THE EFFECTS OF E-PROCUREMENT ON THE PERFORMANCE OF BIDCO UGANDA LTD
CHAPTER ONE
INTRODUCTION
1.0 Introduction
This chapter presents the background to the study, the statement of the problem, general and specific objective of the study, research questions, scope of the study, significance.
1.1 Background to the Study
With ever-increasing competitive pressures, growing numbers of firms use electronic procurement (e-procurement) in an attempt to reduce costs and increase profitability. Electronic procurement is a concept that describes the process of buying, selling or exchanging products, services and information using computer networks including the internet (Ken, 2003). The e-procurement revolution is expected to enhance the status and influence of the purchasing function within organizations, E-procurement is more than just a system for making purchases online. Some companies implement e-procurement and succeed while others fail. E-procurement is about taking this process online and automating the whole procedure with the underlying aim centered on saving money. The growth of the internet and commercial web based application are offering trading even increasing operational cost saving to enterprises (Osmonbekov et al, 2002).
Private and public sector organizations have been utilizing Information Technology (IT) systems to streamline and automate their purchasing and other processes over the past years. It is only in the past decade that e-Procurement systems have attracted attention. While there is debate about how recently e-Procurement has emerged, (Dai & Kauffman, 2001; Koorn, Smith & Mueller, 2001), there is no doubt that the use of e-Procurement provides several advantages over earlier inter-organizational tools. For example, Electronic Data Interchange has been providing automated purchasing transactions between buyers and their suppliers since it was launched in the 1960s. Enterprise Resource Planning (ERP) followed in the 1970s, and then came the commercial use of the Internet in 1980s. It was only in the 1990s that the World Wide Web the multimedia capability of the Internet – became widely enabled and provided the essential resource for the automation of procurement (Tumwesigye, 2009).
Croom& Brandon (2004), there are various forms of e-Procurement that concentrate on one or many stages of the procurement process such as e-Tendering, e-Marketplace, e-Auction/Reverse Auction, and e-Catalogue/Purchasing, e-Procurement can be viewed more broadly as an end-to-end solution that integrates and streamlines many procurement processes throughout the organization. Businesses have realized that time and cost savings can be achieved by having a link with major suppliers through private networks such as electronic data interchange (EDI). Many businesses turned to E-procurement systems during the E-commerce boom to control, simplify, and automate the purchase of goods and services from multiple suppliers. These products let companies aggregate suppliers’ offerings into a single catalog, manage approval processing, and control the transaction process. Businesses today are extending E-procurement beyond controlling the purchase of office supplies and goods for maintenance and repair to reap its benefits in the direct-goods arena (Alex, 2008).
Most Companies are aware, they must make some type of transition to digital technology to remain competitive though few have the deep understanding to prove the case or make requisite investment (Mafakui, 2015). Many areas of conflict are cited between e-procurement and performance of Bidco Uganda Ltd far as purchasing is concerned, many organizations have embraced E-Procurement without understanding clearly what their expectations are. They have been seen to take it up because all their completers are, and in the end they have embraced high performance of companies.
Implementing Web-based e-procurement system not only could make the operational processes of the buyer organization more effective but also could make the order fulfillment process of the supplier organization more efficient and improve partner relationship management (Mburu, 2011).
The adoption of e-procurement by Bidco Uganda Limited has enabled it to procure and distribute it’s resources to various customers in the country and other countries in the most cost-effective manner possible while still ensuring the high quality of its products, service and support. Thus the study seeks to examine the effect of e-procurement on performance of Bidco Uganda Ltd.
1.2 Problem statement
E-procurement has been framed has a means of improving efficiency in organizations. The issues that are put forward as key outcomes of e-procurement are low transaction costs, increasing accessibility and transparency, ensuring an efficient administration of the procurement process, new supplier discovery and paperless environment, increasing competitive sourcing opportunities, and enhancing inter-organizational coordination. As a result, organizations have invested in e-procurement infrastructure of capacity development. Inspite of these endeavors, many organizations continue to underperform due to experiences in procurement such as insecurities in e-transactions, cost implications, system insecurity among others. This research investigates the apparently low procurement efficiency despite these investments.
1.3 Research Objectives
1.3.1 General Objective
The main objective of this study is to establish the effects of e-procurement on performance of Bidco Uganda Ltd.
1.3.2 Specific Objectives
- To examine the factors hindering e-procurement adoption in organizations.
- To discuss how organisations are addressing the e-procurement challenges.
- To investigate the impact of e-procurement adoption on organizational performance.
1.5 Research questions
- What factors hinder e-procurement adoption in organizations?
- How do organisations address the e-procurement challenges?
- What is the impact of e-procurement adoption on organizational performance?
1.6 Scope of the study
1.6.1 Content scope
The study will focus on the effects of e-procurement on performance of Bidco Uganda Ltd. It put main emphasis on the factors that hinder e-procurement adoption in organizations, how organisations address the e-procurement challenges and the impact of e-procurement on organizational performance.
1.6.2 Geographical scope
The research will be carried out at Bidco Uganda Limited.
1.6.3 Time scope
The study will consider 2014-2016 as the period of data to be considered in the organization. The study will be carried out for a period of four months from March to June, 2017 and considering 2010-2016 as the period of body of knowledge to review literature.
1.7 Significance of the statement
It is hoped that the findings will be helpful in the following ways;
The findings of the study will be relevant to the management of Bidco Uganda Limited (strategic and operational plans) in that it will give the milestones towards integrating e-procurement as a strategy for growth and performance.
The findings of the study will also enable employees of the organization to appreciate their role towards business development, growth and strategic adoption module for the success of the organization. Staff will also be motivated towards improving the services they offer and understand customer’s perception in performance of Bidco Uganda Ltd in efforts to achieve the world class organizational status.
Further researchers will also benefit from the findings of this study since it will provide additional knowledge to the already existing literature on e-procurement. The findings and gaps of this study may act as ground for further research.
The findings of the study may also serve as a benchmark to other organizations who intend to adopt e-procurement. It will enable them to better understand the effects of e-procurement on performance of Bidco Uganda Ltd.
