A study of eprocurement technologies, procurement practices, procurement performance and their relationship

Supply chain management involves all approaches used to efficiently integrate all participants of a supply chain so that products/services are delivered to the customer in the right quantities, to the right location, at the right time, and at optimal cost. Advances in information systems technology have had a huge impact on the evolution of supply chain management (Lee and Whang, 2000). As a result of such technological advances as e-commerce, supply chain partners in a B2B environment can now work in tight coordination to optimize the chain-wide performance, and the realized return may be shared among the partners to improve individual firm performance. Eprocurement has shown to be the start point for many companies' overall e-commerce strategy, since procurement is a critical link between members of the supply chain (Novack and Simco, 1991). Procurement and supply chain management practices provide the single greatest opportunity to control costs, manage quality and improve responsiveness (Berger and Gattorna, 2001). The researcher developed valid and reliable measures for procurement practices, eprocurement technology usage and procurement performance. The instrument development process included interviews, a pre-test and a large-scale survey. The large-scale survey yielded to a response rate of 14% from ISM members. Rigorous statistical methods were used to assess and validate constructs using structural equation modeling. The theoretical implications of the research findings include supporting the hypotheses that higher procurement practices lead to higher levels of procurement performance; higher levels of eprocurement technology usage achieve higher procurement practices and higher procurement performance, higher procurement performance positively impacts supply chain performance and finally, supply chain performance have a positive impact on firm performance. The findings did not support the hypothesis of eprocurement technology usage as a moderator variable in the relationship between procurement practices and procurement performance. The data did not support the hypothesis that procurement performance directly affects firm performance. The results from this study have several implications for practitioners. First, it helps understanding the procurement process and its relationship with eprocurement technology usage. It showed that eprocurement facilitates the development of operational tasks in the procurement area. Second, the research provides valid and reliable measures for benchmarking in procurement. Third, the fact that procurement performance impacts indirectly firm performance by means of procurement perception of supply chain performance is a motivational factor for firms to work with their supply chains, instead of just working for increasing their own performance. Guidelines for future research include refinement of the procurement practices construct by adding the strategic view, when organizations have experienced higher levels of eprocurement technology usage.