02. 07 Making sense of the impact of the internet of things on Purchasing and Supply Management-A tension perspective

Journal of Purchasing and Supply Management xxx (xxxx) xxxx Contents lists available at ScienceDirect Journal of Purchasing and Supply Management journal homepage: www.elsevier.com/locate/pursup Making sense of the impact of the internet of things on Purchasing and Supply Management:A tension perspective Hervé Legenvrea,∗, Michael Henkeb, Herbert Ruilec a European Institute for Purchasing Management, France Fraunhofer Institute for Material Flow and Logistics, Germany c Universities of Applied Sciences Northwestern Switzerland, Switzerland b A R T I C LE I N FO A B S T R A C T Keywords: Purchasing and supply management (PSM) Internet of things (IoT) Tensions The Internet of Things (IoT) is transforming how industries operate It impacts on firms’ supply networks, business processes and business models This article describes how the IoT influences the Purchasing and Supply Management (PSM) function Our findings based on interviews and workshop with more than 200 senior European purchasing managers from large corporations suggest that PSM has opportunities to support the development of IoT solutions within firms which are required to work with dynamic and complex markets At the same time, the IoT supports the development of a more capable and efficient PSM organisation As part of this early stage theory building effort, we outline scenarios for the future of the PSM function This leads us to reflect on how PSM leaders manage IoT-related tensions by means of differentiation and integration tactics Introduction The Internet of Things has been presented as a technological paradigm shift that changes how industries operate (Xu et al., 2014) Whenever words such as digital, smart, intelligent, predictive or autonomous are associated with a product, an infrastructure or an industry sector, the IoT provides the foundations that enable such innovations (Atzori et al., 2010; Whitmore et al., 2015; Li et al., 2015) The IoT is best described as a large technical system, an architecture, that integrates multiple technologies; this includes sensors, actuators, networks, platforms, algorithms and applications External sources of data and artefacts can be interfaced within such a system The IoT transforms products into product-service systems (Ardolino et al., 2016) Even in sectors such as agriculture and mining that are not considered to be digital intensive (Chen et al., 2014), IoT-based innovations are emerging thanks to the diffusion of energy-efficient communication technology (Tzounis et al., 2017) The IoT is expected to offer significant productivity gains and opportunities for business model innovations However, this will require firms to access distant yet complementary capabilities across diverse industries (Yu et al., 2016) Even though the IoT is impacting on firms and their supply networks, very little literature has been published on this topic beyond the literature on IoT and supply chains (Yan and Huang, 2009; Bendavid and Cassivi, 2010) from around 10 years ago This gap informed the development of our research questions: (1) How is the IoT ∗ impacting on Purchasing and Supply Management (PSM)? (2) How is PSM responding and adapting to the IoT? (see Fig 1) Our research embarks on a theory crafting effort right from the early stages of development of a contemporary phenomenon We present conceptual steppingstones that close the gap between “what we know” and “what we don't know” on how the impact of IoT on the PSM function is managed On the one hand, we contribute to framing future investigations into how PSM is evolving as IoT is adopted by firms On the other hand, we provide a framework which is useful for practitioners who want to anticipate and prepare for the implications of these technologies for their PSM organisation and supply network To this, our research utilises literature on tensions and paradox as a theoretical foundation Tensions in organisation theory are characterised by conflicting but intertwined demands (Smith and Lewis, 2011) This is particularly relevant for our research because major changes reveal tensions and bring contradictory forces to the forefront of organisational life (Smith and Lewis, 2011) We build on Poole and Van de Ven (1989) who suggested different paths for developing theories using tensions and paradoxes We also follow in the footsteps of Andriopoulos and Lewis (2008) and Smith and Tushman (2005) by interpreting our data through the lenses of differentiation and integration tactics According to them, blending differentiation and integration allows us to embrace the tension and to maximise the benefits from opposite forces In order to answer our research questions and to develop a Corresponding author E-mail address: hlegenvre@eipm.org (H Legenvre) https://doi.org/10.1016/j.pursup.2019.100596 Received 26 October 2018; Received in revised form 18 December 2019; Accepted 18 December 2019 1478-4092/ © 2019 Elsevier Ltd All rights reserved Please cite this article as: Hervé Legenvre, Michael Henke and Herbert Ruile, Journal of Purchasing and Supply Management, https://doi.org/10.1016/j.pursup.2019.100596 Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al Fig Research design trajectories that PSM might follow in the future while discerning how such trajectories could reinforce each other or collide and conflict theoretical foundation at this early stage of the development of a phenomenon, we combine scenario development (Ramirez et al., 2015) with an inductive, grounded research approach (Gioia et al., 2013) For scenario development we adopted the intuitive logic school approach (Bradfield et al., 2005; Notten et al., 2003) Following Börjeson et al (2006), our research builds on a sensemaking process (Weick, 1995) and offers three what-if scenarios that are best described as an answer to “what can happen in the future” To ensure rigor, our research design follows the guidance of systematic inductive research by Gioia et al (2013); more specifically we followed the authors recommendations on how to structure our data in three levels from first order concepts to aggregated dimensions The second order themes of our data structure form a framework for managing the impact of the IoT on PSM On the one hand we combine multiple narratives to elicit patterns and on the other hand we rigorously study how these patterns interact together to develop a robust chain of evidence (Miles et al., 2014) On a normative level, our research design provides us with a vision, a line of horizon that helps us understand how the future could unfold for PSM On an epistemological level, it reveals tensions characterised by conflicting but intertwined demands that are exacerbated by current technological change This leads us to describe and compare different IoT: the need for sensemaking This section provides a definition, some applications, an architecture, and an historical account of the IoT This will lead us to conclude that even if tangible applications of IoT exist, at this early stage of the development of such a broad technical system, most descriptions of the IoT serve as a mobilising vision They influence the cognitive framework and help identify specific opportunities and challenges for a given context This provides valuable contextual information for our overall research effort and it serves as a foundation for some of the choices made in the research design The IoT is defined by the International Telecommunication Union as “the global infrastructure for the information society, enabling advanced services by interconnecting (physical and virtual) things based on existing and evolving interoperable information and communication technologies” (ITU, 2019) The technologies underpinning the IOT are continuously progressing; they are available at a diminishing price and consume less energy (Atzori et al., 2010) From a business perspective Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al the favoured terms used by the consortium members They aimed at establishing a cross-industry and global perspective (IIC, 2019) In 2015, a report named “the industrial internet of things” was presented at the World Economic Forum (O'Halloran and Kvochko, 2015) It stated that consumer applications within the Internet of Things will be complemented by industrial applications leading to a significant impact on firms and industries Industry 4.0 was presented within the report as a specific German initiative promoting the industrial Internet of Things Behind this diversity of terminology, there is also uncertainty and ambiguity on the application side Applications of the IoT have been described by associating words such as smart or intelligent with industry names This includes, for instance, intelligent mines, smart cities, intelligent transportation systems, smart meters or smart agriculture (Chen et al., 2014) Such terms help visualise the future of an industry This is well suited to establishing German or Chinese industrial policy or for helping some firms to foresee the long-term impact of this transformation on their industry But for most managers, this does not provide significant guidance on what can be achieved immediately by using the IoT at their level The 2015 World Economic Forum study (O'Halloran and Kvochko, 2015) reported that: “Our survey results underscore this point: the vast majority (88%) of respondents say that they still not fully understand its underlying business models and long-term implications for their industries.” If the IoT and Industry 4.0 can appear as technical concepts supported by a diversity of technologies, they are primarily mobilising visions of the future that overlap and complement each other the IoT is described as a means to change products into product-service hybrids and to change firms’ business models In such open or semiopen systems (Kortuem et al., 2010; Serbanati et al., 2011) data is a raw material (Schupp and Wöhner, 2018) and value is generated out of interconnections A more refined description of the IoT architecture and its integration within business activities can also be presented Understanding the different layers of an IoT architecture is essential for understanding the nature and the magnitude of the impact of IoT on firms This architecture allows us to describe how technology is converted into business value The IoT architecture is an overarching and integrative framework that connects technology, organisations and business models together The following framework combines a technical IoT architecture (Gubbi et al., 2013) with a business model approach (Dijkman et al., 2015) It consists of five complementary layers (Xu et al., 2014) that transform technology into new business processes and business models: ⁃ Layer includes front-end technology such as sensors, actuators and chips embedded in products, assets, mobile devices or intelligent autonomous objects (e.g drones, robots, vehicles, smart stores) It creates, processes and transfers data autonomously, anytime and anywhere Layer is a source of data that embeds physical things within the digital world ⁃ Layer consists of internal and external communication infrastructures that convey the data from its point of origin to its point of use Communication networks enable the collection, processing and dissemination of valuable data gathered from distributed sources ⁃ Layer represents cloud enabled services that provide SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), IaaS (Infrastructure as a Service), DaaS (Data-as-a-Service) and more Layer aggregates the “Big Data” and makes it available for business applications It is in this layer that data meets and blends with advanced digital technologies and solutions such as data analytics or artificial intelligence ⁃ Layer encompasses the business applications Such applications use the data and services from level to simplify, improve and innovate processes; for instance, analytics can help to generate and capture value along the full value chain by ensuring better coordination of all suppliers and partners It also enables new offerings such as data led services that are central to many firms' strategies today ⁃ Layer outlines impacts on the overall business model A business model describes how a firm creates and delivers value to customers and outlines the structure of revenues, costs, and profits (Teece, 2009) Technologies grounded in layer to contribute towards developing business applications which can lead to business model changes to deliver new competitive advantage Research design 3.1 Research method In order to describe and explain how the IoT is impacting PSM, it is necessary to embark on a theory crafting effort right from the early stages of the development of this contemporary phenomenon The phenomenon, as presented above, is best described as an ambiguous vision As suggested by Gioia et al (2013) such vision statements have benefits, they favour challenging existing knowledge and trigger a sensemaking process that can lead practitioners to revise their beliefs and actions Consequently, from a research standpoint, there is value in investigating such phenomena from an early stage as they frame future knowledge and actions According to Weick (1989), doing this requires a process of theory construction with heterogeneous trials that generate and test multiple explicit assumptions Weick describes the production of useful research as being best governed by selection criterion such as “That's interesting” that shows an inadequacy of past understanding for current theoretical problems or “That's connected” which shows that a relationship amongst two or more concepts exists According to Weick (1989), performing such research is challenging but it enables useful knowledge to be produced The overall research design is described in Fig In 2016 when the three authors decided to investigate whether they could combine their efforts due to the novel nature of the phenomenon studied, a comparative analysis of the methods and initial findings was performed, along three dimensions: The Impact of the IoT on the supply network, opportunities for the PSM function and the conditions for success (See Appendix A) The three studies offered similar findings This confirmed promising opportunities for developing richer and more reliable research findings together during this early stage of the development of the IoT Combining and integrating the three studies enlarged the amount of data used in the analysis and helped the researchers in developing their understanding of this novel phenomena In order to answer the question “How will the IoT impact PSM” we adopted a systematic inductive approach to structure our data in three levels, from first order concepts to aggregated dimensions (Gioia et al., 2013) which enabled us to rigorously clarify “what is interesting” After collecting data, this was performed as a desk-based analysis that Behind the apparent clarity of the definition and architecture presented above, confusion and uncertainty remain This comes primarily from the different terminologies that have been introduced in different contexts over time The IoT goes back to the late 1980's when Mark Weiser started to describe a world where algorithms are closely embedded in our daily life (Weiser, 1991) The IoT, as a term, was coined by Kevin Ashton in 1999: “The phrase ‘Internet of Things’ started life as the title of a presentation I made at Procter & Gamble (P&G) in 1999“ (Ashton, 2009) He described the idea behind the IoT as follows, “We need to empower computers with their own means of gathering information, so they can see, hear and smell the world for themselves in all its random glory RFID and sensor technology enable computers to observe, identify and understand the world—without the limitations of human-entered data.” (Ashton, 2009) In 2014, the Industrial Internet Consortium brought together American companies such as General Electric, AT&T, Cisco, Intel, and IBM The Internet of Things and the Industrial internet of things became Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al Table Informants involved in the three studies Number of informants Main sectors considered Low quartile of digital intensity Medium-low quartile of digital intensity Medium-High quartile of digital intensity High quartile of digital intensity Agriculture Mining Electricity& Gas Water Pharmaceutical Chemical Petroleum Plastic, Rubber and Metal Products Electrical Retail Publishing Machinery Electronic & Computer IT & Telecom Equipment for Transport Banking & Insurance Construction Transportation Food & Beverage Study Interviews Workshop Study Interviews Workshop Case studies Study Workshops Total In percent Wood Defence Services 27 10 15 120 19 17 38 46 35 213 41 19% 30 14% 13 65 31% 10 77 36% helping the firm leverage IoT?” This scenario is called PSM as an IoT Innovator and it describes how PSM contributes to the firm's ability to use IoT opportunities in order to respond to competitive pressure and stimulate innovation and growth The third one is “What if PSM focuses on both concurrently?” This scenario is called PSM as an IoT Master & Strategist It describes how to jointly leverage IoT for efficiency and to use IoT opportunities to stimulate innovation The nature and magnitude of the tensions inherent in this scenario make it distinct from the other two scenarios Each scenario was described by using the associated first order concepts and second order themes For each of the three scenarios, specific tensions are identified and described by using the qualitative data provided by informants From this, we discuss how tension can be reconciled using three of the strategies suggested by Poole and Van de Ven (1989) This includes separating spatially the contradictory forces, separating them temporally as well as accepting the contradictory forces and using them appropriately In line with Andriopoulos and Lewis (2008) along with Smith and Tushman (2005), for the last strategy, our data provides differentiation and integration tactics that embrace the tension and to maximise the benefits from opposite forces To conclude, adopting a tension perspective provided a means to create three distinct and coherent scenarios; the development of a three level data structure was our way to achieve technical rigour in the analysis and combining three studies provided larger set of data strengthened the robustness of our conclusions by focusing on the common findings across the three studies facilitated the combination of a large amount of data collected from different sources The semi structured interviews, informants’ notes, informant feedback and archival data collected served as the main source of information Our conceptual coding built on first-order coding that comprised language used by informants This allowed us to develop s order themes further grouped into four aggregated domains The multilevel coding was developed inductively except for the last aggregated domain where literature on tensions was used to support the coding The data structure is described in Table and in appendix B Throughout the data collection process, it became evident that some informants were solely focusing on how to leverage the IoT within PSM activities to gain efficiency and control, whereas others were focusing on how to leverage IoT opportunities to stimulate innovation, renewal and growth for the firm Finally, a third group of informants addressed both without prioritising one over the other This revealed the existence of tensions defined as conflicting but intertwined demands and perspectives (Smith and Lewis, 2011) This offered alternative visions for the PSM function that helped to answer the question “what is connected?” throughout the data structure As these lines of tensions were identified, scenario development appeared as a valuable way to organise the data that had been collected Ramirez et al (2015) positioned scenario development as an appropriate method of theorizing It expresses and discusses assumptions through an iterative inquiry process According to these authors, it also stimulates the development of conceptual frameworks that deliver testable research results The quality of such frameworks depends on the development of coherent, comprehensive and rigorous analysis (Bradfield et al., 2005) Our approach belongs to the intuitive logic school in scenario development (Bradfield et al., 2005; Notten et al., 2003) In line with Börjeson et al (2006), it builds on a sensemaking process and offers three what-if scenarios that are best described as an answer to “what can happen in the future on a horizon of 5–10 years?” In line with Notten et al (2003) techniques used to develop the scenarios helped to access qualitative knowledge through interviews and workshops, creative techniques and storytelling methods to create, cluster and organise the narratives The three what-if scenarios are qualitative and equally plausible The tension led us to identify three “What if?” questions The first one is “What if PSM only focuses on using IoT within its own processes?” This scenario is called PSM as an IoT Technology Adopter and describes how the IoT is leveraged within PSM activities to gain efficiency and control The second one is “What if PSM only focuses on 3.2 Integrating data from three studies We have performed systematically integrated three studies that had already been initiated by each of the three authors Each study had been conceived as a multi-technique, iterative, research process with the aim to understand the impact of the IoT on the PSM function The people who took part in each of the studies were involved in a sensemaking process Altogether the three studies have mobilised more than 200 direct informants and an additional 300 contributors through surveys or interactive exchange on the topic These 200 informants are senior purchasing managers from large corporations across Europe The researchers have maintained contact with many of the informants and have been kept up to date of some of their development since the early stages of the studies In the present paper we will refer to people involved in our study as informants Combining three separate studies has intrinsic limitations Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al Table Data structure on how the IoT impacts on PSM First order concepts Second order themes Aggregated domains Managing a portfolio of projects to adopt, integrate and operate new technologies Automating the low-skill routine jobs Leveraging new technology in purchasing activities to increase efficiency and performance (market intelligence, costing, ordering, negotiating …) Supporting the adoption of IoT technologies across the supply chain Leveraging transparency across the supply chain to reduce risks Developing real time and forward-looking reporting across the supply chain Implementing innovative solutions that leverage IoT to progress sustainability Integrating IoT opportunities and threats in category strategies Taking advantage of disintermediation opportunities offered by markets Leveraging platforms, aggregators and configurators available from the market Buying IoT and digital solutions from the market Handling rising interdependencies amongst industry actors Operating in markets where suppliers are also competitors or complementors Addressing challenges associated with interoperability and standards Handling suppliers who own and transform data or other critical resources Integrating within the supply network new suppliers with disruptive ideas, including start-ups Leveraging market intelligence, scouting capabilities and integrating innovative solutions coming from different industries Supporting relationships across suppliers to develop, deliver and manage complex systems Selecting suppliers for IoT projects under uncertainty Ensuring access to key external resources (data scientists, cybersecurity …) Contributing to change management for the introduction of digital product service systems Dedicating resources to support explorative IoT projects Supporting the development of new supply networks and organisations to enable strategic IoT projects Sourcing IoT technologies and resources for the creation of new business models and revenue streams Managing a diverse set of relationships and processes to support IoT related projects Attracting and developing buyers with generalist job profiles and a strong business orientation Describing the future role of machines and humans in purchasing Creating an integrated architecture for PSM systems and tools Coordinating the allocation of resources across segments, projects and relationships Fostering a shared culture in PSM Adopting and integrating new technologies to develop PSM performance Managing the transition to a more capable and efficient purchasing organisation Implementing and leveraging new technologies along the supply chain Taking advantage of new opportunities provided by markets Anticipating developments in markets characterised by rising interdependencies Working with more diverse, complex and dynamic markets Integrating innovative suppliers within the firm's supply network and activities Supporting the integration of external solutions within product-service systems Supporting the development of IoT solutions within the firm Supporting the development of new business models and revenue streams Differentiation tactics Managing IoT-related tensions through differentiation and integration Integration tactics ensured here as the three studies were led by the three authors of this article Using the findings of three separately conducted studies offers some advantages comparable to that of adopting mixed methods (Greene et al., 1989) First, this allows for triangulation, the study of similar phenomenon across different geographies allows us to identify common findings and to corroborate results Second it allows us to assess variations across studies And third, it provides for complementarity Finally, in the present context, this can even offer advantages Having three studies offering some variations has contributed towards generating and testing more varied assumptions This led to the construction of a robust common data structure across the three studies We can now describe how the three studies were initiated Study one was conducted as a pilot study to understand the impact of industry 4.0 on PSM First, a heterogeneous group of purchasing managers and Chief Purchasing Officers (CPOs) working in firms headquartered in Germany, Austria and Switzerland were surveyed Later, representatives from twenty-five firms and two universities were involved in more extensive and detailed investigations through interviews and focus groups (Pellengahr et al., 2016) Study two started as a research project on the impact of IoT on Purchasing This included semi-structured interviews conducted with 15 European CPOs, and a workshop with 120 purchasing managers to investigate the impact of the IoT on their industry and their purchasing organisation Following The three studies followed similar inquiry processes and shared the same goal: understanding the impact of the IoT on PSM However, the detailed inquiry processes offered some variations and there were also some differences in the terminology used Indeed, German-speaking informants were more prone to use Industry 4.0 as an overarching term while others used IoT as an overarching term The terminology differed but the sensemaking experience was similar Similarly, some informants were inclined to reflect on all levels of the IoT architecture while others tended to focus on the higher levels of the architecture where it was easier for them to make sense of the opportunities and impacts The IoT and Industry 4.0 cannot be regarded as an objective technical reality; they are broad cognitive frameworks that help describe specific opportunities and challenges for a given context Studying how practitioners make sense of a contemporary phenomenon is bound to face issues in terms of diversity in terms of technology and interpretation Producing useful knowledge needs to embrace the challenges associated with such challenges The variations and complementary aspects observed across studies have been extensively discussed, assessed and on some occasions discussed directly with informants in the later stages of the studies Re-using qualitative data is increasingly accepted within social sciences (Bishop and Kuula-Luumi, 2017) Access to context was Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al Table The three scenarios on the Impact of IoT on PSM Title What if questions Second order themes Scenario PSM as an IoT Technology Adopter What if PSM only focuses on using IoT within its own processes? Scenario 2: PSM as an IoT Innovator What if PSM only focuses on helping the firm leverage IoT? Scenario 3: PSM as an IoT Master & Strategist What if PSM focuses on both concurrently? and integrating new technologies to develop PSM performance • Adopting and leveraging new technologies along the supply chain • Implementing advantage of new opportunities provided by markets • Taking developments in markets characterised by rising • Anticipating interdependencies Integrating innovative suppliers within the firm's supply network and • activities the integration of external solutions within product-service • Supporting systems the development of new business models and revenue streams • Supporting of the above • All differentiation tactics • Adopting • Adopting integration tactics phenomenon being studied The workshop format is well suited to gaining an in-depth understanding and to bringing to the surface the questions, concerns and issues anticipated and experienced by informants For each of the three studies, the outcomes of the workshops were captured by collecting the notes written by informants during small groups sessions Minutes were also taken and shared with informants to gain their feedback and validate their accuracy The case studies in study two were collected through interviews with informants and through access to internal archives and documentation Some case studies entailed multiple interactions over time (interviews, discussions, access to internal documentation) to understand the evolution of projects, while others were more focused on describing projects that had already been completed These case studies were selected based on their representation of specific IoT applications: They included initiatives aimed at developing a smart meter, applications for connected vehicles (automotive and recreational), a smart grid application, a smart building application, and an application for digital healthcare Informants included senior purchasing managers and, occasionally, representatives of other functions this, more specific focus groups were conducted, and six case studies were documented through interviews (Legenvre and Glas, 2016) In the third study, the first investigations were launched in 2016 to examine the expectations and opportunities associated Industry 4.0 and digital technologies in purchasing Up to 2019, a total of 25 workshops with a thematic focus were held with selected senior purchasing executives who intensively dealt with the questions: how IoT related technologies impact the future of purchasing and how this can be implemented within their organisation (Ruile and Vollrath, 2017) 3.3 The informants The three studies were performed by involving senior purchasing managers, from large corporations, responsible for the long-term development of their purchasing organisation Table builds on the OECD taxonomy of digital intensive sectors (Calvino et al., 2018) It provides the number of informants, these senior purchasing managers, for each data collection stream for each study The number of informants is provided for the four quartiles of the OECD taxonomy This shows that a broad variety of industry sectors were represented across the three studies with a dominance for sectors in the top two quartiles in terms of digital intensity This provides both a broad understanding of the phenomenon and access to informants that had started to take actions to address IoT-related opportunities In terms of data collection, the interviews conducted were undertaken using similar protocols They started with questions covering general topics about the impact of the IoT on the industry, the supply network and the firm of the informant Then further specific questions probed into the answers as to how the IoT impacts the purchasing function This included questions related to: (1) the projects and initiatives related to IoT undertaken by the PSM function, (2) the impact on the expectations of and the relationships with internal stakeholders, (3) the impact on supplier searches and how relationships with them are managed, (4) the impact of IoT on the PSM organisation, processes, systems & skills and (5) the impact on the value delivered by the PSM to the firm in terms of performance and outcomes Verbatim notes from recorded interviews where transcribed to ensure reliability Each study has established its focus group that brought together senior purchasing managers from a diverse set of firms and industry sectors They all shared strong interest in IoT applications in PSM The surveys conducted prior to the workshops outlined the importance of IoT for PSM and showed that limited knowledge existed at that time This was used as critical input when designing the workshops The workshops started by focusing on the same set of questions used for interviews Focus groups then moved to more specific questions and investigations allowing for an iterative and inductive data collection process well suited for such studies Workshops also made it possible to observe the informants and create opportunities for additional exchanges and discussions that further informed our understanding of the Analysis of the findings 4.1 The three-level data structure on how the IoT impacts on PSM The data structure on how the IoT impacts PSM is described in Table First-order coding relates to language used by informants Appendix B provides further qualitative data collected from participants The s order themes further grouped into four aggregated domains and are common across the three studies The tensions expressed by informants were used to create three distinct scenarios Each of them responds to a specific What if question The link between the three scenarios and the second order themes is presented in Table For each of the scenarios we first describe the scenario in relation to the IoT architecture before detailing the concepts and themes from our data structure that relate to the scenario We conclude the description of the scenarios by presenting the underlying tensions identified for the scenario 4.2 Scenario one: PSM as an IoT Technology Adopter 4.2.1 Description of scenario one In this scenario, IoT simplifies, automates and enriches PSM activities It enhances PSM performance and delivers additional benefits to stakeholders Platforms and aggregators facilitate access to a diversity of data and services in layer of the IoT architecture A simple example provided by one of our informants illustrates this: the use of self-replenishing vending machines on the shop floor for protective equipment (gloves, earplugs, protective masks …) simplifies access to Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al huge amount of data … the challenge of big data is what you actually with the data!” Beyond this paralysis, our findings also show that projects wrestle to deliver the expected benefits due to the complexity of organisations and systems One of our informants suggested that if each project is expected to offer well-identified benefits “the efforts required to integrate IoT technologies within the enterprise architecture are immense” Our findings suggest that a plurality of opportunities appears in different decision instances across the firm, but complexity and bounded rationality prevent benefits being achieved in line with the grand initial expectations While PSM leaders trust that they have the means to deliver substantial productivity improvement, setting priorities is difficult and they experience a myriad of challenges and integration issues A second tension in this scenario combines the promise of a more strategic and powerful PSM function with harsh prospects for people working within the PSM function One informant described this with irony in a workshop “we might have a bright future, but no jobs” Our data shows that informants repeatedly recognised that PSM departments will become smaller as routine tasks are delegated to machines A purchasing executive explained that “Due to the current technology shifts, within ten to fifteen years, 99% of orders will be handled through the company information systems and 75% of them will be automated” He later suggested “you need curiosity in procurement, people need to see the new world as a chance, not as a risk If people aren't curious, they are fearful of losing their jobs” In the workshops we noticed some of our informants exhibiting defensive routines; they expressed recurring concerns about the resistance to change they were facing Such defensive routines are brought to the surface by current technological change, they are the symptoms of a profound tension experienced by buyers who are confronted by both the promising prospect for the PSM function and by the demanding and unpleasant changes required to achieve them To combine these two tensions, we see the IoT as offering promising prospects for the function both in terms of productivity and prominence, while it also generates indecisiveness in project selection, integration issues during implementation and challenging change prospects This can be labelled as promising technology-demanding changes tension equipment while monitoring the consumption of each user Looking at layer of the architecture, IoT is also available as-a-service It supports the implementation of new commercial frameworks as buying firms pay for the performance or the outcome delivered by the supplier Performance monitoring activities are automated and re-integrated within the suppliers’ offering which delivers incentives and the means to operate efficiently Our informants suggested that IoT will make performance-based contracting more widespread Moreover, the IoT is expected to create transparency along the supply chain It will lead to operational performance enhancements and greater opportunities to operate in a sustainable way Informants also suggested that the IoT could serve as a foundation for more radical operational changes along a supply chain, such as enabling personalised design and delivery of offerings for clients 4.2.2 Concepts and themes mobilised in this scenario 4.2.2.1 Adopting and integrating new technologies to develop PSM performance According to our findings, traditional PSM activities such as costing, contracting, ordering and auditing can be enhanced thanks to the use of IoT technologies Data collected showed that informants expect machines to place orders and provide real time consumption data Some suggested that artefacts can be scanned, and components can be costed thanks to direct access to databases Smart contracts can be associated with containers so trade-offs between delivery performance and logistics costs can be made by machines Audit and compliance activities can be enhanced by virtual reality, IoT devices (telematics or drones equipped with sensors) and access to unstructured data sets Our findings show that if opportunities are to be transformed into results, a multiplicity of projects will have to be implemented and integrated 4.2.2.2 Implementing and leveraging new technologies along the supply chain A recurring theme throughout all the interviews and workshops was the possibility to leverage transparency across the supply chain to reduce risks, improve performance and automate activities Multiple informants expect that the aggregation of data along the supply chain will help their firm move from a backward-to a forward-looking on demand management Also, informants suggested that innovative IoT solutions allow them to progress on their sustainability goals; our findings tended to outline industry specific patterns here with, for instance, the food industry in focus here enhancing traceability and consumer information through the use of IoT technologies, while other sectors focused, for instance, on safety or on implementing the principles of the circular economy by tracking packaging 4.3 Scenario two: PSM as an IoT innovator 4.3.1 Description of scenario two In scenario two, PSM searches for and creates access to external partners with complementary IoT capabilities to support innovation, renewal and growth across the firm Our findings show that this requires operations at all levels of the IoT architecture presented above In this scenario, PSM is integrated in the firm's IoT projects to ensure that IoT related suppliers provide the required complementary capabilities In some cases, their role will be to source basic components and technologies when the firm has decided to insource the design and possibly the assembly of their IoT system; this corresponds to the governance mechanism described above as vertical integration This is in line with the classic role of PSM In other cases, PSM will develop collaborations with external partners to access and integrate IoT capabilities To this, PSM will reach out to a wide spectrum of potential partners ranging from existing suppliers with IoT offerings, to start-ups and technology leaders from outside the industry One of our informants described how a new team had been created within his firm “Our mission is to support the business's digital agenda We need to access external capabilities both from technology firms and from start-ups to progress in our digital agenda” Our informants suggested that PSM will need to work closely with R&D and Marketing to anticipate how a wide array of distant but complementary capabilities can be accessed and integrated to support the most strategic projects of the business Another informant also described how the development of smart technology required orchestrating an innovation project and led to an enduring collaboration with two partners This project generated revenue for the firm as the technology was sold as a standard on the market to industry peers 4.2.2.3 Taking advantage of new opportunities offered by markets The data collected suggested that this pivotal role can be leveraged by considering the impact of IoT on markets, supplier offerings and supplier performance within the existing category strategies One important impact that our informants pointed out is the disintermediation opportunities For instance, service integrators performing the maintenance of some equipment could disappear as equipment manufacturers move towards offering digital productservice systems (PSS) This suggests that becoming an IoT Technology adopter is not limited to selecting and implementing internal projects, it also requires ongoing attention to market opportunities 4.2.3 Underlying tensions within scenario one Tensions within this scenario are twofold The first tension combines a technological hype with the need to bring concrete projects to a successful completion Technology is continuously presented as a great way to deliver improvement and innovation while its implementation is difficult and demanding One informant jokingly indicated “E-procurement was something you could buy from a supplier; here we don't know where to start” One of the common illustrations of this tension was suggested by an informant during an interview: “The IoT generates a Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al business models, one informant described the impact of IoT on the electric energy value chain “From energy generation to energy consumption, (system) architectures are becoming more open … if you look upstream, strong entry barriers remain, but as we head towards analytics and services, we see new actors coming in Some of them can come from radically different industries We will be facing leaders from other industries and it is hard to predict what the architecture of the overall ecosystem will look like in the future Multiple business models will complement each other” Therefore, PSM will on some occasions support IoT projects from a very early stage to introduce new business models One of our informants in the food and beverage industry described how, in his firm, a team comprising marketing and purchasing representatives has worked with a start-up to experiment with new business models; another one involved with connected vehicles described how he led a project that aimed at creating a new business model for his firm In order to create a proprietary solution, they established a collaboration with a university which resulted in the creation of a new firm 4.3.2 Concepts and themes mobilised in this scenario 4.3.2.1 Anticipating developments in markets characterised by rising interdependencies The data collected shows that our informants expect the IoT to create rising interdependencies within industries We identified three kinds of interdependencies First, they described their main suppliers as both partners and competitors of their firm They are partners as collaboration with them is needed to bring innovation to the market and they are competitors as the IoT can eventually allow them to reach out directly to clients An informant working for an industrial services firm described the IoT as a means for existing suppliers of equipment to bypass them in some markets Second, interdependency is nested within the need to develop interoperable systems This can be supported by industry associations, by foundations that pool all actors interested in a specific communication technology or by a firm with a proprietary system through a managed partners ecosystem Interestingly, firms tend to join multiple initiatives to avoid betting on only one option Finally, some suppliers were also described as sales channels or complementors Two firms can buy and sell from each other but they also sell together This creates further interdependencies One informant working for a hightech firm at such relationships needs to be managed with great attention 4.3.3 Underlying tensions within scenario two The main tensions within scenario two consist of developing strong ties between suppliers and internal stakeholders while performing the traditional activities of PSM As described above, PSM needs to strengthen its ability to manage relationships with innovation partners However, some of our informants were adamant that this should not be done at the expense of the fundamentals of PSM If one of our informants would insist on “we need to look at risk and opportunities with a radically different mindset Searching for perfection is not a viable strategy anymore, purchasing needs to accompany a broader and faster experimentation process”, another one would remind us “yes, we might need to work more with start-ups but we need to keep the ownership of the sourcing decision and we need to consider all risks incurred The business might be keen to work with a start-up but one of our existing suppliers might be able to deliver the same service with less risks We should pay attention to this” Building close relationships with internal stakeholders and suppliers can appear as a threat to delivering on some PSM responsibilities While innovation and risks are interlinked, attaining the right balance between an entrepreneurial mindset and a risk management mindset is challenging and cannot be achieved without tensions This can be labelled as entrepreneurial mindset-risk management tension 4.3.2.2 Integrating innovative suppliers within the firm's supply network Our findings show that the IoT requires the integration of innovative actors within a firm's supply network A purchasing manager working for a firm specialised in smart infrastructures described this as follows: “Some of our suppliers with a solid market position can influence our end users; this leaves us with limited room for discussions on price But at the same time, as demand is becoming increasingly personalised across our client markets, the market is more open, there are less entry barriers, expertise and technology are more widely available and small firms are starting to play a more active role here” Some of our informants were even concerned about the ability of their existing suppliers to adapt to changes They don't see incumbent suppliers approaching them with the IoT-related innovation they expect Our informants suggested that companies exceling at critical IoT technologies will gain significant market power and change industry dynamics One informant described the challenge for PSM “Beyond the battle amongst giants, the value in our ecosystems is being redefined by a myriad of start-ups and new actors Here we need to unlearn After years of supply-based rationalization and strict risk management, we need to rediscover how we can work with such players” All this will require scouting capabilities and the integration of innovative actors in the design and delivery of digital product-service systems and in the creation of new revenue streams 4.4 Scenario three: PSM as an IoT master and strategist 4.4.1 Concepts and themes mobilised in this scenario In scenario three, the PSM organisation is simultaneously leveraging the IoT to gain efficiency and control, and enabling the firm to leverage IoT opportunities to stimulate innovation, renewal and growth This requires to combine the concepts and themes presented in scenario one and two Considering the aggregated domain of our data structure, this means that while PSM needs to manage its transition to a more capable and efficient purchasing organisation, it allows the firm to operate in complex and fast changing IoT driven markets 4.3.2.3 Supporting the integration of external solutions within productservice systems Our research findings show that, as firms design and launch their own IoT solutions including digital product-service systems, they will rely on PSM to access the necessary complementary capabilities One informant explained that his firm monitors thousands of ice cream cabinets for a client that required the most effective technologies to support this revenue opportunity As a new innovative actor can play a significant role in providing the right complementary capabilities, such situations can require selecting suppliers under conditions with a high degree of uncertainty As described above, this can also result in managing triadic and even more complex relationships to design, deliver and service digital product-service systems This also requires managing a multiplicity of relationships with internal stakeholders Developing IoT solutions also requires access to resources such as data and skills Our informants repeatedly expressed concerns about gaining access to data scientists and cyber-security experts 4.4.2 Underlying tensions within scenario three Our findings show that tensions arising in scenario three have been repeatedly described by informants as a conflict between a purchasingcentric and a business-centric view of PSM This was described by one of our informants: “In my company we have two schools of thought: the purchasing-centric one that focuses on digitalising our processes, and the business-centric one where we look at how we can help the business address its current challenges There is nothing wrong with digitalising our processes, but we should not lose sight of the business challenges” Purchasing-centric means focusing on the internal purchasing process to gain efficiency and control while being business-centric means focusing on opportunities that stimulate innovation, renewal and growth for the business Focusing simultaneously on both was advocated by some of the 4.3.2.4 Supporting the development of new business models and revenue streams As an illustration of the findings on the development of new Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al informants, especially when their firm were from digital intensive sectors However, focusing on both often appeared challenging and sometime impossible This led some of the informants to discard or ignore the importance of one of the two views However, such contradictory perspectives are also intertwined: PSM needs to respond with adequate solutions to business needs, and the business requires a wellfunctioning PSM function to access suppliers Another informant from a firm that was investing in IoT suggested “Over the past years, we have not invested in developing a genuine business mindset, we have concentrated our attention on our own processes.” This purchasing centric/business centric tension is a function specific version of the exploration-exploitation tension described in the seminal work of March (1991) Whereas exploitation requires focus and constancy in order to exploit existing opportunities and improve, exploration demands search, variation and experimentation to create novelty out of distant knowledge (O'Reilly and Tushman, 2013; Gibson and Birkinshaw, n.d.) If the development of IoT can strengthen exploitation it also requires exploration; it therefore exacerbate pre-existing tensions contributing to the economic goals of the PSM organisation One informant working in the purchasing team of an automotive firm in Asia was handling relationships with local internet firms and start-ups that provided services to end users through the firm's automotive IoT platform This was generating revenue for the firm As this activity was not contributing to the existing economic goals of the PSM function, the informant ended up moving out of PSM and to join a newly formed innovation team where she set up the firm start-up accelerator programme 4.5.2 Strategy 2: temporal separation The second strategy suggested by Poole and Van de Ven (1989) addresses tensions by establishing temporal separation, focusing on one side of the tension for some time before moving to the next side Our data does not provide explicit suggestions for temporal separation where scenario two would precede scenario one Our findings, however, show that a significant proportion of our informants was advocating starting with scenario one By becoming more efficient through the adoption of technology they expected to free up time to focus on delivering more added value to the business afterwards However, one informant contested this, stating: “Freeing up time for existing people is not going to allow you to support the business with innovation You won't have the right people to so” Another informant suggested: “When we think about innovations that can be brought to the business to deliver growth, 25% to 30% of procurement staff has to move to other functions and we need to bring in people from other functions such as R &D, Marketing or Sales” Furthermore, solely focusing on scenario one could lead to a situation where other stakeholders take over some of the PSM's activities In some cases, we identified situations where newly introduced innovation managers or digital officers were managing relationships with innovative suppliers and start-ups while their PSM counterparts were expected to handle relationships with the other suppliers Temporal separation can appear to be a good strategy as it makes it possible to handle tensions sequentially, but in this context there is a risk of only realising some of the benefits promised by the IoT while other functions handle the search for, the selection of and the management of the relationships with innovative suppliers supporting IoT projects 4.5 Reconciling the tensions We can now recall the tensions experienced by PSM with the emergence of IoT A first tension is associated with IoT offering promising prospects for the function both in terms of productivity and prominence, while IoT also generates indecisiveness in project selection, integration issues during implementation and challenging change perspectives We labelled this tension promising technology-demanding changes A tension has emerged as the IoT requires from PSM an entrepreneurial mindset combined with a focus on managing risks This tension was labelled entrepreneurial mindset-risk management A tension is associated with IoT exacerbating the exploration-exploitation tensions It reveals the contradiction between a business-centric view of PSM that entails developing some new ties with suppliers and internal stakeholders and a purchasing-centric view of PSM where PSM processes can be strengthened by the IOT We labelled this tension exploration-exploitation To understand how such tensions can be reconciled, three of the four strategies described by Poole and Van de Ven (1989) were used They include: separating the contradictory forces spatially and temporally, accepting the contradictory forces and using them appropriately The fourth strategy suggested by Poole and Van de Ven (1989) consists of finding new terms to resolve the paradox; we did not find such new terms in our data structure 4.5.3 Strategy 3: accepting and using the contradictory forces appropriately: managing tensions through differentiation and integration To investigate how PSM can accept the contradictory forces and benefit from them, we looked at our data through the lens of the differentiation and integration tactics following the suggestion of Smith and Tushman (2005), and Andriopoulos and Lewis (2008) Differentiation makes it possible to maximise the ability to seize opportunities while integration makes it possible to create synergies and minimise conflicts associated with differentiation Embracing and using tensions was visible within some of our informant communication For instance, a CPO would vigorously claim that leveraging the IoT to enhance the performance of PSM has to be the priority, and a few minutes later, he would suggest that it is obvious that PSM needs to fully deliver on the more exploratory activities His communication appeared to consider the two sides of the divide as being of equal importance This dual tactic was more common in digitally intensive sectors or in firms with strong IoT related ambitions This is probably due to the more pervasive impact of the IoT across the firm that calls for more dispersed and simultaneous efforts to seize opportunities Specific integration and differentiation tactics have been listed in our data structure in the fourth aggregated domain of Table However, to provide a complete perspective on how to accept and use IoT related contradictory forces, two differentiation tactics derived from the exploration-exploitation tension need to be added The first one consists of managing a diverse portfolio of projects to adopt IoT technologies to enhance PSM performance The second tactic consists in widely supporting the development of IoT solutions across the firm Both of them 4.5.1 Strategy 1: spatial separation The first strategy addresses tensions through spatial separation Here, our data shows that some of our informants have partitioned PSM tasks between exploitation and exploratory ones They have described how they had allocated resources to IoT projects outside classic PSM segments and structures One of them explained that he was fully dedicated to a digital product service system initiative while the rest of the PSM organisation was pursuing its classic activities Here a subgroup supports exploratory projects while the rest of the PSM function performs its mission and enhances its processes using IoT technology Spatial separation, also called structural differentiation is a well-established tactic used by ambidextrous organisations (Tushman and O'Reilly, 1996) It can work if the IoT impacts a few activities within the firm As its impact becomes more pervasive throughout the firm, structural separation becomes less efficient and needs to be complemented by contextual ambidexterity (Gibson and Birkinshaw, n.d.) where exploration and exploitation take place concurrently; this means applying the third strategy suggested by Poole and Van de Ven (1989) that consist in accepting and using contradictory forces Furthermore, our data shows that structural separation appeared to be a fragile tactic within a PSM context Two examples were provided where structural separation within PSM was not pursued as the dedicated team was not Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al Table Managing IoT related tensions in PSM through differentiation and integration Managing IoT related tensions within PSM through differentiation tactics integration tactics ⁃ Managing a diverse portfolio of projects to adopt IoT technologies and enhance PSM performance, ⁃ Widely supporting the development of IoT solutions within the firm, ⁃ Managing a diverse set of relationships and processes, ⁃ Attracting buyers with generalist job profiles and a strong business orientation ⁃ Developing a vision on what machines and humans excel at for PSM, ⁃ Creating an integrated architecture for PSM systems and tools, ⁃ Coordinating the allocation of resources across segments, projects and relationships, ⁃ Developing a shared culture within PSM to support exploratory projects and when exploration can be conjointly performed with exploitation ones For instance, one of our informants suggested “What I have been preaching in my company is to dedicate 5% of our resources to open innovation If you have 800 people, this means that you can have 40 people who work on issues, concerns or challenges that not belong to a specific category You dedicate them to initiatives where they can investigate opportunities well beyond traditional boundaries” At the same time, he would still expect innovation to come from within established PSM structures “There are a lot of advantages of performing such innovation as it does not require you to extract yourself from the existing organizational framework This requires the development of a culture where people are encouraged to find out what innovative practices could be adopted within categories” The fourth tactic consists of developing a shared culture It has been greatly discussed within some of the workshops across the three studies The adoption of IoT and new technologies create anxiety; a shared culture helps people envision their future and adapt to changes One informant described developing a culture as “creating a safe environment and a solid backbone for our people” This is something he judged particularly important for PSM organisations that are geographically spread out and facing rapid changes such as the introduction of new technologies This can be achieved by sharing values that support both exploration and exploitation, as suggested by Birkinshaw and Gibson (2004) Table aggregates elements presented above and describes our findings on how to manage IoT related tensions within PSM through differentiation and integration tactics have been described previously as part of other scenarios The next differentiation tactic consists in managing a diverse set of relationships and processes to support an exploratory orientation One of our informants described this exploratory orientation as combining “(1) Seizing opportunities as they emerge; (2) Taking an active role in an accelerated innovation process; (3) Looking at risks and opportunities through new lenses” These activities require an extensive management of the relationships with suppliers and internal stakeholders The fourth differentiation tactic consists in attracting buyers with generalist job profiles and a strong business orientation One informant suggested: “We need people with solid business foundations and a genuine marketing mindset This is essential to develop a 360-degree vision, to spot new opportunities and create value ahead of others” This illustrates well the last tactic that supports differentiation within our framework: attracting buyers with generalist job profiles and a strong business orientation The term generalist is used here to signify that buyers should be able to adapt rapidly to different markets and stakeholders From an integration perspective, our data suggested four tactics The first one consists of describing the future role of machines and humans in purchasing One firm's internal documentation has provided us access to a vision within a firm which was developed to describe how buyers of the future will use technology to be more efficient and contribute to innovation concurrently The CPO of this firm stressed the value of building a compelling vision in a context of rapid change: “Today, many people get confused when it comes to digitalisation, the Internet of Things or data analytics Leaders need to focus first on the why and the ambition they have for purchasing” Such a vision combines both sides of the divide and illustrates synergies between them Such synergies include resource optimisation and enhanced access to information The second tactic consists of creating an integrated architecture for PSM systems and tools Processes supported by IoT technologies are a part of a broader architecture Aggregating processes and tools without optimising the overall architecture can create issues and create suboptimisation traps A proper architecture also generates synergies as it provides access to multiple sources of data that are well curated The third tactics is coordinating the allocation of resources across projects and activities As IoT bring multiple new opportunities financial and temporal resources become stretched Therefore, allocating with care all resources across key activities becomes critical This can create synergies in terms of knowledge sharing across activities This also makes it possible to define when a spatial differentiation is needed Summary of the findings In order to study the impact of emerging technologies on the PSM function we have constructed a framework using a systematic inductive research approach that follows the guidance of Gioia et al (2013) Our data structure developed through a desk-based analysis of interviews and workshops includes three levels of coding The analysis exposed two contrasting ambitions that are adopted by PSM functions The first one consists of leveraging the IoT as a means to gain efficiency and control within PSM In the second one, IoT opportunities are used to stimulate innovation, renewal and growth for the firm Our data analysis revealed tensions associated with pursuing these ambitions concurrently This led us to develop three scenarios as part of our analysis; scenario one and two each focused on a single ambition while scenario Table Summary of the findings Scenario Tensions Strategy: How tensions are handled Implications PSM as an IoT Technology Adopter PSM as an IoT Innovator Promising technology vs Demanding changes Entrepreneurial mindset vs Risk management All of the above + Exploration vs Exploitation Spatial separation Achieving operational excellence at the expense of more strategic contributions Supporting business development but risk of pressure on resources as investment in technology is delayed Achieving efficiencies and business-wide benefit but risk of reorientation of resources allocated to long term project Achieving both efficiencies and business-wide benefits but challenging managerial exercise PSM as an IoT Master & Strategist Temporal separation Spatial separation (if limited impact of IoT on the Business) Accepting and using the tensions (if pervasive impact of IoT on the Business) 10 Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al differentiation and integration tactics, it offers empirical evidence on how PSM leaders manage tensions associated with the emergence of the IoT and achieve ambidexterity Third, it provides a comprehensively grounded framework on how to manage the influence of IoT on PSM Each of these contributions offers implications for future research three focused on both ambitions Part of the analysis for each scenario consisted of revealing the underlying tensions This allowed us to reveal complex relationships across the concepts and themes of our framework By embracing the tensions instigated by the IoT we develop a rich understanding of how PSM addresses contemporary changes and opportunities The first scenario focuses on leveraging the IoT to gain efficiency and control within PSM This appears as the path with the least resistance as PSM operates here within its traditional boundaries, delivering results according to its established performance goals such as efficiency and cost reduction From a tension perspective, this corresponds to a spatial separation strategy It might, however, lead other functions to take over activities related to innovative or IoT critical suppliers and partners We believe that this trajectory, pursued to an extreme, would lead the PSM function to focus on an operational role at the expense of a more strategic role The second scenario implies focusing on exploratory activities for business-wide benefit without simultaneously attempting to gain PSM efficiencies In this trajectory, PSM would extend its strategic role in line with the firm priorities on business development From a tension perspective, this corresponds to a temporal separation strategy If the initial attempt would be to support the firm's strategic development, over time, PSM will have more incentives to use increasingly mature and affordable technologies to innovate its own processes The third scenario combines gaining PSM efficiencies and supporting exploratory activities for business-wide benefit Two trajectories have been identified for this One potential trajectory for PSM would suit firms where a limited number of well-identified IoT projects can be supported by PSM It requires PSM resources to be dedicated to such projects separately from exploitation activities and the adoption of IoT technologies From a tension perspective, this corresponds to a structural separation strategy With this trajectory, the risk is to stop dedicating PSM resources to strategic projects as they make no immediate contributions to PSM economic goals A second trajectory would suit firms where the impact of IoT is more pervasive within the firm From a tension perspective the PSM function would simultaneously pursue both ambitions by accepting and using the tensions, which means simultaneously adopting differentiation and integration tactics From a differentiation point of view, this implies leading and participating in multiple projects across both ambitions thanks to buyers with a strong business orientation who can manage a diverse set of relationships and processes From an integration point of view, this signifies developing a vision and a shared culture that integrates both ambitions, guiding the allocation of resources across projects and ensuring the development of an integrated architecture for processes and tools By doing this, PSM could maximise benefits from each ambition, minimise conflicts between them and maximise synergies across them Table summarizes these findings 6.1 The importance of tensions for PSM research First, we propose that the study of tensions, defined as conflicting but intertwined forces, offers great potential for future PSM research Our analysis shows, in line with Smith and Lewis (2011), that the tensions are not created by the emergence of IoT opportunities, they are revealed by technological change, by the multiplicity of views among stakeholders and by the scarcity of resources In other words, these tensions pre-existed the emergence of IoT technologies but were exacerbated by it The study of tensions should become more central to PSM research; this could build on the literature associated with tensions, contradictions and paradoxes (Smith and Tushman, 2005; Lewis, 2000; Andriopoulos and Lewis, 2008) This would require to conceptualise PSM as a function situated at the centre of a nexus of contradictory but intertwined forces An inventory of existing tensions identified within the literature would offer a logical starting point before collecting more empirical evidence on how specific or multiple tensions are addressed or reconciled 6.2 Managing tensions associated with the emergence of the IoT and ambidexterity By adopting the differentiation-integration tactics suggested by Smith and Tushman (2005) and Andriopoulos and Lewis (2008), our research approach contributes to understanding how IoT related tensions are managed within PSM functions However, further research is needed to expand, describe and test these findings First, performing a longitudinal analysis within a single firm on how IoT has impacted PSM over time could provide access to an in-depth understanding of the role differentiation and integration tactics and on their evolution over time Second, a comparative analysis of differentiation and integration tactics across multiple firms within a digital intensive sector would be extremely valuable It would strengthen our understanding of how IoT related tensions within PSM are managed across different firms facing comparable external turbulences Third, specific measures of differentiation and integration should be included in quantitative studies in order to test their impact on PSM and firm performance 6.3 Framework on how to manage the impact of IoT on PSM We have developed a grounded framework and three scenarios, based on s order themes, on how to anticipate and actively manage the impact of IoT on PSM The findings presented within and across each theme of our framework build on a rich and diverse set of data gathered from informants across three studies Further research opportunities are manifold, three of them can be highlighted First, further research is needed on how decisions related to IoT projects are informed and taken; the plurality of options coupled with the scarcity of resources calls for further investigation Second, the rising interdependencies amongst industry actors, the upsurge of suppliers acting as competitors or complementors and the challenges associated with interoperability and standardisation create a new environment for firms Collecting data on when and how PSM adopts a network view for selecting and qualifying suppliers would be valuable As the concept of ecosystem is maturing in management literature (Adner, 2017; Jacobides, 2018), it could be used as a theoretical backbone for such analysis Third, the role and involvement of the PSM function within the development and management of digital product service systems requires further attention Implications and future directions The development of a comprehensive framework for the impact of the IoT on the PSM functions has revealed tensions On the one hand, the PSM function adopts IoT technologies to enhance its performance, whilst it also needs to support the development of IoT solutions within the firm Our data suggest that, by combining differentiation and integration tactics, PSM leaders can leverage and resolve these tensions Overall, this contributes to PSM literature along three dimensions First, it continues to bring tensions and their active management to the forefront of PSM research This extends past research in sustainable supply chain literature (Xiao et al., 2019; Matthews et al., 2016; Montabon et al., 2016) and in PSM innovation literature where Gualandris et al (2018) have shown that PSM functions balance exploitation and exploration activities to match the dynamism of their external environment Second, through the description of 11 Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al Conclusion CRediT authorship contribution statement The Internet of Things (IoT) impacts a firm's processes and business models but also on its supply network For the PSM function, it creates opportunities to transition to a more capable and efficient organisation that also supports the development of IoT solutions within the firm by harnessing capabilities coming from diverse, complex and dynamic markets This creates tensions that can be managed through differentiation and integration tactics These early efforts on how to understand manage the impact of IoT on the PSM function have revealed insights into the contemporary challenges experienced by PSM functions We hope that future studies can challenge or elaborate on our findings and on the role of tensions within PSM studies in the context of IoT Hervé Legenvre: Conceptualization, Methodology, Formal analysis, Data curation, Writing - original draft, Writing - review & editing Michael Henke: Conceptualization, Methodology, Formal analysis, Data curation, Writing - original draft, Writing - review & editing Herbert Ruile: Conceptualization, Methodology, Formal analysis, Data curation, Writing - original draft, Writing - review & editing Declaration of competing interest The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper Appendix A comparative analysis of the findings of the three initial studies Study Impacts of the IoT on supply networks Opportunities for PSM Conditions for success Study become “intelligent” • Products product-services are more • Hybrid common alliances are needed to create • New new solutions real time access to infor• Providing mation contribution • Strategic enabling changes • Sometimes driving the changes • Sometimes procurement activities • Digitalising value out of data • Creating portfolios and segmenta• Rethinking tion as a central interface • Acting vertical and horizontal • Supporting collaborations the structures and pro• Adapting cesses diversity in terms of • Developing skills and profiles Study technology become product-service-IT bundles • New • Offerings partners (start-ups, research centres …) Increased & fast digital customer- supplier • New • interactions of complex and dynamic ecosystems • Development product life cycle & personalised pro• Multi-actors collaborations needed • Reduced ducts batch size & high volatility • Small efficiencies and transparency Efficiencies in tactical buying • Gain • strategic collaborations market and supplier analysis tools (e.g • Support • Smart risk) to innovation • Contribute value creating networks for business • Contribute to revenue generation • Managing model innovation processes and external networking • Automating • Internal segmentations Digitalisation of operational and tactical pur• Rethinking • chasing processes complex ecosystems • Addressing of digital solutions Purchasing becomes multi-tier supply manage• Sourcing • ment (end to end) and leveraging data • Sourcing processes dedicated to innovation, Use of technology and innovation management • Implementing • start-ups, data access Thinking in circular economies • new organisational models Establishing internal and external dynamic • Implementing • capabilities people with a marketing and business • Developing mindset Appendix B Example of data collected from informants Second order themes Adopting and integrating new technologies to develop “We are focusing on the automation of procurement This include activities related tendering, planning, e- auctions, order PSM performance handling This is still progressing Within years this should be fully in place for the less strategic items.” “In the future data will be available all along the life cycle of equipment Our People will be able to validate the quality of their prediction This will provide opportunities to build cost models that will help to predict the impact of specific parameters on cost.” “Procurement function will be smaller with more automation and with higher level skills people who will need to understand how to get value.” Implementing and leveraging new technologies along “The impact of the IoT on B2B is very significant Companies not jumping on the IoT bandwagon will be left behind The the supply chain supply chain will become more and more automated.” “The supply chain professional of the future will be different from today Demand planning will be an activity of the past Lower skilled jobs in the supply chain won't be required anymore.” “There will be a lot of data This will be a challenge to make sense of it and take better decision at the right time Nevertheless, this will create visibility along the supply chain both This will support planning and sustainability.” Taking advantage of new opportunities provided by “Our Profession will change because of the IoT We will be more and more buying solutions from the market, less products markets and services.” “There will be tremendous opportunities offered by platforms We see them as an opportunity to avoid intermediaries with low added value in the market This will not just be for commodities.” “For the maintenance of our production equipment we have now solutions where we pay based on our usage of the equipment This was made possible by suppliers who invested in monitoring technologies.” Anticipating developments in markets characterised by “I expect the roles across the industry to evolve before stabilizing Some innovative players will emerge and interact with rising interdependencies incumbents The capacity of different actors to seize specific opportunities will influence how value chains will be structured This will lead in some cases to complexity.” “With IOT, company will not come up with the full solutions You will need an ecosystem of partners The established player will adapt but nobody is ready At the same time, more people will create start-ups We will work more in ecosystems This will change how you work with suppliers –how we manage relationships how you establish contracts.” 12 Journal of Purchasing and Supply Management xxx (xxxx) xxxx H Legenvre, et al “In the industry, if you look upstream, strong entry barriers remain but as we go towards analytics and services, we see new companies coming in We will be facing leaders from other industry and it is hard to predict what the architecture of the overall ecosystem will look like in the future.” Integrating innovative suppliers within the firm's sup- “Today we are involved in some project because existing and new suppliers are bringing innovation Our role becomes to ply network and activities scout hunt and fish We are here to bring back some innovation.” “Market is more open: There are less entry barriers – Expertise and technology are more widely available – small companies are starting to play a more active role We need to better manage the relationship with them.” “For startups, we have a new engagement and development process They belong to a dedicated segment so we can “register them” well before “a classic audit” is necessary We have developed simple tools to assess them and integrate them in a list of potential partners.” Supporting the integration of external solutions within “On the data and software side, we have used open competition, innovation tenders and innovation workshops to identify product-service systems and select some new suppliers and partners.” “Collaboration amongst suppliers and with our company take place for smart equipment However, on the software side we don't have all the options to make the most of big data and automation.” “For new services, together with the solution designer we spend more time looking more at what the markets are proposing, and suppliers need to look far ahead to offer something innovative.” Supporting the development of new business models “In our connectivity project we are working on offering better service for end customers The Hardware and software side and revenue streams are the basic building block, they need to be reliable But new services and data sources will be added over time and it will create new revenue opportunities.” “On this project, we are working in a partnership mode with the start-up and we expect to create new sales channels and a new way to generate revenue.” “On this smart product, with our supplier we have established a cost and profit-sharing model We have invested together We buy the product for our own needs And we are coordinating our commercial strategy to support the promotion of the solution and generate revenue together on the market.” Differentiation tactics “We increasingly adopt open innovation practices, we work with marketing teams to better understand our users' painpoints, our offer gaps and to spot complementary solutions that could be rapidly mobilised We work with corporate innovation teams to take an active role in innovation clusters and to be part of multi-players collaborative innovation processes.” “We need people with more breadth of knowledge rather than category specialist, it is not enough to be an expert We need people who will be able to learn fast.” “We need, people with solid business foundations and a genuine marketing mindset This is essential to develop a 360degree vision, to spot new opportunities and create value ahead of others.” Integration tactics “We have built a vision outlining what the category manager of the future will be doing and what new technologies can help them achieve, this is essential to support change.” “We are rebalancing the organisation to go beyond category management This is essential to become more agile and to work closely with the business.” “We need a culture where everyone can contribute to innovation We are investing a lot in creating this We have a community manager and myself and my direct report we spend a significant share of our time on this.” Gualandris, Jury, Legenvre, Hervé, Kalchschmidt, Matteo, February 21, 2018 Exploration and exploitation within supply networks: examining purchasing ambidexterity and its multiple performance implications Int J Oper Prod Manag 38 (3), 667–689 (2013)Gubbi, Jayavardhana, Buyya, Rajkumar, Marusic, Slaven, Palaniswami, Marimuthu, 2013 Internet of Things 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The Impact of the IoT on the supply network, opportunities for the PSM function and the conditions for success... undertaken by the PSM function, (2) the impact on the expectations of and the relationships with internal stakeholders, (3) the impact on supplier searches and how relationships with them are managed,... network and the firm of the informant Then further specific questions probed into the answers as to how the IoT impacts the purchasing function This included questions related to: (1) the projects and