Transformation towards strategic procurement : A multiple case study of companies undergoing a procurement transformation

Abstract: The global business context has created an increased need for procurement to become strategic. Strategic procurement revolves around integrating procurement with the rest of the company and ensuring that its goals are in line with the company’s objectives. Strategic procurement requires it to be included in strategic planning and implementation. It must have a long-term focus and work proactively. Even though much literature agrees that strategic procurement has gotten an elevated status recently, there is still a gap between the current and the desired involvement at several companies according to those working with procurement. To create a strategic procurement, a transformation is needed. In this thesis procurement transformation describes the evolution toward a more strategic procurement. This thesis aims to investigate procurement transformation by examining the process of implementing a strategic procurement and which internal conditions affect the implementation. To emphasize the purpose, the Master’s thesis aims to answer the following research questions:• RQ1: What can the implementation process of strategic procurement, i.e., procurement transformation, look like?• RQ2: How can internal conditions affect procurement transformation? To be able to answer the research questions, a rigorous literature study was carried through. The empirical data was collected through interviews with eleven respondents working as purchasing managers or similar at their respective companies. All eleven companies have a pronounced procurement function and operate in Sweden. The empirical findings are analysed to determine the degree of strategic procurement within the eleven case companies to be able to conclude what has been done to achieve strategic procurement and thus identify what a procurement transformation can look like. Further, it is analysed how the internal conditions business strategy, management control, change management, and organisational structure can affect the transformation. The findings from this Master’s thesis show that a transformation can be compiled into four stages and starts with the initiative and will to transform. The transformation continues with increasing involvement. This includes that procurement should be included in the strategic planning, ensuring a connection between business strategy and procurement strategy. The third stage, develop, indicates that procurement must continually develop its capabilities. The last stage, sustain, revolves around sustaining and developing in line with the changing environment. Moreover, this Master’s thesis shows that the connection between business strategy and procurement strategy is vital for procurement to become strategic. Management control will affect procurement’s possibilities to search for new opportunities, take risks, and improve its way of working. The management control will affect procurement’s possibility to become strategic. Change requires change management and if the resistance towards a change is too big, it will be hard to implement. Although it can not be said with certainty that the organisational structure affects strategic procurement it has been established that the procurement structure has an impact. The analysis shows that the three most successful procurement functions, out of the eleven cases, have a centralised structure, which leads to closer collaboration with management.