International Journal of Procurement Management (38 papers in press)
Implementing E-Tendering to Improve the Efficiency of Public Construction Contract in Saudi Arabia
by Moath Al-Yahya
Abstract: This paper presents an e-Tendering model developed for the public construction contract in Saudi Arabia to improve its efficiency. The research addresses the dilemma of traditional tendering and recommends the use of practical tools in order to improve the efficiency of the process. The demand from governments and the construction industry for paperless business processes has generated many commercial e-Tendering systems around the world. E-Tendering systems can be quite complex since they involve many stages or phases to meet the needs of both the public and private sectors. In the current study, numerous e-Tendering systems have been evaluated to provide background information to assist with the development of the proposed model. The proposed model is developed based on literature review, ten interviews, a focus group, and 52 questionnaire participants. The model allows a contractor to be involved during the design stage and participate officially during the design process. This feature seek to minimise the projects time and maximise the quality and transparency of e-Tendering in the construction industry. The challenge, thus, revolves around adapting the Saudi construction contract into the form of e-Tendering.
The implementation expectations are common across the government and the contracting industries. All participants can envisage an improvement in efficiency with the implementation of e-Tendering. The results also showed that the majority of the participants consider the distribution and receipt of the bids to, or from, the subcontractors and suppliers as the factor that can most easily be influenced by the efficiency of the e-Tendering process. Further, the findings highlight the importance of developing and maintaining best practice for the IT requirements and for the configuration of the whole e-Tendering model. The inclusion into the proposed model of relevant insights obtained from the interviews, the questionnaire, and the focus group ensures that the model has both theoretical and practical validity.
Keywords: e-Tendering; electronic tendering; e-Procurement; e-Bidding.
Optimal selling price and lot size for non-instantaneous deteriorating items with different demand rates and partial backlogging
by Ajay Gor, Hetal Patel
Abstract: This study is an extension of Maihami and Kamalabadi (2012) [Int. J. Production Economics, 136, 116122] by taking the demand rate as general function of price and time and it is different in different time interval. When deterioration starts, price discount is offered. This study also considers deterioration rate as general function of time. Back order rate is also taken as general function to develop a model. Numerical examples are presented to illustrate the model. Sensitivity analysis is carried out for major parameters and some managerial insights are proposed.
Keywords: Non-instantaneous deterioration; generalized demand rate; back order rate; price discount.
An analysis of replenishment model of deteriorating items with ramp-type demand and trade-credit under the learning effect
by Archana Sharma, Usha Sharma, Chaman Singh
Abstract: Effective management and control strategies are prerequisites in order to optimize inventory related decisions. Robust replenishment model can reduce overall inventory cost and increase financial surplus for the organization. Adoption of trade-credit strategy for deteriorating items provides economic benefits to the retailer (buyer) in settling the account for the fixed period and boosts the sales of the organization. Therefore, in this proposed model trade-credit is introduced and demands pattern follows ramp-type which is quadratic function of time for decaying items. Shortages are allowed and partially backlogged where the backlogging rate is dependent of waiting time. The inflation factor is also considered to propose realistic environment. Additionally, this study also considered the cost components which are followed by learning curve to improve the total inventory cost with strategic scheduling. Finally, the model is analysed through numerical examples and the sensitivity analysis is performed to test the robustness of the model.
Keywords: Ramp-type demand; Partial-backlogging; Learning effect; Trade-credit; Inflation.
Interactional Function of Risk Management and Value Engineering in Civil Projects (Case Study: 108-unit Residential Complex project in Parand New Town)
by Majid Razeghi Jahromi, Fatemehsadat Mousavifard, Abdolhossein Ayoubi
Abstract: Risk management is known as a process of properties maintenance and the ability in money making and value engineering and management is a inseparable part of risk management. Unified value management and risk management establishes synergy. This study is done with the intention of studying interactional function of value engineering and risk management in civil projects while Dallas model is considered as theoretical model. In this study implementation of value engineering and risk management was done in a unified practical way. Findings indicate that implementation of his model in construction phase of building project will lead to decrease in approximately certain costs as much as 24.77% while project temporary delivery and finalizing the project are getting near, decrease rate of final costs will reach 21.32%. After procedures and studying results of tables, it can be concluded that Interactional Function of risk management and value engineering in this project was accompanied with 7.35% of saving.
Keywords: Risk Management; Value Engineering; Civil Projects; Residential Complex project; Interactional Function; costs; saving; maintenance; delivery; Risk Measurement.
Multi Item Two Warehouse Fuzzy Inventory Model
by Rahul Waliv, Hemant Umap
Abstract: In this paper multi-item fuzzy profit maximization inventory model with ramp type demand under imprecise space, budget constraints and imprecise holding cost with two storage facilities. There are two warehouses one is situated at market place called as own warehouse (OW) and another is little away from market place called as rented warehouse (RW). The sale is conducted from OW and the sold items are replaced continuously by the items at RW. Here shortages are not allowed. The fuzzy model has been solved by using fuzzy nonlinear programming technique and illustrated numerically.
Keywords: Ramp type demand; Deteriorating items; Linear membership function; fuzzy nonlinear programming technique;.
An analytical approach for EOQ determination using trapezoidal fuzzy function
by Sudhir Kumar Sharma, Srikrishna Madhumohan Govindaluri
Abstract: Inventory management involves ordering right quantities of items for matching demand and supply. In inventory management, Economic Order Quantity (EOQ) problem deals with determining the quantity to be ordered for minimising the sum of ordering and holding costs. This problem has been discussed by a number of researchers under the assumptions of deterministic and uncertain environments. Many studies have also employed fuzzy sets to characterise the imprecision and uncertainty of supply chains in EOQ models. This paper proposes a fuzzy EOQ model where the decision variables, batch order quantity and maximum inventory, are modelled using trapezoidal numbers. The signed distance method is used for defuzzification. The results show that the trapezoidal fuzzy model allows incorporating uncertainty using the proposed fuzzy economic order quantity model with only a slight increase in the batch order quantities and total cost per unit compared to the crisp economic order quantity model, which assumes deterministic conditions.
Keywords: Trapezoidal fuzzy number; EOQ; Inventory management; Signed distance method; Total cost per unit.
A CLUSTER FIRST-ROUTE SECOND APPROACH FOR A CAPACITATED VEHICLE ROUTING PROBLEM: A CASE STUDY
by Serap ERCAN COMERT, Harun R. YAZGAN, Sena KIR, Furkan YENER
Abstract: In this study, a capacitated vehicle routing problem (CVRP) which dealt with minimum distance routes for vehicles that serve customers having specific demands from a common warehouse under a capacity constraint. This problem is an NP hard. We solved the problem as a hierarchical way (i.e. cluster-first route-second method). Firstly, customers were clustered using three different clustering algorithms; K-means, K-medoids and Random clustering with considering a vehicle capacity. Secondly, routing problems for each cluster were solved using a branch and bound algorithm. The proposed solution strategy was employed on a case study in a supermarket chain. Results of numerical investigation were presented to illustrate effectiveness of the algorithms using paired sample t tests. The results illustrated that the K-medoids algorithm provided better solution than the others.
Keywords: Capacitated Vehicle Routing Problem; K-Means Clustering Algorithm; K-Medoids Clustering Algorithm; Random Clustering Algorithm; Branch and Bound Algorithm.
E-procurement and SME involvement in public procurement of innovations: An exploratory study
by Jani Saastamoinen, Timo Tammi, Helen Reijonen
Abstract: Current public procurement policies in the European Union (EU) seek to improve small and medium-sized enterprises (SMEs) access to public procurement, and emphasize public procurement of innovations (PPI) and aim to promote a switch to e-procurement. However, many information and communication related barriers impede SME access to public sector contracts, which could be mitigated by knowledge management (KM). While e-procurement is expected to increase the involvement of SMEs in public procurement, it is not well-understood how or which KM properties of an e-procurement service will best facilitate PPI. This paper presents an exploratory inquiry of how suppliers perceive the properties of an e-procurement platform, and how these properties are associated with their involvement in PPI. The results show that while information exchange properties were not estimated to be as important as other properties they are nevertheless more important in the sense of being positively associated with participating in PPI.
Keywords: Public procurement; public innovation procurement; electronic procurement; e-procurement; SMEs; innovations; knowledge management; suppliers; public sector; contracting authorities; information exchange;.
Lead Time Reduction: Early Supplier Involvement and the Information Supply Chain
by John Hanson
Abstract: Lead time reduction is a central concern of Procurement, but is critical in the initial launch of newly designed or revised products. Early supplier involvement is often advocated for reducing these lead times, but empirical studies show equivocal results. This paper draws from literature on concurrent engineering to develop a framework for lead-time reduction in the supply chain. It is shown that these mechanisms depend on flows of information that is created during the process. There is, in effect a supply chain for information that must be recognized and managed. The conditions are identified that are necessary for early supplier involvement to result in lead time reduction and offered as testable hypotheses for future research.
Keywords: Early Supplier Involvement; Lead Time Reduction; Concurrent Engineering; 3DCE.
Optimizing Safety Stocks and Reorder Point when the Demand and the Lead-time are Probabilistic in Cement Manufacturing
by Karzan Ghafour
Abstract: Inventory control is an extremely challenging task, complicated by a probability of demand and lead-time. An inventory system attempts to balance between overstock and understock to reduce the total cost and achieve customer demand in a timely manner. The optimality of inventory policies for a cement industry is still unknown for many types of inventory systems. In this paper, probability distribution of demand during lead-time is considered when the demand and lead-time are probabilistic while extracting the optimal safety stock placement and the reorder point in cement manufacturing. Probability distributions of demand during lead-time include Pearson Type 6 four-parameter, Log-Pearson 3, Fatigue Life (Birnbaum-Saunders), and Inverse Gaussian Three-Parameter Distributions. The probability distribution of demand during lead-time is established when the demand and the lead-time are probabilistic; each one has a probability distribution function. The safety stock depends on the safety factor under certain service level and the standard deviation of demand during lead-time which can be obtained from the distribution. The quantities of the safety stock and the reorder point represent an optimal value at each position to avoid over or under stock, the most controversial issue in the inventory system.
Keywords: Safety stocks; Reorder points; Probabilistic demand; and lead-time.
A Framework for Assessment of SSCM Strategies with respect to sustainability performance: An Indian Thermal Power Sector Perspective
by Jitendra Narayan Biswal, Kamalakanta Muduli, Suchismita Satapathy, Sushant Tripathy
Abstract: The explosion of the population in India has put a tremendous pressure to generate huge amount of energy, particularly electrical energy. Indeed, more than 50% of the total electrical energy produced in the country is generated by the coal based thermal power plants and is expected to be continued for another 2-3 decades.Growing concern over the environmental effects caused by the supply chain activities of the power industries that affects ecosystems and quality of life adversely as well natural resource depletion has been drawing attention of organizations to focus on sustainability practices.Realizing the importance of sustainable practices in traditional supply chain management, an effort has been made to develop a framework by using AHP-TOPSIS to study SSCM strategies. The findings of the research will facilitate the analysis and assessment of managerial approaches for SSCM in power generation facilities with its differing aspects rather than few limited aspects.
Keywords: Thermal power plants; Sustainable supply chain management; AHP-TOPSIS.
A game theory model for pricing and supplier selection in a closed-loop supply chain
by Maryam Esmaeili, Somayeh Najafi Ghobadi
Abstract: In this paper, pricing and supplier selection in a closed-loop supply chain (CLSC) are modeled by a game theory approach. The CLSC includes one manufacturer and multi-suppliers with variable defective parts. The manufacturer is responsible for collecting the used products where the number of defective parts purchased from the suppliers is random variable. The suppliers determine their standard deviation and the wholesale price. For the defective parts greater than the expected number, the manufacturer penalizes the suppliers. The manufacturer determines the optimal selling price, the price of collecting a used product, the number of appropriate suppliers, and the penalty cost by maximizing the profit. The end demand is affected by the selling price, and the competition between the suppliers is considered based on the Bertrand model. The interaction between the manufacturer and the suppliers is modeled by the static and dynamic games to obtain Nash and Stackelberg equilibria. In the dynamic game, the manufacturer is the leader and the suppliers are the followers. Finally, the numerical examples and sensitivity analysis with respect to the main parameters are presented to illustrate the theoretical results.
Keywords: Closed-loop supply chain; Supplier selection; Pricing; Game theory; Defective parts.
An Inventory Model for Deteriorating Items with Time Dependent Holding Cost and Shortages under Permissible Delay in Payment
by Nabendu Sen, Sumit Saha
Abstract: This study is motivated by the work of Khanra et al.[Applied Mathematical Mathematics and Computation 218(2011)1-9].We have revisited their model taking into account the following points; (i) The demand rate as a+bt+csin(t) ,(ii) Shortages are allowed, (iii) Delay in payment is permissible under three different cases, i.e. case I: The credit period is less than the time of occurrence of shortages, case II: The credit period is greater than the time of occurrence of shortages and case III: The credit period is greater than the cycle time. Under these aforesaid assumptions, an inventory model is developed and solved to obtain optimal solutions for inventory system with deteriorating items. An algorithm is proposed to solve the developed model. Finally, numerical examples are given in support of the developed model and sensitivity analysis is carried out with suitable example. Justification for extension of the existing model in literature with above mentioned demand function and linear time dependent holding cost is also discussed in this paper.
Keywords: Delay in payment; Inventory costs; Deterioration; Backlogged; Profit; Demand rate; Shortage changes slightly; significant changes; Fluctuations in rate of demand; Lead time.
The effect of product quality uncertainty on quality-screening efforts: does the purchase frequency and procurement channel choice matter?
by Renger Kanani, Arnt Buvik
Abstract: Product quality uncertainty is one of the major concerns for buyers in online transactions. In fact, research into the consequences and control of this uncertainty in online transactions has increased considerably in recent years. However, product quality uncertainty poses challenges not only to online buyers, but also to offline buyers. Therefore, the objectives of this empirical study were to examine the effect of product quality uncertainty on quality-screening efforts in offline transactions, and whether the frequency of purchase from the same source and the choice of procurement channel may be used as control mechanisms to reduce this effect. Empirical evidence from 239 small food-processing firms shows that product quality uncertainty has a positive effect on quality-screening efforts. Moreover, our findings demonstrate that this effect decreases significantly when food processors purchase frequently from the same source, and when they buy directly from the farm rather than through intermediaries.
Keywords: quality screening efforts; product quality uncertainty; purchase frequency; procurement channel.
Purchasing Category Management: Providing Integration between Purchasing and Other Business Functions
by Jussi Heikkila, Riikka Kaipia, Mika Ojala
Abstract: Organising the purchasing and supply management (PSM) function has been changing due to the increasingly strategic role of the function requiring integration with other business functions and the entire supply chain. One solution is to organise PSM into categories - a common practice in todays manufacturing organisations. In this paper we explore how purchasing category management (PCM) affects cross-functional integration. We analysed purchasing category management practices through in-depth case-studies in four manufacturing firms in two types of industry. Our research contributes to the purchasing and supply management research in two ways. First, it addresses the role of purchasing category management in organising PSM in large manufacturing companies. Second, it elaborates on purchasing categories providing integration between purchasing and other business functions, suggesting how different mechanisms are needed for different contexts.
Keywords: purchasing; procurement; supply management; purchasing category; category management; purchasing category management; organisation; integration; organisational integration; cross-functional integration; case research.
A partial backlogging production-inventory lot-size model with time-varying holding cost and weibull deterioration
by Ajay Singh Yadav, Anupam Swami
Abstract: This paper presents an economic production model with time varying holding cost. The demand and backlogging rates are assumed to be continuous and varying with time. While the production rate is assumed to be stock dependent with unknown time horizon. Shortages are allowed with partial backlogging of demand. Deterioration is taken into consideration and the deterioration rate follows the weibull distribution pattern. The models generate optimal values of initial production run time, onset of shortages, and production recommencement time that minimizes the total relevant costs of production and inventory for any given set of system parameters. A numerical example and sensitivity analysis are given to validate the proposed models.
Keywords: Production; partial backlogging; inventory; variable holding cost; non instantaneous deterioration.
Inventory decisions in a closed-loop supply chain system with learning and rework
by Wakhid Ahmad Jauhari, Oktiviandri Hendaryani, Nughthoh Arfawi Kurdhi
Abstract: In this study, we investigate a closed-loop supply chain model consisting of a manufacturer and a retailer. The retailer orders items from the manufacturer to satisfy end customers demand. The manufacturer uses both regular production and remanufacturing processes to produce items to satisfy the demand from the retailer. The returned items are collected and screened by the manufacturer for recovering process. We consider learning process in both regular production and remanufacturing processes. In addition, the imperfect items produced during regular production are reworked. The model contributes to the current literature by allowing the inclusion of learning process in regular production and remanufacturing processes, imperfect items, rework and multiple cycle policy. Our objective is to optimize the percentage of used item purchasing price per raw material cost, retailer ordering cycle, number of regular production cycles and the number of remanufacturing cycles, so that the joint expected total annual profit incurred has the minimum value. Furthermore, an algorithm is proposed to find the optimal solutions of the proposed model. We also provide a numerical example and conduct a sensitivity analysis to illustrate the models behaviour and feasibility.
Keywords: closed-loop supply chain; reverse logistic; learning; rework; defective item; remanufacturing.
Supply Chain Coordination Voyage towards Supplier Relationship Management: A Critical Review
by Aishwarya Dash, Ranjit Das, Sushant Tripathy
Abstract: Supply Chain Coordination bridges gap between the point of origin and point of consumption in the supply chain network of companies that is from suppliers to end users to manage their dependence on each other. Now-a-days the Manufacturing organizations are using the power of Supplier Relationship for their survival in a high volatile market Place. This Research is focused on hundreds of past research work in the areas of coordination and their findings have been grouped under three categories like factors affecting Supplier Relationship Management (SRM), methodologies used to measure the performance of SRM & trends of SRM. The findings of this exploratory paper is to uncover the meaningful key factors, appropriate methodology used to measure the performance, and focused dynamic trends of supplier relationship management of manufacturing organisation in twenty fast centuries. Our study will be a guideline for supply chain managers to develop a strong covalent bonding with suppliers in present scenario.
Keywords: Supply chain coordination; Supplier Relationship; Performance Measurement Methodology.
e-Tendering Readiness in Construction: An A Priori Model
by Moath Alyahya, Martin Skitmore, Adrian Bridge, Madhav Nepal, David Cattell
Abstract: Electronic tendering (e-Tendering) is moving the construction procurement industry to more professional practice. Nowadays, many organisations have not made the move to e-Tendering or they dont practice e-Tendering fully. However, the growing use of e-Tendering requires organisations to have a minimum of electronic readiness (e-Readiness). In this paper, the need for an e-Tendering model in construction is demonstrated. Additionally, a conceptual e-Tendering Readiness Model (e-TRM) is developed to describe the status of an organisation readiness to adopt e-Tendering. This involves a review of previous e-Tendering models, the importance of e-Tendering models for the construction industry and the requirements for developing e-TRM. The e-TRM is then proposed to assess an organisation readiness prior to e-Tendering implementation. This involves five themes of People, Process, Work Environment, Technology and Service Providers. These five themes consist of 13 constructs representing the basic items of the e-TRM. The Service Providers theme is proposed for the first time as a necessary support for successful e-Tendering implementation. Finally, some suggestions are made for future work to empirically test the e-TRM.
Keywords: e-Tendering; e-procurement.
An Inventory model for Deteriorating Items with Expiry Date and Time Varying Holding Cost
by Seema Sharma, Sanjay Singh, S.R. Singh
Abstract: In this paper, an economic order quantity model for items which deteriorate and expire with time has been developed. The holding cost has been assumed to be a linear function of time, whereas demand has been considered as a function of expiry date and selling price. Shortages are allowed and partially backlogged. The model so developed has been discussed for two cases of partial backlogging (i) backlogging rate is taken to be constant and (ii) backlogging rate depends upon waiting time. A numerical example given here illustrates each case. Finally, sensitivity analysis is carried out to analyze the behavior of the model.
Keywords: Deterioration; Expiry items; Holding Cost; Partial Backlogging.
Analysing Contractor Prequalification Criteria in Construction: New Insights through Interpretive Structural Modeling
by ASHISH GOEL
Abstract: Previous research has established the importance of selecting suitable prequalification criteria to shortlist competent contractors and the role of these criteria in project success. However, very few studies have dealt with establishing hierarchy and investigating interrelationship among prequalification criteria. The rationale of this research is to unearth this seemingly unapparent relationship among these criteria through Interpretive Structural Modeling (ISM). The analysis reveals that financial capability and past performance of contractor, two of most commonly used criteria for contractor prequalification, are inadequate for competent contractor short-listing due to their strong dependence on other criteria. Based on the hierarchy developed in the model, it is suggested that criteria like environmental policy, litigation/blacklisting history and bid capacity of the contractor should be given higher importance by the clients. The findings may improve the prequalification process by assisting the clients in making informed decision regarding selection of prequalification criteria based on the hierarchy and classification established in the model.
Keywords: Prequalification Criteria; Contractor selection; Construction; Interpretive Structural Modeling (ISM); MICMAC.
INTEGRATED SUPPLY CHAIN MODEL FOR DETERIORATING ITEMS WITH LINEAR STOCK DEPENDENT DEMAND UNDER IMPRECISE AND INFLATIONARY ENVIRONMENT
by Ajay Singh Yadav, Anupam Swami
Abstract: In this paper, we develop an integrated supply chain model for deteriorating item, with linear stock dependent demand, taking into account the views of both the vendor and the multi-buyer under imprecise and inflationary environment. We have used the implicit cost in this model and use function principle to calculate the fuzzy total supply chain cost and Graded Mean Integration Representation Method is used to defuzzify the fuzzy total supply chain costs.
Keywords: integrated supply chain model; deteriorating item; linear stock dependent demand; inflationary environment; graded mean integration representation method.
Solving the problem of industry by formulating it as a capacitated transportation problem
by Kavita Gupta
Abstract: This paper presents the solution to the problem of the manager of a trading firm, D.M Chemicals, who deals in the trade of marble powder. The problem of the manager is to determine the quantity (in tons) of marble powder that the firm should purchase from different sellers and sell to the different buyers such that the total cartage and relative purchasing cost is minimized provided the demand and supply conditions are satisfied and the extra demand is also met during emergency situations. The problem under consideration is modeled as a linear plus linear fractional capacitated transportation problem with enhanced flow. The data is taken from the account keeping books of the firm. The solution so obtained by using the developed algorithm is compared with the existing data. Moreover, the solution obtained is verified by a computing software Excel Solver.
Keywords: capacitated; transportation problem; optimal solution; feasible solution; enhanced flow,related transportation problem; corner feasible solution.
Analyzing the European Unions Tenders Electronic Daily: Possibilities and Pitfalls
by Eric Prier, Palina Prysmakova, Clifford McCue
Abstract: As a public policy tool, the open data movement holds out hope of large payoffs in democratic accountability. This paper explores the efficacy of the Tenders Electronic Daily or TED open dataset which covers 33 European countries operating at numerous levels of government. While the recent move toward making the TED open data available in a potentially more user-friendly manner could have been a milestone in realizing a major aspect of the goals of the open data movement, this study demonstrates through numerous procurement examples that the structure of the individual files that comprise this complex dataset is extremely difficult to understand inrnits current form. Moreover, the transparency that may have resulted from this initiative is unlikely to efficiently serve the purposes of public procurement accountability. As a result, the TED open data in its current form should be approached with an abundance of caution.
Keywords: public purchase; e-government; transparency; large-scale dataset; contract award; contract notice.
A framework for buyer satisfaction in E-Procurement in Indian scenario: An integrated ISM and SEM approach
by Manish Gupta
Abstract: E-Procurement is expected to enhance coordination between buyers and suppliers and result in significant mutual satisfaction and economic benefits. However, many organizations that have implemented E-Procurement are highly uncertain about the extent to which the satisfactions are realized. In the present scenario, even though the overall benefits of such systems are established, there is a need to analyze different factors that lead to different levels of buyer satisfaction among different organizations. In this work the ISM model for buyer satisfaction is proposed which is further analytically validated with SEM using AMOS. The results of validation turned out in fair with our developed models for buyer satisfaction. The findings indicate that transparency, improved quality and fulfilling warranty have the maximum driving power whereas long term relationship between buyer-supplier has the maximum driven power. It is furthermore validated in the paper that transparency, improved quality, and fulfilling warranty leads to commitment, cooperation and trust that further on results in long term relationship.
Keywords: E-Procurement; buyer; supplier; buyer satisfaction; Interpretive Structure Modelling; Structure Equation Modelling.
Using mechanism design theory in negotiations to improve purchasing performance
by Ines Schulze-Horn, Niels Pulles, Holger Schiele, Paul Scheffler
Abstract: The purchasing and supply management field persistently seeks new or enhanced negotiation methods to improve purchasing performance. In this regard, mechanism design theory could be applied to make negotiations more effective. By drawing on the basic premises of game theory, mechanism design theory can be used by purchasers to define negotiation rules that incentivise suppliers to reduce purchasing prices. Research on mechanism design theory still appears to be somewhat underrepresented in the traditional purchasing and supply management literature. Therefore, this study provides an introduction to mechanism design theory and explores the benefits of applying it to purchasing and supply management. Additionally, this study presents a case study of 28 projects to examine how mechanism design-based negotiations can be executed and how this negotiation approach differs from conventional approaches. The research shows how mechanism design theory can extend purchasers toolbox of negotiation methods and contribute to purchasing performance.
Keywords: game theory; mechanism design theory; market design; negotiation; purchasing.
EVALUATING CRITICAL FACTORS FOR THE IMPLEMENTATION OF E-PROCUREMENT IN GHANA
by Safowaa Osei-Tutu, Ernest Kissi, Ernest Osei-Tutu, Desmond Addisson
Abstract: E-Procurement implementation in other parts of the world has brought benefits such as efficiency, cost reduction, reduced procurement process, minimized corruption,enhanced compliance and standardization of procurement. Though the Public Procurement Authority has made many strides in the adoption of e-procurement in the Ghanaian Public Sector, the pace for the implementation and adoption is still very slow.Thus, the aim of this study is to evaluate the critical factors for the implementation of e-procurement in Ghana. With the knowledge of these critical factors for e-procurement implementation a survey was conducted involving 60 procurement professionals. The mean score ranking test was then used to determine the factors that were significant to he implementation of e-procurement. The results revealed that availability of internet, power stability ,capacity enhancement of procurement officers, availability of it infrastructure were important critical factors when it comes implementation of e-procurement while the mandatory Use of e-procurement Technical interoperability Budgetary Control among others were of less important. This study therefore evaluate the critical factors for e-procurement implementation in public sectors. The implication is that the findings offers useful factors that will guide the stakeholders and policy makers in e-procurement implementation. It provides practitioners with better understanding of e-procurement environment.
Keywords: E-Procurement,Critical Factors; Ghana; Implementation.
The influence of the Status Quo Bias Theory in the Compliance to Public Procurement Regulations in a Sub-Saharan Economy
by David Asamoah, Jonathan Annan, Diana Effah-Baah
Abstract: The importance of public procurement cannot be overemphasized, as this is a tool for achieving efficiency and value in acquisition of goods, works and services. Public sector bodies are required to conduct public procurement according to public procurement law. However, user resistance to the compliance of the procurement regulations have been reported in extant literature. Yet, there is lack of research on understanding users non-compliance of public procurement laws, especially in sub-Saharan Africa nations such as Ghana. This study uses the Status Quo Bias (SQB) theory to investigate why users fail to comply with the Public Procurement regulations in a Sub-Saharan nation. We collected data from 84 public sector institutions in Ghana and ordinary least square (OLS) regression was used to analyse the measurement and structural models. Three (3) out of the seven (7) hypothesis developed were supported. We offer theoretical and managerial implications.
Keywords: Public Procurement; Status Quo Bias (SQB) theory; Compliance; Firm Resistance; Ghana.
Green supply management in the public and private sector in Hungary
by Gyongyi Vorosmarty, Tunde Tatrai
Abstract: This paper aims to compare the green purchasing practice of the private sector and that of public procurement. Private sector purchasing in western economies is often seen as benchmark for public procurement in terms of efficiency, management processes and management of spending. In this paper we present the results of a literature review and a survey completed in Hungary. The number of publications comparing the two fields is low even in western countries; however the Hungarian data and evaluation show similarities with previous international results. Based on our results supplier management is more important for private organisations, while public entities focus on the procurement process and concentrate on the administrative requirements of national regulations. Due to the lack of East European comparative studies, this paper follows the approach of the European and US literature in terms of concept development.
Keywords: Green purchasing; green public procurement; supplier management.
28 YEARS OF TRACEABILITY MANAGEMENT: Trends, bottlenecks and opportunities
by Dirk-Jan F. Kamann, Jose A. Alfaro, Szabolcs Sebrek
Abstract: This paper shows the evolution of traceability management from 1990-2017 using 124 articles. It lists 73 journals by name, classified in 12 fields of science. We find a dominance of food journals, with journals in supply chain management and IT in a stable second and third position. Articles are coded for 9 possible topics and divided into two categories: theoretical and empirical. An increasing Berry index for the 9 topics shows an increased dispersion across the various topics. Out of the 43 case studies, 36 relate to the food industry, although more recent publications also deal with other sectors. Various relevant theories are discussed and observed bottlenecks are discussed as well as future potential, like using Systems Thinking with Big Data Analysis as an enabler.
Keywords: Traceability; Supply Chain Management; Food industry; Literature Review.
Compliance with transparency provisions in the Public Procurement ACT, 2003 (ACT 663)
by Re. Fr. Baltharzzar Obeng Larbi, Bernard Kofi Baiden, Kofi Agyekum
Abstract: The Public Procurement Act, 2003 (Act 663) was introduced to improve financial management and judicious use of state resources in Ghana. However, many procurement entities in the public sector, especially the Colleges of Education, are said to perform poorly in complying with the key provisions in the Act. This study examines the extent to which the Colleges of Education (COE) in Ghana comply with one of the key provisions; transparency in the Public Procurement Act 663 of Ghana. A questionnaire survey was conducted among 53 Tender Committee members in seven Colleges of Education in Ashanti Region, Ghana. Respondents were interviewed using tools for assessing transparency which were spelt out in five thematic areas to include record of proceedings, giving notice on records, publicizing procurement activities, advertising procurement, and holding proceedings in public. Data obtained was analyzed through percentages, mean scores and relative importance indices. Findings show that the average percentage level of compliance with the transparency provisions in Act 663 among the COEs is 77.4%, indicating that the COEs complied with the transparency provisions in the Act 663. Findings from this study should encourage people in managerial positions in all sectors where procurement is carried out within Ghana to ensure that they comply with the transparency provisions in the act to help fight the menace of corruption.
Keywords: Public procurement; Compliance; Transparency provisions; Recording; Notification; Publicization; Advertising; Proceedings.
Empirical Classification and Effect of Procurement Process on Organizational Performance Outcomes
by Atef Harb, Reine Abou Antoun, Abdallah Kassem, Cesar Baena
Abstract: For many years, Purchasing and Procurement became a major concern for researchers and decision makers worldwide. In Lebanon, the Purchasing functions have become recently a major concern for different organization and industries. The purpose of this research is to investigate the different purchasing clusters of Lebanese industrial organization and to study their effect on organizational management and performance. In order to achieve our objective, two research questions are addressed. (1) How purchasing functions within Lebanese organizations are classified? (2) How do purchasing functions in the Lebanese organizations affect performance outcomes? These research questions have been translated into the following two hypotheses: (H1) Purchasing functions within the Lebanese organizations/industries can be classified based on their level of involvement in strategic planning, status in the eyes of top management, degree of internal integration, and purchasing skills. (H2) Based on different configurations of purchasing characteristics, different purchasing functions will have higher levels of performance outcomes. To answer the research questions and to test the hypotheses, analyses were conducted based on collected data from 95 Lebanese organizations. The researchers developed a research instrument with 19 indicators to measure performance outcomes (PO) as the dependent variable, and 18 indicators to measure purchasing clusters (PC) as the independent variable. Data were collected via a paper-based, telephone, and email survey questionnaire. Using SPSS, descriptive testing, principal component analysis, and linear regression techniques were used to investigate the relationships among variables and to illustrate the impact of (PC) on (PO) in the Lebanese organizations. The results presented that the hypothesized measurement models are valid and reliable to answer the research questions. Findings supported the two hypotheses and showed a statistically significant relation between the two studied variables. As a conclusion, this research assessesed, analyzed and presented the importance of purchasing clusters and showed its positive influence on organizational performance in the Lebanese organizations/industries. The most efficient purchasing functions included strategic planning, purchasing status, internal integration, purchasing skills and affected supplier integration; supplier relationships outcomes, production performance, and financial performance helping all decision makers involved to better control and plan for the best achievements of the optimal decisions and the expected results. The findings will be very useful for researchers and practitioners seeking to improve the performance and standing of the purchasing function through the identification of the different characteristics and potential limitations faced at each phase. Also, they will be very helpful for engineers and IT managers to know the concept for the best implementation of a new engineering system and/or a new software.
Keywords: Purchasing; Procurement; Purchasing Clusters; Performance Outcome; Organizational Performance; Management; Internal Integration; Strategic Planning; Engineering Design.
A two-echelon supply chain inventory model with shortage backlogging, inspection errors and uniform demand under imperfect quality items
by Nughthoh Arfawi Kurdhi, Mar'atin Marchamah, Respatiwulan
Abstract: Actually, some production and inspection processes do not work perfectly, thereby producing a certain number of defective items and inspection errors. Previous imperfect-quality integrated inventory studies have mostly focused on developing models that do not consider two-way imperfect inspection under stochastic demand. Thus, this paper proposes a cost-minimising integrated vendor-buyer production-inventory model that incorporates imperfect production quality, stochastic demand, and imperfect inspection processes. The imperfect inspection processes are Type I inspection error of classifying a non-defective item as defective and Type II inspection error of classifying a defective item as non-defective. Meanwhile, the demand is assumed uniformly distributed. The objective of this research is to determine the optimal order quantity and reorder point such that the expected integrated total annual cost is minimised. In order to solve the integrated model, an optimal solution procedure is developed. A numerical example is provided to illustrate the application of the model. Besides, a sensitivity analysis is also given to investigate the effects of six important parameters (the transportation cost, the buyer's holding cost, the vendor's holding cost, the percentage of defective items, Type I error, and Type II error) on the optimal solution.
Keywords: integrated inventory model; shortage backlogging; imperfect items; inspection errors; uniform demand.
The impact of total costs and strategic supply on risk management in project business
by Anni-Kaisa Kähkönen, Katrina Lintukangas, Jukka Hallikas, Mika Ojala
Abstract: Purchasing and supply management can have a major impact on the success of project business. Project purchasing can cause huge problems for projects, but it can also be a major source of success. This study investigates the effect of total cost components, supply management capability and the status of supply management on risk management performance in the context of project business. A survey was conducted to collect data from companies engaged in project business in Finland. Based on the responses from 99 firms, it was found that the strategic status of supply management, supply capability, costs before and after purchasing and project duration have a significant effect on risk management. This gives a specific indication of where to focus risk management actions. Risk mitigation strategies, however, seem to be systemic in their nature in the sense that simultaneous strategies are probably needed to assure the effective flow of supply.
Keywords: purchasing; risk management; total cost of ownership; TCO; supply management; project business.
Generalised framework for optimal pre and post release software testing in presence of warranty
by Nitin Sachdeva, P.K. Kapur, Ompal Singh
Abstract: Significant advances in the field of software testing have been made by providing extended warranties, operational support and desired software reliability to the customers. However, the trade-off between minimising testing cost and maximising reliability to ensure well-timed market penetration has been a key concern for developers. Separate release and testing stop time strategy in order to optimise overall testing and market opportunity cost is proposed. We propose a generalised framework for developers to achieve multiple objectives of minimum testing and market opportunity cost; optimal warranty length; and optimal testing and release time. Software reliability growth models (SRGMs) are used to model an average number of bugs detected by testers (users) during the pre (post) release of software. Significant implications and quite intriguing facts related to separate release and testing stop time; early release ensuring higher reliability and; capitalising market opportunity to minimise overall testing cost are suggested based on proposed optimisation models. Numerical illustration is provided to validate the proposed framework.
Keywords: pre and post release software testing; software reliability; warranty; market opportunity cost; reliability.
A sustainable warehouse selection: an interpretive structural modelling approach
by Manoj Kumar Jha, Rakesh D. Raut, Bhaskar B. Gardas, Vaijayanti Raut
Abstract: Warehouse selection has a strategic significance for many organisations, and it is a multi-criteria decision-making (MCDM) problem. The objective of the present paper is to identify and model critical success factors (CSFs) for the selection of sustainable warehouse for Indian chemical industries. Through literature survey and experts' opinions, 14 critical factors were identified, and the interpretive structural modelling (ISM) approach was used to establish interrelationship among the defined parameters and to determine the key criteria having high driving power. After analysing the factors, it was found that four selection parameters namely the availability of the technology, strategic geographic location, the climate of the region, and government policies and regulations were found to have high influencing power. On the other hand, there are three parameters namely, the overall cost of the warehouse, other organisations using the facility, effective water management provision were found to have high dependence and weak driving power. The developed ISM-based model is intended to guide the organisational managers in understanding the significance of the sustainable warehouse selection.
Keywords: warehouse selection; sustainability; critical success factors; CSFs; interpretive structural modelling; ISM; chemical industries.
Supplier selection: a proposed framework for decision making
by Marcus Silva, Paulo S. Figueiredo
Abstract: This article presents and performs a preliminary validation of a framework for supplier selection. It makes use of, in sequence, Kraljic's supplier relationship portfolio and the multi-criteria decision tool named the analytic hierarchy process (AHP). The proposal's main objective is to provide companies with a practical and easy-to-use tool for classifying the importance and criticality of raw materials and for selecting suppliers based on a hierarchy. One result of this action-based study is the preliminary validation of the proposed model through its application in an electronics company. The application of the method suggests an improvement in the company's supplier selection practices related to one key item of one of its products.
Keywords: supplier selection; supplier-base; purchasing process; Kraljic's supplier relationship portfolio; analytic hierarchy process; AHP; procurement.
Buyer-supplier integration and logistics performance in healthcare facilities in Tanzania: the moderating effect of centralised decision control
by Gladness Salema, Arnt Buvik
Abstract: This research concerns logistics performance in public purchasing relationships. It examines the effect of buyer-supplier integration on supplier logistics performance. Particularly focuses on purchasing centralisation in healthcare facilities, and examine whether centralisation of decision control exercised by the health authorities influence the effect of buyer-supplier integration on supplier logistics performance. A survey data of 164 informants from public health facilities in Tanzania was used for analysis. It reveals that buyer-supplier integration improves supplier logistics performance significantly and stronger purchasing centralisation reduces the effect of buyer-supplier integration on supplier logistics performance. It provides a broad and interesting focus on significant antecedents to supplier logistics performance. In the future, the government should focus more on supporting the individual public health facilities in developing and adapting proper governance mechanisms for supporting buyer-supplier integration. Further research in other empirical and cultural settings is desirable to test the external validity of these findings.
Keywords: supplier logistics performance; purchasing centralisation; supplier integration; Tanzania.