Project Work Title

Project report

submitted in partial fulfilment of the requirements for

the award of the Degree of

Master of Business Administration

of the University of Kerala

Submitted by:

Student Name Initials134000xx

CET SCHOOL OF MANAGEMENT

COLLEGE OF ENGINEERING TRIVANDRUM

July 2015

CET SCHOOL OF MANAGEMENT

College of Engineering Trivandrum

2015

CERTIFICATE

This is to certify that the report titled “PROJECT WORK TI-

TLE” being submitted by Student Name Initials, Roll No. 134000xx,

in partial fulfilment of the requirements for the award of the Degree of

Master of Business Administration, is a bonafide record of the project

work done by Student Name Initials at College of Engineering

Trivandrum.

Dr. Chandramohan Guide’s NameDirector Professor

Declaration

I undersigned, hereby declare that the project titled “ProjectWork Title” submitted in partial fulfilment for the award of Degreeof Master of Business Administration of the University of Kerala isa bonafide record of work done by me under the guidance of Guide’sName, Department of Business Administration, College of Engineer-ing Trivandrum. This report has not previously formed the basis forthe award of any degree, diploma, or similar title of any other uni-versity.

Student Name Initials

iii

Acknowledgements

Write your acknowledgements here.

Student Name Initials

iv

Abstract

The objective is to minimize the overall system costs whichinclude the fixed costs of opening depots and using vehicles at eachdepot site, and the variable costs associated with delivery activities.A novel heuristic is proposed which is based on variable neighbour-hood descent (VND) algorithm to solve the resulted problem.

Keywords: keyword1, keyword2, keyword3, keyword4, and soon....

v

Contents

Page

List of Tables viii

List of Figures ix

Symbols and Abbreviations x

1 Introduction 11.1 Problem Definition . . . . . . . . . . . . . . . . . . . 31.2 Objectives of the Project Work . . . . . . . . . . . . 31.3 Scope of the Project Work . . . . . . . . . . . . . . . 31.4 Research Methodology . . . . . . . . . . . . . . . . . 31.5 Limitations of the Project Work . . . . . . . . . . . . 4

2 Company Profile 52.1 Background of the Problem . . . . . . . . . . . . . . 52.2 Introduction to the Industry . . . . . . . . . . . . . . 52.3 Introduction to the Company . . . . . . . . . . . . . 5

2.3.1 Company Profile . . . . . . . . . . . . . . . . 5

3 Literature Review 63.1 E-Procurement . . . . . . . . . . . . . . . . . . . . . 63.2 Different types E-procurement . . . . . . . . . . . . . 103.3 Indirect purchases . . . . . . . . . . . . . . . . . . . 123.4 Procurement Process . . . . . . . . . . . . . . . . . . 133.5 Implementation of E-procurement . . . . . . . . . . . 143.6 Benefits of E-procurement . . . . . . . . . . . . . . . 173.7 Challenges and risks of E-procurement . . . . . . . . 18

3.7.1 E-procurement process risks . . . . . . . . . . 22

vi

3.8 Relevance of Literature Reviewed . . . . . . . . . . . 223.9 Research Methodology . . . . . . . . . . . . . . . . . 22

3.9.1 Research Design . . . . . . . . . . . . . . . . . 233.9.2 Data Collection . . . . . . . . . . . . . . . . . 233.9.3 Tools for Data Analysis . . . . . . . . . . . . 233.9.4 Tools for Hypothesis Testing . . . . . . . . . . 23

3.10 Summary . . . . . . . . . . . . . . . . . . . . . . . . 23

4 Data Collection and Analysis 244.1 First section name . . . . . . . . . . . . . . . . . . . 24

4.1.1 Table referred here . . . . . . . . . . . . . . . 254.1.2 A section in another chapter referred here . . 25

4.2 Equation referred here . . . . . . . . . . . . . . . . . 254.3 Summary . . . . . . . . . . . . . . . . . . . . . . . . 25

5 Empirical Results 265.1 Tables in reports . . . . . . . . . . . . . . . . . . . . 265.2 Equations . . . . . . . . . . . . . . . . . . . . . . . . 265.3 Using the equation, table and figure numbers globally 275.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . 28

6 Results and Discussions 296.1 Sub-figures . . . . . . . . . . . . . . . . . . . . . . . . 296.2 Tables . . . . . . . . . . . . . . . . . . . . . . . . . . 306.3 Summary . . . . . . . . . . . . . . . . . . . . . . . . 30

7 Conclusions 32

References 33

vii

List of Tables

Table Page

5.1 First table . . . . . . . . . . . . . . . . . . . . . . . . 26

6.1 Results of the analysis 1 . . . . . . . . . . . . . . . . 306.2 Performance After Post Filtering . . . . . . . . . . . 31

viii

List of Figures

Figure Page

4.1 A sample figure . . . . . . . . . . . . . . . . . . . . . 24

6.1 Common Caption for the Two Figures . . . . . . . . 29

ix

Symbols and Abbreviations

α Fractional rate of adjustment of WIPβ Fractional rate of adjustment of inventoryµ̂D Single period estimate of demandσ̂ε Estimate of standard deviation of the forecastµD Mean customer demandν Coefficient of variation of demand processω Scaling factor of DINVΦ Standard normal cumulative functionρ Smoothing factor in demand forecastσD Standard deviation of customer demandb1 Back-order cost per unit per periodh Holding cost per unit per periodNn Total number of back order occurrences till period n

z Standard normal deviate Φ−1(DOFR)i.i.d. Independent and identically distributedASC Average system cost per periodBIBO bounded-input-bounded-outputCDn Customer demand in period nFDn Demand forecast for period n

FPS Forward flow production systemIFR Item fill rateOFR Order fill ratePCR Production completion ratePREL Production order release in a production ordering sys-

temTOAR Total orders adjustment rateTOR Total orders receivedWIPk WIP in the kth intermediate manufacturing stage

Provide only if it is absolutely required and essential in

x

the project report.

xi

Chapter 1

Introduction

In this new era, Internet has revolutionary effects on corporate

purchasing practices, in both direct and indirect purchases. Since

1980’s enterprises and companies have been adopting enterprise re-

source planning (ERP) or manufacturing resource planning (MRP)

for supply chain management. The diffusion of the new E-business

technologies in the late 1990’s has created new practices and new

business models for corporate business functions. While the focus

of companies and enterprises has been in the reduction in cost of

bought-in goods and services, there has been a need for procure-

ment managers in increasing their productivity and value creation.

This has prompted the interest of companies and enterprises in re-

designing their relationships with suppliers of indirect goods and

services. According to Orr (2002) indirect purchases can account for

thirty to sixty percent of a firm’s total expenditures. Especially for

service companies the expenditures can rise up to sixty percent of

overall purchases. However, the focus has been more on the sup-

ply chains for direct material suppliers than indirect, due to their

low transaction volumes, low product values and low strategic im-

portance. In order to achieve substantial savings and added value,

managers need to pay more attention to the indirect purchasing pro-

cess. Generally corporate practices related to the purchasing of in-

direct goods and services have been affected with problems, such

as inefficient buying, redundant and disconnected processes, non-

strategic sourcing etc.The emergence of Internet Technologies has

changed the way the procurement activities have done in companies

and enterprises with respect to the indirect materials. The major-

ity of organizational spending consist of purchasing. In order to

decrease the total costs spent on purchasing, internet technologies

are used and E-Procurement has become popular. As mentioned by

several researchers studying in this area, E-Procurement is named

as the Revolution due to its potential to reduce the total costs of

acquisitions. The empirical and theoretical economic literature on

government procurement auctions indicate that as the number of

suppliers or bidders in auctions increase the procurement price is

significantly lower. Thus, the success of E-Procurement systems

highly depends on the increases in number of bidders (suppliers)

that participate to procurement auctions. But the implementation

of E-Procurement has some restrictions namely technology adoption

and usage of E-Procurement systems by suppliers.Purchasing of in-

direct materials is gaining more interest from companies, because

of its potential impacts on corporate-wide savings and productivity

(Puschmann & Alt 2005), and that is why this project only con-

centrates on e-procurement for purchasing of indirect materials.This

project studies what e-procurement is all about.Also it examines the

impact of E-procurement in the purchase of indirect goods quan-

titatively as well as qualitatively, with special reference to BPCL-

Kochi Refinery, Ambalamugal, Ernakulam. This project aims to

find out why the greatly hyped E-procurement solutions for indirect

purchases have not succeeded as expected.

2

1.1 Problem Definition

Provide a brief description of the problem and its domain, the

practical importances of the problem, etc.

1.2 Objectives of the Project Work

The objectives of this project work are:

1. To measure the cost effectiveness of E-Procurement of indirect

materials in BPCL-KR.

2. To compare the lead time of traditional procurement and E-

procurement of indirect materials.

3. To compare the cost pattern of traditional procurement and

E-procurement.

4. To assess the role of E- procurement in market penetration.

5. To measure the role of E-procurement in inventory manage-

ment.

1.3 Scope of the Project Work

The scope of this project work to be included in this section.

1.4 Research Methodology

This section is to provide an overview of the selection of re-

search methods used in the project work, tools, variables, hypothesis,

especially with the data collection, data analysis, making inferences,

testing of the hypotheses, comparing the results, etc. This section

should provide only an introductory description. Description of each

3

has to be provided in detail after the literature review in the next

Chapter, Sec 3.9.

1.5 Limitations of the Project Work

Limitations to be followed by a last paragraph for chapterisa-

tion. A sample will look like the following.

Chapter 3 discusses the ........ Chapter 4 etc... The conclusions

of the findings are provided in Chapter 7.

4

Chapter 2

Company Profile

2.1 Background of the Problem

The background of the problem is discussed in this section.

2.2 Introduction to the Industry

The industry details have to be introduced in this section.

2.3 Introduction to the Company

Here comes the details of the company. If required, we can

provide a sub-section named company profile, as follows.

2.3.1 Company Profile

5

Chapter 3

Literature Review

Here comes the intro to the literature review done. Tell how

the review is classified into sections and subsections.... etc.

3.1 E-Procurement

Procurement activities are an inseparable part of any organiza-

tion. In larger organizations, purchasing activities get complicated

when various goods and services are needed for different departments

and sections. Van Weele et al. (2003) define procurement as follow-

ing: Obtaining from external sources all goods and services which

are necessary for running, maintaining and managing the company’s

primary and support activities at the most favourable conditions.

In general, procurement processes are categorized into two sub

processes (Harink, 2003): (a) Procurement transaction process:- It is

about transaction-oriented procurement, and (b) Procurement man-

agement process:- It consists of activities for management of pro-

curement transaction process.

There are several steps defined within procurement transaction

process. A procurement process consists of six steps: specifying

procurement strategy, selecting right suppliers,contracting, ordering

products and services, expediting and control of deliveries, and follow

up and evaluation (Van Weele, 2001). In addition, Harink (2003)

adds procurement management process. Many organizations and

firms began to use internet as a new way of doing business and this

triggered the rise of electronic commerce (e-commerce). According

to Garrett and Skevington (1999) e-commerce is trading by means of

new communication technology (e.g internet). It includes all aspects

of trading, including commercial market making, ordering, supply

chain management, and the transfer of money.

Business efficiency, increased automation of processes, retained

and expanded customer base, and reduced information costs are

some of the major benefits of e-commerce (Kuzic etal., 2002). Through

the rise of e- commerce, various products and services are available

online and organizations are able to procure their needed products

and services on-line. This initiative was the start of new era for elec-

tronic procurement (e-procurement). E-procurement refers to all of

the connective processes between companies and suppliers that are

enabled by electronic communication networks (Meier and Stormer,

2009)

Harink (2003) defines e-procurement as using internet tech-

nology for procurement process. Thus the ultimate objective of

e-procurement systems is to provide electronic services (e-services)

that facilitate procurement process. By automating processes and

work flows associated with purchasing, the firm expects to increase

the productivity of its purchasing agents, lower purchase prices of dif-

ferent types of goods and services, streamline the information flow,

business processes, and work flows involved in purchasing, eliminate

maverick buying (i.e., buying from unauthorized vendors),reduce or-

der fulfilment and processing times, reduce the number of suppliers

the firm is dealing with, streamline invoice reconciliation and dispute

resolution, reduce the administrative processing cost per purchase

7

order, integrate budgetary controls into the procurement process,

minimize human errors in the buying and shipping processes, and

monitoring and regulating buying behavior (Turban et al., 2005).

From a different perspective, e-procurement can be considered

as a way to benefit from real time information sharing and it provides

the opportunity to take advantage of total quality management and

supply chain management (Sriram and Stump, 2004). Many studies

investigate the effects of increasing the number of participants which

is named in the literature as competition effect. Gupta (2002) anal-

yses how many bidders are required for auctions to be competitive.

By empirically analysing highway construction auctions he shows

that the winning bid amount significantly decreases as the number

of bidders rises to the level of about six to eight firms.

Paarsch (1992) also argues that in the common value paradigm

(CVP), the competition effect would taper off when the number of

bidders is large, as a result of expected winner’s curse effect. In

the independent private value paradigm (IPVP), on the other hand,

the equilibrium bid function may be monotonic. Using data on tree

planting contract auctions, he tests and rejects the hypothesis that

the bid function decreases monotonically with the number of bidders,

as expected at standard first-price sealed-bid auctions within the pri-

vate value model. Empirical studies about government procurement

auctions show the importance of the competitive environment to

achieve savings in government procurement.

Iimi (2006) investigates the competition effect in the Japanese

Official Development Assistance (ODA) projects. Iimi reports that

winning bid decreases as the number of bidders increases. Thus,increasing

local firm participation in auctions strengthens bidding competition

and results in more efficiency at the auction level. Tas et. al.

(2008) analyses 130,094 government procurement auctions for the

8

years 2004 to 2006 in Turkey and finds that the number of bidders

significantly and negatively affects the procurement price.

E-Procurement is a method to reduce administrative costs,

lower inventory levels, shorten the ordering process, prepare organi-

zations for increased technological collaboration and lower the prod-

uct prices (Croom, 2000; Roche, 2001, Gunasekaran et.al., 2008).

Panayiotou et al. (2004) argue that the government can influ-

ence the e-Commerce through its business transactions and affect

the e-Commerce environment Robinson et al. (2005) It has been ar-

gued that e-Procurement helps the governments to save money and

provide a more accountable, more effective and faster way to manage

procurement.

The benefits of a successful E-Procurement system are: low-

ered transaction cost, rapid ordering process, wider vendor choices,

standardized and more efficient procurement system and better con-

trol on the procurement spending, less paper work, more potential

buyers through internet and re-engineered procurement work flows

(Gunasekaran et.al.,2008; Moon, 2005; Bendoly et.al.,2005). The

countries that implement E-Procurement systems get savings up to

13% as mentioned in the report prepared by the Office of Gov-

ernment Commerce of UK. The IDA report indicates that several

government departments have generated savings of GNP 1.6billion

(EUR 2.4 billion) April 2000 and 31 March 2003, exceeding the tar-

get of GBP 1 Billion (EUR 1.5 billion).4 South Korea successfully

implements government e-procurement through its KONEPS : Korea

ON-line E-Procurement System. KONEPS5 has become the world’s

largest cyber market reaching an annual trade volume of USD 43

billion by 2005. In 2005, through E-Procurement works, transaction

costs worth USD 4.5 billion have been saved yearly. The main rea-

son of this high rate of saving is the more competitive environment

9

achieved by higher participation of suppliers through adoption of

E-Procurement system.

Thus, a successful E-Procurement system requires high partic-

ipation of enterprises (suppliers).E-Procurement is used actively in

South Korea, Sweden, Singapore, Hong Kong, UK, USA and Italy.

Many governments, like Australia and Turkey, are taking actions to

implement E-Procurement systems. As mentioned above the success

of E-Procurement highly depends on increase in participation of bid-

ders (suppliers). Technology acceptance of the suppliers is crucial to

achieve significant savings with E-Procurement systems.

3.2 Different types E-procurement

Procurement is one of the largest expense in a company’s cost

structure and can have a significant influence on company’s overall

performance. Croom and Johnston (2003) recognize that procure-

ment activity is an important activity in all organizations whether

it is public, private or governmental. Procurement managers are

constantly looking for solutions to lower the high procurement costs

(processes, risks, reliability) by automating the supply chain (At-

taran & Attaran 2002; Trkman & McCormack 2010). There are

many types for e-procurement, but common to all is that e-procurement

consists of different applications (Knudsen 2003). The main differ-

ence of e-procurement compared to traditional procurement is that

it allows an individual employee to order goods and services directly

from their own PCs through the web (Croom and Johnston, 2003).

A large number of different applications and systems of e-

procurement are identified in the literature. De Boer et al. (2002)

divide e-procurement into six forms:

- E-MRO

10

- E-sourcing

- E-tendering

- E-reverse auctioning

- E-informing

This project mostly concentrates on e-MRO solutions, which

refers to the process of creating & approving purchasing requisitions,

placing purchase orders and receiving indirect goods and services by

using software system based on the Internet technology (de Boer

et al. 2002). Such solutions can be existing function within the

systems such as SAP, or totally independent solutions integrated

into ERP applications (Smart 2010). The solution enables employees

to purchase goods from preferred supplier catalogues. When the

purchase has been made the solution automatically routes employees’

selection of a good through the necessary approval processes and

protocols. (Davila et al. 2003)

Submarian and Shaw (2004) define e-procurement system as

a Web based client/ server application used to replace the manual

procurement process. Simply put e-procurement refers to the pur-

chasing of goods and services using the Internet. E-procurement

solutions cover three major procurement areas: procurement trans-

actions, procurement management and market-making. It also im-

pacts four major operative procurement activities, which are: search-

ing of products or services, order processing, monitoring and control,

and coordination of relevant information. On the buyer side the e-

procurement solution is usually connected to other existing informa-

tion systems, such as ERP. This allows companies to leverage critical

enterprise data present on these systems. On the supplier side, the

solution is mostly connected to the suppliers order fulfilment system

or product catalogues on the website of the supplier. (Subramanian

& Shaw 2004)

11

3.3 Indirect purchases

According to Neef (2001) procurement materials can be divided

into two separate categories: direct and indirect. Direct materials

are those involved in the manufacturing process and related to the

production of finished goods, whereas indirect materials relate to the

materials that do not result directly in finished goods.

Typical indirect purchases involve office supplies and furniture,

computer hardware and software, insurances, telecommunications,

travelling and cleaning materials (deBoer et al. 2003). Indirect mate-

rials are also widely referred in the literature as maintenance, repair

and operation (MRO) and non-product related (NPR) materials.

Most companies implementing e-procurement solutions start their

iniatives with the purchasing of indirect goods (Angeles & Nath,

2007).

Telgen and de Boer (1995) identified the typical characteristics

related to indirect purchases:

(1) They consist of a wide range of goods and services, which are

often purchased from an even larger number of suppliers.

(2) They are often time consuming as they consist of non-standardized

items which are usually purchased in small orders.

(3) They show high end user involvement in the tactical purchasing

phases which implies that indirect purchasing takes place virtually

all over the firm.

(4) In total a lot of money is involved in indirect purchases, and

(5) they attract low attention from managers.

Due to the varying characteristics of purchasing indirect mate-

rials, buyers often have to spend a lot of time dealing with individual

transactions. This means negotiating with suppliers, converting pur-

chase requests to purchase orders, handling queries and ensuring the

12

correct allocation of invoices received. This huge operational work-

load is time consuming and derives buyers to neglect more strategic

tasks (Puschmann and Alt, 2005).

3.4 Procurement Process

The procurement process is one of the most important pro-

cesses of a company. The procurement process usually varies between

companies due to activity times and relations with suppliers (Trk-

man and McCormack, 2010). A basic procurement process starts

with the specification of need and ends with settlement and pay-

ment. Presutti (2002) states that e-procurement systems have the

power to transform the purchasing process because it has an effect

on all of the steps identified.

E-procurement brings about important simplifications of the

operational workload for buyers by decentralizing the operational

procurement process, therefore improving the effectiveness and ef-

ficiency of the purchasing process and enabling buyers to focus on

more strategic tasks (Presutti 2002; Puschmann & Alt 2005). When

companies are adopting e-procurement solutions one has to remem-

ber that organizational changes (and / or process improvements)

can often bring even greater savings than implementation of a sim-

ple technology (Trkman and McCormack 2010).

Kalakota and Robinson (2001, s.308) have listed the five key

challenges Procurement managers are facing in the increasingly com-

petitive business world:

- Reducing order processing cost and cycle times - Providing enterprise-

wide access to corporate procurement capabilities

- Empowering desktop requisitioning through employee self-service

- Achieving procurement software integration with company’s back

13

office systems

- elevating the procurement function to a position of strategic im-

portance within the organization

E-procurement can help companies to achieve the targets listed above.

It can have an impact on the whole procurement function and its

processes, as well as other corporate business functions for example

accounting. Next, the benefits and challenges of implementing an

e-procurement solution are examined.

3.5 Implementation of E-procurement

Implementing an E-procurement solution is not as simple as

many businesses think (Croom and Brandon-Jones, 2005; Angels

and Nath, 2007) (Croom & Brandon-Jones, 2005; Angels & Nath

2007; Smart 2010). According to Yu, Yu, Itoga and Lin (2008)

companies implementing e-procurement need to clearly understand

the purpose of launching such a system. It involves careful analysis

about how e-procurement will affect a company and its strategy and

in which area it will obtain financial and non-financial benefits. The

drivers and problem factors behind adopting E-procurement tech-

nologies vary between companies, when businesses are adopting e-

procurement solutions there are several factors to consider on many

levels of the organization. To succeed in e-procurement implementa-

tion Kalakota and Robinson (2001, s.337-347) have proposed a seven

step roadmap for business managers. The roadmap starts with clar-

ification of goals and ends to the education of solutions end-users.

According to the authors all of the steps need to be covered thor-

oughly in order to fully succeed in e-procurement implementation.

Clarify your goals: Businesses should make sure that the business

problem or goal is well defined and understood. Procurement man-

14

agers need to ask themselves what are the functions you are trying to

improve and are the goals clearly defined and reachable Construct a

process audit: After setting the goal businesses should analyse their

current procurement process. It is important to understand where

you are now, in order to reach the tomorrow. Businesses should

first determine what kind of purchasing is the solution targeted to

support: direct or indirect. (Kalakota & Robinson 2001).

As Presutti (2002) states, for a business to realize maximum

value from an E-procurement initiative, the whole purchasing process

must be evaluated to determine if it needs to be reengineered. Create

a business case for e-procurement: Setting up a business case for E-

procurement implementation can be useful, as it forces the company

to systematically analyze the business (Kalakota & Robinson 2001).

Smart (2010) recognizes that there has been a problem in mea-

suring the value of IT investments and in building a business case for

such investments. This derives from the fact that, in many cases the

benefits from implementing an E-procurement solution are intangi-

ble and non-financial therefore some traditional accounting based-

methods such as ROI are not able to capture them (Piotrowicz &

Irani, 2010). Develop a supplier integration matrix: Without sup-

plier commitment and involvement, the e-procurement project is use-

less. Companies should develop a supplier integration matrix. The

matrix helps determine what kind of relationship is best for individ-

ual vendors (Kalakota and Robinson, 2001). (Kalakota & Robinson

2001). Involving suppliers in organizations e-procurement deploy-

ment is important, since it also has a significant impact on suppliers

IT-infrastructure and strategy (Croom and Brandon-Jones, 2005).

As Smart (2010) identified, neglecting the impact of suppliers in

company’s e-procurement deployment may lead to the failure of the

whole project. Select an e-procurement application: There is a vari-

15

ety of different e-procurement applications for companies to choose

from (de. Boer et al., 2002). By categorizing the products and ser-

vices purchased, companies can more easily decide on the required

procurement strategies and e-procurement applications (Smeltzer,

2001).

Kalakota and Robinson (2001) suggest four questions that man-

agers should think about, in order to define the right application

for their company: Will it support my procurement process; does

it leverage my other application investments; will it work seamlessly

with other applications and; is it extendible? Remember: integration

is everything: Integrating the e-procurement solution with suppliers

and company’s existing back-office systems is the most important

thing in e-procurement implementation (Kalakota and Robinson,

2001). According to Croom and Brandon-Jones (2005) Integration

with company’s finance system had a direct impact on the level of

process savings and was also an important determinant in selecting

the application. Educate, educate, educate: Redesigning the pro-

curement process and influencing end-user behavior towards the new

procedures and business rules is one of the 18 most critical factors in

a successful e-procurement implementation (Angels and Nath, 2007).

Change tends to generate resistance and managers should deal with

it by communicating and encouraging employees to comply with the

new guidelines (Kalakota and Robinson, 2001). Angels and Nath

(2007) propose that providing information about their spend to em-

ployees encourages them to take ownership of savings targets with

the use of re-engineered procurement processes.

16

3.6 Benefits of E-procurement

The benefits of adopting e-procurement technologies have been

widely researched in the literature (Kalakota and Robinson 2001; At-

taran & Attaran 2002; de Boer et al. 2002; Davila et al. 2003; Croom

and Brandon-Jones 2005). The primary motivation for companies

adopting e-procurement solutions has been cost reductions and pro-

cess efficiencies. Croom and Brandon-Jones (2005) found that cost

reductions in goods purchased comprise from three key issues: con-

solidation of purchase specifications; reducing the number of sup-

pliers and; through improved compliance with existing contracts. A

research by Quesada et al. (2010)proposes that E-procurement tech-

nologies affect positively to company’s procurement practices and

procurement performance. Positive impact on procurement practices

facilitates the development of operational tasks in the procurement

function, which leads to continuous improving. As the operational

tasks are performed more effectively the procurement performance

is enhanced.

According to Davila et al. companies using e-procurement

solutions report savings of 42 percent in purchasing transactions

costs. Another research by Croom and Johnston (2003) found that

E-procurement implementation can have up to 75% cost reduction

in procurement process costs and 16 - 18 % reduction in purchasing

price for indirect purchases.

According to Croom and Brandon-Jones (2005) complying with

existing contracts is an important mechanism for realizing lower

prices and discounts. The savings that come out from automat-

ing the process derive from eliminating paperwork and human in-

tervention, reducing transaction costs and cycle time and also from

streamlining and automating the audit trail and approval process

17

(Neef, 2001 s.48).

While the cost savings can be significant, de Boer et al. (2002)

argue that the total volume of purchases needs to be high, as well as

the amount of internal customers, in order to reach savings as high

as mentioned above. The research by Davila et al. (2003) also iden-

tifies that companies using e-procurement gain additional control

over maverick spending and can reduce the headcount supporting

purchasing transactions.

To support this Croom and Johnston (2003) found that e-

procurement can have a major impact on compliance on many differ-

ent levels of the procurement process: it supports managerial bud-

getary control; reduces data entering failures; offers greater trans-

parency and accessibility to corporate wide spending; improves sys-

tem reliability; and improves the access to managerial information.

3.7 Challenges and risks of E-procurement

A research by Smart (2010) identifies that there are numerous

obstacles in implementation projects to achieving in full the benefits

which e-procurement offers. In some cases the benefits of imple-

menting an e-procurement solution have been hard to evaluate. Pi-

otrowicz and Irani (2010) propose that companies should use various

measuring methods in order to fully track and understand how ben-

efits are distributed according to the level and area of their impact.

Even though the benefits of adopting e-procurement solutions can be

significant, there are some internal and external challenges and risks

related to the adoption of e-procurement. In a research by Smart

(2010) the researcher came to a conclusion that there has been a long

term problem with identifying value from IT investments and in cre-

ating a case for IT introduction in general. This is why companies

18

need a clear plan for implementing e-procurement technologies.

According to Kalakota and Robinson (2001) before the imple-

mentation of E-procurement, a company must first clearly define the

business problems its E-procurement solution is intended to address.

Furthermore, before an e-procurement solution can be deployed, a

company must undergo thorough procurement process reengineer-

ing. Automating an existing procurement process will only make

matters worse Sterman (2000).

Puschamann and Alt (2005) (Bijulal et al., 2013) recognize that

in the successful practices the redesigning of the procurement pro-

cess is focused on: reduction or elimination of authorization stages;

regulation of exceptions to a limited degree in the beginning; elimi-

nation of paper; integration of suppliers in the entire process chain;

and consideration of the complete process from searching for goods

through to invoicing.

A study by Angeles and Nath (2007) identified three important

challenges to E-procurement implementation:

- lack of system integration and standardization issues

- immaturity of E-procurement-based market services and end user

resistance

- maverick buying and difficulty in integrating e-procurement with

other systems

Lack of system integration and standardization issues relates to the

fact that E-procurement is still relatively new business application

and it is not unusual to find a lack of benchmarkable reference mod-

els. Another challenge is software immaturity and the lack of cer-

tain key features like invoicing, payment reconciliation or managing

of different geographical jurisdictions, tax structures, currencies etc.

Also, companies need to be aware of the possible hidden costs re-

lated to implementation of E-procurement solutions, such as system

19

integration, content aggregation and rationalization, catalogue and

search engine maintenance, supplier enablement, end user training

and procurement process re-engineering. These costs can easily ex-

ceed software licensing and maintenance cost by five to ten times

(Angeles and Nath 2007). The second challenge relates to the im-

maturity of providers of e-procurement services and the lack of sup-

plier preparation, and the resistance of solutions end users.In some

cases the immature service providers may not be able to provide a

complete suite of services, especially for more complex or advanced e-

procurement implementations projects. The immaturity of suppliers

and the lack of preparation is also a challenge for many companies.

After all, suppliers need to learn how to generate catalogs, process

electronic purchase orders, how to use invoicing mechanisms among

other tasks (Angeles & Nath 2007).

Including companies preferred suppliers is very important as

according to Davila et al. (2003) the success of e-procurement so-

lutions relies on the network effect that will be more effective if

enough players are adopting the same technology. The other chal-

lenge here relates to the resistance of end-users towards operating

the e-procurement solution.

To prevent this Angeles and Nath (2007) state companies should

encourage using new e-procurement technologies through intensive

training and educational sessions with end-users. The third challenge

is linked to the difficulty of changing purchasing-related behaviour

among the company’s employees. Some companies find it difficult

to eliminate maverick buying even after the implementation of E-

procurement. This can be prevented by intensive end-user training

and educational programs. Companies also need to be aware of

the problems in integrating the e-procurement solution with other

systems (Angleles & Nath 2007). According to Gilbert (2000) in-

20

tegrating E-procurement solutions with other business applications

(e.g. accounting) can be more complex than businesses think.

In a research by Davila et al. (2003) four risks associated with

adopting E-procurement technologies were identified. The authors

stress that these risks need to be carefully addressed before these

technologies are adopted. Internal business risks: Businesses have

to be careful while integrating e procurement technologies with other

business applications such as accounting, human resources, accounts

payable and cash management. Most companies already have in-

vested heavily in these other applications and the integration of E-

procurement should go as smoothly as possible, or it can jeopardize

the reliability of organizational information. External business risk:

e-procurement solutions also need to be able to cooperate with sup-

pliers IT-infrastructure. For e-procurement solution to be successful

suppliers must be accessible through the Internet and provide cat-

alogues to satisfy the needs of their customers. In some cases sup-

pliers might lack the resources to meet the demands of customers in

catalogue developing and updating. Companies also need to develop

mechanisms that provide the buyers with assurance that new suppli-

ers meet the expectations and standards relating to supplier quality,

service and delivery capabilities. Technology risks: Many companies

are unsure which e-procurement solution best suits the specific needs

of their company. The lack of widely accepted standards blocks the

integration of different e-procurement solutions across the supply

chain. The researchers insist that without widely accepted stan-

dards for coding, technical, and process specifications, adoption of

e-procurement technologies will continue to be slow and will fail to

deliver the promised benefits.

21

3.7.1 E-procurement process risks

This risk relates to the security and control of the E-procurement

process itself. Such issues can be related to, for example data security

and fraud prevention e.g. fake suppliers, fake bids etc. As identified

in the examination of earlier e-procurement literature, adopting E-

procurement solutions can provide substantial cost savings and other

benefits, but there are also challenges and risks companies need to

take into account when considering e-procurement adoption. Making

the procurement process more efficient and faster can be achieved

with the use of e-procurement solutions. Nonetheless, this requires

that the implementation process must be planned and executed thor-

oughly in order to minimize the challenges and risks companies might

face. While indirect purchases can sometimes account for a big part

of company’s overall spending it is important that also these pur-

chases are conducted following company policies and instructions.

Using e-procurement only for indirect purchases in the beginning

can act as stepping stone for companies before moving into compre-

hensive e-procurement which also involves direct purchases.

3.8 Relevance of Literature Reviewed

Use this section to write the relation between the problem being

analysed and the relevance of the reviewed literature. Also, relate

the concepts, tools and theory understood from the literature review

to the research problem.

3.9 Research Methodology

This section introduces the techniques and tools used for project

work, especially, methodology and sample selection, research design,

22

period of the study, sources of data, tools of data collection, tools

for data analysis, statistical analysis, broad hypotheses put for test-

ing, limitations, etc. This title resembles the section in Chapter 1,

Section 1.4. However, here the difference is that, the methodology

has to be correlated with the literature review done in this chap-

ter. In the previous chapter you will provide only an overview of the

methods adopted in the project work.

3.9.1 Research Design

Here you have to provide the design of the project work, setting

hypothesis and hypothesis testing tools used, etc.

3.9.2 Data Collection

3.9.3 Tools for Data Analysis

3.9.4 Tools for Hypothesis Testing

3.10 Summary

This is a must especially in this chapter, which will tell the

reader what are the points you accepted for the analysis and which

forms the basis for the study.

23

Chapter 4

Data Collection and Analysis

Some text...

4.1 First section name

Some text

A figure can be inserted as follows. Fig. 4.1 is in this section

and so on......

Figure 4.1: A sample figure inserted in a chapter

See how the figure in this chapter is used in another chapter to

refer to it by its number and page number. Check Chapter 5, page

no. 26.

4.1.1 Table referred here

We can see a sample table, Table 5.1, in page no. 26 referred

in this section. Any floating objects like this can be referred without

actually counting the page where it comes in the document. Just

say what to be done, the rest is up to LATEX.

4.1.2 A section in another chapter referred here

In Section 3.2, page no. 10, the different modes and different

practices in e-procurement has been discussed. The research in e-

procurement actually discusses the success stories of e-procurement.

4.2 Equation referred here

Any equation in the report can be referred anywhere like this.

Eqn. (5.3), page no. 27 is a sample equation that says about the

displacement of an object travelling with specific parameters.

4.3 Summary

Provide a paragraph to summarise every chapter.

25

Chapter 5

Empirical Results

In Chapter 4, a figure was inserted to show the capabilities of

LATEX. Now we can refer back to that figure like: Fig. 4.1, Page

no. 24.

5.1 Tables in reports

Like a figure, we can insert a table and refer it anywhere in

the document. The following is a sample table. Provide captions

for every table to enable readability. Usually the table captions are

provided above the table, as in Table 5.1

Table 5.1: First sample table with the table caption above the table

Left align Center Right alignone two threefour five six

5.2 Equations

We can have many types of equations. They are single equa-

tion, equation array, and aligned equations. The first one below is a

single equation.

p(x ≤ n) =n∑i=0

e−λx(λx)i

i!(5.1)

Now we can see an equation array.

f(x) = λe−(λx) pdf of exponenial (5.2)

S = ut+1

2at2 (5.3)

The above equations are aligned to the right. We can make

them aligned at any character. If we select the equal sign as the

alignment position, we have to use align environment like this.

f(x) = λe−(λx) pdf of exponenial (5.4)

S = ut+1

2at2 (5.5)

5.3 Using the equation, table and figure num-

bers globally

The above equations can be referred to at any position in the

document. It is by its identifiers. Eqn. (5.5) measures the distance

an object travels in time t, starting with an initial velocity u and

an acceleration a. Eqn. (5.1) gives the cumulative probability of a

Poison process that there will be n or less events in a given period of

x units of time when the process has an average rate of λ per time.

In the same way we can refer any table or figure in the docu-

ment at any place. Example, Table 6.2 is a sideways table, placed

alone in a page.

27

5.4 Summary

28

Chapter 6

Results and Discussions

The results of the analyses are presented in this chapter divided

in to different sections. Each section presents results of one analysis

each.

6.1 Sub-figures

Here we will discuss how to include figures side by side. Assume

there are two figures to be added. We have to create subfigure

environment inside the figure environment.

(a) First sub-figure caption (b) Second sub-figure caption

Figure 6.1: Common Caption for the Two Figures

Table 6.1: Results of analysis to determine the impactof factor A on system performance

Col 1 Col 2 Col 3 Col 4

Row 1 a b cRow 2 A B CRow 3 α β δ

6.2 Tables

Another table can be sideways as shown in the next page, Ta-

ble 6.2. The table is long and therefore a separate page is used.

6.3 Summary

30

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31

Chapter 7

Conclusions

Here comes the conclusions derived after completion of the

project work. It can extend to any number of pages. If it goes into

many pages, keep them under different and appropriate sections.

References

Angels and Nath (2007). Title of the article. Journal of Purchase 23,196–2004.

Bijulal, D., Anju A., and Lekshmi (2013). A study. IJPR 134 (4),653–564.

Croom and Brandon-Jones (2005). A title of the author’s choice.International Journal of Marketing 18, 34–46.

Croom and Johnston (2003). Title of the article. International Jour-nam of Purchase 23 (4), 78–93.

Gilbert (2000). Article title of the ppppp. Journal of Manage-ment 34 (7), 156–165.

Harink (2003). Title of harink’s paper. Journal in which it wasappeared 34, 23–41.

Kalakota and Robinson (2001). Title. Journal 3, 61–68.

Panayiotou, Panayiotou, and Panayiotou (2004). A title. Anotherjournal of managemnet 45 (3), 401–405.

Puschmann and Alt (2005). Title of the paper. Another journal ofManagement 22 (5), 25–34.

Robinson, Roinson, and Robinson (2005). Title of the paper. Ajournal of management 4 (1), 512–520.

Sterman (2000). Business Dynamics (4 ed.). New York: McGrawHill.

Trkman and McCormack (2010). title of the paper. ManagementJournal of Royal Society 3, 128–132.

33

Index

bidders, 2, 8

e-commerce, 7E-Procurement, 2, 3e-procurement, 22expenditures, 1

internet, 2

monotonic, 8

procurement, 9procurement process, 6purchase order, 8purchasing, 1

suppliers, 10

34