Value-based Procurement

Name: Value-based Procurement
Rating: 3.9 (21 reviews)

Your well-deserved procurement seat at the executive table

Created bySergii Dovgalenko, FCIPS

Last updated 1/2025

English

What you'll learn

Understand the notion of value from various perspectives (e.g., price, relationship, competitive advantage, etc.)
Examine the effects of procurement value on stakeholder work, supplier relationship management, and agility.
Distinguish the value from efficiency and effectiveness.
Review the evolution of the procurement process from the lowest bid to the value-based one
Study some practical concepts, e.g., Best-Value Procurement, Value Stream Mapping, Reverse Marketing, VIPER model, etc.
Conduct exercises on different aspects of value-based procurement

Course content

2 sections • 22 lectures • 1h 48m total length

Procurement Value Evolution5:33
Procurement value evolved from a 3-dimensional model into a 6-dimensional one, in line with the increasing complexity of the procurement profession.
Value-based Pricing5:23
Value-based pricing introduces the perceptional nature of the value that procurement must embrace.
Value Creation and Appropriation5:09
Value must be created and appropriated to enable a sustainable competitive advantage. We will discuss the same in the procurement context.
Exercise on Value Creation and Appropriation Mapping6:06
This exercise will map different stages of the end-to-end plan-to-pay procurement cycle concerning value creation and appropriation.
Procurement Value Curve6:06
We will follow the development of procurement value throughout the entire product lifecycle and note the peaks and lows of the value curve.
Dynamic Capabilities Framework7:03
The theory of dynamic capabilities explains the notion of value as an ability to contribute to the business's competitive advantage.
Value Creation Through Stakeholder Work System4:46
Companies succeed in the market if they create value not only for their customers but broadly for all stakeholders.
VIPER Model2:59
VIPER model provides the evolutionary sequence of levels any procurement function or professional has to pass to get to the top, where the actual value creation and appropriation occurs.
Efficiency, Effectiveness, and Value3:22
We will show how the value stands out from the efficiency and effectiveness, which many of us are excited about.
Lost Value Examples in Real Life2:11
Explore how efficiency sacrifices long-term value in real-world procurement, from covid-19 PPE rapid buys to Boeing 737 Max safety failures, showing the need to balance speed with sustainability and trust.
Section Summary2:57
The section summary provides five significant learnings from the first part of this training course.
Thank you for Studying!0:07
Discover value-based procurement strategies and apply insights from your study journey. Transform procurement decisions with value-driven thinking and practical, outcome-focused approaches.

From Lowest Bid to Value-based Procurement3:10
We will explain the evolution of the supplier selection process from the lowest bid to the value-based procurement approach.
Changes Required to Exercise Value-based Procurement4:02
We suggest two changes required to start exercising value-based procurement.
Exercise: Lowest bid vs. TCO vs. Value-based evaluation of air conditioners4:36
We will select an air conditioner based on three approaches - lowest bid, TCO, and value-based procurement.
Exercise: Value-based Procurement of an Electronic Queue System7:28
Another exercise where we will select an electronic queue system using the value-based approach.
Reverse Marketing4:11
Reverse Marketing is a relatively simple yet essential step in the journey to value-based procurement.
Creating Value in Negotiations7:31
We will review integrative and distributive negotiations from the value-creation prespective
Value-add Area in Negotiations3:35
We will use the Iron Triangle of Project Management to explain the value-add area in negotiations.
Practical case: Value-based Sourcing Strategy10:01
We will suggest a value-based approach to conducting a sourcing strategy and apply it to two distinct categories of goods and services.
Best-Value Procurement Process6:31
Best-Value Procurement process is the proven supplier selection method developed in 1991 by Prof. Dean Kashivagi from Arizona State University and widely adopted in the Netherlands, Canada, Australia, and many other countries. It changes the traditional approach to the logic and sequence of supplier selection activities.
Value Stream Mapping5:45
Value Stream mapping comes from the Lean arena and helps to eliminate non-value-adding activities from any business process. Three simple criteria of value are there for you to apply.

Requirements

Basic understanding of procurement processes

Description

Procurement value became the second-popular buzzword in procurement after "agile."

Interestingly, the agile methodology also describes incremental value delivery. We suggest starting from this course before jumping onto the agile bandwagon.

Tremendous competitive pressures and an ever-lasting global crisis led to the focus shift from traditional savings to the holistic value delivery agenda.

Indeed, we all know what the value is. However, it's one of the most subjective topics.

Value needs to be more substantive. It is rather adjectival. It characterizes something or results from the application of something. It doesn't exist in its raw form; it's being created. It's a universal differentiator between good and bad things or actions.

Look at your bosses – some distinguish only the monetary value, while others care about relationships, sustainability, social contribution, etc. Procurement managers need to sense all these perceptions and transform them into objective and measurable outputs that genuinely matter to the broader stakeholder community.

Our course will carefully define the value from different perspectives and with the help of well-known and workable theories (e.g., dynamic capabilities, VIPER model, stakeholder work system, etc.) Then, we will suggest practical ways of creating and appropriating the value.

Our course includes a handful of exercises that help to understand the usability of proposed theoretical constructs and business concepts.

By the end of this course, you'll emerge with a clear understanding of procurement value and a robust action plan for creating and appropriating value in your organization. Whether you seek to enhance cost savings, strengthen relationships, or drive sustainability initiatives, this course equips you with the tools and knowledge to make a meaningful impact.

Enroll now and embark on a journey towards mastering procurement value – from theory to action!

Who this course is for:

Procurement professionals willing to create and appropriate the value
Procurement beginners and experts looking to organise their knowledge of value and apply it in practice

Value-based Procurement

What you'll learn

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Course content

Procurement Value Basics12 lectures • 52min