Some slides on what an information processing capability for sourcing and procurement needs to support

1. A digital, integrated
sourcing/procurement
information processing
capability
ECSCIA, European Centre of Supply Chain Information
Architecture

2. ECSCIA, European Centre of Supply Chain Information
Architecture
Why?

3. ECSCIA, European Centre of Supply Chain Information
Architecture
A digital, integrated sourcing/procurement information processing capability is an engine for making the
“the five rights of procurement” more right in a faster, more cost efficient and more accurate
manner
Right quality
Right quantity
Right place
Right time
Right price

4. ECSCIA, European Centre of Supply Chain Information
Architecture
Cost Leadtime Availability Reliability Innovation
A digital, integrated sourcing/procurement information processing capability is a toolbox that
refines and accelerates
the journey to reach fundamental sourcing and procurement objectives
Lower Higher Faster

5. The ”new 4P”: -People-Planet-Purpose-Profit
Requires some help from sourcing and procurement….
Some say : ”-Current rate of global consumption will require 2 planets by 2050 ”
Going digital and integrated when sourcing makes sense on so many levels beyond saving the last Euro. It builds
your brand in the eyes of the new, aware consumer..
A digital, integrated sourcing/procurement information processing capability allows for realization of supports
new, changing social values
Builds the corporate brand, attracts and retains employees, powers a partner network journey towards common
greater good.

6. ECSCIA, European Centre of Supply Chain Information
Architecture
Your supplier relationship is a part of your success and part of your failure.
A digital, integrated sourcing/procurement information processing capability is a toolbox to manage, grow and
leverage of that relationship
Horse meat
lasagna
Brake
problems
Material
shortages
IP leaks
Last mile
disasters
To high
product cost

7. How we innovate
How we develop
How we source
How we make
How we plan
How we deliver
How we research
How we sell
How we contractValue chain(s) How we harvest
How we integrate
How we relate
Sourcing objectives Value chain objectives
ECSCIA, European Centre of Supply Chain Information
Architecture
A digital, integrated sourcing/procurement information processing capability allows for balancing
sourcing/procurement priorities relative the overall value chain design.

8. ECSCIA, European Centre of Supply Chain Information
Architecture
First, some conceptual
Sourcing & Procurement user stories
to illustrate what the “digital, integrated
sourcing/procurement information processing capability ”
is to support

9. ECSCIA, European Centre of Supply Chain Information
Architecture
As a professional within
sourcing and procurement, I
want to negotiate from a
platform of digital facts since
facts gives me bargaining
power and allows me to build
strong supplier relationships
As a professional within
sourcing and procurement, I
want to act from a platform of
digital facts so that I can
prepare, execute and follow
up to drive the process with
speed and accuracy and long
term consistency
Factsfuels the sourcing & procurement process.
A digital, integrated sourcing/procurement information processing capability makes facts available

10. ECSCIA, European Centre of Supply Chain Information
Architecture
As a professional within sourcing and
procurement, I want to be empowered by facts
so that I can:
drive cost down, manage risk, manage quality,
enforce compliance, enforce adherence,
manage performance, collaborate to gain
efficiencies in the extended ecosystem,
collaborate to innovate and……..
Continuous improvementin sourcing and procurement requires a toolbox of facts:
a digital information processing capability

11. ECSCIA, European Centre of Supply Chain Information
Architecture
As a professionals within sourcing and procurement, we
want to use facts to enable communities & collaboration
within our own organization and within the extended
enterprise so that each stakeholder can contribute to
overall efficiency in a positive, long term win-win
relationship
Procurement is teamwork, not a fight.
Long term sustainable relationships are built on correct information and collaboration. An integrated
procurement information processing capability is a platform for negotiation strength but it is not onesided. It is
an enabler for stakeholders to work together in extended supply chains.

12. ECSCIA, European Centre of Supply Chain Information
Architecture
As a professional within sourcing and
procurement I want to have access to and
share a clear volume plan on relevant
product granularity over relevant time
horizon so that all stakeholders can
contribute to the negotiation process on
the same and relevant volume scenario.
IBP & S&OP fuels the procurement process

13. ECSCIA, European Centre of Supply Chain Information
Architecture
An digital, integrated sourcing/procurement information processing capability supports digital exchange of facts.
Digital tendering adds clarity to the procurement process. Stakeholders working of clear facts, “single point of
reference” can work faster, more accurate, in a wider team cross more processes.
“See together, know together, act together”
As a professionals within sourcing and
procurement I want to capture, access and
share digital content with my own organization
and with my suppliers when orchestrating the
tender process. I want that so that all
stakeholders obtain a consistent view of need
and response.

14. ECSCIA, European Centre of Supply Chain Information
Architecture
Digitally feeding facts from
the sourcing process into
other processes
supports/enforces
adherence to the contract
As a supply chain planner, I want
my planning assumptions to be
digitally aligned with the facts
procurement processes provides.
As a buyer, I want my orders to
be digitally aligned with the
facts procurement processes
provides.
As a controller, I want my
analyzis tools to be digitally
aligned with the facts
procurement processes
provides.
As a quality engineer, I want to
be digitally aligned with the
facts procurement processes
provides when evaluating actual
material
As a design engineer, I want to
interact with the procurement
selection processes when
designing in order to ensure
that design choices and
procurement strategies support
each other

15. ECSCIA, European Centre of Supply Chain Information
Architecture
Digitally feeding facts from
the fulfilment process
allows for continuous &
scaled monitoring of
quality (performance)
As a professionals within sourcing and
procurement, I want digital access to results
from inspection and statistics relating to
claims so that I can evaluate the suppliers
continuous performance and help drive
improvements across the design and supply
chain

16. ECSCIA, European Centre of Supply Chain Information
Architecture
Digital contract
management
As a professionals within sourcing and
procurement I want to manage contacts digitally
on structured objects and orchestrate the
collaborative process of contract establishment
and contract communication digitally so that the
contract establishment process itself can be
executed efficiently and dependent processes
interfaced with accurate facts in real time

17. ECSCIA, European Centre of Supply Chain Information
Architecture
Productive use of facts in sourcing and procurement processes often require classification of those facts
As a professionals within sourcing and
procurement I want to classify products, parts,
materials and suppliers so that I can work with
them in groups depending of their importance
relative the classification criteria
Sourcing & Procurement PLM & standards

18. ECSCIA, European Centre of Supply Chain Information
Architecture
Bringing product, demand
and supply together
allows for proactive,
interactive and reactive
sourcing
As a procurement professional I
want insight and mandate in the
product design process so that I can
guide and align component choices
relative their sourcing impact
As a procurement professional I want
digital integration to the engineering
change process / manufacturing
implementation process so that I can
evaluate an mitigate the sourcing impact
of changes systematically
As a procurement professional I want
digital integration between the new
product introduction process and the
sourcing process so that I can translate the
product portfolio plan to procurement
needs over time

19. ECSCIA, European Centre of Supply Chain Information
Architecture
Volume plans
accompanied by spend an
performance analytics
empowers negotiations
An digital, integrated sourcing/Procurement information
processing capability enables 360 degree, continuous fact
based transparence of the relationship between buyer and
seller. The digital fact base empowers the negotiator and
allows for tuning execution
As a sourcing & procurement professional I
want digital facts on spend, supplier
performance, our own internal performance
and the volume plan when entering
negotiations so that I can interact with the
supplier supported by a fact base reflecting
our historical and planned future relationship
Sourcing &Procurement IBP & S&OP

20. ECSCIA, European Centre of Supply Chain Information
Architecture
Actuals together with
plans allows for driving
towards set goals
An digital, integrated sourcing/Procurement information
processing capability enables setting goals, follow up and
coordination of work towards those goals
As a sourcing & procurement professional
want to be ale to set goals for long term
savings and continuously follow up on those
against actuals so that I can orchestrate
effort to achieve the goal.

21. ECSCIA, European Centre of Supply Chain Information
Architecture
Integrate
digitally
As a sourcing & procurement professional I
want to integrate processes digitally through
EDI iso that I can interact faster with supplier
and automate negotiations (…auctions…),
automate execution and automate the
financial supply chain.

22. ECSCIA, European Centre of Supply Chain Information
Architecture
What does a digital, integrated
sourcing/procurement information
processing capability mean and what does it
enable?

23. ECSCIA, European Centre of Supply Chain Information
Architecture
it's the early bird that catches the worm…
Integrate procurement into the product and supply chain design process, keep suppliers aware that you have the
information processing capabilities it takes to design them into the product and the supply chain
as well as out of it.
Negotiate suppliers before
locking the product design
Walk together!
Integrate
procurement into the
product and supply
chain design
processes
Sourcing & Procurement PLM & standards

24. ECSCIA, European Centre of Supply Chain Information
Architecture
When facts are systematically consolidated
into digital formats and structured according
to shared references (configuration standards
and master data rules), those facts can
be digitally fed into other
processes, enabling speed, quality,
automation, collaboration…….
Procurement excellence goes beyond achieving internal efficiency. A digital, integrated
sourcing/Procurement information processing capability enables integration to other processes, internal as
well as external
Sourcing & Procurement Integration and messaging standards

25. ECSCIA, European Centre of Supply Chain Information
Architecture
An integrated procurement information
processing capability allows for linking demand
planning, supply chain planning and supply
chain execution monitoring to the procurement
process. Supply chain facts & visibility can be
used to build supplier relationships to maximize
the overall chain.
Procurement excellence
starts from the volumes
Sharing accurate
forecast, accurate
plans makes you a
trusted partner
Adherance to
commited volumes and
early
adjustments/warnings
when at risk of
deviating make you a
trusted partner
Trusted
partners gets
better deals
Sourcing &Procurement IBP & S&OP

26. ECSCIA, European Centre of Supply Chain Information
Architecture
An digital, integrated
sourcing/Procurement
information processing
capability allows for B2B
EDI exchange
Exchanging the volume plan
through B2B EDI enables
automation both at buyer and
supplier side.
Automation improves timeliness
and accuracy in response. Partners
can collaborate more frequently at
less effort (lower cost), which
allows for tuning the overall supply
chain, including the procurement
aspect
Ultimately, the cyclical
negotiation relationship
between buyer and
supplier transitions into
realtime
Sourcing & Procurement Integration and messaging standards

27. ECSCIA, European Centre of Supply Chain Information
Architecture
An digital, integrated sourcing/Procurement information processing capability enables automation.
Structured facts allows for machine processing of sourcing and procurement tasks
Integrated, harmonized facts
Simple automation & workflow
Advanced automation (AI)
Predictions and advanced analytics (ML / AI)
Systematic collaboration
Sourcing & Procurement Machine learning & artificial intelligence

28. ECSCIA, European Centre of Supply Chain Information
Architecture
Digital
frontend
A digital, integrated sourcing/Procurement information processing capability does away with manual touch and
translation delay.
Truly “digitally integrated” allows for instant access to information that is created, processed and presented on the
same information structures, no manual translation, no manual transformation
Reposititories
Documents
Digital
frontend
Integrated,
harmonized
facts
Bi layers

29. ECSCIA, European Centre of Supply Chain Information
Architecture
The information system landscape

30. ECSCIA, European Centre of Supply Chain Information
Architecture
Tender needs Run tender Allocate/Award
Contracts
administration
Operational
contracts
Execution tracking
Rough cut mappig of Sourcing/procurement process steps to the information platform types that (might..) support them
Supply chain
planning tool
PLM tool
Procurement platform Contract mgmt. platform
Demand
planning tool
Supply chain planning tool
Supply chain planning tool
ERP
Supply chain
planning tool
ERP
Spend analytics
tool
Supplier
performance
analytics tool
Spend analytics
tool
Supply
network
optimization
tool
Collaboration platform
Collaboration
platform
B2B EDI platform “EIB”
B2B EDI platform
Invite confirm Onboard Collaborate
Supplier
performance
analytics tool

31. European Center of Supply Chain Information Architecture,
ECSCIA
The supply chain
partners
The product
The parts
The structures
The documents
The transactions
The Metrics
The actuals
The classfications
The plans
The supply chain
networks
PLM tools
ERP tools
Planning tools
SRM toos
The objects and the IT tools interact to form the digital information processing capability. Designing it is a holistic exercise
Analytics tools
workflow tools
Collaboration tools

32. ECSCIA, European Centre of Supply Chain Information
Architecture
The enabling IT stack…..

33. ECSCIA, European Centre of Supply Chain Information
Architecture
Try thinking of the digital information processing
capability for sourcing and procurement using LEAN
5S
Poka yoke
Hoshin Kanri
Nemawashi
Muda Mura Muri

34. ECSCIA, European Centre of Supply Chain Information
Architecture
Sourcing & procurement needs to manage information in the
same way as manufacturing manages shopfloors in LEAN 5S :
Sort : Identify needed information
Set in order : Structure that information
Shine : Clean it up relative the structure
Standardize : Enforce the structure
Sustain : Set it up for continuous executions
A digital, integrated sourcing/Procurement information processing capability enables LEAN 5S on information

35. ECSCIA, European Centre of Supply Chain Information
Architecture
One common way of applying 5S in sourcing and procurement is the Kraljic portfolio matrix.
A digital, integrated sourcing/Procurement information processing capability allows for creating and maintaining
such classification schemes for more objects at less effort, higher frequency and more detail.
Leverage
Non-critical
Strategic
Bottleneck
Impact
High
Low
Low High
Risk

36. ECSCIA, European Centre of Supply Chain Information
Architecture
Hoshin Kanri, jointly set & execute the strategy
Drive
/Exploit
Balance
/Guard
Diversify
Diversify
Balance
/Guard
Balance
/Guard
Drive
/Exploit
Drive
/Exploit
Diversify
HighSupplier market strength
Buyer strength
High
Low
Priorities
Process choices
System choices

37. ECSCIA, European Centre of Supply Chain Information
Architecture
The concept of Poka Yoke, “mistake proofing” goes hand in hand with the digital information processing capability
for sourcing and procurement.
“Work together to prevent errors and improve”

38. ECSCIA, European Centre of Supply Chain Information
Architecture
Threat of new
entry
Threat of
substitution
Buyer powerSupplier power
Competitive
rivalry
Nemawashi, the discrete, quite seeking of consensus for change supports the idea of sourcing and procurement
as team effort enabling win win rather than binary confict across extended stakeholder relationships.
Let the digital, integrated sourcing/procurement information processing capability help you understand your
position and support establishment of good balance.
Porters five forces

39. ECSCIA, European Centre of Supply Chain Information
Architecture
The digital information processing capability should enable sourcing/procurement to execute the supplier network
in lien with the essence of Muda Mura Muri, eliminating waste and inefficiencies.
The end goal of supplier performance management isn´t to expose failure, I is to improve, to eliminate muda,
mura, muri

40. ECSCIA, European Centre of Supply Chain Information
Architecture
Capability framework

41. Procurement capabilities
European Center of Supply Chain Information Architecture,
ECSCIA
Strategic Tactical Operational
PLAN SOURCE
PREPARE SOURCE
EXECUTE
SOURCE
FOLLOW UP ON SOURCE
CLASSIFY FOR SOURCE
EXECUTE
FINANCIAL FLOW

42. European Center of Supply Chain Information Architecture,
ECSCIA
Tender
volumes
Product
structures
Demand
PLAN SELL
PLAN MAKE
PLAN SOURCE
DESIGN (NPD)
Products
Launch lists
Completion plans
INTEGRATE
PLAN
DELIVER
Source list
Contracts
Key
components
Critical
components
Reuse
components
AVL
Plan source (1)

43. volumes
volumes
volumes
Portfolio planning
Sales planning
S&OP
forecastMaterial forecast
Strategic bets/ risk
investments
Contracts
Monthly pricing
process
Quotas (allocation)
Contracts
The volumes (”tender needs”)

44. Plan source (2) APICS SCOR terminology
European Center of Supply Chain Information Architecture,
ECSCIA
Plan Source
sP2Plan Source
sP2.1:Identify, Prioritize and Aggregate Product Requirements
sP2.2:Identify, Assess and Aggregate Product Resources
sP2.3:Balance Product Resources with Product Requirements
sP2.4:Establish Sourcing Plans

45. Prepare source
European Center of Supply Chain Information Architecture,
ECSCIA
Tender
volumes
SOURCE Contracts
Actuals
Performance
AVL
DESIGN
ENABLE
PLAN
SOURCE
The PREPARE FOR SOURCE capability takes the output from PLAN SOURCE and from
that establishes contracts.
PREPARE SOURCE also gathers/sets data in order to execute
RFI
RFP
RFQ
E-Auction
Direct face to face
Catalogues

46. Prepare source (2) APICS SCOR terminology
European Center of Supply Chain Information Architecture,
ECSCIA
Prepare source
sE3 Manage Supply Chain Data and Information
sE3.1: Receive Maintenance Request
sE3.2: Determine/Scope Work
sE3.3: Maintain Content/Code
sE3.4: Maintain Access
sE3.5: Publish Information
sE3.6: Verify Information
Catalogues
AVL
Sourcing BOM (s)
Material master
Vendor master
Users

47. Prepare source APICS SCOR terminology
European Center of Supply Chain Information Architecture,
ECSCIA
Prepare source
sE6 Manage Supply Chain Contracts
sE6.1: Receive Contract/ Contract Updates
sE6.2: Enter and Distribute Contract
sE6.3: Activate/Archive Contract
sE6.4: Review Contractual Performance
sE6.5: Identify Performance Issues/Opportunities
sE6.6: Identify Resolutions/ Improvements
sE6.7: Select, Prioritize and Distribute Resolutions
Contracts

48. Execute source (direct material)
European Center of Supply Chain Information Architecture,
ECSCIA
The SOURCE for direct material capability buys/replenishes material used in MAKE
Discrete PO
Framework PO
PLAN MAKE
SOURCE
Material drive
(Production
Schedule)
DELIVER
MAKE
SMI
Contracts

49. Follow up on source
European Center of Supply Chain Information Architecture,
ECSCIA
SOURCE
DELIVERSELL
Contracts Invoice
ENABLE
Plan SOURCE
Tender volumes
SELL
MAKE
Actuals
FOLLOW UP ON SOURCE
Component classification
Key componenet lists
Critical component lists
AVL
Supplier classification

50. Classify for source
European Center of Supply Chain Information Architecture,
ECSCIA
FOLLOW UP ON
SOURCE
DESIGN
ENABLE
Component
classification
Key component lists
Critical component
lists
AVL
Supplier classification