The Impact of E-Procurement’s On Supply Chain Processes. A Case Study of Kakira Suger Works Company (Uganda)

CHAPTER ONE INTRODUCTION 1.0 Introduction A supply chain can be defined as three or more organizations directly linked by one or more of the flows of products, services, finances, and information from a source to a customer (Mentzer et aL, 2001). Management of the supply chain is essentially management of the relationships and activities among the member organizations. These relationships range from single transactions to complex interdependent relationships. As the business environment becomes more complex, organizations recognize that many benefits can be obtained from closer, long-term relationships (Ganesan, 1994). Day (2000) ventures to say that committed relationships are among the most durable of advantages because of their inherent barriers to competition. The goal of supply chain management is for member organizations to work together in close, long-term relationships to increase the competitive advantage of the supply chain as a whole (Mentzer et al., 2001). The phenomenon referred to as “the next business revolution” — the nexus of computers, networks, people, and business goals for purposes of selling goods, services, and information is an innovative way to cut costs, grow markets and profitability, and improve shareholder return relative to traditional business methods (Palmisano, 1998). This combination is the business phenomenon referred to as e-procurement: the trade of goods and services that takes place electronically such as over the Internet (Dolber et al., 1998). The ratio of online business trade to traditional channels is projected to vary greatly by industry, from a high of over 20 percent for computing to just over 1 percent for industrial equipment (Goldman Sachs & Company, 1999). While the downturn in e-procurement stock valuations in 2000 resulted in the failure of many e-procurement ventures, the growth in B2B e-procurement is still on track. In 2000, the value of worldwide B2B Internet commerce sales transactions surpassed $433 billion, a 189 percent increase over 1999 sales transactions (Pastore, 2001). The emergence of business on the Internet brings a new set of challenges to coordinating supply chain activities. Firms conducting business electronically face several differences in the e-procurement business environment that may have a significant impact on managing relationships in the supply chain.