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THE EFFECTS OF E-PROCUREMENT ON OPERATIONAL EFFICIENCY

A CASE STUDY OF NATIONAL MEDICAL STORES

ACKNOWLEDGEMENT

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 Ms. NakatetePhionahfor 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 National Medical Stores 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 3

1.3 Research Objectives 3

1.3.1 General Objective 3

1.3.2 Specific Objectives 4

1.5 Research questions 4

1.6 Scope of the study 4

1.6.1 Content scope 4

1.6.2 Geographical scope 4

1.6.3 Time scope 4

1.7 Significance of the statement 4

1.9 Definition of terms 5

CHAPTER TWO 6

LITERATURE REVIEW 6

2.0 Introduction 6

2.1 Overview of Key Concepts in the study 6

2.1.1 E-procurement 6

2.1.2 Operational efficiency 7

2.2 Components of e-procurement 8

2.2 Reasons, Benefits and challenges for using E-Procurement 12

2.2.1 Reasons for using E-Procurement 12

2.2.2 Benefits of using E-Procurement 13

2.2.3 Challenges Faced by Organisations that employ E-Procurement 16

2.3 Other factors affecting operational efficiency 17

2.4 Conclusion 21

CHAPTER THREE 22

METHODOLOGY 22

3.0 Introduction 22

3.1 Research design 22

3.2 Study Area 22

3.3 Study population 22

3.4 Sample size 22

3.5 Sampling method 23

3.6 Data collection methods and instruments 23

3.7 Data collection procedure 24

3.8 Validity and reliability of research instruments 24

3.8.1 Validity 25

3.8.2 Reliability 25

3.9 Data analysis 25

3.10 Data Presentation 25

3.10 Limitations of the Study 25

CHAPTER FOUR 27

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 27

4.0 Introduction 27

4.1 Background information of the respondents 27

4.2 Analysis on objective one: components of e-procurement used in an organization 30

4.3 Analysis on Objective two: the reasons, benefits and challenges of using e-procurement 33

4.4 Other factors affecting operational efficiency 37

CHAPTER FIVE 40

DISCUSSION, SUMMARY, CONCLUSION AND RECOMMENDATION 40

5.0 Introduction 40

5.1 Discussion of major findings 40

5.1.1 Components of e-procurement used in an organization 40

5.1.2 The reasons, benefits and challenges of using e-procurement 41

5.1.3 Other factors that affect operational efficiency 43

5.2 Summary 44

5.2.1 Components of e-procurement used in an organization 44

5.2.2 The reasons, benefits and challenges of using e-procurement 44

5.1.3 Other factors that affect operational efficiency 45

5.3 Conclusion 45

5.4 Recommendation 46

5.5 Areas for further research 46

REFERENCES 47

APPENDICES

APPENDIX I: QUESTIONNAIRE FOR RESPONDENTS

APPENDIX II: INTERVIEW GUIDE

LIST OF TABLES

Table 3.1: Showing Sample size

Table 4.1: Department of Respondents

Table 4.2: Showing the application of e-procurement

Table 4.3: Showing how to improve on these components

Table 4.4: How have they tried to minimize the challenges faced?

Table 4.5: How the organization measures operational efficiency

Table 4.6: indicators of operational efficiency in your organization

Table 4.7: Impact of e-procurement on operational efficiency

LIST OF FIGURES

Figure 4.1: Gender of Respondents

Figure 4.2: Age range of Respondents

Figure 4.3: Highest Level of education

Figure 4.4: Period of Work

Fiigure 4.5: Main components of e-procurement in your organization

Figure 4.6: Reasons of using e-procurement

Figure 4.7: Benefits of using e-procurement

Figure 4.8: How e-procurement has enhanced operational efficiency

Figure 4.9: Challenges that organization employ e-procurement face.

Figure 4.10: other factors that affect operational efficiency apart from e-procurement

ABSTRACT

The purpose of the study was to establish the effects of e-procurement on operational efficiency atNational Medical Stores. The research objectives were to investigate the components of e-procurement used in an organization, to examine the reasons, benefits and challenges of using e-procurement and to describe other factors affecting operational efficiency. The significance of the study is to the management of National Medical Stores (strategic and operational plans) in that it would give the milestones towards integrating e-procurement as a strategy for growth and 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 operational efficiency. 

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 stratified and purposive sampling on a population of 100 staff.The researcherexperienced 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 main components of e-procurement used in an organization include catalog content while the minority identified data transmission. Furthermore, the study found out that 33.3% of the respondents were in agreement that the reason behind employing e-procurement was to ensure customer satisfaction while the minority,(8.3%) agreed that it leads to stock reduction. The benefits of using e-procurement include; leads to cost reduction as agreed by the majority, (38.3%) and the least (1.7%) said facilitates real time response to customers. The challenges faced by organizations that employ e-procurement 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. 

In conclusion, based on the findings the organization has several e-procurement components that it employs in its operations despite the fact that it has faced challenges in aligning e-procurement practices in its goals and objectives. E-procurement can reduce quality costs by making sure that the components bought do not lead to complaints on the user department or final product to the customer.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. The researcher also recommended that 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. 

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 and definitions of key terms, based on the effects of e-procurement on operational efficiency.

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).

According to the U.S. Department of Education sciences, (2009), operational efficiency and management is the field concerned with managing and directing the physical and/or technical functions of a firm or organization, particularly those relating to development, production and manufacturing. Operational efficiency management programs typically include instruction in principles of general management, manufacturing and production systems, plant management, equipment maintenance management, production control, industrial labour relations and skilled trade supervision, strategic manufacturing policy, systems analysis, productivity analysis and cost control, and materials planning. Operational Efficiency traditionally relates to the production of goods and/or services separately, although the distinction between these two main types of operations is increasingly difficult to make as manufacturers tend to merge product and service offerings. More generally, operations efficiency management aims to increase the content of value-added activities in any given process. Fundamentally, these value-adding creative activities should be aligned with market opportunity (through marketing) for optimal enterprise performance

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 operational efficiencyas 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 operational efficiency. 

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). 

National Medical Stores (NMS) located along Nsamizi Road, Entebbe, Uganda is an autonomous government Corporation established by the National Medical Stores Statute no. 12 of 1993, which came into effect on 3rd December, 1993. National Medical Stores is responsible is responsible ensuring continuous distribution of Pharmaceutical products in a financially viable and sustainable manner. Supply of Drugs, which involves identification of therapeutic needs, selection of drugs, quantification of requirements, procurement of drugs, distribution and use (.The adoption of e-procurement by National Medical Stores has enabled it to procure and distribute essential medicines and medical supplies to all public health facilities in the country in the most cost-effective manner possible while still ensuring the high quality of its products, service and support. Thus the study soughtto examine the effect of e-procurement on operational efficiency.

1.2Problem statement

With the growing modernity, dynamism and global village, the embracement of electronic procurement has greatly made the business purchasing operation easy and real. Accommodating e-procurement in an organizationhelps to minimize on its ever increasing costs, increases accessibility and transparency, ensures an efficient administration of the procurement process, new supplier discovery and paperless environment. Despite, the fact that many organizations have succeeded in adopting various mechanisms in their operations;they still faces challenges in their operations such as poor employee motivation, ineffective e-procurement practices, poor planning practices, poor communication, bureaucracy,conservativeness of employees, financial constraints, among others (Mafakui, 2015).It was therefore upon this that the researcher sought to examine the effect of e-procurement on operational efficiency.

1.3 Research Objectives

1.3.1 General Objective

The main objective of this study was to establish the effects of e-procurement on operational efficiency.

1.3.2 Specific Objectives

1. To investigate the components of e-procurement used in an organization.
2. To examine the reasons, benefits and challenges of using e-procurement.
3. To describe other factors affecting operational efficiency.

1.5 Research questions

1. What are the components of e-procurement used in an organization?
2. What are the reasons, benefits and challenges of using e-procurement?
3. What other factors affect operational efficiency?

1.6 Scope of the study

1.6.1 Content scope

The study focused on the effects of e-procurement on operational efficiency. It put main emphasis on the components of e-procurement used, the reasons, benefits and challenges of using e-procurementand other factors that affect operational efficiency.

1.6.2 Geographical scope

The research was carried out at National Medical Stores which is located on Plot 4-12, Nsamizi Road, Entebbe – Uganda.

1.6.3 Time scope

The study considered 2014-2016 as theperiod of data to be considered in the organization. The study was carried out for a period of four months from April to August, 2016 and considering 2010-2016 as the period of body of knowledge to review literature.

1.7 Significance of the statement

It is hoped that the findings will be helpful in the following ways;

The findings of the study will be relevant to the management of National Medical Stores (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 service delivery 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 onoperational efficiency.

1.9 Definition of terms

For the purpose of this research, the under – listed terms are defined thus:

e-procurement

Presitti (2002) defined e-procurement as a technology solution that facilitates cooperate buying using internet. It has the power to transform the purchasing process because it pervades all  of the identified by the supply manager.

Operational efficiency 

Operational efficiency is the capability of an enterprise to deliver products or services to its customers in the most cost-effective manner possible while still ensuring the high quality of its products, service and support. 

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter reviews the existing literature put forward by different scholars and personalities on the effects of e-pocuement on opeational efficiency as well as critically analyzing the deviations in the explanations to find out the research gap in the study variables; to investigate the components of e-procurement used in an organization, to examine the reasons, benefits and challenges of using e-procurement and to describe other factors affecting operational efficiency based on secondary sources like text books, internet, newspaper, report at the company, and journals.

2.1 Overview of Key Concepts in the study

2.1.1 E-procurement

Various researchers defined e-procurement differently: Parida and Parida (2005) define e-procurement as a technology solution that facilitates corporate buying using the Internet. Essentially an Internet/Intranet based purchasing application or hosted service that streamlines buying, trading partners, maximizes trade efficiency across the entire supply chain, and provides strategic e-commerce capabilities in Internet time; Process which supports the procurement and sourcing activities via Internet technologies and enables an efficient negotiation between buyers and suppliers (Gimenez and Lourenço 2004); Electronic acquisition of goods and services in a firm (Turban and King 2006); The automation of the procurement processes so that the sourcing, vendor selection, procurement processes, shipment status tracking and payments can be made in an online environment (Bhaskar 2005). 

E-Procurement refers to the use of Internet-based (integrated) information and communication technologies (ICTs) to carry out individual or all stages of the procurement process including search, sourcing, negotiation, ordering, receipt, and post-purchase review (Croom& Brandon, 2004). While 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 morebroadly as an end-to-end solution that integrates and streamlines many procurement processes throughout the organization. 

2.1.2 Operational efficiency

Operational efficiency of organizations is what occurs when the right combination of people, process, and technology come together to enhance the productivity and value of any business operation, while driving down the cost of routine operations to a desired level(Luanne, 2010). The end result is that resources previously needed to manage operational tasks can be redirected to new, high value initiatives that bring additional capabilities tothe organization.  Organizations must examine baseline operational processes that support the business, and then plan, implement, and support the right procedures. Being process-driven means the operations that support business activities become highly efficient. Only with well thought-out business processes in place from the ground up can an organization achieve business agility. In the way companies maintain supplier relationships, keep track of customer data, handle procurement, or manage accounting – the right processes will lead to increasing efficiency of operations while supporting growth, yet be flexible to change. Companies need to find the best way to do what they do. Agile businesses are determined in their efforts to ensure the best people create the best processes, which leverage the best and most relevant technology (Robin, 2010).

Esynch (2009), also adds that operational efficiency 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. Operational efficiency 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. Arjan(2005),brings out the idea that public enterprise can explore the possibilities of taking advantage of different management techniques like cost reduction, cost control, value analysis, inventory control, budgetary control for enhancing operational efficiency of the enterprise and wherever applicable each public enterprise can set up a management service department in the complement of result oriented professionals, charged with the responsibility of suggesting suitable guidelines for operational efficiency. It involves whole companies getting organized in each department, each activity and it must work properly together. For organizations to acquire operational efficiency every single part of it must work properly together because every person and every activity affects and in turn is affected by others. Its in this way that Japanese companies have been so competitive and so successful.

2.2 Components of e-procurement

E-procurement has been able to develop its own body of language and as such regardless of its model, each has similar components that must be properly considered and managed to ensure a successful system. These components include Catalog content, Processes, User maintenance, Establishing buyer/seller relationships, Billing management, Price establishment, Data transmission, and System maintenance (Victoria, 2015).

Catalogue content; at the heart of every e-procurement process lies an electronic catalog. Similar to a traditional mail-order catalog, electronic catalogs contain detailed information on products or services available for sale. Suppliers customize the content to address the specific needs of targeted buyers. This content is manipulated and imported into a database that the e-procurement application integrates into web pages. The management of catalog data can be handled using import and aggregation tools or by outsourcing the task to companies specializing in content management. Content providers generally offer the following services:Convert catalog data into a uniform language and format, Gather and aggregate data from multiple suppliers into one catalog, Publish and maintain the product catalog (Victoria, 2015).Once a catalog is created, various cataloging strategies are used to provide access to the content. Strategies include using a centralized catalog model where the aggregated data is hosted at a central location, a distributed model where data resides at multiple sites, or a content-retrieval method where suppliers present catalog data directly to buyers (Victoria, 2015).

There are three types of catalogues that address various buyer needs: Product catalogs: Contain data on tangible items such as office products, medical supplies, rolls of steel, etc. Service catalogs: Offer professional service “intangibles” such as office maintenance services, temporary personnel services, etc. Commodity-specific catalogs: Offer specific product families or groups such as chemicals, paper, or other raw materials (Victoria, 2015).

According to Zheng (2004), content and catalogue management is the process of suppliers enabling electronic product content to be made available to buying organisations in order for them to procure goods electronically. This product content can be hosted by the buyer or supplier. It must be managed, however, in such a way that the information is reliable and available to facilitate the buyer’s requisitioning process. A successful content and catalogue management solution will ensure that the product data is good quality, and able to be configured and standardized to the buyer’s required format. Catalogues are mostly used for the procurement of frequently replenished indirect goods and services; however, depending on the content within they can also be put to great effect providing purchasing guidelines and frameworks for more infrequent, high value, complicated procurement. 

E-procurement Processes; in addition to creating an electronic catalog, existing procurement processes need to be “electrified” end-to-end to support the entire e-procurement process. This includes requisition and order management, real-time tracking and receiving, online order fulfillment, automatic billing, invoicing and payment, as well as workflow management, commerce transactions, and reporting and analysis tools (Victoria, 2015).

Note that an effective e-procurement platform must support both the buyer’s and the supplier’s business processes. It should also offer functionality that can easily be customized and configured to meet specific e-procurement requirements. In general, a successful e-procurement solution will be founded on an open, component-based model that offers easy configurability and scalability (Victoria, 2015).

User Maintenance; closely related to the two preceding process management components, user maintenance includes defining the individuals authorized to use the e-procurement system, how these users will be enrolled, and how to provide them access to the trading community. This component serves as the foundation for managing the complex buyer-supplier relationships that will occur within the marketplace.User maintenance provides tools that enable the company to control procurement, company master data organizer activities (Mburu, 2011).

E-procurement user maintenance must address two primary tasks:Establish user profiles, access rules, catalog filters, and workflow, allow for unique pricing and contractual relationships between a buyer and supplier.The steps that are vital to successful user management include; creating the buyer organization: Identifying and defining the individual buyers, how they will form buying groups, and how they will access the e-procurement process, creating the supplier organization: Identifying sellers, maintaining company profiles, and creating shipping options and other high-level parameters for supplier activities, e-procurement organization: Aggregating the entire marketplace, including buyer and supplier, to include such things as hours of operation, billing rates, etc.Additionally, user maintenance requires establishing authorization levels and associated procedures to precisely govern buyer and supplier capabilities.Three authorization levels that must be addressed are:Access to the electronic catalog: Defines who may access catalogs and how to do so; creating and editing requisitions: Defines who can create requisitions, who can edit requisitions, and who can edit accounting codes; managing orders: Defines who has access to POs and who has authorization to override shipping or billing information (Victoria, 2015).

Establishing Buyer/Seller Relationships: this component has two phases: managing supplier relationships and managing pricing.Buyers and sellers may be linked based on their previous buying relationship or based on the buyer’s unique needs. Buyers may make purchases based on negotiated contracts or choose the specific commodities they need from customized catalogs. Price lists too may be customized for a buyer or buying group. For example, prices may be established by adding filters that dynamically calculate a price as a markup or discount of the list price. Or groups of buyers may be categorized into classes with filters applied for each group (Victoria, 2015).

Billing Management; e-procurement revenues are generally based on transaction fees. A billing management system will calculate usage charges and generate and distribute statements or invoices to buyer-seller members of the e-procurement network. Suppliers may also use the billing system to calculate ordering charges or to distribute operating costs for specific orders. These functions must directly interface with back office invoicing systems to automatically generate bills (Victoria, 2015).

According to Sababu (2000), billing management involves electronic billing whenever available to expedite processing, billing of all commercial insurances, billing of all public insurance, follow-up on all incorrectly processed, underpaid, and denied claims, monthly statements,customizable reports including comprehensive monthly reportingetc.

Price Establishment; effective pricing enables buyers to negotiate the best possible deals and sellers to liquidate excess inventory. Two major pricing options are used: Dynamic Pricing and Fixed Pricing.Dynamic pricing: Allows buyers and sellers in an Internet market to trade goods and services at prices determined by market forces instead of by a predetermined price list or catalog.

An example of dynamic pricing includes business services such as auctions, reverse auctions, and exchanges.Fixed pricing: Based on a predetermined price list or catalog prices negotiated between a buyer and seller (Victoria, 2015).

Data Transmission; transmitting data over the Internet involves two facets: messaging agents and security. Data and messaging tools enable the Internet-based exchange of transactional data between different buyers andsuppliers in the e-procurement marketplace. To do this, transactions are sent via the Internet as “messages” and then integrated into a supplier’s or buyer’s back-office system, enabling financial postings that coincide with the receipt, payment, and invoicing processes. Data messaging tools are also used to cancel transactions and log failures when messages can’t be delivered within a predefined time period or following a specified number of attempts. The most important aspect of the messaging tool is that it enables real-time communication between buyers and sellers.Coincidentally, security is an important aspect of any Internet transaction. Protecting a buyer’s confidential financial information and ensuringthat only designated buyers have access to supplier product information is critical to ensuring confidence in any e-procurement system (Victoria, 2015).Data transmission involves the movement of data in form of bits between two or more digital devices. This transfer of data takes place via some form of transmission media for example, coaxial cable, fiber optics etc. (Narasimhan, 2001). 

System Management: maintaining an e-procurement system involves configuring and monitoring performance usage, average response time, transaction sources, and traffic patterns. To maximize the benefits and strategic opportunities e-procurement systems offer, this information should be used to analyze growth patterns, session times, and ultimately to fine-tune the system’s performance to fit specific market communities or technical environments.Once an e-procurement system is up and running, it’s important to monitor traffic and system security on a day-to-day basis.Inadequately designed transaction engines can result in poor marketplace performance, lack of scalability, breakdowns in security, and, ultimately, frustrated users (Victoria, 2015).System maintenance is a catchall term used to describe various forms of computer or server maintenance required to keep a computer system running properly. It can describe network maintenance, which could mean that servers are being physically repaired, replaced, or moved. Network maintenance can also mean that the software for a server is being updated, changed, or repaired. This sort of maintenance is typically performed on a regular or semi-regular schedule, often during non-peak usage hours, and keeps servers running smoothly (Wamalwa, 2003).

2.2Reasons, Benefits and challenges for using E-Procurement

2.2.1 Reasons for using E-Procurement

Driven by the increasing trend toward purchasing inputs and other raw materials from outside the organization, implementing electronic procurement (e-procurement) has become a significant tactic in most companies’ e-business strategies (Deloitte Consulting, 2001). Today baseline procurement capabilities are rapidly becoming a cost of doing business. More and more companies are conscious of the needs to introduce Internet-based technologies in their order process, due to the benefits of saving transaction cost, increasing competitive sourcing opportunities, and enhancing inter-organizational coordination. 

Internal customer satisfaction, through E-Procurement function can usually contribute to the competitive position of any company in many other ways than first through cost serving Van Weele (2005) presents a few of these was such as: reduction of quality cost – 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. Product standardization internal customer satisfaction can be enhanced through E-procurement due to the product variety concept. This can be achieved by reducing the number of different components and or the number of suppliers via set product standards. Contribution to product design and innovation of then innovation in industry come from suppliers or are results from intensive interactions between suppliers and user department in any organization. By actively encouraging this kind of interactions E- Procurement can contribute to fast and to continued innovation and improvement of product and user satisfaction. 

Stock reduction, through electronic transaction the sped and real time transaction processes, reduces the amount of stock laying idle in stores and thereby gainful capital employment in other key business proposes or areas. Increasing flexibility E-Procurement necessitates fallibility two edge business flexibility. Service provider companies endeavor to meet their suppliers to be flexible too (Chen, Paulraj and Lado, 2004). Hence if a company wishes to offer flexibility to its customers it might also have to demand it from its suppliers. The EDI and synchronized data system can make it cashier to inform suppliers about charge in demand overtime fostering purchasing synergy. Many companies have a business unit structure where the business units are autonomous. In such a structure the business unit managers are responsible both revenue and cost, hence purchasing is usually done locally through E-Procurement, purchasing officers at the different units can make significant savings by coordination their purchasing with other units (Chen, Paulraj and Lado, 2004). 

2.2.2 Benefits ofusing E-Procurement

Tomplain (2002), reveals that in certain economic time electronic purchasing has emerged as a strategy with staying power. E-Procurement is the internal based automated process of purchasing and sourcing. On line application integrates procurement and business processes and procures to streamline purchasing transaction costs and shorter fulfillment time both for materials used directly and indirectly for goods and services. Companies incorporate to conduct business.

Mburu (2011), argue that electronic buying in e-procurement is faster enough. There is no wasting time on busy telephone lines and chances of making mistakes. Errors are reduced since there is communication in frequently noisy environment, orders can placed any time, and there is no bias broker to push you. You can find a considerable amount  

Mburu (2011), contend that buyers and sellers will be around enough to warrant the financial and personal effort to establish the necessary working relationship. Additionally, all eyes on the option and the future to secure a successful purchasing operation. Electronic buying schemes have revealed sound relations between buyers and suppliers end.

Mburu (2011),put forward that electronic procurement encompasses the entire online process in developing, security delivering, servicing and payment for products and services. The economic model encourages innovation and entrepreneurship hence generating many business and consumers. Electronic buying procedure present a vertical and complex challenge to business and financial institution to develop efficient flexible and secure payment system for online buying.

Kipyegob (2012), emphasize that electronic purchasing when complimented by internet and extranet applications guarantee accessibility to inventory data bases especially of large customers, more over a cooperate employed sales representative help to access customers better decisions to regulate inventory levels are engineered that is, the line of merchandise needs/requirements to be added or disconnected or what kind of investment is needed. This is achieved simply because of electronic procurement feasibility and facilities affected through analysis that is done by internet worked/linked through the electronic data interchange (EDI) Computers.

Organization and procurement stage differ in degree of uniformity, complexity, number of people involved and movement of efforts required to make a good decision. There are basic activities that must be taken to complete a purchase. Buyers have always had to follow some basic steps. Advancements have provided an alternative to an endless time taking purchase stages because formerly processing a purchase order regardless of the value, size and importance of the item in question required on to strictly follow suits.

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 (Kipyego, 2012).

Tomplain (2002), reveal that in certain economic time electronic purchasing as emerged as a strategy with staying power. E-Procurement is the internal based automated process of purchasing and sourcing. On line application integrates procurement and business processes and procures to streamline purchasing transaction costs and shorter fulfillment time both for materials used directly and indirectly for goods and services. Companies incorporate to conduct business.

Tam (2002), stress that Public Trading Exchange (PTE) on electronic market places continues struggling administrative procures and attracting of key suppliers. A public trading exchange is a web based net work point of contact that facilitates internal and external communication through interact and extra-net applications respectively. Normally this communication and collaboration that is to among limited place approved group of member companies in a private electronic market to place this highest essentially with easy accessibility and process integrated within enterprises, companies automatic tactical supply and share supply requirement availabilities  and securities.

Greunen (2010) contend that buyers and sellers will be around enough to warrant the financial and personal effort to establish the necessary working relationship. Additionally, all eyes on the option and the future to secure a successful purchasing operation. Electronic buying schemes have revealed sound relations between buyers and suppliers end. He further put forward that electronic procurement encompasses the entire online process in developing, security delivering, servicing and payment for products and services. The economic model encourages innovation and entrepreneurship hence generating many business and consumers. Electronic buying procedure present a vertical and complex challenge to business and financial institution to develop efficient flexible and secure payment system for online buying.

Whereas Flynn, Huo,and Xhao(2010), emphasize that electronic purchasing when complimented by internet and extranet applications guarantee accessibility to inventory data bases especially of large customers, more over a cooperate employed sales representative help to access customers better decisions to regulate inventory levels are engineered that is, the line of merchandise needs/requirements to be added or disconnected or what kind of investment is needed. This is achieved simply because of electronic procurement feasibility and facilities affected through analysis that is done by internet worked/linked through the electronic data interchange (EDI) Computers.

Greunen (2010), states that by employing electronic data interchange, facilities data exchange represents wide range of business transaction documents with a clearly stated or procedure that has to be followed by individual companies which subscribes to EDI (Electronic Data Interchange) facilities. This type of arrangement is a clear example of automation of electronic procurement. An already formatted data is transmitted over net work links directly between computer without paper document or human intervention because of established protocol by suppliers, manufactures and buyers however, it is worthy stating that direct net work links between the computers the trading parties are not widely used because of fear of confidentiality and security.

Greunen (2010), asserts that consumers/users can compare products features and prices at a mere look at them and make  requisitions/place orders and make purchase online with a purchasing and number via the system link to EDI (Electronic Data Interchange) such link up through direct communication with supplier, buyers can obtain price quotes, determined availability of items in suppliers stock transmit a purchase order, obtain a follow up information about any changes in purchases requirement caused by schedule revision obtain service information and sends letters and memorandum instantly. The closer mutual relationship with suppliers is likely to become the norm rather than the exceptional over the next decades importing for reading change in manner in which buyers and suppliers cope to deal.

Flynn, Huo and Xhao (2010), another factor is information quality. Information quality is seen to capture the e-commerce (web) content issue. In the context of e-procurement success, web content should be personalized, complete, relevant, easy to understand, and secure if one expect buyers or suppliers to initiate transactions via the Internet and to return to the site on regular basis. There are three constructs that are posited in this service quality dimension which are trust, perceived risk and perceived ease of use. 

2.2.3 Challenges Faced by Organisations that employ E-Procurement

Where as e-procurement promises to make procurement processes easier, its implementation in developing countries like Uganda seems to be more of a dream than a reality. This is mainly because of the challenges that arise from using the traditional system of procurement. These challenges are detailed below;

First of all, E-procurement is not practical in Uganda because there is no enabling law that can govern its use. It is important to note that even drafting of the current Ugandan procurement framework took some time, so drafting another one governing e-procurement would probably even take a longer time given the complexities that may be involved. Without a law in place, the introduction of e-procurement would even present greater challenges. There must be a legal framework in place that details how the system will run in government entities and how the private entities will relate to them in that environment.

E-procurement involves such processes like e-ordering and e-tendering. 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 (Tumwesigye, 2009).

Weele (2005), another challenge of implementing e-procurement is connected to cultural aspects. Its introdreuction 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. 

Implementation of e-procurement is not practical in Uganda today largely because there is no capacity to operate a full fledged e-procurement system. To smoothly operate it, there is need for all prospective suppliers to be web enabled. This means that they ideally must have websites and must be connected to the internet all the time. This is not possible because one can find that so many prospective suppliers don’t even own computers let alone know how to operate one. This means that there is no competence to run such a system in a country like Uganda. A very small percentage of Ugandans can afford an internet connection (Alex, 2009).

Tumwesigye (2009), another challenge that would be faced would be that of signat. There is need of signatures on many documents as they move from one level to another especially in public procurement. The intrdoduction of e-procurement would create a big challenge ures in this area, it could bring about forgery if great care is not taken.

Tumwesigye (2009), further argues 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.

2.3 Other factors affecting operational efficiency

Njoroge (2010), states that operational efficiency is reflected in terms of productivity, profitability, morale of employees, customer service improvement, adaptiveness to changes, competitive edges among others. He continues that to make an organisation operate efficiently factors related to the management and determinations of organisational efficiency are essential. Many suggestions have been made by academicians regarding different criteria that can be employed , and  in the assessment  of organisations operational efficiency including: profitability measured in terms of grossprofit,growth,productivity relating a unit of output to the input required to produce, new innovations in terms of new services, new  technology and managerial systems and procedures. 

Orori (2011),notes that operational efficiency can be measured on the following criteria; reduction in operating cost by not producing defective goods, identification of the process faults and defects of products and thus control scrap and waste, setting and resetting of processes and machinery to know the performance of similar machines and operations, increase in the profit earning capacity of the business, reduction in product line bottlenecks and customers’ satisfaction, easy management of working capital, earning and dividends, efficient operation of workers, reduction in material handling costs and efficient installation of new techniques of production and automation if necessary.

Ability to control costs; operational efficiency of organisations is reflected in the ability to control costs and manage the material flow in some uniform way.Kipyego (2012) continues that potentiality of this control is again highly related to the quality of decision making, information available with respect to the quantity and location of materials. A little reflection on the basic needs of the functional units of any organisation will confirm that an effective interrelationship at the various stages of materials utilisation, conversion, location and their movement will ultimately control costs. If the quantity and movement of materials have to be controlled, information flow must be timely, accurate and without disruption.

Demand; operational efficiency involves understanding clearly the demands of each customer and every to cut down on costs and increase productivity as well as quality. Since no one knows a job more than the people who do it every day, hearing their advice on how to reduce costs without limiting quality is often a smart idea. Some organizations now offer an incentive to workers who can resolve the problem of how to save money without hindering efficiency. The purpose of manufacturing cost reduction through design optimization is to make money by reducing the overhead. Keeping the manufacturing process simple, reducing the costs of material and increasing the efficiency of the manufacturing process are the best ways to achieve this objective. Manufacturing cost reduction through design optimization is definitely a good business practice (Orori, 2011).

Management system; a well organised management system can lead to operational efficiency hence substantial savings for a company and these savings are realised in different forms depending on the particular situation of the company. Some common sources of such savings are low purchase cost, lower interest expenses or an increase in the availability of internal funds, lower operating costs (clerical, expediting, transportation, receiving etc.), lower production cost per unit, dependable delivery of production and better customer service in the supply of goods (Njoroge, 2010).

New technologies; operational efficiency is measured through the use of new technologies that  reduces  labor costs and/or increase revenue levels, expenses reduction,  competitivity, and boosting of the  bottom line, identification of  all the hidden costs in a company, efficient  detection of  all the weaknesses in the company’s financial control systems and design improvements that  reduces  operating costs.  Effective Management of company cash flows, increase in gross tax margins and net profits, and reduction of the overall tax rates of the organization (Kipyego, 2012).

Purchasing Leverage; operational efficiency can be reflected in terms of purchasing Leverage.  Being able to order larger quantities of standard parts and materials provides purchasing leverage where buyers can benefit from suppliers economies-of-scale and arrange more frequent deliveries, to support just-in-time operations. Processes must be coordinated and common enough to ensure that all parts and products in the mass customization platform can be built without the setup changes that would undermine flexible manufacturing (David, 2004).

Just as humans, the needs of an organization are numerous. Therefore it is important for an organization to effectively coordinate the behavior of people in order to achieve its aims and objectives. According to London (2001), objectives assist executives in performing Management roles by providing the basis for uniting the efforts of the workers within the organization. It was further stressed that achieving set objectives helps to give identity to an organization as well as recognition, not forgetting satisfying the employees’ needs. As mentioned by Dubrin (2007), there are different classes of needs. These include: physical, social and egoistic needs. However, job satisfaction is often associated with human need and condition.

Leadership has been linked to management as it involves directing, controlling to an extent the nature, degree, extent and passé of activities and changes occurring within the organization. Management as a process is rooted in the interactions of people at work directed towards maximization of efficiency and scarce resources: labour, machines, raw materials and information (Hoover, 2011). Importantly, leadership of an organization should be given adequate attention, if the organization intends to achieve its objectives.

Communication is another factor for effective and efficient operations without doubt, communication plays a key role in work places because an idea or procedure no matter how great, is useless until it is transmitted and understood by others. Individuals in organizations spend a great deal of their work hours writing, reading , speaking, listening, gesturing, etc. it is therefore conceivable that one of the crucial factors for individual and group performance at work is effective communication. Without communication, no one or no group can exist since communication is the only tool through which meanings can be transmitted from one person to another so that information and ideas can be conveyed. Therefore, the current study will attempt to incorporate communication both the transference and the understanding of meanings in investigating the effect of management factor on the quality service delivery (Bergman, 2003).

The interaction processes among individuals in organizations can be broadly construed as protocols which could be written or verbal, gestures, facial expressions, signs, nods, glances, pats on the back frowns, caresses, shaking of heads, etc. these, and any other means through which meaning can be conveyed from one person to another, is characterized as communication. Without this kind of interactive protocols, a group would be static, uneventful, unprogressive, individualistic, or a collection of persons with disintegrated, disharmonious intentions, aspirations and goals. In this vein, Lee (2012) emphasizes that without the means, the capacity, and the will to communicate, what we know as business, government and community activities could not be. But it is not enough for people to talk to others; rather, they need to know how to talk with others.

Financial resources. Firmsthat lack financial resources to enable them to implement the factors that would ensure operational efficiency face a big problem hence limiting their operations. They operate on the very minimum scale and being an informal sector, they do not readily acquire credit facilities from the financial institutions due to lack of security (Brenda, 2015).

Skill and experience. In a study carried out by Chitechi(2015), the findings indicated that skill and experience was found to be of importance since facilitated skills and experience to profitability as viewed by all the 54 (100%) of the respondent managers whereas the respondent employees found skill and experience to be either important or very important in ensuring operational efficiency was achieved given the response of 91% to 9% respectively. 

2.4 Conclusion

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 reviewedto the components of e-procurement used in an organization, the reasons, benefits and challenges of using e-procurement and other factors affecting operational efficiency.

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 was 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 was 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 operational efficiency.

3.2 Study Area

The research was carried out at National Medical Stores which is located on Plot 4-12, Nsamizi Road, Entebbe – Uganda.

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 are deemed to be 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 make us the final sample this method grouped the population into separate homogenous group of subjects with similar characteristics. Purposive Sampling involves deliberate selection of particular units of the population for constituting a representative sample. It involves convenience and judgmental sampling. Judgmental sampling or purposive sampling – The researcher chose the sample based on who would be appropriate for the study. 

3.6Data 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 may have no time to sit down and answer during interviews.

A questionnaire guidewas 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 guidewas drafted with a set of questions that the researcher asked during an interview and this was structured (close ended) in nature.  The method was used to collect data from clients of the company. Interview guide was used by the study since the methods helps in the collection of more data as it allows 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 respondent reached at, fully explaining the purpose of research. After getting their consent, she set a program with the respondents on when the questionnaires was 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 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 to be based on prior research. Secondly, the questionnaire should be 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 bias. 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 was given unique looks to make the work easier. In this case Ms-excel and SPSS were used to analyze the coded data.

3.10 Data Presentation

Presentation of data involved use of tables, pie-charts and graphs that was 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 to this, 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 operational efficiency. A case study of National Medical Stores. 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 4.1: Gender of Respondents

Source: Primary Data

According to figure 4.1 above, 51.67% majorityof 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 4.2: Age range of Respondents

Source: Primary Data

Figure4.2 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 operational efficiency.

Figure 4.3: Highest Level of education

Source: Primary Data

From figure 4.3 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 4.4: Period of Work

Source: Primary Data

According to the figure4.4 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, sinceits assumed that by virtue of their positions, they know about electronic procurement and its impact on operational efficiency.

Table 4.1: Department of Respondents

Source: Primary Data

Table 4.1 shows that majority of the respondents (26.7%) are from sales department, (20%) were from procurement department, also (20%) were from transportation department, 16.7% of the respondents were from Human Resource Department while those from top management and IT department each had 8.3% of the study respondents. This implies that the study got information from the sales, procurement and transportation departments was sufficient in regards to the topic under study since these departments deal directly in electronic procurement.

4.2 Analysis on objective one: components of e-procurement used in an organization

The study found that,majority of the respondents had knowledge about e-procurement as most of them lamented that electronic procurement encompasses the entire online process in developing, security delivering, servicing and payment for products and services.  Therefore valid results were produced. 

Most respondents mentioned that e-procurement applications allow employees to manage their own purchases, from the selection of the desired items from within a preprogrammed offering that matches the procurement office’s parameters for cost and quality and supplier; to submitting requisitions; to tracking delivery status.

This automation streamlines the procurement process and makes it more efficient, thereby making it faster and less costly. It also removes low-value tasks from the procurement department, which can then redirect its resources to higher-value activities such as negotiating contracts.

Furthermore, the tools within many e-procurement applications allow procurement leaders to customize the procurement experience, determine which items will be available through e-procurement to which users. 

Table 4.2: Showing the application of e-procurement

Source: Primary Data

According to table 4.2, majority (35%) said e-informing, 33.4% of them said e-reverse auctioning, 18.3% of the respondents said e-tendering, 5% said Enterprise Resource Planning while 5% of them said e-sourcing. This implies that the organization has the capacity to effectively manage its operations through the application of electronic procurement.

The study sought to examine the components of e-procurement used in an organization. The results were obtained and are presented below;

Fiigure 4.5: Main components of e-procurement in your organization

Source: Primary Data

According to figure4.5 above, majority of the respondents (31.7%) mentioned catalog content,11.7% of them mentioned user maintenance, 11.7% said buyer/seller relationships, system maintenance, billing management and processes; each was said by 10% of the study respondents. 8.3% of the respondents said data transmission as the components of e-procurement at the organization. This implies that the organization is capable of ensuring that it meets the needs of its customers.

Table 4.3: Showing how to improve on these components

Source: Primary Data 

Results show that, 56.7% of the respondents said thatcomponents can be improved by Improving quality of Software while 43.3% of them said by staff training. This implies that the organization has several strategies that it has employed to ensure that the components of e-procurement are improved. These include improvement in the quality of software used and staff training on the new upgrades in the systems. Findings indicate that maintaining an e-procurement system involves configuring and monitoring performance usage, average response time, transaction sources, and traffic patterns. To maximize the benefits and strategic opportunities e-procurement systems offer, this information should be used to analyze growth patterns, session times, and ultimately to fine-tune the system’s performance to fit specific market communities or technical environments. Once an e-procurement system is up and running, it’s important to monitor traffic and system security on a day-to-day basis. 

4.3 Analysis on Objective two: the reasons, benefits and challenges of using e-procurement

The study sought to examine the reasons, benefits and challenges of using e-procurement at National Medical Stores. The results were obtained and are presented below;

Figure 4.6: Reasonsof using e-procurement

Source: Primary Data

According to the figure above, majority of the respondents (33.3%) mentioned ensure customer satisfaction, 18.3% of the respondents said to outcompete other organizations, 13.3% of the respondents mentioned enhancing inter-organizational coordination, another 13.3% of them said increase competitive sourcing opportunities while 8.3% of them said increased flexibility in business, another 8.3% of them said stock reduction. This implies that the overall reason for using e-procurement is to ensure customer satisfaction hence increasing on performance of the employees which leads to overall improvement in the organization’s operations.

Figure 4.7: Benefits of using e-procurement

Source: Primary Data

According to figure 4.7 above, majority of the respondents (38.3%) said leads to cost reduction, 20% of the respondents said it improves transparency in the procurement process while 11.7% of the study respondents said it leads to better service delivery, while it leads to competitive bidding and sourcing, guarantees real time response to the market and enables the organization to streamline processes was mentioned by 8.3% of the study respondents.The table also shows that 3.3% of the respondents said it improves the flow of information and only 1.7% of them said facilitate real time response to customers. This implies that the electronic procurement has an impact on operational efficiency thus enabling the organization to meets its customer demand.

The study sought to find out how e-procurement has enhanced operational efficiency in the organization.

Figure 4.8: How e-procurement has enhanced operational efficiency

Source: Primary Data

According to Figure 4.8, (54.6%) agreed that documentations have also been reduced, 33.3% of them said it reduced on lead time and only 10% of them said it improved information flow in the organization. This implies that electronic procurement ensures the smooth running of the organization’soperations since it reduces on the overall workload.

Figure 4.9: Challenges that organization employ e-procurement face.

Source: Primary Data

Figure 4.9 indicates that the majority (41.7%) agreedlimited finances, 16.7% of them mentioned lack of skill among employees, while longer lead time in aligning the system to the organization policies and a lot of documentations involved was mentioned each by 13.3% of the study respondents. Also, 8.3% of the respondents said conservativeness by some employees and 6.7% of them said lack of capacity to operate a fully-fledged e-procurement system. This implies that 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.

Respondents were to mention how the organization has tried to minimize the challenges faced and are results shown below;

Table 4.4: How have they tried to minimize the challenges faced?

Source: Primary Data

According to study results, 45% of the respondents said increase funding, 26.7% of them said employ skilled personnel, 15% of the respondent mentioned training of the employees and only 13.3% of the respondents said involving the top management in all departments. This implies that increased funding and hiring professional training could be better solutions to the organization, hence improving on their operations.

4.4 Other factors affecting operational efficiency

The study sought to examine the other factors affecting operational efficiency apart from e-procurement. The results were obtained and are presented below;

Table 4.5: How the organization measures operational efficiency

Source: Primary Data

According to table 4.5 above (33.3%) effectively agreed with reduction in operating cost, (26.7%) statedcustomers’ satisfaction, 8.3% of the respondent said efficient operation ofworker.10% of them said identification of the process faults workers, while reduction in product line bottlenecks and efficient installation of new techniques of production were mentioned by 5% of the study respondents and only 3.3% of them said increase in the profit earning. This implies that the organization has the capability of using its resources to ensure customer demand is met effectively and efficiently and that it’s able to compete with other organizations in the market.

Table 4.6: indicators of operational efficiency in your organization

Source: Primary Data

From table above, majority of the respondents (31.7%) said labour utilization, 11.7% of them said delivery in full on time, 11.7% of the respondents said rework, 10% of them said complaints, another 10% said project schedule variance, also 10% of the respondents said overall equipment effectiveness while 8.3% of the respondents said performance quality and 6.7% of them said capacity utilization are the major indicators of operational efficiency.Tis implies that the organization is able to compete with other organizations since it is capable of handling its operations hence leading to satisfaction of its customers.

Figure 4.10: other factors that affect operational efficiency apart from e-procurement

Source: Primary Data

Results indicate that most of the respondents (21.7%) said financial resources, a significant percentage (21.7%) also said morale of employees, 18.3% of the respondents said new technologies, 13.3% of the respondents said material flow while demand and management system were each mentioned by 6.7% of the respondents. This implies that all these factors above affect operational efficiency.

Table 4.7: Impact of e-procurement on operational efficiency

Source: Primary Data

Table 4.7 shows that  (33.3%)of respondents agreed with increased knowledge of the procurement processes, 18.3% of them said e-procurement fosters operational efficiency, 13.3% of them said improved mastery of IT instruments, another 13.3% of them said reduction of “administrative / bureaucratic” activities and redundancies, 8.3% of the respondents said improved management and control of the tendering procedures, another 8.3% of the respondents said more time available for activity generating an higher value-added. The remaining 5% of the respondents said improved transparency of the tendering procedures. This implies that electronic procurement enhances operational efficiency of an organization.

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 Components of e-procurement used in an organization

According to table 4.2, findings indicated that e-procurement is applied by e-informing, e-reverse auctioning and e-tendering. This implies that the organization has the capacity to effectively manage its operations through the application of electronic procurement. These findings agree with Mburu (2011) who put forward that electronic procurement encompasses the entire online process in developing, security delivering, servicing and payment for products and services. The economic model encourages innovation and entrepreneurship hence generating many business and consumers. Electronic buying procedure present a vertical and complex challenge to business and financial institution to develop efficient flexible and secure payment system for online buying.

According to results in figure 4.5the major components of e-procurement are catalog content. This implies that the organization has catalog content a component of e-procurement in the organization. The organization uses catalog content to enable electronic product content to be made available to customers in order for them to procure goods electronically. This finding is in line with Victoria(2015) who stated that at the heart of every e-procurement process lies an electronic catalog. Similar to a traditional mail-order catalog, electronic catalogs contain detailed information on products or services available for sale. Suppliers customize the content to address the specific needs of targeted buyers. This content is manipulated and imported into a database that the e-procurement application integrates into web pages. The management of catalog data can be handled using import and aggregation tools or by outsourcing the task to companies specializing in content management. Content providers generally offer the following services: Convert catalog data into a uniform language and format, Gather and aggregate data from multiple suppliers into one catalog, Publish and maintain the product catalog (Victoria, 2015). Once a catalog is created, various cataloging strategies are used to provide access to the content. Strategies include using a centralized catalog model where the aggregated data is hosted at a central location, a distributed model where data resides at multiple sites, or a content-retrieval method where suppliers present catalog data directly to buyers (Victoria, 2015).

Results in chapter four in Table 4.3 revealed that components of e-procurement can be improved though improving of software and staff training. These findings are in line with Mburu (2011) who argued that tools of e-procurement should be improved to enable the company to control procurement, company master data organizer activities.

5.1.2 The reasons, benefits and challenges of using e-procurement

According to results in chapter four in figure 4.6, the reasons for using e-procurement is to ensure customer satisfaction, to outcompete other organizations and enhancing inter-organizational coordination. This implies that e-procurement can 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. This is in line with Deloitte(2001) whonoted that driven by the increasing trend toward purchasing inputs and other raw materials from outside the organization; implementing electronic procurement (e-procurement) has become a significant tactic in most companies’ e-business strategies. Today baseline procurement capabilities are rapidly becoming a cost of doing business. More and more companies are conscious of the needs to introduce Internet-based technologies in their order process, due to the benefits of saving transaction cost, increasing competitive sourcing opportunities, and enhancing inter-organizational coordination. 

Results in figure 4.7 revealed that the benefits of using e-procurement include; leads to cost reduction. Using e-procurement the organization is able to reduce some operational costs. Also it improves transparency in the procurement process and it leads to better service delivery. This implies that e-procurement has an impact on operational efficiency thus enabling the organization to meet its customer demand. The study findings are in line with Greunen (2010) who asserts that consumers/users can compare products features and prices at a mere look at them and make  requisitions/place orders and make purchase online with a purchasing and number via the system link to EDI (Electronic Data Interchange) such link up through direct communication with supplier, buyers can obtain price quotes, determined availability of items in suppliers stock transmit a purchase order, obtain a follow up information about any changes in purchases requirement caused by schedule revision obtain service information and sends letters and memorandum instantly. The closer mutual relationship with suppliers is likely to become the norm rather than the exceptional over the next decades importing for reading change in manner in which buyers and suppliers cope to deal.

From results in chapter four in figure 4.8 revealed that e-procurement has enhanced operational efficiency through reduction of docuementations.  This is in line with Greunen (2010) who states that by employing electronic data interchange facilities data exchange represents wide range of business transaction documents with a clearly stated or procedure that has to be followed by individual companies which subscribes to EDI (Electronic Data Interchange) facilities.

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 operational efficiency 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. 

The study also revealed in table 4.4 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 Other factors that affect operational efficiency

Findings in table 4.5 revealed that the organization measures operational efficiency by a reduction in operating cost. This is in line with Orori (2011) who notes that operational efficiency can be measured on the following criteria; reduction in operating cost by not producing defective goods, identification of the process faults and defects of products and thus control scrap and waste, setting and resetting of processes and machinery to know the performance of similar machines and operations, increase in the profit earning capacity of the business, reduction in product line bottlenecks and customers’ satisfaction, easy management of working capital, earning and dividends, efficient operation of workers, reduction in material handling costs and efficient installation of new techniques of production and automation if necessary.

The study found out in table 4.6 that, the indicators of operational efficiency are labour utilization. This is in line with Kipyego (2012) who stated that ability to control costs; operational efficiency of organisations is reflected in the ability to control costs and manage the material flow in some uniform way. He continues that potentiality of this control is again highly related to the quality of decision making, information available with respect to the quantity and location of materials. A little reflection on the basic needs of the functional units of any organisation will confirm that an effective interrelationship at the various stages of materials utilisation, conversion, location and their movement will ultimately control costs. If the quantity and movement of materials have to be controlled, information flow must be timely, accurate and without disruption.

According to findings in chapter four (figure 4.10) indicated that the other factors that affect operational efficiency include financial resources, morale of employees and new technologies. This implies that apart from e-procurement; financial resources, morale of employees and new technologies also affect operational efficiency. This is in line with Kipyego (2012) who asserted that operational efficiency is measured through the use of new technologies that reduces labor costs and/or increase revenue levels, expenses reduction, competitivity, and boosting of the bottom line, identification of all the hidden costs in a company, efficient detectionof all the weaknesses in the company’s financial control systems and design improvements that reduces operating costs.  Effective Management of company cash flows, increase in gross tax margins and net profits, and reduction of the overall tax rates of the organization.

The study sought to identify the impact of e-procurement on operation efficiency and results in chapter four in table 4.7 revealed that increased knowledge of the procurement processes and fosters operational efficiency. This is in agreement withEsynch (2009) who adds that operational efficiency 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. Operational efficiency 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 Summary

5.2.1 Components of e-procurement used in an organization

The main components of e-procurement used in an organization include catalog content. This implies that the organization has catalog content a component of e-procurement in the organization. It also contains user maintenance, buyer/seller relationships, system maintenance, billing management and processes, data transmission as the components of e-procurement at the organization. The above components are the commonly used in the National Medical Stores.

5.2.2 The reasons, benefits and challenges of using e-procurement

The main reasons of using e-procurement include ensuring customer satisfaction, enhancing inter-organizational coordination, increase competitive sourcing opportunities, increased flexibility in business, stock reduction. The study found that e-procurement can 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 benefits of using e-procurement include; leads to cost reduction, it leads to better service delivery, while it leads to competitive bidding and sourcing, guarantees real time response to the market and enables the organization to streamline processes, it improves the flow of information and facilitate real time response to customers. 

However, the challenges faced by organizations that employ e-procurement 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. 

5.1.3 Other factors that affect operational efficiency

The study found that financial resources, morale of employees, new technologies, material flow while demand and management system. All these factors affect operational efficiency in the organization apart from e-procurement.

5.3 Conclusion

The study concluded that the organization has catalog content a component of e-procurement in the organization. It also contains user maintenance, buyer/seller relationships, system maintenance, billing management and processes, data transmission as the components of e-procurement at the organization. 

The main reasons of using e-procurement include ensuring customer satisfaction, enhancing inter-organizational coordination, increase competitive sourcing opportunities, increased flexibility in business, stock reduction. The study found that e-procurement can 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 benefits of using e-procurement include; leads to cost reduction, it leads to better service delivery, while it leads to competitive bidding and sourcing, guarantees real time response to the market and enables the organization to streamline processes, it improves the flow of information and facilitate real time response to customers. However, the challenges faced by organizations that employ e-procurement 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 byincreasing funding, employing skilled personnel, training of the employees and involving the top management in all departments. 

Apart from e-procurement; financial resources, morale of employees, new technologies, material flow while demand and management system are some of the other factors that affect operational efficiency in the organization.

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 fundsaimed 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.

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APPENDICES

APPENDIX I: QUESTIONNAIRE FOR RESPONDENTS

Dear respondents,

I am Aitaru Angel, Reg No. 13/U/11172/PLD/PD, a student of Kyambogo University pursuing a Bachelor’s Degree in Procurement and Logistics Management.  I am carrying out research on the effect of electronic -procurement on operational efficiency, A case study of National medical Stores. I humbly request you to spare some few minutes of your time and answer these questions below. The study is strictly for academic purposes and will be treated with utmost confidentiality. Your cooperation is highly appreciated. 

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) Secondary b) Diploma
9. c) 1st 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

5.Inwhich department do you work?

a)Production b) Finance c) Sales

1. d) Stores d) Procurement

Section B: The components of e-procurement used in an organization

6. What do you understand by e-procurement?

1. A procedure that involves the use the internet for procurement of goods.
2. The business of purchase and sale of goods and services using an electronic based system on the internet.
3. The business to business or business to consumer purchase and sale of supplies, work and services through the internet as well as other information and networking systems.

7. Has your organization implemented e-procurement in its operations?

   Yes                             No

9. In what ways has your organization applied e-procurement in its operations?

1. e-tendering
2. Enterprise Resource Planning
3. e-sourcing
4. e-reverse auctioning
5. e-informing

8. Which of the following components of e-procurement does your organization use?

1. Catalog content
2. Processes
3. User maintenance
4. Buyer/seller relationships
5. Billing management
6. Price establishment
7. Data transmission
8. System maintenance

10. How effective are these components to your organization?
11. a) Very effective 
12. b) Not at all
13. How can your organization improve onthese components?

Staff Training

Improving quality of Software

Others

Section C: The reasons, benefits and challenges of using e-procurement

12. What are the reasons of using e-procurement in your organization?

1. To outcompete other organizations
2. Stock reduction
3. Reduction of quality cost
4. Ensure customer satisfaction
5. Increase flexibility in business
6. Enhancing inter-organisational coordination
7. Increase competitive sourcing opportunities

13. Does your organisation benefit from using electronic procurement?

  Yes                                    No 

14. How does your organisation benefit from using e-procurement?

1. Leads to cost reduction      
2. Leads to better service delivery      
3. Enables the organization to streamline processes      
4. Facilitates real time response to customers      
5. Guarantees real time response to the market      
6. Improves transparency in the procurement process      
7. It improves the flow of information      
8. It leads to competitive bidding and sourcing 

15. How has e-procurement enhanced operational efficiency?

1. Reduced on lead time
2. Reduced documentation
3. Improved information flow
4. Reduction in operating costs

Specify…………………………………………………………………………………………………………………..

Challenges faced by Organizations that employ E-procurement

16. Does electronic procurement pose any challenges to your organisation?

  Yes                                  No

17. What challenges does e-procurement pose to your organisation? 

1. Alot of documentations involved
2. Lack of capacity to operate a fully fledged e-procurement system
3. Limited finances
4. Lack of skill among employees
5. Conservativeness by some employees
6. Longer lead time.
7. difficulty in aligning the system to the organisation’s policies.

Specify……………………………………………………………………………………………………………………..

18. How has your organisation tried to minimise the challenges faced?

1. Employ skilled personnel
2. Increase funding
3. Training of the employees
4. Involving the top management in all departments.
5. Others 

Specify……………………………………………………………………………………………………………………

Section D: Other factors that affect operational efficiency

19. What encompasses operational efficiency?

 a)The ratio between the input to run a business operation and the output gained from the business.

1. b) The capability of an enterprise to deliver products and services to its customers at the most cost effective manner while ensuring high quality of its products.

20. What are the indicators of operational efficiency in your organization?
21. Labour utilization
22. Project schedule variance

iii. Delivery in full on time

1. Rework
2. Complaints
3. Capacity utilization

vii. Performance quality

ix.Overall equipment effectiveness

21. How does the organization measure operational efficiency?

1. Per unit costs
2. Work in progress
3. Staffing ratios
4. Response time
5. Cycle time
6. Per unit equipment utilization
7. Per unit full-time equivalents.

22. Are there any other factors that affect operational efficiency in your organisation?

 Yes                         No

23. If yes, what are those factors?

1. New Technologies 
2. Management System 
3. Demand
4. Material Flow
5. Morale of Employees
6. Communication 
7. Financial Resources 

Others Specify…………………………………………………………………………………

24. What is the impact of e-procurement on operational efficiency?

1. e-procurement fosters operational efficiency
2. Improved management and control of the tendering procedures 
3. Improved transparency of the tendering procedures. 
4. Increased knowledge of the procurement processes. 
5. More time available for activity generating an higher value-added. 
6. Improved mastery of IT instruments. 
7. Reduction of “administrative / bureaucratic” activities and redundancies

THANK YOU FOR YOUR TIME

APPENDIX II: INTERVIEW GUIDE

1. What are the components of e-procurement used in your organization?
2. What are the reasons, benefits and challenges of using e-procurement?
3. What other factors affect operational efficiency?