A comparative analysis of electronic purchasing practices within the local manufacturing sector

Abstract

In today’s rapidly changing business environment, the purchasing function has been developed into a strategic player and is now considered by management as a core process of the company’s strategic plan. The shift towards strategic purchasing indicates the buyers’ extensive scope and enhanced commitment to assist and support in delivering the organisation’s strategic aim. The Internet together with integrated software systems, have changed procurement operations. In addition, business dealings between buyers and suppliers are continuously shifting towards an automated process. The world of B2B transactions is continuously evolving and thus progressive managers are looking into innovative practices that assist in the firm’s success. Leading manufacturing companies are competing in a dynamic environment and their integral systems need to be redefined so that organisations can achieve sustainable growth and attain a competitive position in an effective and efficient manner. The underlying objective of this research study is to investigate how leading local manufacturing companies apply e-procurement in their purchasing practices. This dissertation also analyses how the selected companies electronically integrate with their suppliers as a means to improve their operations. The identification of the various advantages and significant challenges attributed to the system implementation served as a background in assessing the performance of the purchasing process and the electronic integration of suppliers with the company’s system. The analysis of buyer-supplier relationships assisted in identifying the fundamental characteristics in the exchange process and also in highlighting the influence of e-procurement on the relationship. The comprehensive literature review has been highly significant in analysing the purchasing transaction process and in identifying the various available e-procurement applications that assist companies in accomplishing outstanding results. A qualitative methodological approach assisted in collecting the required data for this research study. The primary data was attained through semi-structured interviews which were conducted with four local manufacturing companies. Top-level procurement managers were selected as interviewees for this dissertation. The semi-structured interviews were an effective source to provide explanations as well as insights in this research study. The findings of this research indicate that although electronic purchasing practices have generated considerable benefits, e-procurement is still at an early stage within the local manufacturing industry. Companies need to make use of the various valuable and costeffective tools that are available through the Internet. This assists firms to function in the most effective way in order to remain competitive in the contemporary business environment. Various barriers, such as cultural, financial, and technological aspects, need to be meticulously defined for the successful implementation of e-procurement. In addition, fostering a long-term buyer-supplier relationship based on mutual trust and cooperative interaction contributes in implementing a successful integrated buyer-supplier system. This study concludes with a set of recommendations for future research so as to further investigate the implications of electronic buyer-supplier integration. This is followed by proposing additional managerial opportunities so as to highlight the advantages that can be reached through e-procurement implementation.