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E-Procurement, Internal Customer Service and External Customers – a Study of Effects and Interdependencies

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E-Procurement, Internal Customer Service and External Customers – a Study of Effects and Interdependencies MASTER THESIS MASTER OF SCIENCE IN BUSINESS ADMINISTRATION SCHOOL OF MANAGEMENT BLEKINGE INSTITUTE OF TECHNOLOGY E-PROCUREMENT, INTERNAL CUSTOMER SERVICE AND EXTERNAL CUSTOMERS – A STUDY OF EFFECTS AND INTERDEPENDENCIES MAYASE MIBENGE NGOZIKA CHINYERE OKOYE [email protected] [email protected] SUPERVISOR: GUNNAR ÅGREN JUNE 2007 RONNEBY, SWEDEN E-procurement, Internal Customer Service And External Customers – A Study of Effects And Interdependencies ACKNOWLEDGEMENTS We thank God for making it possible for us to successfully complete this work. Special thanks also go to our supervisor Gunnar Ågren for his support and guidance. We are also greatly indebted to the Dean of School of Management, Anders Nilsson for his contribution and help throughout the period of our studies. Lastly, we would like to convey our gratitude to our families and friends at BTH for all their support and encouragement throughout our studies. Special thanks go to Arinze Sunday Nwabude for his invaluable assistance in putting the work together. Mayase Mibenge & Ngozika Chinyere Okoye I E-procurement, Internal Customer Service And External Customers – A Study of Effects And Interdependencies ABSTRACT Rapid technological advancements have completely revolutionalised the way things are done in the business world today. Proliferation of the internet and related technologies in the 1990s made it possible for companies to do business over the internet and it became easier and faster to do business both with suppliers and customers. With the ushering in of electronic business (e-business), many organisations including the public sector have since implemented various forms of its applications such as e-procurement, e-service, e-government and many others. As a matter of necessity organisations that want to sustain their businesses in such an environment must adapt their business strategies to meet the demands of the day and also be able to take advantage of the benefits of doing business electronically. Many such benefits have been cited which include reduction in costs, better communication among supply chain players and increased levels of productivity. It is also important to understand how such applications as e-procurement are impacting on intra organisational systems as this is just as important as inter organisational systems such as external supply chains. Internal processes are a vital part of the supply chain and the effect of e-procurement on internal processes is vital as it has a bearing on the level of customer service within the organisation which could also have a bearing on the level of external customer service. According to Michael Porter’s value chain, procurement is clearly a support function and it must add value to primary activities such as production. E-procurement therefore must create value that will be appreciated by primary activities within the organisation otherwise it is not worth undertaking. It is important for organisations to see where value can be added along the supply chain and find ways of improving on current processes in order to increase profits and decrease costs. Improvements in delivery times for example, as a result of e-procurement can add significant value to the external customer. This thesis therefore has sought to find out the effects of e-procurement on internal customer service and also to find out if internal customer service has any effects on external customers. The results of this research are that e-procurement affects internal customer service positively and that internal customer service affects external customers. The qualitative method has been used in this research work and the works of many different authors have been drawn upon. Mayase Mibenge & Ngozika Chinyere Okoye II E-procurement, Internal Customer Service And External Customers – A Study of Effects And Interdependencies TABLE OF CONTENTS CHAPTER ONE 1.0.0.0 Introduction……………………………………………………………………1 1.2.0.0 Problem statement…………………………………………………………….3 1.3.0.0 Previous studies………………………………………………………………..3 1.4.0.0 Objectives of the study…………………………………………………….......4 1.5.0.0 Research questions…………………………………………………………….4 1.5.1.0 Research question 1……………………………………………..4 1.5.2.0 Research question II…………………………………………….4 1.6.0.0 Significance of the study………………………………………………………4 1.7.0.0 Keywords………………………………………………………………………5 1.8.0.0 Definitions……………………………………………………………………...5 1.8.1.0 E-business……………………………………………………….5 1.8.2.0 Procurement…………………………………………………….5 1.8.3.0 E-procurement………………………………………………….6 1.8.4.0 Supply chain…………………………………………………….7 1.8.5.0 Internal Customer Service……………………………………..7 1.8.6.0 Internal customer……………………………………………….7 1.8.7.0 External customer………………………………………………8 1.8.8.0 E-commerce……………………………………………………..8 1.8.9.0 E-service ………………………………………………………...9 1.9.0.0 Organisation of the study…………………………………………………….10 CHAPTER TWO 2.0.0.0 Literature review……………………………………………………………..11 2.1.0.0 Introduction…………………………………………………………………...11 2.2.0.0 E-business……………………………………………………………………..11 2.3.0.0 E-procurement………………………………………………………………..13 2.3.1.0 Brief history of e-procurement………………………………..14 2.3.2.0 Benefits of e-procurement……………………………………..17 Mayase Mibenge & Ngozika Chinyere Okoye III E-procurement, Internal Customer Service And External Customers – A Study of Effects And Interdependencies 2.3.3.0 Challenges of e-procurement………………………………….23 2.3.4.0 E-procurement strategies……………………………………..25 2.3.5.0 E-procurement models………………………………………...26 2.4.0.0 Supply Chain Management and E-procurement…………………………..28 2.5.0.0 Value Chain…………………………………………………………………..29 2.6.0.0 Value Networks………………………………………………………………32 2.7.0.0 Internal Customer Service…………………………………………………...32 2.8.0.0 E-procurement and Internal Customer Service…………………………....34 2.9.0.0 Future trends of e-procurement……………………………………………..36 2.10.0.0 Conclusion of literature review…………………………………………..…. 37 CHAPTER THREE 3.0.0.0 Research methodology………………………………………………………39 3.1.0.0 Research design……………………………………………………………...39 3.2.0.0 Selection of sources of primary data……………………………………….40 3.2.1.0 History/ overview of Woody Bygghandel……………………41 3.2.2.0 History/ overview of Tarkett…………………………………41 3.3.0.0 Data collection methods……………………………………………………..42 3.4.0.0 Limitations of research……………………………………………………...43 CHAPTER FOUR 4.0.0.0 Findings and data analysis………………………………………………….45 4.1.0.0 Findings………………………………………………………………………45 4.1.1.0 Research question I…………………………………………...45 4.1.1.1 Primary data……………………………………45 4.1.1.2 Secondary data………………………………….46 4.1.2.0 Research question II………………………………………......50 4.1.2.1 Primary data…………………………………….50 4.1.2.2 Secondary data………………………………….52 4.2.0.0 Data analysis…………………………………………………………………55 Mayase Mibenge & Ngozika Chinyere Okoye IV E-procurement, Internal Customer Service And External Customers – A Study of Effects And Interdependencies 4.2.1.0 Research question I…………………………………………...55 4.2.1.1 Primary data……………………………………55 4.2.1.2 Secondary data…………………………………59 4.2.2.0 Research question II………………………………………….61 4.2.2.1 Primary data……………………………………61 4.2.2.2 Secondary data………………………………….66 4.3.0.0 Summary of findings and analysis…………………………………………..68 4.3.1.0 Research question 1…………………………………….……...68 4.3.2.0 Research question 11…………………………………….…….70 4.4.0.0 Conclusion of findings………………………………………………………..71 CHAPTER FIVE 5.0.0.0 Summary, conclusion, recommendations and areas of future research….75 5.1.0.0 Summary……………………………………………………………………...75 5.2.0.0 Conclusion…………………………………………………………………….76 5.3.0.0 Recommendations……………………………………………………………77 5.4.0.0 Areas of future research……………………………………………………..78 CHAPTER SIX 6.0.0.0 References…………………………………………………………………….79 6.1.0.0 Journals……………………………………………………………………….79 6.2.0.0 Books………………………………………………………………………….84 6.3.0.0 Website sources………………………………………………………………86 APPENDIX: QUESTIONNAIRE………………………………………………………....87 LIST OF FIGURES Figure 1 Overview of e-business……………………………………………………….13 Figure 2 Evolution of e-procurement………………………………………………….16 Mayase Mibenge & Ngozika Chinyere Okoye V E-procurement, Internal Customer Service And External Customers – A Study of Effects And Interdependencies Figure 3 Benefits of e-procurement……………………………………………………22 Figure 4 Porter’s Value Chain Model…………………………………………………30 Figure 5 Relationship between internal customer satisfaction, e-procurement compliance and procurement costs………………………………………….35 Figure 6 E-procurement and user’s perceptions of service quality……………….....49 Figure 7 Service profit chain………………………………………………………...…54 LIST OF TABLES Table 1 E-procurement impact……………………………………………………….18 Table 2 E-procurement performance………………………………………………..18 Table 3 E-procurement models………………………………………………………26 Table 4 Findings from Woody Bygghandel for research question I……………….46 Table 5 Findings from Woody Bygghandel for research question II………………50 Table 6 Procurement /purchasing and other departments in Tarkett…………….51 Table 7 Internal service quality ratings……………………………………………..53 Table 8 Analysis of findings from Woody Bygghandel for research question I…..55 Table 9 Effects of e-procurement on Internal Customer Service (Croom, Johnston, 2003)………………………………………………………………………… 59 Table 10 Effects of e-procurement on Internal Customer Service (Croom, Johnston, 2006)…………………………………………………………………………..60 Table 11 Analysis of findings from Woody Bygghandel for research question II….62 Table 12 Effects of business system on external customers in Tarkett……………..65 Table 13 Purchasing’s service quality level to other departments………………….66 Table 14 Purchasing’s internal suppliers’ service
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