EL-IPS is an interdisciplinary procurement research and education laboratory that aims to reframe the research agenda.
UTwente has developed into a unique research centre for Purchasing and Supply Management (PSM) that has expanded to the next level with EL-IPS, the European Laboratory for Innovative Purchasing and Supply. EL-IPS is an initiative of UTwente researchers from five departments in two faculties. Some forty researchers concentrate on PSM in manufacturing purchasing, public health and public procurement, and public works project procurement. EL-IPS’s unique selling point is its broad scope, technological engineering focus, and use of technology for research, which aligns with UTwente as a technical university. Currently, public and private organisations face profound sustainability and digitisation challenges that inevitably need to be solved with how PSM is organised. The Covid‑19 crisis showed that stable supplier relations and resilient supply chains are crucial. The UTwente PSM scholars are ready to foster synergies between private and public fields and raise their research and education to the next level. EL-IPS follows the UTwente Shaping-2030-strategy and focuses first on developing regions through strategic procurement, delivering advanced supply systems and buyer-supplier cooperation. Secondly, the objective is to create excellent challenge-based education didactics for students and practitioners.
Introduction – increasing importance of purchasing and supply
Suppliers are crucial in providing goods and services needed by public and private organisations to ensure further production and delivery. Typically, manufacturers spend more than 60% of their turnover on suppliers (the top 30 Dutch firms even have an average purchasing volume of 70%) – a figure that has increased significantly with the rise of globalisation. According to the European Commission, every year, over 250.000 public authorities in the EU spend around 14% of GDP (around €2 trillion per year) on the public procurement of services, works and supplies. Public and private PSM are central to the effective and efficient acquisition of bought-in goods and services.
Over the last 20+ years, outsourcing, contracting out, and privatisation have increased dependence on suppliers. As the Covid-19 pandemic has starkly highlighted, the complex web of suppliers and sub-suppliers is vulnerable to failure. PSM has developed significantly as a function and profession during the same period. In many organisations, it now has a clear strategic focus and contribution. Many leaders recognise that their organisation’s success depends on effective sourcing and supplier management. This transition – from PSM focusing on operational efficiency to addressing business strategy – has required considerable innovation in vision, leadership, people and organisation, processes and systems. The UTwente EL-IPS core team has been influential in this through their management, consultancy, professional, research and education activities. However, team members have primarily contributed in different domains – manufacturing, infrastructure, public and health sectors – with limited integration and synergies across sector boundaries. The aim is to build bridges and foster synergies between these domains by participating in joint education and research and developing EL-IPS further.
The profession, research, and education can be targeted at enhancing and extending strategic procurement, helping organisations lagging in adopting better practices and refining the leading ones. This is indeed important and necessary, as shown by the European Commission’s policy on strategic public procurement (COM(2017) 572 final) and the attention given to procurement by leading manufacturers. It is, however, not sufficient.
Looking ahead 20 years, PSM should develop further, adding strategic leadership to the portfolio of PSM roles and activities. The climate emergency and the sustainability transition require a profound change in ways of doing business. Industry 4.0 and the acceleration of technological progress are changing industry structures and processes, providing many inspiring opportunities and enhanced risks. How organisations collaborate, coordinate and compete will have to change, and procurement needs to be at the heart of this. The capacity to address grand societal challenges is not just supported by but should be shaped by PSM – for example:
o Circular economy, resource efficiency of raw materials, and closed cycles lead to challenges to manage reversed waste supply chains. The response lies in strategically managing external resources and adapting business strategies to reduce resource depletion. Organisations need to comply with the due-diligence laws; Secure, clean and efficient energy and water production and storage; Smart, green and integrated transport;
o Climate action, environment, and corporate social responsibility promote better environmental and employment practices among suppliers, adapt decision-making criteria and processes, and design incentive structures across supply chains.
o Enabling innovation and promoting competitiveness by market stewardship innovation brokering and buyer-supplier partnering in innovation ecosystems;
o Promoting supply chain resilience by building procurement capability and supply base capacity for better response and recovery. Data and systems for capacity planning in supply networks;
- Onshoring, local sourcing and production versus global sourcing and remote production leading to shorter supply chains; European sourcing – opposing global sourcing; Global sourcing & due diligence - applying PSM rules in global markets and competition; Africa and South America - focus on the emerging importance of North-South connections in PSM
- connecting - collaboration, coordination, rivalry, supplier satisfaction and preferred customership
- Challenge-based research and education – cooperating with partners outside the campus; competence development. The attractiveness of public procurement organisations for future employees is crucial for the EU's yearly spending of € 2 trillion.
o Humans first - the impact of digitalisation and robotic process automation for sustainability and CSR; high tech, human touch – enabling procurement to cope with societal challenges through I4.0 technologies
o Europe in a changing world - inclusive, innovative and reflective societies. Engaging end-users (citizens/patients for public services, consumers for commercial supply chains) in needs specification, sourcing decisions and performance evaluation;
- Health: Currently, one out of seven employees works in health care. Without innovations, this number will be one out of four by 2040. An answer to the ageing population lies in I4.0 applications. Purchasing is essential in supporting the constantly shrinking workforce by sourcing and developing autonomous systems to address demographic change and senior citizens’ well-being. Personal health budget – complex procurement decisions are delegated to families. EL-IPS will closely cooperate with the School of Regional Healthcare Transformation;
- Construction: housing shortage in NL is 300,000 houses. Innovative building methods are necessary, improving the construction procurement process; cooperating with contractors to improve production processes;
- Economic regeneration via regional sourcing policies, collaborative working between commercial and public sectors (PPPs) and sourcing from SMEs and start-ups; SMEs in regions - sourcing by and from SMEs and start-ups; urbanisation & de-ruralisation - placing PSM in the frame of regional development;
o Food security, sustainable agriculture and forestry, marine and maritime and inland water research, and the bio-economy;
o Intellectual property – securing ownership and access to resources and contracting, negotiation of contracts;
o Secure societies - protecting the freedom and security of Europe and its citizens. Stability of supply chains. Digital security of supply chains and protection against cyber attacks.
These strategic procurement leadership activities are not all new, but our experience shows initiatives are often limited in scope and scale and usually bounded to particular domains. And yet, it is clear that these roles are relevant across multiple sectors. Furthermore, taking a holistic, systemic view of these initiatives helps frame the real potential of procurement.
Fully aligned with the Shaping 2030 strategy of UTwente, EL-IPS is uniquely positioned to develop this agenda and shape the future of procurement.
EL-IPS – driven by technology
Research at EL-IPS is technology-driven and will be performed by researchers of Engineering Technology (ET) and Behavioural Managerial and Social Sciences (BMS) faculties in close cooperation with UTwente Design Lab, BMS Lab, BDSi (Behavioural Data Science incubator) and the ETM methodologies group combining novel data sources and techniques, with future-focused methods (e.g. scenario planning) and themes. EL-IPS will explore phenomena such as AI, Blockchain, IoT and the sustainability trinity people-planet-profit.
UTwente already has a recognised interdisciplinary and cross-faculty grouping of academics who focus on various sectors and do PSM research and education in various ways. The EL-IPS core team (see: Contact Tab for the list of the core team) has the vision, ambition, people and track record to lead research and education to design, promote and facilitate strategic leadership through procurement from a technological engineering perspective.
The EL-IPS core team connects to several external doctoral candidates in the industry and public organisations. Through Erasmus+ projects for higher education and other PSM projects, EL-IPS is connected to universities, business schools and organisations in Austria, Brazil, Bulgaria, Croatia, Denmark, Finland, France, Germany, Great Britain, Greece, Hungary, Ireland, Italy, Lithuania, the Netherlands, Poland, Portugal, Romania, Serbia, Spain and Slovakia.
EL-IPS is a facilitator of active, open and expanding coalitions with a strong identity and reputation within UTwente and across the region, nationally and at the European level. There is a very high degree of commitment to and enthusiasm for this proposal within the team, but the individual researchers are already heavily committed. The investment in EL-IPS- is about catalysing and facilitating, amplifying existing strengths, resourcing new activities, and making it easy for the EL-IPS researchers and educators to engage.
Mission: Informed by field-shaping research and framed by regional priorities, we facilitate societal value creation through procurement.
Principles and aims: Our entire procurement research and education activities will link to three core themes – governance, technology and people – addressing many issues connecting with UTwente's strategic priorities and initiatives. Whilst also valuing and promoting ‘traditional’ strategic procurement (i.e. PSM) and drawing on our interdisciplinary and cross-sectoral expertise, we aim to:
· Reframe purchasing and supply – setting the agenda for procurement – we will push the field’s boundaries, engaging at the highest policy levels to influence assumptions and barriers that limit value creation and broader societal impact. We integrate new technologies (I4.0) into procurement.
· Develop a place-based approach to procurement – becoming international experts on regional procurement – our research and education will emphasise regional ecosystems, using procurement relations and activities to bridge traditional sectoral boundaries. To deliver this ‘regional procurement’ perspective, we will work closely with partners in the regions (at various levels) within which UTwente is embedded and engage with partners based in other ecosystems.
· Enable purchasing leaders and professionals to build purchasing capacity and capability in ecosystems and their constituent organisations. We will position ourselves as educators and researchers with excellent facilitation skills and resources, seeking to co-produce knowledge and find ways to accelerate learning through organisational networks and professional communities.
Business-as-usual is not tenable, but it is challenging to break out of organisationally-bounded thinking, contest assumptions, and take a long-term view when thinking about alternatives. Our ambitious view of procurement is centred on new ways of thinking about and doing business and organising PSM in public and private organisations. The influence of PSM in the private and public sectors on sustainability, CSR and regional development is substantial. Therefore the researchers of EL-IPS position themselves as thought leaders and field-shaping in addressing strategic PSM challenges and taking the lead in the discourse on strategic resource management. The objective of EL-IPS is to enable PSM professionals to develop competences and insights to anticipate complex PSM-related societal problems relating to sustainability and CSR issues upstream in the supply chain, the challenges in health care, the stimulation and creation of innovations, and the implications of the digitisation, robotisation and the return of physical production in our regions (reshoring). EL-IPS will address the challenges in health care from a procurement perspective in close cooperation with the School of Regional Healthcare Transformation (SoRHT).
Based on a shared procurement development agenda, EL-IPS will establish regional networks and connect multinational companies (MNCs), small and medium-sized enterprises (SMEs) and public entities in the Twente region and other regions, nationally and internationally. For advanced research methods, close cooperation will be established with internal UTwente partners like the SoRHT and with the BMS Lab and BDSi. EL-IPS distinguishes a unique role for SMEs in regional development and SMEs’ need for other customer-specific knowledge transfer approaches and the use of tools for better purchasing and supply processes. It is vital to make procurement developments easier in SMEs and translate topics such as digitisation, sustainability, and CSR for SMEs’ practical use by helping the local purchasing institutions, e.g. collaborative buying UT-Saxion-ROC van Twente. Within the EL-IPS core team, many projects exist. After the PERFECT project, PERSIST and PERISCOPE were launched. These projects translate PSM requirements in Industry 4.0 and Sustainability/CSR into learning objectives. Recently, through EL-IPS, UTwente joined the EU Urban Agenda Partnership for Innovative and Responsible Public Procurement, connecting 15+ European cities and 12+ national competence centres and associations (e.g. Eurocities, Eurotowns, ICLEI). Together with ten contractors, the ASPARi project for the asphalt paving process is established. Besides the challenge-based education project, future projects are envisioned with the ECIU partners, the European Consortium of Innovative Universities. The challenge is to address lifelong learning issues, mature PSM personnel, train practitioners from private PSM to become public procurers and establish a micro-credentials system.
Regionalisation or regional development will change the configuration of business networks and buyer-supplier relationships. The challenge is to form nodes and connect regional players. The connections with clusters of firms (in and outside the Twente region), public institutions and associations (e.g. via PSM associations such as BME, BMÖ, CNA, NEVI, CIPS or IPSERA) are shaped via challenge-based research and education and can be applied via moderated network events or theses, internships, semester projects, guest lectures or external PhD students. We also have – and will strengthen – our extensive international networks with academic procurement colleagues worldwide via community learning and communities of practice.
EL-IPS will focus on students' and practitioners’ competences and talent in the digital transformation era. New digital platforms in PSM facilitate the exchange of knowledge and ways to work and connect to the digital world. The role of individual PSM professionals is increasingly subject to change due to the digitisation and robotisation process. Students and practitioners need to be prepared to adjust to new acquire new knowledge, skills and traits. Synergies could be achieved by combining the education of graduates and executives in PSM. EL-IPS will offer learning modes to shape and enable students and practitioners to address digital and societal challenges.
EL-IPS aims to stay connected with graduates and make the external PhD network visible to outsiders to foster talent. The aim of EL-IPS is to link challenge-based education projects and programmes for students from academia, universities of applied sciences (HBO institutions) and vocational schools (MBO institutions). The projects and programmes include the participation of lifelong learners from PSM practice. These lifelong learners are educated as students on WO (academic), HBO (university of applied sciences) and MBO (vocational education and training) levels in curricula or separate (mini-) courses. Lifelong learners, alumni and other relations bring in real-life cases that will be used for challenge-based education. We aim to disseminate academic topics to a vocational level and design a micro-credential system for life-long learning education.
The title ‘European Laboratory’ evokes the largest-scale region we identify and expect to engage with as a regional partner. We are also firmly embedded on the European scale, e.g. through our intensive collaboration with the Lappeenranta University of Technology in research and teaching (double Master’ degree diploma).