The behavior of procurement process as described by using system dynamics methodology

What is it about?

System dynamics methodology has been used in many fields of study which include supply chain, project management and performance, and procurement process. The said methodology enables the researchers to identify and study the impact of the variables or factors to the outcome of the model they developed. In this paper, we showed the use of system dynamics methodology in studying the behavior of procurement process that is totally different from those mentioned in previous studies. By using a typical procurement process employed by a telecommunication company as a case study, we developed a procurement model and discovered the number of days involved in completing the whole procurement process depends heavily upon the scenarios we created (especially those that exceed two months), and suggested future research undertakings.

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Photo by Samuel Zeller on Unsplash

Photo by Samuel Zeller on Unsplash

Why is it important?

No (scientific) study was done or conducted to evaluate the performance of the existing and new procurement processes especially before the deployment of the latter. The introduction of online procurement process system did not solve all the problems faced by the existing procurement process. For example, the number of papers where the approval committee could handle or manage at any given time is limited. The meeting would normally be held during working days, once a month, and for a specific number of hours only. More and more reports from the existing meeting are forwarded to the next meeting due to either time constrain or lack of quorum. More and more reports are rejected by approval committee due to failing to meet the criteria fixed by approval committee. Our research undertakings are focused on solving the problems as mentioned above via the introduction of a new procurement process. They are solved in stages where the new procurement process is updated or expanded on each stage. On the first stage and the main highlight of this paper, the problem we wish to solve is the frequency of approval committee meetings. The rest of the problems are solved in future research undertakings. We performed the following steps for the first stage: firstly, we studied the procurement process of a telecommunication company (via Standard Operating Procedure, or SOP, documents supplied by them). Secondly, we collected (one year) real data, which include the number of days required for an applicant to complete the whole procurement process. Thirdly, we designed and built the procurement model using system dynamics methodology and a portion of (or all) real data collected from previous step. Finally, we studied the performance of the procurement model, which include comparing the (procurement) model’s results with the real data collected from previous step.

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