The main aim of this study is to find out the factors influencing e-procurement in the public health sector in Kenya with reference to Mama Lucy Hospital. The study will be guided by specific factors namely cost, government policy and training. The study will be guided by the following objectives, to assess the effects of costs, analyses the effects of government policy and to establish the effects of training on the e-procurement in the public health sector in Kenya
The study will adopt descriptive research design and will be mainly from primary sources i.e. interviews and questionnaires so as to give equal opportunity to all. The target population of the study will be 140 respondents and stratified random sampling method will be used where a sample size of 70 employees (50% of the total population) will be incorporated. The study will use stratified random sampling method. Data to be collected from respondents will be analyzed by the use of graphs, pie charts and table diagrams depending on techniques.
Table of Contents
TABLE OF CONTENTS vi
LIST OF TABLES vii
LIST OF FIGURES viii
LIST OF ABREVIATION/ACRONYMS ix
OPERATIONAL DEFINATIONS OF TERMS x
CHAPTER ONE 1
1.1 Introduction 1
1.2 Background of the study 1
1.2.1 Profile of the mama Lucy Kibaki hospital 6
1.3 Statement of problem 8
1.4 Objectives of the study 9
1.4.1 The general objective 9
1.4.2 Specific objectives 9
1.5 Research question 9
1.6 Significance of the study 9
1.6.1 Mama Lucy hospital 9
1.6.2 Other public hospital 10
1.6.3 Other researchers 10
1.6.4 Government 10
1.7 Limitation of the study 10
1.7.1 Fear 10
1.7.2 Confidentiality 10
1.7.3 Tight schedule 10
1.8 Scope of the study 11
CHAPTER TWO LITERATURE REVIEW 12
2.1 Introduction 12
2.2.Theoretical framework 12
2.2.1 The E-technology perspective theory 12
2.2.2 Resource based theory (RBT) 13
2.3 Conceptual framework 14
2.3.1 Costs 15
2.3.2 Government policy 15
2.3.3 Training 15
2.4 Reviews of variables 16
2.4.1 Costs 16
2.4.2 Government policy 21
2.4.3 Training 27
2.4.4 E-procurement concept 32
2.5 Reviews of critical literature 33
2.6 Empirical review 33
2.7 Summary and research gaps 35
CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY 36
3.1 Introduction 36
3.2 Research design 36
3.3 Target population 36
3.4 Sampling design 37
3.5 Data collection instrument and procedures 38
3.6 Validity and reliability 38
3.7 Data analysis methods 38
APPENDIX II 40
LIST OF TABLES
Table 3.1: Target Population………………………………………………………30
Table 3.2: Sample Frame…………………………………………………………..30
LIST OF FIGURE
Figure 1.1 Organization Structure 7
Figure 2.1: Conceptual Framework………………………………………………….28
LIST OF ABBREVIATIONS/ ACRONYMS
DEFRA Department For Environment Food and Rural Affairs
EOQ Economic Order Quantity
GDP Gross Domestic Product
ICT Information Communication Technology
KIM Kenya Institute of Management
OECD Organization of Economic Cooperation Development
PPDA Public Procurement and Disposal Act
PPDR Public Procurement and Disposal Regulations
ROK Republic of Kenya
SP Sustainable Procurement
TPS Toyota Production System
UNEP United Nations Environment Programme
WSSD World Summit on Sustainable Development
OPERATIONAL DEFININTION OF TERMS
Cost:- This is the value of the purchase of a product. It can be an indication of quality of a product and it also assist an organization to gain competitive in that low prices attract and induce customers to purchase the organizations products and high prices will create quality image
Government Policy:- Government policies help steer morality and integrity practices as organizations conduct their supply chain management practices. This helps in improving the ethics with the supply system adequately select its vendors and negotiate the best prices for goods services that it purchases.
Training: Is the process of identifying and developing the necessary knowledge and skills required for doing a job (Armstrong 2008).
E-procurement This is the business-to-business or business-to- consumer or business-to-government purchase and sale of supplies, work and services through the internet as well
as other information and networking systems
The chapter presents the background of the study, statement of the problem to indicate what made it necessary for researcher to carry out the study. The chapter gives the objectives of the study, significance, limitations and the scope of the study.
1.2 Background of the study
E-procurement is a crucial element in the working functions of any state. It refers to the electronic purchasing of goods and services in the right quality, from the right source and the right price all to meet a specific need. Every government has the obligation to provide essential services to its citizens. In Kenya, procurement consumes 45% of the national budget, excluding local government procurement. The close relationship between procurement and development demonstrates that there is need for transparency and accountability in the manner in which procurement is conducted. (Masime, 2009). This study aimed at determining factors affecting effective implementation of procurement practices in tertiary public training institutions in Kenya. Procurement is the process in which public or private organizations buy supplies or services to fulfill various functions such as shelter, transport and need for infrastructures, among many others (Talluri, 2008). According to (Chopra, 2005), procurement is the process of obtaining goods and services from the preparation and processing through to receipt and approval of the invoice for payment.
E-procurement commonly involves purchase planning, standards determination, specifications development, supplier research and selection, value analysis, financing, price negotiation, making the purchase, supply contract administration, inventory control and stores, and disposal and other related functions (Corsten, 2009). Public procurement is concerned with how public sector organizations spend taxpayers’ money on goods and services (Hall 2009). Public procurement is guided by principles taxpayers.
Globally, in many developed nations, public sector expenditure is substantial. Government organizations across the world tend to spend between 8 per cent and 25 per cent of GDP on goods and services (OECD 2006). In the UK, public procurement expenditure is approximately £150 billion (DEFRA 2007). Government is often the single biggest customer within a country, and governments can potentially use this purchasing power to influence the behavior of private sector organizations (Charles 2007).
Technology especially public e-procurement plays an important role for minimizing the risk of corruption in public procurement processes (OECD, 2008). Developed countries have adopted e procurement at a much faster rate and hence have thus enjoyed the benefits. For instance, in year 2010, over 60% of Korea’s total public procurement (124 billion USD) was conducted through e-procurement system (Chang, 2011). The EU missed a previous target to make 50 per cent of all procurements electronic by 2010. It is currently between 5 and 10% (European commission 2012). More than 50% of procurement processes in Kenya public organization are carried out manually (davis et. al, 1989). The manual processes are costly, slow, inefficient and data storage and retrieval poor (Malela, 2010).
According to e-government strategy paper (2004), e-procurement was one of the medium term objectives which was to be implemented by June 2007, but the process has been very slow and Findings show that most of the procurement processes in public sector are still manual with the internet only being used for e-mails and web browsing (PPOA, 2013). This slowed adoption of e-procurement in the public sector raises concern as to what challenges face adoption of e procurement in Kenya.
The role of purchasing in corporate success has changed considerably due to the advances in information technologies (IT) and information systems (IS). Web-based information systems enable several purchasing related activities to be managed electronically. Internet purchasing, which is business-to-business (B2B) at online marketplaces, and reverse auctions provide possibilities for e-procurement applications. This has enabled purchasing to shift its focus from day-to-day activities to strategic tasks, which can help organizations attain success in the face of turbulent environment.
The changing role of purchasing coincides with the growing acceptance of supply chain management. A supply chain refers to “the network of facilities activities and organizations that performs the functions of product development, procurement of material from vendors, the movement of materials between facilities, the manufacturing of products, the Distribution of finished goods to customers and after-sales support” (Mabert & Venkataramanan 1998).Supply chain represents all activities associated with the transformation and flow of goods and services from the sources of raw materials to end users (Ballou et. al, 2000).
Consecutively, supply chain management is “the integration of key business processes from end user through original suppliers that provides products, services and information that add value for customers and other stakeholders (Cooper et. al, 2007). Before the introduction of supply chain management, the focus was on firm-level performance.
In this context, e procurement has gained strategic visibility in its role in enhancing inter-functional and inter-organizational relationships (Ellram & Carr 2004) and has emerged as the driving force behind several supply chain practices. Today, e procurement is heavily involved in strategic sourcing, which can be defined as engagement in critical purchasing activities that span across organizational boundaries (Anderson & Katz 2008).
For firms, e-procurement means the integration of technological tools into purchasing activities taking place within supply chains while performing their operations. In other words, e-procurement is a deriving benefit attained from technological enhancements rather than using traditional a paper based method in procurement operations. In a more detailed explanation, e-procurement gains the advantage of E-Commerce to determine potential supply alternatives, to purchase goods and services, to transfer the prices of these goods and services and to interact with suppliers (Min & Galle, 2003). It has been noted that development adoption and implementation of e-Procurement has not been as easy as some of the solution providers have suggested, nor has it necessarily brought the anticipated benefits. Nevertheless, engaging suppliers in the process – especially small organizations is difficult given the massive investment expected in terms of providing catalogue information to buyers, and marketplaces using different technologies, platforms and business languages (OGC, 2002).
Difficulties in implementation stem from the tension between the urge to Buy Local policies designed to promote a local economy, and the efficiencies to be achieved through volume purchasing from large suppliers (AGV, 2003). Implementation rate of e procurement in many private as well public procurement systems has been slow and many organizations tend to overstate the degree to which they are involved in e- Procurement (MacManus, 2002). Despite the benefits that can be achieved from a successful e-Procurement adoption and implementation there has been reports of failures of e-Procurement initiatives in a number of organizations in developed world like in the USA and the UK; the results are even worse in the developing countries (Heywood, 2002).
This is due to the fact that e-Procurement result in large investments of time and money, without absolute certainty that its full potential will be achieved every time. Such success and failure stories imply that there is a need for a better understanding of factors that influence adoption and implementation of e procurement in the private health care sector. Tonkin (2003, p. 13) provides a succinct summary of this sector’s relationship with e-Procurement: However “The private health care sector cannot afford to uncritically follow the e-procurement fads and fashions, it can, however, form a strong base of self-knowledge, confidence and with an eye to the future become an innovator in this field. Organizations can often commit millions of shillings to develop their e-procurement programme. Thus an organization must take into account several key considerations before launching an e-procurement system. This is especially true for those who are focusing on operational management in a lean (cost/time sensitive) environment.
According to Neef (2001), some of the major reasons for this growth include significant process savings from automation, compliance, and purchasing advantage as well as reduced costs that organizations can experience by conducting transactions electronically. Although these are the basic benefits associated with generic e-commerce strategies, a majority of these B2B transactions have focused on the purchase of indirect materials (especially office products, disposable medical equipment, and travel services).However, other types of supply chain-related purchases, including maintenance, repair, and operating and replacement parts, and direct material purchases, are becoming more important operational management considerations in e-procurement services. E-Procurement implementation success is also closely related to early supplier/supply chain partner’s involvement. It is important to demonstrate the proposed solution to the supply chain partners and discuss any necessary changes, issues, and concerns such as various options in developing and maintaining supplier catalogues (Birks et al., 2001).
Providing opportunities for supply chain partners to offer their feedback will allow them opportunity to monitor areas for improvement and adjust their internal practices accordingly. This is because many supply chain partners may be unwilling to conduct business electronically with other agencies due to insufficient information about the benefits to be gained; they might see e-Procurement as a means by which a particular actor in the supply chain will simply attempt to force down prices (ECOM, 2002).
Top management support is also a crucial factor that influences success of e-procurement implementation. There is little doubt that senior management leadership is critical to the success of an e-Procurement implementation (AGV, 2003). The top management team (steering committee) must involve the project manager, any consultants working with the committee, and agency staff to develop an implementation strategy (ECOM, 2002). In this regard, considerable attention and support need to be provided by senior management to ensure that the procurement reform has been well understood in the agency (S&A, 2003). Furthermore, the executive management team is responsible for setting the vision and goals, bringing about collective commitment for change in process and organizational structures, and formulating the policies and strategies necessary to put an e-Procurement initiative in place (WB, 2003).
E-Procurement initiatives only deliver the planned benefits if the users and buyers make changes to the way they work, which requires championing the project and senior management sponsorship. Specifically important, but also challenging, is ensuring “Buy In” (Birks et. al, 2001). Birks et, al. (2001) suggest that the business case processes for e-Procurement should include identifying drivers, understanding the starting point, benefits, approaches, affordability, risks, and benefit realization. To ensure achievement of the e-Procurement objectives, the implementation project should proceed, as far as possible, in alignment with the business processes.
The healthcare and allied health industry is increasingly looking for innovative techniques and creative management solutions to handle manufacturing/supplier processes in a competitive manner. Strategic leveraging of e-procurement and Enterprise Resource Planning (ERP) has become a major target for such productivity gains, if properly integrated into existing systems ( Alan, 2004). In 2001, North America occupied 66% of the ERP market, Europe took 22%, and the whole of Asia was 9% (Roche, 2001). As more and more organizations strive to gain a competitive advantage, e-procurement and ERP adoption and implementation are the strategies of choice. Some organizations have experienced great success ranging from huge declines in inventory, breakthrough reductions in working capital, plentiful feedback on customer wants and needs, and the ability to view and manage the inner workings of suppliers, alliances, and customers (Smith et al., 2005).
1.2.1 Profile of the Mama Lucy Kibaki Hospital
Mama Lucy Kibaki hospital is recent government project which was completed and officially opened by former president of Kenya, Mwai Kibaki. This Mama Lucy Kibaki hospital was and is key Kenyan government’s effort to provide essential health services to Kenyans. It was financed by both the government of Kenya and China, which is a proof of Kenyan government’s efforts to improve welfare of Kenyan citizens in conjunction with Chinese government which financed the construction of the Mama Lucy Kibaki hospital facility in Nairobi as well as provision of medical equipments. The government of Kenya provided land and also supported purchase for the construction of Mama Lucy Kibaki Hospital. Mama Lucy hospital has expanded health facilities in Kenya, not only to the people in the Eastlands of Nairobi County in Kenya, but also to all Kenyans from all over.
This hospital has reduced the pressure in the Kenyatta National Hospital in Upper Hill part of Nairobi County which was previously serving the Nairobi residents. Since Mama Lucy Hospital was opened, the government of Kenya has increased its funding to upgrade and equip facilities that embrace information technology in the delivery of health services in Kenya. The government of Kenya has also ensured recruitment of more qualified health workers in Kenya in effort of improving its services to Kenyan citizens.
Some of the health services provided by the government of Kenya are such as reduction of maternal death in Kenya, infants deaths in Kenya and under five mortality in Kenya and reduction of killer diseases in Kenya such HIV/AIDS rates. Mama Lucy Kibaki hospital is a district hospital in Nairobi, located along spine road in Umoja 3 estate in Nairobi. Mama Lucy hospital is located in the east part of Nairobi in Embakasi Division. From Nairobi town you can access Mama Lucy hospital in Umoja estate by any public vehicle passing along Kangundo road such as buses to umoja estate Nairobi and most buses are found around Tusker bus station in Nairobi which is found along Ronald Ngala Street.
Figure 1.1 Management Structure of the Mama Lucy Kibaki Hospital
1.3 Statement of the Problem
In the modern competitive business environment, organizations need to embrace information communications technology in order to remain competitive. A number of public sector agencies worldwide have identified E-Procurement as a priority government agenda and have implemented or are in the process of implementing e-procurement systems (Kishor et al, 2006).
According to ROK, (2009), the five years ending 2007 had indeed been a period when government took bold steps to implement reforms under the Economic Recovery Strategy for Wealth Creation (ERS). As a result, real GDP grew steadily from 0.5% in 2002 to 7% in 2007 and per capita income increased from US$ 430 to US$735. E-procurement system implementation was one of the strategy framework that have been identified to yield significant benefits for government in terms of procurement cost reduction, enhancing efficiency and fighting corruption considering that 60% of government expenditure is spent through public procurement.
Globally, 60% of Information Technology applications in public procurement initiatives and projects do not deliver the expected benefits, (Soudry, 2007). Despite the great benefits of e-procurement technologies, its implementation is still at early stages (Aboelmaged, 2010). Studies done locally on the implementation of e-procurement have concentrated on other sectors other than the government ministries. According to Kangogo and Gakure, (2013), private entities such as Nation Media Group and Second-hand Motor vehicle importers have successfully embraced the use of e-procurement technology. This diverse nature of the outcomes in implementation of e-procurement systems may have attracted a number of researchers who want to understand the reasons for this diversity.
Kishor et al, (2006) concluded that if e-Procurement initiatives in the public sector are to assist the development of e-procurement across the information economy, there should be wider discussion on what constitutes the critical success factors (CSF). A million dollar question is that despite numerous benefits on the use of E-procurement in the government, it implementation has largely been slow. Therefore there exists a gap of knowledge on challenges of e-procurement systems in the public sectors.
This study is therefore intended to bridge the knowledge gap by seeking to examine challenges facing e-procurement systems in the public health sectors with reference to Mama Lucy Hospital.
1.4 Objectives of the Study
1.4.1 The General Objective
The main objective of the study will be to establish the factors influencing e-procurement in public health sector.
1.4.2 Specific Objectives
i. To assess the effects of costs on e-procurement in the public health sector in Kenya
ii. To analyze the effects of government policy on e-procurement in the public health sector in Kenya
iii. To establish the effects of training on e-procurement in the public health sector in Kenya.
1.5 Research Questions
i. How does cost affect the e-procurement in the public health sector in Kenya?
ii. To what extent does government policy affect the e-procurement in the public health sector in Kenya?
iii. What is the effect of training on the e-procurement in the public health sector in Kenya?
1.6 Significance of the Study
1.6.1 Mama Lucy Hospital
This research will enable the management Mama Lucy Hospital to develop effective E-procurement systems in the sector. This improves service delivery and helps in formatting production policies that helps reduce delays in production.
1.6.2 Other Public Hospitals
Other public hospitals will use the study as a basis of improving production. The recommendation in this study helps in redirecting their effort toward improving of E-procurement systems.
1.6.3 Other Researchers
E-procurement systems is and will continue to be studied as it is important process in any organization that determines the levels of inventory an organization has in the store. Information obtained would help future researchers in solving and finding answers to many questions.
Through effective regulation of policies and rules, the research study provides a basis of understanding how policies made by the government affect E-procurement system and facilitate search for solution and reduce law breakage.
1.7 Limitations of the Study
It is anticipated that there might be some problems in terms of information as many respondents feared being victimized for providing such information. However, the researcher will overcame this by initially seeking permission from the relevant bodies to get easy access to the information required and producing letter from the learning institution showing the purpose for which this study is intended.
Many departments regard internal information to be confidential. It is anticipated that many respondents will not provide the information required. To overcome this problem, the researcher will use and treat all the information gathered confidential and assure the respondents that the information to be used for academic purpose only.
1.7.3 Tight Schedule
There might be a problem in collecting data as some senior people were unreachable, due to their schedules. However, the researcher will make several visits to familiarize with the staff members and get enough time to ask questions. The researcher will produce a letter from the University to assure them that the research is for academic purpose and will be treated with most confidentiality.
1.8 Scope of the Study
The study seeks to find out the factors influencing E-procurement systems in public health sectors in Kenya. The study will be conducted at Mama Lucy Hospital located in East part of Nairobi, Embakasi Division area. The Target population will be 140 employees, senior management, middle managers and the support staff. The study will be carried out between October and December 2017.
Literature review is the scrutiny of both private and public document so as to get information relevant to topical issue under investigation. It is the processes of identifying; synthesizing and photocopy of all relevant information from other sources like journal, publications, and magazines e.t.c which helps the researcher identify and adopt relevant methods and procedures used in previous studies. This chapter therefore is devoted to review the literature related to the problem which is challenges in the e-procurement systems in the public health sector in Kenya.
2.2 THEORETICAL FRAMEWORK
2.2.1 The E-Technology Perspective Theory
Indeed it has been claimed that e-procurement has become the catalyst that allows organizations to finally integrate their supply chains from end-to-end, from supplier to the end user, (Gunasekeran& Ngai, 2008). In summation it is noted that the extent of e-procurement adoption remains in a formative stage, falling short of the type of e-sourcing and e-collaboration suggested by (Morris et al., 2000). The transition to modern e-procurement calls for strategic adoption (Gunasekeran& Ngai, 2008). Therefore this theory links effect of government policy on implementation of e-procurement. According to Min and Galle (2002), e-procurement is a business-to-business (B2B) purchasing practice that utilizes electronic procurement to identify potential sources of supply, to purchase goods and service, to transfer payment, and to interact with suppliers. The internet has been widely adopted by companies with the aim of improving performances both in internal processes and in processes going beyond their boundaries (Barratt&Rosdahl, 2002). The theory suggests if government policy support e-procurement there will be effective implementation of e-procurement related activities.
2.2.2 Resource based theory (RBT)
The search for Information Technology has been a key factor in procurement and supply chain management (Pressutti, 2003). Within this field, resource-based theory (RBT) has been identified as new set up for analyzing the sources and sustainability of Information Technology (Baily, 2008). According to RBT, Information Technology- measured as economic rent (Caridi et al, 2004) – derives from strategic resources. This Information Technology is sustainable to the extent that the resources upon which it is based are valuable, scarce, inimitable, and non-substitutable (Bales & Fearon, 2006). Further, RBT is based on concept that resources controlled by firms are different and relatively immobile (Pearcy & Guinipero, 2008).
First, it is difficult to know with certainty that competitors have stopped to attempt to imitate one’s Information Technology or will not attempt the same in future. Second, definition of sustainable Information Technology realizes on outcomes and excludes the technique and measurement of processes. These definitions do not address the changing nature of processes related to continuous improvement or organizational learning. Organizations acquire Information Technology from resources (such as new knowledge and capabilities) which are developed from time to time. Information Technology acquired from such resources will be sustainable since other firms which attempt to imitate them do not have the prerequisite organizational skills, capabilities and learning needed to emulate them (Bales & Fearon, 2006).
Therefore it is very important for any organization to boost its competitiveness by implementing unique resources such as human, capital and information technology.
2.3 Conceptual Framework
A conceptual framework is a set of broad ideas and principles taken from relevant fields of enquiry and used to structure a subsequent presentation (Biklen 2003). In conducting the study, a conceptual framework is developed to show the relationship between the independent variables and dependent variable.
Figure 2.1 Conceptual Framework
Independent Variables Dependent Variable
Cost is the value of the purchase a service or a product. It is an indication of quality of a service and it also assist the industry to gain competitive advantage in the market in that low prices attract and induce customers to purchase the meat as much as e-procurement processes are concerned in the health sector.
2.3.2 Government Policy
Government policy is the regulations set by the government in order to enable them smooth running of any institution in the country. A government policy tries to put regulation towards the running of the organizations so that it may ensure the running of the right undertakings. In this matter, the government can affect the process and procedures of e-procurement systems in government institutions.
A continuous employee training contributes towards improvement of the level of their competency in the execution of e-procurement systems in the health sectors. Competency is a standardized requirement for an individual to properly perform a specific job. It encompasses a combination of knowledge, skills and behavior used to improve performance. More generally, competency is the state or quality of being adequately or well qualified, having the ability to perform a specific role.
2.4 REVIEW OF VARIABLES
Stanley and Gregory, (2001).The aim of this criterion is to identify vital element of cost associated with purchase. The most common cost related with a product is purchase price, transportation costs and taxes operational costs are also being considered during e-procurement system. The operational costs include transaction processing; costs of rejects e.t.c but it requires more effort to estimate. Thus costs of rejects e.t.c. Thus, cost is very important criteria for e-procurement of the right supply. The cost factor has been measured based on the importance of the following cost / price dimensions in e-procurement system in telecommunication industry; raw materials cost, cost due to delay, costs of inspection, after maximization cannot be adhered without the cost minimization. The firm always requires the minimum price of the product to increase the profitability. The firm therefore must find a low cost supply base where it can minimize manufacturing cost related to the production of the product.
Basically, price containment leads to e-procurement attractively distribution cost contains the lengthy distribution channel cost; transport expenses, inventory cost, handling and packaging cost, damages during transportation and insurance costs. Since every business enterprise is all to procure at least cost possible, cost management brings a lot of business to those offering least cost, holding other factors constant. According to Thompson (2005) big organization entities are increasingly using increased funding to carry out their sourcing. This means that sourcing entities need be put in place. sourcing’ entities are also increasingly using improved funding to procure various goods of their interest. Given the breadth specialist nature, and past pace of change in this area we have not attempted to provide a comprehensive outline of it. Instead in this part, we provide: some policies and standards procuring entities may need to consider when sourcing that are additional to policies in this guidelines: and references to other guidance that procurement entities may consider when sourcing. procurement entity that system should ensure that any new measure established meet the same legal and policy obligation that govern all organizations policies. In addition, an employee entity will need to ensure that it adopts additional policies and standards covering the different measures and risks associated with e-sourcing
According to Owino (2000) transport means, dry weather and all weather roads exists in various parts of the World. As traders increasingly find themselves in roles involving movement of goods from one point to the other, infrastructure plays a big role in between the traders. Infrastructure sourcing continues to be a cross-functional part that depends on the effective collaboration of many different organizational actors for success.
Inside the customer organization, representatives of different departments must work together to maintain, enable and sustain good transport links. Alliances with other organizations outside the boundaries of one’s own firm are more necessary than ever as long ago. The key question is how these multifaceted relationships should be structured and managed. Internally, organizational structures, roles, standards, policies must be developed that facilitates effective co-operation. Externally contracts must be crafted that clarity expectation and responsibilities between the parties. Recent research, however suggests that big organization are best means to stimulate sourcing program (Owino 2000).
Managers must find the cultural and other mechanisms that create environments which elicit discretionary collaboration both internally and externally. Another exciting use for framework is to serve as the foundation for affords to reengineers sourcing measures. One firm analyzed the sub-processes involved in the requirements analysis and sustenance of sourcing life cycle to reduce sourcing and contracting cycle time. Instead of looking at the deployment sub – processors as a linear sequence of activities, this innovative organization used the framework to analyze and develop a compression strategy to reduce the cycle time in its road maintenance processes by preforming a number of sub-processes in parallel. Deployment processes consists of activities that are performed (to a greater or lesser extent). Each time a service is required, each individual sourcing can be thought of in terms of a life – cycle that begins with tendering. Each service that is acquired has its own individual iteration of this deployment life-cycle.
Aids management refers to transmitting ideas, feelings, suggestions and decisions to, Mutuko (2008). It enables sourcing chanels to communicate their responses, attitude and problems to management. Two way communications helps to build trust between the management and the employee’s hence stronger relationships.
Aid to coordination ensures proper and effective funding enhances communication act as a cementing force in uniting the suppliers agency into a well-knit and well directed team. Therefore effective funding helps to harmonize all the activities in the organization and creating good value for money. Effective funding enhances feedback between the organization and the supplier hence better performance. Effective funding also helps to avoid repeat works hence saving time. It also promotes better public relation through building a positive organization image to then corporate world.
The destruction of information may result from mechanical barriers, organizational barriers, and personal barriers. Information filtering may also be due to noise in the transmission line or because the communicator does not use the right words to give the meaning and precision to his or her ideas and interpretation (Smither, 2008). The noise problem can be overcome by repairing the mechanical defects or by organizing the communication system. In addition, filtering is caused due to the distance between the communicator and the receiver (Hofman, 2000). As you might expect, the management levels through which a message passes, the more it is prone to distortion. Information overload occurs when the amount of information received exceeds a person’s ability to handle or process it. Where the problem cannot be solved by introducing addition channels, the manager should ensure that the urgent and important messages are given preference over the routine types of communications. In adequate facilities may have a negative effect on mechanism for hearing and sorting out suggestions as well as complaints (Stower, 2002).
Vera and Pullman, (2001).The cost ratio is an additional method that relates all identifiable purchasing costs to the monetary value of the goods received from vendors. The higher the ration of cost to value, the lower the rating applied to the vendor. The choice of costs to be incorporated in the evaluation depends on the products involved. The costs associated with quality included the costs of getting to the websites plants and sample approval, inspection costs of incoming shipments, and the associated with defective products such as inspection procedures, rejection parts and manufacturing losses due to defective goods. Quality costs can be determined and documented by the quality control department, with the help of others departments such as production and receiving. The usual costs associated with delivery include communications, settlements and emergency transport costs. (For example air shipments) the same tabulation procedure is followed as the quality costs.
The cost ratio method establishes a “norm” of e-procurement services and evaluates vendors above and below the norm in relation to price. The subjective elements common to other methods are thus reduced.
Degraeve and Roodhof, (2003) the cost ration method is based on cost analysis that considers ratios for product quality, delivery customer service and price. The cost ratio measures the cost of each factor as a percentage of total purchase for this process. Due to flexibility of this method, any organization in any market can adopt it. The drawback of the method is its complexity and requirements for a development cost accounting system. Similarly the total cost of ownership, method attempts to quantify all of the costs related to the purchase of a given quantity of products or services from a given supply determined from the website. Optimum use to discounts available can read to substantial savings, in additional to the price components, other costs factors also play an important role, including the costs associated with quality shortcomings, e-procurements unreliable delivery services, transport costs, ordering costs, reception costs and inspection costs. This method uses activity based costing which is a management accounting technique that attempts to assign costs to cost generating activities within a business. This technique uses activity analysis, which defines the various activities performed by an organization.
Procurement encompasses the whole process of acquiring property and/or services. It begins when an agency has identified a need and decided on its procurement requirement. Procurement continues through the processes of risk assessment, seeking and evaluating alternative solutions, contract award, delivery of and payment for the property and/or services and, where relevant, the ongoing management of a contract and consideration of options related to the contract. Procurement also extends to the ultimate disposal of property at the end of its useful life (Waters 2004).
Operating costs are the expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility. They are the cost of resources used by an organization just to maintain its existence. For a commercial enterprise, operating costs fall into two broad categories: fixed costs, which are the same whether the operation is closed or running at 100% capacity. Fixed Costs include items such as the rent of the building. These generally have to be paid regardless of what state the business is in.
Variable costs, which may increase depending on whether more production is done, and how it is done (producing 100 items of product might require 10 days of normal time or take 7 days if overtime is used. It may be more or less expensive to use overtime production depending on whether faster production means the product can be more profitable). Variable Costs include indirect overhead costs such as Cell Phone Services, Computer Supplies, Credit Card Processing, Electrical use, Express Mail, Janitorial Supplies, MRO, Office Products, Payroll Services, Telecom, Uniforms, Utilities, or Waste Disposal etc (Owade,2008).
Among the more significant cost barriers is real and perceived cost premiums associated with green procurement in private sector. Other barriers include cost externalities that is; costs that are born by persons other than the purchaser and are not included in the price and situations in which financial interests of different parties involved are misaligned, which is sometimes referred to as the principal-agent problem. Such barriers may be especially difficult to overcome, except perhaps for misperceptions about cost. There is a perception that green products are more expensive than conventional alternatives. This is true in some cases, particularly where development costs are reflected in the price; however, often there is no significant difference. The real problem may simply be that products are being ordered in small quantities, or are not available locally.
Sometimes a green product may have a higher up-front purchase price, but will cost less over its lifetime. For example, a non-toxic alternative to a toxic product will cost less to transport, store, handle, and discard. It will require fewer permits, less training for staff, and the consequences of an accident will be greatly reduced. Similarly, a product that uses less packaging and that is easily recyclable or reusable will carry a lower disposal cost (Brammer & Walker, 2007). Uncertainties may include concerns about the stability of market demand for green products and services, which can vary with the costs of inputs such as energy, as well as risks that a nonstandard technology may not be effective in meeting green performance goals, and reluctance to invest in a significant immediate acquisition in a situation such as lighting where technologies are rapidly changing. Those barriers may also be particularly difficult to overcome.
Sustainable products are often perceived as being expensive or requiring a big capital investment (Blair and Wrigh, 2012). The UN Procurement guide reiterates that the whole process and outcomes are professed to be expensive and time consuming. This conflicts with procurement objectives of obtaining the goods at the lowest possible price (Lyons and Farrington, 2006). Cost is the prime decision factor in purchasing. Many public sector organizations do not have purchasing practices that factor in total cost of ownership, or full life cycle costs of the organization. Providing information and tools that will change these behaviors to favor environmentally preferable products will be key to overcoming the status quo (Sterner, 2002).
2.4.2 Government Policy
A policy is a body of principles, expressed or implied, laid down to guide an organization towards achieving its objectives policies are compulsory and must be adhered to by the people concerned while carrying out their duties within the organization. Policies provide guidelines when formulating functional and operational strategies. They also from a basis for management control and allow co-ordination amongst organizational units and provide authority based on principle for a given course of action moreover, policies help in reducing time spent by managers in decision making (Lyson,2006).
Lyson (2006) argues that policy is deliberate of action to guide decision thus helps in achieving rational results. It may apply to individual, groups, organizations, private sectors or government institutions policy can also mean the process of making vital decisions in the organizations, such as programmes and selecting them on the basis of their impact. Such policies can be selecting them on the basis of their impact such policies can be categorized as presidential executive orders, parliamentary rules of orders or even corporate privacy policies. Furthermore, policies can cover areas such as financial, political, administration mechanism aimed at attaining specific goals.
Policies vary significantly from the stringent to the very informal. Mostly government entitles and large corporations have stringent and formal processes thus making the goals of such policies to vary depending on the organizations and the context in which they are formulated. Basically, policies are typically instituted so as to avert negative effects that have been noticed in the organization (Lyson,2006).
Robinson (2007) stated that policies are directives designed to guide the thinking decisions, and actions of managers and their subordinates implementing a firms’ strategy, sometimes called standard operating procedures policies increase management effectiveness by standardizing many decisions and clarifying the discretion managers and subordinate can exercise in implementation functional tactics and in some instances, from corporate or business strategies with the key purpose of aiding strategies executive.
Policies communicate guidelines to decisions. They are designed to control decisions while defining allowable direction within which operational personnel can execute business activities. Policies establishes indirect control over independent action by clearly stating how things are to be done now by defining direction, policies in effect control decisions yet empower employees to conduct activities without direct intervention by top management policies promote uniform handling of similar activities without direct intervention by top management policies promote the coordination of work tasks and helps reduce friction arising from favoritism, discrimination and desperate handling of common functions, something that often hampers operating personnel (Robbinson, 2007).
Robbins, (2007) states that policies ensure quicker decisions by standardizing answers to previously answers to previously answered questions that otherwise would recur and be pushed up to the management hierarchy again and again something that requires unnecessary levels of management between senior decision makers and field personnel they institutionalize basic aspects of organizing behaviours. This minimizes conflicting practices and establishes consistent pattern of action in attempts to make the strategy work again, freeing operating personnel to act.
Policies reduce uncertainties in repetitive and day-to-day decision making thereby providing a necessary foundation of cp-ordinated efficient efforts and freeing operating personnel act policies counteract resistance to or rejection or chosen strategies by organization members. When major strategic change is undertaken, unambiguous operating policies clarify what is expected and facilitate acceptance, particularly when operating managers participate in policy development. (Robbins,2007).
Applicability and scope statement describes who the policy affects and which actions are impacted. This applicability and scope may express exclusion of certain organizations, people or actions from the policy requirement policy therefore address the intent of the organization, whether professional, government, voluntary or business. Policy affects the real world by guiding the decisions that are made most organizations have adopted policies, whether written or not (Clyson, 2006).
Policies offer predetermined answers to routine problems. This greatly expenditure dealing with both ordinary and extraordinary problems, with the former by referring to these answers, with the letter by giving operating personnel more time to cope with. They afford managers a mechanism for avoiding hastily and ill-conceived decision in changing operations prevailing policy always be used as a reason for not yielding to emotion-based, expedient, or temporary valid arguments for altering procedures and practices. Policies are usually associated with a strategic need for competitive secretary. Policies are usually associated with a strategic need for competitive secretary policies are usually associated with a strategic need for competitive reference, they ensure alterable transmission of policies, they require managers to think through the policy meaning content and intended use, they make equitable consistent treatment of problems more likely and they systematically enhance indirect control and organization wide coordination of the key purpose of policies (Mellar,2008).
The strategic significance of polices can vary at one extreme are such policies as travel reimbursement procedures which are really work rules and must not have an obvious link to the implementation of a strategy at the other extreme policies can be externally imposed or internally derived. Policies regarding equal employment practices are often developed in compliance with external requirement and policies regarding leasing or depreciation may be strongly influenced by current tax regulations policies play an important role in strategy influenced by current tax regulations policies play an important role in strategy implementation communication specific policies will help overcome resistance to strategic change, empower people to act, and foster commitment to successful strategy implementation he stated that policies empower people to act-compensation at least theoretically, rewards their action (Robbins,2007).
Pearce (2007) states that a policy is standing plan that communities broad guidelines for decisions in specific circumstances in matters relating to workforce for example, typical human resource policies address such matters as employee hiring, termination, performance, appraisals, pay increases and discipline policies should focus attention on matters of special organization consequences and then guide people in how they are supposed to deal with them. Good policies can help ensure that employee’s daily actions and decisions are consistent with organizational values, strategies and objectives – such policies are important to all types of organization, large and small alike.
Gamble (2006) states that a company’s policies and procedures can either assist the cause of good strategy executive or be a barrier. Anytime a company moves to a new strategy elements in place or improve its strategy executive capabilities, managers are well advised to undertake a careful review of existing policies and procedures, proactively discarding or revising those that are out sync. A change in strategy generally requires come change in work such changes is by instituting a selected of new policies and procedures deliberately aimed at steering the actions and behaviours of company personnel in a direction more conducive to good strategy execution and operation excellence.
Lysons (2006) argues that policies provide management by exceptional guidelines for routines actions, a new decision required only in exceptional circumstances and they lead to uniformity of procedures and consistency in though and actions. Policies are plans hence they guide in decision making i.e the storage, transportation and handling of merchandise is controlled by statutory legislation and subjected to official inspection. Policy cycle can also be referred to as a strategic approach which puts a range of postmodern academic challenge linear cycle models are unresponsive and unrealistic.
Policies are typically promulgated through official written, documents which have standard formats that are particular to the organization issuing the policy. While such formats differ in terms of their form, policy, documents usually contain standards components such as a purpose statement, outlining why the organization is issuing the policy and what its desired affect is.
In the modern global economy multinational players have to be privy to prevailing regulatory frameworks that exist in different countries. There are some underlying issues that affect t global sourcing directly or indirectly inside the legal framework. It is important however to note that globalization has changed the political and legal role in its society, in which the government reduced its control over the economics. The integration of economic and the Free Trade Organization are the main reasons behind the situation Penar (2008). However, the government especially in developing and under developing countries still attempted to protect their own local and national economic interests by issuing economic policies and regulation such as taxes, quota, protection, etc.
The imitation and duplication of global brands by local players are the common problem that many multinational and international companies faced in the developing and under developing countries. The regulation in patent and copyright is the main solution to solve these problems. Another problem related with the emerging of global products and brands is the boycott or the demonstration of the local people in the society whom are in particular organizations field to the global brands which are evaluated as the cause of the destruction of their organizations (Cappels, 2004).
The entire situation and condition above made the politicians had to be careful in issuing and establishing the policy or regulation by balancing the international and the national interests. If they supported more on the national interests than the international ones, consequently the country faced a problem with the international trade law and agreement and perhaps it is possible to be suffered by the international punishment like economic embargo. On the other side, if they supported more on the international interests than the national ones, consequently they lose the support from the people in the society (Evans, 2003). Companies that lack policy guidelines would not be able to offer effective management due to lack of discipline among its staff.
Policies offer guidelines to both staff and customers by setting standards of service to maintained and adhered to. In addition, policies ensure that management stays on course as they can fall back on them when in doubt or when issues are not clear to them or their staff. Moreover, without company policies, nothing can be achieved effectively; hence, codes of conduct must be adhered to at all times (Lyson, 2006).
Heery & Noom (2001) states that company policies are useful business tools. Often compiled into employee handbooks, they detail rules for employees as well as your company’s mission and goals. Don’t be daunted by the thought of writing your government policy numerous vendors can assist you in writing your company policies and procedures or can provide prewritten employee manuals or company policies and procedures handbooks. Here are the top considerations for company policies and employee policies: Create company policies and procedures, including employee policies, to set forth company regulations for everything from making personal phone calls at work to handling customer refunds. Organization policies and procedures are the best way to set forth rules and regulations and to outline disciplinary issues. Make sure all company policies and procedures, as well as employee manuals, are legal and compliant with federal, state and local requirements. Establish and enforce anti-discrimination and anti-harassment employee policies.
Many organizations policies and procedures vendors offer free trials or let you sample a limited number of resources before purchasing their software or templates. Personnel Policy Service, Inc. gives you 30 days free to try out their Personnel Policy Manual. Also check out their free procurement policy download center to download free company policies on rest breaks, sexual harassment, holidays, layoffs, recalls and more. Avoid workplace disputes (which can lead to employee turnover, poor customer service and declining workplace productivity) by setting forth company policies in writing. Plan to review and update your company policies, including employee handbooks, every year to ensure they address all current policies. Be specific in company policies and employee policies so there is no room for misunderstanding. Give new employees a government policy manual, and ask them to sign a sheet once they’ve read through the company policies and procedures. Don’t allow some employees special privileges while others are expected to obey all employee policies to the letter (Maventette, 2000).
Compton (2007) suggests that effective execution of organization procurement procedures greatly depends on the level of employees’ training since lack of professional trained staff on procurement functions limits the ability of the organizations to embrace procurement best practices through benchmarking. Charles (2007) contends that lack of professional training is a key impediment to maintenance of high level of professionalism in the execution of procurement procedures in many public sector organizations.
According to Andrew (2008), new training ideas are developed because trends are towards making training more practical, realistic and pertaining to employees? jobs. Training must give employees broader knowledge to enable them to effectively use new technology and integrate it into the workplace. Lower costs, better quality, faster return on investment, increased productivity and long-term growth are all achieved once employees adapt to changes and are trained accordingly. In the past, training was very classroom/instructor-oriented, this has recently proved ineffective compared to modern developments. More recent trends show training going beyond “job specific” to “continuous learning”, in which the focus is on other areas of expertise within the company.
In continuous learning, employees are encouraged to learn and understand the jobs and skills needed of those around them and more often perform them on a regular basis. Semi-autonomous work teams are most conducive in the continuous learning environment because each employee trains others in their group. This way, employees know one another?s jobs and can perform them in case of an employee absence. Employees begin to realize that learning and continuous training is as big as job itself (Christianne 2008). Training one another, or “train the trainer”, is another important aspect of continuous learning. It allows employees to develop new applications and techniques and share them with their peers or supervisors. (Christianne, 2008)Smith (2009) contends that lack of professional training on procurement functions and lack of continuous training on implementation of best procurement practices hinders the procurement staff in public sector organizations to effectively execute procurement procedures. Hall (2009) argues that the efficiency and the effectiveness of procurement procedures is hindered by absence of effective continuous employees training programmes that help in equipping the employees with competitive procurement management skills.
Armstrong (2008) affirms that continuous employees training contributes towards improvement of the level of their competency in the execution of respective job task functions. David (2007) argues that competency is a standardized requirement for an individual to properly perform a specific job. It encompasses a combination of knowledge, skills and behaviour used to improve performance. More generally, competency is the state or quality of being adequately or well qualified, having the ability to perform a specific role.
Ebrahim (2010) contends that from management viewpoint, training is associated with higher organizational productivity, it can improve the adaptability and flexibility of their employees and their responsiveness to innovation, it can be regarded as a means of engaging the commitment of employees to the organization and training programmes specific to the organization are of paramount importance not least because they bind the employee and cannot be used by rival organizations. A study by Emmanuel (2007) showed that in Africa, training of procurement personnel could greatly support effective implementation of procurement practices in many public training institutions. A study by Simpson and Power (2007) found that in many African government institutions, many procurement managers are not trained on implementation of effective procurement practices and this contributes to wastage of procurement funds.
A study by Arthur (2009) notes that many procurement managers in tertiary training institutions in Kenya lack competitive knowledge and skills on how to effectively embrace effective procurement practices and this hampers minimization of procurement expenditure. A study by Handfield (2009) notes that in UK, many public training institutions have succeeded in embracing effective procurement practices as a result of continuous training of procurement staff and employment of professionally trained procurement staff.
Findlay (2009) notes that in South Africa, many public training institutions have not managed to embrace effective procurement practices as a result of low level of staff competency, use of poor training methods, lack of qualified procurement staff with technical knowledge and skills on the requirements of effective procurement practices. A study by Cristianne (2008) reveales that lack of professionally trained procurement staff and employment of unqualified and incompetent staff discourages implementation of effective procurement practices in many public institutions in developing nations.
Training is the process that enables people to acquire new knowledge, skills and task performance in a more knowledgeable way than before. Training helps in updating workers, improve their working moral and sharpen their working skills. Training is of high importance in maintaining a productive and motivated workforce. Its main aim is to teach employees on how to perfome specific duties. The smooth and effective running of any organization depends directly on how well employees are required with relevant skills. New employees will need some of training to keep them abased of technology development.
Therefore, employees must be from time to time trained to perfome better of their present position and to prepare them for possible transfer, promotion and introduction of new technology and ways of doing things (Cole, 2002)
According to Armstrong (2004), training is important in e-procurement especially where upward growth through promotion can be instituted but people can still work on effective in their current role to develop illiteracy. Generally need to provide training to help maintain and raise performance and learning. Such training might be skills training like for a new piece of software or it could be time management or team motivation or it may be work on specific behaviors that helps in effective or team training which helps maintain motivation and management is a clear sign of organizational investment and its people. It also fosters employability both with homegrown and beyond. Training is to instruct and discipline in or for a particular art, profession, occupation or practicals. Above all, trainers’ role is to let learning happen to create a friendly environment and atmosphere that encourages the learning process. To organize and present information in such a way that participants can utilize it to improve their knowledge base to present activities that will reinforce the learned weakness and to check and re-check that learning is taking place.
Training is important and should ensure that groups are as the same as the objectives of the trainer, so that individuals can progress. Effective training can improve efficiency and moral, introduce new techniques, provide for succession, enabling qualified and replacements to be available raise the standard of unskilled persons thus helping to overcome labor shortage and lead reduction in scrap rates and improve machine utilization. Any learning process will require planning, extrusion, follow-up or revision phases, a training specialists described those as continuous cycle (Apple, 2004)
According to Maul (2006) teams that work well together have lower turnover. This results in reduced costs associated with recruiting, hiring new members. There are also several benefits to the culture or internal operations aspects of the businesses derived from team training. They include easier adaptability to change, either inside the organization or in the external environment as a whole. Generally, training refers to the creation of skills or characteristics that can be used only in the particular firms that provides training.
According to Cole (2002) firms adapting systematic approach to training and development will usually be about defining their need for training. In accordance with a well-organized procedure, such a procedure will entail looking at training need from a number of different perspectives. The organization corporate requirements, the department or functions the job or occupation group and individual employees. Trainer should identify what the issue is that requires training as a solution, ‘need assessment’. IT is vital to enquire about the skills needed to accomplish a function or a job, then identify who learners are, design; trainers design strategy to be used in accomplishing the training. He then gathers data on which to base the learning objectives, design the training approach and settle the training methods, tools and timing appropriate for the skills to be learnt.
Develop much attention at this phase is paid to look and feel of the final training and monitor the progress and response of trainers. This is a way of attempting to evaluate the effectiveness of the design and delivery at the training unfolds. Evaluation; if attended to properly, this phase can create better training programmers’ for the future and can serve to guide revision of the programme and give the trainer important feedback on his performance.
This phase leads directly back into the analysis phase during which that gathered in evaluation is used to determine further controlling and delivery of firm’s recourses to achieve the policy’s objectives. The size of management can range from one person in a small firm to hundreds or thousands of managers in multinational companies. In large firms the board of directors formulate the policy which is implemented by the chief executive officer (Roberts, 2003).
The reason for training is to grow and change; this was formulated by Bethel et al (1986). Industrial workers are often hired without specific skills and are trained on the job to perform skilled industrial operations. They went further to say that without effective training our complex industrial society could not operate. New technology, machines, laws, methods and managerial procedures make training an never ending task. Industrial training reconfirms ‘life- long learning’. Attitude and learning work together. Companies should not develop or purpose a training programme based on untested attitude assumptions. Doing so is asking up with the right answers to the wrong question; always define the target audience current attitude towards the subject that will be taught. This therefore means attitude change is an important component of the training design, the main objective being that what learnt has a direct bearing on improved performance.
According to Betcherman et al (2008), the hope is that employees who receive training in line with their individual or original goals will become more efficient in what they do. Organizations should look at the positive effects of training on employee’s performance and consider employee development as a targeted investment into making the frontline worker stronger. More importantly, development plans that include train the trainer (training that trains employees to become trainers of skills) can provide exponential benefits to the firm. This training can be benefiting from how employees can do their own jobs better than those employees being groomed to replace their supervisor. In addition, employees who are invested, as a trainer might be further inclined to stay with the organization and possibly reduce employee tune.
Mansdorf (2009) feels that training should be key to the role and responsibility of each participating in a safety program. Training should be a mechanism used to make sure that it equip each person with knowledge and tools necessary to carry out his function and make sound decisions, Cohen and Colligan (2008) looks at variety of training programmers. There’s the fundamental programs which involves institutions in prevention of work related injury through proper use and maintenance of tools, equipments, materials, knowledge of emergency procedures, personal protective equipment for operations or as an intern safeguard until engineering controls can be implemented.
2.4.4. E-Procurement Concept
E-procurement is the acquisition of goods and services without the use of paper processes (Panayiotou, Sotiris & Tatsiopoulos 2004). Procurement activities may be grouped and defined in three distinct ways: indirect procurement, direct procurement and sourcing (Minahan & Degan, 2001). Indirect procurement includes selecting, buying and management of supplies for the day to day running of the company. Direct procurement may sometimes be called supply chain management and involves buying goods and organizing activities to manufacture finished products. Sourcing can apply to both indirect and direct procurement and involves a four phase model (information, negotiation, settlement and after-sales) (Kim & Shunk, 2003).
Electronic procurement / tendering are not a strategy in itself but the use of electronic means to carry out the procurement / tendering process (Minahan & Degan, 2001). The buying process has considerably changed with the introduction of the internet and e-procurement removing lost time and errors resulting from the exchange of paper and retyping of data (Egbu, Vines & Tookey, 2004). Although the opportunities for improvement seem abound, both private and public sector are still cautious as far as the adoption of electronic technologies is concerned (Zheng, Caldwell, Harland, Powell, Woerndl, and Xu, 2004).Private and public sector organizations have been utilizing Information Technology (IT) systems to streamline and automate their purchasing and other processes over the past years. It is only in the past decade that e-Procurement systems have attracted attention. While there is debate about how currently e-Procurement has emerged, (Dai & Kauffman, 2001; Koorn, Smith & Mueller, 2001), there is no doubt that the use of the internet in e-procurement provides several advantages over earlier inter-organizational manual processes and tools.
2.5 Review of Critical Literature
Cost is the value of the purchase of a product. It can be an indication of quality of a product and it also assist an organization to gain competitive advantage in the market in that low prices attract and induce peoples to purchase the services that creates quality image. Though this is true, the study has not exploited on the effect of costs on e-procurement in public sectors in Kenya, thus leaving a gap to be filled.
Government policies help steer morality and integrity practices as organizations conduct their supply chain management practices. This helps in improving the ethics with the supply system. Though policies from the government creates specialized mind in in the industry, the study hasn’t shown how it affects e-procurement hence leaving a gap to be filled.
The study, however, failed to give recommendations on how health institutions should incorporate effective procurement practices in public procurement training organizations. This clearly demonstrates that training on implementation of effective e-procurement systems remains a major critical issue affecting implementation of effective e-procurement practices.
2.6 Empirical Review
Studies done have identified a number of drivers and identified a number of benefits or drivers for e-procurement implementation and maps the progress of usage of e-procurement across all sectors in private and public sectors. Hawking, Stein, Wyld and Forster (2004) investigated the barriers to e-procurement implementation in Australia identifying and ranking these in order of importance as inadequate technical infrastructure, lack of skilled personnel, inadequate technological infrastructure of business partners, lack of integration with business partners, implementation costs, company culture, inadequate business processes to support e- procurement, regulatory and legal controls, security, cooperation of business partners, inadequate e-procurement solutions and upper management support. Kennedy and Deeter-Schmelz (2001) concluded that organizational characteristics and organizational influences were significant motivators to the implementation of e-procurement.
With reference to Wu (2007) e-procurement applications focus on creating efficiencies where their goal is to make the traditional purchasing procedures more efficient and cost effective. On the other hand, the implementation of electronic commerce business models such as a procurement portal in organizations is a challenge that goes beyond mere technological functionality (Larsen 2008). Top management support organizational adaptation and training of employees are examples of issues for the successful implementation of e-business. (Kawalek, 2003). Chapman (2000) pointed that e-procurement adoption in any organization is frequently determined by technical capabilities and experience with ICT. Lin and Lee (2005) in their study illustrated that implementing a new technology such as e-procurement needs skill and knowledge to operate in the organizations and most organizations do not implement it because organizations’ employees are not familiar with new technology.
Research conducted in Greece on e-procurement adaptation, Panayiotou (2004) pointed out e-procurement strategy, re-engineering of procurement processes and management of expectations as key success factors in an e-procurement adaptation strategy. Their conclusion was that implementation must be achieved in a manner of “incremental change” where technological solutions apply to regulations and policies.
An investigation into the implementation strategy of e-procurement in the Irish public sector concluded that fundamental changes are required in the public sector procurement environment to achieve the benefits of e- procurement approach (Lee, 2007). It was found that the key issues could be grouped into a number of areas: procurement framework and practices, organizational arrangement, e- procurement technology framework, and the legal and economic environment. Among these issues, a strong and efficient organizational aspect was identified as a very critical success factor for efficient e-procurement implementation
A research carried out by Kinot (2013) on e- procurement adoption and implementation by government parastatals in Kenya: the supplier perspective, sought to examine how the supplier attitude, capacity, transparency and integrity affect their propensity to adopt it. The results are to indicate that the model examined in this study is significant with a score of 95% and that two of the independent variables had a significant relationship individually with prosperity to adopt e-procurement.
The results will show that there is a strong positive relationship between capacity and prosperity to adopt. The study intends to conclude that attitudes and supplier capacity leads to adoption or non-adoption of e-procurement. Orina (2013) studied on e-procurement readiness factors in Kenya’s public sector to determine the extent of e-procurement levels in public organizations in Kenya. The results of the study showed that lack of enthusiasm, resistance to change, staff skills and by some extent procurement policies impacted the readiness of e-procurement in public institutions. With factors analysis done on the responses, the derived factors from the rotated component factors matrix noted from that study were technology, organization`s finance, leadership and integrity, legal framework and technical preparedness
2.7 Summary and Research Gaps
Cost is the value of the purchase of a product. It can be an indication of quality of a product and it also assist an organization to gain competitive advantage in the market in that low prices attract and induce customers to purchase the organizations services.
Policies are rules by which government determines the way by which government determines the way business should be done in an organization. With well-regulated rules by the government and restrictions by the same, a rule concerning what to do and what not to, brings enables organizations to work in accordance with formulated rules. Managers should therefore set up clear rules that do not contradict with the government policy which leads to successful running of the organization’s operations.
A study by Simpson and Power (2007) found that in many government health institutions, many procurement managers are not trained on implementation of effective procurement practices since most training institutions have not embraced effective e-procurement practices in public health sectors.
RESEARCH DESIGN AND METHODOLOGY
This chapter discusses research design and methodology by looking at the research designs, target population, sampling design, data collection instruments and procedures.
3.2 Research Design
The plan and structure in which the study will be carried out is descriptive design. This is because of its appropriateness in giving accurate account of the characteristics of a particular phenomenon, situation, community or person. The descriptive research design will be undertaken in order to ascertain and be able to describe the characteristics of the variables of interest in a situation. This design will aim at collecting data on current conditions or situation (Kothari, 2004).
According to Kerlinger, (2006), He defines research design as, the plan and structure of investigation so conceived as to obtain answers to research questions. The plan is overall scheme or program of the research. It includes an outline of what the investigator does from writing hypotheses and their operational implications to final analysis of data. A research design expresses both the structure of the research problem and the plan of the investigation used to obtain empirical evidence on relations of the problem.
3.3 Target population
A target population is generally a large collection of individuals or objects that is the main focus of a research. According to Kombo and Tromp (2006), population is a group of individuals or objects or items from which samples are drawn from for measurements. It is an entire group of elements or persons that have at least one thing in common. The study will be carried out at Mama Lucy Hospital with a target population of 140 staff. This composition will be presented as follows;
Table 3.1 Target Population
Category Target Population Percentage
Top Management 2 1
Middle Management 10 7
Support Staff 128 92
Total 140 100
Source: Author (2018)
3.4 Sampling Design
To identify the sampling design, the researcher will use stratified random sampling for the study. According to Mugenda and Mugenda (2003). Subjects in the stratified random sampling are selected in a way that the existing sub-groups in the population are more or less reproduced in the sample. Kombo and Tromps (2006), point out that it involves dividing the population into homogeneous subgroups and then taking a simple random sampling method, it is used because it enables the researcher to achieve fair representation from various respondents to be chosen from the study. A sample size will be selected to make it convenient and easily accessible for researcher to select the sample size that was effectively managed. The sample size of 70 will be selected using stratified random sampling. This represents 50% of the total population and will be represented on table 3.2 as follows,
Table 3.2 Sample Size
Category Target population Sample Size Percentage
Top Management 2 1 1
Middle Management 10 5 7
Support Staff 128 64 92
Total 140 70 100
3.5 Data collection Instrument and Procedures
The researcher will use questionnaires to collect data from respondents. This method allows each respondent to receive the same set of questions in the same way for efficient to collection of data and ensures accurate analysis of the same. Questionnaires yield data more accurately and easily than information obtained through interview as they have open and closed ended questions. The questionnaires will be administered through a drop and pick method. The respondents will be given two weeks to fill the questionnaires and the researcher collects them after that period.
3.5.2 Validity and Reliability
The researcher will obtain authority from relevant departmental actions of the hospital to circulate questions to ensure reliability and validity. Before the actual issuing of questionnaires, the researcher will circulate a number of questionnaires to a set of respondents who will not be included in the study. After the circulation, they will be tested and corrected before final distribution to respondents. This will assist in ensuring that the questionnaires administered for final study are capable of soliciting the kind of information required (validity). This also will make it possible for similar study to be reciprocated with consistent outcomes (reliability).
3.6 Data Analysis Methods
The data will be collected using both quantitative and qualitative techniques which will be used. Quantitative method is a specific method used during analysis and included tables, graphs, charts and descriptive statistics, while qualitative technique is a method that uses textual data during investigation. Here the researcher will use his knowledge and judgment to interpret comments which will be obtained from questionnaires. The data will then be presented using tables and charts for clarity.