OPM 692: Strategic Sourcing

Looking back over the past twenty years, competitive purchasing approaches created significant value for firms by driving substantial cost savings to the bottom line. However, the widespread usage of professional procurement techniques has eroded the advantages that they had for pioneers in the 1990s and in the early years of the current century. In addition, environmental, competitive, geopolitical, and technological changes have created an uncertain business environment in which a mere focus on purchasing cost will not be sufficient to support sustainable competitive advantage. Against this backdrop, this module covers advanced approaches in procurement that aim at creating “value beyond cost”. Based on an end-to-end analysis of the key procurement processes, the module addresses the following core topics: Demand and supply analysis (need identification and specification management, supply market analysis, RFx, cost
modeling, optimization levers), sourcing decisions and awarding of business (analytical models for supplier selection, negotiations, and auctions), formal relations­hip governance (contracts and price models), operational purchasing (purchase-to-pay process), management of nonperformance and conflicts, and technological enablers.

Learning outcomes
This course is of interest to students seeking more in-depth knowledge of the processes and tools in modern procurement. For each topic covered, concepts, frameworks, and analytic tools are presented. Participants will learn:

  • how to organize healthy competition to find the right suppliers for a specified demand,
  • how to pull commercial, technical, and processual levers of optimization,
  • how select the most effective award business mechanism and contract based, and
  • how to deal with performance exceptions and supplier conflicts.

Necessary prerequisites

Recommended prerequisites
The module builds on topics covered in OPM 591. Participants who have not attended this module might require additional preparation.

Forms of teaching and learningContact hoursIndependent study time
Lecture2 SWS9 SWS
Exercise class1 SWS5 SWS
ECTS credits6
Graded yes
Form of assessmentWritten exam (90 min, 90%), case challenge (10%)
Restricted admissionno
Further information
Performing lecturer
Prof. Dr. Christoph Bode
Prof. Dr. Christoph Bode
Frequency of offeringSpring semester
Duration of module 1 semester
Range of applicationM.Sc. MMM, M.Sc. WiPäd, M.Sc. VWL, M.Sc. Wirt. Inf., M.Sc. Wirt. Math., MAKUWI
Preliminary course work
Program-specific Competency GoalsCG 1
LiteratureThere is no mandatory textbook. All relevant course materials will be provided.
Auxiliary readings:
  • Cousins, P.D., Lamming, R.C., Lawson, B., Squire, B., 2008. Strategic Supply Management: Principles, Theories and Practice. Prentice Hall, Harlow, UK.
  • Johnson, P.F., Leenders, M.R., Flynn, A.E., 2010. Purchasing and Supply Management (14th ed.), McGraw-Hill, New York, NY.
  • Monczka, R.M., Handfield, R.B., Giunipero, L.C., Patterson, J.L., 2015. Purchasing and Supply Chain Management (6th ed.), Cengage, Florence, KY.
  • van Weele, A.J., 2014. Purchasing and Supply Chain Management (6th ed.), Cengage, Florence, KY.
Course outlineModule 1: Demand analysis (need identification; specification management; cost modeling; technical levers for optimization; value engineering)
Module 2: Supply analysis (supply market analysis; global sourcing; RFx)
Module 3a: Sourcing decision – Decision support methods (linear programming; scoring methods; analytic hierarchy process; pareto optimization)
Module 3b: Sourcing decision – Auctions (auction theory; reverse auctions)
Module 3c: Sourcing decision – Negotiation (fundamentals; distributive bargaining; integrative bargaining)
Module 3d: Sourcing decision – Contracting (legal background; contract types; SLAs)
Module 4: Operational purchasing (P2P process; expediting; performance exceptions and conflicts)