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Achieving Supply Chain Excellence through e-procurement: A case
study approach of Infrastructure Industry.
Presented By:Neha Grover Asian Council of Logistics Management
Research ScholarDr. Rameshwar DubeyAssistant Professor-Logistics
& Supply Chain ManagementUniversity of Petroleum & Energy
Studies,Dehradun1st International Conference OnManagement of
Technologies & Information Security21st-24th
January,2010Venue:IIIT Allahabad
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Agenda of Todays discussionIntroductionResearch
objectiveLiterature ReviewResearch MethodologyConclusionLimitations
and further scope of studyReferences
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IntroductionWith the advent of internet, entire business turned
into e-business. Today the use of e-business technologies to
enhance supply chain efficiency is increasing in importance
(Talluri et.al, 2006).Various e-business technologies are available
that addresses the various need of e-procurement technologies that
aims at streamlining and improving the purchasing function.
E- collaboration is a part of e-business, and today a very
influential aspect of collaboration between companies. E-
collaboration is defined as business-to-business interactions
facilitated by the internet (Johnson and Whang,2002).
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E-PROCUREMENT:
E-procurement refers to the use of the internet-based
(integrated) information and communication technologies (ICTs) to
carry out individual or all stages of the procurement process
including search, sourcing, negotiation, ordering, receipt, and
post-purchase review (Croom & Brandon-Jones, 2004).
While there are various forms of e-procurement that concentrate
on one or many stages of the procurement process such as
e-Tendering, e-Marketplace, e-Auction/Reverse Auction, and
e-Catalogue/Purchasing, e-Procurement can be viewed more broadly as
an end to end solution that integrates and streamlines many
procurement processes throughout the organizations.
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Research ObjectiveTo identify CSFs (critical success factors)
behind e-procurement implementation.
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Literature ReviewHere researchers divided literature review in
three segments-Supply Chain Collaboration:It relates to the process
of planning, development, and working together to achieve a common
goal (Shafritz et.al, 1998).
Here collaboration in e-supply networks refers to the ways in
which supply networks utilise the internet to facilitate
coordination and collaboration among relevant parties
(Hedaa,2000).
Collaboration here comprises human collaboration and
e-collaboration. Here collaborative supply chain focuses on joint
planning and execution of supply chain activities (Ayers,2006).
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E-business and supply chain management:E-business is defined as
the marriage between the Internet and Supply chain integration and
is divided into three main categories: e-procurement, e-commerce,
and e- collaboration (Lee and Wang, 2001).
E-Collaboration is defined as business-to-business interactions
facilitated by the Internet. These interactions go beyond simple
buy/sell transactions and may be better described as
relationships.
E-businesses must create networks with other firms in ways
allowing both sides to benefit as much as possible. As the digital
era is constantly witnessing massive changes, e-business,
especially over the internet, should be considered increasingly
difficult to sustain. These include such activities as information
sharing and integration, decision sharing, process sharing, and
resource sharing.
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Collaborative Supply chain planning Firms wishing to adopt
e-commerce in a supply chain need to invest time and money to adapt
their internal processes and systems and develop the competence
needed to handle new e-commerce challenges (Cassivi, 2006). A more
detail method known as the collaborative, planning, forecasting and
replenishment (CPFR) is use to sequentially define key actions to
be taken. This paper also elaborate on the fact that companies that
find themselves in a supply chain environment are often forced to
innovate in order to compete in their sector. This change is driven
by major suppliers and customers Process innovations, product
innovations and relational innovations.
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Literature Review in context to developed & developing
countries
Author(s) & YearContextConclusionEyholzera and
Hunizker,2000Swiss CompaniesOnly 18% of the swiss companies used
electronic product catalogs, auctions or requests for quotations in
procurement.Wyld,2004American CompaniesAlmost half of all the
American companies use e-procurement systems.Pani and
Agrahari,2004Indian Steel IndustryMetaljunction.com generated
substantial savings for TISCO and SAIL.
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Puschmann and Alt,2005On MNCs from Germany and Switzerland.The
e-procurement has substantantially streamlined the procurement
activity but there is a need for procurement strategy.Tatsis
et.al,2006Greek food and drink industryUse of E-procurement in the
Greek food and drink industry: Drivers and impediments.Kaliannan
andAwang,2008 Malaysian e-Government StudyICT to enhance
administrative performance.
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Critical success factors for the implementation of collaborative
environments for the Indian Firms.
Source: Blismas et.al, 2004
Project characteristics LocationCostDurationSizeNature of
ownershipNature of contractCategory of projectComplexity to
construction tasksComplexity to design and engineering
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Project team characteristicsPresence of a championAbility of
project managerPrior experience with collaborative
environmentsInvolvement of team members during planning processTeam
attitude towards collaborative environmentsTeam attitude towards
ITType of internet service Frequency of collaborative environments
features/ functions in-useParty decides to use collaborative
environmentsParty who pays for the collaborative
environmentsInternet access availabilityAlignment of collaborative
environments implementation strategy to projectTeam strategyLevel
of top management supportTrainingAvailability of resources
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Service ProviderContact facilitiesPromptness of
responsescompetencyattitudeKnowledge in construction business and
problemsEase of useSoftware characteristicsFrequency of software
updatesSystem reliabilityData quality and reliabilityData
securityTypes of services Integration among collaborative
environment featuresIntegration with teams internal
systems/functionsIntegration with external software programmeNumber
of team members having access to collaborative environments
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Research Methodology
Case Study Method: Case study research method as an empirical
inquiry investigates a contemporary phenomenon within its real-life
context, particularly when the boundaries between phenomenon and
context are not clearly evident and when multiple sources of
evidence are used (Yin, 1984). These case studies will be based on
qualitative research methods where the perception of individuals
will be the focus of the study, in naturally occurring situations.
The identified key success factors for the implementation of
collaborative environments for the Indian firms will be used as a
benchmark in the case studies to identify key success factors for
e-tendering implementations within collaborative environments.
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The three case studies are construction projects undertaken in
India. All the three organizations used the same collaborative
environment e-procurement software. Case study 1 is conducted with
a Simplex Infrastructure, using collaborative environments for
procurement and project management. This organization is among the
recent adopters of e-procurement in collaborative environments.Case
study 2 is Multicon and consultant Case study 3 is a construction
consultant team
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Case Study- 1: Simplex InfrastructureIncorporated in the year
1990 as a Public Limited Company. The Registered Office at Calcutta
is controlling Project Sites all over India. In a decade of its
working SPL has emerged as a renowned civil engineering and
construction Company.The Company has procured a fleet of
construction equipment over this period. This organization was
among the earlier adopters of e-procurement in collaborative
environments in India among premier Infrastructure companies.
Interviews were conducted with the Project Manager, Project
Quantity Surveyor and several clerks; an observation of the
organizations work progress was also carried out.
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Resistance from employees was visible during the first three
months of implementation,organization provided sufficient training,
support and resources as part of the introduction scheme. The
e-procurement system managed to cut down the number of manpower
hours involved in the stages of estimating, tender enquiries and
pre-contract negotiations. Less tedious paper-based work. providing
better efficiency, higher quality of work and completion in a
shorter time. The correspondence among project members shifted from
traditional snail mail to e-mails and the collaborative environment
system.
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Case Study-2: Multicon The Multicon flagship real estate
business has achieved over 2.5 million Sq. ft. of prime space in
the city of Kolkata. It holds substantial interest in Cablecomm,
the largest reach MSO in the country and in a 100% EOU Granite
manufacturing unit. The Groups core business verticals are Real
Estate, Media & Internet Services, Exports, Travel Services,
Financial Services and Supply Chain. This case was conducted with
assistance from the Procurement manager, Project Quantity Surveyor
and Assistant Project Manager.
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The organization have just adopted the use of e-tendering,
therefore it is using it on a project-by-project basis.The major
change was the reduction of personnel throughout the project tasks
which previously took 6 persons to complete, now only required
three. This resulted in a significant reduction in cost, personnel
management and work efficiency, with the additional requirement of
IT competence. The system also provided audit trails and database
back-ups for easy search and filing capabilities. This case study
presents a scenario where the younger generation of construction
professionals is dominant in an organization. Younger employees are
more IT savvy.
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Case Study -3
This organization is a consultancy firm and owes it success to
over 100 expert employees. This organization has not fully
implemented e-procurement; it is only being rolled out on a
project-by-project basis. Work process observation and interviews
were conducted with the Procurement Manager, IT Manager, Assistant
Quantity Surveyor and several administrative personnel. The
organization does not have to endure large-scale people or process
changes for rollout; being a consultancy organization, employees do
not require extensive use of the e-procurement system. Therefore,
uptake of the system was easy. Resistance was minimal, less tedious
paper work, higher work satisfaction, shorter working time and
increased motivation.There was also no significant reduction in
cost. It is also noted that the system did not yield a good return
on investment for the organization.
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ANALYSIS:
The case studies show that the e-procurement solution is welcome
move in most of the selected firms. Employers have the perception
that e-procurement made the tendering process less tedious and less
costly as well as ensuring better control and management over the
tender process. This enabled organizations to handle more jobs in a
single timeframe when compared to the traditional method of
procurement. One of the many good responses from users is
attributed to the software itself, i.e. that it is designed with
user-friendly features and demands very little computing knowledge
to use the system efficiently. The basic set-up only needs internet
access and a web browser.
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Potential critical success factors for the process issue
Changes must be process-led, not technology-led.
Alignment of collaborative environments implementation strategy
to project team strategy. Never change the entire work process to
suite technology or software solutions.
Conduct self-evaluations before change.
Conduct change through change strategies business process
reengineering, change management, etc. Alert to current research
and development methods for better business processes.
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Potential critical success factors for the people issue
collaborative environment solution.
Motivation of employees. Interest in IT of employees. Work
satisfaction of employees.
Prior experience with collaborative environments. Employee
attitude towards collaborative environments. Presence of a
champion.
Level of top management support.
Security of job technology does not replace human processes.
Internet access and type of availability.
Adequacy of training. Adequacy of resources.
Employment of the younger generation more interest, training and
focus on IT. Proven computing technology and capabilities of the
collaborative environment solution.
Proven to improve efficiency and productivity in work of the
collaborative environment solutions.
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CONCLUSION:
This study investigates the people and process critical success
factors to successfully implement e-procurement in collaborative
environments, with a specific focus on the Infrastructure Sector.
In implementing e-procurement, perhaps the most important critical
success factor is that all changes in the organization must be
process-led, and not technology-led. Technology is mainly used to
automate, simplify and secure the communication process among
parties, in turn making the tendering process more efficient, less
costly and more accurate. To achieve maximum benefit from
e-procurement, organizations must be ready to adopt change, through
self-evaluation and incorporating change management strategies.
Organizations must also align their e-procurement implementation
strategy with the project team strategy.
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Potential critical success factors in implementing e-tendering
for the industry include employee motivation, interest in IT,
attitude and prior experience within collaborative
environments.Organisations could adopt a measured approach in order
to help them be e-ready; the rubrics of which could be augmented
through some form of a practical framework which allows them to
measure their e-readiness.
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Limitations & Further scope of the study:The study is based
on case studies, hence in future an empirical survey can be
conducted to develop synthesis between case study findings and
empirical survey.
The study can further be carried out to study correlation among
CSFs and develop regression model.
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