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Paper Presentation on E-Procurement

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This is the presentation of my paper in the context of E-Business course, at Berenschot, November 2008

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Paper Presentation on E-Procurement

  1. 1. Paper Presentation by Stella Pachidi Master in Business Informatics – Utrecht University Berenschot, 7 th November 2008 BUILDING AND IMPROVING THE PROCUREMENT FUNCTION USING THE GO-EPIC MODEL
  2. 2. <ul><li>Agenda </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Theoretical Framework: </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data analysis </li></ul><ul><li>Validation of hypotheses – results </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul>
  3. 3. <ul><li>The GO-EPIC model </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Derived from Hammer & Champy’s Business Prcess Redesign model </li></ul><ul><li>Business Perspectives : Goals, Organization, E-Technology, Processes, Information, Control </li></ul><ul><li>Maturity levels : Transactional orientation, Commercial orientation, Purchasing coordination, Internal integration, External integration, Value chain integration </li></ul><ul><li>Performance : Transaction costs, Price purchase index, Quality conformance, Time - supplier delivery accuracy </li></ul><ul><li>Alignment : the closeness of maturity scores of all dimensions </li></ul>
  4. 4. <ul><li>The GO-EPIC model </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Hypothesis 1 : The more mature is an organization, the higher is its procurement performance . </li></ul><ul><li>Hypothesis 2 : The higher the alignment of an organization along the six business dimensions, the higher is its procurement performance . </li></ul>
  5. 5. <ul><li>Situationality </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>A general designation of the factors that render an organization relevant to a specific situation </li></ul><ul><li>Factors that determine a company’s situationality on procurement: </li></ul><ul><li>Size of the organization : small, medium, big enterprise </li></ul><ul><li>Purchasing volume : the number of purchase orders </li></ul><ul><li>Purchasing spend : the percentage of the revenues spent on purchasing </li></ul><ul><li>Use of E-Technology : the application of information technology in the purchasing process </li></ul>
  6. 6. <ul><li>Situationality </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Size </li></ul><ul><li>Purchase volume </li></ul><ul><li>Purchasing spend </li></ul><ul><li>Application of IT </li></ul>Procurement maturity <ul><li>Hypothesis 3: Procurement maturity is defined by the situationality factors in a proportional way. </li></ul>
  7. 7. <ul><li>Operationalization </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Online survey on procurement of 54 organizations </li></ul><ul><li>Quantitative analysis </li></ul>
  8. 8. <ul><li>Data analysis </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Maturity: mean (G,O,E,P,I,C) ( Mean: 3.15) </li></ul><ul><li>Alignment: ( Mean: 1.39) </li></ul><ul><li>Performance: </li></ul><ul><li>Performance_T = mean (Delivery_t, Quality_t, Costs_t) Performance_C = mean (Quality_c, Price_c, Costs_c) </li></ul><ul><li>(Mean: 3.20) </li></ul>
  9. 9. <ul><li>Validation of hypotheses </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>High maturity – high performance : Correlation = 0.102 </li></ul><ul><li>High alignment – high performance : Correlation = -0.8 </li></ul><ul><li>High maturity * alignment – high performance: </li></ul><ul><li>Correlation = 0.007 </li></ul>
  10. 10. <ul><li>Situationality - Size </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Procurement maturity </li></ul><ul><li>Positive correlation in 2 categories </li></ul>SIZE 1-100 101-1000 1001-110000 N 19 16 19 Procurement_Maturity mean 2,9 3,2396 3,3246 Procurement_Performance mean 3,1842 3,1534 3,2807 Correlation Procurement_Maturity with Performance -0,29 0,632 0,395
  11. 11. <ul><li>Situationality – Purchasing Volume </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Procurement maturity </li></ul><ul><li>Positive correlation in 4 categories </li></ul>PURCHASE ORDERS 1 0-5000 2 500 0 -10000 3 1000-15000 4 1500-20000 5 20001-25000 6 >25000 N 30 7 2 3 3 9 Procurement_Maturity mean 3,02 3,17 2,94 3,4 1 3,3 8 3,44 Procurement_Performance mean 3,2 3,26 2,6 7 3,2 8 3,33 3,22 Correlation Procurement_Maturity with Performance -0,1 2 -0,01 1 0,74 0,92 0,3 3
  12. 12. <ul><li>Situationality – Purchasing spend </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul>PURCHASING SPEND 0-29 30-69 70-100 N 19 21 14 Procurement_Maturity mean 2,7471 3,47 1 3,22 Procurement_Performance mean 3,12 3 3,31 8 3,14 3 Correlation Procurement_Maturity with Performance -0,062 0,253 -0,001
  13. 13. <ul><li>Situationality – Application of IT </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Procurement maturity </li></ul><ul><li>Positive correlations between maturity, alignment, performance </li></ul>APPLICATION OF IT 1-1,5 1,6-2,5 2,6-3,5 3,6-4,5 4,6-6,0 N 8 23 15 5 3 Procurement_Maturity mean 2,5 2 2,9 1 3,5 2 3,74 3,9 1 Procurement_Performance mean 3,08 3,2 4 3,2 2 3,23 3,1 1 Correlation Procurement_Maturity with Performance -0,65 0,2 5 0,22 -0,19 0,48 Correlation Alignment with Performance 0,75 -0,5 7 -0,15 0,6 2 0,6 6
  14. 14. <ul><li>Results </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>GO-EPIC model: useful instrument for measuring maturity and alignment in organizations </li></ul><ul><li>We need to find a more reliable construction of Performance variable to validate our hypotheses </li></ul><ul><li>Maturity and Alignment measured by more questions </li></ul><ul><li>Hypotheses are validated in individual cases </li></ul>
  15. 15. <ul><li>Case Study: Mayfair Club S.A. </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Branch: retail </li></ul><ul><li>Total headcount: 336 </li></ul><ul><li>Headquarter in Athens, 4 branches in Athens, Patras, Thessaloniki, Heraklion </li></ul><ul><li>Scope of the company: the import, export and trading of house, electrical and electronic products to end customers in Greece </li></ul><ul><li>Trading through stores, telephone and telemarketing </li></ul>
  16. 16. <ul><li>Strategy </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Value discipline: </li></ul><ul><li>Operational Excellence “best total cost”: lowest price, most reliable delivery, rationalized assortment, strong central control </li></ul><ul><li>Market’s Strategy : House, electrical and electronic products sales aimed at a middle level of the market </li></ul><ul><li>B2B e-procurement strategy – strong points: </li></ul><ul><li>The integration of IT systems in the operational and tactical purchasing process contributes to high-level flow of purchasing information and effective control over the various stages along the supply chain. </li></ul>
  17. 17. <ul><li>Maturity assessment </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Procurement maturity: 4.36 </li></ul><ul><li>Alignment: 0.89 </li></ul><ul><li>Performance: 4/5 </li></ul>
  18. 18. <ul><li>Benchmarking </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>Higher maturity mean </li></ul><ul><li>Lower alignment </li></ul><ul><li>Higher performance </li></ul>
  19. 19. <ul><li>Feedback on Procurement </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>The company focuses too much on other dimensions while strategy has remained low </li></ul><ul><li>Increase Strategy maturity : </li></ul><ul><li>integrate procurement strategy in overall business strategy </li></ul><ul><li>Increase Processes and Organization maturity </li></ul>
  20. 20. <ul><li>Purchasing strategy </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>BUSINESS STRATEGY </li></ul><ul><li>Quality, WIN-WIN relationship with end-customers, Delivery, Strong central control </li></ul><ul><li>PURCHASING STRATEGIC OBJECTIVES/ COMPETITIVE PRIORITIES </li></ul><ul><li>Cost, Price, Quality </li></ul><ul><li>+ Time delivery, Strong central control in the procurement function, Build network cooperation with suppliers </li></ul>PURCHASING CHOICES/DECISIONS IMPLEMENTATION <ul><li>PURHCASING PERFORMANCE/CAPABILITIES </li></ul><ul><li>Cost, Quality, Flexibility, delivery </li></ul><ul><li>BUSINESS PERFORMANCE </li></ul><ul><li>Commercial performance, Financial performance </li></ul>Purchasing function
  21. 21. <ul><li>Purchasing Strategy </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>BUSINESS STRATEGY </li></ul><ul><li>Quality, WIN-WIN relationship with end-customers, Delivery, Strong central control </li></ul>PURCHASING STRATEGIC OBJECTIVES/ COMPETITIVE PRIORITIES <ul><li>PURCHASING CHOICES/DECISIONS </li></ul><ul><li>Develop long-term relationship with suppliers </li></ul><ul><li>Evaluation of suppliers </li></ul><ul><li>Involvement of suppliers in procurement planning </li></ul><ul><li>Select products according to customers needs </li></ul>IMPLEMENTATION <ul><li>PURHCASING PERFORMANCE/CAPABILITIES </li></ul><ul><li>Cost, Quality, Flexibility, delivery </li></ul><ul><li>BUSINESS PERFORMANCE </li></ul><ul><li>Commercial performance, Financial performance </li></ul>Purchasing function
  22. 22. <ul><li>Procurement Strategy </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>BUSINESS STRATEGY </li></ul><ul><li>Quality, WIN-WIN relationship with end-customers, Delivery, Strong central control </li></ul>PURCHASING STRATEGIC OBJECTIVES PURCHASING CHOICES/DECISIONS <ul><li>IMPLEMENTATION </li></ul><ul><li>Technical, functional product specifications </li></ul><ul><li>Requirements for the suppliers, using supplier knowledge </li></ul><ul><li>Purchasing product selection based on objective factors (e.g. price, delivery time) after market research and risk analysis </li></ul><ul><li>Purchasing ordering based on demand/supply chain system </li></ul><ul><li>Quality assessment by supplier </li></ul><ul><li>Sign design contracts </li></ul><ul><li>PURHCASING PERFORMANCE/CAPABILITIES </li></ul><ul><li>Cost, Quality, Flexibility, delivery </li></ul><ul><li>BUSINESS PERFORMANCE </li></ul><ul><li>Commercial performance, Financial performance </li></ul>Purchasing function
  23. 23. <ul><li>Practical Contribution </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>GO-EPIC model - a tool for planning and evaluating the procurement function of an organization </li></ul><ul><li>Measure procurement maturity and visualize alignment </li></ul><ul><li>Using maturity of dimensions and situationality, we can decide which strategy will lead to higher performance </li></ul><ul><li>Use the survey data for benchmarking the organizations </li></ul>
  24. 24. <ul><li>Conclusions </li></ul><ul><li>Agenda </li></ul><ul><li>GO-EPIC model </li></ul><ul><li>Situationality </li></ul><ul><li>Operationalization </li></ul><ul><li>Data Analysis &Hypotheses Validation </li></ul><ul><li>Case Study </li></ul><ul><li>Practical Contribution </li></ul><ul><li>Conclusions </li></ul><ul><li>GO-EPIC model proves to be a useful strategy tool for planning and evaluating the procurement process in organizations </li></ul><ul><li>Need to research on measurement of procurement performance </li></ul><ul><li>Enhancement of the questionnaire with more maturity questions </li></ul>
  25. 25. <ul><li>Questions </li></ul>

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