-
Using Electronic Procurement to Facilitate Supply
ChainIntegration: An Exploratory Study of US-based Firms
H. Pearcy, Eastern Michigan UniversityDelvon B. Parker, Michigan
State UniversityLarry C. Giunipero, Florida State University
AbstractWith ever-increasing competitive pressures, growing
numbers of firms use elec-tronic procurement (e-procurement) in an
attempt to reduce costs and increaseprofitability. Academicians and
practitioners alike agree that one of the mostimportant benefits of
e-procurement is its ability to facilitate integration withinthe
firm and across the supply chain. However, there is much to be
discoveredabout the prevalence of actual implementation of
e-procurement. The purposeof this study is to empirically examine
the extent to which firms operating in di-verse industries use nine
different e-procurement tools that differ in their abilityto
facilitate supply chain integration. The survey data were provided
by a sampleof 142 members of the Institute for Supply Management
(ISM). Factor analysisrevealed that the group of nine e-procurement
tools could be categorized intotwo types: basic, single-process
tools and integrative tools. A t-test of the meandifferences
between each type of e-procurement tool revealed that firms
usedbasic, single-process tools to a greater extent than they used
integrative formsof e-procurement. To fiirther explore firms' use
of e-procurement, we attemptedto ascertain whether the industry in
which a firm operates impacts use. Logisticregression revealed that
firm sector has an effect on the use of integrative e-procurement
tools, with firms operating in the petroleum and the
transporta-tion equipment sectors being less likely to use them
than their manufacturingcounterparts. These findings are important,
as previous research indicates thateffective supply chain
integration is associated with improvements in productionplanning,
inventory management, distribution, and overall supply chain
perfor-mance.
Keywords: electronic procurenfient, supply chain management,
supply chain integration
IntroductionWith increasing competitive pres-
sures, supply chain management pro-fessionals must continually
find waysto reduce costs, increase efficiency, andreduce lead time.
How does today'ssupply chain management profes-sional accomplish
all of this? Increas-ing numbers of firms use e-procure-ment in an
attempt to enhance thesekey business outcomes. This comes as
no surprise, given one of the key com-petitive priorities for
the 21" centuryis the maximization of Internet-basedtechnologies
such as e-procurement(Monczka and Morgan 2000). Amongother things,
Internet-based technol-ogies assist supply chain
managementprofessionals in the sometimes ardu-ous task of linking
supply chain mem-bers, which is a necessity in increasingthe speed
of information transfer and
reducing non-value adding processes.Supply chain management
profes-
sionals are faced vwth the challenge ofselecting and
implementing the mostappropriate e-procurement tools orapplications
to meet the needs of theirfirms. Some examples of available
e-procurement applications include on-line auctions, e-catalogs,
and e-mar-ketplaces to name a few. Whue theseand other forms of
e-procurement
Ainerican Journal /"BusinessSpring 2008 Vol. 23. No. 1
-
Pearcy, Parker and Giunipero
can prove to be beneficial, the sup-ply chain management
professional'sdecision-making process can be com-plicated by the
fact that these toolsvary in many respects, including theirability
to facilitate supply chain inte-gration within and across firms.
Somee-procurement tools involve applica-tions within a single
function (e.g.,electronic requisitions), while somefacilitate
integration across multiplefunctions within a single firm
(e.g..Enterprise Resource Planning [ERP]systems); others provide
integrationacross organizations (e.g.. ElectronicData Interchange
[EDI]).
PurposeThe opening quotes of this paper
underscore the importance of theuse of Internet-based
technologies,including e-procurement in the in-tegration of supply
chains. Althoughthe potential of e-procurement tocontribute to
supply chain successhas generated substantial interest,Cagliano,
Caniato, and Spina (2003)noted that evidence is stiU lackingwith
regard to the prevalence of ac-tual implementation and
effectivenessof these tools in firms. Researchershave made strides
in understandingthese issues in European firms (e.g.,Cagliano et
al. 2003, Frhlich andWestbrook 2002). This exploratorystudy
provides a first step in address-ing the gap in the literature
regardinge-procurement implementation issuesfaced by US-based
firms.
The purpose of this research is toempirically assess the extent
to whichUS-based firms use nine different e-procurement tools that
differ in theirability to facilitate supply chain in-tegration.
Furthermore, this studyexplores the relationship (if any) be-tween
the industry in which the firmoperates and the use of
e-procure-ment applications. Specifically, thisstudy addresses the
following researchquestions: 1) Which type of e-pro-curement
application is more widelyused (applications that are relevant
tosingle function/process or those that
integrate processes across functionsand/or firms)? 2) Is there a
relation-ship between the industry in whichthe firm operates and
the use of inte-grative e-procurement applications?It is important
to answer the afore-mentioned questions because theconcept of
integration is foundationalin effective supply chain manage-ment.
While a supply chain consistsof at least two or more distinct
enti-ties, the processes that occur betweenthem must be seamless in
order to beeffective. In other words, these enti-ties must come
together and operatein a unified manner in order to satisfycustomer
needs. Some of the benefitsthat are associated with the
integra-tion of supply chain processes includeincreased competitive
advantage, low-ered operational costs, and enhanced
competitive nature of today's businessenvironment makes the
effective use ofe-procurement an operational necessityfor firms; it
is an important issue thatmust be confronted by purchasing/supply
management decision-mak-ers now and into the future (Dooleyand
Purchase 2006; Davilia, Gupta 6cPalmer2003; Carter et al. 2000).
Someof the noted benefits of e-procure-ment include increased
collaborationbetween buyers and suppliers, reducedpersonnel
requirements, improved co-ordination, reduced transaction
costs,shorter procurement cycles, lower in-ventory levels, and
greater transparency(Dooley and Purchase 2006; Davila etal. 2003;
Min and Galle 2003; Turbanet al. 2002; Osmonbekov, Bello &
Gil-liland 2002; Rajkumar 2001; Carter etal. 2000).
"While a supply chain consists of at least two or moredistinct
entities, the processes that occur between themmust be seamless in
order to be effective. "coordination and collaboration amongsupply
chain members (Themistocle-ous, Irani & Love 2004).
In order to examine this topic, areview of the existing
literature one-procurement and supply chain inte-gration is
presented. The literature re-view is followed by an explanation
ofthe research methodology and results.The paper concludes with a
discussionof the findings, conclusions, and op-portunities for
future research.
Literature ReviewE-procurement
While a number of definitions ofe-procurement exist. Min and
Galle's(2003, 227) definition of electronicprocurement as
"business-to-businesspurchasing practice that utilizes elec-tronic
commerce to identify potentialsources of supply, to purchase
goodsand services, to transfer payment, andto interact with
suppliers" was adoptedfor this research because it is
compre-hensive. Many agree that the intensely
Giunipero and Sawchuck (2002)noted that the Internet can be used
asa research tool, allowing the purchas-ing professional to "shop
around" andcompare suppliers' capabilities and toperuse online
catalogs. Second, theInternet can be used to generate sav-ings.
Purchasing via the Internet is aneffective way to reduce otherwise
hightransaction costs for low-value itemssuch as maintenance,
repair, and oper-ating items. Third, Internet-based pro-curement
tools can be used not only toreduce transaction costs, but as a
meansof reducing prices paid for purchasedgoods/services. The
buying firm canuse the Internet to solicit bids from awider range
of potential bidders thanis possible using traditional methods.This
could increase the firm's chancesof getting a better price. Fourth,
thebuying firm can use an e-marketplaceand participate in online
auctions, bothreverse (where a buying firm makes itspurchase needs
known online) and for-ward (where a selling firm puts
goods/services up for sale on-line). Finally, e-
24 American Journal /"BusinessSpring 2008 Vol. 23, No. 1
-
procurement can be used as part of aneffort undertaken by the
entire supplychain, from the final customer back toa firm's
suppliers.
The Importance of Integrationin Effective Supply
ChainManagement
In order to understand the im-portance of integration in
effectivesupply chain management (SCM),one must first examine how
SCMhas been conceptualized and defined.The term SCM first emerged
in theliterature in the early 1980s and hasgained increasing
prevalence over thelast two decades. Pagh and Cooper(1998)
described SCM as a methodof integrating and performing logisit-ics
and manufacturing activities. Tanet al. (1999) defined SCM as "the
si-multaneous integration of customerrequirements, internal
processes, andupstream supplier performance". Fi-nally, Lambert and
Cooper (2000,66) defined SCM as "the integra-tion of key business
processes fromend user through original suppliersthat provides
products, services, andinformation that add value for cus-tomers
and other stakeholders". Al-though SCM has been defined
dif-ferently among scholars, a commontheme clearly exists: the
importanceof integration.
Internal and external integrationare indamental to superior
supplychain performance. Firms achieveinternal integration by
effectivelycoordinating processes on an en-terprise-wide basis. The
ability ofdistinct functions working togetherto create seamless
interfaces acrossprocesses is fundamental to firm andsupply chain
success (Narasimhanand Kim 2002). This requires deci-sion-makers to
reject the traditionalschool of thought in which the vari-ous
functional-level managers' pri-mary concern focuses on their
owndepartments (Rajagopal 2002). Ex-ternal integration entails
recognizingsuppliers as an integral part of thesupply chain and
engaging in collab-
orative efforts with these firms (Nar-asimhan and Kim 2002).
Integrationat this level is imperative because itincreases the
overall performance ofthe supply chain (Speckman, JW &Myhr
1998; Gattorna 1998).
The Role of ITin Integrating Supply Chains
The use of IT provides the basis forsupply chain integration by
providingefficient, timely, and transparent busi-ness information
to the appropriateparties (Cagliano et al. 2003). Someof the
relevant types of informationinclude operations, logistics, and
stra-tegic planning information. Sharingof this information enables
multiplefirms to engage in synchronous deci-sion making and can
lead to improve-ments in production, planning, inven-tory
management, and distribution(Sanders 2005). Due to its ability
toprovide vital information to the appro-priate parties, Sanders
(2005) dubbedIT the "backbone of supply chain busi-ness
structure."
Zeng and Pathak (2003) suggestedthat supply chains advance when
theyprogressively integrate multiple func-tions into the process.
This progres-sion is driven by the development, ad-vancement, and
implementation of IT,which allows coordination of activitiesand
processes between supply chainmembers (Zeng and Pathak 2003).In
addition, Daugherty, Germain, andDroge (1995) assert that the
greatestvalue associated with the use of ITmay be its ability to
allow users to de-velop networks that reach beyond theborders of
the individual firm.
Categorizing Typesof E-procurement Applications
A number of researchers havedeveloped classification schemes
ortaxonomies to categorize Internet-based tools (e.g., DeBoer,
Harink 6cHeijboer 2002; Kehoe and Bough-ton 2001; Whitaker et al.
2001;Brynjolfsson and Smith 2000). Thiscategorization is necessary
becausee-procurement tools differ in many
Pearcy, Parker and Giunipero
respects including costs, benefits,goals, and as previously
noted - inte-grative ability.
Frhlich and Westbrook (2002)surveyed a sample of UK-based
firmsin order to investigate the extent towhich they used
Internet-based tech-nologies to integrate supply chainactivities
such as inventory planning,order taking, and demand forecast-ing.
The authors categorized the re-spondents' usage into four
groups:
1. web-based, low integration (In-ternet-enabled focus on the
firmonly)
2. web-based supply integration(Internet-enabled
integrationbetween the firm and its sup-pliers)
3. web-based demand integration(Internet-enabled
integrationbetween the firm and its cus-tomers)
4. web-based demand chain (In-ternet-enabled integration
be-tween the firm, its suppliers,and its customers)
Frhlich and Westbrook (2002)found that the majority of firms
(63%)engaged in web-based, low integra-tion. The web-based demand
chaingroup was the smallest segment, withonly 4% of the respondents
in thiscategory.
Cagliano et al. (2003) conducteda study on a sample of
Europeanmanufacturing firms and identifiedfour clusters of
respondents basedon their use of Internet-based tech-nologies. The
authors categorizedthe firms in the following
manner:traditionalists (55% of the sample)did not use
Internet-based technolo-gies within the supply chain, e-sellers(23%
of the sample) used Internet-based technologies for sales and
cus-tomer care only, e-purchasers (14% ofthe sample) employed
Internet-basedtechnologies extensively, but only for
American Journalo/'lkisiiiessSpring 2008 Vol. 23. No. 1
-
Pearcy, Parker and Giunipero
the purpose of making purehasesfrom suppliers. Finally,
e-integrators(7% of the sample) used Internet-based teehnologies in
every aspeetof their supply chain processes. Thisincluded use in
internal operations,procurement, and sales.
Previous research has establishedthat e-procurement tools can
beclassified on the basis of a number ofcharacteristics, including
an abilityto facilitate integration. Based on thefindings of
Frhlich and Westbrook(2002) and Cagliano et al. (2003),the foUowing
is proposed:
P I : The use of less integrative e-procurement applications
willbe more prevalent among thesample firms than the use
ofe-procurement applications thatfacilitate integration
acrossdepartments and/or firms.
The Relationship betweenFirm Sector and the Use ofE-procurement
Applications
In an attempt to fiirther under-stand e-procurement use, the
authorsexamined previous research on the re-lationship between firm
sector and theadoption of technology. The resultsof a multi-sample
survey of Span-ish firms operating in various sec-tors, which was
conducted by Ortega,Martinez, and DeHoyos (2006), pro-vided support
for the premise that thesector in which a firm operates playsa role
in the acceptance of technolo-gies. Ortega et al. (2006) found
therewere factors that influenced technol-ogy adoption such as
perceived ease ofuse and usefiilness of the technology,but their
effect was contingent uponthe sector in which the firm
operated.Specifically, the authors found thatfirms operating in the
IT industrynot only perceived on-line manage-ment applications (the
technology inquestion) to be more usefiil and easierto use; they
also had higher adoptionintentions and intensity of use thanfirms
operating in the primary, indus-trial, and services sectors.
While a number of studies sug-gest that firm sector plays a role
intechnology adoption, researchershave taken somewhat different
ap-proaches to explaining this relation-ship. Ortega et al. (2006)
noted thatsome industries are characterizedby greater experience in
technologyuse, which facilitates the adoptionof additional
technological applica-tions (including e-commerce).
Additional research suggests thatindustries that are more
technologi-cally advanced promote greater andmore effective use of
the appropri-ate technologies (Chewlos, Benba-sat & Dexter
2001; Dyer, Cho &Chu 1998; Goodacre and Tonks1995). Thatcher
and Foster (2002)support this notion in their analysisof how
information technology has
evolved in firms operating in vari-ous industries. The authors
noted,for example that industries such astextiles tend to be less
technologi-cally advanced than other sectorssuch as electricity
companies, whichtend to be in the forefront of tech-nology
adoption.
Motiwalla, Khan, and Xu (2005)undertook a study to identify
thefactors that impact the adoption/useof e-business across three
differentsectors. The researchers concludedthat similarities in the
level of ITadoption were identified withinsectors because engaging
in a par-ticular activity prompts firms to de-velop similar
behavior patterns.Thiswould explain why firms engaged
ininformation-intensive activities aremore likely to accept new
techno-
Table 1Survey Items and Descriptive Statistics
We use Internet-based technologies to:
Plan and schedule production
Collaborate with suppliers on product design issues
Place orders on suppliers' web sites
Search for suppliers that will help us differentiate our
offerings
Achieve cross-functional coordination
Check suppliers' finances
Develop an integrated supply chain
Access electronic marketplaces
Use the software services of an electronic purchasing
solutionsprovider
Search for low-cost suppliers
Access on-line catalogs
Visit suppliers' web sites
Mean
2.80
2.88
2.91
2.94
3.08
3.31
3.32
3.33
3.44
3.62
3.63
3.85
StandardDeviation
1.16
1.21
1,21
1,19
1,06
1.16
1,08
1,12
1,14
1,10
1,10
1,03
1 = strongly disagree, 5 = strongly agree
/Vmericaii Journal /"BasinessSpring 2008 Vol. 23, No. 1
-
logical innovations. These firms doso primarily because using
advancedtechnologies provide greater stra-tegic benefits for them
(Yap 1990;Min and Galle 2003).
Dyer et al. (1998) found thatfirms operating in a particular
sectorrequire similar levels of efficiency ofmanagers, which can be
facilitatedby various levels of technology use.Similarly, Premkumar
and Rob-erts (1999) examined the intensityof competitive pressure
within thefirm's sector as a determining fac-tor in the adoption of
technologies.The authors maintain that firmsthat engage in more
competitiveeconomic activities are driven to
employ increasingly sophisticatedtools. Consequently, the
adoption/use of higher levels of technologyhas become strategically
vital forfirms belonging to sectors such astelecommunications or
distribution(Premkumar and Potter 1995).
Based on previous research, whichsuggests that the industry in
whichthe firm operates impacts the adop-tion of technology in
general and e-commerce specifically, the followingis proposed:
P2: A significant relationship willexist between firm sector
andthe use of integrative e-pro-curement applications.
Table 2Respondents' Demographic Information
Number of years employed in pur-chasing/supply management
Annual business unit revenues*
Dollar amount of purchases forwhich respondent is
responsible*
N
140
128
126
Min.
1,00
4,50
1,00
Max.
31
45,000
17,000
Mean
11,68
5,487,35
516,98
StandardDeviation
765
7,104,88
1,568,63
Ten Most Frequently Reported Position Titles (N = 140)
Title
Purchasing Manager
Senior Buyer
Director
(Strategic) Sourcing ManagerCommodity Manager
Vice President
E-procurement Manager
Buyer
Supply Chain Manager
Supply Manager
Percentage
19,7
14,8
14,1
8,5
77
5,6
5,6
4,9
3,5
2,8
' in millions of dollars
Pearcy, Parker and Giunipero
MethodologySurvey Participants and Mailing
The Institute for Supply Man-agement provided a list of
potentialsurvey participants in eleven differ-ent standard
industrial codes. Theindustries were: food products, pa-per
products, chemicals, petroleum,rubber, primary metals,
transporta-tion equipment, fabricated metals,computer equipment,
measuring andanalyzing instruments, and electricalequipment. One
thousand, twenty-five surveys were mailed to purchas-ing/supply
management profession-als with a cover letter explaining
theobjective of the research and a post-age-paid return envelope.
Follow-uppostcards were sent to all potentialparticipants two weeks
later in an at-tempt to increase the response rate.
The InstrumentThe instrument contained basic
demographic questions and items in-tended to assess
e-procurement tooluse. The scale to assess "e-procure-ment tool
use" was developed by theresearchers. The survey items
reflectedInternet-based activities discussed inthe SCM literature
and the popularbusiness press, along with general sug-gestions by
Porter (1980, 1985) in adiscussion of ways to achieve competi-tive
advantage (applied in the contextof Internet-based technologies).
Thescale was anchored with the statement"we use Internet-based
technologiesto..." followed by a list of e-procure-ment
applications. The e-procurementapplications assessed were as
follows:plan and schedule production, collab-orate with suppliers
on product designissues, place orders on suppliers' websites,
search for suppliers that will helpus differentiate our offerings,
achievecross-functional coordination, checksuppliers' finances,
develop an inte-grated supply chain, access e-market-places, use
the software services of ane-purchasing solutions provider,
searchfor low-cost suppliers, access on-linecatalogs, and visit
suppliers' web sites.Each item was measured on a Likert
American Journal /BusinessSpring 2008 Vol. 23, No. 1
-
Pearcy, Parker and Giunipero
scale ranging from 1 = "strongly dis-agree to 5 = "strongly
agree". Table 1contains the scale items along withdescriptive
statistics.
Response Rateand Sample Demographics
Of the 1,025 surveys mailed, a totalof 142 useable surveys were
received- resulting in a 14 percent responserate. While this
response rate may ap-pear somewhat low. Min and Emam(2003) note
that response rates lessthan 20 percent are not uncommonin the
supply chain management lit-erature when the research
methodinvolves mail surveys (see Petersen,Ragatz C Monczka 2005;
Claycomband Frankwick 2004; Wisner 2003;Carter and Narasimhan
1996). It ispossible that the response rate wasimpacted by the fact
that the surveywas only relevant to firms that use atleast one type
of e-procurement ap-plication listed. If a firm did not useany of
the nine e-procurement appli-cations listed on the survey, it
couldnot be included in the sample.
In order to assess the potentialof non-response bias, the
research-ers implemented a commonly usedtechnique advanced by
Armstrongand Overton (1977). Multivariatet-tests were performed on
each itemto determine if there were statisti-cally significant
differences betweenearly and late respondents. The firsttwenty
questionnaires received wereconsidered early responses and thelast
twenty received were consideredlate. No statistically significant
dif-ference existed between early andlate respondents. Thus,
non-responsebias did not pose a threat to the studyresults.
The respondent possessed con-siderable experience in
purchasing/supply management and had sig-nificant responsibilities
within theirfirms. The mean doUar amount ofpurchases for which the
respondentwas responsible and the respondents'annual business unit
revenues variedwidely. The respondents were em-
Table 3Respondents' Primary Line of Business
Industry
Manufacturing
Food
Automotive parts
Petroleum/gas
(Tele)communicationsChemicals
Transportation equipment
Pharmaceuticals
Metals/mining
Paper/paper products
Consumer products/packaged goods
Lawn and garden
Electronics
Consumer plastics
Inertial instruments
Medical equipment
Self-test diagnostic systems
Utility/power
Aircraft
Optical components
Semi-conductor
Industrial equipment
Tires
Computer (hardware and software)Office equipment
Personal care
Convenience store
AC/CE equipment
Agricultural products
Heating, ventilation, and air conditioning
Cans
Total
Frequency
28
12
11
10
8
7
7
7
6
4
3
3
3
3
3
3
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
142
Percent
19,7
8,5
7,7
7,0
5,6
4,9
4,9
4,9
4,2
2,8
2,1
2,1
2,1
2,1
2,1
2,1
1,4
1,4
1,4
1,4
1,4
1,4
1,4
1,4
1,4
,7
,7
,7
,7
,7
,7
100.0
/VmericanJournal f/Bu,sinessSpring2OO8''Voi, 23. No. 1
-
Pearcy, Parker and Giunipero
Table 4Rotated Component Matrix
SURVEY ITEMWe use Internet-based technologies to:
Develop an integrated supply chain
Plan and schedule production
Collaborate with suppliers on product design issues
Achieve cross-functional coordinationSearch for suppliers that
will helpus differentiate our offerings
Search for low-cost suppliers
Visit suppliers' web sites
Access on-line catalogs
Place orders on suppliers' web sites
Component
1
.70
.70
.85
.81
.62
-.14
-.10
-.01
-.04
2
.28
.06
-.03
-.02
-.10
.68
.77
.88
.64
Extraction Method: Principal Component AnalysisRotation Method:
Varimax with Kaiser Normalization
Total Variance Explained
Component
1
2
Eigenvalues
Total
3.10
2.97
% of Variance
25.80
24.75
Cumulative %
25.80
50.55
Extraction Method: Principal Component Analysis
ployed in thirty-three different in-dustries, with manufacturing
beingthe most commonly reported.The ex-tent to which each industry
reportedwas representative of the number ofsurveys mailed varied
widely, with alow of 4 percent for paper and alliedproducts to a
high of 20 percent forboth transportation equipment
andmeasuring/analyzing instruments.The mailing resulted in no
responsesfrom those employed in the "fabri-cated metals" industry.
Table 1 con-tains a summary of the respondents'demographic
information and Table3 lists the respondents' primary lineof
business.
Data AnalysisIn order to test the first proposi-
tion that the use of less integrativee-procurement tools would
be moreprevalent among the sample firmsthan the use of integrative
e-procure-ment tools, the data were analyzedusing the Statistical
Package for theSocial Sciences (SPSS 13.0). Whenthe "e-procurement
tool use" scale wasdeveloped, it was believed that firmsused two
general types of e-procure-ment applications: applications thatare
relevant to one fianction/process orapplications that help firms
integrateacross functions and/or firms. Thissuggested the scale
would be com-
posed of two underlying factors. Con-trary to that presumption,
the initialexploratory factor analysis (EFA) onthe 12-item scale
revealed three fac-tors. The first factor was composed offive items
with factor loadings rang-ing from .59 to .84. Four items
com-prised the second factor, with factorloadings ranging from .61
to .86. Thethird factor only contained two items,"we use
Internet-based technologiesto: access e-marketplaces" and "usethe
software services of an e-pur-chasing solution provider". The
itemshad factor loadings of .90 and .66respectively. Using
Tabachnick andFideU (1996) as a guide in approach-ing two-item
factors, correlationswere examined. The correlation be-tween the
aforementioned items didnot exceed .7 (r = .44), nor were
theyrelatively uncorrelated with the otheritems. Consequently, the
items weredeleted. An additional item, "we useInternet-based
technologies to checksuppliers' financial status," failed toload on
any factor, with factor load-ings of only .16, .28, and .29.
Accord-ing to Comrey and Lee (1992), factorloadings less than .45
are consideredpoor; therefore this item was also de-leted.
Factor analysis was performed onthe remaining nine-item scale.
Therotated solution revealed two fac-tors. The first factor was
composedof five items and had factor loadingsranging from .62 to
.85. Four factorscomprised the second factor and hadfactor loadings
ranging from .64 to.88 (see Table 4).
Next, an attempt was made to la-bel the factors. The first
factor, whichincluded items such as, "we use In-ternet-based
technologies to: achievecross-functional coordination
andcollaborate with suppliers on designissues," was labeled
"integrative e-procurement tools". The second factor,which included
items such as, "weuse Internet-based technologies to:search for
low-cost suppliers and visitsuppliers' web sites," was labeled
"ba-sk, single-process e-procurement tools."
American Journal i/BusinessSpring 2008 Vol. 23. No. 1
-
Pearcy, Parker and Giunipero
In order to determine if each of theaforementioned sets of items
could betreated as distinct scales, discriminantvalidity was
tested. Within each set,the items exhibited significant
corre-lations (ranging from .27 to .69) andwere uncorrelated across
sets. Thissuggested that discriminant validityexisted. In addition,
both sets of itemswere found to be reliable based onthe assessment
of Cronbach's alpha(Cronbach 1951). Cronbach's alphafor the "basic,
single-process e-pro-curement tools" scale was .77; it was.80 for
the "integrative e-procurementtools" scale.
The next step in testing PI was toascertain which type of
e-procure-ment tool use was more prevalent.To accomplish this,
summated scaleswere developed for each set of itemsand t-tests were
conducted to deter-mine if significant differences existed.The data
indicated that significant dif-ferences existed between the means
ofthe "basic, single-process e-procure-ment tools" and the
"integrative e-procurement tools" (means = 3.50 and3.01
respectively, t = -6.77, p
-
TableCluster Centroids
Variable
Search for lowcost suppliers
Visit suppliers'Web sites
Access on-linecatalogs
Place orderson Web sites
Develop integrated SC
Plan and scheduleproduction
Collaborate with supplierson product design
Achieve cross-functionalcoordination
Search for suppliers todifferentiate
Panel A
Cluster 1(n = 44)
4.00
4.09
3.75
2.91
2.77
1.84
1.75
2.20
2.34
Cluster2(n=96)
3.45
3.73
3.56
2.92
3.58
3.26
3.41
3.50
3.20
Diff.
0.55***
0.36**
0.19
0.01
0.81***
1.42***
1.66***
1.30***
0.86***
Panel B
BasicTool Users
(n=66)
3.62
3.82
3.48
2.86
2.70
2.08
1.89
2.35
2.33
IntegrativeTool Users
(n=74)
3.62
3.86
3.74
2.96
3.89
3.47
3.77
3.76
3.46
Diff.
0.00
0.04
0.26
0.10
1.19***
1.39***
1.88***
1.41***
1.13***
*p
-
Pearcy, Parker and Giunipero
Table 7Logistic Regression Results
Dependent Variable is Group (i= Integrative Tools; 0 = Basic
Tools)Manufacturing is the reference group for Industry Dummy
Variables
No. of obsv.t =
LRx^(io) =Prob > x' =Pseudo R^ =
Log likelihood =
135
19.00
0.0402
0.1019
-83.77
Independent Variable(Industry)
Chemicals
Electronics
Food
Measuring andAnalyzing Instruments
Paper
Petroleum
Primary Metals
Rubber
TransportationEquipment
Wholesale
Odds Ratio
.2625
.56
.7
1.05
.1166667
.15
.175
.525
.125
.4666667
Std. Err.
.1827203
.4029888
.4914265
.9734601
.1441289
.122693
.1699264
.5318306
.0851731
.3248361
z
-1.92
-0.81
-0.51
0.05
-1.74
-2.32
-1.80
-0.64
-3.05
-1.09
p-value
0.055
0.420
0.611
0.958
0.082
0.020**
0.073
0.525
0.002**
0.274
95% Conf. Interval
.0670853
.1366608
.1768163
.1706225
.0103605
.030189
.0260924
.0720913
.0328787
.1192627
1.027144
2.294733
2.771237
6.461634
1.313751
.7453055
1.173713
3.823274
.4752324
1.826034
+Five observations/industries could not be analyzed due to low
representation (< 2 firms)**p
-
the absence of these industry-levelcompetitive pressures, it is
quite pos-sible that firms operating in the pe-troleum industry
perceive less need toemploy more sophisticated, integra-tive
e-procurement applications.
Firms operating in the transporta-tion equipment sector include
compa-nies that provide railroad equipment,aircrafts, and aircraft
parts/supplies.As with the firms operating in the pe-troleum
industry, these types of firmsalso face relatively lov*^ levels of
com-petition, thus they possess less needfor more sophisticated,
integrativeforms of e-procurement. In addition,Cagliano et al.
(2005) noted that cer-tain sectors, including the automo-tive
industry (which encompasses thetransportation equipment sector)
hadadopted and invested substantial re-sources in EDI and other
proprietaryinfrastructures prior to the popular-ization of
e-procurement. This mightexplain why the respondents whosefirms
operate in the transportationequipment industry are less likely
toadopt more integrative (and more re-source dependent) types of
e-procure-ment.
It is possible that the use of basic,single-process
e-procurement appU-cations is more prevalent in the sam-ple overall
than the use of integrativetools because the former are
easilyemployed, require minimal financialinvestment, and involve
little risk.Visiting suppliers' web sites, access-ing on-line
catalogs, placing orderson suppliers' web sites, and searchingfor
low-cost suppliers are all simpletools firms can use to get started
withe-procurement. Conversely, achievinginter- or intra-firm
integration is morecomplicated and risky. For example,firms looking
to collaborate with sup-pliers on design issues face a numberof
challenges and risks, including un-certainty about the supplier's
capabiU-ties, sharing proprietary information,and issues
surrounding intellectualproperty. Achieving
cross-inctionalcoordination may be challenging be-cause it requires
individuals from var-
ious departments within a single firm,with diverse perspectives
to work to-ward a common end. FmaUy, develop-ing an integrated
supply chain is themost challenging because it involvesmultiple
firms. A fiilly integrated sup-ply chain is characterized by
exten-sive sharing of information and highlevels of trust (Folinas
et al. 2004),which in many instances is not easily
Pearcy, Parker and Giunipero
In other words, why do firms adoptcertain e-procurement
applications?Further, no attempt was made to as-sess whether firms
that currently usebasic, single-process e-procurementapplications
have plans to adopt moreintegrative e-procurement tools inthe
future. This would be helpful inassessing the rate of adoption
acrossindustries. Finally, this exploratory
"...the petroleum and transportation equipmentindustries possess
characteristics that make them lesslikely to use integrated
e-procurement tools than theirmanufacturing counterparts. "
attainable, particularly when multiplesuppliers and multiple
customers areinvolved. Each of the aforementionedintegrative
activities is complex, evenwhen executed by "traditional"
means.When considering the use of Inter-net-based technologies to
accomplishthese activities, firms face additionalchallenges that
may cause reluctance.These additional challenges includetraining of
employees, incurring coststo implement e-procurement applica-tions,
willingness of trading partnersto invest in technology, and
securityissues related to the electronic transferof data.
Future ResearchThe scope of the research is lim-
ited in that no attempt was made toexamine the relationship
between theuse of the various e-procurement ap-plications and
business outcomes.Future research could examine the re-lationship
between the use of integra-tive e-procurement applications
andbusiness outcomes such as increasedcommunication, operational
agil-ity, improved product/service design,and overall supply chain
performance.In addition, our understanding of e-procurement use
could be furtherenhanced by the assessment of firms'motivations for
adopting particular e-procurement applications over others.
study relies on speculation with re-spect to the impact of firm
sector one-procurement use. The role of firmsector could be
fiarther examined byasking respondents to what extentindustry
characteristics such as com-petitiveness, need for efficiency,
andovera technology acceptance impacte-procurement use.
Academicians and practitionersalike express great interest in
the valueof Internet-based technologies in im-proving supply chain
performance. Inaddition, an extensive research streamregarding the
essential role of inter-and intra-firm integration in effec-tive
supply chain management exists.Nevertheless, investigation of the
useof Internet-based technologies toachieve supply chain
integration hasbeen primarily limited to the studyof European
firms. Further, previousstudies on e-business resulted in
clas-sification schemes founded on a con-ceptual basis or on
evidence from casestudies. While this study is explor-atory, it
provides valuable, preliminaryempirical data to support the
notionthat e-procurement tools can be cat-egorized by their ability
to facilitatesupply chain integration and contrib-utes to the
literature by examiningthe actual e-procurement practices
ofUS-based firms across a wide varietyof industries.
American Journal /BusinessSpring 2008 Vol. 23. No. 1
-
Pearcy, Parker and Giunipero
Notes1. The odds ratio is a ratio of the probabil-
ity of the presence of an attribute to theprobability of its
absence.
ReferencesArmstong, J. and T Overton, "Estimation
Non-reponse bias in mail surveys "Jour-nal of Marketing
Research, (14:3), 1977,pp. 304-321.
Brynjolfsson, E. and J. Smith. 2000. Fric-tionless commerce? A
comparison ofInternet and conventional retailers.Management Science
46: 563-585.
Cagliano, R., F. Caniato, and G. Spina. 2003.E-business
strategy: How companiesare shaping their supply chain throughthe
internet. International Journal of Op-erations and Production
Management 25:1309-1327.. 2005. Reconsidering e-business strat-egy
and the impact on supply chains.International Journal of Operations
andProduction Management 25(12): 1328-1332.
Carter, J. and R. Narasimhan. 1996. Is pur-chasing really
strategic? InternationalJournal of Purchasing and
MaterialsManagement 32(1): 20-28.
Carter, P., J. Carter, R. Monczka,T. Slaight,and A. Swan. 2000.
The future of pur-chasing and supply: A ten-year forecast.The
Journal of Supply Chain Management36: 4-13.
Chwelos, P., I. Benbasat, and A. Dexter.2001. Research report:
Empirical testof an EDI adoption model. InformationSystems
Research. 12(3): 304-321.
Claycomb, C. and G.L. Frankwick. 2004.A contingency perspective
of commu-nication, conflict resolution and buyersearch effort in
buyer-supplier taxion-shjps. Journal of Supply Chain Manage-ment
40(1): 18-34.
Comrey, A. L. and H. B. Lee. 1992. Arstcourse in factor
analysis. 2"'' ed. HiUsdale,NJ: Erlbaum.
Cronbach, L. 1951. Coefficient Alpha andthe Internal Structure
of Tests. Psy-chometriha 16: 297-334.
Daugherty, P., R. Germain, and C. Droge.1995. Predicting EDI
technology adop-tion in logistics management: The influ-
ence of context and structure. Logisticsand Transportation
Review 31: 309-324.
Davila, A., M. Gupta, and R. Palmer. 2003.Moving procurement
systems to the in-ternet: The adoption and use of e-pro-curement
technology models. EuropeanManagement Journal 21:11-23.
DeBoer, L., J. Harink, and G. Heijboer.2002. A conceptual model
for assessingthe impact of electronic procurement.European Journal
of Purchasing and Sup-ply Management 8: 25-33.
Dooley, K. and S. Purchase. 2006. Factorsinfluencing
e-procurement usage. Jour-nal of Public Procurement 6: 28-45.
Dyer, J. D., D. S. Cho, and W. Chu. 1998.Strategic supplier
segmentation: Thenext "best practice" in supply chainmanagement.
California ManagementReview 40(2): 57-77.
Folinas, D., V. Manthou, M. Sigala, and M.Vlachopoulou. 2004.
E-volution of asupply chain: Cases and best practices.Internet
Research 14: 274-283.
Frhlich, M. and R. Westbrook. 2002. De-mand chain management in
manufac-turing and services: Web-based integra-tion, drivers and
performance. Journal ofOperations Management 20: 729-745.
Gattorna, J. 1998. Strategic supply chainalignment: Best
practice in supply chainmanagement. Aldershot, Hampshire:Ashgate
Publishing.
Giunipero, L. and C. Sawchuck. 2002. E-purchasing plus: Changing
the way cor-porations buy,JGS Enterprise.
Goodacre, A. and I. Tonks. 1995. Financeand technological
change. In Handbookof the Economics of Innovation andTech-nological
Change, ed. P. Stoneman, 298-341. Oxford: Blackwell.
Gujarati, D.N. 2003. Basic econometrics. 4*ed. New York, NY:
McGraw-HiU.
Hair,J.R, W.C. Black, B.J. Babin, R.E. An-derson, and R.L.
Tatham. 2006. Multi-variate data analysis. 6* ed. New
Jersey:Prentice HaU.
Johnson, R. and D.W. Wichern. 2000. Ap-plied Multivariate
Statistical Analysis, 5*edition. New Jersey: Prentice-Hall.
Kehoe, D. and N. Boughton. 2001. Newparadigms in planning and
controlacross manufacturing supply chains:The utilization of
internet technologies.
International Journal of Operations andProduction Management 21:
582-93.
Kutner, M.H., CJ. Nachtsheim, and J. Ne-ter. 2004. Applied
linear regression models.4* ed. New York: McGraw-HiU.
Lambert, D. and M. Cooper. 2000. Issuesin supply chain
management. IndustrialMarketingMangement 29: 65-83.
Min, H. and W.P Galle. 2003. E-purchas-ing: Profiles of adopters
and non-adopt-ers. Industrial Marketing Management32:227-233.
and A. Emam. 2003. Developing the pro-files for truck drivers
for their successfulrecruitment and retention: A data min-ing
approach. International Journal ofPhysical Distribution and
Logistics Man-agement ZZ: 149-162.
Monczka, R. and J.P. Morgan. 2000. Com-petitive supply
strategies for the 21"century. Purchasing 128: 48-55.
Motiwalla, L., M.R. Khan, and S. Xu. 2005.An intra- and
inter-industry analysisof e-business effectiveness. Informationand
Management 42(5): 651-667.
Narasimhan, R. and S. Kim. 2002. Effectof supply chain
integration on the re-lationship between diversification
andperformance: Evidence from Japaneseand Korean rms. Journal of
OperationsManagement 20: 303-323.
Ortega, B. H., J. Martinez and M. DeHoyos.2006. Analysis of the
moderating effectof industry on online behavior. OnlineInformation
Review 30(6): 682-698.
Osmonbekov,T., D. Bello, and D. Gilliland.2002. Adoption of
electronic commercetools in business procurement: En-hanced buying
center structure and pro-cesses. Journal of Business and
IndustrialMarketing 17: 151-166.
Pagh, J.D. and M.C. Cooper. 1998. Sup-ply chain postponement and
specula-tion strategies: How to choose the rightstrategy. Journal
of Business Logistics 19:13-33.
Patterson, K., C. Grimm, andT. Corsi. 2003.Adopting new
technologies for supplychain management. Transportation Re-search.
Part E, Logistics and Transporta-tion Review 39E(2): 95.
Petersen, K., G. Ragatz, and R. Monczka.2005. An examination of
collaborativeplanning effectiveness and supply chain
Americanjournal/BusinessSpring 2008 Vol. 23, No. 1
-
performance. Journal of Supply ChainManagement 41{2): 14-25.
Porter, M. 1980. Competitive strategy. NewYork: Free Press..
1985. Competitive advantage: Creatingand sustaining superior
performance. NewYork: Collier MacmiUian.
Premkumar and M. Roberts. 1999. Adop-tion of new information
technologiesin rural small business. The InternationalJournal of
Management Science, OMEGA27(4): 467-484.
Rajagopal, P. 2002. Supply chain partner-ing involvement among
electrical andelectronic firms in Malaysia today. In-ternational
Conference on OperationsResearch, Chenai.
Rajkumar, T. 2001. E-procurement: Busi-ness and technical
issues. InformationSystems Management 18: 52-60.
Sanders, N. 2005. IT alignment in supplychain relationships: A
study of supplierbenefits. Journal of Supply Chain Man-agement A\:
4-13.
Spekman, R., K. JW, and N. Myhr. 1998.An empirical investigation
into supplychain management: A perspective onpartnership. Supply
Chain Management3: 53-67.
Stonebraker, P. and J. Lia. 2006. Supplychain integration:
Exploring productand environmental contingencies. Sup-ply Chain
Management: An InternationalJournal 11: 34-43.
Tabachnick, B. and L. FideU. 1996. Usingmultivariate statistics.
3"* ed. New York,NY: HarperCoUins.
Tan, K., V. Kannan, R. Handfield, and S.Ghosh. 1999. Supply
chain manage-
ment: An empirical study of its impacton performance.
International Journal ofOperations and Production
Management10:1034-1052.
Thatcher, S.M. and W. Foster. 2002. B2Be-commerce adoption
decision in Tai-wan: The interaction of organizational,industrial,
governmental, and culturalfactors. Proceedings of the 36'*'
HawaiiInternational Conference on SystemsSciences.
Ihemistocleous, M., Z. Irani, and P. Love.2004. Evaluating the
integration of sup-ply chain information systems: A casestudy.
European Journal of OperationalResearch 159: 393-405.
Turban, E., D. King, J. Lee, M. Warkentin,and H. Chung. 2002.
Electronic com-merce 2002: A managerial perspective.New York:
Pearson.
Whitaker, J., M. Murphy, A. Haltzel, and R.Dik. 2001. Private
exchanges: The smartpath to collaboration. Supply ChainManagement
Review (July/August).
Wisner, J. 2003. A structural equation modelof supply chain
management strategiesand firm performance. Journal of Busi-ness
Logistics 24(1): 1-26.
Yap, C.S. 1990. Distinguishing characteris-tics of organizations
using computers.Information and Management 18(2): 97-107.
Zeng, A. and B. Pathak. 2003. Achievinginformation integration
in supply chainmanagement through B2B e-hubs:Concepts and analyses.
Industrial Man-agement and Data Systems 103: 657-665.
Pearcy, Parker and Giunipero
About the AuthorsDavfn H. Pearcy is an Associate Profes-sor of
Marketing at Eastern MiciniganUniversity. She earned a Ph.D.
fromFlorida State University. She teachesundergraduate and graduate
coursesin supply chain management and mar-keting. Her research
interests includee-procurement and fair trade. Dr.Pearcys research
has been publishedin several academic journals and pro-ceedings of
national and internationalconferences.
Delvon B. Parker is a doctoral candi-date in Operations
Management atMichigan State University. He earnedhis Bachelor of
Science degree inChemical Engineering and has donepost graduate
study in Manufacturingand Innovation. Mr. Parkers currentresearch
interests include organization-al integration, modular systems
andsupply chain design.
Larry C. Giunipero is Professor ofPurchasing/Supply Chain
Manage-ment at Florida State University. Heteaches and consults in
the area ofsupply management. He holds a Ph.D.from Michigan State
University. Hehas published numerous articles in aca-demic journals
and performed consult-ing/training projects for over 30 differ-ent
corporations. His research interestsinclude e-procurement and
supplychain sourcing strategies.
American Journal"/BusinessSpring 2008 Vol. 23, No. 1