ELECTRONIC PROCUREMENT PROCESSES AND ITS IMPACT ON FIRM
PERFORMANCE (A CASE STUDY OF DRIVER VEHICLE AND LICENSING
AUTHORITY)
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CHAPTER ONE
INTRODUCTION
1.1 Background of Study
The concept of procurement has gained much prominence in recent years as a way of gaining
competitive advantage in the market (Koellinger, 2016). For procurement, the primary goals are to
provide the required customer service level in a specific market segment and to minimize total supply
chain investment costs (Gunasekaran, Patel & McGaughey, 2014). Maximizing service efficiency
and procurement costs require that superfluous operations must be eliminated. Information and
communication technology (ICT) has the power to fundamentally change the lives of much of the
world’s population (Kurien & Qureshi, 2011).
Information technology (IT) is defined by Laudon and Laudon (2011) as a set of interconnected
components that acquire, analyze, store, and disseminate data to aid users' decision-making.
Businesses and organizations use information technology to achieve their objectives, which includes
both hardware and software, as well as the knowledge that goes with it. Organizations are increasingly
relying on Information and Communication Technology (ICT) to improve the efficiency of their
operations (Laudon & Laudon, 2011). Technology has an impact on many corporate and government
activities, as well as how individuals live, work, and interact in a variety of ways. As more
organizations seek ways to manage their supply chains, technology such as ERP systems, electronic
payment systems, and bar codes are becoming more prevalent (Gunasekaran, Patel & McGaughey,
2014).
One of the most important aspects of running a business is keeping track of information across the
supply chain. When procurement processes are efficient, customers, suppliers, and the firm as a whole
benefit. Technological solutions are used in distribution and procurement management to increase
efficiency and eliminate waste in value chains (Capgemini, 2018). Organizations may utilize Material
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Requirements Planning (MRP) to manage supplier networks, increase traceability, and manage
distribution networks. Businesses must employ effective procurement management to be competitive
on the global arena (Christopher, 2011). Rather than the fragmented systems that have characterized
many organizations, the globalization of procurement processes have compelled companies to seek
out better and more interconnected systems that link procurement competencies, multiple
procurement strategies, implementation processes, and procurement capabilities to coordinate
materials entering and leaving the company (Capgemini, 2018). Preliminary needs analysis, contract
award, contract administration, and final payment comprise the public procurement process (Asabere,
Oppong & Sarpong, 2012).
As a result of the use of procurement technology, a company's agility, operational efficiencies, cycle
time reduction, and ability to deliver items on time may all be improved (Gunasekaran et al., 2014).
Increased customer service, reduced expenses, and streamlined procurement chains may all be
achieved by integrating technology into current processes (Capgemini, 2018). Technology must be
incorporated into current policies, processes, and personnel in order to be truly successful. Human
and material movement can be profoundly altered by technological advancements (Gunasekaran et
al., 2014).
Technology is potentially an important enabler of change in social and organizational practices, thus
affecting the demand for transport in spatial and temporal terms (Capgemini, 2018). The availability
of products on the market is critical in any sector. A lack of availability of the items generally results
in a decrease in sales since clients may simply choose another product or brand (Kurien & Qureshi,
2011). It is only possible to supply the market with the commodities it needs by making and sending
the correct products at the right time. A procurement management system supported by technology
is the only way to meet these important business performance requirements (Christopher, 2011).
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The adoption of technology solutions is important in order to make the purchase process less
burdensome (Lysons & Farrington 2016). The ever-changing business climate influences the
competitive environment in which organizations compete. An organization's survival depends on its
ability to outpace the competitors. Incorporating technology into the procurement process helps to
strike a balance between meeting consumer demands and keeping costs under control to maximize
revenues (Kurien & Qureshi, 2011). Procurement goals are primarily associated with quality,
reduction of financial and technical risks, and protection over competition and integrity in the system.
It is common for non-procurement aims to include economic, social, and political objectives.
Increasing procurement's efficiency is a tall order, since the market structure, regulatory framework,
and political climate that buyers must contend with provide various obstacles (Thai, 2014). It is
therefore crucial to examine developments in procurement practices specifically e-procurement. With
the Ghanaian government being the largest procurement entity in the country, such a study in the
public sector is of dire importance.
1.1 Problem Statement
Today's procurement procedures are extremely convoluted, including a plethora of physical and
informational interactions to make sure that the correct things are delivered to the right location at the
right time at a reasonable price (Capgemini, 2018). Nearly every aspect of a business may be
supported and improved by ICT's strong and advanced technological solutions (Klein & Rai, 2009).
Many businesses in today's dynamically competitive world have embraced new procurement trends
by implementing cutting-edge technologies. Many businesses are implementing cutting-edge
technological solutions to get a competitive edge in today's global market (Evangelista & Sweeney,
2016). However, due to the complexity of some of these tools, it is not strange to find certain key
employees kicking against its adoption especially within public sector institutions. Advocating for a
shift in procedures can be challenging since most employees are accustomed to doing things a certain
way. E-procurement research has been done at the local level.
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With many state-owned enterprises across the country, not all are involved in procurement activities.
Driver Vehicle and Licensing Authority (DVLA) is one of the state-owned enterprises that does quite
a number of procurement activities. Many studies have looked at the impact of e-procurement in
Ghana (See Ameyaw, Mensah & Osei-Tutu; 2012; Boateng; 2013; Boateng & Evelyn, 2017).
However, the impact of e-procurement in state-owned enterprises has gotten less attention.
Furthermore, most state-owned enterprises trail behind privately owned organisations when it comes
to the adoption of technological solutions (Boateng & Evelyn, 2017). It is therefore essential to find
out whether the benefits accrued from e-procurement amongst state-owned enterprises is the same as
that amongst privately owned organisations. Also, more studies on e-procurement in Ghana has been
amongst privately owned organisations and not on state-owned enterprises. To address this gap, this
study focused on the impact of electronic procurement process o firm performance.
1.2 Objectives of the Study
The general objective of this study is to assess the impact of electronic procurement process and its
impact on firm performance using Driver Vehicle and Licensing Authority (DVLA) as case study.
The study was guided by the following specific objectives.
1. To identify the procurement technology tools employed by DVLA.
2. To establish the challenges associated with the type of e-procurement tools employed at
DVLA.
3. To examine the effect of technology on the procurement performance of DVLA.
1.3 Research Questions
The study was guided by the following questions.
1. What are the procurement technology tools employed by DVLA?
2. What are the challenges associated with the type of e-procurement tools employed at DVLA?
3. What is the effect of technology on the procurement performance of DVLA?
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1.4 Significance of the Study
The findings of this study can be applied entirely to the e-procurement process of public sector
institutions in the country. The findings of the study will also provide policy framework to
management of Driver Vehicle and Licensing Authority to adopt measures to administer sound
procurement process. Also, findings of the study will assist management of Driver Vehicle and
Licensing Authority and other public sector institutions to utilize the best e-procurement practices as
will be suggested throughout this study. Academicians and researchers will benefit from this study as
it will assist them in developing theoretical framework and add up to the existing knowledge of
literature for academic purposes.
1.5 Scope of the Study
This subsection focuses on content scope, time scope and geographical scope. Concerning content
scope, this research focuses on electronic procurement processes and its impact on firm performance
within the public sector. Driver Vehicle and Licensing Authority (DVLA) was chosen as the case
study. In terms of time scope, this study looked at a 5-year period, specifically the years 2017–2021.
In terms of geographical coverage, this study was conducted in Ghana's Greater Accra Region.
1.6 Limitations of the Study
Almost every field research encounters some challenges, this study was no exception. The study
covered only one public sector organization in Ghana specifically DVLA. Therefore, not being able
to generalize the results to be obtained can be considered as a limitation. The study will be narrowed
down to a few executives and management employees, from whom primary data will be acquired.
This is also a drawback since the information that may be collected may have certain biases. To
address this constraint, the study will use objective questionnaires for all participants in order to
decrease personal views.
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1.7 Organization of the study
The study is presented in five chapters. Chapter one gives an introduction to the study, the
background, the problem statement, research questions and the research objectives. It included the
purpose and significance of the study. Chapter two focuses on the literature review and theoretical
framework of the study. Chapter three describes the research design that is used, the target population
and the sampling procedure. It also describes the data collection procedure and data processing and
analysis. Chapter four describes the actual sample used and its characteristics. It also presents,
analyzes and discusses the findings of the study. Chapter five gives an overview of the entire research.
It includes the summary and conclusion of the study as well as recommendations based on the key
findings of the study.
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