Electronic decision support for procurement management : evidence on whether computers can make better procurement decisions

We analyse how well purchasing managers are able to judge the likelihood of problems for a given purchasing transaction. The literature on clinical versus statistical prediction suggests that humans in general, including purchasing managers, are often outperformed by relatively simple statistical formulas for such kinds of tasks. Based on a vignette experiment of real purchasing transactions, we compare the performance of purchasing managers with freshmen students and with a statistical formula based on a cross-validated sample. The results show that the formula outperforms the humans, and that experienced purchasing managers do not outperform freshmen students. We conclude that it would make sense to use decision support systems in the daily practice of purchase management so that humans can devote their time to what they are good at, while being guided by statistical software that takes care of multi-dimensional decisions in noisy environments.