IMPACT OF TECHNOLOGICAL ADVANCEMENT IN PROCUREMENT EFFECTIVENESS

1.0 Introduction

This chapter covers the background of the study, Statement of the problem, purpose of the study, research objectives, research questions and scope of the study, significance of the study and definition of terms.

1.1 General Background to the study

Technology covers vast areas of organizational activities and is used in an organization in many forms such as mobile and wireless technology, telecommunications, software development, security. Printing and photocopying, intelligent systems etc. technological advancement has had a huge impact on industries, organizations, and the community in general and our daily lives technology has many application in an organization can be applied to many fields. (Huang et al 2012).

Technological advancement is fast becoming one of the main drivers of change, posing new organizational opportunities and impacting on its strategic challenges (Somuyiwa, 2010). The business environment today has been undergoing unprecedented change and many companies are seeking new ways to stand out from the competition by sustaining their competitive advantage. In today’s highly competitive global marketplace, the pressure on organization’s to find new ways of creating and delivering value to customers is growing stronger. Technology is today being applied in many organizations in a wide range and operations areas. It has provided new ways for organizational workers like secretaries to store, process, distribute and exchange information both within an organization like with management and fellow employees   and with customers and suppliers in external organization(Oyesiku et al, 2010).

It is now commonly accepted that technological advancement in various fields like in communication and data storage systems provide many benefits to organizations , including small enterprises to make their performance more efficient, effective and competitive (Disterer, et al 2006).Many companies conduct business using technologically advanced systems like electronic commerce (e-commerce), whether focusing on business-to-business (B2B) or business-to-consumer (B2C) activities. They realize that easy access to information and communication and the delivery of their products or services are important drivers in developing and sustaining market competitiveness nationally and internationally. Having a supportive technological advanced system is very important to enhance the performance of the organizations work force (Sarkis, et al, 2004). The application of computers, internet and information communication systems are all products of technological advancement and can be seen in virtually all activities involving duties of a secretary in organizations, such as communication, data storage secretarial duties like typing and designing of letters among many others. Technological advancement has helped organizations to achieve competitive advantages by improving the efficiency of workers in their respective fields (wing et al 2009). The source of competitive advantage is found in the ability of the organization to respond to customer needs timely and to prevent save time for customers, from its competition and again from operating at lower cost and hence at lower cost and greater profit. Successful organizations either have a productivity advantage that gives a lower cost profile or they have a value advantage that gives the product or offers a differential over competitive offerings or a combination of the two. (Sarkis, et al, 2004)

.According to National fraud authority London (2010), in most developed countries, public procurement takes place within a framework of international obligations, such as the World Trade Organization’s Agreement on Government Procurement or the Procurement Directives made under regional agreements such as the European Union or the North America Free Trade Agreement. Uganda as a country procurement fraud has been experienced in many sectors and occasions including Temangalo land issue, mismanagement of national social security fund and during CHOGM in 2007 in Uganda. According to the Public Accounts Committee (PAC) report on the Commonwealth Heads of Government Meeting (CHOGM 2007) Kampala, the committee estimated that CHOGM expenditure almost doubled from the authorized and appropriate budget of two hundred seventy billion shillings (270,000,000,000/=) to over five hundred billions (500,000,000,000/=). According to PAC report (2010), some roads which were designed by the consultants were never worked on yet the designers had already been paid. Despite the fact there is constant improvement in Technology systems and the huge amount of money invested in Technology by the government, organizations are still incurring heavy losses in terms of high costs in procurement like inflated contracts over the budget, failure to finish work in time, leading to losses of tax payers’ money, this is very disturbing to all the stakeholders as to why such mishaps continue to happen. Basing on this background the researcher therefore seeks to investigate into the impact of technology adoption on procurement effectiveness at NSSF.

1.2 STATEMENT OF THE PROBLEM.

NSSF is a national savings scheme mandated by government through the NSSF Fund Act, cap 222 to provide social services to employees in Uganda, established by an act of parliament in 1985 (NSSF Records 2010). NSSF uses E-procurement for contracts to achieve benefits such as increased efficiency, cost savings, improved transparency in procurement services. Despite this benefits, it is faced with numerous procurement challenges, in the 2008 acquisition of 564 acre piece of land at 11 billion shillings NSSF was accused of procurement fraud due to failure to advertise procurement of that value,(New Vision 27 October 2008), Apart from that, the PPDA audit report 2012 also questions a number of procurement activities at NSSF including the contract for the supply of fumigation services in which it was marred by irregularities. All these irregularities happen despite the existence of technologically advanced systems at NSSF, This study questions whether the adoption of technologically advanced systems has an impact on promotion of procurement effectiveness.

1.3 Purpose of the study

The purpose of study is to establish the impact of technological advancement on procurement effectiveness.

1.4 SPECIFIC OBJECTIVES OF THE STUDY

The overall objectives of this research are;

• To assess the various benefits of technology in procurement at NSSF Kampala Uganda.
• To assess the different ways of improving procurement effectiveness in an organization at NSSF.
• To establish the influence of technological advancement on procurement effectiveness.

1.5 RESEARCH QUESTIONS

The following research questions shall guide the study;

• What are the various benefits of technology in procurement at NSSF Kampala Uganda?
• What are the different ways of improving procurement effectiveness in an organization at NSSF?
• What is the influence of technological advancement on procurement effectiveness?

1.6 SCOPE OF THE STUDY

The scope of this study will be divided into subject, geographical and time scope.

1.6.1 SUBJECT SCOPE

The study will specifically look at the impact of technological advancement on procurement effectiveness.

1.6.2 GEOGRAPHICAL SCOPE

The study will be conducted at NSSF located at plot95 Kampala road

1.6.3 TIME SCOPE

The period of data to be considered in the organization will be from 2012-2014 and period of body of knowledge in reviewing literature will be from 2000-2014.

1.7 SIGNIFICANCE OF THE STUDY

The findings of the study will provide the management of NSSF Uganda unlimited information on finding solutions to some of the challenges they are facing in implementing technologically advanced systems in their organization.

It study will also help different organizations with knowledge on different ways of promoting procurement effectiveness in the organization.

The study will also be of benefit to future researchers with information on the benefits of technological advancement to an organization.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter presents an overview of the existing literature based on other writers’ opinions, findings, and viewpoints on the impact of technological advancement on the procurement effectiveness. it generally covers definitions of technology, various benefits of technology in procurement , different ways of improving procurement effectiveness , influence of technological advancement on procurement effectiveness.

2.1 Over view of key concepts in the study

2.1.1 Procurement

Means the acquisition by purchase , rental, lease , hire purchase, license, tenancy, franchise, or any other contractual means of any type of works,  services or supplies of any type of works, services or supplies or any combination, (PPDA ACT, 2006).

2.1.2 Technology

Technology refers to systems and devices which are the result of scientific knowledge being used for practical purposes (Oxford Dictionary, 2006).

Technological advancement has helped organizations to achieve competitive advantages by improving the efficiency of workers in their respective fields (wing et al 2009). The source of competitive advantage is found in the ability of the organization to respond to customer needs timely and to prevent save time for customers, from its competition and again from operating at lower cost and hence at lower cost and greater profit. Successful organizations either have a productivity advantage that gives a lower cost profile or they have a value advantage that gives the product or offers a differential over competitive offerings or a combination of the two. (Sarkis, et al, 2004).

2.2 BENEFITS OF TECHNOLOGY IN PROCUREMENT

Different scholars have written about the benefits of technology and they include;

Globalization,According to Marasco (1992), technology has not only brought the world closer together, but it will allow the world’s economy to become a single interdependent system. This means that we will not only share information quickly and efficiently, but we will also bring down barriers of linguistic and geographic boundaries. The world will developed into a global village due to the help of information and communication technology, allowing countries like Chile and Japan who are not only separated by distance but also by language to share ideas and information with each other.

 Communication, Chaffey (2007) asserts that with the help of technology, communication become cheaper, quicker, and more efficient. We can now communicate with anyone around the globe by simply text messaging them, or sending them an email, for an almost instantaneous response. The internet has also opened up face-to-face direct communication from different parts of the world, thanks to the help of video-conferencing.

Cost effectiveness, According to Crake Richard (1998), technology helps to computerize the business process, thus streamlining businesses to make them extremely cost effective money-making machines. This, in turn, increases productivity, which ultimately gives rise to profits; that means better pay and less strenuous working conditions.

Bridging the cultural gap, Cortesao L., Martins F., Rosa A., Carvallio P. (2005) argues that information and communication technology helps to bridge the cultural gap by helping people from different cultures to communicate with one another, and allow for the exchange of views and ideas, thus increasing awareness and reducing prejudice.

More time, Technology makes it possible for businesses to be open 24 x7 all over the globe. This means that a business will be open anytime, anywhere, making purchases from different countries easier and more convenient. It also means that you will have your goods delivered right to your doorstep without having to move a single muscle (Kennedy A, 2001).

Creation of new jobs, Kennedy A, (2001) argues that probably, the best advantage of information and communication technology is the creation of new and interesting jobs. Computer programmers, Systems analyzers, Hardware and Software developers and Web designers are just some of the many new employment opportunities created with the help of ICT.

2.3 DIFFERENT WAYS OF IMPROVING PROCUREMENT EFFECTIVENESS

Many scholars have written about ways of improving procurement effectiveness and the recommendations are below.

Proper management of procurement records, Management of records is essential towards tracking of the fraudulent effectiveness in an organization Procurement officers should be encouraged to management their records or to use professional staff to maintain procurement records (Lysons, 2006).

The inspectorate of government has revealed that most PEs do not have good record management system that will ensure effective and efficient performance of public procurement auditing. In most cases, the records/books are not kept anyhow to the extent that the auditors cannot sufficiently extract required information and therefore usually frustrated. This also means that plans for performance improvement cannot be easily implemented. (IGG reports, 2010).

Training of procurement personnel new ICT skills, procurement operations require experts to carry out public procurement at the private and public sector levels most of the procurement duties are carried out by some un qualified procurement professionals since procurement is a relatively new profession in some countries unlike other professions like law or medicine so most of this people need to be trained or an organization should recruit qualified procurement profession to carry out procurement duties this will help organization in reducing fraudulent effectiveness in procurement , Ntayi (2005). The PPDA as the regulatory public procurement body should provide enough personnel to carry out the function.  Besides, there should be training to provide knowledge and skills of the scope and dynamics of public procurement as required by the (PPDA Act, 2003)

Procurement entities should provide conducive environment that should be supported by trained skilled and professional report. The reports add that non-compliant officials should be prosecuted in courts of law.  PAC Reports (2009-10).

Employing procurement auditors to oversee the procurement process, The government or private companies should employee procurement auditors in order to examine the procurement process of the system so as to identify the fraudulent stages in the procurement process so that the responsible authorities are made aware of the existence of the fraudulent procurement effectiveness so that such criminals can be taken to courts of law and prosecuted so that fraud is eliminated (basheka, 2005). Whereas procurement is guided by the PPDA Act, the provisions of the Act are utterly ignored. Government procurement auditors should be given the responsibility to examine the procurement systems in the organization so as that they make recommendations in order to identify the fraudulent effectiveness in the procurement process of different organizations this will help in exposing noncompliance through periodic reporting to ensure cautious procurement undertakings. The HR training role should be emphasized. It is believed that professionally trained people are very cautious in matters of ethic and integrity. The big number of staff involved could be doing so because they are not bound by ethical considerations. They may continue to act with impunity and therefore the need to restrain and educate them through training (IPPU, 2010).

Limiting political influence, Influence of politicians in procurement process is one of the major causes of poor procurement effectiveness like procurement fraud and this makes organizations to fail to achieve value for money in the procurement process which violates the PPDA act 2003, principle which states that procurement should be carried out in a manner to maximize competition and achieve value for money (PPDA act, 2003, section 46).Procurement professionals should be left to practice their duties without political influence this will increase efficiency in the system and eliminate procurement fraud since it’s a major obstacle to achieving value for money, (IPPU, 2010).

According to the Global integrity report 2008, it has been noted that although there are penalties, Procurement process especially big procurement contracts tend to involve high profile politicians, who influence the process & therefore usually protect the individuals who may be implicated. The regulations are in place but not effective due to the influence assumed by procurement personnel and how they manipulate the system to attain their own ends (IGG reports, 2010).

Eliminating corruption, There are challenges resulting from corruption. During the tendering process, opportunities for corruption include tailoring specifications to limit competition or favour a particular bidder, abusing confidentiality, limiting advertisement and publicity. At the contract implementation stage, cases of fraud are highly noticed and abused such as false invoicing, over billing, underperforming, and failure to meet specifications, contract changes and renegotiations (Turner, et al, 1994).

The need to fight corruption is further strengthened by the Transparency International ranking that paints a gloomy picture about Uganda. The ranking Transparency International (TI) over an eight year period through the, Corruption Perceptions Index (CPI) indicate that Uganda needs to further strengthen its effort to fight corruption. At a score of only 2.8 against a clean scale of 10, Uganda is ranked among those countries that are really in a critical situation.

The government of Uganda in its National Strategy to fight corruption and rebuild ethics and integrity in Public Office (2004–2007) launched in July 2004, recognizes that corruption in public procurement and service delivery poses a serious obstacle to economic and social development in Uganda.

2.4 INFLUENCE OF TECHNOLOGICAL ADVANCEMENT ON PROCUREMENT EFFECTIVENESS.

Organizational procurement planning is made easy with technology.  According to Beach (2004). Organizing is establishing a structure and conscious planning where people work together in coordinated manner for the accomplishment of recognized goals. Passi (2006) says that organization is a network of relationship among individuals and activities through structural arrangement of persons, positions, roles and specified tasks to be performed, the people to do the work, the levels of authority rules and the flow of information. Organization affects not only productivity and economic efficiency but also morale of the work force apart from that organization structure defines tasks and responsibilities, work role, relationships and communication channels.

When an organization has efficient technological system, operations it’s able to plan for future anticipated challenges so that it’s in better position to maximize its operations and also to reduce costs, in period of uncertainties like floods, drought, or economic challenges organization with efficient technological system in place an organization is able to plan for its procurement effectively , (David ,2007).

Organizational control, Robbins et al (2005) defines control as the process of monitoring activities to ensure that they are being accomplished as planned and correct any significant deviation. He further says that managers can not really know whether their units are performing poorly until they have evaluated what activities have been done and compared the actual performance with the desired standard, According to Baguley (2003), workers need a working environment in which they direct and control their own efforts towards goals they have been involved in making so as to ensure effectiveness.  Technology  enable organizations to regulate on the level of their procurement effectiveness from inefficiency to effectiveness usage of some products especially when the organization is anticipating scarcity in the future, most government around the world use ware houses to store agricultural products so that to ensure food security and price stability Robbins (2005) .

Promotes just in time (JIT), just in time is defined as production based on demand, though this systems is still not widely used in most companies across the globe due to its need for an efficient technology however its used in most developed markets so that such companies are able to meet the timely demands of their customers. Warehousing is concerned with timely and reliable flow of goods from the receipt of an order until the goods are made available to the customer, Retailers and suppliers tap on global opportunities through vendor managed inventory and Just in Time inventory techniques by employing the drop-shipping strategy by the end physical distribution service providers to allow timely and reliable delivery of products to buyers, (Rabinovich, et al. 2008). Companies with efficient and reliable technology systems are able to realize to have a procurement system that can promote just in time system, (Zineldin et al, 2006).

Technological advancement is able to help an organization adopt procurement system which can control on the level of inventory; ware housing helps in minimizing the bull whip effect whose implications include: excess costs, excess inventories, slow response and lost profit, to increase the customer satisfaction, and also helps to gain competitive advantage over their rivals. Apart from that coordination between the ware house of the buyer and seller can easily be planned due to certainty in delivery of both manufactured and raw materials, (Gunasekarana, et al. 2004). Most organizations use inventory control techniques like vendor managed inventory, this technique helps in eliminating the mismatch between supply and demand and such this the most favored technique currently used in the control of inventory, (Lyson, 2003). Most organization are ensuring that there is proper buyer supplier relationship in order to ensure that there is effective physical distribution system and customer satisfaction in an organization the benefits of inventory control includes: It prevents wastage, increases on the organizational level of satisfying customers needs and also increases on the level of competitiveness of an organization against its competitors, (lysons 2003).

Customer service quality which is the main goal of most manufacturing companies across the globe are able to stand out of the competition in the manufacturing for example in the soft drinks markets customers service quality has mainly been associated with timely meeting of the markets industry but this has been realized by most companies who have created and well structured physical distribution system. Warehousing efficiency improves service quality by creating reliability, timeliness, availability of the products. This will therefore save customers time and also satisfies customers accordingly most of the new generation companies especially in the logistics systems they have used physical distribution efficiency as the strength to be able to maximize on their customers base this is due to the fact they are able to meet customers orders in time and be able to stand out of the competitive industry so that they are able to maximize profits,(Sambasivan, et al. 2009).  Service quality is expected to lead to customer satisfaction in all types of service industries like logistics and also in the manufacturing organizations (parasuraman et al 2000).

CHAPTER THREE

METHODOLOGY

3.0       INTRODUCTION

This chapter presents the methodology which consists of the research design, area of study, study population, sample population and selection, sampling technique, data collection method, data quality control, data collection procedures and limitations of the study.

3.1 Research design

Qualitative and quantitative research designs will be used, the researcher will use the above methods because many aspects will be covered in the study concerning the impact of technological advancement on procurement effectiveness at NSSF given the complex nature of NSSF, qualitative research method will be used because it collects information within a short time while quantitative will be through interview to cross check what has been given.

3.2       AREA OF THE STUDY

The study will be carried out at NSSF located at plot95 Kampala road.

3.3 STUDY POPULATION AND SAMPLE SIZE

The study targeted NSSF evaluation committee members, contracts committee members, procurement staff, and accountants of NSSF.

3.4       SAMPLING SIZE

According to (Amin, 2005) sampling involves selecting a sample of the population in such a way that samples of the same size have equal chances of being selected.

The sample will be comprised of 30 respondents who will include evaluation committee members, contracts committee members, procurement staff, accountants.

While carrying out research, purposive sampling will be applied to the above different categories of respondents.

Table 3.1

SOURCE: NSSF

3.5 Data Collection Instruments

The major instruments for data collection are questionnaires and interview guide. Surveys will be one part of a complete data collection and evaluation strategy. The major method of data collection for the study will be survey, which will be done using selected instruments like questionnaires. The questionnaire will provide respondents with ample time to comprehend the questions raised and hence, they will be able to answer factually.

3.5.1 Questionnaires

The questionnaire will be used to collect quantitative data. The researcher will administer the questionnaires to all the respondents, which will be designed basing on study objectives and questions. Respondents who can read and write will fill in the questionnaires themselves. The questionnaires will be close ended.

3.5.2 Interviews

Qualitative data will be collected from the informants using interviews. The interview guide will be structured. The interviews will be held with procurement staffs and accountants, and will take approximately thirty to sixty minutes. This will be used since it’s the best tool for getting first-hand information /views, perceptions, feelings and attitudes of respondents. Both formal and informal interviews will be used to get maximum information from the different respondents who will participate in the research.

3.6 Reliability and Validity of data

Data analysis in this study will focus on data validity and reliability. To establish the validity of the questions, pre-testing will be done amongst the selected categories of respondents. Their comment will be incorporated in the final instruments to suit the data requirement of the study. The final amended research instrument will be reviewed jointly by the researcher and the supervisor. Reliability will be checked using the test –retest practice advocated for by Amin(2005). In other words, the questions will be put to course mates and their comments noted, they will then be presented to the respondents and their views will be compared with those of the course mates. On receipt of the questionnaires, manual editing will be done, followed by coding. Frequency count of different variables will be done and this will give the number of occurrences and percentages out of total occurrences.

3. 7 Data collection methods

Source of data will be from both primary and secondary sources.

• Primary data

Primary data will be obtained from the questionnaires administered on the target respondents to gain opinions on impacts of technological advancement on procurement effectiveness at NSSF.

• Secondary sources

Secondary data is data which has been collected by individuals or agencies for purposes other than those of a particular research study. It is data developed for some purpose other than for helping to solve the research problem at hand (Bell, 1997). This will comprise of literature related to impacts of information and communication technology on procurement fraud in relation to the case study. Secondary data will be sourced because it yields more accurate information than obtained through primary data, and it is also cheaper.

3.8 Data collection procedures

Upon receiving the University permission to carry out research, the area of study will be visited for purposes of familiarization.  The researcher will seek permission from staff and once allowed to proceed with research, questionnaires will be issued and an interview will be carried out with the selected staff.

3.9 Quality control of data instruments

The instrument will be taken to the supervisor to check its correctness there after pilot study will be carried out to find out if it measures what it is meant for.

3.10 Data processing and analysis

The raw data will be coded, edited, and arranged ready for analyzing only completed raw data will be analyzed using statistical tables and graphs.

3.11 Limitations of the study

Financial constraint, this is in terms of financial support for transport, printing questionnaires among other requirements that require finance. However this shall be prevented by soliciting money from friends, relatives and sponsors which will assist in making my work a success.

Respondents may delay in filling the questionnaire and fear to give information, but they will be persuaded that the information will be kept secret.

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