THE EFFECT OF E-PROCUREMENT ON SUPPLY CHAIN PERFORMANCEIN

SUPERMARKETS

BY

MOHAMED ABDIRAHMAN RAGE

AND
SIHAM MOHAMUD AMIR

FACULTY OF MANAGEMENT SCIENCE

SIMAD UNIVERSITY
20/june/2022
Contents
BY ....................................................................................................................................................... 1
SIHAM MOHAMUD AMIR ............................................................................................................. 1
1.7 OPERATIONAL DEFINITIONS AND KEY TERMS ............................................................... 7
CHAPTER TWO ................................................................................................................................ 8
LITERATURE REVIEW ................................................................................................................... 8
INTRODUCTION .............................................................................................................................. 8
DEFINITIONS AND CONCEPTS OF E-PROCUREMENT PRACTICES. .................................... 8
EMPIRICAL STUDIES OF E-PROCUREMENT PRACTICES AND SUPPLY CHAIN
PERFORMANCE ............................................................................................................................. 10
DYNAMIC CAPABILITY THEORY ............................................................................................. 10
CONCEPTUAL FRAME WORK .................................................................................................... 11
3.2 RESEARCH DESIGN ................................................................................................................ 12
3.3 RESEARCH POPULATION ..................................................................................................... 12
3.3.1 SAMPLE SIZE ........................................................................................................................ 12
3.3.2 SAMPLE PROCEDURE ......................................................................................................... 13
3.4 RESEARCH INSTRUMENT ..................................................................................................... 13
3.4.1 RELIABILITY AND VALIDITY OF THE RESEARCH ...................................................... 14
3.4.2. DATA GATHERING PROCEDURE ..................................................................................... 14
3.4.3 DATA ANALYSIS .................................................................................................................. 14
3.5 ETHICAL CONSIDERATIONS ................................................................................................ 15
3.6 LIMITATIONS OF THE STUDY .............................................................................................. 15
 CHAPTER ONE

LITERATURE REVIEW
1.1BACKGROUND
An e-procurement, also electronic procurement, is a system of organizational purchasing
depending upon a certain information technology which is considered as at the input side of a
supply chain management(Faheem & Siddiqui, 2020). The electronic procurement system was
distributed in late 1990s which has transformed the whole supply chain and procurement system.
Slowly and gradually, the innovative system is replacing and substituting the conventional
procurement and supply chain practices into it. This system has significantly improved the
procurement effectiveness and efficiency while decreasing the procurement/supply chain cost
along with maintaining the quality requirement of the organization. It is the tendering process
happening through the help of the internet which saves efforts, time, and cost as compared to
manual procurement system(Faheem & Siddiqui, 2020).
Globally, e-procurement has gained popularity especially with the advent of technology. In the
United States of America for instance, rapid development of e-procurement was reported in early
2000 just before the recession. By the end of the same year, it was reported that all state functions
were maintaining web presence in at least some stage of their procurement processes with some
participating in online bidding (Waithaka & Kimani, n.d.)In Malaysia, the government at some
point issued a statement calling for all suppliers to use the e-procurement system pointed out that
the Malaysian public sector is going through a rapid change especially as far as adoption of
technology is concerned. Adoption of e-government and particularly e-procurement is inevitable
for the government. A review conducted by the Commonwealth of Australia indicates that the
National governments of Italy, New Zeeland, Scotland, New South Wales and Western Australia in
2005 revealed that these countries were already using e-procurement systems for public
procurement activities(Waithaka& Kimani, n.d.)
In Africa, the concept of e-procurement is just gaining popularity especially in the public sector.
To deal with the problems of lack of accountability and transparency in procurement activities in
the public sector, Most African countries have resorted to legal reforms and adoption of
procurement. Tanzania for instance put into place e procurement systems to allow e-sharing, e-
advertisement, e-submission, e-evaluation, e-contacting, e-payment, e-communication and e-
checking and monitoring to ensure all public procurement activities are conducted
online(Waithaka& Kimani, n.d.)
David Teece, Gary Pisano, and Amy Shuen were the first to create the term "dynamic capability"
(Chien& Tsai, 2012). The notion describes an organization's ability to structure its resources
strategically in order to improve performance. Dynamic capability, according to Chien and Tsai
(2012), ability to actively modify its resource base. An organization's ability to respond to external
developments should be adequate and timely. This necessitates the implementation of several
methods that will tap into the organization's many capabilities and put them to good use. The
company will be able to integrate, grow, and capitalize on its environmental competitive advantage
as a result of this. The present corporate landscape is, indeed, quite active. Organizational
structures, culture, marketing, and customer preferences have all changed and Our preferences are
veering off in a separate direction. As a result, businesses should be able to respond to these
changes in the most efficient way possible. According to the dynamic capability hypothesis, only
those firms who are able to do this will be able to break even in today's competitive
world(Waithaka& Kimani, n.d.)
1.1.1 E-procurement
An e-procurement, also electronic procurement, is a system of organizational purchasing
depending upon a certain information technology which is considered as at the input side of a
supply chain management(Faheem & Siddiqui, 2020). E-procurement is electronic procurement
whose implementation process refers to an inte- grated communication system (web-based) to
perform procurement functions, including ordering, purchasing, negotiating, and searching for raw
materials in the procurement process. E-procurement is a process of requisitioning, ordering and
purchasing goods and services online(Masudin et al., 2021).
1.1.2 Supply chain performance
The SC performance is also declared as the evaluation of the management of supply chain,
however, it also declared as the evaluation of the cost spent on supply chain activities including
tangible factor and the capacity utilization of supply chain as intangible factor includes
In this research my working definition is E-procurement is a process of requisitioning, ordering
and purchasing goods and services online.
E-procurement system is an information technology-based purchase system which is at the input
end of the supply chain. Supply chain performance refers to the evaluation of supply chain
management, and includes both tangible (e.g. cost) and intangible (e.g. capacity utilization). E-
procurement system can improve the effectiveness of operation processes and the transparency of
the supply chain performance (Puschmann and Alt, 2005)E-procurement implementations are also
subject to challenges that can affect the further adoption or levels of diffusion. Respondents were
asked to identify the major challenges to e-procurement implementation; the top five challenges
are software integration, Assessing cost benefit, supplier readiness and Difficulties with catalog
integration Issues relating to software and catalog integration now rank as two major challenges
facing organizations currently procuring online thus there is a partner relationships, information
sharing, and supply chain integration can represent the processes through which e-procurement
contributes to supply chain performance, thus e-procurement has a positive relationship between
supply chain performance.
1.2 Statement of problem
A single fleabag in the procurement process can have a substantial impact on the functioning of the
business and supply chain. The grounds for procurement shortcomings are a lack of understanding
as well as a lack of knowledge regarding market demand (Qrunfleh&Tarafdar, 2013). The
procurement process has become more diverse than previously, thanks to the growing trend of
computerized procurement. As a result, the frequency and severity of procurement process
disruptions has increased in recent years. These disruptions can be disastrous for businesses and
their supply chains. They also make it difficult for businesses to achieve responsiveness in
conjunction with their supply chain and procurement strategies. In this case, the example of a PC
manufacturing company will be more appropriate because Compaq's loss was due to their inability
to respond swiftly, which was caused by inefficient procurement and supply chain processes
(Qrunfleh&Tarafdar, 2013). In light of the recent economic turmoil in the country, it is critical to
keep track of every second and make every step productive and useful to the company.
Organizations nowadays are unable to tolerate any waste associated with internal and/or external
processes, as each move costs a significant amount of money, time, and effort. However, firms can
save money by improving procurement and supply chain management economies and
responsiveness. Economic disturbances have an impact on the flow of procurement and supply
chain activities, particularly in multinational procurement and supply chain management systems.
Because their spending and/or purchasing power has reduced dramatically, a value deficiency in
national currency might have a negative impact on the end consumer and dissuade them from
acquiring our products. Furthermore, firms may lose the trust of their suppliers, resulting in a
decline in procurement and supply chain performance (Qrunfleh&Tarafdar, 2013). In order to
achieve the highest level of responsiveness and efficiency in the supply chain and procurement
system, practitioners should thoroughly analyze this problem and rectify these concerns by
observing procurement practices, procurement activities, and procurement strategies(Faheem &
Siddiqui, 2020).This study is intend to fill the gap between the effect of e-procurement and supply
chain performance in supermarkets
1.3 OBJECTIVES OF STUDY
The general research objective is to investigate the effect of e-procurement on supply chain
performance. In the course of the study, the effectiveness of e-procurement practices on supply
chain performance.
1.3.1 Specific Objectives
1. To examine the effect of E-sourcing on quality
2. To investigate the effect of E-ordering process on lead time
3. To establish the effect of e-tendering on delivery time
1.4 RESEARCH QUESTIONS
1. What is the effect of e-sourcing on quality?
2. How e-ordering process effect the lead time?
3. What effect has e-tendering on delivery time?
1.5 SCOPE OF STUDY
The study was covered in 2022. In this research we will investigate the effect of E-procurement on
supply chain performance
1.6 SIGNIFICANT OF STUDY
Future researchers will benefit from this study since it will act as a source of knowledge as well as
a guideline from them to follow in the future studies dealing to this project. The chapters on this
industry in supply chain management literature with an emphasis on assessing the impact of e-
procurement methods on supply chain performance. The literature fails to share knowledge
concerning the study's stated problem. As a result, the current study occupies a unique position in
the literature and fills a void. This aspect of the setting adds to the significance of the current study.
For its target audience of procurement practitioners, supply chain professors, supply chain
students, and business consultants, the current research generates remarkable expertise. Moreover,
this study will benefit many institutions since it will raise awareness of current e-procurement as
well as suitable methods for developing long-term solutions to the problem studied.Furthermore,
the current study focused solely on four basic aspects of e-procurement procedures, omitting other
variables that may have an impact on supply chain performance.
1.7 OPERATIONAL DEFINITIONS AND KEY TERMS
E-procurement is a system of organizational purchasing depending upon a certain information
technology which is considered as at the input side of a supply chain management.
E-sourcing is the usage of Internet to facilitate operational purchasing process, including
demanding and arrange handling.
E-ordering is the process of creating and approving purchasing requisition, placing purchase
orders as well as receiving goods and services ordered, by using a software system based on
internet technology which greatly improves the supply chain performance
E-Tendering is an online procurement process for automatically soliciting proposals and
evaluating suppliers through a software platform.
 CHAPTER TWO
LITERATURE REVIEW

INTRODUCTION

This chapter presents different literatures related to the effect of e-procurement on supply chain
performance in supermarket, it will specifically focus on effect of e-tendering, e-information, e-
sourcing on supply chain performance in Mogadishu supermarkets. These literatures have been
retrieved from various books, articles and studies relating to the same research topic under
investigation. The independent variable like e-tendering, e-purchasing and e-ordering process
and e-supplier management are positively influence on supply chain performance measured
delivery speed, lead times and quality performance and cost reduction. From empirical studies it
was established that e-procurement is fundamental to the performance of supply chain
management. The adoption of e-procurement is vital due to the fact that procurement is one of
the most critical functions of the supply chain. It has been also noted that e-procurement has a
positive and significant effects on supply chain performance. Walters, 2008 proved and
suggested that the organizations can integrate at the time of entering into e-procurement
technology assuming that these strategies will have a great effect on the performance of supply
chain (Walters, 2008).(Faheem & Siddiqui, 2020)

DEFINITIONS AND CONCEPTS OF E-PROCUREMENT PRACTICES.

An e-procurement, also electronic procurement, is a system of organizational purchasing
depending upon a certain information technology which is considered as at the input side of a
supply chain management. Electronic procurement has been initially explored by Global Public
Procurement focusing on the initial time of sourcing and during the process of industrial
development for upgrading the system to professional efficiency. The electronic procurement
system has been distributed in late 1990s which has transformed the whole supply chain and
procurement system. E-procurement is a technology designed to simplify implementing goods
and services through an electronic network or Electronic Data Interchange (EDI). In Recent
researches has revealed that technologies like e-procurement have massively integrated in the
businesses and implanted along with other factors for developing organizational growth.
Procurement is an activity or process of obtaining company goods and services.
E-sourcing
E-sourcing is the usage of Internet to facilitate operational purchasing process, including
demanding, arrange handling, arrange endorsement, the transmission and acknowledgment of
this by providers (Candela, 2022)(Candela, 2022). Early acquirement innovation arrangements
focused on this aspect of e-procurement since it was thought that this was the zone where the
most extreme efficiencies might be achieved. The fundamental advantage of using e-purchasing
is that if the supplier can acquire the purchase order data electronically, they may be able to
transfer it directly into their order management framework. This provides the benefit of avoiding
re–keying data by sales operations workers and reducing the possibilities of requests being
incorrect. By keeping all purchasing data electronic from start to finish, the process runs more
smoothly, reduces errors, and provides a clear governance and audit trail.

E-tendering

E-tendering is gaining popularity in supply chain management. E-tendering facilitates fast

accessibility to market structures, coordination between suppliers and customer- supplier
relationships. In the airline sector e-tendering is important especially for the commercial flights.
The ability of a firm to penetrate into the market is not difficult as a result of low cost and little
time needed in accessing the market and thus this enables that firm to make more strides. This is
supported by a study done by Rebecca (2007) who reveals that to pursue the understanding of
current business-to business e-procurement practices by describing the success factors influencing
e-procurement implementation. (Mutangili, n.d.) (Ngeno & Kinoti, 2017)

E-ordering

E-ordering is the process of creating and approving purchasing requisition, placing purchase
orders as well as receiving goods and services ordered, by using a software system based on
internet technology which greatly improves the supply chain performance. In the case of e-
ordering, the goods and services ordered are indirect goods and services i.e., non-product related
goods and services. The supporting software system an ordering catalogue system is usually used
by all employees of an organization. In case of Enterprise Resources Planning (ERP) the goods
and services ordered are product related. It may be noted that ordering of direct goods and
services usually is plan-based. EDI electronic ordering is ideal for customers wishing to develop
an automated purchasing system for orders
 needed about require items and suppliers. The buyer, afterwards, prepares the list of available
suppliers who can deliver the required items.

EMPIRICAL STUDIES OF E-PROCUREMENT PRACTICES AND SUPPLY CHAIN

PERFORMANCE

Globally, e-procurement has gained popularity especially with the advent of technology. In
United States of America for instance, rapid development of e-procurement was reported in early
2000 just before the recession. By the end of the same year, it was reported that all state
functions were maintaining web presence in at least some stage of their procurement processes
with some participating in online bidding Kioko and Mwangangi 2017(Ngeno & Kinoti, 2017)
carried out a study on the influence of e-procurement on supply chain performance in
supermarkets. The main objective of this study was to analyze the influence of e-procurement on
supply chain performance of supermarkets. The specific objectives were to find out whether e-
purchasing, and e-tendering have a positive relationship with performance in supermarkets. the
study concludes that performance of supermarkets can be improved by e-purchasing, and e-
tendering, this revealed the use of e-procurement systems also is termed to reduce ordering costs.

DYNAMIC CAPABILITY THEORY

The aspect of dynamic capability was first coined by David Teece, Gary Pisano and Amy Shuen
(Waithaka & Kimani, n.d.)The theory describes an organization’s ability to deliberately organize
its resources in an effort to improve performance. This will give the company the ability to
integrate, develop, and leverage on the environmental competitive advantage. Supply chain
management is now moving away from traditional processes to agile capability of competitive
bases of speed, flexibility, innovation, quality, and profitability through the integration of
reconfigurable resources and services in a fast-changing market environment (Yusuf et al., 2004).
This theory is related to e-order processing to cope and change with dynamic markets to be able
to provide goods and services to sugar processing to use in their production process in highly
dynamic and competitive environment. able to process customers’ orders quickly.
Evidently, e-procurement integrates the in-house and external procurement components to
address dynamics in the way organizations achieve operational excellence by reducing cost and
saving on time used to procure goods. Additionally, e-procurement is IT based, and will almost
always be up to date with the latest trends in the market.
CONCEPTUAL FRAME WORK

E-PROCURMENT SUPPLY CHAIN PERFORMANCE

 Quality
 E-Sourcing  Delivery
 E-Tendering  Lead time
 E-ordering
 CHAPTER THREE

RESEARCH METHODOLGY
3.1 INTRODUCTION
This chapter relates to the presentation of the study methodology. It consists of research
design, study area, target population, sample size, sample procedure, research tool, data
analysis, ethical consideration and limitations of the study.

3.2 RESEARCH DESIGN

The current study focuses one effect of e-procurement on supply chain performance in super
markets during the study, the research is designed to be descriptive research, intended to
comprehend the relationship between e-procurement and supply chain performance.
Researcher will be using questionnaires for collecting primary data, and it is to be cross sectional,
to collect the data at one time rather than recollecting many times. The study is going to be
quantitative in design when selecting the samples to analyze, and discover the
Information gathered through the questionnaires. We use online platform for surveys and let
population fill the forms. In the meanwhile, the online questionnaire on Google form has been
made and spread through emailing and texting the link of online questionnaire to the experts in
supply chain field.

3.3 RESEARCH POPULATION

Target population of study is intended to be the supermarkets in Mogadishu, Somalia and those
include small shops, mini supermarkets The exact number of supermarkets in the study area are
anonymous due to the unrest and difficulties in the security of the region, so that researchers
are not able to mention their numbers accurately.

3.3.1 SAMPLE SIZE

The researcher is using Slovin’s formula to calculate the sample size of appropriate population.The
Slovin’s formula allows the researcher to get an ideal sample size given a desired level of precision,
desired level of confidence, the predictable proportion of the attribute present in the
population. Cochran’s formula is considered as one of the most appropriate tools used when

the population number is large or infinite. A sample of any given size provides more information
about a smaller population than a larger one, then there is a correction through which the
number given

Slovin’s formula

𝑁
n= (1+𝑁𝑒 2 )
246
n = (1+246(.6)2 ) = 83

n = sample size
N=total population e
e=eError tolerance
Therefore, the sample size of the target population is 83 numbers of supermarkets

3.3.2 SAMPLE PROCEDURE

The study of the effect of e procurement and supply chain performance is used non-probability
sample, which is a method found on subjective judgment. Judgmental sampling is way of
sampling where the researcher uses his or her judgment to select population members who are
candidate for the accuracy of the information. This sampling method needs the researchers to
have preceding knowledge of their studies, so that they can accurately select and approach the
suitable participants for the questionnaires

3.4 RESEARCH INSTRUMENT

In this study questionnaires will be used as a tool of gathering from every respondent of the target
population. The main purpose of the questionnaire is to gather sufficient information in short
Period of time. The researcher will use the following scale “strongly disagree, disagree, neutral,
agree, and strongly agree”. The questionnaires will be distributed directly to the intended
respondents.
3.4.1 RELIABILITY AND VALIDITY OF THE RESEARCH
Researchers involved maintaining the reliability and validity of the study by testing the reliability
and validity of instrument. Testing for reliability is important as it concerns to the consistency
across the parts of a measuring instrument. A scale is said to have high internal consistency
reliability if the items bond together and measure the same construct. The most commonly used
internal consistency measure is the Cronbach Alpha coefficient. There is no exact rule that exists
for internal consistencies, however most agree on a minimum internal consistency coefficient of .70
(Hamid T, 2016).

3.4.2. DATA GATHERING PROCEDURE

Legality is prioritized, and before commencing the data collection, we request each office an
approval of proceeding to collect the needed answers. Closed questionnaire will be used to
collect research data. Respondents will be briefed about the study and its objectives. The
content of the questionnaire will be explained for them and will also be requested to answer the
questions as honest as possible.

3.4.3 DATA ANALYSIS

In this study, it will be used quantitative approach, and will be analyzed by using SPSS 25.0
version, regression, correlation, and descriptive statistics; mean. The aim of the questionnaire is
that it can answer the research questions as well as matches the research objectives. The
Questionnaire was regulated one to five scales, where: -
1 = Strongly Agree.
2 = Agree.
3 = Neutral.
4 = Disagree.
5 = Strongly Disagree.
3.5 ETHICAL CONSIDERATIONS
Respect: Respondents will be completely respected, whether entering their spheres or asking
questions.
Confidentiality: Respondents will be given complete guarantee of the maximum confidentiality
fortheir responds and their information will only be used for the study purpose.
Freedom to take part: All participants will be informed that they are free to answer the
questionnaire, and they will be informed that they have right to withdraw.

Informed consent: Consent will be secured from the participants after fully informing the nature,

Potential risks and benefits of the study.

3.6 LIMITATIONS OF THE STUDY

Since all research studies need time and money to finalize reaching the ultimate answer for the
research problem, yet the time and money are not the only constrains that researchers face.
Limitations in this study are the financial constraints that researchers experience during data
collection, language barriers for the respondents and their brassiness, an issues of dishonesty and
un-conscientious responses due to the instrument which is the questionnaires using without
other instruments such as interviews and observations to collect the data, and lack of exact
number of target population which may create difficulties in the accuracy of the sample
population.
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