CHAPTER ONE

INTRODUCTION

1.1       Background to the study

Electronic procurement (e-procurement) has been labelled as a tool that can improve competence and performance while enabling simplicity and automation (Phillips & Piotrowicz, 2006; Hendrickson & Mahnke, 2005). Davila et al (2002) explained e-procurement as any technology that facilitates the acquisition of goods and services by a private or public organization over the internet, a view that is substantiated by Parida & Parida, (2005).

 The e-procurement value chain comprises indent management, e-tendering, e-auctioning, vendor management, catalogue management and contract management. Indent management is the workflow involved in the preparation of tenders.

Profitability is defined as the operating income divided by sales, as a measure of profitability. Whether you are recording profitability for the past period or projecting profitability for the coming period, measuring profitability is the most important measure of the success of the business. A business that is not profitable cannot survive. Increasing profitability is one of the most important tasks of the business managers. Managers constantly look for ways to change the business to improve profitability.

Supply Chain Managers are to take into account the effects of IT and know how to make a commercial case for electronic procurement.  Today, businesses are increasingly demanding in terms of decisions to be taken with regard to e-procurement and to manage the huge number of influences and pressures.  However, in spite of huge stress on the benefits associated with e-procurement, research on the topic is lacking with regard to the integration theory of strategic choice. 

The present procurement process consists of traditional manual procedures that are slow and even slower systematic process of purchasing entries (Hawking et al., 2004)

Most developing and developed countries governments would like to implement public e-procurement technology in such a way, as to enhance transparency and accountability in business procurement processes. The basic principle of the procurement is straightforward: to acquire the right item at the right time with the right price. The process should be open, objective and transparent. However, corruption in public procurement processes leads to problems such as lack of accountability and transparency, lack of political control and auditing, weak professionalization of the bureaucracy and many more.

 To overcome these concerns relating to corruption in the government procurement, information and communication technology (ICT) can play an important role to reduce corruption by promoting good governance (Bertot,Jaeger & Grimes, 2010), enhancing relationships between government employees and citizens tracking activities, monitoring and controlling the government employees and reducing potentiality of corrupt behaviours. ICT enabled technology especially public e-procurement plays an important role for minimizing the risk of corruption in public procurement processes (OECD, 2008).

1.2       Statement of the problem

Just like every other concept in business and management E-procurement is also faced with some problem as regards making goods and materials available to the organizations at when needed which includes:

The challenges involved with e- procurement. The most important of these bothers on how best to employ the use of IT in this era of communication revolution to enhance the procurement process.

Poor skill and in professionalism of staffs of an organization need to acquire the necessary skills that can enable them to operate effectively and efficiently while using the new e-procurement system if staff is not adequately trained, they may not be able to own the e-procurement system and this may contribute to failure.

The success of e-procurement also depends on communication to the users the organization adopting an e-procurement system must be able to communicate this information to the users distorted communication of information may lead to failure of the system.

Behavioural uncertainty arises because web retailers (suppliers) have the chance to behave in an opportunistic manner by taking advantage of the distant and impersonal nature of e-commerce in this context e -procurement and the buyer’s inability to monitor adequately all transactions it is important for organizations to ensure that all the perceived risks are handled properly to ensure success of the e-procurement project

1.3   Objective of the study

The main objective of the study the impact of E-procurement on the profitability of listed construction firms, other specific objectives includes to:

i.      To determine the importance of e-procurement on the profitability of listed construction firms in Nigeria. 

ii.    To find out the effect of e-procurement staff training on the profitability of listed construction firms in Nigeria.

iii.To examine the impact of e-procurement facility maintenance on the profitability of listed consumer firms in Nigeria.

iv. To identify the behavior (willingness/unwillingness) of employees to adopt e-procurement in listed construction firms in Nigeria.

                                                                                                        

1.4       Research hypotheses

In order to achieve the objective, the following research Hypotheses are formulated and assessed:

          i.     H0: E-procurement adoption has no significance on profitability in construction firms in Nigeria

       ii.     Hi: E- procurement adoption has significance on profitability of consumers firm in Nigeria.

1.5       Scope of the study

This study is restricted to Construction  companies  in Kaduna. it also focuses on the E-procurement and its impact on productivity  and it covers a period of (2009-2014) The study will also be limited to the subject matter The study aimed to provide a complete and analysis of the importance of e-Procurement and Supply Chain Management Integration, private sector perspective in Nigeria through a theoretical framework developed. Therefore, the first step of the research was to undertake a complete study of all factors relevant with the subject matter that guided the experiential examination of e-procurement implementation on listed construction firms in Nigeria.

1.6     Significant of the study

The study will be of benefit to construction firms as it can be used to get more knowledge on factors affecting the use of E-Procurement. The knowledge will also be used by such firms to use E-Procurement to reduce cost and increase profits. The research will be of benefits to Scholars interested in conducting research in e-Procurement and related areas as a source of reference. The policy makers on Procurement in both the private and public sectors will find this study useful in policy formulation.

This study intends to explore the practical significance of e-procurement in reference to corporate organizations in economic growth and bringing more employment opportunities for the nation, has motivated the researcher to explore the importance of e-procurement and integration with the supply chain management of the private and public sector in Nigeria.

The study will also provide the public with firsthand information and knowledge on e-procurement.

Furthermore, it is also a requirement in partial fulfillment for the award of Postgraduate Diploma in Procurement and Supply chain management at the Kaduna state university.

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