CHAPTER ONE

1.0 Introduction

CHAPTER TWO

LITERATURE REVIEW

CHAPTER THREE

METHODOLOGY

CHAPTER FOUR

DATA PRESENTATION, INTERPRETATION AND ANALYSISOF FINDINGS

CHAPTER FIVE

DISCUSSION, SUMMARY, CONCLUSION AND RECOMMENDATIONSOF FINDINGS

LIST OF TABLES

ABSTRACT

1.2 Statement of the problem

1.3 Purpose of the study

1.4 Objectives of the study

1.5 Research questions

1.6 Scope of the study

1.6.1 Content scope

1.6.2 Geographical scope

1.6.3 Time scope

1.7 Significance of the study

1.8 Definition of key terms

2.0 Introduction

2.1.1 e-procurement

2.1.2 Operational efficiency

2.2 The effect of e-procurement on operational efficiency

2.3 Forms of e-procurement

2.4 Challenges faced in e-procurement implementation

3.0 Introduction

3.1 Research Design

3.2 Study area

3.3 Study population

3.4 Sample size

3.5 Sampling procedure

3.6 Data Sources

3.6.1 Primary Sources

3.6.2 Secondary Sources

3.7 Data Collection Instruments

3.7.1 Questionnaires

3.7.2 Interview guides

3.8Validity and reliability

3.9 Data collection procedure

3.10 Data analysis and presentation

3.11 Anticipated Limitations of the study

4.0 Introduction

4.1 Respondents’ demographic characteristics

4.3 The effects of e-procurement on operational efficiency

4.4 The forms of e-procurement

4.5 Challenges faced in implementing e-procurement and solutions

5.1 Introduction

5.2 Discussion

5.2.1 E-procurement and operational efficiency

5.2.2 Forms of e-procurement

5.2.3 Challenges faced in implementing e-procurement

5.4 Conclusions

5.5 Recommendations

REFERENCES

Appendix 1: Questionnaire

research support services

THE EFFECT OF e-PROCUREMENT ON OPERATIONAL EFFICIENCY

CASE STUDY

MINISTRY OF HEALTH

Table 1 the age of the respondents 14

Table 2 respondents’ designation 18

Table 3 Effects of e-procurement 19

Table 4 Forms of e-procurement 20

Table 5 Challenges in implementing e-procurement 21

LIST OF FIGURES

Figure 1 the gender of the respondents 15

Figure 2 the respondents’ marital status 16

Figure 3 the respondents’ education levels 17

The purpose of this study was to assess the effect of e procurement on operational efficiency with reference to the forms of e-procurement used at the Ministry of Health and finding out the challenges faced with implementing e-procurement.

The researcher used both qualitative and quantitative approaches where qualitative approach involved the use of observations, documentation, interviewing, and quantitative approach was used to get the workers and managers’ opinions, views, attitudes and responses towards the impact of e-procurement on operational efficiency. The study involved the use of a total of 50 respondents at ministry headquarters. Simple random sampling was used as a sample method. Questionnaires and Interview guides were the main tools of data collection used. The collected data was presented inform of tables, percentages, and frequencies.

The results indicated that e-procurement reduces the costs incurred in the procurement process and also reduces errors made by employees. Secondly, the study results indicated that the main forms of e-procurement used by the ministry are E-ordering and E-tendering. Third, the study results indicated that there is the inability to on-board and support suppliers (in large numbers) at the ministry.

The study recommends that there is need to implement online dashboards for monitoring spend metrics / procurement performance. There is a need to improve spend compliance with contract management. Contract compliance continues to be a differentiating technology that assists in identifying the most important supplier relationships based on usage customer catalogs and for optimizing procurement.

This chapter presents the background to the study, the statement of the problem, the research objectives and questions, the scope and the significance of the study.

1.1 Background to the study

Globally, public procurement is defined as the purchase of commodities and contracting of construction works and services if such acquisition is effected with resources from state budgets, local authority budgets, state foundation funds, domestic loans or foreign loans guaranteed by the state, foreign aid as well as revenue received from the economic activity of state. Public procurement thus means procurement by a procuring entity using public funds (World Bank, 1995).

The rise of e-business in the late 1990’s led to the development of new opportunities related to procurement: e-procurement, spend management, outsourcing and joint product design (Lancioni, Smith, and Oliva, 2000). The advent of the Internet as a business systems platform has been a catalyst for major changes in the operation and status of organizational procurement. Information Technologies have changed the way organizations and governments operate.

Most governments in Africa have instituted reforms in public procurement. The major goals of these reforms are to encourage competition, improve financial transparency, and ensure accountability in public institutions (Hunja, 2003). Procurement reforms in Africa have to some extent brought modernity, transparency, competition, as well as fairness in the procurement process.

In SSA, Mphela (2008) established that even with E procurement, the procurement deficiencies have persisted in many countries and became worse in other countries. Implicitly, improvements in public procurement systems in developing countries could have a direct and beneficial effect on the overall economic situation of the countries. Evaluating the benefits developing countries could derive from well structured procurement systems necessitated intervention programs from the World Bank and other regional institutions like the African Development Bank (AfDB) to assist developing countries to review and revise their procurement structures and systems (Wittig, 1999).

Before the introduction of Public Procurement and Disposal Act (1997), the government of Uganda through the Financial Regulations of 1964, gave the Ministry of finance the overall responsibility of regulating the procurement of goods, works and services (Bigirwa, 2010). Further, the Ministry of finance communicated all procurement issues to government department through circulars.

Later the government realized that this procurement system had several deficiencies that contributed to huge losses in public funds. The procurement system was noted to lack transparency, accountability and fair competition. In the health sector, Mwenda (2013) noted that e-procurement has brought more efficiencies in the health sector than it has brought efficiencies. The scholar believed that the deficiencies have led to shortages of essential drugs like anti malarials which have led to increased mortality especially of the children and mothers in the rural areas of Uganda. It was against this background that the study was out to investigate the impact of e-procurement in planning the occurrence of these deficiencies with the Ministry Of Health as a case study.

Ward and Peppard (2003) indicate that irrespective of the level of development a country may be at, 60% of Information Technology application in procurement initiatives and projects do not deliver the expected benefits. On the African continent, Mphela (2008) stated that even with e procurement in Sub Saharan Africa, procurement deficiencies have persisted in some countries and even became worse in other African countries.

In Uganda’s health sector, Mwenda (2013) stated that e procurementisknown to bring about efficiencies in the procurement through improved transparency and reduced order and service delivery time. Despite the fact that the ministry uses e-procurement in her transactions with suppliers, operational deficiencies in the health sector have persisted and there has been limited academic literature on the effect of e procurement on government procurement deficiencies especially in Uganda. This is evidenced by the persistent shortages of essential drugs like anti malarials which have led to increased mortality especially of the children and mothers in the rural areas of Uganda.

The purpose of this study was to assess the effect of e procurement on operationalefficiency.

To study the effect of e-procurement on operational efficiency of Ministry of Health.
To establish the forms of e procurement used at the Ministry of Health.
To find out the challenges faced with implementing e procurement of Ministry of health.

How may e-procurement affect public sector operational efficiency at Ministry of Health?
What are the various forms of e-procurement at Ministry of Health?
What challenges face e-procurement use at Ministry of Health?

The study’s main points of reference were the effects of e-procurement on MOH operational efficiency, the forms of e procurement in the health sector and the challenges faced in adopting e procurement.

The study was carried out at the MOH. The organization is located at Plot 6 Lourdel Rd, Nakasero.

The study was carried out between March 2014 and August 2014. This period was selected basing on the fact that there is a need to adjust the proposal as specified by the supervisor and the need to fully meet the respondents for meaningful results.

The study will be of great importance to the government especially in the design of policies to wipe out a significant number of challenges faced by the health sector in adopting e procurement strategies.
The study will be of use to the student especially in broadening his knowledge on the procurement deficiencies that arise out of the use of e procurement in the health sector.
The study is a requirement for the award of the award of bachelor of procurement and logistics management of Kyambogo University.
To the policy makers, the relationship between the dependent and independent variables had received less academic lit erature and hence incomplete and ineffective policies. The results will thus provide stronger policy options for improved performance of the employees.

E-procurement is the business-to-business or business-to-customer or business-to-government purchase and sale of supplies, works and services through the internet and as well as other information and networking systems such as electronic data interchange (EDI) and enterprise resource planning (ERP) (Baily, 2008).

According to Coellie et el, (2005), operational efficiency can be defined as the ratio between the inputs gained from the business.

When improving operational efficiency, the output to input ratio improves.

This chapter presents a review of the existing literature on the effects of e-procurement on operational efficiency, the other factors affecting operational efficiency and the challenges faced in implementing e-procurement.

2.1 Definition of key variables

Information and communication technologies are changing the way organizations do business, particularly the adoption of e-business and e-commerce. The scope of e-business includes information exchange, commercial transactions and knowledge sharing between organizations (Croom, 2005), whereas e-commerce focuses only on commercial transactions (Cullen and Webster, 2007). Some of the technologies associated with e-commerce include websites, e-mail, extranets, intranets and electronic data interchange (EDI) (Mclvor and Humphreys, 2004).

Definitions of e-procurement vary across literature in the field. E-procurement has been defined as the use of information technologies to facilitate B2B purchase transactions for materials and services (Wu et al., 2007). Different forms of technology are appropriate for different procurement activities; six forms of e-procurement have been classified (de Boer et al., 2002), including e-ordering/e-Maintenance Repair Operate (MRO), web-based enterprise resource planning (ERP), e-sourcing, e-tendering, e-reverse auctioning/e-auctioning and e-informing.

E-procurement is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning (Baily, 2008).

Other writers have classified e-procurement into three broad types transaction management to manage the requisition to payment process, brokerage such as using electronic exchanges and e-auctions, and electronic integration which may involve shared information systems in the supply chain, such as EDI or sharing computer aided design systems (Chopra et al., 2001a; Kalakota, 2000). Integration of information across firms within supply chains is a requirement for efficient, responsive operations (Mabert et al., 2003); integrated information has been described as the glue that holds supply chains together. Having considered how e-procurement has been defined and described, the next section goes on to consider current use of e-procurement.

According to Coelli et al., (2005), operational efficiency can be defined as the ratio between the input to run a business operation and the output gained from the business. When improving operational efficiency, the output to input ratio improves.

Several financial ratios allow business leaders to analyze their operational efficiency. The basic efficiency ratio is operating expenses divided by revenues, with a lower result indicating a greater level of efficiency. This ratio can be applied to a business as a whole, or an individual area of operations if revenue and costs can be restricted to that department. Other ratios for measuring operational efficiency include the turnover ratio for inventory and the ratio of accounts payable to sales.

Understanding operational efficiency levels is only the first step toward maximizing efficiency within a business. Owners and managers must analyze the results of these calculations and identify patterns over time or areas in which greater efficiency is possible. For example, if revenue increases at a steady rate but costs also rise, the efficiency ratio may decline from year to year, indicating a need to keep costs under control. In other cases, business leaders create theoretical models based on how much it should cost to operate and how much revenue a given level of operation should produce. Comparing these theoretical models to actual efficiency ratios reveals the extent of inefficiencies.

Business owners and managers use a number of tools to calculate the maximization of operational efficiency. While the simplest part of the process involves comparing basic ratios, other analysis requires software tools that synthesize business data and compare it to industry benchmarks or past performance. Some businesses also hire operational efficiency consultants who identify areas of inefficiency. Consultants also suggest plans for eliminating inefficiencies and project maximum efficiency for planning and benchmarking.

E-procurement has been a common theme of many organizations for the promotion of transparency and good governance in procurement for many developed and developing nations. Some of the early adopters began implementing e-procurement / e-tendering systems 20 years ago before the Internet and Web services became a primary medium for the exchange and dissemination of information (Andersen, 2001).

E-procurement systems have also allowed governments to apply standard procurement processes across institutions, using appropriate monitoring and management controls to delegate more responsibility to the individual procuring entities (Kaufmann et al., 2004). The proper implementations of standard processes and controls has improved the work efficiency within procuring entities and reduced procurement times by providing users with electronic tools and environments to support their tasks.

Government agencies have learned that an e-procurement system on its own is not a guarantee for success regardless of how advanced or technically sound the e-procurement system may be. Success of the system is not measured by the physical implementation of the system alone, but must also consider the procurement conducted on the system (Timothy et al., 2005). And, success of procurement is more dependent on the regulations and policies governing the procurement process, the content of the procurement notice, and the associated bidding documents and participation of the supplier community.

The potentials of e-Procurement have already been proven in a number of studies (Aberdeen, 2001; Eyholzer and Hunziker, 2000; Andersen, 2001). According to these studies, e-Procurement enables companies to decentralize operational procurement processes and centralize strategic procurement processes as a result of the higher supply chain transparency provided by e-Procurement systems. Typically, a company’s procurement function is subdivided into strategic and operational processes since activities and priorities in these two areas are entirely different (Kaufmann et al., 2004).

Supplier management, the pooling of purchase requisitions and procurement-oriented product development are tasks which are typically assigned to strategic procurement. Prior to e-Procurement, strategic procurement often had to deal with administrative routine work as well, such as individual transactions, converting purchase requests into purchase orders or ensuring the correct allocation of invoices received (Gebauer, & Shaw, 2004).

Strategic aspects are frequently neglected in the process, with the buyer having little influence over the choice of suppliers and the purchased products. The use of Internet technologies in procurement is aimed at realizing faster and more efficient operational procurement processes which bypass the purchasing department and enable those people to concentrate on more strategic tasks (Giunipero and Sawchuk, 2000). In e-Procurement, requesters directly search for and select products in electronic catalogs which are authorized and negotiated by strategic procurement in advance.

Electronic procurement (EP) can be defined as using Internet technology in the purchasing process. It is important to note that this definition is narrow in the sense that it excludes old applications like ordering by telephone or by fax. On the other hand, this definition is relatively wide, because it not only encompasses the use of Internet applications in the purchasing process, but it also includes the use of intranet and extranet applications. For example, using this definition ordering office supplies by using a supplier catalog on a website is a form of EP.

E-ordering as well as web-based ERP is the process of creating and approving purchasing requisitions, placing purchase orders as well as receiving goods and services ordered, by using a software system based on Internet technology. In the case of e-ordering the goods and services ordered are indirect goods and services (i.e., non-product related goods and services). The supporting software system (an ordering catalog system) is usually used by all employees of an organization.

In the case of web-based ERP the goods and services ordered are product-related. These are called direct goods and services. Usually only the employees of the purchasing department (or the planning department) are using the supporting software system (a web-based ERP-system (Enterprise Resource Planning)). It may be clear that ordering of indirect goods and services usually takes place on an ad hoc basis, whereas ordering of direct goods and services usually is plan-based.

E-sourcing is the process of identifying new suppliers for a specific spend category, using Internet technology (usually the Internet itself). By identifying new suppliers a purchaser can increase the competitiveness in the tactical purchasing process for this spend category. E-sourcing is a way of decreasing the supply risk associated with this spend category (Kraljic, 1983).

E-tendering is the process of sending RFI’s and RFP’s to suppliers and receiving the responses of suppliers back, using Internet technology. Usually e-tendering is supported by an e-tendering system. Often the e-tendering system also supports the analysis and assessment of responses. E-tendering does not include closing the deal with a supplier. As a matter of fact, e-tendering smoothens a large part of the tactical purchasing process (Van Weele, 1988), without focusing on the content (i.e. spend category) of that process.

In practice an auction enables a supplier to sell (surplus) goods and services to a number of buying organizations. During a relatively short time frame the buying organizations involved submit bids for the goods and services that are auctioned. The auction operates with an upward price mechanism or a downward price mechanism.

A reversed auction is the opposite: it enables a buying organization to buy goods and services needed from a number of (known of unknown) suppliers. E-reverse auctioning is the Internet technology based equivalent of reverse auction. Usually e-reverse auctioning focuses on the price of the goods and services auctioned. In most cases, other criteria are neglected during the e-reverse auction. Of course, other criteria can be used in a previous phase in order to determine which suppliers should be invited to join the e-reverse auction. E-reverse auctioning does really close a deal between a buying organization and a supplier, if parties agree on the price.

Unlike the previous forms, e-informing is a form of EP that is not directly associated with a phase in the purchasing process like contracting or ordering. E-informing is the process of gathering and distributing purchasing information both from and to internal and external parties, using Internet technology. For example, publishing purchasing management information on an extranet that can be accessed by internal clients and suppliers is a way of e-informing. This form is also called purchasing intelligence or spend control.

Organizations, in implementing e-procurement encounter problems related to lack of perceived benefits of e-procurement by many stakeholders who participate in the transactions. This is due to lack of enough skills in ICT (Information and Communication Technology) which in turn make reluctance in going for this modern way of procurement despite the fact that some of the activities like advertisement of tendering is currently done through internet.

User acceptance of new information system has a critical and profound impact on the overall usage and success of the system’s adoption (Venkatesh et al., 2003). Al-Ghatani and King (1999) suggested that system usage is an obvious defined measure and better indicator of information technology acceptance. According to Davis (1993), user acceptance is often the pivotal factor determining the success or failure of information system. In similar vein, Pikkarainen, Karjaluoto & Pahnila (2004) contended that user acceptance and usage of a system defines the effectiveness or ineffectiveness of the system. Understanding the factors that influence user acceptance of information technology is undoubtedly of interest to both scholars and researchers in a variety of fields as well as procurers of technology for large organizations.

Organizations also face problems related to lack of trust and security problems due to cyber-crime via the internet many stakeholders in procurement transaction including the government. piracy and presence of fake suppliers make some stakeholders not to have much trust with the use of internet as they calculate much risks from cyber-crime.E-Procurement success is closely related to early supplier involvement. It is important to demonstrate the proposed solution to the suppliers and discuss any necessary changes, issues, and concerns such as various options in developing and maintaining supplier catalogues (Birks et al., 2001).

There is also a problem of reluctance of suppliers as a matter of fact that not all suppliers will have the positive response in terms of complying effectively into the new IT system of e-procurement. Suppliers should be educated on the e-Procurement benefits that can be provided to them through a process of consultation as early as possible in the project. The degree to which the success of an e-Procurement initiative can be realized may well be related to the level of e-readiness of suppliers, and appropriate communication with suppliers is therefore important (AOT, 2003).

The organizations also face difficulties in integrating Information System. This comes in due to the fact that the integration will need many resources when training people involved in the process, set up costs,running costs etc.

Training of staff in procurement practices and the use of e-Procurement tools are critical to the success of an e-Procurement initiative (WB, 2003). The staffs of an organization need to acquire the necessary skills that can enable them to operate effectively and efficiently while using the new e-procurement system. If staff is not adequately trained, they may not be able to own the e-procurement system and this may contribute to failure. The success of e-Procurement initiative depends on users and buyers making use of the new process and system.

The solution must attract end users to view e-Procurement as the preferred means by which to purchase goods and services (KPMG, 2001). The success of e-procurement also depends on communication to the users (Birks et al, 2001). The organization adopting an e-procurement system must be able to communicate this information to the users. Distorted communication of information may lead to failure of the system. The World Bank (2003) suggests that developing an e-Procurement system in an open environment allows it to link to other systems for interoperability and simplifies upgrading the system.

This chapter presents the research design, investigative procedures, sampling methods, sampling design, data sources, and instruments of data collection, study variables, and limitations of the study:

The study was carried out at the ministry of Health. The headquarters of the back are located at Plot 2/4, Nakasero road Kampala.

The study population was the employees and the administrators of the ministry.

A number of respondents were selected to represent the total population to be investigated; it consisted of top managers, middle managers, employees at the ministry.The study involved the use of a total of 50 respondents at ministry headquarters.

Simple random sampling was used as a sample method. By using this, members of the organization were chosen randomly due to bureaucracy of the organization and the fact that there is a need for assigning an equal chance of selection into the sample.

There were two sources of data to be used that is to say primary source and secondary source. The primary information was got from raw data while secondary information was got from existing literature sources.

This required the researcher to obtain data from respondents such as supervisors, employees, for the information needed from the ministry; it provided data that was obtained from the use of questionnaires which were given to the respondents.

Under this method data was collected from secondary sources such as already written reports, libraries, electronic media, magazines, and research journals for the researcher to acquire the data needed.

The researcher used both questionnaires and interview guides to seek information from the various respondents.

The questionnaires were written on papers, they were both structured and unstructured, and they contained open-ended and close ended questions. Close ended questions were asked to give straight forward opinions whereas open ended questions helped the researcher to seek detailed answers from the respondents.

In order to complement the data collected by means of the questionnaire, the study used an interview guide to collect all the other information. This was issued to the administrators of the ministry.

Content validity was tested by subjecting the tool to a number of experts to determine the relevancy of the content in relation to the variables. A score of 0.6 or above was considered good or acceptable.

Reliability is the degree to which the tool provides stable and consistent results. The reliability of the data collection instrument was ensured through testing the tool on a sample of employees in other areas to check out whether its contents would be understood by the respondents. In the study, a reliability coefficient of 0.7 meant that the tools have questions easy to answer and thus was used.

The researcher presented himself to the respondent; introduce herself assuring the respondent of guaranteed confidentiality about the data provided, present a letter from the university to (endorsed by the Permanent secretary) to further prove the academic intent of the proposed study and then ask for the respondent’s consent.

In the event that the respondent accepts to be part of the sample, the researcher then presented the respondent with the questionnaires for filling. The researcher then held interviews with the organization’s top management about the aspects under the study.

This called for deep interpretation of the data that would collected from the field and it dealt with the result of both qualitative and quantitative data and was presented inform of tables, percentages, and frequencies.

The researcher faced challenges of non response due to business confidentiality and some officers were too busy thus fail to allocate sufficient time to the researcher. The researcher had to explain to every respondent the purpose of the study to overcome this challenge.
The researcher faced a problem of exaggeration or underplay of events by the respondents. However, this was solved by making check backs where necessary.
The respondents also delayed to give the required information. To solve this problem, the researcher exhibited patience and persistence in data collection hence was in position to obtain all the required information.
The research process faced a problem of finance constraints due to the fact that the process involves costs such as printing, internet and transport. With proper budgetary allocations however, the researcher was in position to minimize such costs.

This chapter presents the data and interprets the findings made from the data in reference to the study objectives and as answers to the research questions in the first chapter of this report.

The demographic characteristics of the respondents include the age of the respondents, the gender, the marital status and the education level as indicated in the descriptive statistics below.

Table 1 the age of the respondents

Age bracket of the respondent	Number of respondents	Percentage
Less than 25 years	3	6
Between 25 and 30 years	10	20
Between 30 and 35 years	15	30
Over 35 years	22	44
Total	50	100

Source: Primary data

Table 4.1 above shows that of the interviewed respondents, 44 percent were over 35 years of age. This is explained by the fact that the study desired collecting the required information from the well informed respondents who were mainly those above 35 years of age. The study results are backed by the fact that those above 35 years of age had complete information and were more experienced in the field of electronic procurement and performance of the Ministry of Health.

Figure 1 the gender of the respondents

Source: Primary data

The figure in 4.1 above shows that a majority (74%) of the interviewed respondents were male. This is explained by the fact that the study intended to extract information from informed individuals on the effects of e-procurement on organizational performance. Basing on the observation, the non response rates were very high with female respondents and this implied that in order to solve the non response problem, there was a need for replacing them with those respondents willing to provide the required information on the subject under study.

Figure 2 the respondents’ marital status

Source: Primary data

The pie chart above shows that a majority (56%) of the respondents were married. This implies that the right sample was selected with regards to better information on the aspects under study.

The study results especially on the marital status show some resemblance with the age of the respondents. The study results showed that since there were more respondents above the age of 30 years, there was enough evidence to support the claim that the higher the age of the respondents, the higher the possibility that they were married. The effects of marital status with regard to the validity of the information provided with respect to information on the effects of e-procurement on performance of the Ministry of Health were however not investigated.

Figure 3 the respondents’ education levels

Source: Primary data

The study results in figure 4.3 above show that a 74% of the respondents were bachelors’ degree holders while 16% were diploma holders and 10% were certificate holders. The pie chart shows that the ministry employed more of the degree holders and these were thought to contribute a lot to the information base on the study variables and hence present the professionalism required when answering the study objectives. The study results indicate that education levels bring about the professionalism required for improving the understanding of the respondents of the phenomenon under study.

Table 2 respondents’ designation

Designation of respondent	No. of respondents	Percentage
Dept head	5	10
Supervisor	17	34
Other staff	28	56
Total	50	100

Source: primary data

Table 4.2 above shows that of the interviewed respondents, a majority (56%) was other employees. This is because of the fact that the study employed probability proportional to size sampling in the selection of the respondents. The study results indicated that the other staff comprised of a bigger number compared to the respondents from the other designation brackets. The study results indicated that the department heads were five due to the fact that the ministry employs decentralized procurement in her overall procurement strategy.

E-procurement has several effects on the operational efficiency of government departments. The table below summarizes the effects of electronic procurement at the ministry of health.

Table 3 Effects of e-procurement

	SA	A	U	D	Total
Reduces the order and service delivery time	43 (86%)	4 (16%)	2 (4%)	1 (2%)	50
Reduces the costs incurred in the procurement process	46 (92%)	3 (6%)	1 (2%)	0	50
Cases of fraud are reduced with e-procurement	41 (82%)	5 (10%)	3 (6%)	1 (2%)	50
Better quality products are purchased	44 (88%)	3 (6%)	3 (6%)	0	50
Reduces errors made by employees	45 (90%)	3 (6%)	2 (4%)	0	50

Source: Primary data

Table 3 above shows that of the responses, 86 percent were related to strongly agreeing with the fact that e-procurement reduces the order and service delivery time, 16 percent agreed with the validity of the proposition while 4 percent were not sure.

The table also showed that of the responses, 92 percent were related to strongly agreeing with the fact that e-procurement reduces operational costs, 6 percent believed that the proposition was valid while 2 percent were not sure.

Third, of the responses, 82 percent were related to strongly agreeing with the fact that the Cases of fraud are reduced with e-procurement, 10 percent agreed with the validity of the proposition, 6 percent were not sure and the rest were in disagreement with the statement’s validity.

Forth, of the responses, 88 percent were related to strongly agreeing with the fact that the e-procurement leads to better quality purchases, 6 percent were also in agreement with the proposition while 6 percent were not sure.

Lastly but not least, of the responses, 90 percent were related to strongly agreeing with the fact that e-procurement reduces errors made by employees, 6 percent agreed with the proposition while 4 percent were not sure.

Operational efficiency may be defined as maximizing production while minimizing costs. With improved quality as well as reduced losses in time and finance, there is enough evidence to support the claim that e-procurement improves operational efficiency.

There are several forms of e-procurement used by the ministry of health. These are summarized as in the table 4.5 below using a Likert scale of measurement.

Table 4 Forms of e-procurement

	SA	A	U	D	Total
E-ordering is often used by MOH	42 (84%)	6 (12%)	2 (4%)	0	50
The ministry uses E-sourcing to improve her operations	40 (80%)	8 (16%)	2 (4%)	0	50
MOH uses E-tendering in contract awards	41 (82%)	6 (12%)	1 (2%)	1 (2%)	50
The ministry also uses E-reverse auctioning as a mode of e-procurement in her operations	32 (64%)	17 (34%)	1 (2%)	0	50

Source: Primary data

Table 4above shows that of the responses, 84 percent were related to strongly agreeing with the fact that the Ministry uses e-ordering in her procurement operations, 12 percent agreed with the proposition’s validity and the rest were not sure of the validity of the proposition.

The table also shows that 80% of the respondents were in agreement with the proposition that the ministry used e-sourcing in her procurement, 16 percent agreed with the proposition’s validity and the rest were not sure of the validity of the proposition.

The table also shows that 82% of the respondents were in agreement with the proposition that MOH uses e-tendering in contract awards, 12 percent agreed with the proposition’s validity and the rest were not sure of the validity of the proposition.

The table also shows that 64% of the respondents were in agreement with the proposition that ministry of Health uses e-reverse auction as a mode of e-procurement in her operations, 34 percent agreed with the proposition’s validity and the rest were not sure of the validity of the proposition.

There are several forms of e-procurement that are used by government agencies and ministries in general. These include e-ordering, e-tendering, e-sourcing and e-reverse auction in that pecking order. The study results indicated that the different forms have different effects of overall operational efficiency of MOH.

There are several challenges that are encountered in implementing e-procurement in public institutions. These challenges are presented as in the table below.

Table 5 Challenges in implementing e-procurement

	SA	A	U	D	SD	Total
Inability to integrate with existing ERP and Procurement systems	43 (80%)	6 (12%)	1 (4%)	0	0	50
The inability to on-board and support suppliers (in large numbers).	42 (84%)	3 (6%)	2 (4%)	2 (4%)	1 (2%)	50
The complex and unintuitive user interface.	40 (80%)	5 (10%)	3 (6%)	2 (4%)	0	50
It is important to consider solutions that have standardized integration adapters	41 (82%)	7 (14%)	2 (4%)	0	0	50
Leveraging a business network i.e. a centralized “hub” to connect buyers and suppliers	38 (76%)	7 (14%)	3 (6%)	1 (2%)	1 (2%)	50

Source: Primary data

Table 4.6 above shows that of the responses, 80% were related to strongly agreeing with the fact that the main challenges facing e-procurement arise from the inability to integrate with existing ERP and Procurement systems, 12% agreed with the proposition’s validity and the rest were not sure.

Secondly, 84% of the respondents were in agreement with the proposition that the other challenge arises from the inability to on-board and support suppliers (in large numbers), 6 percent agreed with this statement, 4% were not sure and the rest disagreed.

Third, 80% of the respondents were in agreement the proposition that the complex and unintuitive user interface is another challenge facing e-procurement implementation, 10% agreed with the proposition’s validity, 6% were not sure of the statement’s validity while the rest disagreed with the proposition.

Forth, the study established that 82% of the respondents were in agreement the proposition that considering solutions that have standardized integration adapters could be fundamental in wiping out these challenges, 14% agreed with this as a key solution and the rest were not sure of whether it could make any impact.

The table also shows that 76% of the respondents were in agreement with the proposition that leveraging business networks is fundamental in eradicating the challenges faced in using e-procurement, 14% agreed with the statement’s validity, 6% were not sure and the rest disagreed with the proposition’s validity.

From the table above, there is enough evidence to support the claim that the failure by the ministry of Health to support suppliers has been a critical aspect in realizing the effects of e-procurement. However, standardizing the procurement process could help nullify these challenges.

This chapter presents a summary of the findings, the main conclusions that could be drawn as well as the recommendations for the study and for the future studies as drawn from the study objectives.

The study’s first objective entailed establishing the effects of e-procurement on operational efficiency of the ministry of health. The results indicated that e-procurement reduces the costs incurred in the procurement process and also reduces errors made by employees.

Operational efficiency can be defined as the ratio between the input to run a business operation and the output gained from the business. Inputs would typically be money (cost), people (headcount) or time/effort. In line with the literature review, Kaufmann et al., (2004) stated that cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. A reduction in costs with e-procurement would be a necessary but not sufficient condition for improved operational efficiency. According to Coelli, Prasada, O’Donnell & Battese (2005), a reduction in errors made by the employees is a sufficient condition with regard to the effect of e-procurement on operational efficiency. Since the findings are consistent with the literature review, there is enough evidence to support the claim that e-procurement improved operational efficiency.

Secondly, the study was out to investigate the various forms of e-procurement used by the ministry of health. With this objective, the study results indicated that the main forms of e-procurement used by the ministry are E-ordering and E-tendering. E-tendering is an internet based process wherein the complete tendering process; from advertising to receiving and submitting tender-related information are done online. According to the review in the second chapter of this report, Wu, F., Zsidisin, G.A. and Ross, A.D. (2007) stated that this enables firms to be more efficient as paper-based transactions are reduced or eliminated, facilitating for a more speedy exchange of information. Wisner & Keah Choon Tan (2000) also state that with E-ordering, the customers visiting a organization’s website to order and, in many cases, actually pay for products and services over the Internet. At this ministry, it is the pharmaceutical dealers.

The study’s third objective entailed establishing the challenges faced in implementing e-procurement and solutions. With this objective, the study results indicated that there is the inability to on-board and support suppliers (in large numbers) at the ministry. There is one thing businesses are prone to neglect: supplier management. The natural focus of companies is on fostering customer loyalty but that’s not the only relationship you should be nurturing. This is in line with Wisner & Choon Tan (2000) who stated that neglecting the supplier involvement and development affects e-procurement effectiveness.

5.3 Summary of findings

Operational efficiency can be defined as the ratio between the input to run a business operation and the output gained from the business.Inputs would typically be money (cost), people (headcount) or time/effort.Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. A reduction in costs with e-procurement would be a necessary but not sufficient condition for improved operational efficiency. According to Coelli, Prasada, O’Donnell & Battese (2005), a reduction in errors made by the employees is a sufficient condition with regard to the effect of e-procurement on operational efficiency.

Secondly, the study was out to investigate the various forms of e-procurement used by the ministry of health. With this objective, the study results indicated that the main forms of e-procurement used by the ministry are E-ordering and E-tendering. E-tendering is an internet based process wherein the complete tendering process; from advertising to receiving and submitting tender-related information are done online. This enables firms to be more efficient as paper-based transactions are reduced or eliminated, facilitating for a more speedy exchange of information. With E-ordering, the customers visiting aorganization’s website to order and, in many cases, actually pay for products and services over the Internet. At this ministry, it is the pharmaceutical dealers.

E-procurement improves cost efficiency

The e-procurement does not intrinsically reduce purchase costs. However, e-procurement empowers the organisation to achieve this goal in the following ways:

By introducing a system that people can use easily and are happy to use, it is possible to ensure that everyone in the organisation adheres to preferred supplier rules and therefore increases the buying power of the organisation with its chosen suppliers.
When transacting with a supplier electronically, suppliers are more likely to give discounts, because their own administration costs are less.
By reducing council ‘maverick buying’ suppliers become more committed to their agreements as there is more assurance of obtaining a greater share of the ministry spend.

The forms of e-procurement

The study results indicated that there are three mainly used forms of e procurement and the benefits include the following

Suppliers benefit from a fair and open tendering process.
Buyers (i.e. public sector bodies) have access to a bigger pool of potential suppliers which enables them to exploit economies of scale and expertise built up by such suppliers across the continent.
Competition is enhanced, which can lead to more competitive prices for contracts.
E-tendering saves time and money for suppliers and buyers.
E-tendering facilitates prompt completion of contracts.
E-tendering enhances security and confidentiality.

The e-ordering options that offers can save the organization a great deal of time in the order process: clients just submit their orders using one of the above methods. The e-ordering process also saves time for the sales team: the less time we need to spend manually inputting orders, the more time the organization has available to respond to the clients’ personal wants, needs and wishes.

The study established that the main challenge facing the implementation of e-procurement is the lack of institutional support of the suppliers. The study showed that aspects such as buyer supplier relationships are not given ultimate attention, supplier development is loose and that the avenues for supplier selection are not transparent. The study recommends that;

There is a need to implement online dashboards for monitoring spend metrics / procurement performance. Organizations that have instituted more tools to assist in the visibility of the ministry’s spend through online dashboards may have an advantage of identifying trends and look to this information more frequently.

There is a need to improve spend compliance with contract management. Contract compliance continues to be a differentiating technology that assists in identifying the most important supplier relationships based on usage customer catalogs and for optimizing procurement.

There is a need to establish workflow on mobile devices in e-Procurement systems. Leveraging more advanced functionality of e-Procurement systems for workflow using mobile devices and smart phones will increase access to users on the go. And given their increasing prevalence in business, mobile devices also provide the opportunity to enhance the cost efficiency of complex workflows by shortening the execution time.

The ministry needs to outsource select technology components. To take it to the next level of cost savings and efficiency, Best-in-Class organizations may also be considering ways to expand their initiatives by focusing on outsourcing technology components not considered to be a “core competency” within the procurement organization.

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Statement

Reduces the order and service delivery time

Reduces the costs incurred in the procurement process

Cases of fraud are reduced with e-procurement

Better quality products are purchased

Reduces errors made by employees

Dear respondent,

I am a third year student of BPLM at Kyambogo University. As part of the above award, I carry out a study on THEEFFECT OF e-PROCUREMENT ON OPERATIONAL EFFICIENCY AT THE MINISTRY OF HEALTH. The study will be strictly academic and utmost confidentiality will be guaranteed.

Section one: Demographic characteristics

Age of respondent

Less than 25 years
Between 25 and 35 years
Between 35 and 45 years
More than 45 years

Gender of respondent

Male
Female

Marital status of respondent

Single
Married
Widowed
Divorced

Education levels of respondent

Certificate
Diploma
Degree
Other Tertiary

Designation of respondent

Dep’t head
Supervisor
Other employee
Others (specify)…………………………………..

Section two: the effects of e-procurement on operational efficiency

The following are some of the effects of e-procurement on operational efficiency. Please indicate by ticking in the boxes that form the table below. Note: SA stands for strongly agree, A stands for agree, N stands for not sure, D stands for disagree and SD for strongly disagree.

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

Please state the role of e-procurement operational efficiency relationship with respect to the effectiveness in services delivery.

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Section three: forms of e-procurement

The following are some of the other forms of e-procurement. Please indicate by ticking in the boxes that form the table below. Note: SA stands for strongly agree, A stands for agree, N stands for not sure, D stands for disagree and SD for strongly disagree.

No.	Statement	SA	A	N	D	SD
1	E-ordering is often used by MOH
2	The ministry uses E-sourcing to improve her operations
3	MOH uses E-tendering in contract awards
4	The ministry also uses E-reverse auctioning as a mode of e-procurement in her operations

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

Is there a difference in the effects of the forms of e-procurement on operational efficiency? If yes, please provide a write up of this

Section four: challenges and solutions to implementing e-procurement

The following are some of the challenges and solutions to implementing e-procurement. Please indicate by ticking in the boxes that form the table below. Note: SA stands for strongly agree, A stands for agree, N stands for not sure, D stands for disagree and SD for strongly disagree.

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

What can be done to improve the effectiveness of the e-procurement at MOH?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..