Achieving Supply Chain Excellence through e-procurement: A case

study approach of Infrastructure Industry.

Presented By:

Neha Grover

Asian Council of Logistics Management Research Scholar

Dr. Rameshwar Dubey

Assistant Professor-Logistics & Supply Chain Management

University of Petroleum & Energy Studies,Dehradun

1st International Conference On

Management of Technologies & Information Security

21st-24th January,2010

Venue:

IIIT Allahabad

Agenda of Today’s discussion

• Introduction

• Research objective

• Literature Review

• Research Methodology

• Conclusion

• Limitations and further scope of study

• References

Introduction

• With the advent of internet, entire business turned into e-business. Today the use of

e-business technologies to enhance supply chain efficiency is increasing in

importance (Talluri et.al, 2006).Various e-business technologies are available that

addresses the various need of e-procurement technologies that aims at streamlining

and improving the purchasing function.

• E- collaboration is a part of e-business, and today a very influential aspect of

collaboration between companies. E- collaboration is defined as business-to-

business interactions facilitated by the internet (Johnson and Whang,2002).

E-PROCUREMENT:

• E-procurement refers to the use of the 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 organizations.

Research Objective

• To identify CSFs (critical success factors) behind e-

procurement implementation.

Literature Review

• Here researchers divided literature review in three segments-

Supply Chain Collaboration:o It relates to the process of planning, development, and working together

to achieve a common goal (Shafritz et.al, 1998).

o Here collaboration in e-supply networks refers to the ways in which supply networks utilise the internet to facilitate coordination and collaboration among relevant parties (Hedaa,2000).

o Collaboration here comprises human collaboration and e-collaboration. Here collaborative supply chain focuses on joint planning and execution of supply chain activities (Ayers,2006).

E-business and supply chain management:

o E-business is defined as the marriage between the Internet and Supply chain

integration and is divided into three main categories: e-procurement, e-commerce,

and e- collaboration (Lee and Wang, 2001).

o E-Collaboration is defined as business-to-business interactions facilitated by the

Internet. These interactions go beyond simple buy/sell transactions and may be better

described as relationships.

o E-businesses must create networks with other firms in ways allowing both sides to

benefit as much as possible. As the digital era is constantly witnessing massive

changes, e-business, especially over the internet, should be considered increasingly

difficult to sustain. These include such activities as information sharing and

integration, decision sharing, process sharing, and resource sharing.

Collaborative Supply chain planning

o Firms wishing to adopt e-commerce in a supply chain need to invest time

and money to adapt their internal processes and systems and develop the

competence needed to handle new e-commerce challenges (Cassivi, 2006).

o A more detail method known as the collaborative, planning, forecasting and

replenishment (CPFR) is use to sequentially define key actions to be taken.

This paper also elaborate on the fact that companies that find themselves in a

supply chain environment are often forced to innovate in order to compete in

their sector.

o This change is driven by major suppliers and customers

Process innovations,

product innovations and

relational innovations.

Literature Review in context to developed & developing countries

Author(s) & Year Context Conclusion

Eyholzera and

Hunizker,2000

Swiss Companies Only 18% of the swiss companies used

electronic product catalogs, auctions or

requests for quotations in procurement.

Wyld,2004 American Companies Almost half of all the American

companies use e-procurement systems.

Pani and

Agrahari,2004

Indian Steel Industry Metaljunction.com generated substantial

savings for TISCO and SAIL.

Puschmann and

Alt,2005

On MNCs from Germany and

Switzerland.

The e-procurement has substantantially

streamlined the procurement activity

but there is a need for procurement

strategy.

Tatsis et.al,2006 Greek food and drink industry Use of E-procurement in the Greek

food and drink industry: Drivers and

impediments.

Kaliannan

andAwang,2008

Malaysian e-Government

Study

ICT to enhance administrative

performance.

Critical success factors for the implementation of collaborative

environments for the Indian Firms.

 Project characteristics

Location

Cost

Duration

Size

Nature of ownership

Nature of contract

Category of project

Complexity to construction tasks

Complexity to design and engineering

Source: Blismas et.al, 2004

Project team characteristics

Presence of a champion

Ability of project manager

Prior experience with collaborative environments

Involvement of team members during planning process

Team attitude towards collaborative environments

Team attitude towards IT

Type of internet service

Frequency of collaborative environments features/ functions in-use

Party decides to use collaborative environments

Party who pays for the collaborative environments

Internet access availability

Alignment of collaborative environments implementation strategy to project

Team strategy

Level of top management support

Training

Availability of resources

Service Provider Contact facilities

Promptness of responses

competency

attitude

Knowledge in construction business and problems

Ease of use

Software characteristics Frequency of software updates

System reliability

Data quality and reliability

Data security

Types of services

Integration among collaborative environment features

Integration with teams internal systems/functions

Integration with external software programme

Number of team members having access to collaborative environments

Research Methodology

– Case Study Method: Case study research method as an empirical inquiry

investigates a contemporary phenomenon within its real-life context, particularly

when the boundaries between phenomenon and context are not clearly evident

and when multiple sources of evidence are used (Yin, 1984).

– These case studies will be based on qualitative research methods where the

perception of individuals will be the focus of the study, in naturally occurring

situations.

– The identified key success factors for the implementation of collaborative

environments for the Indian firms will be used as a benchmark in the case

studies to identify key success factors for e-tendering implementations within

collaborative environments.

• The three case studies are construction projects undertaken in India.

All the three organizations used the same collaborative environment e-

procurement software.

• Case study 1 is conducted with a Simplex Infrastructure, using

collaborative environments for procurement and project management.

This organization is among the recent adopters of e-procurement in

collaborative environments.

• Case study 2 is Multicon and consultant

• Case study 3 is a construction consultant team

Case Study- 1: Simplex Infrastructure

• Incorporated in the year 1990 as a Public Limited Company.

• The Registered Office at Calcutta is controlling Project Sites all over India. In a

decade of its working SPL has emerged as a renowned civil engineering and

construction Company.

• The Company has procured a fleet of construction equipment over this period. This

organization was among the earlier adopters of e-procurement in collaborative

environments in India among premier Infrastructure companies.

• Interviews were conducted with the Project Manager, Project Quantity Surveyor

and several clerks; an observation of the organization’s work progress was also

carried out.

• Resistance from employees was visible during the first three months of

implementation,

• organization provided sufficient training, support and resources as part of the

introduction scheme.

• The e-procurement system managed to cut down the number of manpower hours

involved in the stages of estimating, tender enquiries and pre-contract negotiations.

• Less tedious paper-based work.

• providing better efficiency, higher quality of work and completion in a shorter

time.

• The correspondence among project members shifted from traditional “snail” mail

to e-mails and the collaborative environment system.

Case Study-2: Multicon

• The Multicon flagship real estate business has achieved over 2.5 million Sq. ft. of

prime space in the city of Kolkata.

• It holds substantial interest in Cablecomm, the largest reach MSO in the country

and in a 100% EOU Granite manufacturing unit. The Group’s core business

verticals are – Real Estate, Media & Internet Services, Exports, Travel Services,

Financial Services and Supply Chain.

• This case was conducted with assistance from the Procurement manager, Project

Quantity Surveyor and Assistant Project Manager.

• The organization have just adopted the use of e-tendering, therefore it is using it on

a project-by-project basis.

• The major change was the reduction of personnel throughout the project – tasks

which previously took 6 persons to complete, now only required three.

• This resulted in a significant reduction in cost, personnel management and work

efficiency, with the additional requirement of IT competence.

• The system also provided audit trails and database back-ups for easy search and

filing capabilities.

• This case study presents a scenario where the younger generation of construction

professionals is dominant in an organization. Younger employees are more IT

savvy.

 Case Study -3

 • This organization is a consultancy firm and owes it success to over 100 expert employees.

• This organization has not fully implemented e-procurement; it is only being rolled out on

a project-by-project basis. Work process observation and interviews were conducted with

the Procurement Manager, IT Manager, Assistant Quantity Surveyor and several

administrative personnel.

• The organization does not have to endure large-scale people or process changes for

rollout; being a consultancy organization, employees do not require extensive use of the e-

procurement system. Therefore, uptake of the system was easy.

• Resistance was minimal, less tedious paper work, higher work satisfaction, shorter

working time and increased motivation.

• There was also no significant reduction in cost. It is also noted that the system did not

yield a good return on investment for the organization. 

ANALYSIS:

• The case studies show that the e-procurement solution is welcome move in most of

the selected firms.

• Employers have the perception that e-procurement made the tendering process less

tedious and less costly as well as ensuring better control and management over the

tender process. This enabled organizations to handle more jobs in a single

timeframe when compared to the traditional method of procurement.

• One of the many good responses from users is attributed to the software itself, i.e.

that it is designed with user-friendly features and demands very little computing

knowledge to use the system efficiently.

• The basic set-up only needs internet access and a web browser.

Potential critical success factors for the process issue Changes must be process-led, not technology-led.

Alignment of collaborative environments implementation strategy to project team strategy. Never change the entire work process to suite technology or software solutions.

Conduct self-evaluations before change.

Conduct change through change strategies – business process reengineering, change

management, etc.

Alert to current research and development methods for better business processes.

Motivation of employees. Interest in IT of employees. Work satisfaction of employees.

Prior experience with collaborative environments. Employee attitude towards collaborative environments. Presence of a champion.

Level of top management support.

Security of job – technology does not replace human processes. Internet access and type of availability.

Adequacy of training. Adequacy of resources.

Employment of the younger generation – more interest, training and focus on IT. Proven computing technology and capabilities of the collaborative environment solution.

Proven to improve efficiency and productivity in work of the collaborative environment solutions.

Potential critical success factors for the people issue•collaborative environment solution.

CONCLUSION:

• This study investigates the people and process critical success factors to successfully

implement e-procurement in collaborative environments, with a specific focus on the

Infrastructure Sector.

• In implementing e-procurement, perhaps the most important critical success factor is

that all changes in the organization must be process-led, and not technology-led.

Technology is mainly used to automate, simplify and secure the communication

process among parties, in turn making the tendering process more efficient, less costly

and more accurate.

• To achieve maximum benefit from e-procurement, organizations must be ready to

adopt change, through self-evaluation and incorporating change management strategies.

Organizations must also align their e-procurement implementation strategy with the

project team strategy.

• Potential critical success factors in implementing e-tendering for the industry

include employee motivation, interest in IT, attitude and prior experience within

collaborative environments.

• Organisations could adopt a “measured approach” in order to help them be “e-

ready”; the rubrics of which could be augmented through some form of a practical

framework which allows them to measure their e-readiness.

Limitations & Further scope of the study:

• The study is based on case studies, hence in future an empirical survey can

be conducted to develop synthesis between case study findings and

empirical survey.

• The study can further be carried out to study correlation among CSFs and

develop regression model.

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THANK YOU