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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