Improving Procurement Performance with E-business Mechanisms

University dissertation from Department of Industrial Management and Logistics, Lund Institute of Technology

Abstract: E-procurement — e-business mechanisms deployed on procurement — offers many recent and innovative methods that can improve procurement in different ways. The key challenge of e-procurement, however, is how to apply the various e-procurement applications in such a way that they improve the procurement practice and sourcing strategy of a company. There is a demand for an investigation that scrutinizes the e-procurement value propositions and explains how e-procurement applications can improve procurement performance, and that demand motivates this Ph. D. thesis. Five case studies were conducted with the purpose of finding out how the case companies had worked with e-procurement, what specific e-procurement applications they had investigated or implemented, and the expected or actual benefits of doing so. An e-procurement framework was developed in order to investigate how various e-procurement applications operate. The e-procurement framework is a matrix made up of two dimensions, a list of generic procurement tasks and a list of e-business value creation mechanisms. The generic procurement tasks could be grouped in four procurement areas, namely strategic procurement, purchasing process, internal tasks, and external tasks. E-business value creation mechanisms were grouped in three major themes: novelty, efficiency, and coordination. This framework was then used to position the case companies’ usage of e-procurement applications. It was also used for positioning the literature on e-procurement. The thesis also includes three papers that go into detail regarding issues like differentiation, alignment and usage of marketplaces. Deploying e-procurement applications requires that the procurement groundwork has been laid down. Procurement strategies must be present, and preferably aligned with corporate strategy. Processes and procedures must be mapped and understood; supplier relationships must be set up so the full potential of suppliers’ capabilities is acquired. When this foundation has been established, it is time to assess how different e-procurement applications can leverage the procurement work and pick the one(s) that offer the best prospect of improving the procurement performance even further. E-procurement is after all not a remedy for poor procurement work; it is a possibility to improve the performance of procurement work that is already working well even further.

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