Extending Maturity Models With E-Procurement

Abstract

Digital transformation in procurement is important for Purchasing and Supply Management (PSM) organisations to develop global organisational competitiveness. Generally, procurement performance can be determined and improved through the use of a maturity model. Existing models do not cover the latest (e-)procurement processes (E-Sourcing, Procure-to-Pay, and Supplier Relationship Management) resulting from digitalisation. Therefore, an extension to existing maturity models was required to assess company performance. A literature study was conducted to describe and explain meaningful concepts and several maturity models were selected to review and compare the frameworks most suitable for an extension. Experiences of a major PSM organisation called the Corporate Group strengthened the research study by determining key topics and industry best practices, providing a foundation for the extension. A company analysis resulted in an understanding of (digital) procurement and the selection of Schiele (2007) due to its comprehensiveness. Semi-structured interviews were conducted with procurement experts to review Schiele's model and develop an extension. The extended model contains an additional spend management domain and a new dimension covering e-procurement. Multiple purchasing functions and stage descriptions were developed, whereby the model consists of 56 original and 22 new assessment questions. The new dimension includes Spend & Data Management, Contract Management, Market Intelligence, E-Sourcing, Transactional Procurement, and Supplier Relationship Management. Entity A is part of The Corporate Group and provided the ideal opportunity to test the extended model through a multiple-case study. Maturity assessments were conducted of several operating companies (OpCos) to determine maturity levels and whether the extended model actually measured purchasing maturity. The extended model was able to quickly provide a performance overview and guide the OpCos towards improvement. Self-assessments as an alternative for third-party audits were provided, including a digitalised approach to process data easily. However, comparing results among OpCos outside of their sub-unit delivered an unexpected outcome. It was questionable whether the model measured purchasing maturity or rather the perception of it. Although the results were unexpected, the extension appeared to be more accurate. This was most likely due to the elaborate stage descriptions, enabling assessors to identify stage levels more easily. This research study provided a foundation for assessing e-procurement using an extended maturity model but limited itself to the Corporate Group. Thereby, it confirmed the criticism regarding the four stages being too rigid. Potential future research is recommended to improve both the extended model and the assessment approach. First, it must be shown to what extent e-procurement is covered in the new dimension and whether the extended model can be sufficiently generalised. Interviews should be conducted with procurement experts from different companies or industries to validate the extension through statistical analysis. Secondly, the assessment approach could be improved by including a control person and more experienced people, ensuring critical thinking and more realistic maturity levels. Self-assessments are not necessarily less reliable compared to external audits, but they rather need support to guide the process through a standard protocol. The subsequent step should be to formalise a proper action plan to initiate improvement.