CHAPTER to get information as at when needed.

CHAPTER 2

LITERATURE REVIEW

2.0
Introduction

This chapter seeks to introduce previous researches,
and related articles, journals, and other literature on the e-procurement with
particular emphasis on the of it plays in health services delivery, the
benefits its poses, challenges associated as well as how its influences health
services delivery positively. Also, an empirical and theoretical framework on
how the system works if introduced.

2.1 Overview

The main reason for initiating of
e-procurement in some countries is to create electronic atmosphere for both
private and public institutions and as a result that would support public
authorities and private companies, especially upcoming business, small medium
enterprises in accessing procurement information to know the good and best
suppliers to engage with (Blili Raymond, 1994). The concern of hospital management
is to identify ways of reducing the escalated healthcare costs while providing
at the same time better and safer services to the hospital patients (Wilson
& Cunningham 1992; Jarrett 1998; Okoroh, Gombera, Evison, & Wagstaff
2001). Similarly to what has already been witnessed in the private sector, the
initial implementation of e-procurement solutions has been saluted with great
enthusiasm. The benefits generated by e-procurement have varied, depending on
the implementation context. However e-procurement’s value impact, when applied
intelligently, is indisputable (Aberdeen Group, 2005)

Transparency and efficiency has also
being a major influence of e-procurement. It enables all stakeholders to get
information as at when needed. In some countries, tendering systems are usually
operated directly by government agencies and few private ones. The service is
been contracted out to a specialized agency as in Australia, Mexico and in a
few cases, to private operators (e.g. Canada, Chile). Comparatively
e-procurement is not to improve public institutions but also private ones. The
prominence of e-procurement does not focus on the public sector but takes into
consideration major institutional changes from the procurement process
perspective as well as from the organizational perspective. Another report
state that, the e-procurement strategy is based on the introduction of sound
procurement practices while taking into account the differences in requirements
of the public and private sector

Moreover,
challenges associated with e-procurement for the past years have being that
fact that if the cost of investment and the sustainability of the internet
connection is bad, we may not be able to access it. Expectation of adopting of
electronic procurement in some countries and public institutions seems to being
have failed. Claims made are the fact they are not getting the benefit
expected. (MacManus, 2002) indicate that implementation rate of public
procurement systems has been slow and many government agencies tend to
overstate the degree to which they are involved in e-procurement. As observed
by Heywood (2002), e-procurement will result in large investments of time and
money, without absolute certainty that its full potential will be achieved
every time and few report. Such failures of e-Procurement initiatives is
recollected from a number of public sector agencies in the USA, UK and New
Zealand in recent years.

 Governments in many countries are making
conscious efforts to migrate their procurement activities towards e-procurement
platform, on the contrary the problem remains that there is shortage of
knowledge of the actual adoption of e-procurement experiences in the public
sector (As-Saber & Rahim, 2011).

Nevertheless,
there is a strong positive views about e-procurement outcomes (Croom, 2000; Roche, 2001; Gamble, 1999; Greenemeier, 2000;
& Murray, 2001).
These include the fact that e-Procurement saves time as compared to the
traditional procurement, it is more flexible as well releases stress. Few
errors are made when we adopt e procurement. Information about suppliers are up
to date information which helps a buyer to enhance his decision making
capabilities. E-procurement ensures efficiency in decision making on an
institution having competitive advantage over others. It’s also a platform that
gives information about various suppliers to choose who you want to transact
business with and as a result making you risk less as a buyer. E-Procurement
seeks to ensure transparency and prevent duplication of service. This will in
the long run prevent corruption. Finally, it saves time and makes response to
problem quicker and easier. Success of every initiative primarily depends on
good communication of the program. 
Frequent. E-procurement plays a role of good and frequent communication
amongst all the users. The success of e-procurement depends on frequent
communication to the users in its supply chain (Ujakpa,2016).

2.2 Definitions

Although
for decades the reengineering of procurement has been attempted through various
information technologies (e.g., telecommunications), the real opportunity for
achieving this reengineering goal may lie in the use of e-procurement. This is
particularly true in a stagnant economy. High revenue growth is often the major
concern of corporate executives but such growth may not be always possible in a
slow economic environment. Therefore, the cost component, substantially
impacted by an e-procurement strategy, may be the key to continue creating
value in difficult circumstances. The classical value of e-procurement lies in
reducing costs that goes directly to the bottom line which has a greater impact
than increasing revenue (Sharrard, 2001, p. 5). Almost all of
the e-procurement definitions in the literature suggest that it is an automated
purchasing process, employing information technologies such as EDI, the
Internet. More definitions follow, Tatsis et al. (2006) define
E-procurement as, “the integration, management, automation, optimization and
enablement of an organization’s procurement process, using electronic tools and
technologies, and web-based applications”. According to Alaniz and Roberts (1999),
“E-procurement refers to Internet solutions that facilitate corporate
purchasing”. According to Morris et al. (2000), “E-procurement is
a series of steps from the formulation of the corporate purchasing strategy to
the actual implementation of an Internet-based purchasing system”. The Aberdeen Group (2001) defines
E-procurement as, “the creation of private web-based procurement markets that
automate communications, transactions, and collaboration between supply chain
partners.

 

2.3
Benefit

The
perceived benefits of e-procurement as seen by companies have tremendous
implications whether one goes for the technology or not. In many cases, the
real benefits including strategic impact, intangibles, and non-financial
outcomes are not spelt out, resulting in companies not recognizing the true
value of e-procurement in the supply chain and in turn helping to provide the
best possible customer service. Attaran,(2001) classifies
e-procurement benefits into three different categories: (1) strategic, which
concerns organizational changes and market advantage; (2) opportunity, which is
mainly related to improved and explored relations with present or even new
suppliers; and (3) operational, which means cheaper and more efficient
purchasing processes. Roche (2001) emphasizes the benefits coming from
immediate availability of information, paperless processes, and supply chain
integration. The adaptors of e-procurement systems worldwide, such as Cisco,
Chevron, and Eastman Chemicals, have demonstrated substantial improvements in
several ways. The benefits of e-procurement should include improved control of
vendor relationships, accurate order fulfillment processes, improved
effectiveness of the purchasing process, achievement of higher service levels,
reduced prices from the key suppliers, reduced inventory MacManus (2002) examined the
slow implementation rate of public e-procurement systems. In a related
research, 85% of the 2001 NIGP survey respondents mention “time savings”, while
75% cite “reduction in costs”. Similar results came up in Forrester Research,
Inc.’s survey of 35 state and local government purchasing directors.
Respondents claimed that, by using the Internet to purchase, 54% lowered
paper/printing costs, 49% saved postage/mailing costs, and 43% experienced
quicker response/turnaround. E-procurement is about enhancing collaboration,
streamlining processes, controlling costs, and enhancing information exchange
within and across organization boundaries”.
The first factor refers to the rationalization of the firm’s management of its
suppliers. Optimum organizational performance is the key objective of
any organization. Therefore, any change in the process or technology should
have a positive impact on a company’s performance. E-procurement does have some
implications for process improvement but more important is how this
improvement, affects organizational performance in both financial and
non-financial terms. E-procurement has several advantages (Raghavan & Prabhu, 2004):
reduced overall procurement costs compared with current traditional methods,
shorter-order processing and fulfillment cycles, reduction in administrative
costs, improved strategic sourcing, and reduced inventory costs. Findings reconfirm the need for the
well?documented practice of reducing the number of suppliers with whom a firm
intends to conduct e?procurement (Roth, 2001; Min &Galle, 2001). In the course of doing so, it also makes sense
to consolidate its suppliers and contracts to achieve significant savings and
better contract terms. Forrester Research reported on best practices on
e?procurement and found that firms and government offices adopting such
practices do, in fact, centralize corporate?wide purchasing policies,
standards, technologies, and the actual execution of sourcing to the relevant
departments and employees (Bartels, 2004). Large customer firms appear to be in a better position to centralize
its purchasing resources; they have larger annual purchasing volumes, and thus
stand to gain more financially from price discounts they could extract from
major suppliers (Min & Galle, 2001; Riggins & Mukhopadhyay, 1994). In keeping with focusing the firm’s energies on
a highly select group of suppliers, it is also suggested that the buyer firm
tries to understand their preferred suppliers’ technology plans and their
future abilities to respond to future business information systems requirements
and involving them in planning for e?procurement initiatives such as the
“supplier councils” conducted by Harley Davidson Motor Company (Fitzgerald, 2002) and the Online Procurement Top Committee (OPTC) organized by JJM, a
Taiwanese freight forwarder, as it coordinates its purchasing activities with its
500 suppliers (Lin & Hsieh, 2000). On account of their power, larger customer
firms appear to be able to keep a tighter rein on their supplier network when
it comes to implementing IT infrastructure requirements (Min and Galle, 2001).

2.4 Challenges

On
the contrary e -procurement adoption poses a great many challenges for most
companies. One serious impediment to adoption is the lack of awareness of
e-procurement and its implications for organizational performance. Carrying
costs, and reduction of the order cycle (Panayiotou
et al., 2004) . Liao et al. (2003) highlight
behavioral and infrastructure barriers to the implementation of E-procurement.
Besides lack of top management support, behavioral barriers include purchasing
personnel receiving improper benefits from favored companies, false floor
prices, and information leaks, while infrastructure barriers include lack of
expertise and the necessary technology. Unfortunately, this tremendous expected
growth rate has been revised downwards. Recent market observations indicate
that the adoption and integration of e-procurement technologies into the
business mainstream is occurring at a much slower than expected pace. One
reason is the implicit association that investors have made between
e-procurement technologies and the business-to-consumer (B2C) models
responsible for the Internet bubble. More often, the slow-down has been
associated with technology-related issues. A 2001 study by the Conference Board
points to problems in the implementation side and concludes that ‘organizations
are finding (e-procurement) implementation more complex, more expensive, and
more time consuming than they originally envisioned’ and that consultants have
been ‘widely criticized for overstating the business case for e-procurement’ (Conference Board, 2001). Companies were
jumping onto the e-procurement bandwagon without fully understanding the
inter-organizational collaboration and network effects underlying these
technology models, the investment required to move the right information from
suppliers to employees, and the complexities of integrating these technologies
with existing Enterprise Resource Planning systems (Gilbert, 2000). Thus, Lack of system integration and
standardization”. This deal with the immaturity of providers of e?procurement
services in the marketplace i.e. consulting services, marketplace services, and
pricing models used by service providers and the nature of certain suppliers
that buyer firms have to deal with, and the resistance of internal end?users to
learning how to use multiple e?procurement systems. In light of these, this
factor is termed “Immaturity of e?procurement?based market services and
end?user resistance”. Finally, the last factor concerns the difficulties of
eliminating “maverick” buying on the part of the firm’s staff and the
challenges of taking spend data from e?commerce?driven transactions and
connecting the data collected from these systems to the rest of the purchase
transaction data gathered through other systems. Therefore, this factor is
called “Maverick buying and difficulty in integrating e?commerce with other
systems”

The introduction
of e-procurement in healthcare delivery

Influence on health serves delivery

Critical success
factor

Challenges associated

Perceived benefit

2.5 Theoretical Framework

 

 

 

 

 

Above is a theoretical framework
for E-procurement adoption suggested by Gunasekaran and Ngai (2008) was
based on an empirical study conducted in Hong Kong. That framework has been
modified herein to fit health services delivery. In this literature, we are
focusing on the health sector. Based on this, our study sample is private and
public quasi hospital. The original framework highlighted the importance of
e-procurement, e-procurement adoption issues, and critical success factors for
e-procurement adoption, including: financial support, system interoperability,
communication system standards, top management support and commitment,
understanding company priorities, and suitable security systems. This basically
is a constructed proposed model exhibiting the various benefits of e-procurement. Kheng
and Al-Hawamdeh (2002) explored
e-procurement at Singapore and examines the impact of Internet-based technology
on the buyer side of the procurement function, how e-procurement is helping
organizations to enhance their competitiveness and the challenges to its
adoption. In e-procurement, buyer software enables users to automate
transactions and focus on the buying organizations’ activities, such as order
placement, catalog management, payment, reporting, and so on (Rajkumar, 2001). E-procurement
systems generally must be capable of integrating multiple supplier catalogs
into an aggregated, buyer-managed view of the catalog. They enable review of
product purchase patterns and deliver knowledge that can be used to facilitate
supplier negotiations. These systems enable purchasing to automate most of the
transaction processing, as well as to reduce cycle times, limit reductions in
off-catalog buying, and free purchasing to focus more on activities such as
strategic sourcing.

In
e-procurement systems, critical success factors should include efficient
processes without excessive idle times, existence of monitoring and evaluation
systems that permit the continuous improvement of the process, and adequate
training of the employees in order to enable them take advantage of the new
system (Panayiotou
et al., 2004). Its introduction will require changes, updates,
replacements, and adaptations throughout the infrastructure. Successful
e-procurement is more concerned with the fundamental procurement aspects than
with the electronic aspects. The successful adoption of e-procurement depends
on the barriers present in the system. Identifying the barriers themselves is
part of the major managerial function in developing the right pathway for the
adoption of e-procurement. The barriers could stem from infrastructure, strategy,
people, culture, etc.Liao et al. (2003) highlight the
problems associated with procurement: untrue floor prices, improper alteration
supplements, improper procedures in awarding contracts, information leaks,
taking bribes and improper benefits for some favored companies, and careless
supervision and resource distribution. In many cases, the communication has
been distorted by the individuals to pursue their own interests in the
organization. E-procurement will facilitate shared information and hence open
communication, and there will be fewer behavioral and political impacts.

 Some of the perceived barriers of  adopting e-procurement includes plans for new
ways of doing business, particularly when expressed using technological jargon
are generally not well received. It may need changes in the way people work, as
well as in the strategies of the organization. Also, insufficient resources,
lack of motivation of people, resistance to new technology, lack of top
management support, etc. Lack of capital, lack of expertise and technical
skills, lack of technologies and tools, resistance to change, and lack of top
management support will delay in introduction of e-procurement. Hawking et al. (2004) identified
barriers to the adoption of e-procurement as follows: security of transactions,
lack of supplier e-procurement solutions, high cost of technology, lack of a
legal framework, lack of technical expertise, lack of e-procurement knowledge,
no real business benefits identified, lack of data exchange standards, and lack
of business relationships with suppliers.

 

2.6 Empirical Framework

At this
stage, we intend using the system theory model and modifying to fit it in the
introduction of e-procurement in health services delivery

2.7 The System Model

A system is an entity with interrelated and
interdependent parts; it is defined by its boundaries and it is more than the
sum of its parts (subsystem). Changing one part of the system affects other
parts and the whole system, with predictable patterns of behavior. Positive
growth and adaptation of a system depend upon how well the system is adjusted
with its environment, and systems often exist to accomplish a common purpose (a
work function) that also aids in the maintenance of the system or the
operations may result in system failure. The goal of systems theory is
systematically discovering a system’s dynamics, constraints, conditions and elucidating principles (purpose,
measure, methods, tools, etc.) that can be discerned a applied to systems at
every level of nesting, and in every field for achieving optimized goal. 

 Systems theory was introduced by biologist L. von Bertalanffy in the 1930s as a
modeling devise that accommodates the interrelationships and overlap between
separate disciplines. It reminds us of the value of integration of parts of a
problem since the problem itself cannot be solved as well if they are considered
in isolation from interrelated components. This conceptions appears in
contemporary science and that it is concerned with what is somewhat vaguely
termed ‘wholeness’, i.e. problems of organization, phenomena not resolvable
into local events, dynamic interactions manifested in difference of behavior of
parts when isolated or in a higher configuration, etc. Hence they are the
systems of various order which is not understandable by investigation of their
respective parts in isolation. Conceptions and problems of this nature have
appeared in all branches of science, irrespective of whether inanimate things,
living organisms, or social phenomena are the object of study.

2.8 Terms in System Theory

Systems Theory Terms includes Problem, A problem can be a question
looking for an answer, a situation such as an existing information system that
isn’t working properly and needs improving, or a new opportunity or idea that
is worthy of further consideration. Also it has a System, system is a set
of related components that work together in a
particular environment to
perform whatever functions are
required to achieve the system’s objective.
Furthermore it is goal-seeking by definition. 
The definition of a system says that a system’s components work together
to achieve a common objective it means that the system seeks to complete a
goal. It is important to be able to
identify the objectives of any existing or new system to be able to understand
it and evaluate its effectiveness. In an information system, the components
include people, procedures, data, software, and hardware. Paper artifacts are
part of this, such as manuals, forms, and reports. Moreover all systems should
have input and output. It is fair to say that a system may be evaluated by
determining if its output results in the achievement of its objective.
Therefore Feedback needs to be effective and efficient a system needs a
feedback mechanism that can ascertain whether the outputs of the system are
what they should be. If not, a system should have the ability to adjust its
inputs or processes to improve the outputs. An ideal system is self-regulating.
To continue, the Internal Environment, a system operates in an environment with
both internal and external components. Its internal environment it that part of
its environment over which it has some control. If some aspect of the internal
environment is causing some difficulty for the system, that aspect can be
altered. For example, a particular information system operates in a particular
office environment. If a requirement of the information system is that its
users must collect data that hasn’t been collected previously, this new
activity can be asked of them. The A system’s external environment is that part
of its environment over which it has no control, but it still affects the
requirements of the system. So an
analyst must be aware of the requirements of both the internal and external
environments in which an information system will work. Furthermore,
Subsystem is usually composed of self-contained but interrelated systems. It is
important to be able to recognize these subsystems, because understanding this
interdependence is vital to developing a complete system. Finally, system boundary, a system
boundary may be thought of as the point at which data flows as output from one
system to another as input.  It’s also
divided into two component thus permeable and non-permeable. Permeable boundary
allows data to flow freely, resulting in an open system. An impermeable boundary
is one which strictly controls or even restricts the acceptance or dispensing
of data, resulting in a closed system.

In this literature,
discoverer would be made on benefit of e-procurement since it will influence
others to adopt it, the barriers of e-procurement since the
successful adoption of e-procurement depends on the barriers present in the
system because it is the major managerial function in developing the right
pathway for the adoption of e-procurement and
finally how e- procurement influences service delivery positively. The diagram
depict the process of e-procurement using the system theory.