DECLARATION - Makerere University · Web viewCost reduction is also influenced by control over maverick spending i.e. purchase of goods from suppliers with which the organization

THE IMPACT OF ELECTRONIC PROCUREMENT ON ORGANIZATIONAL

OPERATIONAL EFFICIENCY

A CASE STUDY OF SHOPRITE SUPERMARKET

NAKAJJE DIANA ROSE

07/U/11863/EXT

A RESEARCH REPORT SUBMITTED TO THE COLLEGE OF BUSINESS AND

MANAGEMENT STUDIES IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF THE DEGREE OF BACHELOR OF

COMMERCE (EXTERNAL) OF MAKERERE UNIVERSITY

JULY 2011

1

DECLARATION

I Nakajje Diana Rose, declare that the work presented in this research paper is my original

work achieved through personal reading, research plus reflection. Therefore it has never been

submitted to any other University or institution of higher learning for academic credit.

Name: NAKAJJE DIANA ROSE. REGN NO: 07/U/11863/EXT

Signature……………………….. Date………………

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APPROVAL

The research was done under the topic “The impact of E-procurement on organizational

operational efficiency” taking a case study of Shoprite supermarket Entebbe road and was

approved by:

Signature……………………………….. Date………………………………..

Mrs. Mbatudde Sheila

Supervisor

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DEDICATION

This research is devoted to my caring guardians’ Aunt Anne, Aunt Mardine for the material

and moving support they rendered to me. It is precious that they played a great role in my

education and in my life in general.

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ACKNOWLEDGMENT

A cheerful appreciation goes to my Aunt Mardine, Aunt Anne, Aunt Teddy, Daddy and

Revered Sister Polycarp

Special thanks go to my supervisor Mrs. Mbatudde Sheila for her commitment and guidance

when supervising my work.

I would also want to gratefully acknowledge the support of my guardians for their love,

encouragement and financial support during my education. My brothers and sisters plus my

cousins not forgetting my coursements, Edrone, Edith, Sarah, Swaibu, Wilber, Ronnie to

whom I am vastly thankful for their discussions and thoughts. Thank you for allowing me

to make use of you through out the course and more so in my struggle to bring the efforts of

this research to fruition.

As the saying goes “Life is not a puzzle to be solved, but a mystery to be experienced” I have

been fortunate to have people to live the mystery with while providing some solutions to

many puzzles but, more important challenged the reader to experience the mystery.

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ABSTRACTThe study was meant to establish the influence of e-procurement on the operational frequency

of an organization. Shoprite supermarket was selected as a case study. The study objectives

were; To find out the e-procurement tools used by shoprite supermarket, To find out the

advantages of e-procurement on operational efficiency of shoprite supermarket; and To

identify the challenges being faced by shoprite supermarket.

The study adopted descriptive and explanatory design. The study involved a sample of 60

respondents who were selected using simple random sampling. Data was collected using

questionnaires which were close ended. The data obtained was analyzed using descriptive

statistics and interpreted using narrative text.

Findings indicated that Shoprite used e-procurement tools that included e-catalogues, e-

market, web-procurement and internet. Findings also revealed e-procurement had brought

advantages such as saving time, cost reduction, increased efficiency in making purchases and

increase in the flow of information. Findings further indicated that Shoprite faced challenges

with the use of e-procurement that included infrastructural constraints such as installing

software and mechanical breakdown.

The study concluded that the adoption of e-procurement improves on operational efficiency

of business enterprises as was the case with Shoprite Supermarket. Though there were

challenges associated with system, management of shoprite should work out modalities of

mitigating them.

The study recommended the need of training the staff members about the operation of the

system. This could take form of after work training as well as organizing weekend refresher

courses for the staff. The study also recommended the need for regular serving of the

computer systems such that the incidence of breakdown is greatly.

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TABLE OF CONTENTSDECLARATION........................................................................................................................i

APPROVAL..............................................................................................................................ii

DEDICATION..........................................................................................................................iii

ACKNOWLEDGMENT...........................................................................................................iv

ABSTRACT...............................................................................................................................v

TABLE OF CONTENTS..........................................................................................................vi

LIST OF TABLES.....................................................................................................................x

CHAPTER ONE.......................................................................................................................1

1.0 Introduction..........................................................................................................................1

1.1 Background of the study......................................................................................................1

1.2 Problem statement................................................................................................................3

1.3 Purpose of the study.............................................................................................................3

1.4 Objective of the study..........................................................................................................3

1.5 Research Questions..............................................................................................................4

1.6 Scope of the Study...............................................................................................................4

1.6.1 Subject Scope....................................................................................................................4

1.7 Significance of the Research................................................................................................4

CHAPTER TWO.....................................................................................................................5

LITERATURE REVIEW........................................................................................................5

2.0 Introduction.......................................................................................................................5

2.1 Electronic procurement tools...............................................................................................5

2.1.0 Electronic catalogue..........................................................................................................5

2.1.1 Electronic markets.............................................................................................................6

2.1.2 Electronic data interchange (EDI).....................................................................................6

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2.1.3 Web based e-procurement.................................................................................................7

2.1.4 Internet..............................................................................................................................7

2.2 .The advantage of using electronic procurement on operational efficiency........................8

2.2.1. Saves time......................................................................................................................8

2.2.2 Reduced costs....................................................................................................................9

2.2.3 Efficient purchasing........................................................................................................11

2.2.4 Shopping.........................................................................................................................12

2.2.5 Shortened ordering time..................................................................................................13

2.2.6 The internet.....................................................................................................................13

2.2.7 Efficient and cost effective way of communication.....................................................14

2.2.8 Order fulfillment.............................................................................................................16

2.2.9 Faster response................................................................................................................16

2.2.10 Consolidation of data....................................................................................................17

2.3 Challenges of using e-procurement....................................................................................18

2.3.1 Implementation is not necessarily easy...........................................................................18

2.3.2 Gambling.........................................................................................................................20

2.3.3. Limited capacity to fully operate e-procurement system...............................................21

2.3.4 Cultural Aspects..............................................................................................................22

2.3.5 Too many suppliers to deal with.....................................................................................23

CHAPTER THREE...............................................................................................................24

METHODOLOGY.................................................................................................................24

3.0 Introduction........................................................................................................................24

3.1 Research design..................................................................................................................24

3.2 Study population................................................................................................................24

3.3 Study area...........................................................................................................................24

3.4 Sample size and sampling method.....................................................................................24

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3.5 Data sources.......................................................................................................................24

3.5.1 Primary data....................................................................................................................24

3.5.2 Secondary data................................................................................................................24

3.6 Data collection tools...........................................................................................................25

3.6.1 Questionnaires.................................................................................................................25

3.7 Data processing..................................................................................................................25

3.8 Data analysis......................................................................................................................25

3.9 Measurement of variables..................................................................................................25

3.10 Validity.............................................................................................................................25

3.11 Reliability.........................................................................................................................25

3.12 Limitations of the study...................................................................................................26

CHAPTER FOUR..................................................................................................................27

PRESENTATION AND INTERPRETATION OF FINDINGS........................................27

4.0 Introduction........................................................................................................................27

4.1 General information on respondents..................................................................................27

4.2 Descriptive statistical tables showing the E-procurement tool used Shoprite supermarket...

...................................................................................................................................29

4.3 Descriptive statistical tables showing the advantages of E-procurement..........................31

4.4 Descriptive statistical tables showing the challenges associated with the use of E-

procurement..............................................................................................................................35

CHAPTER FIVE....................................................................................................................39

SUMMARY, DISCUSSION, CONCLUSION AND RECOMMENDATIONS...............39

5.1 Introduction........................................................................................................................39

5.2 summary of the finding......................................................................................................39

5.2.1 E-procurement tool used by Shoprite supermarket.........................................................39

5.2.2 Advantages of E-procurement.........................................................................................39

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5.2.3 Challenges associated with E-procurement....................................................................39

5.3 Discussion of the findings..................................................................................................40

5.3.1 E-procurement tools used by Shoprite supermarket.......................................................40

5.3.2 Advantages of using e- procurement on operational efficiency......................................41

5.3.3 Challenges of using e- procurement................................................................................42

5.3 Conclusions........................................................................................................................43

5.4 Recommendations..............................................................................................................43

5.4 Areas for further research...................................................................................................44

References................................................................................................................................45

Appendices...............................................................................................................................49

Appendix A: Questionnaire......................................................................................................49

Appendix B: Introductory Letter..............................................................................................55

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LIST OF TABLESTable 1: Gender of the respondents.........................................................................................27

Table 2: Distribution of the respondents by age......................................................................27

Table 3: Level of education of the respondents.......................................................................28

Table 4: Marital status of the respondents...............................................................................28

Table 5: Length of employment at Shoprite supermarket........................................................28

Table 6: Use of e-catalogues....................................................................................................29

Table 7: Use of e-market..........................................................................................................29

Table 8: Use of web based e-procurement...............................................................................30

Table 9: Use of internet............................................................................................................31

Table 10: Saves time................................................................................................................31

Table 11: Reduction of costs....................................................................................................32

Table 12: Efficient purchases...................................................................................................33

Table 13: Improved information flow......................................................................................34

Table 14: Consolidation of data..............................................................................................34

Table 15: Implementation is not easy......................................................................................35

Table 16: E-procurement involves gambling...........................................................................36

Table 17: Limited Capacity......................................................................................................37

Table 18: Cultural aspects.......................................................................................................37

Table 19: Too many suppliers................................................................................................38

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CHAPTER ONE

1.0 Introduction

This chapter presents the background of the study, the problem statement, study objectives,

research questions, and scope of the study and significance of the research.

1.1 Background of the studyElectronic procurement refers to the purchasing of goods and services for the day to day

operation of the business online and automating the whole procedure with an underlying aim

of saving money (Malcolm, 2001).

It can also be defined as any business transaction that occurs in cyberspace, whether it

involves a sale from business to business or business to consumer .For business to business

and business to consumer, cyberspace offers convenient market accessibility 24hrs a day and

it gives sellers access to enormous customer base (Roger and Greylord , 2003). Hence, David

(2000) consents that electronic procurement includes e-sourcing, electronic data interchange,

electronic tendering, and electronic resource planning and also electronic reverse auction.

On the other hand, operational efficiency refers to the ability to work well and produce good

results by using the available time and suppliers in the most effective way (Rainer, 2003). It

can also refer to how much resources are consumed in achieving the output relative to the

amount that was forecasted as required. Therefore the aim of operational efficiency is to

economize the human activities and maximize productivity (Kenneth, 2006).

Implementing an electronic procurement system offers an organization various benefits and

they include; reduced competition and aggregation of demand, increased compliance

monitoring, it allows employees to purchase directly from approved suppliers, time saving,

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improved supplier relationships, reduced administrative costs and it has also facilitated

payment hence improving on the financial results (David,2000)

However, implementing an electronic procurement system in an organization is still difficult

as it is costly in terms of implementation and maintenance, training employees on how to

operate an electronic procurement is challenging and also there is loss of direct relationship

between the buyer and the seller (Kenneth, 2006).

Thus, the focus of organization’s electronic procurement is on making its operations more

efficient through paperless processing of orders, receipts, and invoices therefore reducing

costs and saving time in its operations.

Kenneth (2000), asserts that with the emergency of internet as well as other information

systems such as e-sourcing, e-catalogues electronic resource planning many organizations are

engaged in the use of electronic procurement to carry out their purchasing activities. For

example in the supermarket there is electronic point of sale in that when a product is

purchased, the check operation scans a barcode on its label which automatically registers the

price on the cash till. The same signal triggers a computer process that re-orders the items

from the manufacturer, set off a production cycle, arranges invoicing, payment and

transportation of the new order. Electronic point of sell helps the buyer to know the amount

of items left in the shelf with no paper and a minimum of human involvement.

As a result, electronic procurement is seen as an opportunity to improve not only efficiency

and effectiveness but also the quality of services with more emphasis in the technological as

well as organizational changes needed in order to efficiently use electronic procurement in

future for any flourishing organization particularly in Shoprite supermarket Entebbe Road.

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1.2 Problem statementElectronic procurement focuses on the carrying out of business transactions over the internet.

According to Chaffey (2004) and Barber (2005) the broad aims of electronic procurement are

to reduce transaction costs, improve internal procurement process and also increase buyer-

supplier collaboration.

However, many organizations today have failed to implement e- procurement system as it

involves a lot of the organizations financial commitment in order to invest in the software

necessary to participate in the e-market place. This has resulted into the organization’s

inability to function effectively and efficiently.

It is therefore upon this statement that the researcher undertook the study to find out how

electronic procurement impacts on operational efficiency in Shoprite supermarket Entebbe

Road.

1.3 Purpose of the studyThe purpose of the study was to assess electronic procurement on operating efficiency of

Shoprite Supermarket, Entebbe Road.

1.4 Objective of the study To determine the advantages of using electronic procurement on operational

efficiency in Shoprite supermarket.

To examine the type of electronic procurement tools used by Shoprite Supermarket

Entebbe Road.

To establish the challenges associated with the use of electronic procurement in the

purchase of goods and services particularly in Shoprite supermarket Entebbe Road.

.

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1.5 Research Questions What are the advantages of using electronic procurement on operational efficiency in

Shoprite supermarkets?

What are the major types of electronic procurement tools being used in Shoprite

supermarket?

What are the challenges associated with the use of electronic procurement in the

purchase of goods and services in Shoprite supermarket Entebbe Road?

1.6 Scope of the Study

1.6.1 Subject ScopeThe study focused on electronic procurement and operational efficiency. It focused on the

different electronic procurement tools, advantage, challenges which are associated with using

electronic procurement in Shoprite supermarket Entebbe Road.

1.6.2 Time scope

This study focused on operations of Shoprite supermarket between 2000-2010

1.7 Significance of the ResearchThe research will help to direct profit making organizations in achieving the value for money

as a way of procuring goods and services.

It will also help in coordination of global oriented products to agree upon a product to be

purchased via electronic procurement solution.

The research will also act as a reference for future research study by students in higher

institutions of learning.

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CHAPTER TWO

LITERATURE REVIEW

2.0 IntroductionThis chapter aims at explaining what other researchers reported in relation to e-procurement

and its impact on organizational operational efficiency. Information gathered here is mainly

from textbooks, journals, magazines, newspapers and also from the internet.

2.1 Electronic procurement tools

2.1.0 Electronic catalogue Davila and Palmer (2003) define Electronic catalogue as a list of suppliers’ products that are

accessible through the internet and they can be managed through hosted and managed in-

house, out sourced to party such as market places or hosted and managed by suppliers. E-

catalogues can be used where an existing agreement is in place with the end user base that

understands electronic purchasing. They are typically used for high volume, low cost

transactions, manual purchasing process is often more costly than the items being purchased.

They are suited ideally, for environment where there is multiple users repeatedly making

multiple purchase on maintenance repair operations. They go on to confirm that there are two

types of electronic catalogues which are stated. Internally hosted catalogues.

In this case, the buying organization loads the catalogue with information directly into their

transactional e-procurement system end users search and browse the internally hosted

catalogue to locate the items they wish to purchase (Davila and Palmer 2003) Punch-out

catalogue.

Here the customer uses their transactional e-procurement system to punch out to access

information from the suppliers’ web site and bring back this information into the internal

procurement system. It is revealed that the purchase details are captured and stored within the

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buying organization systems but the actual catalogue can be maintained and up dated by the

supplier Gilbert (2000)

2.1.1 Electronic markets According to Kenneth (2006), electronic markets are web sites that enable purchasers to

select from a list of suppliers. Besides, David (2000) who describes e-market as an attempt to

use information and communication technologies to provide geographically dispersed traders

with information necessary for the fair operation of the market.

With e-markets, the buyer is in control as open market places enable purchases to evaluate all

potential suppliers for a particular product or service and make informed decisions regarding

what and where to buy. E-markets also bring together product, price and service information

from many or a particular class of the goods or in a specific trade sector. Easy access to

information on a range of competing product offering reduces the search cost finding the

supplier that best meets the buyers’ purchase requirements. (Davilla and Palmer 2003)

2.1.2 Electronic data interchange (EDI) Kenneth Lysons says that EDI are techniques based on agreed standards, which facilitate

business transactions in standardized electronic form in an automated manner directly from a

computer application in one organization to an application in another organization. Yet

Gilbert (2000) revealed that EDI deals with the way information is communicated during

procurement and linking suppliers and buyers. In addition David (2000) portrays that EDI are

used by organizations for transactions that occur on a regular basis to a pre determined

format. The above scholar confirms that electronic point of sale is the best example of EDI in

the supermarket reason being that when a product is purchased, the check out operator scans

a bar code on its labels which automatically registers the price on the cash till. Hence the

same signal triggers a computer process that re-orders the item from the manufacturer sets off

the production cycle and arranges invoicing, payment and transportation of the new order.

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EDI effectively puts the product back on the shelf with no paper work and a minimum of

human involvement. Gebauer and Buxmann (2000) support the above scholar signifying that

EDI is a major tool used in e-procurement yet, it is very expensive to implement and maintain

as only large sized organizations can afford.

2.1.3 Web based e-procurement.Enterprise level usually covers two types of purchases, that is indirect and direct purchases

(Subramaniam and Slaw, 2003; Chaffey, 2004). Indirect procurement addresses goods and

products that are not part of finished product but support business activities such as

computers office equipment, maintenance and repair operating goods.

Direct procurement addresses the raw materials and components that are used in the

manufacturing process of finished goods. Maintaining direct procurement involves strategic

activities such as sourcing in negotiating with suppliers and coordination with suppliers.

(Eyholzer and Hunziker, 2000).

Subramaniam and Slaw (2003) and Chaffey (2004) revealed that web based e-procurement

system is a compound applied that contains many usable functions, provide and achieve

relatively low communication and coordination cost hence it mainly affects four of the

organization that is business tasks of search, purchase processing, monitoring and control

coordination. Therefore web based procurement has covered procurement automation for

organizational process and supplier relationship for inter organization process.

2.1.4 Internet Benbasat (2003) revealed that most of the organizations now have an external web site

providing information about their source to the public including citizens, business and

organizations the internet is now governed by multiple standards for purchasing for example

open buying on the internet (OBI). Consortium is a procurement industry initiative that aims

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at facilitating message transport and business to business purchasing over the internet by

accepting standards for the industry. David (2000) reveals that the internet can be used to

locate sites offering or advertising appropriate goods and services. It is used to offer after-

sales service as many information technology providers now offer on-line support and on-line

services such as on-line banking.

Internet procurement has the potential to redesign and streamline procurement processes by

shaping electronic markets that are tailored to reflect the contracts, purchasing rules, and

business workflow of an individual buying organization (Aberdeen Group Profile, 2009).

2.2 .The advantage of using electronic procurement on operational efficiency

2.2.1. Saves timeElectronic procurement saves time as buyers do not need to leave their desks or make phone

calls to suppliers in order to place orders but simply go to the internet and make orders to

their identified potential supplier’s .Suppliers receive the orders almost immediately whereby

it is fulfilled and the ordered goods are shipped to the intending buyer. Thus making the

operations of the organization more efficient and effective (Chaffey, 2004; Barber, 2005).

E- Procurement can be implemented and applied in different departments and sections of an

organization, be it finance, procurement, marketing and any other crucial sections of an

organization (Wendy, 2004). In today’s fast moving world sections of an organization like

finance which are very crucial to an organization’s survival have to be carefully handled to

ensure that no problems arise that may have a great impact on the organization. This is why

implementation of e- procurement in the finance department of an organization can help to

increase efficiency of an organization’s financial activities hence saving time and money

(Cascarino, 2007)

E-procurement users also report a reduction in the number of suppliers, associated cost

benefits of lower managerial complexity, lower prices and a headcount reduction in the

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purchasing process. Cutting those cycle times helps in streamlining the process and has a

significant impact on the revenue generation potential for the firms because products get to

market faster, allowing the firm to position it to capture market share from a first to market

position (Presutti, 2003). Different authors have elaborated on the benefits that accrue from

adopting e-procurement technologies. These benefits are expected to accelerate the rate of

adoption of these technologies once the uncertainties that remain around e-procurement are

reduced to levels that encourage significant resource commitments leading towards higher

process efficiency (Davila, Gupta & Palmer, 2003). E-procurement solutions do not always

require additional technology, dedicated personnel or staffing resources. Rather, existing

technology infrastructure, including equipment and computers with Internet connectivity

(which may already be in place) can be used (Carabello, 2001). E-procurement and related

technologies promise major improvements in the management of procurement. These

improvements are achieved by sliming the supply chain and by acting on (or perhaps

creating) markets at either end of that chain. Also, buyers and sellers are able to share

information in real time to build specification that add value to resulting product and build

strong relations.

2.2.2 Reduced costs According to Chaffey (2004), Pressuti (2003), costs can be reduced by leveraging volume,

having structured supplier relationships and by using system improvements to reduce internal

spending while improving quality and supplier performance. E-procurement eliminates

paperwork, re-work and errors thus making the buyers orders more accurate and increasing

their productivity.

Cost per transaction using e-procurement can be reduced by 65% compared to traditional

procurement transaction (Davila, Gupta, & Palmer, 2003). Cost reduction and negotiation are

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the reason for transaction costs fall so precipitously with e-procurement. Reductions in labour

costs in the purchasing process, increase in purchase volume, leads to better price from

supplier and better negotiation i.e. suppliers are ready to reduced the price as they get the

assurance of transaction from the buying company. The effect of e-procurement on inter-

organization enhances the benefits of e-procurement within an organization. Companies

using e-procurement have reported savings up to 42% in purchasing transaction cost

associated with less paperwork, which translates into fewer mistakes and more efficient

purchasing process. In a labour intensive, paper-based purchasing process, transaction costs

can range from $70 to $300 per purchase order. For example, GE (General Electronic) saw

those costs drop to 30%. Other firms have experienced even greater reductions (Presutti,

2003). Cost reduction is also influenced by control over maverick spending i.e. purchase of

goods from suppliers with which the organization does not have formal relationships

A study carried by De Boer, Harink, & Heijboer (2002) established that e-procurement

brings about reduction in costs of business in a way that there is: cost saving directly related

with production or service delivery ; cost reduction of non production goods and services;

reduced cost of operational purchasing activities e.g. ordering, expediting and requisitioning;

reduced cost of tactical procurement activities e.g. formulating specification, selecting

suppliers, negotiating with suppliers, contracting, disposals etc; reduced Cost of strategic

procurement activities – e.g., spend analysis, transaction analysis, market analysis, planning,

developing purchasing policies etc; internal benefits arising from investments in particular

inter-organizational relationships and the contribution of investments in particular inter-

organizational relationships to revenues.

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E-procurement has the potential to lower overhead costs associated with purchasing (Chircu

and Kauffman, 2000), and to increase a firm’s bargaining power. This power can result in

better purchasing terms and conditions, better suppliers, more reliable supply of quality goods

and services, better prices and, ultimately, lower all-inclusive purchasing costs. Purchasing

cost savings add to profit (Simonaska, 2001; Tulloch, 2001; Wagner, 2005). For these type of

reasons, e-procurement has been seen to have the potential to play a pivotal role in a firm’s

endeavours to “create a competitive cost advantage that lasts for many years” (Bloomberg,

LeMay and Hanna, 2002), hence grounding sustainable competitive advantage. This is

particularly important for Australia because ICT is the critical enabling technology and is a

major contributor to national productivity and growth. This is a compelling motivation not

only for e-procurement adoption by firms, but also for this adoption to be a matter of urgency

given the belief that “early adopters will obtain maximum benefits" (Nestle, 2001).

2.2.3 Efficient purchasing With e-procurement, there is effectiveness in the transactions made due to more control

through buying system rules. Orders that are not made through the system cannot be paid for.

This leads to standardized approval processes and formal work flows that ensure the correct

level of authorization is applied to each transaction and that spending is directed to draw off

existing contracts. It makes impossible for the users to comply with the policy and can

quickly locate products and services from preferred suppliers thus unable to create maverick

purchases. (Kenneth 2006; Davilla, 2003)

According to Stadler (2002), e-procurement encourages efficient purchasing in a way that it

brings about a process efficiencies amounting to annual savings, has ability to link into

existing systems, such as ERP; leads to reductions seen in lead times within the procure-to–

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pay cycle, in some cases by 50%, encourages self-invoicing on behalf of clients can add to

the bottom line. In addition, month-end reconciliation can end the problem of the wrong

items being ordered or the wrong prices bring offered as business process have been

streamlined and all was working off the same catalog; the buyer is engaged in more strategic

product management, leading to better contracts being negotiated; maverick spending is

reduced and there is reduction in stock levels can lead to savings of millions of dollars

Apart from the cost reductions arising from transactional and price benefits that directly

impact ROI, e-Procurement can also contribute to efficient purchasing process in many other

indirect ways. As the workflow automatically routes information through the purchasing

process without the need for data re-keying, the user can complete a requisition very quickly,

easily and with a minimal amount of data entry (OGC, 2002). Reducing duplication reduces

error rates and improves efficiency throughout the purchase to pay process. Streamlining of

the internal processes enabled by e- Procurement results in improved delivery times,

flexibility and reduction in process cycle times (NOIE, 2000). Use of e-Procurement systems

also offers increased ability to search for products and services, automated reordering

systems, and access to a wider range of service providers (DPWS, 2001). Thus, it can be said

that the ease of use, system availability and user friendliness together can contribute to

positive user satisfaction.

2.2.4 Shopping This is a significant advantage of e-procurement as a customer does not need to leave his or

her office and communicate to purchase an item (Schniederjans, 2000). The customer does

not need to look for parking in a shopping mall during holidays, nor risk losing the

supervision of his or her small children or elderly relatives. Shopping tasks can be done from

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the privacy of the organization with a few clicks of the mouse (Qing 2002). A traditional

business with an e-procurement presence would increase its potential customers (Mac

Gregor, 2007) customers from remote location and those outside the business’s geographical

boundaries can purchase products and services from e-procurement sites. (Vrazalic, 2007)

2.2.5 Shortened ordering time Paper orders have to be printed enveloped and sent out by the customers post room, passed

through the postal service, received by the suppliers post room and put to the supplier order

processing system. But e-procurement orders are sent straight into the network and the only is

how often the supplier’s retrieves messages from the system .Orders can be in the suppliers

system within day or if there is urgency the messages can be retrieved more frequently for

example every hour (David,2000)

2.2.6 The internet Internet allows people from all over the world to get connected inexpensively and reliably.

As a technical infrastructure, it is global connection of net works, connected to share

information using a common set protocol (Stoineovska, 2001). Also as vast network of

people and information, the internet is an enabler for e-procurement as it allows businesses to

show case and sell their products and services. On line and it gives potential customers

prospects and business partners and get access to information about these businesses,

products and services that would lead to purchase (Raisinghani, 2001).

For an individual business, dealing with the impediments and accessing the benefits afforded

by e-procurement can be argued to be essential for sustainable competitive advantage,

possibly determining its survival. Arguably, businesses have no choice but to adopt e-

procurement, or risk seeing competitors lure away their customers 'with Internet-based supply

chains that are faster and cheaper" (Koch, 2000; Semple, 2005). The literature advances a

large array of benefits driving e-procurement adoption (Tomorrowfirst, 2000). In the

13

Australian case, a recent study identified price (process) reduction, unit cost, customer

demand, administration costs and market intelligence as the most important drivers in this

order (Hawking, Stein, Wyld and Foster 2004; Stein and Hawking, 2004).

2.2.7 Efficient and cost effective way of communication

Duncombe and Heeks (2004) reveals that 70% of the supermarkets and hotels in Uganda the

enterprise suppliers have e-mail even though the most of the local customers tend to use

telephone to place orders; e-mail is a key to create personalized relationship with the client

through the faster communication skills.

Studies by Davila, Gupta and Palmer (2002) &Presutti (2002) established that e-procurement

is associated with cost savings, process efficiency, better information flow between buyers

and supplier, reduced Maverick spending, streamlined process and better inventory level. In

agreement with Davila, Gupta and Palmer (2002), Leonard and Cochran,(2003) indicated

that e-procurement gives management of a company ability to implement “just in time”

strategy; streamlining of supply chain by removal of inefficient intermediaries; better access

to information and transparency in markets and removal of market barriers like time

difference and geography.

Management Information (MI) can be extracted from the e-procurement system using

standard reporting software (OGC 2002), which makes the data collection process

transparent. This transparency makes it possible to identify non-conformance and identify the

necessary corrective action and improves ability to enforce compliance with procurement

policy and procedures (DOCITA 2000; OGC 2002). Sharing and analysis of procurement

information (NOIE 2000; OSD 2001) facilitated by e-Procurement enables a more accurate

estimate of the total spend on goods and services for a contract duration using actual

14

historical spend data. Thus, both the better estimation and user compliance give suppliers

confidence that promised order volumes will be achieved (OGC, 2002). In addition to

contract compliance by the users, MI provided by e-Procurement also enables to monitor

compliance with Service Level Agreements (SLA) and measure supplier performance (OSD,

2001).

An e-Procurement system has the potential to provide better procurement information

(DOCITA, 2000) by means of various customized reports allowing a complete visibility of

the history of a transaction, automatically recording the ‘who’, ‘when’, ‘what’ and ‘where’ of

every data entry on the system (OGC, 2002) of all purchasing activity and can reveal issues

such as duplicated contracts, off-contract spend, and total spending patterns (NEPP, 2003;

DPWS, 2001). This enables management to better understand specific or critical issues in

regards to procurement planning and have informed input into decision making processes

(DPWS, 2001). In summary, management information that can be extracted from the e-

Procurement system improves transparency, employee accountability, compliance, SLA

monitoring and supplier performance measurement, which in turn, contribute to value for

money improvement.

It is obvious that e-Procurement greatly helps improve communication with suppliers

providing access to the latest information 24 hours a day, 7 days a week. Thus the maximum

systems availability makes it easier for businesses to obtain tender documentation and to

submit an offer. The general ease of information flow afforded by the Internet can help

overcome many of the problems of geographic isolation (DPWS, 2002) which can promote

competition.

15

2.2.8 Order fulfillment.Implementing e-procurement system does not only make the operational process of the

buyers organization effective , but also make the order fulfillment process of the supplier

organization more efficient and improve partnership management .The main objective of

order fulfillment process is that the buyers expect the suppliers to deliver quality products to

fulfill the order at the right time in the right place and in the right quantity (Chopra and

Melnd, 2004).The order fulfillment can be improved if the supplier can recognize the order

demand patterns and also buyer –supplier sharing of information.

Mass customization is possible through easy-to- use ordering systems which allow customers

to choose and order products according to their personal and unique specifications (Rosen,

2000). For instance a car manufacturing company with an e- procurement strategy allowing

for online orders can have new cars built within a few days based on customer specifications.

This can work effectively if a company’s manufacturing process is advanced and integrated

into ordering system. Similarly, (Hossein, 2002), reveals that e- procurement website by

using various web technologies is able to offer different personalized services to its

customers and at the same time customize the product or service to suit a particular customer

by collecting relevant information on different customers, a particular product or service

would be tailor made to a customer taste and preference.

2.2.9 Faster responseWith paper orders it would be several days that the customer is informed of any supply

difficulty, such as the product is out of stock. But with e-procurement the customer can be

informed straight away giving time for an alternative supplier to be used David (2000). With

paper orders it would be several days at the customer is informed of any supply difficulty,

such as the product is out of stock but with e-procurement the customer can be informed

straight away giving time for an alternative supplier to be used David (2000).

16

The e-procurement process may involve sending faxes, wire transfers, electronic receipts , e-

sourcing that involves identifying new suppliers for specific category of purchasing

requirements using internet technology (Hefley, 2010), e- tendering which involves sending

requests for information and prices to suppliers and receiving the responses of suppliers using

internet technology (Pernul, 2005), e-reverse auctioning which involves using internet

technology to buy goods and services from a number of known or unknown suppliers and

many other processes as of the e-procurement process (Monczka, Robert, Hand field and

Larry, 2008). All these processes as compared to traditional procurement processes make the

procurement process faster and more efficient and the chances of getting a variety of potential

suppliers are more

2.2.10 Consolidation of dataE-procurement system helps companies to consolidate data on procurement of various goods,

direct or indirect. These data enable organizations to go in for bulky purchases on which

suppliers extend handsome discounts. For instance the ten different independent departments

of Shoprite supermarket may be buying a product in small numbers. However, centralized

and a well net worked procurement system in the organization will help to truck the periodic

demand for the product and bulky purchase orders can be made accordingly. If the

organization can easily demonstrate to the supplier that there is consistent demand, it can

successfully leverage its purchasing orders. However by channeling purchasing orders for

certain parts and supplies through specified route, the purchasing company can reduce the

number of transactions needed for the items (Chaffey, 2004).

The use of e-procurement is known to have implications for information asymmetries or

impact on inter-organizational relationships, in particular for search and monitoring costs.

Alternative explanations for the benefits of e-procurement arise from the resource based

17

perspective through which the resources of the firm may be leveraged to achieve competitive

advantage with electronic commerce presenting opportunities to enhance firm resources

(Dhillon, & Caldeira,2000; Rasheed, & Scott, 2001). Finally, there is also impact on firm’s

asset base and the inventory level can be significantly reduced. There are no problems like

stock outs, wrong product ordered faster delivery, etc, and there is better inventory control.

An effective e-procurement strategy for example, extranets link the system of buyers and

suppliers over the Internet facilitate real time exchange of the information in the buyer’s

production schedule and develops capabilities that allow a degree of flexibility with suppliers

(Presutti,2003).

2.3 Challenges of using e-procurement.

2.3.1 Implementation is not necessarily easy.According to Wyld (2000) e-procurement software set up is available but implementing the

system into the organization is costly and also getting the employees to use the e-procurement

services can be difficult. And also surprisingly equipment suppliers are not anxious to join

the process either. Providing online services for products that are of complexity and to be

used over a long period of time may be complex, expensive business and in a competitive

market its costs may be difficult to front- load into purchase price as customers need product

information support and maintenance.

A study by the Conference Board (2000), pointed to the problem in the implementation side

and concludes that organization are finding (e-procurement) implementation more complex,

expensive and time consuming than they originally envisioned’ and that consultants have

been ‘widely criticized for overstating the business case of e-procurement’ (Conference

Board,2001). Companies were jumping into the e-procurement bandwagon without fully

understanding the inter-organizational collaboration and network effects underlying these

technology models, the investment required to move the right information from suppliers to

18

employees, and the complexities of integrating these technologies with existing enterprise

recourse planning (ERP) system (Gilbert, 2000). The analysis indicated that the slower-than-

predicted growth is not the consequences of a single problem.

The perceived risks that are holding back companies from investing in e-procurement

technologies are numerous. These risks mentioned by (Davila, Gupta, & Palmer, 2003) are:

Internal business risks: Companies are uncertain about having the appropriate resources to

successfully implement an e-procurement solution. Implementing an e-procurement solution

not only requires that the system itself successfully performs the purchasing process, but it

integrates with the existing information infrastructure (Davila, Gupta, & Palmer, 2003).

External business risks: E-procurement solutions need not interact with internal information

systems, but also need to collaborate with external constituencies, mainly customers and

suppliers. External constituencies need to develop internal systems that facilitate the

communication through electronic means, an issue that demands technology investments as

well as incentives for these constituencies. For e-procurement technologies to succeed,

suppliers must be accessible via the Internet and must provide sufficient catalogue choices to

satisfy the requirements of their customers. Suppliers, especially in low margin industries,

may be hesitant or even unable to meet such demands without guarantees of future revenue

streams (Davila, Gupta, & Palmer, 2003).

Technology risks: Companies also fear the lack of a widely accepted standard and a clear

understanding of which e-procurement technologies best suit the needs of each company. The

significance of this risk factor seems to suggest the need for clear and open standards that

would facilitate inter-organization e-procurement technologies. Without widely accepted

standards for coding, technical, and process specifications, e-procurement technology

19

adoption will be slow and fail to deliver the benefits as excepted (Davila, Gupta, & Palmer,

2003).

E-procurement process risks: Another set of risks has to do with the security and control of

the e-procurement process itself. Organizations must be confident, for example, that

unauthorized actions will not disrupt production or other supply chain activities when

committing to e-procurement technologies (Davila, Gupta, & Palmer, 2003).

Each one of these makes it difficult for firms to implement e-procurement strategies, to the

possible extent that the implementation may be deemed too difficult. For example, in the

Australian case, cost, top management support, inadequate e-procurement solutions, business

partners and lack of skilled personnel were found to be important (Hawking et al. 2004; Stein

and Hawking, 2004). For the case of small businesses in Canada, security issues and the

realization that ‘once committed to automating business processes, nothing in those

businesses will ever be the same again’ grounds the argument that ‘big businesses,

universities and governments can survive e-business failures. Smaller businesses cannot

afford them at all” (Bray 2004: 6).

2.3.2 Gambling.According to Wyld. (2000) gambling sites can be sophisticated with the facilities of the web

used to display the odds, report on the result of the event .Gambling makes it prone to illegal

activity and possibly more vulnerable than its conventional operate e-procurement ,there is

need for all counterparts. There is no technical quick fix to the fraudulent use of credit cards

in e- procurement and there is a suggestion of an added problem of some of e- customers

using their own cards online and then denying that they made transactions.

It is also denoted that by Kenneth (2006), that online trade is less secure than conventional

trade. This is particularly true in the case of credit cards fraud where any retailers can keep

20

and misuse the customer credit card details when a credit sale is processed. Whatever the

truth of the argument, people feel particularly vulnerable in e- procurement transactions.

Therefore in e- procurement, there is no sales person whom customers can trust or return to

complain and there is no simultaneous exchange of value.

2.3.3. Limited capacity to fully operate e-procurement system Mendoza, Perez and Griman (2006) observed that as organizations evolve toward a more

strategic view of e-procurement and implementations broaden in reach and deepen in scope,

there are increasing challenges associated with integrating different systems and applications

efficiently throughout the organization. The challenges cited by Mendoza, Perez and Griman

(2006) were software integration issues, difficulties with catalogue integration and

coordinating inter-organizational information.

E-procurement is a concept strongly related to concepts such as logistics, supply chain

management (SCM), and even e-commerce. Although, some definitions are suggested to

distinguish between these concepts, the problems faced are similar. They all require financial,

transportation, legal, and communication infrastructures (Ohmae, 2000). If a country is weak

in one or some of these infrastructures, then e-procurement activities are destined to fail. In

addition to these four factors, education of thee-procurement personnel, security issues,

societal readiness to use information and communication technologies (ICT), and the impact

of the wireless technologies should also be considered.

Williams(2004) and Hardy (2005) found out that the most common reasons provided by

organizations that have no current plans to implement e-procurement are the high costs of

implementation; the size of the organization (some organizations believed they were too

small to benefit from e-procurement).

21

To smoothly prospective suppliers to be web –enabled. This means that ,ideally, they must

have web sites and must be connected to the internet all the time .But this is not possible in

Uganda because many suppliers do not own computers ,also operating them alone is

difficult .This implies that there is no compliance to run such a system as denoted by Croom

(2005).

2.3.4 Cultural AspectsAdoption of e-procurement focuses attention to broader considerations relating to benefits

management and value creation in systems development in that benefits do not necessarily

reside within the IT domain but incorporate changes in wider organizational activities;

requiring changes to be identified and planned for and incorporate varying stakeholder

expectations and roles (Tiernan & Peppard 2004; Dhillon 2005). The challenges identified

included lack of supplier readiness, systems integration issues, audit ability risks,

implementation costs, inadequate technological infrastructure to support e-procurement,

insufficient skilled staff, lack of management support and lack of supplier interest/support.

The use of e-procurement tools may not be accepted in organizations because employees

involved in purchasing are used to the older system of purchasing therefore, getting used to

the new system would probably take time really to be accepted by the employees. However if

the system is to be changed, one way is to encourage use of changes management programs

to the employees would help to orient the concerned parties(Deloitte Consulting Group,

2001).

According to Kenneth (2006), intangible benefits include such things as cultural changes

consequent on the implementation of e- procurement. These benefits can not be measured

within the business case but support it.

A number of the organizations that have implemented e-procurement identified a reduction in

employee overhead as a marginal benefit (Osmonbekov, Bello and Gilliland, 2002). However

22

they also indicate that staff training and development needs have significantly increased.

Further, a shortage of sufficiently skilled staff was identified in the top five factors inhibiting

e-procurement adoption. This is consistent with the heightened strategic importance of e-

procurement, which may require different skill sets.

2.3.5 Too many suppliers to deal with.Despite the recognizing of the advantages of e-procurement buyers don’t achieve completely

success in their attempt to reduce costs .This is because of too many suppliers to deal

with .Invoices usually became the most the expensive to process worse of it fail to support

the e-procurement program as denoted by Percy and Chaffey (2004).However this problem

can be addressed by reducing the number of suppliers.

Hardy(2005) viewed coordinating inter-organizational information and lack of

management support and the complexity surrounding the nature and diversity of products and

services to be procured as set backs that are most likely to hinder effective application of e-

procurement in bigger business that deal with many suppliers and clients.

The achievement of efficiency in e-procurement requires the segmentation of purchasing by

type of product, with products of greater importance for a business remaining the core of the

specialist purchasing staff. A classification developed by Hartmann (2005), provides great

detail. Products are classified as direct products, indirect products, merchandise and other.

Such classification and segmentation procedures may be hard to achieve given that business

enterprises like Shoprite deal with many suppliers.

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CHAPTER THREE

METHODOLOGY

3.0 Introduction This chapter presents the methodology that was used in carrying out the study. It began with

describing the research design, study population, sample size and sampling method, data

collection tools, data management, presentation and analysis and measurement of variables.

3.1 Research designThe study took descriptive and explanatory design based on the e-procurement tools put in

place to monitor the procedures followed in achieving the organizational efficiency. Also

quantitative methods were employed because data analyzed had nominal values.

3.2 Study populationThe study population constituted of customers and suppliers of shoprite supermarket

3.3 Study areaShoprite supermarket, Entebbe road branch

3.4 Sample size and sampling method The sample size was limited to 60 respondents who were picked from the five departments,

that is, finance, marketing, accounting, procurement and human resource departments.

3.5 Data sources The researcher used both primary and secondary data

3.5.1 Primary dataThis was got from the respondents in the area of study using a self administered

questionnaire.

3.5.2 Secondary dataThe data was got from availed relevant literature like, procurement brochures, online product

catalogues, Newspapers, text books from various libraries, reports, and records of the

supermarket and other sources considered relevant to the study.

24

3.6 Data collection tools

3.6.1 QuestionnairesThis was the main method of collecting data. Both structured and unstructured were designed

and printed. They contained relevant questions concerning the research topic. They were

distributed to all departments that were selected

3.6.2 Observation

Observation was used in this research. This involved looking at the different e-procurement

facilities implemented in place

3.7 Data processing The data was sorted, coded and edited and then compressed into tables, calculated values and

percentages, charts and graphs were used to present the information statistically.

3.8 Data analysisThe researcher used SPSS to analyze the data obtained from different sources. This involved

editing, coding and tabulation of data from the questionnaires’ responses to ensure

uniformity, accuracy, consistence and legibility.

3.9 Measurement of variablesA five likert scale was used to measure the variables which ranges from strongly agree to

strongly disagree.

3.10 Validity This was measured basing on the content validity index in addition to the discussion that was

made with the supervisor who assisted in identification of the most relevant questions that

answered the objectives of the study

3.11 ReliabilityReliability involves testing the consistency of the research instrument. This was established

using cronbach alpha coefficient.

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3.12 Limitations of the study The study involved a number of hindrances to its accomplishment and these included;

The majority of the population were conversant about research thus they never

understood the purpose of the research and most of them were not willing cooperate in

research activities such as responding to interviews or questionnaires, however, the

researcher assured them of confidentiality and utmost secrecy by making the

questionnaire anonymous.

The researcher never had enough money to complete the study in its totality; however she

overcame this by making a budget for the little money she had and worked for long hours

collecting data such that she reduces on transport and feeding costs.

The researcher found difficulties in fixing the time to give out questionnaires to the

respondents since many respondents worked in shifts; however the researcher drew a

work plan and a time table to ensure proper time allocation such that she collects data

from all the sampled respondents.

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CHAPTER FOUR

PRESENTATION AND INTERPRETATION OF FINDINGS

4.0 IntroductionThis chapter presents and discusses the finding of the study that included a sample of 60

respondents. The study was aimed at looking at the impact E-procurement on organization

operational efficiency Shoprite supermarket.

4.1 General information on respondentsIn this section the back from characteristics of the respondents such as gender, age, level of

education marital status and period of employment at Shoprite supermarket are presented.

Below are the tables showing the analysis of the finding.

Table 1: Gender of the respondents

Gender

32 53.3 53.3 53.328 46.7 46.7 100.060 100.0 100.0

MaleFemaleTotal

ValidFrequency Percent Valid Percent

CumulativePercent

From Table 1, the staff Shoprite supermarket is made up of more male (53.3%) than females

(4.6.7%)

Table 2: Distribution of the respondents by age

Age of respondent

8 13.3 13.3 13.312 20.0 20.0 33.330 50.0 50.0 83.310 16.7 16.7 100.060 100.0 100.0

Below 2020-3031-4041 years and aboveTotal


CumulativePercent

From Table 2 the finding reveal the majority of respondent were between 31 -40years 12%

were between 20 -30years 10% were aged 41years and above were 13.2% were aged below

20years.

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Table 3: Level of education of the respondents

Marital status

23 38.3 38.3 38.333 55.0 55.0 93.31 1.7 1.7 95.03 5.0 5.0 100.0

60 100.0 100.0

MarriedSingleSeperatedWidowTotal


CumulativePercent

From Table 3, finding reveal that 61.7% were degree holders 15.0% had diploma 13.30 hold

masters degree while 10.0% hold certificate. This implies that Shoprite largely to be more

innovation.

Table 4: Marital status of the respondents

Educational levels

8 13.3 13.3 13.337 61.7 61.7 75.09 15.0 15.0 90.06 10.0 10.0 100.0

60 100.0 100.0

MastersDegreeDiplomaCertificateTotal


CumulativePercent

From Table 4, 55.0% were single 38.3% were married 5% were widowed while 1.7% had

separated. This implies that most employed at Shoprite are single.

Table 5: Length of employment at Shoprite supermarket

Period worked with the organization

17 28.3 28.3 28.315 25.0 25.0 53.322 36.7 36.7 90.06 10.0 10.0 100.0

60 100.0 100.0

Less than 1 year1-4years5-9 years10 years and aboveTotal


CumulativePercent

Results from Table 5 reveal that 28.3% had worked for less than 1 year 25.0% had worked

for 1 -4 year, 36.7% had worked for 5-9 years while 10% had worked for 10years and above.

This implies that most of the respondents had worked for more than 1 year and therefore were

more knowledgeable about the dynamic of operation of e-procurement and impact on

organizational operational efficiency.

28

4.2 Descriptive statistical tables showing the E-procurement tool used Shoprite supermarket.Table 6: Use of e-catalogues

Use of e-catalogues N Minimum Maximum Mean Std. Deviation

Shop rite use e-catalogues especially when an existing agreement is in place with the end user

60 1 5 4.00 1.06

Shoprite supermarket uses e-catalogues for high volume but low cost transaction.

60 1 5 3.58 1.08

Shoprite supermarket uses e-catalogue because end users can search and browse the internally hosted catalogue to locate the items they wish to purchase.

60 1 5 3.07 1.30

Shoprite supermarket uses e-catalogue because some of the products sold have multiple users repeatedly making multiple purchases on maintenance repair operations.

60 1 5 4.18 1.00

Shoprite supermarket utilizes e-catalogues because the purchase details are captured and stored

60 1 5 3.28 .92

From table 6, the respondents strongly agreed that shoprite supermarket uses e-catalogues

largely because the products sold have multiple users making multiple purchases (mean =

4.18) and uses catalogues especially when an existing agreement is in place with end users

(mean= 4.00). The respondents further agreed that Shoprite supermarket uses e-catalogues for

high volume but low cost transaction. (Mean=3.58). Shoprite supermarket also utilizes e-

catalogues because purchase details can be captured and stored (Mean=3.28) and end users

can search and browse the internally hosted catalogue to locate the items they wish to

purchase (Mean=3.07).

Table 7: Use of e-market

Use of e-market N Minimum Maximum Mean Std. Deviation

E-market is used because it saves time 60 1 5 3.60 1.03e-market is used because it provides information access to geographically dispersed traders leading to fair operation of the market

60 1 5 3.02 1.19

With e-market, the buyer because it allows for evaluate all potential suppliers for a particular product or service

60 1 5 3.00 1.16

29

e-market brings together product, price and service information from many or a particular class of the goods.

60 1 5 3.03 1.26

e-market allows easy access to information on a range of competing product offerings

60 1 5 2.92 1.50

From table 7, the respondents strongly agreed that there was use of e-market because it saves

time (mean = 3.60), brings together product, price and service information from many or a

particular class of the goods (Mean=3.03) and provides information access to geographically

dispersed traders leading to fair operation of the market(Mean=3.02). This implies that

Shoprite supermarket has implemented e-marketing to improve on the time spent in making

purchases and connecting to the clients. However, the respondents were not sure whether e-

market allowed the buyer evaluate all potential suppliers for a particular product or service

(Mean=3.00). The respondents were also unaware of E- markets allowing easy access to

information on a range of competitive product offering (mean =2.92).

Table 8: Use of web based e-procurement

Use of web based e-procurement N Minimum Maximum Mean Std. Deviation

Indirect Web based e-procurement addresses goods and products that are not part of finished product but support business activities such as maintenance and repair operating goods.

60 1 5 3.88 .94

Direct procurement addresses the raw materials and components that are used in the manufacturing process of finished goods

60 2 5 3.97 .80

There is sourcing in negotiating and coordination with suppliers.

60 2 5 4.02 .77

Web based e-procurement affects business tasks of search, purchase processing, and monitoring and control coordination.

60 1 5 4.23 1.37

Web based e-procurement has covered procurement automation for organizational process and supplier relationship

60 2 4 3.57 .74

From table 8, the respondents strongly agreed that web based E-procurement effect business

tasks of search, purchase processing, monitoring, control and coordination (mean = 4.23) and

in sourcing, negotiation and coordination with suppliers (Mean=4.02). The respondents also

agreed that direct procurement addresses the raw materials and components that are used in

30

the manufacturing process of finished goods (Mean=3.97), addresses goods and products that

are not part of finished product but support business activities such as maintenance and repair

operating goods (Mean=3.88); and that web-based has covered procurement automation for

organizational process and supplier relationship (Mean=3.57). This implies that Shoprite

supermarket has implemented web-based procurement because it improves on business tasks

such as purchase processing, monitoring, control and co-ordination.

Table 9: Use of internet

Use of internet N Minimum Maximum Mean Std. Deviation

Internet is used to locate sites offering or advertising appropriate goods and services

60 1 4 3.15 .99

Internet offers after- sales service as many information technology providers now offer on-line support and on-line services such as on-line banking.

60 1 4 3.20 .94

Shoprite supermarket uses internet and e-mailing services for making inquiries all the time

60 1 5 2.92 1.50

Orders are generated by Shoprite supermarket using the internet

60 1 5 3.88 .94

There is open buying on the Internet (OBI) 60 2 5 3.97 .80

From table 9, the respondents strongly agreed that there is use of internet for open buying

(mean = 3.97), generation of orders (Mean=3.88) and offering on-line support and on-line

services such as on-line banking (Mean=3.20) . The respondents further agreed that internet

is used to locate sites offering or advertising appropriate goods and services (Mean=3.15).

This implies that Shoprite supermarket uses internet because it improves flexibility of

conducting businesses. However, the respondents were also unaware that shoprite uses

internet uses internet and e-mailing services for making inquiries all the time (Mean=2.92).

4.3 Descriptive statistical tables showing the advantages of E-procurement.Table 10: Saves time

E-procurement saves time N Minimum Maximum Mean Std. Deviation

Suppliers receive the orders almost immediately whereby it is fulfilled and the ordered goods are shipped to the intending buyer

60 2 5 4.02 .77

31

Increase efficiency of an organization's financial activities hence saving time and money

60 1 5 4.23 1.37

Revenue generation potential for the firms because products get to market faster, allowing the firm to position it to capture market share from a first to market position

60 2 4 3.57 .74

E-procurement slims the supply chain 60 1 4 3.15 .99Buyers and sellers are able to share information in real time to build specification that add value to resulting product and build strong relations.

60 1 4 3.20 .94

From table 10, the respondents strongly agreed that e-procurement increase efficiency of an

organizations’ financial activities hence saving time and money (mean = 4.23). The

respondents also agreed that suppliers receive the orders almost immediately whereby it is

fulfilled and the ordered goods are shipped to the intending buyer (Mean=4.02), use of e-

procurement increases revenue generation potential for the firms because products get to

market faster (Mean=3.57), e-procurement enables buyers and sellers to share information in

real time to build specification that add value to resulting product and build strong relations

and that e-procurement slims the supply chain (Mean=3.15).

Table 11: Reduction of costs

E-procurement leads to reduction of costs

N Minimum Maximum Mean Std. Deviation

Cost saving directly related with production or service delivery

60 1 5 2.92 1.50

Reduced cost of operational purchasing activities e.g. ordering, expediting and requisitioning

60 1 5 3.88 .94

Reduced cost of tactical procurement activities e.g. formulating specification, selecting suppliers, negotiating with suppliers, contracting, disposals etc

60 2 5 3.97 .80

Reduced Cost of strategic procurement activities - e.g., spend analysis, transaction analysis, market analysis, planning, developing purchasing policies etc

60 2 5 4.02 .77

Cost reduction and negotiation are the reason for transaction costs fall so precipitously with e-procurement.

60 1 5 4.23 1.37

32

From table 11, the respondents strongly agreed that e-procurement leads cost reduction and

negotiation are the reason for transaction costs fall so precipitously with e-procurement

(mean = 4.23). The respondents also strongly agreed that e-procurement activities such as

spend analysis, transaction analysis, market analysis, planning, developing purchasing

policies reduce on costs incurred by Shoprite supermarket (Mean=4.02). It was revealed that

e-procurement reduces cost of tactical procurement activities such selecting suppliers and

contracting (Mean=3.97) and reduced cost of operational purchasing activities such as

ordering(Mean=3.88). However, some respondents were not aware that there is cost saving

directly related with production or service delivery (mean=2.92)

Table 12: Efficient purchases

E-procurement leads to efficient purchases


E-procurement encourages efficient purchasing in a way that it brings about process efficiencies amounting to annual savings

60 2 4 3.57 .74

E-procurement encourages self-invoicing on behalf of clients can add to the bottom line.

60 1 4 3.15 .99

E-procurement encourages month-end reconciliation can end the problem of the wrong items being ordered or the wrong prices bring offered as business process have been streamlined

60 1 4 3.20 .94

With e-procurement, the workflow automatically routes information through the purchasing process without the need for data re-keying

60 1 5 2.92 1.50

E-procurement allows streamlining of the internal processes hence improved delivery times, flexibility and reduction in process cycle times

60 1 5 3.88 .94

From the analysis in table 12, the respondents strongly agreed that e-procurement allows

streamlining of the internal processes hence improved delivery times, flexibility and

reduction in process cycle times (mean = 3.88). Respondents further agreed that e-

procurement encourages efficient purchasing in a way that it brings about process efficiencies

(Mean=3.57) and e-procurement encourages month-end reconciliations hence streamlining

the process of entering items and prices (Mean=3.20). It was also revealed that e-procurement

encourages self invoicing (Mean=3.15). However, respondents were unaware that e-

33

procurement automatically routes workflow information through the purchasing process

without the need for data re-keying (Mean=2.92).

Table 13: Improved information flow

E-procurement leads to improved information flow


E-procurement is associated with cost savings, process efficiency, better information flow between buyers and supplier.

60 2 5 3.97 .80

E-procurement streamlining of supply chain by removal of inefficient intermediaries

60 2 5 4.02 .77

E-procurement encourages better access to information and transparency in markets and removal of market barriers like time difference and geography

60 1 5 4.23 1.37

E-procurement makes the data collection process transparent

60 2 4 3.57 .74

E-Procurement enables a more accurate estimate of the total spend on goods and services for a contract duration using actual historical spend data

60 1 4 3.15 .99

From table 13, the respondents strongly agreed that e-procurement encourages better access

to information and transparency in markets and removal of market barriers like time

difference and geography (Mean = 4.23), it streamlines the supply chain by removing

inefficient intermediaries (Mean=4.02). It was also revealed that e-procurement is associated

with cost savings, process efficiency, better information flow between buyers and suppliers

(Mean=3.97). The analysis also shows that respondents agreed that e-procurement makes

data collection process easy (Mean=3.57) and enables more accurate estimate of the total

spend on goods and services using actual historical spend data (Mean=3.15).

Table 14: Consolidation of data

E-procurement leads to consolidation of data


Consolidated data enable organizations to go in for bulky purchases on which suppliers extend handsome discounts

60 1 4 3.20 .94

E-procurement encourages centralized and a well net worked procurement system in the organization that tracks the periodic

60 1 5 2.92 1.50

34

demand for the product and bulky purchase orders can be madeWith e-procurement Shoprite supermarket can easily demonstrate to the supplier that there is consistent demand and can successfully leverage its purchasing orders.

60 1 5 3.88 .94

With e-procurement there is also impact on firm's asset base and the inventory level can be significantly reduced

60 2 5 3.97 .80

E-procurement encourages channeling purchasing orders for certain parts and supplies through specified route

60 2 5 4.02 .77

From table 14, the respondents strongly agreed that e-procurement encourages channeling

purchasing orders for certain parts and supplies through specified route (mean = 4.02) and

significant reduction on the firm’s asset base and the inventory level (Mean=3.97). It was

revealed that e-procurement enables Shoprite to easily demonstrate to the supplier that there

is consistent demand and can successfully leverage its purchasing orders (Mean=3.88) and

consolidated data enables organizations to go in for bulky purchases on which suppliers

extend handsome discounts (Mean=3.20). However, some respondents were unaware that

encourages centralized and a well net worked procurement system in the organization that

tracks the periodic demand for the product and bulky purchase orders can be made (Mean =

2.92).

4.4 Descriptive statistical tables showing the challenges associated with the use of E-procurement Table 15: Implementation is not easy

Implementation is not easy N Minimum Maximum Mean Std. Deviation

Providing online services for products that are complex and to be used over a long period of time may be complex, expensive business and in a competitive market

60 2 4 3.50 .75

Shoprite supermarket finds (e-procurement) implementation more complex, expensive and time consuming than they originally envisioned'

60 1 4 3.15 .99

Shoprite is uncertain about having the appropriate resources to successfully

60 1 4 3.20 .94

35

implement an e-procurement solution Some suppliers are hesitant or even unable to meet such demands without guarantees of future revenue streams

60 1 4 3.37 .82

Shoprite fears the lack of a widely accepted standard and a clear understanding of which e-procurement technologies best suit the needs of each company

60 1 4 3.05 .96

From table 15, the respondents strongly agreed that providing online services for products

that are complex and to be used over a long period of time may be complex, expensive

(Mean=3.50).The analysis further showed that respondents further agreed that some suppliers

are hesitant or even unable to meet such demands without guarantees of future revenue

streams(Mean=3.37). The respondents further agreed that Shoprite is uncertain about having

the appropriate resources to successfully implement an e-procurement solution (Mean=3.20)

as well as Shoprite supermarket finding e-procurement implementation more complex,

expensive and time consuming than they originally envisioned (Mean=3.15). The analysis

also shows Shoprite fears the lack of a widely accepted standard and a clear understanding of

which e-procurement technologies best suit the needs of each company (Mean=3.05).

Table 16: E-procurement involves gambling

Gambling N Minimum Maximum Mean Std. Deviation

Gambling makes Shoprite prone to illegal activity and possibly more vulnerable than its conventional operate e-procurement

60 1 4 2.62 .88

There is fraudulent use of credit cards in e- procurement

60 2 4 2.85 .84

Some of e- customers use have used their own cards online and then denied that they made transactions.

60 1 4 2.93 .94

People feel particularly vulnerable in their e- procurement transactions with Shoprite.

60 1 3 1.72 .49

With e-procurement, there is no sales person whom customers can trust or return to complain and there is no simultaneous exchange of information.

60 1 4 1.47 .65

From table 16, the respondents strongly disagreed that with e-procurement, there is no sales

person whom customers can trust or return to complain and there is no simultaneous

exchange of information. (Mean=1.47) and that there is no sales person whom customers can

36

trust or return to complain and there is no simultaneous exchange of information

(Mean=1.72). The analysis also shows that some of e- customers have used their own cards

online and then denied that they made transactions (Mean=2.93), there is fraudulent use of

credit cards (Mean=2.85) and gambling makes Shoprite prone to illegal activity and possibly

more vulnerable than its conventional operate e-procurement (Mean=2.62).

Table 17: Limited Capacity

Limited capacity N Minimum Maximum Mean Std. Deviation

Most suppliers have not automated their activities and therefore compliance to the system used by Shoprite is low

60 2 4 2.95 .29

Some employees in some companies lack know-how on computer usage

60 1 5 4.00 1.06

Integrating different systems and applications for e-procurement is complicated

60 1 5 3.58 1.08

Implementation of e-procurement process is costly.

60 1 5 3.07 1.30

Like other computer systems e-procurement is limited by infrastructural challenges like system breakdown

60 1 5 4.18 1.00

From table 17, the respondents strongly agreed that like other computer systems, E-

procurement is limited by infrastructures challenge like system break down (mean =4.18).

The analysis further shows that some employees in some companies lack know-how on

computer usage (Mean=4.00). It was also revealed the integration of different systems and

applications for e-procurement being complicated (Mean=3.58), the implementation of e-

procurement process is not easy (Mean=3.07). However, the respondents were unaware most

suppliers have not automated their activities and therefore compliance to the system used by

Shoprite is low (mean =12.95).

Table 18: Cultural aspects

Cultural aspects N Minimum Maximum Mean Std. Deviation

Employees have found it hard to switch to the new system used by Shoprite

60 1 5 2.98 1.08

Its not easy to quantify the benefits that accrue to Shoprite through use of e-procurement

60 1 5 3.60 1.03

There is a shortage of trained staff to run 60 1 5 3.02 1.19

37

the system Adoption of e-procurement has increased the training costs of staff members

60 1 5 2.95 1.13

From table 18, the respondents strongly agreed that it’s not easy to quantify the benefits that

accrue to Shoprite through use of e-procurement (Mean=3.60) and shortage of trained

personnel to run the system (Mean=3.02). However, respondents were unaware that

employees found it hard to switch to the new system used by shoprite (Mean=2.98) and

adoption of e-procurement has increased the training costs of staff members (Mean=2.95).

Table 19: Too many suppliers

Too many suppliers N Minimum Maximum Mean Std. Deviation

There is difficulty in coordinating information between the many suppliers/customers and Shoprite supermarket

60 1 5 2.32 1.26

Costs of transaction using e-procurement are high because of many suppliers involved

60 1 5 3.83 1.04

There is lack of management support and the complexity surrounding the nature and diversity of products and services to be procured.

60 1 5 3.88 .94

Classification of goods supplied consumes a lot of time

60 2 5 3.95 .81

From table 19, the respondents strongly agreed that classification of goods supplied

consumes a lot of time (Mean=3.95), there is lack of management support and the complexity

surrounding the nature and diversity of products and services to be procured (Mean=3.88).

The analysis also revealed that the cost of transaction using e-procurement are high because

of many suppliers involved (Mean=3.83). However, respondents were unaware whether there

was difficulty in coordinating information between the many suppliers/customers and

Shoprite supermarket (2.32).

38

CHAPTER FIVE

SUMMARY, DISCUSSION, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction This chapter provides the summary of the finding presented in the preceding chapter

discussion, conclusions and recommendations. Suggestion for areas that should be researched

on is also indicated.

5.2 summary of the finding

5.2.1 E-procurement tool used by Shoprite supermarketFrom the findings, there was a positive perception of the respondents regarding the e-

procurement and e-procurement costs used by Shoprite supermarket. This implies that e-

catalogues, e-market web-based procurement and internet were the most credible

procurement tool used by Shoprite.

5.2.2 Advantages of E-procurementFrom the findings, E- procurement improves operational efficiency of Shoprite .The

respondents agreed on the most variables under the study that E-procurement increased

organizational efficiency, slimed the supply chain, increased on real time sharing of

information and brought about a drastic fall in the transaction costs among others .However,

respondents were unaware that e -procurement improves operational efficiency, for example,

respondents disagreed that e-procurement encouraged centralized and well networked system

that tracks the periodic demand for products as well as enabling bulky purchases to be made.

5.2.3 Challenges associated with E-procurement.From the findings respondents indicated the like other computer system E-procurement is

limited by infrastructural challenges like system breakdown lack of knowhow about compute

usage respondents were unaware about shortage of trained staff, high costs of transaction are

incurred, because of the many suppliers who are involved, wastage of time in classification of

goods supplied.

39

5.3 Discussion of the findings

5.3.1 E-procurement tools used by Shoprite supermarket

Findings of the study revealed that Shoprite supermarket uses e- catalogues. These are used

for high volume, low cost transactions. E- Catalogues are used Gilbert (2000), e- catalogues

can easily be updated by the supplier.

The findings also revealed that Shoprite uses e- market. The findings indicated that e-market

is used because it saves time allows evaluation of all suppliers to be done and provides easy

access to information a range of competing product offerings which leads to saving of time

and costs. According to Davilla and Palmer (2003), E-market bring together product, price

and service information on a range of competing product offering that reduces search costs.

Cascarino (2007) observed that implementation of e- procurement in the finance department

of an organization can help to increase efficiency of an organization’s financial activities

hence saving time and money.

The findings also reveal that web- based procurement was used by Shoprite supermarket.

This form of e- procurement is largely used for goals and products that support business

activity but are not part of the finished product, negotiating and coordinating with suppliers

and direct procurement of raw materials like wheat floor for making of bread in her

confectionery.

According to Subramanian and Slaw (2003) enterprise level were based procurement covers

indirect and direct purchases. From the findings, it was revealed that internet is used by

Shoprite supermarket. It was indicated that internet is used to execute many e- procurement

like locating sites advertising. Open buying and offering after sale services to the customers.

This encourages prompt settlement of customers’ complaints.

Aberdeen group profile (2009) observed that internet procurement has the potential to

redesign and streamline the procurement process by shaping electronic markets that are

tailored to reflect the contracts, purchasing rules and business work flow of an individual

buying organization.

40

5.3.2 Advantages of using e- procurement on operational efficiency

From the findings, it was revealed that e- procurement increases efficiency of organizations

financial activities and hence saves time. For example, it reduces on the time wasted and

costs incurred in making follow ups for restocking when the e-mail service is used to press

orders at zero cost. According to Chaffey (2004) and Barber (2005), e-procurement makes

the operations of an organization to be more efficient and effective since it enables suppliers

to receive the orders immediately they are pressed. There orders are immediately responded

to and a dispatch of goods effected there and then.

From the findings, it was revealed that e- procurement brings about operation of business

enterprises at reduced costs. It was revealed that e-procurement for example reduces the costs

of operational purchasing activities e.g. ordering, expediting and requisitioning. According to

Davilla and Palmer (2003), e- procurement reduces costs per transaction to reduce by 65%.

The findings also revealed that costs of procurement activities such as analysis, planning and

developing purchasing policies are reduced with adoption of e- procurement. According to

presentation (2003) cost reduction under e- procurement is influenced by control over market

spending. The findings are supported by Chircu and Kanffoman (2000) who observed that e-

procurement has the potential of lowering over head costs associated with purchasing.

Simonaska (2001) Tulloch (2001) and Wagner (2000) e- procurement adoption results in

better purchasing terms and conditions, better suppliers, more reliable supply of quality goods

and services hence lowering all inclusive purchasing costs.

The findings also revealed that e-procurement brings about efficient purchasing. Study

findings revealed that e- procurement encourages purchasing. Study findings revealed that e-

procurement encourages efficiency, self invoicing and streamlining of internal processes

hence improved delivery times, flexibility and reduction in process cycle times.

According to Stadler (2002), e- procurement encourages efficient purchasing in a way that it

brings about processes efficiency amounting to annual savings has ability to link to other

systems such as ERP ) enterprises resource planning) and encourages self invoicing.

The findings of the study, further revealed that e-procurement brings about transparency in

data collection, encourages centralized and a well networked system the tracks the periodic

41

demand of the products and provides online services products that are complex and to be

used over a long period of time.

According to Stoineovska, (2001), internet is an enabler for e- procurement as it allows

business to show case and sell their products and services as well as access to information

about the numerous other business products and services that would lead to purchase.

5.3.3 Challenges of using e- procurementFrom the findings, it was reveled that implementation of e- procurement is not easy. The

study findings revealed that implementation of e- procurement is more complex, Expensive

and time consuming. According to David (2000), e- procurement soft ware set up is available

but implementing the system in to the organization is costly and setting the employees to use

the system is difficult.

The findings also revealed that e- procurement involves gambling people (customers) and the

suppliers to feel vulnerable. Findings by earlier studies like Kenneth Lysons (2006) expressed

that online trade is less secure than conventional trade most especially where credit cards

have to be used.

The findings further indicated that there was limited capacity to fully operate the system. .

The study established the some employees were not proficient at computer usage. Ohmac

(2000) recommended that among the four major factors to consider in implementing an

innovation, education of the personnel (e-procurement personnel) is very important.

From the findings’ it is revealed that there is shortage of trained personnel to run the system

Osnonbekov, Bello and Gilliland (2002) indicated that staff training and development costs

inhabits e-procurement adoption. This has kept e-procurement operations at Shoprite at

“infancy stage”.

From the findings-procurement brings about many suppliers in the play. This complicates

process like classification of goods. As a result the costs of operation and clearing all these

activities tend to be high.

According to Hardy(2005), because of the many supplier problem, coordination, lack of

management support and the complexity surrounding the nature and diversity of products and

services to be procured are major set backs.

42

5.3 Conclusions

From the findings of this study, major conclusions can be drawn in line with the problem

statement and more specifically on the basis of the objectives of the study. On the e-

procurement tools used, the findings revealed the e-catalogues, e-market, web based

procurement and internet are used. On the advantages of e-procurement, the study established

that use of e-procurement has led to saving of time, flexibility in communication, on-spot

settlement of the claims from suppliers and the customers and reduction in the operations

costs that was common with the manual systems hitherto used. The study concluded that e-

procurement has greatly improved on the operational efficiency of shoprite. On the

challenges met by shoprite using e-procurement, the study established that e-procurement

operates on computer systems and it was concluded that the innovation is liable to breakdown

common with computer systems such as scare of viruses, hacking and mechanical faults.

5.4 Recommendations The researcher made the following recommendations ;

I would recommend that management of Shoprite supermarket should organize the training

of its employees into the better use of e-procurement programme such that they can use the

programme with a lot of precision.

I would recommend that shoprite invests in Research and Development such that more

understanding is created about the complex procurement information landscapes as well as

how procurement information is used to support strategic decision-making and operational

improvement.

I would recommend the need for integrating other e-procurement tools such as Smartbuy in

the mix that Shoprite Supermarket has adopted. Smartbuy is a comprehensive, easy-to-use

and robust e-Procurement tool with a full ‘purchase to pay’ process.

43

5.4 Areas for further research

The researcher recommends further research into the following areas;

(i) Factors affecting a firm’s decision to adopt e-procurement system

(ii) E-procurement and profitability of firms

(iii) E-procurement and effectiveness of inventory management

44

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Appendices

Appendix A: QUESTIONNAIREIam Nakajje Diana Rose a student of Makerere University. This study is meant for the

completion of the requirement of bachelor of commerce. It is part of the requirement for my

graduation. Iam expected to conduct research and submit the report to the university. In this

regard, I have chosen to do the study, the impact of e- procurement on organizational

efficiency.

Kindly provide the vital information that will enable me to complete this task. The

information you will provide will be treated with due confidentiality.

Instructions

Place a tick in the boxes for the most appropriate response, where an explanation is required

use the space provided below the item.

Background information

Gender

a) Male b) Female

Age of respondent

a) Below 20 years b) 20-30 years c) 31-40years d) 41 years and above

Marital status

a) Married b) Single c) Separated d) Widow

Educational levels

a) Master b) Degree c) Diploma d) Certificate

Period worked with the organization

a) Less than 1 year b) 1-4 years 5-9 years 10 years and above

Section AE – PROCUREMENT TOOLS AND APPLICATIONS

Please tick the appropriate response to indicate whether you strongly agree (SA), Agree (A), Not sure (NS), Disagree (D), or strongly disagree (SD)

Statement SD D NS A SA

Electronic catalogue1. Shop rite use e-catalogues especially when an existing

agreement is in place with the end user

49

2. Shoprite supermarket uses e-catalogues for high volume but low cost transaction.

3. Shoprite supermarket uses e-catalogue because end users can search and browse the internally hosted catalogue to locate the items they wish to purchase.

4. Shoprite supermarket uses e-catalogue because some of the products sold have multiple users repeatedly making multiple purchases on maintenance repair operations.

5. Shoprite supermarket utilizes e-catalogues because the purchase details are captured and stored

E-market

1. E-market is used because it saves time

2. E-market is used because it provides information access to geographically dispersed traders leading to fair operation of the market

3. With e-market, the buyer because it allows for evaluate all potential suppliers for a particular product or service

4. E-market brings together product, price and service information from many or a particular class of the goods.

5. E-market allows easy access to information on a range of competing product offerings

Web based e-procurement

1. Indirect Web based e-procurement addresses goods and products that are not part of finished product but support business activities such as maintenance and repair operating goods.

2. Direct procurement addresses the raw materials and components that are used in the manufacturing process of finished goods

3. There is sourcing in negotiating and coordination with suppliers.

4. Web based e-procurement affects business tasks of search, purchase processing, monitoring and control coordination.

5. Web based e-procurement has covered procurement automation for organizational process and supplier relationship

Internet

1. Internet is used to locate sites offering or advertising appropriate goods and services

2. Internet offers after- sales service as many information technology providers now offer on-line support and on-line

50

services such as on-line banking.

3. Shoprite supermarket uses internet and e-mailing services for making inquiries all the time

4. Orders are generated by Shoprite supermarket using the internet

5. There is open buying on the Internet (OBI)

SECTION B

ADVANTAGES OF USING E- PROCUREMENT

Please tick the appropriate response to indicate whether you strongly agree (SA), Agree (A), Not sure (NS), Disagree (D), Strongly disagree (SD)


Saves time

1. Suppliers receive the orders almost immediately whereby it is fulfilled and the ordered goods are shipped to the intending buyer

2. Increase efficiency of an organization’s financial activities hence saving time and money

3. Revenue generation potential for the firms because products get to market faster, allowing the firm to position it to capture market share from a first to market position

4. E-procurement slims the supply chain

5. Buyers and sellers are able to share information in real time to build specification that add value to resulting product and build strong relations.

Reduced costs

1. Cost saving directly related with production or service delivery

2. Reduced cost of operational purchasing activities e.g. ordering, expediting and requisitioning

3. Reduced cost of tactical procurement activities e.g. formulating specification, selecting suppliers, negotiating with suppliers, contracting, disposals etc

4. Reduced Cost of strategic procurement activities – e.g., spend analysis, transaction analysis, market analysis, planning, developing purchasing policies etc

5. Cost reduction and negotiation are the reason for transaction costs fall so precipitously with e-procurement.

Efficient purchasing

51

1. e-procurement encourages efficient purchasing in a way that it brings about a process efficiencies amounting to annual savings

2. E-procurement encourages self-invoicing on behalf of clients can add to the bottom line.

3. E-procurement encourages month-end reconciliation can end the problem of the wrong items being ordered or the wrong prices bring offered as business process have been streamlined

4. With e-procurement, the workflow automatically routes information through the purchasing process without the need for data re-keying

5. e- procurement allows streamlining of the internal processes hence improved delivery times, flexibility and reduction in process cycle times

Efficient and cost effective way of communication1. E-procurement is associated with cost savings, process

efficiency, better information flow between buyers and supplier.

2. E-procurement streamlining of supply chain by removal of inefficient intermediaries

3. E-procurement encourages better access to information and transparency in markets and removal of market barriers like time difference and geography

4. E-procurement makes the data collection process transparent

5. E-Procurement enables a more accurate estimate of the total spend on goods and services for a contract duration using actual historical spend data

Consolidation of data

1. Consolidated data enable organizations to go in for bulky purchases on which suppliers extend handsome discounts

2. E-procurement encourages centralized and a well net worked procurement system in the organization that tracks the periodic demand for the product and bulky purchase orders can be made

3. With e-procurement Shoprite supermarket can easily demonstrate to the supplier that there is consistent demand and can successfully leverage its purchasing orders.

4. With e-procurement there is also impact on firm’s asset base and the inventory level can be significantly reduced

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5. E-procurement encourages channeling purchasing orders for certain parts and supplies through specified route

SECTION C

What challenges do you face with the use of e- procurement in your supermarket?


Implementation is not necessarily easy.

1. Providing online services for products that are complex and to be used over a long period of time may be complex, expensive business and in a competitive market

2. Shoprite supermarket finds (e-procurement) implementation more complex, expensive and time consuming than they originally envisioned’

3. Shoprite is uncertain about having the appropriate resources to successfully implement an e-procurement solution

4. Some suppliers are hesitant or even unable to meet such demands without guarantees of future revenue streams

5. Shoprite fears the lack of a widely accepted standard and a clear understanding of which e-procurement technologies best suit the needs of each company

Gambling

1. Gambling makes Shoprite prone to illegal activity and possibly more vulnerable than its conventional operate e-procurement

2. There is fraudulent use of credit cards in e- procurement

3. Some of e- customers use have used their own cards online and then denied that they made transactions.

4. People feel particularly vulnerable in their e- procurement transactions with Shoprite.

5. With e-procurement, there is no sales person whom customers can trust or return to complain and there is no simultaneous exchange of information.

Limited capacity

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1. Most suppliers have not automated their activities and therefore compliance to the system used by Shoprite is low

2. Some employees in some companies lack know-how on computer usage

3. Integrating different systems and applications for e-procurement is complicated

4. Implementation of e-procurement process is costly.

5. Like other computer systems e-procurement is limited by infrastructural challenges like system breakdown

Cultural aspects

1. Employees have found it hard to switch to the new system used by Shoprite

2. Its not easy to quantify the benefits that accrue to Shoprite through use of e-procurement

3. There is a shortage of trained staff to run the system

4. Adoption of e-procurement has increased the training costs of staff members

Too many suppliers

1. There is difficulty in coordinating information between the many suppliers/customers and Shoprite supermarket

2. Costs of transaction using e-procurement are high because of many suppliers involved

3. There is lack of management support and the complexity surrounding the nature and diversity of products and services to be procured.

4. Classification of goods supplied consumes a lot of time

Thank you for your valuable time

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Appendix B: Introductory Letter

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Documents

DECLARATION - Makerere University · Web viewCost reduction is also influenced by control over maverick spending i.e. purchase of goods from suppliers with which the organization