Achieving Supply Chain Excellence through e-procurement: A case study approach of Infrastructure Industry.

Presented By:Neha Grover Asian Council of Logistics Management Research ScholarDr. Rameshwar DubeyAssistant Professor-Logistics & Supply Chain ManagementUniversity of Petroleum & Energy Studies,Dehradun1st International Conference OnManagement of Technologies & Information Security21st-24th January,2010Venue:IIIT Allahabad

Agenda of Todays discussionIntroductionResearch objectiveLiterature ReviewResearch MethodologyConclusionLimitations and further scope of studyReferences

IntroductionWith 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 ObjectiveTo identify CSFs (critical success factors) behind e-procurement implementation.

Literature ReviewHere researchers divided literature review in three segments-Supply Chain Collaboration:It relates to the process of planning, development, and working together to achieve a common goal (Shafritz et.al, 1998).

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).

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: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).

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.

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 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). 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. 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) & YearContextConclusionEyholzera and Hunizker,2000Swiss CompaniesOnly 18% of the swiss companies used electronic product catalogs, auctions or requests for quotations in procurement.Wyld,2004American CompaniesAlmost half of all the American companies use e-procurement systems.Pani and Agrahari,2004Indian Steel IndustryMetaljunction.com generated substantial savings for TISCO and SAIL.

Puschmann and Alt,2005On 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,2006Greek food and drink industryUse of E-procurement in the Greek food and drink industry: Drivers and impediments.Kaliannan andAwang,2008 Malaysian e-Government StudyICT to enhance administrative performance.

Critical success factors for the implementation of collaborative environments for the Indian Firms.

Source: Blismas et.al, 2004

Project characteristics LocationCostDurationSizeNature of ownershipNature of contractCategory of projectComplexity to construction tasksComplexity to design and engineering

Project team characteristicsPresence of a championAbility of project managerPrior experience with collaborative environmentsInvolvement of team members during planning processTeam attitude towards collaborative environmentsTeam attitude towards ITType of internet service Frequency of collaborative environments features/ functions in-useParty decides to use collaborative environmentsParty who pays for the collaborative environmentsInternet access availabilityAlignment of collaborative environments implementation strategy to projectTeam strategyLevel of top management supportTrainingAvailability of resources

Service ProviderContact facilitiesPromptness of responsescompetencyattitudeKnowledge in construction business and problemsEase of useSoftware characteristicsFrequency of software updatesSystem reliabilityData quality and reliabilityData securityTypes of services Integration among collaborative environment featuresIntegration with teams internal systems/functionsIntegration with external software programmeNumber 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 InfrastructureIncorporated 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 organizations 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 Groups 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.

Potential critical success factors for the people issue

collaborative environment solution.

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.

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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