makerere university -...
TRANSCRIPT
1
MAKERERE UNIVERSITY
E-PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
ACASE OF UCHUMI SUPERMARKET, KAMPALA UGANDA
CANDIDATE:
MS: NABASA NAUME
07/U/11404/EXT
SUPERVISOR:
MR. SHALOM JOEL
A RESEARCH REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF A BACHELOR OF COMMERCE DEGREE
OF
MAKERERE UNIVERSITY
Date………………………………………………………
i
DECLARATION
I Nabasa Naume do hereby declare that the contents of this research are a result of my own
study and findings. To the best of my knowledge, they have not been presented for a degree in
any university.
Signed :………………………………
NABASA NAUME
07/U/11404/EXT
STUDENT
Date:……………………………………
ii
APPROVAL
I undersigned, declare that I have supervised this work and I am justified that it is worthy the
award of the Bachelor of Commerce (B.COM) degree.
Signed:…………………………..
PS. YOEL SHALON
SUPERVISOR (MUK)
Date: …………………………………………..
iii
DEDICATION
This research is dedicated to my parents Mr. Alfred and Christine Kiiza. They have been a great
inspiration in my life and they have given me all the support and guidance a child has ever
wanted from the parent. May God continuously harass them with his unending blessings and
give them life to live more years on this planet earth and in the world after.
iv
ACKNOWLEDGEMENT
The composition of this work has depended on the support of many people to whom I owe
acknowledgement like Nkumba University Motto” I owe you” I also say I owe you to the
following people;
I say I owe you to the almighty God for the precious gift of life he has given me and the ability
to overcome obstacles in comp airing this work. All the glory and honor goes back to him.
I say I owe you to my supervisor for his tireless efforts that shaped my trend of thought and for
his encouragement and the weapon of faith he has put in me. Without his guidance it would have
been practically unbearable. I say I owe you to my sisters, Phoebe, Beth, Esther and my
brothers; James and James, George, Emma, Joseph and my Nephew Ronald for their great
financial and moral support throughout my education and particularly in the composition of this
research.
In the same spirit I say I owe you to my friends; Allen, Amon, Sarah , Barbra, Palma, Justus,
Ben, Moreen and all my group members for without their constant challenge and discussions I
wouldn‟t have made it to the end.
To all am grateful.
NABASA NAUME .
v
TABLE OF CONTENTS
DECLARATION ........................................................................................................................ i
APPROVAL .............................................................................................................................. ii
DEDICATION .......................................................................................................................... iii
ACKNOWLEDGEMENT ......................................................................................................... iv
TABLE OF CONTENTS ............................................................................................................v
LIST OF FIGURES ................................................................................................................ viii
ABSTRACT ............................................................................................................................. ix
CHAPTER ONE .......................................................................................................................1
1.0 INTRODUCTION ...........................................................................................................1
1.1 Background to the study ..................................................................................................1
1.2 Statement of the problem ..................................................................................................2
1.3 Purpose of the study ..............................................................................................................2
1.4 Objectives of the study ..........................................................................................................3
1.5 Research questions ................................................................................................................3
1.6 Scope of the study .................................................................................................................3
1.7 Significance of the study .......................................................................................................3
CHAPTER TWO ......................................................................................................................4
2.0 INTRODUCTION ............................................................................................................4
2.1 E-procurement .................................................................................................................4
2.1.1 Definition. .......................................................................................................................4
2.1.2 Electronic procurement forms .........................................................................................5
2.1.3 Advantages of e-procurement ..........................................................................................7
2.1.4 Disadvantages of e-procurement ......................................................................................9
2.2 SUPPLY CHAIN MANAGEMENT ............................................................................... 11
2.2.1 Supply chain management enablers ................................................................................ 12
2.3 The relationship between e-procurement and supply chain management ......................... 14
CHAPTER THREE: METHODOLOGY .............................................................................. 16
3.0 Introduction ......................................................................................................................... 16
3.1 Research design ................................................................................................................... 16
vi
3.2 Procedure of the study ......................................................................................................... 16
3.3 Study population ................................................................................................................. 16
3.4 Sampling technique and size ................................................................................................ 17
3.4.1 Sampling method.............................................................................................................. 17
3.4.2 Sample size ...................................................................................................................... 17
3.5 Source of data ..................................................................................................................... 17
3.6 Data collection methods and instruments ............................................................................. 17
3.7 Presentation and analysis of findings ................................................................................... 18
3.8 Limitations of the study: ...................................................................................................... 18
CHAPTER FOUR: PRESENTATION AND INTEPRETATION OF FINDINGS .............. 19
4.0 Introduction .................................................................................................................... 19
4.1 Characteristics of respondents......................................................................................... 19
4.1.1 Characteristic according to gender............................................................................... 19
4.1.2 Characteristic according to Age ................................................................................... 20
4.1.3 Characteristics according to highest level of education ................................................ 21
4.1.4 Characteristics according to position in the company .................................................. 23
4.1.5 Characteristics according to period worked with Uchumi supermarket. ....................... 24
4.2 Findings about e-procurement ........................................................................................ 25
4.3 Findings About supply chain management of uchumi supermarket ................................. 29
4.4 Findings about the effect of e-procurement on supply chain management ....................... 31
CHAPTER FIVE..................................................................................................................... 35
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ....................... 35
5.0 Introduction ......................................................................................................................... 35
5.1 Summary of major findings ............................................................................................ 35
5.1.1 Finding‟s about e- procurement methods .......................................................................... 35
5.1.2 Supply chain management of Uchumi supermarket ..................................................... 35
5.1.3 Effect of E-procurement on supply chain management ..................................................... 36
5.2 Conclusion .......................................................................................................................... 36
5.3 Recommendations of the study ....................................................................................... 36
5.4 Areas for further research ............................................................................................... 37
REFERENCES ......................................................................................................................... 38
vii
LIST OF TABLES
Table 1: Showing composition of respondents ...........................................................................20
Table 2: Age composition of respondents ..................................................................................21
Table 3: Showing highest level of education..............................................................................22
Table 4: Position in the company...............................................................................................23
Table 5: Period worked with Uchumi supermarket. ...................................................................24
Table 6: Showing methods of e-procurement that are used ........................................................26
Table 7: Showing e-procurement procedures of each method ....................................................28
Table 8: Showing people involved in the management of uchumi supply chain .........................30
Table 9: Response on which people that takes the highest percentage of responsibility on the
management of supply chain .....................................................................................................31
Table 10: Response on whether e-procurement affects supply chain management .....................32
Table 11: Response on how greatly e-procurement methods affect the management of Uchumi
supply chain ..............................................................................................................................34
viii
LIST OF FIGURES
Figure 1: shows the six forms of e-procurement plotted in the purchasing .................................7
Figure 2: A pie chart showing percentage of female to male respondent .................................... 19
Figure 3: A bar graph showing the age frequency and percentage of respondents. ..................... 20
Figure 4: A bar graph showing the highest level of education .................................................... 21
Figure 5: A pie chart showing percentage of respondents according to their positions in the
company. i ................................................................................................................................ 23
Figure 6: A bar graph showing period worked with Uchumi supermarket .................................. 24
Figure 7: A bar graph showing the frequency of e-procurement methods that are used. ............. 25
Figure 8: A bar graph showing e-procurement procedures followed by each e- procurement
method. ..................................................................................................................................... 27
Figure 9: showing people involved in management of uchumi supply chain. ............................. 29
Figure 10: Showing people taking the highest responsibility of managing the supply chain ....... 30
Figure 11: A pie chart showing response on whether e-procurement affects supply chain
management. ............................................................................................................................. 32
Figure 12: shows effect of each e-procurement method on supply chain management. .............. 33
ix
ABSTRACT
The study was conducted from Uchumi supermarket Kampala Uganda under the topic “E-
procurement and supply chain management”. The study had three major objectives to examine
the e-procurement methods and procedures of Uchumi supermarket Kampala, to assess the
management of supply chain of Uchumi supermarket and to establish the effect of e-
procurement on supply chain management.
The study was purely descriptive and analytical based on both qualitative and quantitative data
from primary and secondary sources.
It was discovered that Uchumi supermarket uses the following e-procurement methods,
electronic data interchange, e-tending, e-auctioning, e-market places and each method follow
certain procedures.
It was found out that supply chain management was far below the desired level. It was
discovered that e-procurement affects supply chain management. It was also found out that e-
procurement has affected supply chain management because of non-adherence to the set
procedures of each method and even failure to implement some e-procurement methods like e-
auctioning and e-market places.
The study therefore, concluded that e-procurement affects supply chain management. The study
further made recommendations for improvements and for further studies.
1
CHAPTER ONE
1.0 INTRODUCTION
This chapter presents the background of the study, statement of the problem, purpose of
the study, objectives of the study, research questions, scope of the study and significant
of the study.
1.1 Background to the study
Uchumi is public limited company incorporated in 1975 under the companies Act cap
486 of the laws of Kenya. Its main objective is to have an enterprise for equitable
products at affordable prices while creating an outlet for the local manufacturers.
In 2002, Uchumi crossed the Kenyan boarders and set up a store in Kampala Uganda.
Due to the los s of 1.2 billion shillings that was inherited by the new management, it held
its annual general meeting on 14-Dec-2005 at the grand imperial royal and the grand
budget was again proposed chopping the budget by c- 17 from procurement Merchant, e-
procurement service, traders and businesses both locally and international were proposed
and I expect a commanding performance from her when she does it. The internet rapid
growth will drive many companies to add an e- procurement component to their
operations to gain competitive advantage.
E- Procurement refers to the purchasing of goods and services for the day today
operations of the business on- line and authorizing the whole procedure with the
underling aim of reducing costs.
However, its not just a system of making purchases on- line, if properly implemented, it
can connect companies and their business process directly with the supplier while
managing all interactions between them (malcom wheattly, 2000).
Supply chain management (scm) is the integration of key business processes from end
user through original suppliers that will provide products & services and information
that add value for customers and other stakeholders (Lambert] supply chain management
emphasizes the management of upstream and downstream supplier relationships and the
2
role of supply chain opt ionization is to increase customer value at less cost (Christopher,
1998, Ross 1998).
The focus of a company‟s e- procurement will be making its supply chain more efficient
through paperless processing of order, receipt and invoices. Increasing costs, competition
and customer pressure will drive companies to review their supply chain processes and
tap into the enormous savings potential from indirect spending (e-procurement L staven
R Leonard, 2001).
Lee (2004) specifies that to make a supply chain more agile, it has to short term changes
in demand or supply quickly and to handle external disruptions smoothly. The use of e-
procurement enables fast responses, creating high responsiveness and cuts costs right
through the supply chain.
1.2 Statement of the problem
There are barriers in the supply chain and they include technological barriers,
relationship barriers, structural and human resource barriers. to rectify these barriers,
the organization has changed its structure by having a coherent business strategy that
aligns business units towards the same goal, and having a formal process that is
methodologies, it has also joined strategic alliances with BIDCO supplier and logistic-
service providers to have expectations clearly stated, understood and agreed upon, the
organization has also tried to manage its human resources through out sourcing,
Recruiting and selection of skilled people at all levels, finding change agents to mange
supply chain implementation. However, despite all the above efforts barriers have
continued to exist in the supply chain. This may be attributed to the organizational failure
to implement e-procurement and if the situation continues, it may lead to collapse of the
organization because of low profitability. It is from this haunting problem that the
researcher decided to find out the effect of e-procurement on supply chain management.
1.3 Purpose of the study
The purpose of the study was to establish the effect of e-procurement on supply chain
management.
3
1.4 Objectives of the study
i) To examine the e-procurement methods and procedures of Uchumi supermarket
Kampala-Uganda.
ii) To assess the management of supply chain of Uchumi supermarket kampala- Uganda.
iii) To establish the effect of e-procurement on supply chain management.
1.5 Research questions
i) What are the e-procurement methods and procedures of Uchumi supermarket Kampala,
Uganda?
ii) How is supply chain managed in Uchumi supermarket Kampala, Uganda?.
iii) What is the effect of e-procurement on supply chain management?
1.6 Scope of the study
(i) Subject scope: The study focused on e-procurement as the independent variable ,
supply chain management as the dependent variable and the effect of e-procurement
on supply chain management.
(ii) Geographic scope: the study was conducted from the premises of Uchumi
supermarket, Nakasero suburb, garden city Kampala Uganda.
(iii) Period scope: The study focused on the period between 2002 and 2011.
1.7 Significance of the study
(i) The study helped the researcher to gain skills of conducting research. The acquired
skills will not only be limited to academic research but will also be of paramount
importance to the researcher while in office after school.
(ii) The study findings helped to identify the weaknesses in the use of e-procurement of
Uchumi supermarket this company to know the inherent weaknesses in their e-
procurement system and device means of overcoming them.
(iii) The study findings helped to add on the body of existing literature about the study
variables and this will be of help to future students and researchers.
4
CHAPTER TWO
2.0 INTRODUCTION
This chapter reviewed the existing literature about E-procurement and supply chain
management. It helps the researcher to get full understanding of the variables before
actually going into the field to carry out the study and this gives a basis to the study.
2.1 E-procurement
E-procurement is the business – to – business purchase and sale of supplies and services
over the internet. An companies are extending the use of internet technologies from the
traditionally known marketing and sales to logistics, payments and most importantly the
procurement processes (KALUBANGA; November, 2005)
2.1.1 Definition.
E-procurement (EP) can be defined as using internet technology in the purchasing
process. It is important to note that this definition is narrow in the sense that it excludes
old applications like ordering by telephone or by fax. On the other hand, this definition
is relatively wide, because it not only encompasses the use of internet applicant in the
purchasing process, but it also includes the use of internet and extranet applications. For
example, using this definition ordering office supplies by using a supplier catalog on a
website is a form of EP (Mr. Reunis Mare
E- Procurement is using the internet to operate the transactional aspects of requisitioning,
authorizing, ordering, receiving and payment processes for the required services or
products (The chartered institute of purchasing and supply (IPS)
E-procurement refers to the purchasing of goods and services for the day to day
operations of the business on-line and authorizing the whole procedure with the
underlying aim of reducing costs.
5
However, its not just a system of making purchases on-line, if properly implemented, it
can connect companies and their business process directly with the supplier while
managing all interactions between them (Malcom whealthly, 2000)
2.1.2 Electronic procurement forms
Nowadays, e-procurement encompasses a variety of forms. In order to get the most out of
these forms, a buying organization has to apply these forms in a coherent, integral way.
Of course, it is not necessary that every organization applies every single one of these
forms, but the forms that are applied, should interact optimally. This research defines the
most important forms of e-procurement and positions these forms in the purchasing
process.
L.De Boer, J. Harink, G. Heijboer (2001) distinguished between the following forms,
i. E-ordering is the process of creating and approving purchasing requisition,
placing purchase orders as well as receiving goods and services ordered, by using
a software system based on internet technology. In the case of e-ordering, the
goods and services ordered are indirect goods and services (i.e., non-product
related goods and services). The supporting software system (an ordering catalog
system) is usually used by all employees of an organization. In case of enterprise
resources planning (ERP) the goods and services ordered are product –related. It
may be noted that ordering of direct goods and services usually is plan-based.
ii. E-sourcing. Is the process of identifying next supplies for a specific spend
category, using internet technology (usually the internt itself). By identifying new
suppliers a purchaser can increase the competitiveness in the tactical purchasing
process for this spend category. E-sourcing is a way of decreasing the supply risk
associated with this spend category (Krajjic, 1983)
iii. E-tendering- is the process of sending RFI‟s and RFP‟s to suppliers and receiving
the responses of suppliers back, using internet technology. Usually e-tendering is
supported by an e-tendering system often the e-tendering system also supports the
6
analysis and assessment of responses. E-tendering does not include closing the
deal with a supplier. As a matter of fact, e-tendering smoothens a large part of the
tactical purchasing process (Van Weele, 1988), without focusing on the content
(that is spend category) of that process.
iv. E-reverse auctioning- in practice an e- auction enables a supplier to sell (surplus)
goods and services to a number of (known or unknown) buying organizations.
During a relatively short time frame the buying organizations involved submit
bids for the goods and services that are auctioned. The auction operates with an
upward price mechanism or downward price mechanism. A reversed auction is
the opposite; it enables a buying organization to get goods and services needed
from a number of (known of unknown) suppliers.
Usually e-reverse auctioning focuses on the price of the goods and services
auctioned. In most cases, other criteria are neglected during the e-reverse auction.
Of course, other criteria can be used in a previous phase in order to determine
which suppliers should be invited to join the e-reverse auction. E-reverse
auctioning does really close a deal between a buying organization and a supplier,
if parties a gree on the price.
v. E-informing- Unlike the previous forms, e-informing is a form of EP that is not
directly associated with a phase in the purchasing, process like contracting or
ordering. E-informing is the process of gathering and distributing purchasing
information both from and to internal and external parties, using the internet
technology. For example publishing purchasing management information on an
extranet that can be accessed by internal clients and suppliers is away of e-
informing. This form is also called purchasing intelligence or spend control.
7
Figure 1: shows the six forms of e-procurement plotted in the purchasing
process according to (Van Weele 1988
E-sourcing supports the specification phase: it identifies suppliers that can be used in the
selection phase. E-tendering supports the selection phase: It facilitates the RF1 and RFP-
activities, usually including support for the analysis and assessment activities. E-reverse
auctioning supports the contract phase. It enables closing a deal with a supplier.
Additionally, the researcher included a separation between transaction oriented forms and
information oriented forms. The transactions oriented forms are separated in indirect
transactions and direct transactions.
2.1.3 Advantages of e-procurement
E-procurement has got a number of benefits or advantages and the researcher focused on
David Eakins version of measuring e-procurement.
Direct spend
Indirect spend e-sourcing e-tendering e-reverse auctionary
Web-bored ERP
e-ordering
e-informing
Tactical procurement process Operational procurement process
Tra
nsa
ctio
n /
info
rmat
ion
8
i. Transactional benefits
E-procurement enables the purchaser to pay process on line. A typical example uses a
web-based transacting tool where by items are selected predominantly from pre-
sourced catalogs and submitted for electronic approval. This tool is then linked to the
back end enterprise resource planning system for entry payment of invoices and
collection of management information. This leads to great time saving and
efficiency.
ii. Compliance benefits
In many cases with an an organization, compliance and materials spending is a
significant issue not because employees deliberately purchases outside because of
preferred arrangements, but rather through lack of awareness. E-procurement address
this through tools such as catalogs and standards, order processing and approval
processes: compliance will be achieved due to;
A simple and quick requisition-to-payment process
A simple and quick strategic sourcing process
The e-procurement system the only procurement mechanism available.
iii. Management information benefits
The fact that key information is hard corded against the user dramatically reduces
coding errors and provides highly detailed and easily accessible data. This is essential
to maximize the financial benefits of strategic sourcing. A successful e-procurement
implementation will provide high quality, detailed management information and will
negate the need for data warehousing or resource-heavy data mining.
iv. Price benefits
The ability to prove to your suppliers that you are using e-procurement as a tool to
ensure users do honor their contract status will enhance ability to negotiate down
prices through;
- Greater enhanced capture and therefore reliability of spending information.
9
- Increased confidence that spending volumes can be guaranteed from increased
compliance with the system thus allowing volume price breaks and discounts to
be achieved.
v. Payment benefits
The successful operation of the first four benefits enables electronic payment of
invoices. This includes the ability to better control the business cash flow and to
manage the efficient payment of suppliers due to more streamlined procurement
processes providing more timely and accurate information to the accounts payable
department.
vi. Reduced manpower
The use of e-procurement reduces on the number of man power employed and thus
cutting the costs involved in maintaining this man power like salaries, rent,
allowances, health and even their offices on which to work from.
vii. Replacing the paper documents, purchase orders, acknowledgements, invoices and so
on-used by buyers and sellers in commercial transactions with standards electronic
messages conveyed between computers, often without the need for human
intervention for example. Electronic point of sale at the supermarket where a product
is purchased, the checkout operator scans a barcode on its label which automatically
registers the price on the cash till.
2.1.4 Disadvantages of e-procurement
Killer and Kamauff point out that before adopting e-procurement, an organization
should;
i) Ensure that exchanging –information electronically supports the overall
organizational strategy. If the 2 are in conflict then there will rise a problem in
implementing e-procurement.
10
ii) Consider the cost and ramifications of e-procurement specifically (EDI) electronic
data interchange standards tools and techniques, including implementation, software
maintenance, man power and participant training and how to promote systems and
applications integration.
iii) Price- The major disadvantage is the financial commitment a company must make in
order to invest in the software necessary to participate in the e-market place. And of
course the costs can vary depending on the applications for companies that plan to
buy and install in house e-procurement software, the price can range from $ 200,000
to $ 3million, says Sharyn leaver. This just covers software license costs and getting
suppliers connected.
iv) Implementation problems
Just because the software set up is available implementation is not necessarily easy.
Getting employees to use-e-procurement services can be difficult. And surprisingly,
equipment suppliers are not always anxious to join in the process, either. According
to an October 2001 forester report titled “E-procurement Applications”
companies reported four types of problems with e-procurement projects.
- Back-end system integration is bear
- User expectations/charge management can be difficult
- Suppliers do not always want 2 get on board and
- Content management is tough.
v) Loss of direct relationship between the buyer and the seller
The lack of personal contract between the two parties can be off-putting to some
companies. E-procurement relationships are reduced to electronic transactions with
no personal interactions – companies must choose whether this is the way they want
to conduct business between the different entities that sustain them.
11
2.2 SUPPLY CHAIN MANAGEMENT
A supply chain is that network of organizations that are involved, through upstream and
downstream linkages, in the different processes and activities that produce value in the
form of products and services in the hands of the ultimate customers or consumer.
Supply chain has a number of characteristics
i) Customer – supplier characteristics
- Virtually
- Scope supply chains
- Complexity
Supply chain management (SCM) is an integrating philosophy to manage the total
flow of materials, information from supplier to ultimate consumer. The goal of SCM
is the meet the needs of the final consumer by supplying the right product and the
right place time and price. (Kalubanga and Reuis).
Supply chain management can be considered as an aggregation of approaches and
efforts supporting the efficient consolidation of producers, suppliers and distributors
in effect a coordination of the value chain so that products are produced and
distributed in the right quantity, at the right quality, at the right time and at the right
place to ultimately achieve consumer satisfaction (Simchi-Levi etal, 2000).
Mentzer et al state that the many published definitions can be classified into 3
categories
i) Supply chain as a management philosophy. This has 3 characteristics.
- A systems approach to viewing the supply chain as a whole and managing the
total flow of goods inventory from the supplier to the ultimate consumers.
- A strategic orientation towards cooperative efforts to synchronize and converge
intra-firm and inter firm operational and strategic capabilities into a unified whole
- A customer focus to create unique and individualized sources of customer value,
leading to customer sastifacation.
ii) Supply chain management as a set of activities to implement a management
philosophy.
12
The seven activities listed below are essential to the implementation of a management
philosophy are:-
- Integrated behavior
- Mutually shared information
- Mutually shared risks and rewards
- Cooperation
- The same goal and same focus on serving customers.
- Integration of processes
- Partners to build and maintain long-term relationships
iii) Supply chain management as a set of management of process.
Lambert et al, listed eight SCM processes originally postulated by the international
centre for competitive excellence;
- Customer relationship management
- Customer service management
- Demand management
- Order fulfillment
- Manufacturing flow management
- Supplier relationship management
- Product development and commercialization
- Returns management
2.2.1 Supply chain management enablers
Mavien identified four key enablers, all of which must be fully leveraged if SCM is to
be successful. Marich also observed that these four enablers become barriers to effective
SCM if they are not in place. The four enablers and their relative rankings by Marien‟s
respondents are;
a) Organizational infrastructure
How business units and functional areas are organized, how change management
programs are led and coordinated with the existing organizational structure constitute the
organizational infrastructure. Therefore having a coherent business strategy that aligns
business units towards the same goal, having a formal process and having the right
13
process metrics to guide the performance of operating units towards the strategic
organizational SCM objectives will help improve SCM.
b) Technology
The word (technology) (not just IT but also the „physical‟ materials management
technologies for material design operations and materials handing) is a factor in the
selection of business allies and how intercompany relationships are built and managed.
Having operations marketing and logistics data co-ordinate within the company, having
data reading available to managers and the coordination of operations, marketing and
logistics data between supply chain members help improve SCM.
c) Strategic alliance
This factor covers how external companies (customers, suppliers and logistics –service
providers) are selected as business allies and how intercompany relationships are built
and managed. Having expectations clearly stated, understood and agreed to upfront,
collaboration on supply chain design, having top management of partnering companies
interface on a regular basis and having compatible information technology systems may
help manage the supply chain.
d) Human resource management
This area involves managing how job descriptions are designed, positions filled, people
are recognized and compensated and career paths directed. Sourcing, hiring and selecting
skilled people at all levels, finding change agents to manage SCM implementation,
having compensation and incentives and finding internal process of facilitators helps
manage the supply chain.
14
2.3 The relationship between e-procurement and supply chain management
Since procurement is very important element in supply chain. In order to understand the concept
in more details, this study is using these factor as constructs to study the relationship of e-
procurement methods on supply chain performance.
According to (Malcon Wheattly, 2000), procurement is not just a system of making purchases
on line. if properly implemented, it can connect companies and their business process directly
with the supplier while managing all interactions between them.
Lee (2004) specifies that to make a supply chain more a gile, it has to react to short term changes
in demand or supply quickly and to handle external descriptions smoothly. The use of e-
procurement enables fast responses, creating high responsiveness and cuts costs right through the
supply chain.
The focus of a company‟s e-procurement will be making its supply chain more efficient through
paperless processing of order, receipt and invoices. Increasing costs, competition and customer
pressure will drive companies to review their supply chain processes and tap into the enormous
savings potential from indirect spending (E-procurement L Staven, R Leonard, 2001).
According to Leenders and Fexion, 1997; the major part of supply chain management is
traditionally supported by information technology with the use of enterprise resource planning
(ERP), manufacturing resource planning (MRP) or electronic data interchange connections with
suppliers that were established in 1980s. .
Gebaner and Seger, 1998 identifies that the diffusions of e-procurement systems in the late
1990s has created the potential for reorganizing supply chains. Compared to enterprise resource
planning, these systems were considerably less expensive and more flexible due to increased
standardization on a tactical level. More or less all studies on e-procurement, report large
efficiencies regarding supply chain management.
15
The main idea of e-procurement is to include the end-user in the procurement process via an
electronic multi-vendor catalog and to close the process gaps in the supply chain for indirect
goods (Neef, 2001).
According to (Dalmalch et al, 2000), e-procurement deals with the management of supply
chains in the procurement of indirect goods that is based on internet information systems and
also e-markets.
Croom and Johnshon (2003) identified five main improvements in the supply chain that e-
procurement enabled supporting managers‟ budgetary control offering robust process
performance with fewer failures, offering far greater transparency and accessibility across the
whole process and improving management information reinforced user compliance, improving
systems reliability and ensuring compliance to process.
Conclusion
The study discovered that firms should implement e-procurement systems in supply chain for
better communication and performance improving. E-procurement undoubtedly promotes
information sharing and improves supply chain performance. Further more, there was no
literature reviewed that concern the operations of Uchumi Kampala Uganda. This further made
it imperative for the researcher to carry out a study in order to establish the impact of e-
procurement on supply chain management of Uchumi Supermarket Kampala Uganda.
16
CHAPTER THREE
METHODOLOGY
3.0 Introduction
This chapter presents the methods and instruments that were used to carry out the study. It
presents the research design, procedure of the study, study population, sampling technique and
size, sources of data, data collection methods and instruments, presentation and analysis of
findings, and the limitations of the study.
3.1 Research design
The study used both quantitative and qualitative research design. This design was preferred
because the researcher based on the views of the respondents to derive conclusions and
recommendations.
3.2 Procedure of the study
The researcher picked an introductory letter from the research coordinator, which was presented
to the management of Uchumi supermarket Kampala Uganda to seek permission to carry out a
study from this company. The researcher through sampling selected respondents from whom
data was collected .the researcher conducted both library and internet research to collect
secondary data that helped to back up primary data in compiling a report.
3.3 Study population
The study population included the management and employees of Uchumi supermarket
Kampala Uganda.
17
3.4 Sampling technique and size
3.4.1 Sampling method
The study used stratified sampling to group the study population into two groups that is
management group and employees group. Then from each stratum, the researcher used simple
random sampling to select a representative sample.
3.4.2 Sample size
The study used simple random sampling to select a sample of 50 respondents in different
proportions presented in the table below;
3.5 Source of data
The researcher collected data from both primary and secondary sources. The primary source
provided first hand data from the respondents through interviews/ questioners, and observation.
The secondary source provided second hand data from the company‟s records, the library and the
internet.
3.6 Data collection methods and instruments
The researcher used four different types of methods and instruments to collect data they include;
a): Questionnaire method: the researcher used semi-structured questioners to collect data.
These were given to respondents to fill them in and were collected after a period of one week.
b) Interviews. The researcher conducted face to face interviews with the respondents. The
interviews were based on the answers provided in the questionnaires.
c) Observation method: the researcher used this method to collect firsthand data by looking at
the different purchasing activities taking place in the field and the body language of respondents
during interviews.
d) Library research: the research conducted library reading in order to collect secondary data
from the company‟s documents and the university library
18
3.7 Presentation and analysis of findings
After the data collection exercise, data was arranged and edited to ensure accuracy, relevance
and completeness. It was then analyzed using frequencies and percentages as units of
measurement and using frequency tables.
3.8 Limitations of the study:
a) The time allocated to the study was too limited for the researcher to exhaust the study
variables. In spite of the fact that time was a problem, the study was still successful.
b) The study involved a lot of financial expenditure in terms of transport, stationary, printing,
binding. Luckily enough, the researcher managed to raise enough funds to finance the study.
c) The respondents refused to provide some of the data that the researcher requested for. But still,
the researcher managed to collect qualitative data and was successful.
19
CHAPTER FOUR
PRESENTATION AND INTEPRETATION OF FINDINGS
4.0 Introduction
This study was conducted with three major objectives. That is; to examines e-procurement
methods of Uchumi supermarket (u), to assess the management of supply chain of Uchumi
supermarket Kampala. Uganda, to establish the effect of e-procurement on supply chain
management. This chapter therefore presents the findings of the study, based on the underlying
objectives.
4.1 Characteristics of respondents
The respondents were classified under five categories to determine whether there was good
representation of the study population and whether the respondents were well informed about the
data required from the company.
4.1.1 Characteristic according to gender
Figure 2: A pie chart showing percentage of female to male respondent
Figure 1 above shows that 56% were, males and 44% females
22%
28%
Female
Male
20
Table 1: Showing composition of respondents
Gender Frequency Percentage
Female 22 44
Male 28 56
Total 50 100
Table 2: above indicates that 56% were, males and 44% females.
4.1.2 Characteristic according to Age
Figure 3: A bar graph showing the age frequency and percentage of respondents.
Figure3 above indicates that 2 people were 20 and below years, 23 people were 21 – 30 years, 17
were 31 – 40, 7 were 41 – 50 and 1 was above 50 years of age.
0
10
20
30
40
50
60
70
80
20 and below 21 – 30 31 – 40 41 – 50 Above 56
Fre
qu
ency
Age (Years)
Percentage
Frequency
21
Table 2: Age composition of respondents
Age (years) Frequency Percentage
20 and below 2 4
21 – 30 23 46
31 – 40 17 34
41 – 50 7 14
Above 56 1 2
Total 50 100
Source: Primary Data
Table 3 above indicated that, 44% were 21- 30 years, 34% were 31 – 40 years, 14% were 41 – 50
years, 4% were 20 years and below and 2% were above 50 years.
4.1.3 Characteristics according to highest level of education
Figure 4: A bar graph showing the highest level of education
Figure 3 above indicates that 9 people had gone to secondary, 7 were certificate holders, 17
Diploma holders, 13 degree holders and 4 post graduates.
0
10
20
30
40
50
60
Never gone to school
Primary Secondary Certificate Diploma Degree Post graduate
fre
qu
ency
Percentage
Frequency
22
Table 3: Showing highest level of education
Level of education Frequency Percentage
Never gone to school - -
Primary - -
Secondary 9 18
Certificate 7 14
Diploma 17 34
Degree 13 26
Post graduate 4 8
Total 50 100
Source: Primary Data
Table 4 above indicated that 34% had a Diploma level, 28% degree level, 18% secondary level,
14% certificate and 8% post graduate.
23
4.1.4 Characteristics according to position in the company
Figure 5: A pie chart showing percentage of respondents according to their positions in the
company. i
Figure 5 above indicates that 6% of the respondents were among top managers, 18%
among middle level managers and 76% among other operating staff.
Table 4: Position in the company
Position Frequency Percentage
Among top managers 3 6
Among middle level managers 7 18
Among others operating staff 38 76
Total 50 100
Source: Primary Data
From table 5 above, 76% were in the category of other operating staff, 18% among middle level
managers and 6% among top managers.
6%
18%
76%
Among top managers
Among middle level managers
Among others operating staff
24
4.1.5 Characteristics according to period worked with Uchumi supermarket.
Figure 6: A bar graph showing period worked with Uchumi supermarket
Figure6: above indicates that 4 people have worked for less than 3 years, 14 for 3-5 years, 19 for
6 -8 years, 8 for 9 -12 years and 5 for above 12 years
Table 5: Period worked with Uchumi supermarket.
Period Frequency Percentage
Less than 3 years 4 8
3 -5 years 14 28
6 – 8 years 19 38
9 – 12 years 8 16
Above 12 years 5 10
Total 50 100
Source: Primary Data
0
10
20
30
40
50
60
Less than 3 years
3 -5 years 6 – 8 years 9 – 12 years Above 12 years
Fre
qu
en
cy
Period (years)
Percentage
Frequency
25
Table 6 above indicates that 38% had worked for 6- 8 years, 28% for 3 -5 years, , 16% for 9 – 12
years, 10% for above 12 years and 8% for less than 3 years.
From the general analysis of the respondents the sample was representative enough as it had
good education background and had worked with uchumi supermarket company for a reasonably
long period. This made the researcher believe that the data provided was reliable.
4.2 Findings about e-procurement
The study sought to establish whether the company had methods and procedures that guide e-
procurement. The respondents overwhelmingly (100%) agree that the company has e-
procurement methods.
Figure 7: A bar graph showing the frequency of e-procurement methods that are used.
Figure 7 above indicates that electronic data interchange takes a frequency of 35, both online
auctioning and on line market places take 13 meaning they are not frequently used and e-
tendering takes 31 meaning its frequently used.
0
5
10
15
20
25
30
35
40
Electronic data
interchange
Online market places
Online auction
E-tendency
Fre
qu
ency
E-procurement method
26
Table 6: Showing methods of e-procurement that are used
Method Strongly
Agree
Agree Sometime Disagree Strongly
Disagree
Freq % Freq % Freq % Freq % Freq %
Electronic data
interchange
35 70 15 30 - - - - - -
Online market
places
13 26 11 22 26 52 - - - -
Online auction 13 26 10 20 27 54 - - - -
E-tendering 31 62 19 38 - - - - - -
From table above 70% strongly agree and 30% agree that electronic data interchange is the most
commonly used e-procurement method at Uchumi supermarket.26% indicated that uchumi
sometimes uses the online search for market places. 54% indicated that uchumi sometimes uses
online auction to sell its products.
60% strongly agree and 38% agree that uchumi uses e-tendering.
The study sought to establish the procedures followed by supermarket while using each e-
procurement method.
27
Figure 8: A bar graph showing e-procurement procedures followed by each e- procurement
method.
EDI=electronic data interchange
OMP=online market places
OU= Online auctioning
ET=e-tendering
Figure8 above shows that EDI takes procedures a,b and c where a means transmitting a purchase
order, b is online transactions and c is online payments.
OMP takes d and e where; d is searching for market places on line, and e is closing a sale on line.
OU takes f,g,h and,I where; f is placing items to be auctioned online g is submit ion of bids, h is
evaluation of bids, and I is online award of the contract to the best evaluated bidder.
ET takes j,k,l,and m where; j is advertising tenders online is submission of proposals online is
evaluation of proposals online and m is award of the tender to the best evaluated bidder online.
a
b
C
EDI OMP OU e-procurement method.
60% strongly agree and 38% agree that uchumi uses e-tendency.
ET e-procurement method
Methods
P
roce
du
res
d
e
i
h
g
f
m
l
k
j
28
Table 7: Showing e-procurement procedures of each method
Procedure Strongly
Agree
Agree Sometime Disagree Strongly
Disagree
Freq % Freq % Freq % Freq % Freq %
Electronic data
interchange Transmitting a
purchase order online and
transactions done until
online payment
35 70 15 30 - - - - - -
Online market places
searching for market places
online until a sale is closed
13 26 11 22 26 52 - - - -
Online auction placing
items to be auctioned on
line and to be given to the
bidder with the highest price
13 26 10 20 27 54 - - - -
e-tendering advertising
tenders online and interested
supplies, responds with their
proposals
31 62 19 38 - - - - - -
From table 9 above, 70% strongly agree and 30% agree that electronic data interchange follows
the placing of order online and conducting business online until the time of payment.
52% indicated that sometimes the online search for markets until a sale in closed is the procedure
used under online market places that is followed.
54% say that sometimes when online auctioning is done, it follows the procedure of placing
items to be auctioned online and to be given to the highest bidder.
29
62% Strongly agree and 385 agree that while doing e-tending tenders are advertised online and
interested suppliers respond with their proposals online and it continues until a supplier is
chosen.
4.3 Findings About supply chain management of uchumi supermarket
The study tried to achieve objective two of the study under this section.
The study sought to establish the respondent‟s explanation of the supply chain management.
Figure 9: showing people involved in management of uchumi supply chain.
From the pie chart above 20% of people managing supply chain are top managers, 30‟%
functional managers, 10% operating staff and 40% indicated that the supply chain is managed by
all the above that is top managers, functional managers and operating staff.
20%
30%
10%
40%
Top managers
functional managers
Operating staff
All the above
30
Table 8: Showing people involved in the management of uchumi supply chain
Category Frequency Percentage
Top managers 15 20
functional managers 10 30
Operating staff 5 10
All the above 20 40
Total 50 100
From table 9 above, 20% indicated that top management is responsible for management of
uchumi supermarket, 30% said functional managers are the ones responsible and 10% indicated
that it‟s the operating staff that is responsible for the management of uchumi supply chain while
40% said that all the above people are responsible for the management of supply chain.
The study sought to establish people with the highest responsibility in managing the supply
chain.
Figure 10: Showing people taking the highest responsibility of managing the supply chain
People responsible for managing the supply chain
From figure 10 above, 60% indicated that a functional manager that is specifically the
procurement department managers are responsible for managing the supply chain top
0
10
20
30
40
50
60
70
Functional managers Top Management Operating staff
Series1
31
management takes only 30% and 105 for the operating staff. Therefore it‟s the functional
managers that take the highest responsibility of managing the supply chain.
Table 9: Response on which people that takes the highest percentage of responsibility on
the management of supply chain
Category of people Frequency Percentage
Top managers 15 30
Functional managers 30 60
Operating staff 5 10
Total 50 100
From table 11 above, 30% said that top managers are more responsible, 60% indicated that it‟s
the functional managers that are highly responsible for managing the supply chain an 10%
indicated that the operating staff takes the highest percentage. It was interpreted that functional
managers take the highest percentage of responsibility for managing uchumi supply chain.
4.4 Findings about the effect of e-procurement on supply chain management
The study sought to establish whether e-procurement has an effect on supply chain. The
respondents concurred that e-procurement affects supply chain management
32
Figure 11: A pie chart showing response on whether e-procurement affects supply chain
management.
From figure 11 above, 76% indicated that yes e-procurement has great effect on the supply chain
management while 24% say no it has less effect on the supply chain management of uchumi
supermarket.
Table 10: Response on whether e-procurement affects supply chain management
Response Frequency Percentage
Yes 38 75
No 12 24
Total 50 100
From table 11 above, 76% said yes and 24% said No indicating that e-procurement have
significantly affect on the supply chain of Uchumi supermarket.
76%
24%
Yes
No
33
The study also sought to establish the effect of each e-procurement method on supply chain
management.
Figure 12: shows effect of each e-procurement method on supply chain management.
From figure 12 above, it indicates that electronic data interchange affects greatly the supply
chain by70%, followed by e-tendering with 62% , online market places takes 26% together with
online auction.
0
10
20
30
40
50
60
70
80
Electronic data interchange
Online market places
E-tendering Online auc tion
Effe
ct o
n s
up
ply
ch
ain
in P
erc
en
tage
s
E-procurement method
Series1
34
Table 11: Response on how greatly e-procurement methods affect the management of
Uchumi supply chain
Procurement method Strongly Agree Agree Sometime Disagree Strongly
Disagree
Freq % Freq % Freq % Freq % Freq %
Electronic data
interchange
35 70 15 30 - - - - - -
Online market places 13 26 11 22 26 52 - - - -
E-tendering 31 62 19 28 - - - - - -
Online auc tion 13 26 10 20 27 54 - - - -
From table 12 above, 70% strongly agree and 30% agree that electronic data interchange affects
supply chain management, 52% said that sometimes online market places also affects supply
chain management, 62% strongly agree and 38% agree that e-tendering greatly affect the
management of supply chain and 545 indicated that sometimes online auction affects supply
chain management. All in all this indicated that electronic data interchange greatly affects
management of supply chain of Uchumi supermarket compared to other e-procurement methods
because it has the highest percentage of 70% and 30%.
35
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This is the final chapter of this study. It summarizes the major findings of the study, draws
conclusions and makes recommendations.
5.1 Summary of major findings
The study was conducted with three major objectives; that is; examine e-procurement methods of
Uchumi supermarket, to assess the management of supply chain of Uchumi supermarket
Kampala Uganda and to establish the effect of e-procurement on supply chain management.
5.1.1 Finding’s about e- procurement methods
The study found out that different methods of e-procurement are used when purchasing different
types of commodities. Electronic data interchange is commonly used for example use of
electronic point of sale (EPOs) that help transfer sales records, to the suppliers and store keepers
and thus making it able to prepare supplies in time.
e-tendering is also used to invite proposals from possible suppliers to submit their bids and show
what they have to supply and they are evaluated and the tender awarded to the best evaluated
bidder.
Online market places and online auction are the least used methods of e-procurement.
5.1.2 Supply chain management of Uchumi supermarket
The study found out that Uchumi supermarket Kampala had numerous barriers in supply chain
for example technological barriers, relationship barriers, structural and human resource barriers.
The company registered a loss of 1.2 billion shillings due to the above barriers. In 2005, the
company proposed chopping the budget by C-17 from procurement merchant, e-procurement
service, traders and businesses both locally and internationally were proposed.
36
5.1.3 Effect of E-procurement on supply chain management
The study found out that e-procurement affects its supply chain management. E-procurement of
Uchumi supermarket was found to be ineffective due to frauds involved, inflation of purchase
costs, losses due to poor quality products, poor record keeping, high costs of training employees,
lack of information about suppliers thus making it difficult to properly coordinate and manage
the supply chain. The study found out that the losses realized in 2005 were largely attributed to
inefficiencies in the company‟s procurement function.
5.2 Conclusion
The study based on the findings of the study to derive the following conclusions; that uchumi
supermarket uses different e-procurement methods and each method follows its own procedures
until a purchase is made.
The supply chain management has been improving since the implementation of e-procurement
from the previous looses of 2005.
E-procurement effects the management of supply chain. The study concurs with other scholars
that once e-procurement is efficient or properly implemented, it will lead to acquisition of high
quality products but at a low cost, timely delivery, reduce paper work, timely payments, allow
fair competition, enhance productivity and management of supply chain and the reverse will
lead to shortage in the supply chain.
5.3 Recommendations of the study
The study recommends that, Uchumi supermarket should introduce full e-procurement policy
suitable for streamlining efficiency in its supply chain.
The study also recommends that, Uchumi supermarket should emphasize strict adherence to the
e-procurement procedures so that this facilitates easy audits trail. This will reduce on frauds and
other malpractices in the supply chain of this company. The study further recommends that,
Uchumi supermarket should investigate other areas that reduce shortages in the supply chain so
as to achieve high performance in the management of supply chain.
37
5.4 Areas for further research
The study recommends that further research should be conducted to establish the effect of
employee training on e-procurement implementation. Further research should also be conducted
to establish the effect of using just in time technique on supply chain management. This might
provide an alternative to the internal procurement system.
38
REFERENCES
Christopher, 1998, Ross 1998. Supply chain Management 6th edition
Kenneth Lysons and Brian Farrington: Supply Chains: Purchasing and supply chain management
Seventh edition PP91.
Ballon. H. Ronald (1987), Basic Business Logistics: Transportation, Materials management,
physical distribution (2nd
ed), Prentice Hall Inc. New Jersery.
Kalakota and Robinson: Evolution of e-procurement models: Purchasing and supply chain
management PP. 187
Malcom Wheathly, (2000)
Institute of Logistics, Principles of warehouse design, 1993, reproduced with permission.