Journal of Intelligent Manufacturing

https://doi.org/10.1007/s10845-020-01594-x

Investigating the effect of value stream mapping on procurement

effectiveness: a case study
Shuwei Jing1 · Kaixuan Hou1 · Junai Yan1 · Zih‑Ping Ho2 · Lu Han3 

Received: 18 June 2019 / Accepted: 20 May 2020

© Springer Science+Business Media, LLC, part of Springer Nature 2020

Abstract
In order to find a new lean methodology to improve the process of procurement management, this paper takes the warehouse
in the manufacturing enterprise as a case to study. During lean consulting service provision, the firsthand material which the
research work needs through the spot inspection was collected. To analysis the whole procurement process, the procurement
value stream map based on the data collected was plot. Then the whole procurement process can be seen in the procurement
value stream map, including making procurement plans, audit, procurement, transportation, inspection, storage, classifying
and receiving materials. According to the procurement value stream map, wastes and non-value activities in the procurement
process can be easily found and the improvement methods can be prompted. The contribution of this paper main reflects
in two aspects: (1) the procurement value stream mapping (P-VSM) enriches improvement methodology of procurement
management; (2) the P-VSM methodology enlarges the application scope of lean tools on one side.

Keywords  Supply chain management · Value chain · Case study · Lean management · Survey studies

Introduction Render 2000); (2) products are made up of raw materials, the
quality of the materials determines the quality of products;
Procurement is among the most essential of all activities in (3) the stocks represent a large proportion of funds, the for-
manufacturing enterprises. Its importance is mainly reflected mulation and implementation of material procurement plans
in the followings: (1) procurement cost accounts for 50–60% play an important role in the operation of manufacturing
of a company’s total costs (Anderson et al. 2012; Heizer and enterprises. As the starting point of all value-added activi-
ties, procurement process includes the whole process of
logistics, technology flow, information flow and service flow
* Lu Han from the supply-side to the demand-side. Procurement activ-
sxgkhl@163.com
ities become the core of creating value and profits for enter-
Shuwei Jing prises. Some scholars have provided new methods for the
jingshuwei.abcd@aliyun.com
further research of procurement management. Zimmermann
Kaixuan Hou and Foerstl (2014) analysis the purchasing and supply man-
hou_kaixuan@163.com
agement practice from a perspective of performance link.
Junai Yan Rodríguez-Escobar and González-Benito (2017) realizes to
sxyja@126.com
improve procurement management according to strategic
Zih‑Ping Ho alignment. Central Procurement Organizations (Fang and
tp.her@msa.hinet.net
Natarajan 2019); Project Procurement Management (Rane
1
School of Management Science and Engineering, Shanxi et al. 2019); Green Procurement (Liu et al. 2020; Ivanova
University of Finance and Economics, Taiyuan 030006, 2019; Blome et al. 2014); Outsource parts of the purchas-
China ing process. (Bals and Turkulainen 2017); cross-functional
2
Administration Specialist, R&D Department, Chang Bing integration with other departments (Johnson et al. 2014).
Show Chwan Memorial Hospital, Kukang, Changhua, Defining purchasing strategies using Kraljic portfolio model
Taiwan, Republic of China
(KPM) (Gangurde and Chavan 2016); multi-echelon supply
3
School of Economics and Management, Tongji University, chain network (Sarrafha et al. 2015).
Shanghai 200082, China

13
Vol.:(0123456789)

Existing improvement measures have improved the
proficiency and profits of procurement activities in some
contexts. These measures, however, are not systematic and
are sometimes ineffective in eliminating wastes and delay,
due to ignored the process of value increment at the outset.
There are many non-value-added activities in the existing
procurement activities, such as waiting time, duplicating
efforts, confused labour structure, expensive procure-
ment cost, lack of flexibility in the supply mechanism,
and false information. However, these measures cannot
identify non-value-added activities, they cannot eliminate
all delays and wastes systematically. The procurement pro-
cess creates value from the two aspects following as: (1)
through procurement, resources are obtained to ensure the
smooth progress of normal production, which is the benefit
of procurement; (2) in the procurement process, there will
be various expenses, which is the procurement cost. In
order to pursue the maximization of procurement value,
to reduce the procurement cost and obtain the maximum
benefit with the least cost is necessary. Ohno (1988) have
summed up the waste phenomena in the production pro-
cess of enterprises into the following seven kinds: error
correction, over production, material handling, moving,
waiting, inventory and process. Value stream mapping
(VSM) is a useful methodology that can identify these
non-value added activities in the procurement process and
eliminate wastes, thus reducing costs. However, VSM is
rarely used in procurement process. We combine VSM and
procurement management into procurement value stream
mapping (P-VSM) to research how to save cost and create
value in procurement activity.
To research P-VSM empirically, a famous manufacturing
enterprise TY in China was taken as a case study to research.
First, we analyse the whole procurement process, includ-
ing making procurement plans, enquiry, audit, procurement,
transportation, material inspection, storage, classification
and receiving materials. Then, we draw a value stream map-
ping of procurement based on the analysis above. Based on
the analysis of the current P-VSM, we can find non-value-
added activities in each process, and we can also find the
improvement measures for them. Second, we can draw the
future P-VSM after improvement. Finally, with the combina-
tion of the future P-VSM and the reality of the enterprise, we
can take specific improvement measures. Then, we can con-
tinually promote the lean-kaizen using P-VSM. The results
of this research verify that the P-VSM can indeed shorten
the procurement cycle, and the procurement processes are
improved and simplified during this research. The scientific
research is that there is no overall research on procurement
improvement in the existing research; our work takes the
inventory, supply chain and platform involved in procure-
ment as a system, which is the development for the existing
research. Furthermore, P-VSM is an extended lean concept;
13
Journal of Intelligent Manufacturing
it maps, as a one-page diagram, reflected flow of materials,
products, information and their linkage.
In what follows, we first conduct a literature review of
procurement management and value stream mapping given
in “Literatures review” section. We find it necessary to
improve the procurement process of manufacturing enter-
prises based on the value-added process. We then present
the new concept of the procurement value stream mapping
(P-VSM) in “Procurement value stream mapping” section.
Finally, we choose one manufacturing enterprise warehouse
as the case study to analyse in “Case study” section. The
conclusions and prospects are presented in “Conclusions”
section.
Literatures review
To illustrate how to apply the theory of value stream to pro-
curement management, we first review existing research
about management and value stream. This paper analyses
the literature of procurement management and value stream.
Procurement management
Procurement management is defined as procurement activi-
ties that include planning, organization, coordination and
control. Providing a steady supply of raw materials is an
important component in procurement activities (Lawson
et al. 2009). Procurement management plays an important
role in cutting down the inventory backlog and purchasing
raw material stably in manufacturing enterprises (Edler and
Georghiou 2007). Especially under changing market condi-
tions, the product life-cycle is becoming increasingly shorter.
Advanced procurement management then becomes the core
of competition. For the most part, when the products have
quality problems, due to the procurement management not
working well (Wolinsky, 2015). The direct consequence
of inefficiency in procurement activities is unpunctual
delivery (Ndubisi et al. 2013). As the competition of the
market tends to be more intense, the role of procurement
management tends to be more important. In the situation
of demand-orientation, procurement management not only
plays a functional role in reducing costs but also tends to be
a strategic way to attracted customers. The factors affect-
ing procurement management will be divided into three
categories: (1) internal factors of the enterprise, including
procurement management skills, discourse power, executive
supports and the mechanism of supplier network governance
(Saga and Kunimoto 2016); (2) inter-organizational relation-
ship factors, including goal consistency, supplier trusts, and
supplier similarity (Ibem and Laryea 2015); and (3) supplier
factors, including supplier capacity and desire of suppliers
(Aydin et al. 2017).
Journal of Intelligent Manufacturing
In the transition from seller’s market to buyer’s market,
there are many shortcomings exposed in traditional procure-
ment management activities following as: (1) Organizational
structure: the division of labour is unclear, and the power
and responsibilities of staffs are uncertain (Saga and Kuni-
moto 2016). (2) Procurement methods: the supply-side and
demand-side have not established a stable cooperative rela-
tionship, and there is not a guarantee for the timeliness and
quality of materials (Aydin et al. 2017). (3) Procurement
information: information asymmetry will have a harmful
influence. The works of the purchaser and supplier, pro-
curement department and other departments, managers
and operators are easily confused by misinformation. (4)
Management of suppliers: the existing research lacks the
performance evaluation and professional management of
the suppliers. (5) Procurement plans: the prediction of the
enterprise and the demands of materials are mismatched.
The result is that the enterprise cannot organize procure-
ment activities based on the demand of production, and the
balance between material supply plans and current demands
cannot be achieved. (6) Procurement logistics: tracking pro-
curement is not realistic. Many things are not working, such
as purchase requisition, purchase review, our inquiry, quo-
tation, transportation, and quality monitoring. (7) Supervi-
sion and administration: the absence of effective supervision
(Binková 2012). There is no duty classification for author-
izing, issuing, executing and recording, there may be black-
box operations (Schoenherr et al. 2012).
In addition, at the same time, the theory of procurement
management is also developing, such as procurement man-
agement based on inventory theory, timely procurement
management based on supply chain coordination, and pro-
fessional procurement management based on reverse auc-
tions (Park and Park 2015, Teng and Chern 2010). Some
scholars proposed other theories. For example, procurement
management can be divided into three types based on how
much suppliers participate in product development. First,
the purchaser designs the supplier’s production; second, the
buyers and suppliers both participate in the design; third,
the purchaser provides functional requirements of techni-
cal standards and installation parameters (Pascual-Miguel
et al. 2015). These procurement management theories were
applicable under some circumstances; however, they have
their own scope of application and limitations.
Many scholars put forward improvement measures for
procurement. (1) Improvement of procurement management
based on inventory. there have been authors talking about
improvements of procurement process: (1) tactical sourcing
levers. Hesping and Schiele (2016) verifies that the appli-
cation of tactical sourcing levers varies according to ‘stra-
tegic importance’ and ‘supply risk’, and tactical sourcing
levers is effective in procurement activities. (2) Business
networks. Úbeda et al. (2015) finds that business networks
constitute a tool to improve this situation, and purchasing
can help organizations create business networks with sup-
pliers, as purchasing has evolved from a support function to
a key strategic tool for organizations. (3) Intelligent business
models. Schulz and Müller (2017) verifies that development,
sales and procurement will have to work jointly to realize
innovations, and intelligent business models will offer enor-
mous opportunities. (4) Collaborative product improvement
(Springer et al. 2011). And the findings highlight the need
to develop a coherent sourcing strategy for specific com-
modity groups, including reinforcing tactics and avoiding
trade-offs. (2) Improvement of procurement management
based on supply chain. Criticalities of process management
(efficiency and effectiveness): (1) Online auctions, Emiliani
(2000) proposes that online auctions will delay the adop-
tion of modern supply chain management methods and the
implementation of lean production that are needed for both
buyers and suppliers in order to truly eliminate waste and
reduce total costs. (2) Improving services supply manage-
ment. Hawkins et al. (2015) find that procurement process
impacts the supplier’s level of delivered service quality, and
they verify that improving services supply management can
improve procurement activity. (3) Appropriate operational
and strategic criteria. Nair et al. (2015) examine how pur-
chasing’s strategic participation influences supply manage-
ment activities via the choice of appropriate operational and
strategic criteria. (3) Improvement of procurement manage-
ment based on platform. Some paper put forward process
model framework of procurement, such as: (1) A generic
business process model for small purchases (Parikh and
Joshi 2005). They offer a generic business process model
for small purchases and employs equity-implementation
model to explain the factors leading to the success in this
purchasing process transformation. (2) A process model for
evaluating and assessing possible suppliers (Kakouris et al.
2006), they focuses in particular on the planning and quali-
fying phases of the process, and offers outsourcing decision
makers a structured and systematic selection framework. (3)
A structured purchasing process model (Van der Valk and
Rozemeijer 2009). They confirm that a proper specification
is an important prerequisite for purchasing services success-
fully. And they proposed an expansion to the traditional pur-
chasing process which incorporates the steps of pre-selecting
suppliers and detailing the initial specification. Then, many
scholars have researched the improvement of procurement
process.
Value stream mapping
Given this summary, from the manufacturing or operations
management literature, we recognize that major process
improvement has involved lean tools and Value stream map-
ping (VSM). The VSM was the main tool used to identify the
13

opportunities for various lean techniques (Abdulmalek and
Rajgopal 2007). And many innovative frameworks to apply
Value Stream Mapping to products. For example, Braglia
et al.(2006) make an innovation framework with complex
Bill of Materials is presented. Serrano Lasa et al. (2008)
research that the different aspects of planning projects for
redesigning productive systems using VSM.
Some scholars suggest that enterprises should discern
the value activities in the operations before formulating
enterprise strategies. These value activities include basic
value activities and ancillary value activities. Together, they
constitute the value chain of the whole enterprise. Value
chain can also be defined as value stream in lean manu-
facture process (Francis et al. 2014). The concept of value
stream divides enterprise activities into value-added activi-
ties and non-value-added activities. Value-added activities
are activities that directly create value for customers. Non-
value-added activities are activities that include moving the
work piece, replacing uniforms and fixtures, and activities
that are necessary for turn-over although they do not create
value (such as transportation and waiting time). The VSM
plays an important role in recognizing whether activities
can create value for enterprises, and managers can eliminate
non-value-added activities as far as possible (Dinis-Carvalho
et al. 2019). They allows enterprises to realize the goal of
decreasing costs, shortening production time, eliminating
resource waste and maximizing product value.
The traditional VSM can be converted into Dynamic
value stream (Shafique. 2014). For example, the dynamic
VSM based on Industrial Internet of Things (Balaji et al.
2020). The VSM has been widely applied in various fields
successfully following as: procurement process in the public
sector (Hofacker et al. 2012), quotation preparation process
(Stadnicka and Ratnayake 2018), quotation creation process
(Sremcev et al. 2019), pulp and paper industry (Erixon and
Bjorklund 2018), products development value stream (Jing
et al. 2019), continuous construction processes (Barathwaj
et al. 2017), improving efficiency of offices (Chen and Cox
2012), healthcare environments (Henrique et al. 2016), pro-
duction assembly (Westin et al. 2014; Matt 2014), chemi-
cal plant (Michlowicz and Zwolinska 2015), exploitation of
software (Ali et al. 2016), government management (Scor-
sone 2008), and glass industry (Atieh et al. 2016), supply
chain networks (Plapper et al. 2018).
As the origin of the value-added process in all production
and operations, procurement management plays an impor-
tant role in adding value for the enterprise. However, the way
to create value varies at different stages of the processes.
Traditional procurement management focuses on reducing
the costs of the enterprise, creating value for the enterprise
through saving costs. The theory of modern procurement
management believes that the process of increasing the value
includes the entire supply chain, from the supplier to the
13
Journal of Intelligent Manufacturing
customer. It is no longer the sole goal to reduce business
costs. Now the main goal is to continuously improve the
quality, timely meet customer needs and enhance competi-
tiveness. Procurement management will take place through-
out the entire value-added process of manufacturing enter-
prises. However, it is rare to see a study on the improvement
of procurement management activities from the perspective
of value flow.
In summary, the existing literature has focused on how to
improve procurement management based on inventory, sup-
ply chain and platform separately; ignoring the procurement
system is a complete system. The contribution of this paper
is to make a systematic research on improving procurement
management using P-VSM. (1) This paper enriches improve-
ment methodology of procurement management; (2) The
P-VSM methodology enlarges the scope of application of
lean tools.
Procurement value stream mapping
The P-VSM is a breakthrough for traditional lean value
stream. The traditional value stream has been applied
to many areas successfully. Based on the abundance of
research, this paper initially proposes a lean tool from the
perspective of procurement activities creating value, and
then applies it to improve the procurement process of manu-
facturing enterprises, especially for the lean-kaizen. Apply-
ing the theory of value stream to purchasing activities, we
find that the P-VSM plays an important role for the lean-
kaizen of procurement.
The P-VSM is an important breakthrough for the tradi-
tional value stream applied to the field of procurement man-
agement in manufacturing. We use the P-VSM to analyse the
process of procurement depending on the value stream map-
ping of procurement (P-VSM). The P-VSM can reflect all
value-added and non-value-added activities during the entire
procurement process, including making procurement plans,
purchasing raw materials and purchasing materials from the
departments of production and transportation. In this way,
the non-value-added parts can be found, wastes and delays
can be reduced for all procurement activities. The ability of
procurement management directly reflects the management
level of the company. The targets of P-VSM include two
parts following as: (1) the first part is to reduce the workload
of purchasing managers, and (2) the second is to establish a
more complete system of scrapping and cancelling stocks.
The goal of these targets is to reduce waste and delays, and
improve the efficiency of procurement.
Based on the research of procurement process (Schoe-
nherr et al. 2012), this paper draw from the consolidate
framework of value stream mapping (Chen et al. 2010),
and proposed a new model draw in Fig. 1, and we named
Journal of Intelligent Manufacturing
Fig. 1  The schematic diagram of the P-VSM
this figure as P-VSM. The P-VSM is used to describe the
material flow, time flow, information flow, etc. These
flows are involved in the process of the enterprise from
making the procurement plan to obtaining the materials
of the operation department. The P-VSM helps enter-
prises simplify the procurement management process
using lean management tools and ideas. At the same time,
the P-VSM can help find wasteful links in the original
procurement process and create overall improvement. In
practice, we need to first draw the current P-VSM of the
warehouse and identify delays and waste at various nodes
throughout the procurement process based on the map.
Second, in order to solve problems reflected in the current
P-VSM, we can find the appropriate solution in reality as
much as possible. Third, we draw a P-VSM of the future
state. Finally, we find the applicable countermeasures and
implementations according to compare the two diagrams
of P-VSM. The drawing of P-VSM mainly include two
contexts as follows:
1. The information flows. Based on the production capacity
and the forecast of market demands, the procurement
departments need to do the following: make procure-
ment plans, perform an enquiry, summarize purchasing
plans, manage the loan application, give approval, con-
trol the budget, and process the financial audit.
2. The material flows. The mean of the material flow
includes the transportation of procurement materials
from the supplier, the inspection of materials before
sending them into the warehouse, the classification of
materials, and the operation departments finally taking
the goods.
The improvement process of procurement
management
To apply the P-VSM to prompt procurement management
in the enterprises, we need to specifically analyse accord-
ing to the P-VSM procedures. That is, we need to draw the
current status of the P-VSM for the enterprise based on the
current procurement process. We also need to identify non-
value-added parts and make improvement measures. Then,
we need to draw the future state diagram of the P-VSM.
According to this procurement value map, we can find how
to improve procurement processes comparing the two dia-
grams. Finally, we can put forward specific improvement
measures based on the previous analysis. The specific steps
are reflected in Fig. 2.
Observing the current procurement
process
Drawing the P-VSM before improvement
Analyzing the current situation,
identifying non-value-added links
Putting forward improvement measures
in practice
Drawing P-VSM after improvement
Comparing Two maps and improving
procurement management
Fig. 2  The analysis process flow of the P-VSM
13

(1) Observe the current procurement process of the ware-
house. For a specific warehouse in an enterprise, we need
to observe the current information creatively and record
it in detail; for example, procurement plan, procurement
model, supplier transportation, goods verification, sorting
the materials and putting the above in storage and getting
materials. At the same time, in order to survey their specific
work contexts roundly, we need to interview relevant staffs,
observe the time to complete each process, the interval that
workers need to wait and the man-days of some key pro-
cesses in the whole procurement process. In particular, it is
necessary to record, collate, and backup the key complicated
procedures. (2) Draw the current P-VSM for the enterprise
before improvement. We need to draw the current P-VSM of
an enterprise according to the existing procurement process.
We will draw the procedures of procurement on the P-VSM
based on these inherent logic relationships. We will mark
operating time and waiting time of every link under the cor-
responding position. (3) Analyse the present situation and
propose improvement measures. In this step, we will analyse
the present situation of procurement management, according
to the current P-VSM and identify which parts can be can-
celled and which parts can be upgraded based on reality, and
then we can put forward corresponding improvement meas-
ures. (4) Draw the future P-VSM after improvement. We
draw the future P-VSM after improvement based on the idea
of lean management and the improved measures mentioned
above. Then, we can find how to improve procurement
management according to comparing the two diagrams. (5)
Improve procurement management. Set goals according to
the aforementioned study. Design specific improvement pro-
grammes in several aspects, especially in some key areas.
Try to improve the procurement management mechanism
of enterprises continuously.
Case study
Case overview
We take a typical enterprise in manufacturing in China as
a case to study. This enterprise is called TY. One reason
for the choice is the TY has all the features of the service-
embedded manufacturing; the other is that its business per-
formance has been declining and suffered from market share
decline and poor customer satisfaction. We have provided
consulting services for enterprise management over time.
The aim of this paper is to show the application potential of
a new tool for the procurement process, and this case as start
representative of future replication. The analytical thinking
of this paper can be applied into other enterprises, according
to adjustment specific parameters of procurement organiza-
tion, people, working hours and so on.
13
Journal of Intelligent Manufacturing
Based on the interview of first-line workers, field obser-
vation, equipment account and document analysis, we find
many problems in its procurement management, for exam-
ple, making accounts repeatedly, a lack of any mechanism
for scrapping, entering data into the computer manually, and
a large storehouse workload. To solve the problems above,
this paper surveyed procurement activities in this enterprise
for a long time, and found many problems in the procure-
ment processes:
1. Warehouse management tools. The current warehouse
management tools include stores requisition, warehouse
warrant, purchase certificate, GAMA software, UFIDA,
etc. First, in the daily warehouse management process,
staffs need to fill out complex documents, and they then
need to enter the information recorded in the document
into the computer. This process wastes too much time.
Furthermore, GAMA software and UFIDA cannot con-
nect directly, so that staffs need to do extra financial
statements.
2. Procurement mechanism. The procurement mechanism
of this enterprise is not complete. This has led to high
storage costs for companies. For example, in completing
job treks, we found that, when the goods are damaged
or fail to satisfy production demands, they are still con-
served in the warehouse. This method not only increases
the operation cost of the enterprise but also reduces pur-
chasing efficiency. Furthermore, each operation depart-
ment cannot obtain goods for production in time due to
the lack of a systematic management mechanism. To
produce, many operation departments have to set up a
separate warehouse in the production workshop. This is
also known as an ancillary warehouse. It is worth men-
tioning that the inventory is too large to be conserved in
the repair department, and the damage to the materials
in the ancillary warehouse is serious.
3. Procurement model. Depending on the statistics of TY,
there are approximately 120 temporary procurement
applications in 7 months. There are approximately 150
work days in addition to office days. There are approxi-
mately 0.8 temporary purchasing applications per day.
However, the monthly procurement cycle is too long.
Purchasing materials are distributed to the production
team at once, which is not easy for the warehouse to
manage. The cost of temporary procurement is high,
and procurement staffs need to go out and buy materi-
als almost every day.
The improvement of procurement management
The capacity of procurement management directly reflects
the management level and the ability of competition. It is
essential to the success or failure of the enterprise in the
Journal of Intelligent Manufacturing

market share. Therefore, it is necessary to improve the pro-
curement management of TY. This paper will improve the
procurement management of TY based on the P-VSM.
Step 1: Plot the current procurement flowchart
Observe and record the procurement state of departments,
staffs, and work conditions in TY. It is also necessary to
interview the operators of each process and to record the
interview data. Then, we need to analyse each process and
the relationship among these processes. Be sure to record
the key and complicated processes using video. Backup and
collate the above observation data, and plot the current pur-
chasing flowchart of TY enterprises:
Based on Fig. 3, we find that there are three obvious prob-
lems in the procurement process. First, procrastination is
severe. There was a 7-day delay during the process of report-
ing the monthly procurement plans. There is also a problem
of procrastination when the manager is required to check
the signature on the purchase application. Second, there is
wasteful duplication of efforts during the process of filling
in the material entry form when entering the warehouse and
filling in the material amount when entering the account.
Step 2: Plot the current P‑VSM
Based on the current purchasing flowchart of TY, we col-
lect the operation time and waiting time of every process.
We can then analyse the specific measures to improve the
procurement process. Then, we can estimate the improve-
ments of every process. Finally, we can plot the current
P-VSM based on the above information (Fig. 4).
Based on the current P-VSM for the case enterprise in
Fig. 4, there is a clear understanding of the overall value
flow for the TY enterprise procurement process. First, the
procurement department needs to make a monthly procure-
ment plan based on the material demands of each depart-
ment. They need to go to each department to reform the
statistical plans. Second, the procurement department
needs to go to the market to make an inquiry based on
the procurement plans. After they adjust the procurement
plans, they need to fill in the material purchase application
forms and take the financial audits. If the procurement
managers review the procurement successfully, the pro-
curement plans will be confirmed. Third, the procurement
staff will purchase goods one by one. They are required
to purchase goods according to the procurement plan one
by one. In other words, they need to go to supplier A, sup-
plier B, and supplier C in turn. Then, suppliers will deliver
goods to the procurement departments. The procurement
department will inspect goods before storing materials in
the warehouse. The procurement departments will classify
purchased materials before putting them on the shelves.
Finally, the purchase documents, such as the material, are
forwarded to the finance department for audit. If the docu-
ments are audited successfully, then the operation depart-
ments will be notified to receive materials when they are
free.

Fig. 3  The current procurement Procurement

flowchart of TY Procurement plan Total procurement
Begin application
report plans statistics

NO
NO
Relevant
Authentication Manager review YES Audits department
verifaction
<(6

Tracking Warehouse keeper Goods

Procurement
delivery confirmstion return

Good-in form Testified to

Storage YES be qualified NO

Source Accounting
Reimbursement End
document documents
fill-in

13

Fig. 4  The current P-VSM of case enterprise
Step 3: Analysis of the present situation
and the improvement measures
It is not hard to find that there are some procurement activi-
ties that can be improved through the basic survey of the
procurement process above. First, the procurement cycle is
too long. There are approximately 34 days between mak-
ing procurement plans and distributing materials; however,
approximately 29 of these days are waiting time, including
16 days of the order information transferring among dif-
ferent departments—this process cannot create any value.
Second, the enterprise needs to purchase goods according to
the procurement plan one by one. In other words, they need
to go to supplier A, supplier B, and supplier C in turn. There
is approximately 1 week from making procurement plans to
confirming statistical procurement plans. This cycle is too
long, and there is room for improvement. Third, the procure-
ment department is inefficient. For example, the warehouse
managers still charge accounts manually. Although the ware-
house is equipped with an electronic accounting system, the
warehouse managers still use the manual entry model. Many
unreasonable parts in procurement activities lead to waste
and delays.
According to the analysis of the present situation, we
find that there are some improvement measures in each
13
Journal of Intelligent Manufacturing
procurement process. This paper will put forward the
improvement measures in two ways. One is to improve
management process, and the other is to upgrade warehouse
management system. The former can shorten the procure-
ment cycle; the latter can solve the problem of duplicated
labour and manual entry. At the same time, the analysis of
the process can provide scientific evidence for the manage-
ment system; the management system can simplify the man-
agement process.
The corresponding improvement measures are as fol-
lows: (1) establish a long-term partnership with suppliers.
(2) Replace the series purchase models with the parallel pur-
chase model. In other words, the procurement department
can go to the next supplier regardless of whether the former
has already delivered. (3) Change the monthly purchases
plan into a weekly procurement plan. (4) Introduce the man-
agement software of warehouse.
Step 4: Plot the future P‑VSM after improved
Then, we can plot the future P-VSM after improved, which
can reflect procurement process which has already elimi-
nated wasted time and man-days. This future map is in
Fig. 3.
Journal of Intelligent Manufacturing
In addition to the substantial reduction in the cycle
required for each link in the procurement process, there
are several noticeable improvements reflected in Fig. 5. (1)
Make a procurement plan once a week instead of once a
month. More flexible procurement can adjust the scope of
temporary purchases in time. (2) Purchase documents can
be audited at any time. They are no longer to be audited
only on Monday and Thursday. (3) The series procurement
model is replaced with the parallel procurement model. The
purchasing department can go to the next supplier regard-
less of whether the former has already delivered. It is not
necessary that the enterprise accomplish the exchange with
the former suppliers before going to the next. The enterprise
can go to three suppliers to buy goods at the same time.
This improvement measure saves much time. (4) The storage
costs can be reduced according to the procurement model
once a week; (5) there is only one material form required
when the procurement materials are checked and reserved
into the warehouse, and the employees are not required to
repeat the labour. (6) The application of management soft-
ware. The warehouse managers can enter data according
scanning a code system, and the efficiency of the procure-
ment department will be improved using this management
software. The first four improvement measures belong to the
reform of the procurement mode, and the latter two belong
to the reform of the procurement system.
Fig. 5  The future P-VSM after improvement of case enterprise
Step 5: The improvements of procurement management
mechanism
According to the comparison of the P-VSM before and after
improvement, we find the improvement measures of pur-
chasing management in TY. First, import the purchasing
management software. Select the appropriate management
software based on the reality of TY. Adjust the software
according to the actual situation of the enterprise. Introduce
the software into the daily operations of TY. Second, change
the procurement model. Establish specialized submodules
of suppliers and logistics following the initial procurement
plan and perfect related procurement files continuously. The
specific operations are shown as following:
1. Develop an employee performance review process. Man-
agement should carry out the reform of the personnel
matters system based on the demands of fixed person-
nel, fix position, and fixed arrangement. The staff can be
evaluated whether he or she is competent in his or her
work.
2. Standardize the procurement process. Plot the specific
process diagram based on the P-VSM after improve-
ment. The diagram must reflect specific operations of
the procurement department. The managers are respon-
sible for training the staff according to the process dia-
13

gram, and the staff can receive promotions from this
standardized procurement process according to absorb
experience and knowledge from their work and improv-
ing work efficiency, the quality and quantity of every
procurement activity can be guaranteed.
3. Establish a flexible procurement system. To establish a
flexible procurement system, the procurement depart-
ment needs to adapt some specific measures, such as
formulating the precise implementation measures,
standardizing the operation process and establishing the
mechanism of procurement management.
The achievement of the P‑VSM
To verify whether it is correct to apply the P-VSM into the
improvement of procurement management, this paper will
evaluate the procurement cycle of TY. The comparison of
procurement management before and after improvement for
TY is shown in Table 1:
We can see clearly from Table 1 that the time required
for each procurement process of TY has fallen sharply
after improvement. (1) Plan-making cycle. After chang-
ing the monthly procurement plan to a weekly procurement
plan, the plan-making cycle was shortened from 12 days to
2.5 h. That is a reduction in time of 97.4%. At the same
time, procurement work becomes more flexible. (2) Bill-
ing cycle. After introducing the procurement management
software, the traditional manual entry operation procedures
have been replaced. The billing cycle was shortened from
10 days to 1 h. That is a 98.6% reduction in time spent. This
improvement not only liberates the labour of manual entry
staff but also improves the overall efficiency of the procure-
ment department. (3) Information cycle. The information
cycle includes collecting information from the procurement
department through final confirmation of procurement
orders. The information cycle was shortened from 16 days to
4.5 h. That is a 96.5% reduction in time spent. While short-
ening the cycle of information transmission, the authenticity
and reliability of information are guaranteed. (4) Logistics
cycle. The logistics cycle was shortened from 18 days to 8 h.
The time spent has been shortened for 94.4%. This improve-
ment ensures the demand for various raw materials in the
production department. (5) The whole procurement cycle.
The whole procurement cycle was shortened from 34 days
Table 1  The comparison of Plan-making
procurement management cycle
before and after improvement
for TY
Before (days) 12
After (h) 2.5
percentage (%) 97.4
13
Journal of Intelligent Manufacturing
to 12.5 h. The time spent has been shortened for 95.4%. This
helps the enterprise to adjust the procurement plan in real
time based on the market demand. The P-VSM also helps
the enterprise to achieve the goal of meeting customers’
demands better.
The application of the P-VSM has shortened the cycle
of procurement activity over 90%. This illustrates that the
P-VSM can not only improve the efficiency of procure-
ment but also adjust the procurement plan based on market
demands in real time, providing a guarantee for the effec-
tive operation of the enterprise. The P-VSM reduces the
possibility of mismatched raw material and products that
can’t meet market demands. Moreover, the application of
the P-VSM can urge manufacturing enterprises to make their
procurement process more institutionalized, standardized
and excelsior.
Conclusions
The P-VSM is an effective solution for reducing business
inventories, shortening the purchasing cycle, saving prod-
uct costs and enhancing market competitiveness. Under
the guidance of the traditional value stream and the lean
thoughts, this paper takes the manufacture enterprise TY
as an example to analyse the purchasing management pro-
cess of TY empirically. According to the application of the
P-VSM, we can identify the main waste links in the ware-
house procurement process and try to eliminate wasteful
links based on lean thoughts. Driven by the demands of
other departments, information flow and material flow can
achieve smooth and orderly delivery. The results illustrate
that the plan-making cycle, billing cycle, information cycle,
logistics cycle and the whole procurement cycle can be
shortened substantially, according to apply the P-VSM, and
the efficiency of procurement management in the warehouse
is improved over 90%. This can verify that the P-VSM is sci-
entific, and the P-VSM can be widely applied in warehouse
procurement management of manufacturing enterprises. The
research results show that the following:
1. The P-VSM is a major countermeasure for the lean-
kaizen of the procurement activities. The P-VSM can
resolve many problems such as excess inventories, wast-
Billing cycle Information Logistics cycle Procure-
cycle ment
cycle
10 16 18 34
1 4.5 8 12.5
98.8 96.5 94.4 95.4
Journal of Intelligent Manufacturing
age, delays and inefficiency in procurement activities.
This paper proposes the P-VSM based on optimizing
the traditional value stream. This paper applies the
P-VSM to manufacturing to enhance the efficiency of
procurement warehouse management. This is signifi-
cant for shortening non-value-added time and wasting
of resources.
2. The P-VSM can achieve customer-oriented procurement
goals. The P-VSM can adjust the procurement plan at
any time depending on the demands of production,
achieving the demand-oriented goals of the production
departments. The P-VSM can also realize these goals:
meeting customers’ demands, reducing the possibility
of scrapped products and raw materials, making produc-
tion more flexible, enhancing business productivity, and
improving product quality and market competitiveness.
However, this study also has some shortcomings. This
paper only takes one case as an example. There are not
multiple cases and perspectives to demonstrate whether
the P-VSM should be applied to other types of enterprises.
Further research needs to include systematic analysis in a
multi-angle or multi-case study and provide references for
the improvement of procurement management.
Acknowledgements  This research is supported by the Program for the
Philosophy and Social Sciences Research of Higher Learning Institu-
tions of Shanxi No. 2016(39) and No. 2017326. This research is also
supported by Program for the Outstanding Innovative Teams of Higher
Learning Institutions of Shanxi No. 2016 (3).
Data source  We provided long-term counselling service for this enter-
prise, and all the data was taken from practical production before and
after improvement. We had already listed related data in this paper.
Compliance with ethical standards  Erixon, M., & Bjorklund, P. (2018). Steam exploded pellets made from
Conflict of interest  The authors declare that there is no conflict of in-
terest regarding the publication of this manuscript.
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