CIPS L6M8 - Innovation in Procurement and Supply

CIPS L6M8 - Innovation in Procurement and Supply Supply chain integration Supply chain integration requires the procurement professional to develop strategic collaboration with key supply chain partners and understand customer requirements. Behaviours to enhance innovation Pellathy identified 3 key behaviours that affect how individuals engage with each other: 1, Task behaviours - how an individual executes tasks of their role 2, Organisational citizenship - the quality of a person's interpersonal actions and to challenge change while accommodating others 3, Counterproductive work behaviours - challenging individuals Early Supplier Involvement Supplier Involvement is the result of cooperation between suppliers and the organisation at the product conceptualisation stage. Suppliers will need to determine the extent to which they are willing to invest in working with organisation on innovation and procurement & supply Supplier Involvement Supplier involvement is essential for improving supply chain effectiveness and contributes to managing the tensions between cost, time and quality. Innovation councils Innovation councils provide a governance structure which can be used to coordinate and maximise innovation throughout the supply chain, coordinating concurrent innovation efforts across multiple stakeholders within the organisation. Supplier forums & associations Gaining access to diverse perspectives gives the procurement professional access to different world views, information & ideas that can help to drive the development of innovation in the procurement and supply function and the supply chain. Supplier forums & associations Provide the opportunity for the procurement professional to meet with other professionals who may be able to offer a new perspective on a particular challenges or opportunities. Professional associations offer access to research, training courses, resources, peer networks and discussion forums.. this exposes the procurement professional to current thinking, market changes and technical and practice changes. technology transfer The organisation can enhance its business operations by combining innovation to develop new products with technology transfer to secondary supply partners for existing products. technology transfer Technology transfer can affect the breadth of distribution avenues , opening up new market places and opportunities for an organisations products and services Data Analytics As of 2016, only 28% of organisations ahd incorporated a big data initiative and 85% did not have the IT capacity to maganage a database of a petabyte Advanced analytics The subsets of Advanced analytics: 1, Descriptive analytics - dashboards for ad hoc reporting i.e. what happened? 2, Predictive analytics - Real-time & historical data to make predictions based on probability i.e. forecasting using Alogorythims & machine-based learning 3, Prescriptive analytics - Utilises predictions based on data i.e. scenario analysis, game theory, simulation Data analytics Data analytics can be used to help the procurement professional better understand the capacity of suppliers in the supply chain. Data integration tools in system technology Data integration is a digital process of integrating and mining data from disparate systems using integrations tools such as: 1, API - Tightly coupled systems integration - Application programming interface - requests data from various systems e.g. CRM, ERP, SCM - Makes the request, transports response and translates the response for reporting purposes. 2, SOA - Service-orientated architecture - Promotes loose coupling & greater flexibility meaning changes in one functions system do not directly affect another functions system. 3, ESB - Enterprise Service Bus - A customised central hub which helps to connect distinct systems and applications, enabling them to communicate. 4, iPaaS - Integrated platform as-a-service - Cloud based tool that uses web service protocols to manage integration. Data integration tools in system technology (4): API - Application programming interface Tightly coupled systems integration that requests data from various systems e.g. CRM, ERP, SCM - Makes the request, transports response and translates the response for reporting purposes. Data integration tools in system technology (4): SOA - Service-orientated architecture Promotes loose coupling & greater flexibility meaning changes in one functions system do not directly affect another functions system. Data integration tools in system technology (4): ESB - Enterprise Service Bus A customised central hub which helps to connect distinct systems and applications, enabling them to communicate. Data integration tools in system technology (4): iPaaS - Integrated platform as-a-service Cloud based tool that uses web service protocols to manage integration. (7) Forms of e-procurement: EDI - Electronic Data Interchange Networks EDI - Electronic Data Interchange Networks - Suppliers and Buyers linked through a private network called an EDI. Automate procurement processes including inventory replenishments. (7) Forms of e-procurement: B2E - Business to employee requisition applications Enable self service procurement within the organisational structure to speed up the buying approval process and standardise requisition proceedures (7) Forms of e-procurement: Corporate Procurement Portals For buying production and non-production related goods required for day to day production and business operations. (7) Forms of e-procurement: First-generation trading exchanges Centralised online marketplace for RFQ/RFPs - pre-approved groups of suppliers submit proposals. Buyer can evaluate potential suppliers and make informed decisions. Information and content hubs such as storefronts and online trading exchanges. Provide insights, news, trends and production information as well as forums and bulletin boards (7) Forms of e-procurement: Second-generation trading exchanges Transaction hubs to support the buying and selling of products including virtual distributors. (7) Forms of e-procurement: Third-generation trading exchanges Manage the supply chain through value add services using integrated commerce technology Relies on integration and collaboration. (7) Forms of e-procurement: Industry Consortiums Also known as join venture procurement hubs to take advantage of buying power. Reduces cost and improves service e-procurement Choosing a form of e-procurement is difficult. It is important the procurement professional considers what business problem the form e-procurement is trying to solve. e-catalogues Catalogue management is an essential component of the procurement & supply function. E-catalogues provide the opportunity to: - quickly respond to any mistakes that may have been made in a product or price update - Flex to any changes in the availability for products and services and; - ensure that product information and price reflect the latest changes (3) types of e-catalogues: Sell-side catalogues A suppliers online catalogue that supports online purchasing. Info and ordering available 24/7 (3) types of e-catalogues: Buy-side catalogues Created by procurement organisations such as consortiums or corporate procurement portals - only include approved products with negotiated pricing (3) types of e-catalogues: Third-party catalogues Links in house -e-catalogues to a master catalogue enables info to be standardised. Passes responsibility for managing and updating info to the suppliers . Negotiated prices can be encrypted. e-sourcing e-sourcing is where the procurement and supply function introduces an electronic platform for individuals across the organisation to source goods & services for a negotiated price that are within the boundaries of the procurement & supply functions guidelines. e-auction types: English Bid Process Traditional auction e.g. eBay Buyer places bids against other bidders with the bid price moving upwards when higher bids are places e-auction types: Dutch Bid Process Used when a supplier is selling large portions of items to numerous buyers Auctioneer sets a high price gradually reducing the price until a buyer provides a bid e-auction types: Sealed Bid Process Buyers submit their best offer and the bids are then assessed against an evaluation criteria a ta set date & time, with the highest bidder winning. e-auction types Reverse Bid Auctions Buyer advertises the product or service they wish to buy but do not state the price that they are willing to pay. Suppliers then bid with the auction being one by the lowest price. e-auction