Blind on one eye? A critical analysis of the relationship between external customers and purchasing and supply management

Since the 1980s, scholars emphasise the importance of customer-driven management, as ultimately external customers determine organisational competitiveness. This study critically examines the relationship between external customers and Purchasing and Supply Management (PSM) through a systematic literature review. It explores whether PSM adopts an ambilateral focus, addressing not only upstream supplier relationships but also downstream customers. Drawing on 105 empirical journal articles, the study holistically investigates how external customers and PSM interact. Key findings reveal that while external customer considerations are definitely present, they are often fragmented, incidental, and predominantly confined to industrial customer relationships in B2B contexts. End customers, their preferences, and qualitative insights are notably underrepresented. Moreover, most studies address customer concepts with limited adoption of advanced digitalisation technologies, which hold potential for richer customer engagement. Bidirectional relationships between PSM activities and customer outcomes were identified, suggesting that customer demands influence procurement decisions, and PSM activities, in turn, impact customer satisfaction and value perception. However, this dynamic remains underexplored, limiting PSM's ability to position itself as a driver of external value creation. Thus, this review argues that by embracing an ambilateral perspective, PSM can not only increase the efficiency and effectiveness of its activities but also strengthen its strategic significance for the focal organisation's competitive position. Avenues for future research and theoretical development lie therefore in (1) reconceptualising the PSM-customer relationship, (2) integrating end customers into core PSM considerations, (3) incorporating advanced digitalisation technologies as novel instruments for PSM-customer interaction, and (4) contemplating PSM's role in value creation for external customers.