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Procurement definition, process, and models
Lecture week 37 (part 2), Extended EnterpriseJohan Versendaal
Lecture overview
• What is Procurement?• E-Procurement – a demo• Procurement models
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Procurement definitions
• “All activity that requires an invoice”• Procure-to-pay process• Open Buying on the Internet (1997-2002†)• RosettaNet (www.rosettanet.org):
– PIP 3A1: Request Quote– PIP 3A4: Request Purchase Order
• Exostar, an aerospace consortium and marketplace
• Procurement objects
OBI – Open Buying on the Internet
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RosettaNet (www.rosettanet.org)
Exostar procurement process (www.exostar.com)
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E-procurement of indirect materials –Demo Baan E-Procurement
Demo – Personalized experience
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Demo – Browse catalogue
Demo – Manage requisitions (1)
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Demo – Manage requisitions (2)
Demo – Route for approval & submit
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Demo – Process purchase orders
Demo – Receive materials
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E-procurement of direct materials
ERP
Buying Organization Supplier
E-enablingsoftware
- service-calls
- PO- Changed PO- Open POs
- PO Ack- Changed PO Ack- ASN- Invoice- Special Delivery Notice
XML-formats
Web services
- service-calls
Portal enabled
Procurement models
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Porter’s value chain
Organizational infrastructure
Technology development
Procurement
Inboundlogistics
productionOutboundlogistics
Marketing &sales
service
Profitmargin
Porter’s five forces model
New entrants
Threat of new entrants
Customer power
CustomersSuppliers
Substitute products/services
Competitors
Rivalry
Supplier power
Threat of substitute products/services
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Van Weele’s Procurement process
Tactical / Strategic
CustomerSupplier
Customers
Customers
Procurement process
After careEvaluation
LogisticsEvaluation
OrderingContractingSupplierselection
DetermineProductspecifications
Operational
D-BOI-model
Organization & Processes
Management & Control
Primaryprocess
Information
Strategy
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Kraljic-matrixLeverage competitiveness
Efficiency Secure supply
Supply chain cooperation
Leverage type of products
Routine type of products
Strategic type of products
Bottleneck type of products
Impact onfinancial result
High
High
Low
Low Supply risk
Procurement maturity model Retail
Automotive
Electronics
Telco
Computer
Value chainorientation
Supply chainorientation
Processorientation
Purchasecoordination
Commercialorientation
Transactionorientation
Chemicals
Food andbeverages
Pharma
FinancialservicesGovern.
Time
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Procurement performance
Purchasingresult
Purchasingeffectiveness
Purchasingefficiency
Product costs/prices
Product quality
Purchasing logistics
Purchasing organization
Manage material prices/costs
Lower material prices/costs
Purchase department involvement with new products
Quality of purchased products
Efficient purchasing process
Order & inventory policy
Trustworthiness of supplier delivery
Employees
Management
Procedures and policy
ICT
Supplier development modelSupplier Preferred
supplierSupplypartner
Developingpartner
Type of relation
Timing
Quality
Logistics
Type of contract
Price/costs
Operational
Short term
According to supplier; QCat supplier
Orders
From order toorder
Price
Tactical
One year
According to supplier; QCat supplier andbuyer
Contracts andcall-offs
Contracts (oneyear)
Price and quantityprice breaks
OperationalStrategic
Mid term Long term
Coordination ✓ QC atsupplier
Coordination ✓ QC atSupplier (incl.design)
Logistic systems Coupled logisticsystems; EDI
Contracts (> 1year)
Collaborativeengineering typeof contracts
Price and costreductionprogram
Open cost pricecalculation
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Papers
• Journal of Strategic Information Systems: Theory comparison
• Supply Chain Management: Partnering for product innovation
• Journal of Production Planning & Control: Assessmentof a-procurement projects
• To be accessed via BSCW, if you do not have access to the particular papers, send a mail (referencing this course) to: [email protected], [email protected].
Upcoming• Reflection on literature research (15 September, 9-10
am)• Introduction new assignment (15 September, 10-11
am)• Apply procurement model to case study (15
September, 11 am-1 pm• Submission of assignment week 37 (this week)
before 18 September 5 pm • Lecture on business/IT-alignment, procurement/IT-
alignment, and World Class Purchasing (20 September, 15.15-17 pm)
• Find respondent!!!