An Exploratory Study of the Item Importance Construct

Drawing from marketing, supply chain, and operations management literature, we develop and empirically assess a causal model of purchased item importance. We define item importance as the overall value that a buyer places on a particular direct material and examine how the purchased item’s functional contribution to end-product performance, customer involvement in the purchasing decision, end-product importance, financial impact of the purchased item, and item customization affect buyer’s perception of purchased item importance. To assess our causal model, we collected primary survey data from 34 ISM purchasing professionals from the Northeast U.S. Using bivariate correlation analysis, we find that purchased item’s functional contribution to end-product performance and financial impact positively influence perceptions of item importance. However, customer involvement, end-product importance, and item customization have no effect on item importance. These findings lend new insights into supplier segmentation practices and inform supplier portfolio management approaches.