Procurement Strategies

About the project

In the last decades, companies, across all industries, have gone through a relevant outsourcing trend. As a consequence, procurement costs cover nowadays between 60% to 80% of the total profit and loss of most firms, leading to a massive impact on profitability, on finance, and on supply risk. For this reason companies are investing resources in defining their procurement strategies to support value creation in the long run. Over the last years, companies are experiencing also a stronger contribution of technologies for procurement, such as Artificial Intelligence, Big data analytics or Additive Manufacturing. The research programme aims at monitoring and investigating the most effective strategies according to different contextual factors and the role played by digital technologies to foster the importance of procurement within companies.

Research team: Federico Caniato, Michela Guida, Christine Harland, Antonella Moretto, Stefano Ronchi, Alessio Ronchini

Funders: Politecnico di Milano, Erasmus – Rotterdam School of Management, University of Bath

Partners: Aalto University, Bundesweher Universiteit Munich, KTH, University of Dublin

KEY RESEARCH QUESTIONS

OUTPUTS & IMPACT

KEY RESEARCH QUESTIONS

In the last decades, companies, across all industries, have gone through a relevant outsourcing and offshoring trend. This trend is fostered by some market forces, among which the increasing demand variability, the continuous customization required by customers, the technology innovation requiring multiple competences, the reduced lifecycles, and the push towards lower prices.

As a consequence, procurement costs cover nowadays between 60% to 80% of the total profit and loss of most firms, leading to a massive impact on profitability, on finance, and on supply risk. As a matter of fact, innovative procurement strategies and practices enable companies to leverage profitability, to optimize the working capital, and to be resilient to possible risks and disruptions that might come from a multitude of suppliers. For this reason companies are investing resources in defining their procurement strategies to support value creation in the long run. In the definition of the procurement strategies, a more and more important role is played by the contribution of digital technologies, that are redesigning the role of procurement itself. Just to make a few examples, Artificial Intelligence is completely reshaping the role of the buyer within the procurement department; big data analytics are supporting procurement decisions; additive manufacturing is modifying the supply chain design itself.

The research programme aims at monitoring and investigating the most effective strategies according to different contextual factors and the role played by digital technologies to increase the value of procurement within the companies. In particular, we assess portfolio management strategies according to the different purchasing categories, we analyse procurement processes, tools, and organizational structures, we identify most appropriate KPIs to monitor and evaluate the procurement performance. This is done by comparing different cases and their contextual factors at the international level.

Main funded Projects

Spending rationalization and centralization strategies in a medium-large mechanical components and equipment manufacturing company.
Vendor rating system design and its organizational implications in large bank.
Vendor qualification system and process improvement in a manufacturing company.
Portfolio management strategies in a large company in the entertainment industry.

OUTPUTS & IMPACTS

Patrucco, A. S., Moretto, A., & Knight, L. (2021). Does relationship control hinder relationship commitment? The role of supplier performance measurement systems in construction infrastructure projects. International journal of production economics, 233, 108000.
Maestrini, V., Patrucco, A. S., Luzzini, D., Caniato, F., & Maccarrone, P. (2021). Supplier performance measurement system use, relationship trust, and performance improvement: a dyadic perspective. The International Journal of Logistics Management.
Caniato, F., Harland, C., Johnsen, T., Moretto, A., & Ronchi, S. (2020). The Art and Science of Procurement: Revisiting Leonardo da Vinci: Editorial of the 2019 IPSERA Conference Special Issue. Journal of Purchasing and Supply Management, 26(4), 100650.
Moretto, A., Patrucco, A. S., & Harland, C. M. (2020). The dynamics of reshoring decisions and the role of purchasing. International Journal of Production Research, 58(19), 5929-5944.
Patrucco, A. S., Moretto, A., Luzzini, D., & Glas, A. H. (2020). Obtaining supplier commitment: antecedents and performance outcomes. International Journal of Production Economics, 220, 107449.
Moretto, A., Patrucco, A. S., Walker, H., & Ronchi, S. (2020). Procurement organisation in project-based setting: a multiple case study of engineer-to-order companies. Production Planning & Control, 1-16.
Maestrini V., Luzzini D., Caniato F., Maccarrone P., Ronchi S., 2018, “The impact of supplier performance measurement systems on supplier performance: A dyadic lifecycle perspective”, International Journal of Operations and Production Management, 38(11), 2040-2061.
Maestrini V., Luzzini D., Caniato F., Ronchi S., 2018, “Effects of monitoring and incentives on supplier performance: An agency theory perspective”, International Journal of Production Economics, 203, 322-332.
Patrucco A.S., Luzzini D., Moretto A., Ronchi S., 2018, “Attraction in buyer-supplier relationships: Improving supply network performance through purchasing recognition and proficient collaboration initiatives”, Business Process Management Journal, forthcoming.
Maestrini V., Luzzini D., Caniato F., Maccarrone P., Ronchi S., 2018, “Measuring supply chain performance: a lifecycle framework and a case study”, International Journal of Operations and Production Management, 38(4), 934-956.
Patrucco A.S., Luzzini D., Ronchi S., 2017, “Achieving innovation through supplier collaboration: the role of the purchasing interface”, Business Process Management Journal, 23(6), 1270-1289.
Moretto A., Ronchi S., Patrucco A.S., 2017, “Increasing the effectiveness of procurement decisions: the value of big data in the procurement process”, International Journal of RF Technologies: Research and Applications, 8(3), 79-103.
Spina G., Caniato F., Luzzini D., Ronchi S., 2016, “Assessing the use of External Grand Theories in Purchasing and Supply Management research”, Journal of Purchasing and Supply Management, Vol. 22(1), 18-30.
Luzzini D., Ronchi S., 2016, “Cinderella purchasing transformation: linking purchasing status to purchasing practices and business performance”, Production Planning and Control, 27(10), 787-796.
Caniato F., Ronchi S., Luzzini D., Brivio O., 2015, “Total cost of ownership along the supply chain: a model applied to the tinting industry”, Production Planning and Control, Vol. 26(6), 427-437.
Luzzini D., Amann M., Caniato F., Essig M., Ronchi S., 2015, “The path of innovation: purchasing and supplier involvement in new product development”, Industrial Marketing Management, Vol. 47, 109-120.
Caniato F., Elia S., Luzzini D., Piscitello L., Ronchi S., 2015, “Location drivers, governance model and performance in service offshoring”, International Journal of Production Economics, Vol. 163, No. 5869, 189-199.
Caniato F., Luzzini D., Ronchi S., 2014, “Purchasing performance management systems: an empirical investigation”, Production Planning and Control, Vol. 25(7), 616-635.
Kauppi K., Brandon-Jones A., Ronchi S., van Raaij E., 2013, “Tools without skills: Exploring the moderating effect of absorptive capacity on the relationship between e-purchasing tools and category performance”, International Journal of Operations and Production Management, Vol. 33(7), 828-857.
Spina G., Caniato F., Luzzini D., Ronchi S., 2013, “Past, present and future trends of purchasing and supply management: An extensive literature review”, Industrial Marketing Management, Vol. 42(8), 1202-1212.
Luzzini D., Caniato F., Ronchi S., Spina G., 2012, “A transaction costs approach to purchasing portfolio management”, International Journal of Operations and Production Management, Vol. 32 (9), 1015-1042.
Luzzini D., Ronchi S., 2011, “Organizing the Purchasing Department for Innovation”, Operations Management Research, Vol. 4, 14-27.
Ronchi S., 2011, “Collaborative Markets in B2B Relationships”, Supply Chain Forum: an International Journal, Vol. 12 (3), 22-34.
Caniato F., Golini R., Luzzini D., Ronchi S., 2010, “Towards full integration: eProcurement implementation stages”, Benchmarking: an International Journal, Vol. 17 (4), 491-515.
Luzzini D., Ronchi S., 2010, “Purchasing management in the luxury industry: organization and practices”, Operations Management Research, Vol. 3 (1-2), 7-21.
Ronchi S., Brun A., Golini R., Fan X., 2010, “What is the value of an IT e-procurement system?”, Journal of Purchasing and Supply Management, Vol. 16, 131-140.

FUNDERS

Funds and Banks: Equiter, Intesa San Paolo, OltreVenture, Plus Value, Sefea Unicredit, Ubi Banca
Social Ventures: ActionAid, Fondazione Bracco, Fondazione Cariplo, Paideia, PerMicro, SpazioZeroSei, Gruppo CGM, Centro Medico Sant’Agostino
Institutions: Comune di Milano, Istituzioni Scolastiche, Ministero dello sviluppo Economico, Ministero degli affari Esteri, Ministero degli Affari Esteri, OECD

PARTNERS

Social Ventures: ActionAid, Fondazione Bracco, Fondazione Cariplo, Gruppo CGM, Valdocco
Institutions: Comune di Milano, Istituzioni Scolastiche, Ministero dello sviluppo Economico, Ministero degli affari Esteri, Ministero degli Affari Esteri, OECD
Academic: Università di Trento, Università di Bologna, Università di Napoli, Università di Torino, Università di Macerata, Università di Catanzaro, Università Bocconi, Università Cattolica

Knowledge

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