THE EFFECTS OF E-PROCUREMENT ON THE PERFORMANCE OF BIDCO UGANDA LTD

CKNOWLEDGEMENT

Special thanks to the almighty God for giving me the gift of life and giving me a chance to do this research report.

Thanks to my supervisor Dr. Ssennoga Francis for tirelessly guiding me in conducting and in the completion of this research report. May the almighty God bless and reward you abundantly in all your endeavors.

I extend my gratitude to the management of Bidco (U) ltd without whom this research would not be completed. Thank you for your time and information you provided.

I thank my loving family for the financial, spiritual and material support in the preparation of this report and throughout my study career.

TABLE OF CONTENTS

DECLARATION i

APPROVAL ii

DEDICATION iii

ACKNOWLEDGEMENT iv

TABLE OF CONTENTS v

LIST OF TABLES viii

LIST OF FIGURES ix

ABSTRACT x

CHAPTER ONE 1

INTRODUCTION 1

1.0 Introduction 1

1.1 Background to the Study 1

1.2 Problem statement 2

1.3 Research Objectives 3

1.3.1 General Objective 3

1.3.2 Specific Objectives 3

1.5 Research questions 3

1.6 Scope of the study 3

1.7 Significance of the statement 4

CHAPTER TWO 5

LITERATURE REVIEW 5

2.0 Introduction 5

2.1 Factors hindering e-procurement adoption in organizations. 5

2.2. How organisations are addressing the e-procurement challenges 8

2.3 The impact of e-procurement adoption on organizational performance. 10

2.4 Summary and research gaps 13

CHAPTER THREE 14

METHODOLOGY 14

3.0 Introduction 14

3.1 Research design 14

3.2 Study Area 14

3.3 Study population 14

3.4 Sample size 14

3.5 Sampling method 15

3.6 Data collection methods and instruments 15

3.7 Data collection procedure 16

3.8 Validity and reliability of research instruments 16

3.9 Data analysis 16

3.10 Data Presentation 16

3.10 Limitations of the Study 17

CHAPTER FOUR 18

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 18

4.0 Introduction 18

4.1 Background information of the respondents 18

4.2 Factors hindering e-procurement adoption 21

4.3 How organisations are addressing the e-procurement challenges 23

4.4 Impact of e-procurement adoption on organisational performance 24

CHAPTER FIVE 27

DISCUSSION, SUMMARY, CONCLUSION AND RECOMMENDATION 27

5.0 Introduction 27

5.1 Discussion of major findings 27

5.1.1 Factors hindering e-procurement adoption 27

5.1.2 How organisations are addressing the e-procurement challenges 27

5.1.3 Impact of e-procurement adoption on organisational performance 28

5.2 Conclusion 28

5.4 Recommendation 28

5.5 Areas for further research 29

REFERENCES 30

APPENDICES 32

APPENDIX I: STUDY QUESTIONAIRE FOR STAFF 32

APPENDIX II: INTERVIEW GUIDE FOR TOP MANAGEMENT 35

LIST OF TABLES

Table 3.1: Showing Sample size

Table 1: Objective one: factors hindering e-procurement adoption

Table 2: Objective two: how organisations are addressing the e-procurement challenges

Table 3: Objective three: impact of e-procurement on organisational performance

Table 4: Relationship between e-procurement on organisational performance

LIST OF FIGURES

Figure 1: Gender of Respondents

Figure 2: Age range of Respondents

Figure 3: Highest Level of education

Figure 4: Period of Work

ABSTRACT

The purpose of the study was carried out at Bidco Uganda Limited with the main of establishing the effects of e-procurement on performance. The research objectives were to examine the factors hindering e-procurement adoption in organizations, to discuss how organisations are addressing the e-procurement challenges and to investigate the impact of e-procurement adoption on organizational performance.

The literature was reviewed from 2000-2016 basing on research questions. The organization data covered a range (2014-2016) from different scholars which was extracted from journals, books and many others based on the effect of e-procurement on orgnisational performance. The research design was descriptive in nature where both qualitative and quantitative approaches of data collection were adopted. The researcher used questionnaire and interview method to collect data from 60 respondents using purposive sampling. The researcher experienced various limitations that included not finding all respondents in the study area, expensive in terms of stationary and some respondents not providing information for the study as information relating to the study variables. 

The study found out that the majority of the respondents (31.7%) identified the factors that hinder e-procurement adoption to include limited finances as suggested by the majority, (41.7%) and the least 6.7% mentioned lack of capacity to operate a fully-fledged e-procurement system. The organisation has tried to involve the top management in all departments (60%), training of the employee (60%) and employ skilled personnel (51%). Therefore e-procurement adoption leads to improved transparency and reduced in bureaucracy. The study found a positive relationship between e-procurement adoption and organizational performance.

In conclusion, despite the fact that it has faced challenges in aligning e-procurement practices in its goals and objectives. The organization should aim at improving customer response/demand through improving on its e-procurement implementation. From findings, the organization faces a challenge of limited finance allocated to e-procurement implementation, thus, the researcher recommends that the government should allocate more funds aimed at improving the e-procurement function in the organization.

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 sought 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. Despite 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 which led to low procurement efficiency. Therefore, this study sought to establish the effects of e-procurement on performance of Bidco Uganda Ltd

1.3 Research Objectives

1.3.1 General Objective

The main objective of this study was to establish the effects of e-procurement on performance of Bidco Uganda Ltd.

1.3.2 Specific Objectives

1. To examine the factors hindering e-procurement adoption in organizations.
2. To discuss how organisations are addressing the e-procurement challenges.
3. To investigate the impact of e-procurement adoption on organizational performance.

1.5 Research questions

1. What factors hinder e-procurement adoption in organizations?
2. How do organisations address the e-procurement challenges?
3. What is the impact of e-procurement adoption on organizational performance?

1.6 Scope of the study

1.6.1 Content scope

The study focused on the effects of e-procurement on performance of Bidco Uganda Ltd. Main emphasis was put 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 was carried out at Bidco Uganda Limited.

1.6.3 Time scope

The study considered 2014-2016 as the period of data considered in the organization. The study was carried out for a period from March to September, 2018 and considered 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.

CHAPTER TWO

LITERATURE REVIEW

• Introduction

This chapter reviews the existing literature put forward by different scholars and personalities on the effects of e-pocuement on organizational perfiormance as well as critically analyzing the deviations in the explanations to find out the research gap in the study variables according to the research objectives based on secondary sources like text books, internet, newspaper, report at the company, and journals.

2.1 Factors hindering e-procurement adoption in organizations.

2.1.1 Supplier Enablement 

According to research by Aberdeen group (2007), it was discovered that supplier enablement is one of the top three factors for e-procurement implementation. Suppliers do not fit into organizational plans or may want to do things their way National e-Procurement Project (2004). This may be because organizational processes and systems do not match those used by most of their other customers or because organizational business is insufficient to justify organization’s investment in the system. 

Supplier enablement is becoming a bigger challenge because forcing suppliers to adopt organizational preferred trading method can be problematic, particularly if there are no alternatives readily to hand Filipe(2009). Most suppliers are not E-procurement enabled because they are not ICT compliant. Moreover, complex purchasing cannot be put in place without considerable personal contact between the parties concerned Lysons (2003). 

According to Tan, Felix & Ter (2010), successful e-Procurement system is required to have suppliers willing and able to trade electronically. A study conducted by the AGIMO (2005), showed that supplier adoption is important to the overall success of an e-Procurement program. The study concluded that the more suppliers in the system, the more inclined buyers will be to use it. If suppliers are not correctly involved, then a low adoption rate can constrain users from leveraging the full associated capabilities from e-Procurement solutions. 

The lack of a critical mass of suppliers accessible through the organization’s e-Procurement system might limit the network effects that underlie these technologies, delaying the acceptance and adoption of the solution Paulo (2009).According to a study by Lin, Huang, Jalleh & Tung (2010) about the adoption of e-commerce by the health care organizations in Australia, there were complains about loss of interpersonal relationships with suppliers and customers via the use of e-procurement systems. 

Therefore, those organizations that had fewer problems in adopting and implementing e-procurement systems were those that had better communication with key stakeholders throughout the entire supply chain and had listened to their concerns. Several interview participants also mentioned that having effective supply chain management in their organizations was not good enough. Benefits only would come about if these management processes could be extended to the suppliers. Some participating health care organizations had some difficulties or simply failed to integrate their e-procurement system with other functions throughout the supply chain. 

2.1.2 System Security 

System security is another challenge that hinders the implementation of e-procurement. The perceived challenges are mainly related to technical issues such as lack of information from the technology provider when new versions of the system are launched. Anne, Åsa & Esmail (2008) According to Bell (2001), in 1999, 59% of companies that were interested in adopting e-procurement cited security as the key barrier. 

There are associated risks and challenges in adopting e-procurement, most of which are related to network security issues. There are just so many people outside there that are ever on the prowl, looking for the slightest opportunity to make money from the unwary users of the Web. Sometimes the motive may be to interfere with the business of the competitor, through the Internet. Traditional threats include viruses, worms and Trojans, which can be used to compromise business information confidentiality and integrity, as well affecting the network availability. 

The mode and nature of the threats and attacks are quite dynamic, tending always to target at the vulnerabilities in the most widely used applications. Applications like e-mails, instant messaging, spam, etc, may appear harmless to many organizations but these are being used quite successfully to compromise e-procurement security. Shwan(2006)The traditional protections based on firewalls, VPNs, antivirus software, etc, are not enough. 

Besides the architecture must be designed and implemented in such a manner that it is dynamic in terms of the architecture being both scalable and adoptable. A layered defense approach provides the best protection result in a three-tier scenario. Specific details on security at each tier must take in cognizance the likely attack and threat scenarios. Client-side and server side security details and requirements are similar in some aspects, but there are certain glaring differences in information security requirements. Shwan (2006) 

Also according to Shwan (2006), information stored in the client computer system should be protected to prevent unauthorized access, disclosure, or manipulation of the stored information. This protection needs be both physical and software based. A number of applications are now supporting biometrics as a physical access technology that provides better authentication. Host hardening and the use of secure access controls can greatly enhance client side security. 

Issues of privacy and authenticating the identities of the parties involved in e-commerce transactions are also among foremost societal concerns of businesses and consumers. According to the Washington Post, 90 percent of Web sites fail to comply with basic privacy principles. In monetary terms, Forrester Research showed that, due to consumers’ privacy concerns, e-commerce companies lost some $2.8 billion in the last year Escalante (2003). Lin et al (2010) found that some health care practitioners related challenges of e-procurement to disaster recovery and security. They emphasized the importance of having a backup/alternative e-procurement system and IT disaster recovery and data security contingency plans in case of system failure or other security issues.

2.1.3 Cost Implications 

The inability to justify costs/benefits as an inhibitor for adoption 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 challenge is that in a capital-tight environment, cost of acquisition and fielding of e-procurement system can be prohibited software licensing and enterprise findings can run in millions of dollars depending on the size of the organization. According to Australian national survey 2006, there is considerable high cost of acquiring and managing inter-organizational information management systems, other challenges to implementation of e- procurement as with any other new system fielding is push-back from users. 

Both internal users and even vendors can create friction and create the change. For leaders in an organization it is critical to prepare both internal customers and actively communicate with vendors to ensure that they are on- board with the program. In addition electronic procurement is still growing and changing. Hosted solutions are coming up into being referred to as procurement service providers (PSP) that provide externally hosted procurement systems. Williams & Hardy (2006).

2.1.4 Legal Infrastructure 

According to a Seng and Hwee (2003), Legal issues relating to e-procurement could be categorized mainly into Global Trading, Contract Enforceability, Liability Risks, Security Breaches and Intellectual Properties Protection (IPR)

According to Eadie, Perera, Heaney & Carlisle (2007), legal validity of exchanges of information is considered a barrier in implementation of e-procurement system. E-procurement is not well established in emerging countries because of legal infra structure barriers. Karaman &Yamamoto (2007).

2.1.5 Insecurity in E-Transactions 

Shared systems, shared network resources or web servers that are commonly used are subjected to theft, virus and worm attacks. Hence this has created difficulties in controlling access to a computer which contains confidential information and hence putting the integrity of the information at risk. These attacks can be either external (hackers) or internal (employees, partners and clients). There are also cases where database of credit cards information is being hacked or unauthorized persons gaining access to sensitive information from systems which are supposed to be secure. Seng & Hwee (2003).

2.2. How organisations are addressing the e-procurement challenges

Commitment to ensure success of the implementation as well as the use of e-procurement is required from the internal users (Panda & Sahu, 2012). According to Tan, Felix and Ter (2010), successful e-procurement system is required to have suppliers willing and able to trade electronically. A study conducted by the AGIMO (2005), showed that supplier adoption and involvement is important to the overall success of an e-procurement program. The study concluded that the more suppliers in the system, the more inclined buyers will be able to use it therefore improving its performance.

Also according to Shawn (2006),information stored in the client computer should be protected to prevent unauthorized access, disclosure or manipulation of the stored information. This protection needs to be both physical and software based. A number of applications are now supporting biometrics as a physical access technology that provides better authentication. Host hardening and the use of secure access controls can greatly enhance client side security.

Repudiation property of the information must be maintained to void a customer from disowning a transaction. The use of digital signatures and incorporation of encryption-based approaches when carefully selected and implemented can greatly minimize non-repudiation type of security attacks, (Hall 2006). Major online security threats that impede performance of e-procurement include eavesdropping by sniffer programs, software back doors, spoofing and denial of service (Dillard 2001).

System specification appears to be a critical issue in the uptake of e-procurement. The IDC report (2003) highlights the slow uptake of e-procurement systems, emphasizing some of the IS-related issues that inhibit implementation, including software integration. 

The extent to which an e-procurement system is able to integrate effectively with other information systems, particularly production planning & control and finance systems, is posited by Subramaniam & Shaw (2002) to be a major causal determinant of the efficiency and effectiveness of an e-procurement system. Rajkumar (2001) also identifies system integration as a critical success factor for e-procurement implementation, both with the customer’s information infrastructure and in its links to suppliers. 

Lin & Hsieh (2000) use a single case study to highlight the importance of both web content management and content rationalization as significant issues for e-procurement operation. They note that constantly changing prices, specifications and account details across the supply base cause major problems in the maintenance of supplier catalogues. In addition, the way an item is described (item coding) is noted as a significant data management issue for e-procurement.

The influence of improved information transmission and user access to the procurement process through the adoption of e-procurement has a significant impact on the configuration and structure of supply chains. Croom (2001) notes that the literature posits two opposing schools of thought on the subject

On one side, they may increase the tendency towards market transactions as the barriers to participate in electronic transactions diminish. Malone et al. (1989) argue that inter-organizational electronic networks improve co-ordination between firms to reduce the costs of searching for appropriate goods and services – “electronic brokerage effects”.  Consequently, they claim that one of the major effects of inter-organizational networks would be a shift from hierarchical to market relationships. Barratt and Rosdahl (2002) argue that ease of search and transparency acts as an advantage to the buyer but may be a disadvantage for the seller, which further reinforces market-based relationships under e-procurement.  

On the other side, it has been posited that the proprietary nature of some inter-organizational systems may in fact serve to tie in customers and suppliers into virtual hierarchies (Konsynski & McFarlan, 1990). Brousseau’s (1990) review of 26 inter-organizational networks shows that most serve to reinforce already existing hierarchical relationships among firms.  Only in two, the petroleum business and textiles, was the use of inter-organizational networks associated with buyers gaining advantage by having more suppliers from which to choose.  Evans and Wurster (2001) claim that the low infrastructure and transaction costs of Internet-based systems allow organizations to exploit the increased opportunities for complex information exchange with multiple partners, but also recognize the value to be gained through closer, hierarchical, relationships between regular trading partners (‘affiliation’).  Amit and Zott (2001) likewise discussed the importance of close relationships (‘lock-in’) between trading partners as a key source of advantage to both buyer and seller. 

2.3 The impact of e-procurement adoption on organizational performance.

E-procurement system plays a fundamental role in B2B purchasing by streamlining the buying process and providing the information needed to make more effective purchasing decisions (Osmonbekov et al. 2002). Previous studies allude to the fact that many companies have found benefits from their implementation of e-procurement system. The adoption of Web-based e-procurement system in the B2B purchasing transaction allows firms to reduce transaction costs, improve internal procurement process efficiency, and increase collaboration with suppliers (Barbieri and Zanoni 2005). The benefits of technology-based supports for procurement activities can be organized into two broad categories: organizational level and inter-organizational level. In organizational level, previous studies suggested that implementing e-procurement system could make company’s procurement process more efficient and effective through automating procurement process, reengineering the internal processes and enhancing inter-organizational coordination. 

For example, Davila et al. (2003) thought that implementing e-procurement the firm could shorten the order fulfillment cycle time, lower inventory levels and the price paid for goods, and reduce administrative costs of procurement. Eakin (2003) argued that the benefits of e-procurement can be classified to hard benefits (such as price savings and process cost reductions), soft benefits (such as individual time freed up through more efficient processes), and intangible benefits (such as cultural change, financial approval for all spending, and high visibility of supplier performance). Presutti (2003) found e-procurement system can bring benefits to the company such as reducing time to- market cycles, reducing material and transactions costs, and reducing stock levels. Chaffey (2004) argued that the benefits of e- procurement include reduced purchasing cycle time and cost, enhanced budgetary control, elimination of administrative errors, increasing buyers’ productivity, lowering prices through product standardization and consolidation of buys, improving the payment process, and improving information management. 

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. The main objective of the order fulfillment process that buyer expected is supplier can deliver qualified products to fulfill its orders at the right time and right place (Lin and Shaw 1998). The order fulfillment performance can be improved if supplier can recognize the order, so that the order demand patterns are more transparent to the supplier. In order for supplier to enhance order fulfillment performance, buyer and supplier have to share information. For instance, Toyota shares its inventory and sales information with its suppliers. Having access to such information helps Toyota’s suppliers plan and manage their operations better and Toyota can coordinate the inventory orders effectively; as a result, the implementation of just in time (JIT) delivery strategy can be achieved (Chopra and Meindl 2001). Web-based e-procurement enables the information to be shared among trading partners, such as sales forecasts, production schedules, inventory levels, and product specifications.

Developing a purchasing strategy that will enhance internal customer satisfaction on e-Procurement function is a complex process and there are a lot of factors that has to be taken into account, which factors vary between companies, commodities, situation and environment. Dobler and Burt (1996) states that if suppliers are involved earlier in the buyer design process of the E-procurement system, they can contribute with their expertise in the following areas: Material specifications, tolerances, standardization, order sizes, process ethanol’s in supplier manufacturing, packaging, inventory & transportation, via a web designed interlink. Further Dobler and Burt (1996) states that another aspect to consider when developing a strategy is how many parallel sources supply should be used. 

A company can chose to take all supply from a single supplier, which is usually called single sourcing, or they can take their supplies form two or more suppliers, called dual or multiple sourcing. The different strategic are appropriate in different situations. According to Dobler and Baurt (1996) single sourcing is appropriate when. Bottler prices can be achieved through larger volumes (economies of scale), quality is important, A strong influence over a supplier is advantageous, In addition to quality, control and coordination required with just-in-time manufacturing require a single source, significantly lower freight costs many result; special tooling or machinery is required, and the use of more than one supplier is impractical or excessively costly, total system inventory will be reduces, an improved commitment on the supplier’s part results, improved interdependency and risk sharing result and time to market is critical. 

On the other hand Dobler and Burt (1996) states that dual or multiple sourcing many is appropriate. To protect the buyer of shortage, strikes or other emergencies, to maintain competition and provide a back-up source; to meet local content requirements for international manufacturing locations; more also to meet customer’s volume requirements, avoid lethargy or complacency on the part of the single source supplier when the customers a small player in the market for a specific item, when technology part is uncertain and in areas where suppliers tend to leapfrog each other technologically. 

Croinin- Harris (2004) state a company has two main windows to the outside world, the sales department and the purchasing deportment. Because of this they mean that the actions of these two departments are extremely visible and therefore important for the perception of the firm externally. According to Cronin. Harris (2004), studios have shown that behavior of the purchasing department in ethical issue has a major effect t on the behavior of the rest of the company in similar situation (Internal customers). It is therefore essential to ensure ethnical behavior form the purchasing department. The author states that the best way to ensure this is through the development and enforcement of a relevant ethics policy and through continuous training and education. 

According to Heinrityz et al (1991), a purchaser is an agent for his/her company who has been given the authority by owner or management to commit funds. There are often monetary limit to the amount that may be spent by any single buyer without securing approval of the expenditure by general management. The author’s state further that authority should be comparable with responsibility and the ability to meet that responsibility. Hein Ritz et al (1991), states that managers gives purchasers authority, they usually control cost by restricting the amounts that a purchaser has the authority to sign for. There might be several steps of authority, for instance a single buyer ties the authority to sign deals up to a certain amount, over that amount the deal has to be signed by a senior purchaser up to a certain amount and over that by the chief procurement officer and above that by the CEO.

2.4 Summary and research gaps 

E-procurement constitutes a very important information technology managerial tool that has the potential of improving and integrating various functions across the organization. This internal integration can enhance the current performance of an organization as well as improve the future performance of the organization. E-procurement can also help drive future confidence in the face of both internal and external risk. E-Procurement can reduce quality costs by making sure that selected suppliers deliver a product of service that does not exceed extensive quality control. E-Procurement can also reduce quality costs by making sure that the components bought do not load to complaints on the user department or final product to the customer. 

The literatures reviewed have indicated that there are no studies that have been carried out on the effects of e-procurement on the performance of organizations. Studies on e-procurement are also few since the concept has not been adopted in most organizations. There is need therefore to conduct a study to establish the effects of e-procurement on organizational performance.

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents the research methodology which include; Research design, study population, study area, instruments of data collection, data processing, Study  instruments, sources of data and data  analysis.

3.1 Research design

The research employed a descriptive research design. The design exploited both qualitative and quantitative approaches. Qualitative approach included use of interviews, while quantitative approaches involved use of descriptive statistics that were generated inform of frequency tables, graphs, and Charts. Qualitative and quantitative approaches were adopted to enable the researcher get and analyze information concerning respondents’ opinions about e-procurement and service delivery.

3.2 Study Area

The research was carried out at Bidco Uganda Limited.

3.3 Study population

Study population is a complete set of individuals, cases or objects with some common observable characteristics. The sample population consists of 100 staff. The population included the sales representative, procurement department, and transportation department, and other employees holding familiar and unfamiliar titles but were deemed suitable stakeholders for generating relevant data to the problem which was under investigation

3.4 Sample size

The sample size consisted of 60 respondents from the study area and these were selected as follows;

Table 3.1: Showing Sample size

Source: Primary Data

The study used a sample size selected 60 respondents because it was enough for the study to obtain reliable information. In addition, it helped the researcher to finish her study in time.

3.5 Sampling method

Sampling is a definite plan determined before data collection for obtaining a sample from a given population. It involves three decisions: who to be sampled, how many people to sample, and how to obtain the sample. The stratified sampling was used to arrive to the people to include in the study. It’s a method in which the population is divided into a number of divisions and a sample is drawn from division and such sample makes us the final sample. Using this method, respondents were grouped into separate homogenous group of subjects with similar characteristics. Purposive Sampling involved deliberate selection of particular units of the population for constituting a representative sample. It involved convenience and judgmental sampling where the researcher chose the sample based on who was appropriate for the study. 

3.6 Data collection methods and instruments

Questioning method

The researcher used the questioning method whereby she drafted to respondents structured questions. This method was used because some respondents had no time to sit down and answer during interviews.

A questionnaire guide was used and this was inform of close ended in nature and this allowed the study respondents to fill the questionnaire in the study field. The questionnaire method of data collection was used because of being cheap and that the method collects responses with minimum errors and high level of confidentiality.

Interviewing method 

An interview is a conversation where questions are asked and answers are given. Interview refers to a one-on-one conversation with one person acting in the role of the interviewer and the other in the role of the interviewee.

An interview guide was drafted with a set of questions that the researcher asked during an interview and this was structured (close ended) in nature. Interview guide was used by the study since the methods helps in the collection of more data as it allowed the interaction of both the researcher and the respondents. 

3.7 Data collection procedure

The study observed all procedures followed in research. Using the letter of introduction obtained from the Research Coordinator, School of management and Entrepreneurship, the researcher was introduced to every department, fully explaining the purpose of research. After getting their consent, she set a program with the respondents on when the questionnaires were administered and date for the interview sessions was set. The researcher also built the confidence of the respondents by assuring them that their views were confidential and was used only for academic purposes.

3.8 Validity and reliability of research instruments

There are no scientific principles which would guarantee a valid and reliable questionnaire, but there are ways in which this can be pursued. First, the items in the questionnaire should be based on prior research whenever possible. Due to this, in this study most of the questions were based on prior research. Secondly, the questionnaires were pre-tested (Malhotra & Birks 2007).

3.8.1 Validity

To test the construct validity, citations of all sources where materials and evidence of material collected from was provided. The supervisor reviewed the questionnaires and approved them.  

3.8.2 Reliability

When conducting research, the researcher tried to act as neutral as possible in order to avoid being biased. The researcher was also conscious about the type of questions to ask.

3.9 Data analysis

The data collected was edited for accuracy, completeness and to find out how well the answered questionnaires were and this was done in line with the questionnaires. The edited data was coded. Coding involved assigning numbers to similar questions from which answers were given unique looks to make the work easier. In this case Ms-excel was used to analyze the coded data.

3.10 Data Presentation

Presentation of data involved use of tables, pie-charts and graphs that were generated from the questions relevant to the study variables. Interpretation and discussion of the results was done as the researcher explained the strength of the study variables basing on the frequencies and percentages, charts and graphs. 

3.10 Limitations of the Study

The study was faced with a problem of not finding all respondents in the study area especially the employees who go to field as a group. The researcher however arranged with them to fix for her an appropriate time in order to collect reliable and valid information from them for the study.

The study also was expensive in terms of stationary. However the researcher mobilized funds from her friends and family members for the study to be completed successfully in time with the help of her supervisor.

The researcher further faced a problem of some respondents not providing information for the study as information relating to the study variables, however, researcher explained to them that the information was only for the academic purpose while making them to understand the study variables. 

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS

4.0 Introduction

The study looked at the effects of e-procurement on service delivery. A case study of Bidco Uganda ltd. The findings from the study were presented and analyzed orderly based on the formulated study objectives. This was made possible with help of computer packages MS word and Excel where by tables were generated. The chapter begins by presenting the biographic characteristics of respondents in terms of gender; age, education levels, department and period of work. The study there after discusses findings as per the formulated objectives of the study.

4.1 Background information of the respondents

Under the gender distribution of respondents, the study was delighted with both male and female respondents as shown in the table below;

Figure 1: Gender of Respondents

Source: Primary Data

According to figure 1 above, 51.67% majority of respondents were male while 48.33% were women. This implies that the organization is gender sensitive since all categories of people were employed by the organization.

Figure 2: Age range of Respondents

Source: Primary Data

Figure 2 indicates that majority of respondents (38.3%)were in the 30-39 age group, 30% of them were less than 30years. This justifies that the organization follows the constitution of the Republic of Uganda that allows employers to recruit staff above 18 years. The staff had the experience since respondents were of average age and energetic enough to carry out their duties and responsibilities assigned to them hence they would hence they would relied on to give appropriate information on the impact of electronic procurement on service delivery.

Figure 3: Highest Level of education

Source: Primary Data

From figure 3 above, majority of respondents constituting 46.67% (28) were diploma holders, 28.33% of them acquired 1st degree and 25% of the respondents had acquired secondary level. This justifies that the organization recruits, maintains and retains high qualified human resource to fill the positions of the organization who are capable of sustaining electronic procurement components which implies that the selected sample had the capacity to avail the researcher with reliable and appropriate information on the topic under study.

Figure 4: Period of Work

Source: Primary Data

According to the figure 4 above, majority of the respondents (50%) had been in the organization for less than 2years while 40% of them had been in the organization from 2-5years and 10% of the respondents have stayed in the organization for 6-10years. This shows that the working experience for the categories of workers was enough to get conclusive results, since its assumed that by virtue of their positions, they know about electronic procurement and its impact on service delivery.

4.2 Factors hindering e-procurement adoption

The study sought to examine the factors hindering e-procurement adoption at Bidco Uganda ltd. The results were obtained and are presented below;

Table 1: Objective one: factors hindering e-procurement adoption

Source: Primary Data

Most respondents (40%) agreed with the statement that alot of documentations involved in e-procurement process, 15% strongly agreed, while 6.7% strongly disagreed, 33.3% disagreed and 5% were not sure. This implies that, alot of documentations involved in e-procurement process has affected service delivery in Bidco Uganda ltd.

From Table above, findings show that fewer respondents 40% agreed with lack of capacity to operate a fully fledged e-procurement system, 35% strongly agreed, 11.7% disagreed, 8.3% of the respondents strongly disareed and 5% were not sure. This implies that, lack of capacity to operate a fully fledged e-procurement system has affected service delivery in Bidco Uganda ltd.

Findings above show that 45% agreed with limited finances, 5% of the respondents strongly agreed, 31.7% disagreed, 8.3% strongly disagreed while 10% were not sure. This implies that in most cases, limited finances allocated to e-procurement practice have diminshed service delivery in Bidco Uganda ltd.

In the table above, 41.7% of the respondents disagreed with lack of skill among employees, 38.3% of them agreed, 1.7% strongly agreed, 15% were not sure and 3.3% of the respondents strongly disagreed. This implies that sometimes, lack of skill among employees has not affected e-procurement practices in Bidco Uganda ltd.

Results above show that 45% of the respondents agreed with conservativeness by some employees, 40% disagreed, 4% strongly agreed, 3.3% of them strongly disagreed only 5% were not sure. This implies that in most cases, conservativeness by some employees in Bidco Uganda ltd has made service delivery poor.

Fewer respondents (5%) strongly agreed with e-procurement longer lead time, 45% of them agreed, 31.7% disagreed, 8.3% of the respondents strongly disagreed while 10% were not sure. This implies that sometimes, longer lead time has affected service delivery in the organization.

Finally, (8.3%) strongly agreed with difficulty in aligning the system to the organisation’s policies, 3.3% of them agreed, 50% disagreed, 38.3% of the respondents strongly disagreed and no respondent were not sure. This implies that the organization has not faced difficulties in aligning the system to the organisation’s policies.

Conclusively, limited finances leads to inadequate application of e procurement to meet customer demand which affects the customer relations with the organization, thus management should ensure they have adequate resources to ensure smooth running of the firms operations.

4.3 How organisations are addressing the e-procurement challenges

The study sought to examine how Bidco Uganda ltd is addressing the e-procurement challenges. The results were obtained and are presented below;

Table 2: Objective two: how organisations are addressing the e-procurement challenges

Source: Primary Data

The study sought to identify how Bidco (U) Ltd is addressing e-procurement challenges and result shows that, majority of respondents (45%) strongly agree with employ skilled personnel, 40% of them agree and only 6.7% of the respondents disagree while 8.3% were not sure and no respondent strongly disagreed. Since the majority of the respondents were positive implies that e-procurement challenges in Bidco Uganda ltd have been addressed by employing skilled personnel.

Results also show that most (41.7%) of the respondents agree with increase funding, 36.7 of them were not sure, 13.3% of the respondents strongly agree and only 8.3% disagree, no respondent strongly disagreed. From findings majority were positive thus e-procurement challenges in Bidco Uganda ltd have been addressed by increasing funding in procurement activities.

Table also indicates that a majority of the respondents (66.7%) strongly agree with training of the employees, 33.3% of them agree. No respondent was not sure, disagree, or strongly disagree.  This implies that e-procurement challenges in Bidco Uganda ltd have been addressed by training employees on the best ways to handle procurement activities.

Also findings indicate that, 75% of the respondents strongly agree with involving the top management in all departments while 25% of them agree, no respondent was not sure, disagree, or strongly disagree. All respondents were positive with the statement implying that e-procurement challenges in Bidco Uganda ltd have been addressed by involving the top management in all the process of procurement.

4.4 Impact of e-procurement adoption on organisational performance

The study sought to investigate the impact of e-procurement adoption on organisational performance. The results were obtained and are presented below;

Table 3: Objective three: impact of e-procurement on organisational performance

Source: Primary Data

According to table above, majority of the study respondents 66.7% strongly agreed that e-procurement fosters service delivery, 33.3% of them agreed and no respondent was not sure, disagree, or strongly disagree. This implies that the application of e-procurement in Bidco Uganda ltd has improved service delivery.

Majority of respondents 41.6% agreed that improved management and control of the tendering procedures, 13.3% strongly agreed, 36.7% were not sure and only 8.3% of them opposed while no respondent strongly disagreed implying that improved management and control of the tendering procedures in Bidco Uganda ltd.

Most respondents 75% strongly agreed that improved transparency of the tendering procedures, 25% of them agreed while no respondent was not sure, disagree, or strongly disagree. This implies that the application of e-procurement has improved transparency of the tendering procedures.

Also majority of respondents 81.7% strongly agreed with increased knowledge of the procurement processes while 18.3% agreed as compared to none of the respondents who opposed or were not sure. This means that the application of e-procurement in Uganda has increased knowledge of the procurement processes.

Furthermore, findings in table above indicate that most respondents 50% strongly agreed with more time available for activity generating and higher value-added, 48.3% agreed, 1.7% strongly agreed while no respondents were not sure or disagreed. This implies that at Bidco Uganda ltd, e-procurement has allowed more time available for activity generating and higher value-added. 

Most respondents (66.7%) strongly agreed with the statement that improved mastery of IT instruments, 33.3% of them agreed, no respondent was not sure, disagree, or strongly disagree. This implies that in most cases, e-procurement improved mastery of IT instruments in Bidco Uganda ltd.

Table above showed that majority of the respondents (100%) agreed with reduction of “administrative / bureaucratic” activities and redundancies. This implies that electronic procurement enhances service delivery of an organization.

The researcher went on to determine the strength of the relationship between e-procurement on organisational performance using Pearson’s correlation coefficient. 

Table 4: Relationship between e-procurement on organisational performance

From the table above, findings indicated that there is a strong positive relationship between e-procurement and organisational performance at Pearson correlation coefficient r= 0.614. This implies that e-procurement affect organisational performance by 61.4% and others factors by 38.6%.  

CHAPTER FIVE

DISCUSSION, SUMMARY, CONCLUSION AND RECOMMENDATION

5.0 Introduction

This chapter presents the discussion, summary, conclusion and recommendation of the findings presented   in the previous chapter. The summary focuses on the finding in relation to the objective of the study to achieve. The summary is followed by the conclusion which is also based on the findings of the study and the finally the recommendation.

5.1 Discussion of major findings

5.1.1 Factors hindering e-procurement adoption

The study sought respondents’ views and opinions on the challenges faced by organizations that employ e-procurement and the study found limited finances, lack of skill among employees, longer lead time in aligning the system to the organization policies and a lot of documentations involved. This implies that the electronic procurement has an impact on service delivery thus enabling the organization to meets its customer demand. These findings agree with Weele (2005) who argued that implementing e-procurement is connected to cultural aspects. Its introduction would create a real challenge because it would not be easy for the people involved to easiley accept it having been used to the old system. Getting used to the new system would probably take some years before it is really accepted by the people. However if the system is to be changed, one way of solving this cultural problem would be the introduction of change management programmes before and after the introduction of the new system which would help to orient the concerned parties through it. This would enable them to cope when the new system is finally introduced. While most procurement-software vendors are positioning their products as supply-chain-ready, they still have work to do to support complex B-to-B trading relationships. 

5.1.2 How organisations are addressing the e-procurement challenges

The study also revealed in table 4.2 that, increasing funding and employing skilled personnel are one way of minimizing the challenges faced during the implementation of e-procurement. This is in line with Tumwesigye (2009) e-procurement involves such processes like e-ordering and e-tendering. Thus, much funding is needed to enhance its operation. In such a case, there can arise a problem of e-evidence especially in cases where a procurement official can claim that he /she mailed the bids or an order yet he did not. In such a case there may be no evidence to prove that the official actually mailed the document. In other words, it is not a reliable system given that the procurement processes is largely dependent on deadlines.

5.1.3 Impact of e-procurement adoption on organisational performance

The study sought to identify the impact of e-procurement on operation efficiency and results in chapter four in table 4.3 revealed that increased knowledge of the procurement processes and fosters service delivery. This is in agreement with synch (2009) who adds that service delivery of any productive organization largely depends on its ability to control costs and manage the material flow in some uniform fashion. The potential of this control is again highly related to the quality of decision making information available with respect to the quantity and location of materials. Service delivery of organizations can be encouraged when organizations have operating systems built as part of it and that these must derive from the function of the organization itself. This assists in the setting and achievement of targets which are in turn driven by customer requirements.

5.2 Conclusion

The study concluded that the factors that hinder e-procurement adoption at Bidco (U) ltd include limited finances, lack of skill among employees, while longer lead time in aligning the system to the organization policies and a lot of documentations involved and lack of capacity to operate a fully-fledged e-procurement system. These have been minimized by increasing funding, employing skilled personnel, training of the employees and involving the top management in all departments. The study found a positive relationship between e-procurement adoption and organizational performance at Pearson correlation coefficient r= 0.614. This implies that e-procurement affect organisational performance by 61.4% and others factors by 38.6%.  

5.4 Recommendation

From findings, the organization faces a challenge of limited finance allocated to e-procurement implementation, thus, the researcher recommends that the government should allocate more funds aimed at improving the e-procurement function in the organization.

From findings, the organization is faced by lack of skill among employees, the researcher recommends that employees need to be trained on usage of the e-procurement system. This will enable them to operationalize the system. There is also need for the organization to integrate the various functions so that e-procurement can thrive. 

From findings, the organization faces a challenge of a lot of documentation when employing e-procurement, therefore the researcher recommends that the website of the organization need to be regularly updated with the latest information concerning procurement activities. Suppliers should be encouraged to summit their quotations online.

5.5 Areas for further research

A study should be carried out to establish the reasons behind low utilization of e-procurement among commercial state corporations in Uganda even after the system has been fully installed. 

There is need to conduct a comparative study of the effects of e-procurement on performance of the private sector companies and those in the public sector. This will assist in coming up with similarities and differences that can serve as benchmarks.

REFERENCES

Barbieri, P. and Zanoni, A. (2005).The e-procurement experience in Italian universities. Journal of Public Procurement, 5 (3), 323–343. 

Chaffey, D. (2004). E-business and e-commerce management: strategy, implementation and practice. 2nd edition. Financial Times Prentice Hall. 

Chopra, S. and Meindl, P. (2001), Supply Chain Management: Strategy, Planning, and Operation. Prentice-Hall, New Jersey. 

Croom, S. & Brandon-Jones, A. (2004).“E-Procurement: Key issues in e-Procurement implementation and operation in the public sector”, 13thInternational Purchasing & Supply Education & Research Association (IPSERA) Conference, April 4-7, Catania, Italy.

Dai, Q. & Kauffman, R.J. (2001). “Business Models for Internet-Based E Procurement Systems and B2B Electronic Markets: An Exploratory Assessment.” A paper presented at the Thirty-Fourth Annual Hawaii International Conference on Systems Sciences, January 3-6, Maui, HI. 

Deloitte Consulting. (2001). Realizing the B2B procurement Vision: Trends, Challenges and Best Practices in e-Sourcing and procurement. Deloitte Consulting, New York.

Eakin, D. (2003). Measuring e-procurement benefits.Summit: Canada’s magazine on public sector purchasing. Available at: http://www.summitconnects.com/Articles_Columns/PDF_ Documents/060104.pdf

e-BusinessW@tch (2006). European e-Business Reports. Available at: < http://www. ebusiness – watch.org/key_reports/synthesis_reports.htm >

Koorn, R., Smith, D. & Mueller, C. (2001) e-Procurement and Online Marketplaces. Amsterdam, The Netherlands: Compact. 

Mburu, D. K. (2011) The Role of E-Procurement in Enhancing Efficiency in Telecommunication Industry (A Case Study of Safaricom Limited Company-Kenya).Jomo Kenyatta University of Agriculture and Technology 

Njoroge . K. K. (2010) Factors Influencing E-Procurement Practices in Construction Industry in Kenya. Jomo Kenyatta University of Agriculture and Technology 

OGC (2002) A Guide to e-Procurement for the Public Sector. Office of Government Commerce, UK.

Orori, J. M. (2011) Factors That Influence the Introduction of E-Procurement in Retail Industry: A Survey of Retail Chain Supermarkets in Kenya, Unpublished research, Jomo Kenyatta University of Agriculture and Technology 

Osmonbekov, T., Bello, D.C. and Gilliland, D.I. (2002). Adoption of electronic commerce tools in business procurement: enhanced buying center structure and processes. Journal of Business and Industrial Marketing, 17 (2/3), 151–166. 

Parida, U., Parida V., (2005) E-procurement: An Indian and Swedish Perspective, A Masters Thesis, Luleä University of Technology. 

Subramaniam, C. and Shaw, M. (2002). A study of value and impact of B2B e-commerce: the case of web-based procurement. International Journal of Electronic Commerce, 6 (4), 19-40. 

APPENDICES

APPENDIX I: STUDY QUESTIONAIRE FOR STAFF

Dear respondents NAMUGOSA FLAVIA, student of Kyambogo universty conducting a research study on the effect of e-procuremnt on the performance of Bidco (U) Ltd. Your organisation has chosen as aresourcefull place to attain the required infomation in regard to the  research study. The questions are not meant to test you but to gather your humble and objective response about  the facts on e-procurement and service delivery.please feel free when responding to questionaires because the information given was treated with respect,alot confidentiality and shall never be disclosed to any other person unless authorised.

Section A: Background information

Note: For each of the questions, tick against your response or write your response in the blank space provided.

1.Gender

1. a) Female
2. b) Male
3. Age range
4. a) Less than 30yrs b) 30-39yrs
5. c) 40-49yrs d) 49-50yrs
6. e) over 50yrs
7. Level of education
8. a) Post graduate b)       b) Diploma
9. c)  Degree d) Masters
10. Period you have served in this organization 
11. a) Less than 2 years b) 2-5 years
12. c) 6-10 years d) Over 10 years

Section B: The factors hindering e-procurement adoption in organizations.

5. What factors hinder e-procurement adoption in your organization? Tick the best option by using  Strongly Disagree (SD), Disagree (D), Not Sure (NS), Agree (D) and Strongly Agree (SA) SD=1, D=2, NS=3, A=4, SA=5

Others (specify) ……………………………………………………………………………………………………..

Section C: How organisations are addressing the e-procurement challenges.

6. How has your organisation tried to minimise the challenges faced? Tick the best option by using  Strongly Disagree (SD), Disagree (D), Not Sure (NS), Agree (D) and Strongly Agree (SA) SD=1, D=2, NS=3, A=4, SA=5

Others Specify…………………………………………………..

Section D: The impact of e-procurement adoption on organizational performance

7. What is the impact of e-procurement on organizational performance? Tick the best option by using  Strongly Disagree (SD), Disagree (D), Not Sure (NS), Agree (D) and Strongly Agree (SA) SD=1, D=2, NS=3, A=4, SA=5

Others (specify) …………………………………………………………

THANK YOU FOR YOUR TIME

APPENDIX II: INTERVIEW GUIDE FOR TOP MANAGEMENT

1. What do you under stand by the term e- procurement?
2. In what ways has your organisation applied e-procurement in its operations ?
3. What factors hinder the adoption of e-procurement in your organisation?
4. How has your organisation tried to minimise the hinderances?
5. What is the impact of e-procurement on organizational performance?
6. What is your general comment concerning the study under investigation?

THANK YOU FOR YOUR COOPERATION