Smart Buyer: A Bayesian Network modelling approach for measuring and improving procurement performance in organisations

Abstract Procurement, the act of buying goods or services from an external supplier, plays an important role in any organisation. To measure how well an organisation undertakes this activity, it needs to measure all associated Key Performance Indicators (KPIs). The current literature's major drawback in performing such a measurement is how to integrate the different KPIs, each of which captures a specific aspect of the organisation's performance. In this paper, we highlight this drawback and present our proposed Smart Buyer framework that is based on a Bayesian Network (BN) model capable of capturing and integrating the different KPIs. The measured procurement performance value can then be used by organisations to identify the areas in which they need to improve and develop plans to achieve this. Four scenarios are presented to show how the proposed BN model can be further used for analysis and decision making within organisations. Finally, a recent real-world procurement example is studied to demonstrate the applicability of the proposed Smart Buyer framework.