Structuring the phenomenon of procurement digitalisation: contexts, interventions and mechanisms

Abstract

PurposeThe study develops a structure for procurement digitalisation by identifying its context drivers, technology interventions and performance-inducing mechanisms and exploring the linkages between these variables.Design/methodology/approachThe study draws on rich interview and workshop data on 48 digital intervention projects, as reflected by mental models of managers from 12 case organisations in manufacturing, retail and service sectors. Supported by an a priori structure, the study employs an abductive cross-case analysis approach.FindingsResults suggest several categories within the elements of context, intervention and mechanism to structure procurement digitalisation and the linkages between them. Seven propositions that reflect digitalisation strategy options in procurement are developed regarding the linkages. Internal complexity dominantly drives procurement digitalisation, motivating communication support and process structuring interventions, which in turn aim at procurement coordination and control as well as process improvement. External coercive pressure and external dynamism also drive interventions for information processing and decision aiding, which appear to be linked with supply market knowledge, strategic alignment and supplier capability assessment. Therefore, an internal–external dichotomy is observed as the main thrust of procurement digitalisation.Practical implicationsThe study supports decision makers in developing digitalisation strategy options for different procurement contexts. The results also raise awareness of a possible bias in existing strategies for procurement digitalisation.Originality/valueA novel forward-looking approach is employed to enable the design and construction of systems that do not yet exist by focusing on the mental models of managers in a systematic way.

A knowledge-based view of analytics capability in purchasing and supply management

“…We define analytics as all the activities that transform data into action, giving rise to new skills being needed, practices developed and governance principles established. The PSM function, specifically, requires capabilities to handle the large amounts of data accumulated internally, the supply market information (Lorentz et al, 2020;Sch€ utz et al, 2020) and the integration of the generated insight with the relevant other functions internally at the firm (Arvidsson and Melander, 2020;Sch€ utz et al, 2020) to satisfy both its cost-saving and long-term strategic purposes (Lorentz et al, 2020(Lorentz et al, , 2021Sch€ utz et al, 2020;Van Weele and Van Raaij, 2014).…”

“…Reflecting general analytics related research, PSM research has been technology-focused, and hence only to a limited extent addressed the transformation of the function in the face of the new analytics challenges. Examples include discussion on contextual drivers and technological interventions in the digitalization of PSM (Lorentz et al, 2021) and the potential of certain technologies, such as big data analytics, cloud computing, automated procure-topay processes, real-time spend analytics, blockchain technology and virtual supplier rooms (Schmidt and Wagner, 2019;Srai and Lorentz, 2019). While Bals et al (2019) note that technical skills related to analytics are increasingly in demand in PSM, it is safe to say that we still know little about the capability required to leverage analytics in PSM (Arvidsson et al, 2021;Kosmol et al, 2019).…”

“…Complementing prior technology-focused research on PSM analytics (Handfield et al, 2019;Lorentz et al, 2021;Srai and Lorentz, 2019) and firm-level analytics capability research (Roßmann et al, 2018), the purpose of this study is to elaborate on how analytics capability develops within the PSM function. The findings, thus, contribute not only to the understanding of analytics capability for the specific requirements of the PSM function but also generate a more in-depth and detailed understanding of how analytics capability is manifested in the firm (cf.…”

The impact of Logistics 4.0 on corporate sustainability: a performance assessment of automated warehouse operations

“…truck drivers) on the most efficient routes based on real-time traffic and weather conditions. Seyedghorban and Samson (2020), Bag et al (2020b) and Lorentz et al (2021) all reveal that the adoption of digital technologies helps firms to modernise their procurement, data analysis and strategic planning processes. Schlegel et al (2020) and Choudhury et al (2021) describe the role of big data analytics in enhancing firms' capacities to process information and engage in more efficient and effective sales and operations planning (S&OP).…”

Modelling procurement processes by UML diagrams

“…H. Lorentz explains that internal complexity dominantly drives procurement digitalisation, motivating communication support, and process structuring interventions, which in turn aim at procurement coordination and control, as well as process improvement [1]. D. Forgues and L. Koskela declare that traditional procurement processes reinforce socio-cognitive barriers that hinder team efficiency.…”