1.1 Introduction
Electronic Procurement System is an electronic means to integrate corporations and suppliers, allowing revisions on needs/supply to be made through the Internet. It helps companies lower their procurement overheads as well as to save time in procurement. It also enables suppliers to acquire procurement via the platform within the shortest time as well as to get an immediate reply of procurement. The establishment of electronic procurement provides corporations with a safer and more convenient channel for platform information exchange (Nair et al., 2010). However, the building of a rapid response and successful e-procurement platform hinges on one crucial factor; the categorization of products and the formulation of sound material coding principles. The goal of this research is to develop a web-based e-procurement platform, which can be actually initiated in the multinational shipping companies.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
The rapid development of information technology has a significant impact on the business world. It affects the way the company runs its business and the used business model. The positive impact of information technology development is the opportunity for every business actor, either big or small, to compete. This can also create a new market and new business models such as e-commerce, e-marketing, and e-procurement. The developed e-procurement system by the IT consultant company is not only used inside the company. It is also used as a framework if there are clients that need an e-procurement system.
According to Chaffey (2009), e-procurement can be defined as the electronic integration and management of all procurement activities. It includes purchase request, authorization, ordering, delivery, and payment between a purchaser and a supplier. Similarly, Electronic Procurement is the process of purchasing and selling goods or services over the Internet or another network such as electronic data interchange and Enterprise Resources Planning (ERP). In short, e-procurement can be interpreted as part of e-business to perform Internet-based procurement process within a company. E-procurement covers not only the purchase process, but it also includes approval, decision-making, and contracting processes with vendors. E-procurement system is quite common in small and medium enterprises in Indonesia.
According to Beauvallet et al., (2014), the main advantage of e-procurement includes saving money, time, and additional workloads that are associated with writing. The conventional procurement process usually involves a lot of paper processing, which consumes a significant amount of time and money. The benefits of e-procurement are not only from time and cost aspect, but it also includes the simplification of the transaction process. Companies can shorten its business processes by cutting out unnecessary activities as conventional procurement processes require a place to gather vendors in the auction process. By using e-procurement, those activities are not needed. Vendors only need to fill out the form listed on the procurement website and the presence of these vendors is not needed.
1.3 Statement of Problem
Investigation revealed the problems of the existing system which is stated as follows;
- The manual recording system which tends to be complex and lack of good storage information system.
- The procurement personnel of head office or business units worldwide may not be able to buy the products at the same time.
- As the internal product coding principles and product categories of a company lack a set of standards, people are unable to find the needed.
- The procurement behavior or modes of trading on the part of procurement personnel from head office or worldwide business units cannot be audited. The transactions are not transparent, which easily leads to into kickbacks and other corrupt practices.
Also, there is large amount of manpower required in the procurement work leads to many mistakes occurring in some crucial steps of the procedure which include filling in the order form, sending the order’s confirmations, inventory, inspection, and acceptance of shipment. In view of all these problems, it became necessary to develop an electronic procurement System.
1.4 Aim and Objectives of the Study
The aim of the study is to design and implement an Electronic Procurement System. In achieving this aim, the following specific objectives were laid out as follows to develop an application software that will:
- Provide a means of buying products from procurement personnel or business;
- Accurately record product in a concise and precise form;
- Provide efficient product storage information system; and
- Ensure the transparency of transaction to avoid kickbacks and other corrupt practices.
1.5 Significance of Study
The significance of e-procurement are not only from time and cost aspect, but it also includes the simplification of the transaction process. Companies can shorten its business processes by cutting out unnecessary activities as conventional procurement processes require a place to gather vendors in the auction process. By using e-procurement, those activities are not needed. Vendors only need to fill out the form listed on the procurement website and the presence of these vendors is not needed.
The e-procurement proposed system will have a significant and positive impact on procurement process in the company. The study hopes to solve the problems of traditional procurement method, to lower procurement costs, and to shorten delivery time. It will also help the enterprises improve the efficiency of procurement.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.6 Scope of Study
The study focuses on the design and implementation of an Electronic Procurement System using pharmacy department of the Enugu State University Teaching Hospital (ESUTH) as a case study.
1.7 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).
1.8 Definition of Terms
Electronic Procurement: It is an electronic means to integrate corporations and suppliers, allowing revisions on needs/supply to be made through the Internet. It helps companies lower.
Database: A collection of logically related data to meet the information need of organization.
DBMS: Database management software that enable the user to define, maintain Control the database.
Application Program: A computer program that interacts with the database.
MENU: This is a list of options presented on the screen with each option identified by short code followed by longer description of its purposes.
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