Procurement definition, process, and models v1_1.pdf · 1 Procurement definition, ... • What is...

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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: bscwadmin@cs.uu.nl, ormhoed@cs.uu.nl.

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!!!