Digitalizing procurement: the impact of data analytics on supply chain performance

Abstract

Purpose

This study aims to investigate digitalization as a performance driver in supply chains, especially the role of data analytics in the digitalization of procurement. The study investigates how digital procurement capabilities are linked to data analytics capabilities and supply chain operational performance and how this links to business success.

Design/methodology/approach

Using operational and dynamic capabilities as foundations for data analytics capabilities, this paper studied the digital procurement capabilities and proposed the conceptual model and hypotheses for empirical testing. The collected industry survey data and structural equation method are then applied to test the hypotheses.

Findings

The study confirms positive and significant relationships among digital procurement capabilities, data analytics capabilities and supply chain performance. Digital procurement capabilities mediate the positive relationship between external data analytics capabilities and supply chain performance.

Research limitations/implications

This study has some limitations that should be addressed. The empirical study was based on survey data from a questionnaire that was probably challenging for some respondent companies with low levels of digital procurement and data analytics. Also, it is necessary to adopt secondary data to measure business performance in future studies which reduces the effect of subjective bias.

Practical implications

From the managerial point of view, the findings highlight the importance of gaining knowledge from gathered data and digitalized processes. Managers must focus on data utilization capabilities to improve the operational performance expected from the digitalization of supply chain activities. In addition, managers need to consider exploiting of data through new creative approaches as part of standardized operations.

Originality/value

The present study contributes to existing knowledge by investigating the mediating role of data analytics capabilities between the digitalization of procurement and supply chain performance. The findings support a positive relationship between the data analytics capabilities and supply chain performance in digital upstream supply chain procurement processes. The present study also clarifies the impact and role of data analytics capabilities in digital supply chain development and success.

Citation

Hallikas, J., Immonen, M. and Brax, S. (2021), "Digitalizing procurement: the impact of data analytics on supply chain performance", Supply Chain Management, Vol. 26 No. 5, pp. 629-646. https://doi.org/10.1108/SCM-05-2020-0201