.
Table 3. Importance of activities for better preparation for the future crisis periods
It
doesn't
matter
at all
It doesn't
matter to
some
extent
It is neither
important
nor
unimportant
It's
somewhat
important
It is
extremely
important M SD
f % f % f % f % f %
Better enterprise
inventory
planning
0 0 0 0 2 4,2 8 16,7 38 79,2 4,75 0,526
Adding an annex
to the contract by
which behaviour
in times of crisis
is defined
3 6,3 7 14,6 13 27,1 17 35,4 8 16,7 3,42 1,127
Creating
additional
financial stocks /
better cash flow
control
0 0 0 0 6 12,5 18 37,5 24 50 4,38 0,703
Internal training
on crisis
management
0 0 5 10,4 9 18,8 18 37,5 16 33,3 3,94 0,976
0 5 10 15 20 25 30 35 40
Something else
Cancellation of orders by customers
Difficulty in delivering the required quantity of goods
Non-compliance with contracted deliveries
Switching the payment terms from due to advance
…
Lack of communication with suppliers
Logistic problems with delivery delays
Longer delivery terms
Absence of employees from work
Source: authors.
Most of the problems at the beginning of the Covid-19 pandemic were caused
by longer delivery times of suppliers, logistical problems with delivery delays and
the inability to deliver the requested goods. e absence of employees during that
period was not a key problem, as the pandemic still did not affect a large number
of people as it did a year later. ere was a crisis and market disturbance, initially
even the borders between the Republic of Croatia and neighbouring countries
were closed. After a few days of tension, the traffic of goods across the border was
regulated, but the drivers were still under great pressure. For all of the above said
resulted in delays in deliveries, the inability to find carriers and, in general, the
inability to deliver goods. In Table 3 are shown the results of a survey of procure-
ment staff related to activities to better prepare for the future crisis periods.
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 761
Table 3.Importance of activities for better preparation for the future crisis periods
It
doesn’t
matter
at all
It
doesn’t
matter
to some
extent
It is
neither
impor-
tant nor
unim-
portant
It ’s
some-
what
impor-
tant
It is ex-
tremely
impor-
tant M SD
f%f%f%f%f%
Better enterprise inventory
planning 0 0 0 0 2 4,2 8 16,7 38 79,2 4,75 0,526
Adding an annex to the con-
tract by which behaviour in
times of crisis is defined
3 6,3 7 14,6 13 27,1 17 35,4 8 16,7 3,42 1,127
Creating additional financial
stocks / better cash flow con-
trol
0 0 0 0 6 12,5 18 37,5 24 50 4,38 0,703
Internal training on crisis
management 0 0 5 10,4 9 18,8 18 37,5 16 33,3 3,94 0,976
Internal training on crisis
communication 0 0 3 6,3 11 22,9 19 39,6 15 31,3 3,96 0,898
Creating a list of trusted sup-
pliers / partners 2 4,2 7 14,6 7 14,6 16 33,3 16 33,3 3,77 1,189
Team building activities in the
company 3 6,3 8 16,7 12 25 12 25 13 27,1 3,5 1,238
Investing time and effort in
improving partnerships 0 0 1 2,1 4 8,3 17 35,4 26 54,2 4,42 0,739
Creating a crisis strategy for all
sectors 0 0 1 2,1 4 8,3 15 31,3 28 58,3 4,46 0,743
Source: authors.
Employees in the procurement sector state that the most important activities for
better preparation for the future periods of crisis are better inventory planning of
companies (M = 4.75), creating a crisis strategy for all sectors (M = 4.46), investing
time and effort in improving partnerships (M = 4.42), and creation of additional
financial stocks / better cash flow control (M = 4.38). Safety stocks primarily de-
pend on the company’s storage capacity, but a certain minimum stock must always
be set for the key materials. e instability of deliveries during the first lockdown
caused by the COVID-19 pandemic lasted a little less than a month, so companies
that could and wanted to organize a one-month minimum stock of key materials
survived the period without much turbulence. Crisis strategies do not have to be
extremely detailed, but they must be arranged through well-developed procedures
so that all sectors know how to behave in future crises. It is extremely risky to
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
762
create crisis procedures when the crisis has already started, because it can lead to
even greater confusion and panic among the employees. Partnerships in any crisis
prove to be crucial, because all partners are interconnected, regardless of whether
they are in the role of a customer, supplier, intermediary, third party, etc. ere
will always be partners who will not act as partners in times of crisis, but will turn
to protection their own business regardless of cost. All crises result in financial
consequences, due to lack of demand, difficulties with production, delayed input
or absence of employees. rough careful planning and stockpiling, company can
create financial security that will always be one of the key factors.
6. CONCLUSION
Crisis and unpredictable situations that can negatively affect a company’s business
will always be a threatening danger. Welfare conditions can deceive employees and
managers and can create false self-confidence that leads to insufficiently decisive
and effective strategic and operational measures at the beginning of the crisis situ-
ations. Purchasing operations in all market situations have an extremely key func-
tion for achieving stability and growth, especially during crisis conditions. is
research was conducted among employees of the procurement business from the
territory of the Republic of Croatia. e research comprehended questions related
to examining the factors that are important for creating and maintaining partner-
ships, how suppliers can help during times of crisis, the factors that most affected
business difficulties at the beginning of the Covid-19 virus pandemic and also
what activities of purchasing operations should be implemented to better prepare
for the future crisis periods. e research has shown that for creating partnerships,
the most important are regular communication, timely responses to complaints
and shortening delivery times in emergency situations. Purchasing business has its
own specific requirements towards partners, but the important conclusion is that
among the most important factors we consider regular communication. Procure-
ment employees responded that the most important activities of suppliers in times
of crisis are compliance with delivery deadlines, faster (shorter) delivery deadlines
and finding alternatives in crisis situations. e deadlines for the delivery of or-
dered goods and services directly affect the production in the final result of the
business, so it is not surprising to see that the above statement received the most
confirmation from the procurement staff. ese statements have confirmed the
hypothesis H2 – to the procurement employees in crisis situations are more im-
portant delivery times, quality cooperation and assistance from suppliers in find-
ing alternative solutions than the lowest price and payment terms. Partners will
always help each other when finding alternatives in any aspect of the business, es-
pecially if the situation is extremely urgent and threatens to stop production. e
Matej Galić, Ivan Ružić, Tomislav Horvat: PARTNERSHIPS IN MODERN PROCUREMENT... 763
COVID-19 virus pandemic has caused a number of turbulences and instabilities
around the world, and it was especially challenging and unpredictable during the
spring of 2020. Procurement employees were most challenged during this period
by longer delivery times, logistical problems with the delayed deliveries, absence
of employees from work and inability to deliver the requested goods. e three
biggest factors are directly related to the supplier and the logistics part of the
business. Longer delivery times were expected due to the announced restrictions
on population movements and numerous measures that were announced, but the
biggest challenge for planning of the procurement was the sudden restrictions for
lorry drivers when crossing the border and entering other countries. e most dif-
ficult situation was at the beginning of April 2020, when the entire traffic between
the Republic of Croatia and neighbouring countries was closed for a few days, but
a few days later the decision was made that all drivers that were entering the coun-
try must be in a two-week quarantine. e price of transportation jumped sharply
and it was almost impossible to find a vehicle to make the delivery. e situation
was quickly regulated and transport traffic was returned to a certain normal, but
with certain restrictions. From each crisis it is important to draw conclusions and
adjust business to the new situations. Respondents from the procurement busi-
ness answered that the most important measures for preparation for future crisis
periods are better planning of companies’ stocks of materials, creating a crisis strat-
egy for all sectors and investing time and effort in improving partnerships. ese
results have fully confirmed the H1 and H3 hypothesis, i.e., (H1) investing time
in the activity of creating and maintaining partnerships is crucial in unpredicta-
ble crisis situations in the market, and (H3) awareness of the importance of inter-
nal training on crisis management, and the importance of team building activities
is highly present at the procurement employees.
When comparing this paper with other papers, some of the papers dealt with
the business crisis of the whole company, not for just one isolated function. A
small number of authors have dealt rigorously with crisis analysis within pro-
curement. Analysed research has confirmed that active companies, which carry
out activities to anticipate and eliminate business risks, better cope with crisis
situations. In addition to the abovementioned, it turned out that many managers
simply do not have enough experience in the environment or business history in
the market in which they operate to offer adequate strategies to handle the crisis
situations. Managers of smaller companies do not have enough experience, while
managers of large companies do not have enough financial resources for preven-
tive activities. e common conclusion between the observed research and this pa-
per is the realization that managers are aware of the need to develop processes and
strategies within the company to overcome crisis situations. e contribution of
EU AND COMPARATIVE LAW ISSUES AND CHALLENGES SERIES (ECLIC) – ISSUE 5
764
science work is an overview of the opinions of procurement employees regarding
to the development of partnerships and what are the expectations towards part-
ners in crisis situations. Precisely presented are the activities that have the greatest
impact on the development of partnerships and what is important to the procure-
ment employees. Another contribution of science would be research related to the
challenges of the procurement business during the COVID-19 pandemic, where
it was shown exactly what were the biggest problems of the procurement business
and what activities should be applied to help overcome future crises. ere are
very few papers that directly analyse the procurement business to so many specif-
ic processes and situations. Future research can offer answers to questions about
which business strategies and processes within the company are most effective
for crisis prevention with the least invested financial resources, and in terms of
procurement operations, which specific activities would help procurement given
the activity and size of the company to adapt everyday processes to future crises
situations.
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