Factors Affecting The Implementation Of E-procurement In Supermarkets (a Survey Of Supermarkets In Nakuru Town)

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ABSTRACT

The purpose of the study was to establish the factors affecting the implementation of electronic procurement in the business organizations. It was carried out in Nakuru town specifically in the supermarkets. The specific objectives of the study were: to find out whether the products being procured affect the implementation of e-procurement in the organization; to establish whether the level of technology affects the implementation of e-procurement; to investigate whether cost affects the implementation of e-procurement; and to establish whether the availability of skills influences the implementation of e-procurement in the organization. The findings of the study will enable the managers of organizations to come up with strategies that will be of help to minimize the factors affecting the implementation of e-procurement negatively and maximize the factors affecting it positively. A survey research design was adopted for the study where the target population comprised of 220 employees from 17 different supermarkets in Nakuru who were drawn from the management, procurement departments and the stores departments. A stratified random sampling technique was used where a sample size of 51 respondents was selected and issued with the questionnaires so as to participate in collection of data for the study. The questionnaire was structured using closed ended questions. The findings revealed that implementation of e-procurement in supermarkets are greatly affected by the level of technology available in the supermarkets. If there was no computer in the organization, then there would be no e-procurement taking place since it requires a computer to work. Also, the computers should be capable of installing the e-procurement software in order to work. Products also affect the implementation of e-procurement. Fast moving products require an efficient procurement system and thereby positively affecting the implementation of e-procurement. Technology being the key element required implementing e-procurement; it greatly affects the implementation. Specifically, technology in this case is the use of computers to which specific e-procurement software is installed. Cost itself also affects the implementation of e-procurement. The cost becomes a major factor that affects the implementation of e-procurement because it’s the capital and in every project in a business, capital plays a major role in determining its future existence. Based on these findings, the researcher recommended that there was need for accountability and provision of adequate funds for successful implementation; and modern models of computers should be purchased to accommodate the installation of all the e-procurement software needed. Also, the researcher recommended that further research should be done on the factors contributing to the implementation of e-procurement in business organizations.

 

TABLE OF CONTENTS

DECLARATION.. ii

DEDICATION.. iii

ACKNOWLEDGEMENT. iv

ABSTRACT. v

TABLE OF CONTENTS. vi

LIST OF TABLES. ix

LIST OF FIGURES. x

LIST OF ABREVIATIONS. xi

DEFINITION OF WORDS. xii

CHAPTER ONE. 1

1.0 INTRODUCTION: 1

1.1 Background of the study; 1

1.2 Statement of the problem.. 3

1.3 General objective. 3

1.4 Significance of the study. 4

1.5 Limitations of the study. 4

1.6 The scope of the study. 5

CHAPTER TWO.. 6

2.0LITERATURE REVIEW... 6

2.1Introduction. 6

2.2Review of Empirical Literature. 6

2.3 Review of Theoretical Literature. 12

2.3.1 How E-procurement works. 13

2.3.2 Information Technology. 14

2.3.3 Influence of Cost 17

2.3.5 Influence of Availability of Skills. 22

2.4 Influence of Products. 23

2.5 Summary and Gaps to be filled by the Study. 25

2.4.1Conceptual Framework. 25

CHAPTER THREE. 27

3.0 RESEARCH DESIGN AND METHODOLOGY.. 27

3.1 Introduction. 27

3.2 Research Design. 27

3.3 Target Population. 27

3.4 Sampling Design and procedure. 28

3.5 Data Collection Instruments and Procedures. 30

3.6 Data Analysis and Presentation. 30

CHAPTER FOUR.. 31

4.0 DATA ANALYSIS AND PRESENTATION OF FINDINGS. 31

4.1 Introduction. 31

4.2 Presentation of Findings. 31

4.2.1 Gender of the Respondents. 31

4.2.2Age of the respondents. 32

4.2.3 Education Level of the Respondents. 33

4.2.3 Duration of the Respondents in the Organization. 33

4.3 Implementation of E-procurement 34

4.3.1 Specific E-procurement systems implemented. 34

4.3.2 Extent of E-procurement Implementation. 35

4.4 Influence of Information Technology in the Implementation of E-procurement 36

4.4.1 Extent to Which Information Technology Affects the Implementation of E-procurement 37

4.4.2 The respondents’ take on statements concerning information technology and e-procurement implementation. 37

4.5 Influence of Cost in the Implementation of E-procurement 38

4.5.1 Respondents’ take on statements concerning cost and e-procurement implementation. 39

4.6 Influence of Availability of Skills to the Implementation of E-procurement. 41

4.6.1 Skilled Personnel and E-procurement System Operation. 42

4.6.2 Way in which availability of skills affect the implementation of e-procurement 42

4.7 Comparison Between E-procurement System and Manual Systems. 43

4.8 Products Procured. 43

4.8.1 Influence of Products in the Implementation of E- procurement 45

4.8.2 How do products procured affect e-procurement implementation?. 45

4.8.3 Respondents’ take on the statements concerning products procured. 46

CHAPTER FIVE. 49

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS. 49

5.1 Introduction. 49

5.2 Summary of Major Findings. 49

5.3 Answers to Research Questions. 53

5.3.1 Does the information Technology affect the Implementation of E-procurement in your Organization?  53

5.3.2 Does Cost Affect the Implementation of E-procurement in your organization?. 53

5.3.3 Does Availability of Skills Influence the Implementation of E-procurement?. 54

5.3.4 Do the Types of Products Being Procured Affect the Implementation of E-procurement in your organization?  54

5.4 Conclusion. 55

5.5 Recommendations. 56

5.6 Suggestions to Further Studies. 56

REFERENCES. 57

 APPENDIX 1: RESEARCH LETTER

APPENDIX 11: RESEARCH QUESTIONNAIRES

CHAPTER ONE

1.0 INTRODUCTION:

1.1 Background of the study;

E-procurement is the business to business or business to consumer or business to government purchase and sale of supplies, work and services through the internet as well as other information and networking systems such as electronic data interchange (E.D.I).

The public procurement in Kenya has been undergoing reforms starting with the public procurement disposals act 2005 that saw the creation of the public procurement oversight authority. The next step was the implementation of e-procurement for the public sector. According to the e-government strategy paper 2004, e-procurement was one of the medium term objectives which were to be implemented by June 2007, but the process has been very slow. The manual processes are costly, slow, inefficient and data storage and retrieval poor.

The use of inter-organizational systems such as electronic data interchange and internet-based extranets enables new types of collaborative alliances between separate trading partners. (Philips 2003)

Most organizations in Kenya today are adopting e-procurement as a way of operating their activities and getting feedback through the electronic mails extranets and other internet technologies used to support every business (Mentzer 2006)

Many suppliers nowadays offer detailed tracking and tracing facilities which enable their customers to monitor orders, follow ups and delivery real time. Besides this, electronic procurement enables electronic invoicing and invoice matching. As a result, the traditional purchasing is reduced and simplified considerably. (Pinkerton 2010)

Within the past 30 years, a remarkable development of data processing equipment that aids the recording of, analysis and reporting of information in operation of complex business systems. There are many potential areas of computer systems that are installed to assist in performing of purchasing function in an organization.

E-procurement enables users within an organization to order directly within an e-catalogue without interferences as suppliers acknowledge the orders automatically. E-procurement enables invoicing and as a result, traditional cycle is reduced and simplified considerably. E-procurement has improved business immensely which as a result has led to improved products and services. Information technology which is the backbone of e-procurement requires financial investment and extended effort to ensure confidentiality of the system. Many procurement activities require frequent real-time communication flow with suppliers to bridge organizational boundaries.

The supermarkets actually procure almost every kind of product since their customers are people from all walks of life. There are those who come to supermarkets to purchase something as small as a packet of sweets; there are also those that come to purchase different types of furniture in the same supermarkets; be it dining furniture, living room furniture or even bedroom furniture. This makes a supermarket an organization dealing with every kind of product there is. This as a result makes it be in great need of an efficient procurement system and that’s where e-procurement and its full implementation come in.

Confusion exists in defining the term e-procurement (Vaidya,Yu, Soar & Turner, 2003).While the terms “e-procurement” and “e-purchasing” have been used synonymously in many jurisdictions in an attempt to prove their involvement in the e-Commerce revolution (MacManus, 2002), the term “purchasing” has a narrower scope. 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-Jones, 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 more broadly as an end-to-end solution that integrates and streamlines many procurement processes throughout the organization. Although the term “end-to-end e-procurement” is popular, industry academic analysts indicate that this ideal model is rarely achieved (DOIR, 2001) and e Procurement implementations generally involve a mixture of different models (S&A, 2003).

1.2 Statement of the problem

Procurement is an important and expensive business activity. This is because they spend a large portion of their budget on purchasing goods and services.

All supermarkets deal with some products that are fast moving and perishable and; others that are slow moving. The fast moving products are mostly the dairy products like milk, bread and other food stuffs that expire quickly. The slow moving products are furniture and appliances. In order to effectively deal with a stock of mixed inventory, these organizations need an efficient procurement method. The most appropriate being e-procurement, the supermarkets have been trying to fully implement this system so as it can be the primary method of carrying out their procurement activities. Some have faced a handful of difficulties and implementation has been slow while others have fully implemented e-procurement without much difficulties. It is therefore due to this reason the study intends to investigate the factors affecting the implementation of e-procurement in business organizations.

1.3 General objective

The general objective is to identify the factors that affect the implementation of e-procurement in business organizations.

Specific objectives

  1. To establish whether information technology affects the implementation of e-procurement in supermarkets in Nakuru Town.
  2. To investigate whether cost affects the implementation of e-procurement in supermarkets in Nakuru Town.
  3. To establish whether the availability of skills influences the implementation of e-procurement in supermarkets in Nakuru Town.
  4. To investigate whether products procured do affect the implementation of e-procurement in supermarkets ion Nakuru Town

Research questions

  1. Does information technology affect the implementation of e-procurement in supermarkets?
  2. Does cost influence or affect the implementation of e-procurement in supermarkets?
  3. Does availability of skills influence the implementation of e-procurement supermarkets?
  4. Do products procured affect the implementation of e-procurement in supermarkets?

1.4 Significance of the study

The information gathered in this study will be substantially important to business organizations’ owners and management in the sense that they will get to learn the many ways e-procurement can be beneficial to them and their customers. Also and most importantly, they will learn the factors that affect the implementation of e-procurement whether positively or negatively. This way, the managers and supervisors will be able to effectively adjust the organizations’ resources to achieve the expected results in the implementation of e-procurement.

1.5 Limitations of the study

There was lack of co-operation at first from some respondents who were apprehensive that their confidential information could be disclosed to their competitors. This led to their unwillingness to participate in the research exercise of filling in the questionnaires. However, the researcher had to convince the respondents that the purpose of the research was purely academic and that it will be treated with at most confidentiality. Others also feared victimization by their seniors but the researcher guaranteed them that the information will be treated as confidential.

1.6 The scope of the study

The study was carried out across the supermarkets in Nakuru town. The target population comprised of employees selected from all the supermarkets. The target population comprised of the personnel in top management, procurement department and all the employees with knowledge about the procurement systems in their supermarkets. The study was conducted between February 2015 and May 2015.

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