Service-Dominant Strategic Sourcing: Value Creation Versus Cost Saving

  • Laleh Rafati
  • Geert Poels
Conference paper
Part of the Lecture Notes in Business Information Processing book series (LNBIP, volume 247)


The concept of strategic sourcing recognizes that procurement is not just a cost function, but supports the firm’s effort to achieve its long-term objectives. Organizations more and more expect from their chief procurement officer (CPO) to develop long-term and short-term plans in procurement. Typically, however, procurement is driven by a tactical spend management sourcing process aimed at cost saving targets, which is not able to support organizations in achieving strategic objectives like innovation, value creation, sustainable competitive advantage and long-term partnerships. A paradigm shift from a tactical way of thinking about sourcing to a more strategic way of thinking is needed by focusing on value-driven targets. To help realize the new paradigm of value-driven management in sourcing, we designed a systemic view on strategic sourcing based on Service-Dominant Logic and (service) systems thinking. We used this systemic view to develop the conceptual basis of a new modeling and analysis language that helps organizations in exploring sourcing alternatives according to value-driven management.


Strategic sourcing Value-driven management Service-Dominant Logic Capability sourcing 


  1. 1.
    Anderson, P.H., Rask, M.: Supply chain management: new organizational practices for changing procurement realities. J. Purchasing Supply Manag. 9(2), 83–95 (2003)CrossRefGoogle Scholar
  2. 2.
    Ellram, L.M., Carr, A.S.: Strategic purchasing: a history and review of the literature. Int. J. Phys. Distrib. Mater. Manag. 30(1), 9–19 (1994)Google Scholar
  3. 3.
    Chen, I.J., Paulraj, A., Lado, A.: Strategic purchasing, supply management and firm performance. J. Oper. Manag. 22(5), 505–523 (2004)CrossRefGoogle Scholar
  4. 4.
    Weele, A.: Purchasing and Supply Chain Management. Analysis, Strategy, Planning and Practise, Cengage Learning EMEA, Hampshire (2010)Google Scholar
  5. 5.
    Berger, R.: The CPO’s Agenda for 2014. Technical report, Aberdeen Group (2014)Google Scholar
  6. 6.
    Cox, A.: From Spend Management to Supply Management - Improving Category Management & Strategic Sourcing. Technical report, IIAPS (2015)Google Scholar
  7. 7.
    Cox, A.: Sourcing Portfolio Analysis: Power Positioning Tools for Category Management & Strategic Sourcing. Earlsgate Press (2014)Google Scholar
  8. 8.
    Cox, A., Ireland, P.: Value Flow Management: How to Create and Appropriate Value from KPI-Driven Companies and Supply Chains. Earlsgate Press (2015)Google Scholar
  9. 9.
    Peffers, K., Tuunanen, T., Rothenberger, M., Chatterjee, S.: A design science research methodology for information systems research. J. Manag. Inf. Syst. 24(3), 45–77 (2007)CrossRefGoogle Scholar
  10. 10.
    Cox, A.: Sourcing portfolio analysis and power positioning: towards a “paradigm shift” in category management and strategic sourcing. Supply Chain Manag. Int. J. 20(6), 717–736 (2015)CrossRefGoogle Scholar
  11. 11.
    Kraljic, P.: Purchasing must become supply management. Harvard Bus. Rev. 61(5), 109–117 (1983)Google Scholar
  12. 12.
    Cox, A.: Understanding buyer and supplier power: a framework for procurement and supply competence. J. Supply Chain Manag. 37(1), 8–15 (2001)CrossRefGoogle Scholar
  13. 13.
    Schuh, C., Kromoser, R., Strohmer, M.F., Pérez, R.R., Triplat, A.: The Purchasing Chessboard™, pp. 55–207. Springer, Heidelberg (2009)Google Scholar
  14. 14.
    Cox, A.: Improving Procurement Competence. Technical report, IIAPS (2014)Google Scholar
  15. 15.
    Cox, A.: Power Positioning & Sourcing Portfolio Analysis. Technical report, IIAPS (2015)Google Scholar
  16. 16.
    Von Bertalanffy, L.: The meaning of general system theory. General system theory: foundations, development, applications, pp. 30–53 (1972)Google Scholar
  17. 17.
    Ng, I., Parry, G., Maull, R., McFarlane, D.: Complex engineering service systems: a grand challenge. In: Ng, I., Parry, G., Wild, P., McFarlane, D., Tasker, P. (eds.) Complex engineering service systems, pp. 439–454. Springer, London (2011)CrossRefGoogle Scholar
  18. 18.
    Barile, S., Polese, F.: Smart service systems and viable service systems. Serv. Sci. 2(1–2), 21–40 (2010)CrossRefGoogle Scholar
  19. 19.
    Vargo, S.L., Maglio, P.P., Akaka, M.A.: On value and value co-creation: a service systems and service logic perspective. Eur. Manag. J. 26(3), 145–152 (2008)CrossRefGoogle Scholar
  20. 20.
    Eltantawy, R., Giunipero, L., Handfield, R.: Strategic sourcing management’s mindset: strategic sourcing orientation and its implications. Int. J. Phys. Distrib. Logistics Manag. 44(10), 768–795 (2014)CrossRefGoogle Scholar
  21. 21.
    Beer, S.: Brain of the Firm. The Penguin Press, London (1972)Google Scholar
  22. 22.
    Beer, S.: The viable system model: its provenance, development, methodology and pathology. J. Oper. Res. Soc. 35(1), 7–25 (1984)CrossRefGoogle Scholar
  23. 23.
    Vargo, S.L., Lusch, R.F.: From repeat patronage to value co-creation in service ecosystems: a transcending conceptualization of relationship. J. Bus. Market Manag. 4(4), 169–179 (2010)CrossRefGoogle Scholar
  24. 24.
    Maglio, P., Spohrer, J.: Fundamentals of service science. J. Acad. Mark. Sci. 36(1), 18–20 (2008)CrossRefGoogle Scholar
  25. 25.
    Vargo, S.L., Lusch, R.F., Akaka, M.A.: Advancing service science with service-dominant logic: Clarifications and conceptual development. In: Handbook of Service Science, pp. 133–156. Springer, New York (2010)Google Scholar
  26. 26.
    Vargo, S.L., Akaka, M.A.: Service-dominant logic as a foundation for service science: clarifications. Serv. Sci. 1(1), 32–41 (2009)CrossRefGoogle Scholar
  27. 27.
    Poels, G.: The resource-service-system model for service science. In: Trujillo, J., Dobbie, G., Kangassalo, H., Hartmann, S., Kirchberg, M., Rossi, M., Reinhartz-Berger, I., Zimányi, E., Frasincar, F. (eds.) ER 2010. LNCS, vol. 6413, pp. 117–126. Springer, Heidelberg (2010)CrossRefGoogle Scholar
  28. 28.
    Barney, J.B.: Firm resources and sustained competitive advantage. J. Manag. 17(1), 99–120 (1991)Google Scholar
  29. 29.
    Barney, J.B.: Gaining and Sustaining Competitive Advantage, 2nd edn. Prentice Hall, Upper Saddle River (2002)Google Scholar
  30. 30.
    Lusch, R.F., Stephen, L., Vargo, S.L., Matthew, O.: Competing through service: Insights from service-dominant logic. J. Retail. 83(1), 2–18 (2007)CrossRefGoogle Scholar
  31. 31.
    Hill, C., Jones, G.: Strategic Management: An Integrated Approach, 10th edn., Cengage Learning (2012)Google Scholar
  32. 32.
    Helfat, C., Finkelstein, S., Mitchell, W., Peteraf, M., Singh, H., Teece, D., Winter, S.: Dynamic Capabilities: Understanding Strategic Change in Organizations. Wiley, New York (2009)Google Scholar
  33. 33.
    Zollo, M., Winter, S.G.: Deliberate learning and the evolution of dynamic capabilities. Organ. Sci. 13(3), 339–351 (2002)CrossRefGoogle Scholar
  34. 34.
    Teece, D.: A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. J. Int. Bus. Stud. 45(1), 8–37 (2014)CrossRefGoogle Scholar
  35. 35.
    Vargo, S.L., Maglio, P.P., Akaka, M.A.: On value and value co-creation: a service systems and service logic perspective. Eur. Manag. J. 26(3), 145–152 (2008)CrossRefGoogle Scholar
  36. 36.
    Akaka, M.A., Vargo, S.L., Lusch, R.F.: An exploration of networks in value cocreation: a service-ecosystems view. Rev. Market. Res. 9, 13–50 (2012)CrossRefGoogle Scholar
  37. 37.
    Vargo, S.L., Akaka, M.A.: Value co-creation and service systems (Re)formation: a service ecosystems view. Serv. Sci. 4(3), 207–217 (2012)CrossRefGoogle Scholar
  38. 38.
    Wieland, H., Polese, F., Vargo, S.L., Lusch, R.F.: Toward a service (eco) systems perspective on value creation, pp. 12–24 (2012)Google Scholar
  39. 39.
    Cardoso, J., Lopes, R., Poels, G.: Service systems: concepts, modeling, and programming, pp. 1–91. Springer (2014)Google Scholar
  40. 40.
    Vargo, S.L., Lusch, R.F.: Service-dominant logic: looking ahead. Presentation at the Naples Forum on Service, pp. 14–17 (2011)Google Scholar
  41. 41.
    Bowman, C., Ambrosini, V.: Value creation versus value capture: towards a coherent definition of value in strategy. Br. J. Manag. 11, 1–15 (2000)CrossRefGoogle Scholar
  42. 42.
    Thalheim, B.: The science and art of conceptual modelling. In: Hameurlain, A., Küng, J., Wagner, R., Liddle, S.W., Schewe, K.-D., Zhou, X. (eds.) Transactions on Large-Scale Data- and Knowledge-Centered Systems VI. LNCS, vol. 7600, pp. 76–105. Springer, Heidelberg (2012)CrossRefGoogle Scholar
  43. 43.
    Rafati, L.: Capability sourcing: a service-dominant logic view. In: Proceedings of the 8th Mediterranean Conference on Information Systems, p. 8 (2014)Google Scholar
  44. 44.
    Rafati, L., Poels, G.: Introducing service-oriented organizational structure for capability sourcing. In: Leonard, M., Snene, M. (eds.) IESS 2014. LNBIP, vol. 169, pp. 82–91. Springer, Heidelberg (2014)CrossRefGoogle Scholar
  45. 45.
    Rafati, L., Poels, G.: Capability sourcing modeling: a high-level conceptualization based on service-dominant logic. In: Iliadis, L., Papazoglou, M., Pohl, K. (eds.) CAiSE Workshops 2014. LNBIP, vol. 178, pp. 77–87. Springer, Heidelberg (2014)Google Scholar
  46. 46.
    Loftin, R., Lync, R., Calhoun, J.: The Sourcing Canvas: A Strategic Approach to Sourcing Decisions. Technical report, Accelare (2011)Google Scholar
  47. 47.
    Sijnave, B.: The care information system of the future is VIRTUAL. Technical report in Presentation at 18de Colloquium Automatisering en zorgverlening, Affligem, Belgium (2014)Google Scholar
  48. 48.
    Jacobs, J.: Dependency and vulnerability: an exchange approach to the control of organizations. Adm. Sci. Q. 19(1), 45–59 (1974)CrossRefGoogle Scholar

Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.Faculty of Economics and Business Administration, Center for Service IntelligenceGhent UniversityGhentBelgium

Personalised recommendations