E-PROCUREMENT AND ORGANIZATIONAL SUCCESS OF NOODLES MANUFACTURING FIRM IN PORT HARCOURT

E-PROCUREMENT AND ORGANIZATIONAL SUCCESS OF NOODLES MANUFACTURING FIRM IN PORT HARCOURT

ABSTRACT: This study presents an empirical investigation on the relationship between e-procurement and organizational success of noodles manufacturing firms in Port Harcourt. The aim of this study was to examine the relationship between the E-procurement Organizational Success of Noodle Manufacturing Firms in Port Harcourt. The study adopted the quasi-experimental research design; quantitative data were collected through a 5-point Likert-type scale. Out of a total of 223 copies of a questionnaire distributed, 200 copies were fit for analysis. The spearman’s rank correlation coefficient statistical tool was used with the aid of the Statistical Package for Social Sciences (SPSS Version 23.0). The findings of the study showed that e-procurement significantly related to organizational success, thus enhancing Prompt delivery and cost reduction. Based on the findings, the study recommended that noodles manufacturing firms in Port Harcourt should bear in mind that e-procurement has a great impact on organizational success, so they should try to stimulate and manage e-procurement activities cautiously. The entire hypotheses that were stated in the null form were rejected and the alternative hypotheses were all accepted. Our findings from quantitative data analysis support the argument that e-procurement affects organizational success through dimensions such as e-tendering, e-sourcing, and e-auction. Also, other organizations can enhance e-procurement activities in it’s firm by introducing e-procurement in their procurement activities in different departments. In this way, the volume of e-procurement increases and it’s impact.

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CHAPTER ONE

 INTRODUCTION

1.1   Background to the study

In this increasing global competition, manufacturing firms regardless of their age or size, are forced to build more on e-procurement in order to compete, survive and succeed. For a manufacturing firm to be effective, efficient and increase in its’ success, internet technologies are used in order to decrease the total cost spent on the purchasing process and the adoption of e-procurement is imperative. However, the involvement of the internet in doing business has served as a medium of major changes in the status of procurement and organizational success (Mishra, Konana, & Barua, 2007).

Organizational success is very imperative that is has gotten great attention in management studies. Success is very relevant because it is a determinant of the extent to which organizations achieve their set objectives in the presence of some limitations (Miller and Friesen, 1978, as cited in Victoria, Umoh & Amah, 2018). Successful organizations are high performing, productive, efficient and effective, and whose outcomes (such as growth, profitability, Return on Investment, Market Share, improved product quality, job satisfaction) are in agreement with expectations. However, the mere achievement of the aforementioned desirable outcomes is not enough to depict success for contemporary organizations. In this direction, Tavakoli (2015) remarked that “Today’s most successful companies align strategic business objectives with the professional, personal, and social goals of their employees. They create an environment where employees feel valued, appreciated, and eager to help achieve the corporate vision. Success underscores the capacity of the organization to continue to survive, despite the vagaries of the turbulent and dynamic business environment (Chandler, 1977 as cited in Victoria et al., 2018). However, the hallmark of success is the ability of a manufacturing firm to carry out its tasks effectively and efficiently in other to achieve a predetermined goal and objective. What an organization chooses might depend or determine if they are or will succeed or not. Noodles manufacturing firm needs to design a well-planned strategy in other to sustain the future of its business. In other to remain successful in this ever-dynamic business environment firms ought to increase its sustainable results, through effectiveness, efficiency, goals, and mission. Although they have challenges, these challenges can be said to be competition or strategic window of opportunities such they must overcome in other to achieve their goals, potential or success. (Mellahi & Wilkinson, 2004; Simpson, Padmore & Newman, 2012; Brooksbank, Kirby, Tompson, & Taylor,2003).

Procurement refers to all activities involved in obtaining items from a supplier e.g., purchasing, transporting and warehousing the items. Procurement is an important element of Business operation which involves commerce between two or more businesses. According to Njoroge, (2012) from the strategic perspective, procurement includes the entire operations pertaining to requisitioning, transportation, warehousing, and inbound receiving process. The main aim of the procurement is process efficiency (Aldin et al. 2004).

E-procurement has the capacity of acting as an integrative technology that enables integration and improvement of processes between departments. Flynn et al, (2010) define internal integration as the degree to which two departments collaborate in the management of both inter and intradepartmental processes to provide maximum value for the firm. Researchers have argued that the internal integration of various activities in an organization will be able to enhance economic performance.

According to Hawking, Stein, Wyld, and Forster (2004), procurement of goods and services represents the single largest cost item for any given enterprise since each naira a company earns on the sale of a product it spends on goods and services. More capital is spent on the procurement of materials and services to support the business’s operations than on all other expense items combined (Hawking et al., 2004).

E-procurement systems aid in reducing transaction costs by automating processes, thus replacing human labor with information technology (Brown, 2005; Maniam, 2005). There are some fundamental things a manufacturing firm aims to achieve when it comes to purchasing. These include reducing the time, increasing volume with a few preferred suppliers to get better pricing, reducing the time employees spend looking for a product, service or suitable supplier, cost of administering purchases, reducing cycle times as well as limiting choices to only a number of pre-qualified suppliers to ensure quality. E-procurement has been advocated as a tool that can improve competence and organizational success through data transmission, buyer/supplier collaboration, systems management, and billing management. Previous research has shown that e-procurement may indeed contribute to improved organizational performance (Croom & Jones, 2007; Hawking et al. 2004)

So many studies have been done on e-procurement. Paul, Namusonge & Fredrick (2017) conducted a study on the effect of e-procurement on organizational performance. Which the study reviewed that e-procurement plays an important role in achieving a firm’s goals. It is more than just a system for making purchases online because It provides an organized way to keep an open line of communication with potential suppliers during a business process. Adebayo and Evans (2015) also conducted an investigation on the adoption of e-procurement system in developing countries, the study concluded on the adoption of e-procurement in Nigeria with the view of gaining an understanding of the drivers, benefit, barriers, critical success factors, organizational performance post-implementation and the impact of e-procurement utilization on curtailing corruption in public procurement. Also, Ruzindana and Kalaskar (2016) conducted an investigation on the adoption of e-procurement and its impact on the procurement performance of selected telecommunication companies. The study concluded that the adoption of e-procurement contributes to improved customer service, customer satisfaction by improving employee contribution through procurement performance. However as stated above, it is clear that studies have not focused on e-procurement and organizational success of noodles firm in Port Harcourt. Therefore, this study as its point seeks to examine the relationship between e-procurement and organizational success of noodles manufacturing firms in Port Harcourt.

1.2 Statement of Problem.

Considering the increased competition in today’s society, which firms are seeking to attract and retain different customers. Speed and accuracy of service delivery through a well-defined procurement system is a major factor to ensure organizational success and survival (Korir, 2009). Adoption of e-procurement plays a significant role in improving the effectiveness and efficiency of organizations’ procurement functions. The procurement department could contribute tremendously to the organization’s vision and the bottom line if it adopts proper technologies. Technology adoption helps the procurement department to buy all that is required in the organization at the right time, price, place, quantity, and quality for all departments and users within the organization. An organization could derive great benefits from e-procurement and thus be able to serve their customers (both internal and external) better (Odago & Mwajuma, 2013).

On the other hand, if the procurement department is inefficient in its acquisition of goods and services or even works, other departments would be affected. Adoption of e-procurement could make it easier, faster and less expensive to purchase the goods and services which the organization needs. However, many organizations have ignored this essential component to be a thing of less important which have led to delay in delivery, mismatching of items with customer need and in turn, affected their performance and aims to be successful (Mutindi, Namusonge & Obwogi, 2013). In other words, if firms do not live up to their success, gaps can occur as a result of negative procurement processes. It is based on this the researcher is embarking on this work which is aimed at finding out if there is any relationship between e-procurement and organizational success of noodles manufacturing firms in Port Harcourt; and the extent to which e-procurement may contribute to organizational success.

1.3 Aim and Objectives of the study

The aim of this study is to empirically determine the relationship between e-procurement and organizational success of noodles manufacturing firm in Port Harcourt, while the specific objective of this study are listed below:

1. To examine the relationship between e-tendering relates to prompt delivery of noodles manufacturing firm in Port Harcourt.
2. To examine the relationship between e-tendering relates to cost reduction of noodles manufacturing firm in Port Harcourt.
3. To examine the relationship between e-sourcing relates to prompt delivery of noodles manufacturing firms in Port Harcourt.
4. To examine the relationship between e-sourcing relates to cost reduction of noodles manufacturing firm in Port Harcourt.
5. To examine the relationship between e-auction relates to prompt delivery of noodles manufacturing firms in Port Harcourt.
6. To examine the relationship between e-auction relates to cost reduction of noodles manufacturing firms in Port Harcourt.

1.4 Research Questions

With regards to the study, the following question where latter addressed, they are:

1. To what extent is e-tendering affect prompt delivery of noodles manufacturing firm in Port Harcourt?
2. To what extent is e-tendering affect the cost reduction of noodles manufacturing firms in Port Harcourt?
3. To what extent is e-sourcing affect prompt delivery of noodles manufacturing firms in Port Harcourt?
4. To what extent is e-sourcing affect cost reduction of noodles manufacturing firm in Port Harcourt?
5. To what extent is e-auction affect prompt delivery of noodles manufacturing firms in Port Harcourt?
6. To what extent is e-auction affect the cost reduction of noodles manufacturing firms in Port Harcourt?

1.5 Research Hypotheses

Ho_1: There is no significant relationship between e-tendering and effectiveness of noodles manufacturing in Port Harcourt.

Ho_2:   There is no significant relationship between e-tendering and prompt delivery in noodles manufacturing firm in Port Harcourt.

Ho_3:   There is no significant relationship between e-sourcing and prompt delivery of noodles manufacturing firm in Port Harcourt.

Ho_4: There is no significant relationship between e-sourcing and cost reduction of noodles manufacturing firm in Port Harcourt.

Ho_5:   There is no significant relationship between e-auction and prompt delivery of noodles manufacturing firm in Port Harcourt.

Ho_6: There is no significant relationship between e-auction and cost reduction of noodles manufacturing firm in Port Harcourt.

1.5.1 Study Variables and Conceptual Framework

1. In this study, e-procurement is the independent variable having its components/ dimensions as e-tendering, e-sourcing, and e-auction.
2. Organizational success is the dependent variable in this study having its measures/indices as prompt delivery and cost reduction.

Functional Relationships and Model Specification

The objective of this study is to establish a functional relationship between two measures of a dependent variable (organizational success) which are prompt delivery and cost reduction and the three dimensions of an independent variable (E-procurement) which are e-tendering, e-sourcing, and e-auction.

Premised on these variables, the research is expressed in the functional relationship as follows:

OS = f(E-PC) – – – – – – – – – – – – – – – – –  – – — – –  —  – —  – – – – – –1

E-PC = f(ET, ES, EA) – – – – – – – – – – – – – – – – – – – – – – – – – – – – -2

DP = (PD, CD) – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –3

Where

OS = organizational Success

E-PC = E-procurement

ET = E-Tendering

ES = E-Sourcing

EA = E- Auction

PD = Prompt Delivery

CD = Cost Reduction

CONCEPTUAL FRAMEWORK (IMG.CF MISSING)

Fig 1.1: Conceptual Framework of E-Procurement and Organizational Success of Noodles Manufacturing Firms in Port Harcourt.

Source: Timm, (2008) and Scott, (2002).

1.6 Significance of the Study

Manufacturing firms: This will provide a deeper understanding of e-procurement and how it influences organizational success of noodles industries on how to source to effectively source raw material on time.

Marketing Manager: To the marketing manager, the findings of this study are expected to provide answers to the fundamental question of why customers are loyal to a particle firm and why they switch one firm to the other.

Researchers and students: Researchers and students who may wish to carry out similar studies will benefit using this study as it offers a reference for future research that might examine the relationship between e-procurement and organizational success or related topics.

1.7 Scope of the Study

The scope of this study is in three main areas, these are; the content or the context scope, the survey scope, thus the geographical scope and the unit/level of analysis.

The content/context scope: These consider the variables of e-procurement and organizational success. The study covers the extent of the relationship between e-procurement and organizational success of noodles manufacturing firms operating in Port Harcourt.

The geographical scope: This study covers the selected noodles manufacturing firm operating in Port Harcourt metropolis in Rivers State of Nigeria.

Unit of Analysis: This study adopts the macro level of analysis whereby the units of analysis refer to all the managers, supervisors, coordinators in the procurement processes.

1.8 Limitation of the Study

This study has been limited in the selection of samples to study rather than the study to the total population. The research was on noodles manufacturing firms operating in Port Harcourt, therefore, generalization made from the finding applied in Port Harcourt but if it is applied in any geographical area it may or may not yield the same result.

1.9 Definition of Terms

For the purpose of this study, the following terms which are particularly related to this study are accordingly defined.

E-Sourcing: E-sourcing is an internet-based process of identifying opportunities, evaluating potential sources, negotiating contracts, and managing supplier relationships to achieve corporate goals, such as cost reduction and increased quality and service are done online.

E-Tendering: E-tendering is an internet-based process wherein the complete tendering process; from advertising to receiving and submission of tender-related information are done online.

E-Auction: An online, real-time auction between a buying organization and two or more invited suppliers, where suppliers can submit multiple bids during the time period of the auction, and where some degree of visibility exists among suppliers regarding the actions of their competitors

Prompt Delivery: Refers to speedily delivery from a firm with respect to customers’ requests or orders.

Cost Reduction: Refers to the reduction in the unit cost of goods or services without impairing suitability for the use intended.

1.10 Organization of the Study

Chapter one presents the introduction of the study containing the statement of the problem, followed by the purpose/objectives of the study, the research questions, research hypothesis, the scope, limitation, and significance of the study.

Chapter two deals with the review of related literature and statement of scholars as well as a business expert. Articles, textbooks, journals, etc. were extensively reviewed to show what has been done on the problem.

Chapter three of this work is the methodology that shows the research design, sample size determination and technique, sources of data, data collection technique and the operational measure of variables.

Chapter four of this work presents the data analysis, findings, and discussions. The data arising in chapter one were presented and analyzed. The hypotheses stated in chapter one was tested in this chapter.

Chapter five brings this study to an end as it shows the summary of the work, conclusions drawn and recommendations and suggestions for further study.