2.3
Empirical review
Over the years, the world has seen a massive change in the
management of businesses; from organizations replying more on specialized
in-house service functions, conventional multipurpose service functions to
outsourced services. Information technology (IT) has helped many businesses in
improving their operational efficiencies by providing internet-based solutions
for their supply chain networks and electronic solutions. From the late 1990s a
raft of new e- commerce technologies emerged which revolutionized working
practices, threatening existing business models (Chan & Lu, 2004). As a
result of this development on the use of e-commerce in business-to-business
market, there has been significant adoption of new supply chain related
technology and applications by organizations globally (Sheng, 2002).
In a recent survey in Europe, Palma dos Reis and Soares Aguiar
(2006) studied the factors leading to the adoption of electronic procurement
systems in Portugal.
The respondents were people in management positions from 240
large companies in manufacturing, commerce and services sectors. The authors
built their hypotheses on the framework of Tornatzky and Fleischer (1990),
which describes three aspects of a firm?s context that can influence the
adoption of technological innovations; these are technological context,
environmental context and organizational context. The authors found positive
relationships among technological capabilities (technological context), trading
partner readiness (environmental context) and firm size (organizational
context).
In a field study in Ireland, Nagle et al. (2006) explored the
effects B2B relationships have on E-procurement systems. The authors performed
an in-depth field study in six selected companies and successfully showed that
adversarial type relationships influence E-procurement systems around the
sourcing phases (background review, information gathering, negotiation and
supplier contact) demonstrated that collaborative relationships tend to affect
the fulfillment and consumption phases more than other procurement
activities.
A survey on E-procurement in Australia conducted by Williams
and Hardy (2007) showed that E-procurement has become an increasingly strategic
topic in companies in different industries across the private and public.
Compared to a similar survey conducted two years before, E-procurement
implementations had increased in both scope and spread. More companies were
investing in the electronic support of procurement functions and processes.
In Singapore, Kheng and Al-Hawandeh (2002) investigated the
adoption of E-procurement and presented stumbling blocks to this initiative
from the point of view of Singaporean organizations. Firstly, the laws
governing B2B commerce, crossing over to E-procurement, are still not
developed. For instance, questions concerning the force and legality of e-mail
contracts, role of electronic procurement show only about half of those
specific respondents had any formal spending analysis tool in place while the
few that had these tools analyzed only half of their total spending. Secondly,
technical difficulties related to conversion, data exchange and information
such as inefficiencies in locating information over the internet using search
engines and the lack of common standards get in the way of the easy integration
of electronic catalogs from multiple suppliers. Thirdly, there was concern
about privacy and security of procurement transaction data. Fourthly; it
required a significant investment in software, hardware, and personnel training
to participate in E-procurement which is prohibitive.
In Africa, despite significant recent increases in internet
sales in many countries, total B2B plus business-to-customer internet commerce
is still low (Walker and Harland, 2008). In spite of the claimed business
benefits that can come from embracing E-procurement, the extent of adoption in
Organization for Economic Co-operation and Development (OECD) countries is
below expectations and progressing slowly (Pires & Stanton, 2005).
In Rwanda, UMUCYO is a single channel, portal and point of
access for Rwanda procuring entities allowing to negotiate better contract
terms and to realize savings and achieve value for money.It provides suppliers
with increased access to markets without additional marketing efforts and a
faster and more efficient method for quoting and increased order accuracy
through receipt of electronic orders.
Moreover, companies using
e-procurement system reported that they achieve saving up to 42% in purchasing
transaction cost as a result of less paperwork, which enabled transaction
processes to be less prone to errors, leading to more efficient purchasing
(Flynn et al., 2010).E-tendering is a procedure in
e-procurement applied in supplier selection in order to find a competent
supplier using internet based ICT infrastructures or on the basis of electronic
transaction through the internet. It is expected to reduce face to face
transaction as well as collusion. Through e-tendering, the process of supplier
or contractor selection is considered a suitable mechanism to select a proper
contractor fairly, efficiently and productively (Oyediran& Akintola
2011).
Eadie et al. (2007) argues that e-procurement allows sections
of electronic documentation to flow through the supply chain; it improves the
speed of returns and subcontractor price visibility. He further notes that
since it is easier to communicate requirements in a quicker more accessible
manner, it will result in a better understanding of requirements and due
compliance besides allowing clients to gauge the state of the market by seeing
how much interest is shown in the tender.
Any good e-procurement software system today is designed to
greatly reduce effort and time required to complete purchasing transactions by
eliminating traditional paper chain of payment reconciliation, approvals,
requisitions and receiving. The key features of e procurement approaches enable
users to find an item in an electronic catalog, create a requisition, route the
order requisition for approval, create and transmit the order to vendors, and
also help to automate the invoicing and payment process (Berger & Zeng,
2006).
Rama (2014) Electronic procurement
enhances key principles of procurement namely; transparency, value for money
(efficiency), and timeliness. E-procurement enhances transparency and fairness
by bringing together procuring entities and bidders in a virtual environment.
Enhanced transparency and fairness brings increased private practitioners'
confidence in the procurement system. This confidence increases participation
and competition.
Diane (2016) stated that electronic procurement enhances key
principles of procurement namely; transparency, value for money (efficiency),
and timeliness. E-procurement enhances transparency and fairness by bringing
together procuring entities and bidders in a virtual environment. Enhanced
transparency and fairness brings increased private practitioners' confidence in
the procurement system. This confidence increases participation and
competition.
Juliette (2013) E-Procurement is on the rise and it is said to
be one of the most efficient ways to conduct business. This is evidenced by
studies showing that organizations are spending as much as 50 to 60% of total
revenue on e-procurement activities. E-Procurement is generating great
excitement because of its potential to reduce procurement costs and improve
strategic sourcing.
Benston (2015) E-public procurement technology reduces
physical barriers of space and time, allows faster information flow and wider
access to information and services. It offers benefits such as reducing the
opportunities for corruption and providing public access to information related
to the different stages of the procurement process; greater efficiency in the
procurement process and better use of the government resources; significant
savings in government and public institutions purchases due to greater
competition between suppliers, better comparison of prices and reductions in
transactions costs; and higher level of integration and development of
economies while stimulating the competitiveness and productivity of small and
medium sized companies through greater access to national and international
markets.
Rankin quoted by Robert E. et Al. (2007) also identifies data
transaction accuracy as a driver. These are all associated with «improving
Communication». Since e-procurement allows sections of electronic
documentation to flow through the supply chain; it improves the speed of
returns and subcontractor price visibility. As it is easier to communicate
requirements in a quicker more accessible manner, it will result in a better
understanding of requirements and due compliance.
Egbu (2007) It also allows clients to gauge the state of the
market by seeing how much interest is shown in the tender. For the purposes of
this study these three benefits have been combined and considered under the
broad category of improving communication. Behnam Bahreman (2010) E-procurement
is a rapid efficient method of finding and connecting new sources, being a lean
channel for communication.
A lot of time is spending on paper invoicing in terms of
writing, filing and postal communication but while in e-procurement, staff have
sufficient time to engage on strategic issues of procurement The time wasted in
moving from one town or country to another to look for a potential supplier or
buyer is greatly reduced since with a click of a button, you can readily get
the information in the internet.
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