International Journal of Procurement Management (24 papers in press)
The Impact of Internal and External Factors on Sustainable Procurement: A Case Study of Oil Companies
by Ajmal Mian, Mohammed Hasan Alhashmi, Mehmood Khan
Abstract: The contentious and growing sustainability concerns within the UAEs oil and gas industries have highlighted the necessity of systematically examining the internal and external organisational factors that influence sustainable procurement (SP) in the industry. This study investigates the internal and external factors most influencing SP in the UAEs oil and gas industry. Utilising questionnaires, the researcher obtained data from 100 procurement professionals working in three oil and gas companies operating in the UAE. The research framework, developed through an extensive literature review, was analysed and tested using structural equation modelling (SEM). The results reveal that both internal and external factors have a positive and statistically significant impact on sustainable procurement, although internal factors have a relatively greater effect. This study found that leadership in change management, internal management structure, management strategy, and infrastructure cost management, are the most influential internal factors affecting SP, whilst social and economic factors are the most influential external factors. An emphasis on these internal and external factors can help oil and gas companies operating in the UAE greatly improve their level of SP performance.
Keywords: Internal factors; External factors; Sustainable procurement; Oil industry.
Is advertising on social media effective? An empirical study on the growth of advertisements on the Big Four [Facebook, Twitter, Instagram, WhatsApp]
by Mohammed Nuseir
Abstract: The past decade has witnessed a rise in the use of social media for communication. Social media have created virtual spaces that businesses use to sell their goods and services. Platforms such as Facebook, Twitter, WhatsApp and Instagram (the Big Four) have become known for linking individuals through text, pictorial, and video messaging, thus creating a way of passing information to customers instantly in a way that creates appeal. An evaluation of the level of involvement of customers with the Big Four indicates that businesses choose their social media platform based on the likelihood of reaching customers. This study identified the reciprocal relationships that businesses have with their customers via the four main social media platforms. This relationship has been created because customers feel they have an individual space in social media, and because the businesses that advertise on social media use personalised messaging to their advantage. This ownership and personalisation speaks to the degree to which relationships are formed between corporate entities and individuals in contemporary society.
Keywords: Advertising; Interactive; Communication; Information; Social media; Platforms; Big Four.
Multi-objective Optimization Approach as Decision Making Support for Product Mixing and Raw Material Allocation Planning
by Sutrisno Sutrisno, Solikhin Solikhin, Purnawan Adi Wicaksono
Abstract: This article is addressed to discuss a newly developed decision making support by using multi-objective optimisation approach for production planning and supplier selection problem of raw material. The problem faced is finding an optimal value for the planned production volume of each product at each time period and the raw material volume that should be purchased from each supplier for each type at each time period such that the total occurred cost is minimal and all occurred constraints are satisfied. We have solved the problem by finding the Pareto set to be the optimal solution by initially converting it into single objective optimisation by means of weighting method. From the computational simulation, the optimal decisions were obtained for all time periods which are the optimal volume of each raw material type that should be purchased from each available supplier, and the planned optimal volume of each product to be produced.
Keywords: Decision making support; Multi-objective optimization; Product mixing; Raw material allocation.
Efficiency and Bid Rigging in Simultaneous Procurement Auctions under an Oligopoly
by Aaro Hazak, Tanel Kerikmäe, Evelin Pärn-Lee
Abstract: Splitting of large procurements into several smaller ones has been propagated, for example in the European Union and OECD members, as a way for enhancing competition and improving institutional framework for market efficiency. This paper presents a conceptual argumentation on the causes and consequences of potential bid rigging when simultaneous bids for similar goods are asked from oligopolists. It appears that calling for similar bids simultaneously may incentivise collusion among bidders, while arranging several consecutive procurement auctions could lessen that problem. Moreover, simultaneous procurement auctions may result in a relatively high cost of supply due to the larger risks involved for bidders. Furthermore, bid rigging remains difficult to detect under simultaneous procurement auctions due to a large degree of uncertainty for bidders, which supports relatively high bid prices that may, in fact, be collusive.
Keywords: bid rigging; collusion; oligopoly; umbrella pricing; simultaneous procurement auctions.
Analysis of Relationships of Third Party Logistics Enablers Using Multi-Criteria Decision Making Technique DEMATEL-Based On ANP (DANP)
by Maryam Aliei, Mostafa Kazemi*, Amir Mohammad Fakoor Saghih, Zahra Naji-Azimi
Abstract: Globalisation and adapting to market conditions, the existence of competitive pressures, such as the entry of emerging companies into the competition market and the need for increased investment costs, has led manufacturers to improve their innovative ways of serving customers. The third party logistics (3PL) Provider is an external supplier that manages, controls and performs logistic activities on behalf of the customer. In this paper, seven major dimensions of third-party logistics enablers have been evaluated with MAXQDA(v11) software and using literature review, text content analysis and specialised interview with 16 experts from the logistics industry, then using the DANP technique. The results of the Analysis in relation-impact diagrams show that the most important enablers are: manufacturing, technical and marketing and sales, financial, human resources and strategic enablers, respectively. Also, technical and manufacturing enablers are of the most influential enablers, and has the most interaction with other enablers as well.
Keywords: Third Party Logistics (3PL); empowerment; DANP; Multi-Criteria Decision Making Introduction.
Perishable Inventory Management Using GA-ANN and ICA-ANN
by Saeideh Farajzadeh Bardeji, Amirmohammad Fakoor Saghih, Alireza Pooya, Seyed-Hadi Mirghaderi
Abstract: We have developed a multi-objective multi-product inventory management model for perishable products, focusing on the inventory management of veterinary drugs. This model minimises holding, shortage, and expired costs and also demand forecast error simultaneously. The number of expired and shortage drugs can be calculated for each period using this model. Data from three types of veterinary drugs have been collected from a distribution centre (DC). In this research, multi-layer perceptron (MLP) neural network is used to forecast the demand and genetic algorithm (GA) and imperialist competitive algorithm (ICA) are used to solve and find satisfactory solutions. In this research, artificial neural network (ANN) is combined with the two above-mentioned algorithms to solve the problem. The results show that the proposed model can find high-quality solutions because it reduces inventory costs and forecast errors in the DC. Finally, the results of combining ANN with each of the algorithms were compared and it was concluded that the combination of ANN and ICA produced better solutions.
Keywords: Inventory management; Genetic Algorithm ; Imperialist Competitive Algorithm ; Artificial Neural Network ; Multi-Layer Perceptron; Veterinary drug; Multi-objective Multi-product model.
Comparing the effects of brand equity, job security and salary and wages on the efficiency of human resources from the perspective of the staff.
by Seyed Fathollah Amiri Aghdaie, Azarnoush Ansari, Mahdi Amini Filabadi
Abstract: The purpose of this study is to compare the effects of brand equity, job security and salary and wages on the efficiency of human resources from the perspective of the staff in the hotel industry. For this purpose, a sample of 520 managers and supervisors who are working in the hotel were selected by stratified probability sampling method. The information has been collected by researcher-made questionnaires and the data has been analysed by LISREL 8.8 and SPSS 21. The reliability of the questionnaire which determined through the Cronbach's alpha coefficient was 0.933. The results of the hypotheses test showed that brand equity and job security from the perspective of employees have a positive effect on employees' efficiency; the way and amount of salary payments have a significant and positive effect on employees efficiency; and efficiency is influenced by brand equity and salary and wages respectively.
Keywords: Brand equity; Job Security; Employee Efficiency; Hotel Services.
COLLABORATIVE INNOVATION: WEAK COMMITMENTS AND UNENFORCEABLE CONTRACTS
by John Hanson, Joachim Henkel
Abstract: Innovation that crosses organisational boundaries, such as those between buyers and sellers, requires complementary investments of assets by participants. This creates a contracting problem with the possibility of opportunistic behaviour. We show that this problem can be overcome using the mechanism of weak commitments. In situations where both parties can see a return on their investment in innovation that increases with their partners investments, there is a bounded range of commitment that can be made unilaterally by either party within which cooperative behaviour becomes the dominant strategy for both parties. This finding is important because it shows that collaborative innovation is possible without the need for elaborate contracts or reliance on intangible constructs such as relational trust or reputational cost. This suggests that collaboration is possible in situations where it was previously considered unlikely and suggests new approaches to research on inter-firm collaborations.
Keywords: collaborative innovation; opportunism; weak commitments; game theory; prisoners dilemma.
What is the value of e-Procurement for suppliers? The drivers, barriers and opportunities for engaging MRO suppliers
by Cristiane Biazzin, Andre Luis Cardoso
Abstract: While an increasing number of studies recognise the importance of e-procurement tools (EPT), purchasing executives seem to face continuous challenges to engage suppliers to adopt such tools. This study aims to explore the barriers to maintenance, repair and operations (MRO) suppliers in adopting EPT, and how to overcome them by developing a multiple case study. Our findings indicate that suppliers willingness to adopt EPT depends on the maintenance of ties and relations previously established with customers. While access to new customers is perceived as a driver to adopt EPT, its use demands robust investment in data management and technology, otherwise suppliers will increase their operational activities and costs. Moreover, suppliers who have the capability to integrate EPT into an intelligent system have a higher willingness to accept it.
Keywords: e-Procurement; MRO supplier; technology adoption; strategic sourcing; case study.
A Causal Relationship among the key factors of Supplier Relationship Management: A Fuzzy DEMATEL Approach
by Sushant Tripathy, Lalit Pothal, Aishwarya Dash
Abstract: Put essentially, supplier relationship management (SRM) is tied in with incorporating the correct innovation, procedures, assets, and instruments expected to adjust the manufacturing/service organisations with their suppliers to make more grounded and increasingly steadfast connections. Many organisations are focusing their concentration only customer relationship due to short-term goals, e.g., sales and profit and missing their vital relationship with suppliers. This paper intends to investigate and assess the basic elements which have critical effect on the SRM. The fuzzy DEMATEL method has been used to build up the causal relationship among the basic variables extracted from the literature and to decide the level of impact of a factor. The outcomes uncover that supplier development program, established mutual relationship, good management practice and common goal are the most critical factors which influence SRM. Moreover quality issue due to delivery, benefit measurement, supply uncertainty and supplier competency are also remarkably impact SRM. This paper may be a guideline to the decision makers of manufacturing organisations for the betterment of SRM strategy.
Keywords: SRM; Key Factors; Fuzzy DEMATEL.
Reviewing the Concept of CKM with Social Perspective by means of the ANN-GT Approach (Case Study: Environmental protection by the water market implementation)
by Maedeh Rabbanimehr, Ali Sanayie, Ali Kazemi
Abstract: The purpose of this research is to develop a customer knowledge management model adopting a social marketing approach for solving social problems by a case study for the facilitation of water market implementation. In this regard, mixed research and qualitative approaches consisting of thematic analysis and grounded theory, together with a quantitative approach (artificial neural network) have been used, and ultimately, a combination model has been proposed. The statistical population incorporates three groups of experts (academics, farmers and water industry experts) in the qualitative section of the research, and in the quantitative section, it includes farmers throughout the Zayandehrood Basin in Iran. One of the most important results of this research is the ranking of customer knowledge management indicators taking a neural network approach in predicting the social facilitation and planning, based on which it attracts popular participation in social issues.
Keywords: Customer knowledge management; Social marketing; Social facilitation; Water market; ANN; GT.
E-Procurement Practices to improve the efficiency of Vendor Transactions in Indian Cement companies
by Tisha Meriam Cherian, Shanmugam Munuswamy, Mohamed Jasim
Abstract: E-procurement ensures an end-to-end integrated purchase of materials right from indent management until final payment through internet which results into cost efficiency in a supply chain management. While the e-procurement has been successfully practiced in global markets, it is in the early stage of adoption among cement companies in India. The main objective of this study is to explore the factors influencing e-procurement of materials in the cement industry. The other objective is to measure the impact of e-procurement practices on materials purchase in the value chain of the said industry. Initially, the study conducted a Delphi interview with selected managers. Based on the information from interview, a structured questionnaire was framed and the same was used to collect information from 126 employees of five cement companies. Besides descriptive analysis, the factor analysis was applied to identify the significant factors in e-procurement. A confirmatory factor analysis was carried out to verify the factor structure of the set of observed variables. The study identified the significant factors that contribute to e-procurement practices in India. Interestingly, it was also found that the employees are comfortable to use e-procurement but require adequate training and better e-infrastructure.
Keywords: E-procurement; Vendor transactions; Business transactions; E-commerce; Cement industry.
Application of integrated fuzzy MCDM approach for financial performance evaluation of Turkish technology sector
by Eyad ALDALOU, Selçuk Perçin
Abstract: Information and communications technology (ICT) sector of Turkey encountered a massive increase since 1970s as a result of the rapid international development in the communications and information technologies. Compliance with such a huge investment and the market integration of ICT sector, the analysis and evaluation of its financial performance is very important. In this regard, an integrated fuzzy Shannons entropy and fuzzy ELECTRE I approach is proposed. To avoid subjectivity in the decision process, FSE method is used to assign weights for the evaluation criteria, then FELECTRE I method is applied to evaluate and rank alternatives. The proposed approach is used to identify and evaluate the financial performance of companies listed at BIST Technology Index of Turkey, in which DESPEC Company is financially evaluated to be the best company within the sector. Sensitivity analysis and comparison of the results with other MCDM models are also provided.
Keywords: financial performance evaluation; fuzzy Shannons entropy; FSE; FELECTRE I; Turkish technology sector.
Manufacturer optimal stock requirement and production rate to maximise the expected profit during peak time
by Mahadev Ota, S. Srinivasan, NANDAKUMAR C. D, Khalid Waheed
Abstract: n today's competitive business world, the manufacturers have to face a very volatile market demand and hence need to take the decision accordingly so as to maximise their profit. For a manufacturer, the production rate is usually constant in the short run and may not be adequate to meet the demand during the upcoming peak period. Therefore he needs to keep some stocks as a reserve so as to meet the upcoming peak demand period. But storage space and holding costs are another concern. Considering these problems, this paper aims at developing a model considering the number of order as a Poisson process with individual demands following lognormal distribution and find the optimal initial stock requirement to meet the peak period demand which maximises the expected profit. In addition to this, waiting period for the first order, the time between the successive orders, probability of shortage of stock at a given initial level during the peak time, optimal initial stock requirement to keep the probability of shortage below a predetermined level has been discussed. The numerical examples suggest that an optimal solution can be obtained which would maximise the manufacturer expected profit.
Keywords: optimal initial stock; manufacturer model; production rate; peak time; probability of shortage; expected profit; Poisson process; compound distribution.
Gap Analysis in Supplier Sustainable Development - With a Case Study in Healthcare Service
by Arash Shahin, Mina Razavi
Abstract: The objectives of this study are threefold: to identify the three factors of supplier sustainability; to calculate the gap ratio of the three factors; and to prioritize the gaps in terms of their importance ratings. For this purpose, a healthcare service supplier has been investigated as a case study. Base on literature review, the indicators of the three factors of supplier sustainability of healthcare service have been identified and confirmed using content validity analysis. Then, by calculating the expectation and perception of indicators, the gap of the three factors of supplier sustainability has been computed and finally, the gaps have been prioritized in terms of their importance ratings. Findings indicated that the supplier under study had a negative gap in all of the indicators of the three factors of sustainability and its highest and lowest gaps were related to the economic and environmental factors, respectively.
Keywords: Sustainable development; Factors of sustainability; Supply Chain Management; Supplier; Gap analysis; Healthcare service.
Developing a Brand Avoidance Model in Pygmalion Cycle
by Azarnoush Ansari, Hossein Rezaei Dolatabadi, Shahnaz Honarmand
Abstract: In this research, a model has been identified and presented for multiple dimensions of brand avoidance in Iranian home appliance industry. For designing the model, the causative conditions of factors, which lead to brand avoidance in the home appliance industry, were considered along with the dominant platform underlying brand avoidance and weakening or reinforcing interventional conditions. The research methodology is grounded. 256 semi-structured interviews were conducted. The sampling method is purposeful and judgmental along with the snowball method. To identify the consequences of brand avoidance, three perspectives of society, customer and companies have been investigated. The results of the research indicate the experiential, identity, moral, deficit-value, marketing, attitude and cognitive dimensions of brand avoidance. The Pygmalion effect was used to avoid the brand. In this study, gender behaviours were identified as intervening conditions and the role of government as the dominant platform.
Keywords: Brand Avoidance; Gender Behaviors; Government Role; Home Appliances; Brand Avoidance Consequences; Pygmalion Cycle.
Channel Coordination in a two echelon supply chain with lead time reduction using wholesale price scheme
by Jafar Heydari, Elham Zakaryaie, Roya Tat, Elham Heydari
Abstract: This paper develops the coordination of a two-echelon supply chain (SC) under lead time reduction strategies using a wholesale price contract as an incentive scheme. In the investigated model, the buyer defines the order quantity and the seller determines the replenishment policy and the lead time reduction strategy. Under the decentralised decision structure, both members' decision models are optimised where each party tends to maximise own profit. In the next step, the centralised decision model for the whole channel is studied where a single decision-maker optimises the entire SC profitability. The results show that under the decentralised decision model not only the channel profitability is lower, but also there is no effort for crashing lead times. Finally, a wholesale price coordination contract is developed to coordinate SC and convince both members to globally optimise their decisions. Our analysis indicates that the presented coordination policy leads to a win-win result for both members and at the same time reduces lead times.
Keywords: Supply chain coordination; lead time reduction; wholesale price scheme.
An Integrated approach of ISM and Fuzzy TOPSIS for Supplier Selection
by Tran Thi Tham, Nguyen Trong Tri Duc, Tran Thi My Dung, Nguyen Hong Phuc
Abstract: Supplier selection is one of the most important tasks that contribute to the success of supply chain management. Choosing the right supplier will bring many benefits to the enterprises, such as costs reduction, profit increase, flexibility and competitiveness improvement. This study is conducted to develop a methodology that provides suitable supplier selection solution. Firstly, a set of 23 criteria are used to analyse the relationships between criteria by using interpretive structural modelling (ISM). The less important criteria will be eliminated though the model. Next, the fuzzy TOPSIS method, which focus on the distance from alternatives to positive ideal solution and negative ideal solution is applied to evaluate and rank suppliers. The result of ISM suggests choosing 22 appropriate criteria among the original 23 criteria used for the supplier selection problem. The result of fuzzy TOPSIS shows the ranking of six suppliers through a case study of a plastic packaging company.
Keywords: Interpretive Strutural Modeling (ISM); TOPSIS; Supplier selection; Fuzzy theory; Supply chain management.
Application of the theory of convenience to a case of illegal public procurement of healthcare services
by Petter Gottschalk
Abstract: We address the following research question in this article: how can convenience theory in terms of motive, opportunity, and willingness explain deviant behaviour in the case of public procurement of healthcare services in a Norwegian municipality? This research is important, as it can identify motives at the individual and organisational level, opportunities at the organisational and societal level, and willingness at the individual level, even when there is not necessarily corruption involved. The application of convenience theory is by no means an excuse for violations of laws and regulations. Rather, this article demonstrates where prevention of misconduct and crime needs attention. It is particularly at the organisational level, where opportunity structures tend to enable commitment and concealment of illegitimate financial transactions. When auditing and other forms of control are de facto absent, where the blame game occurs, and where it is impossible to trace events because documents and e-mails have disappeared, then misconduct and crime become convenient options.
Keywords: white-collar crime; public procurement; convenience theory; neutralisation techniques; opportunity structures.
Third-party logistics service providers selection and evaluation: a hybrid AHP-DEA-COPRAS-G group decision-making approach
by Rakesh D. Raut, Bhaskar B. Gardas, Shamik Pushkar, Balkrishna E. Narkhede
Abstract: The objective of this study is to identify the best third-party logistics service provider (3PLSP) by using a hybrid approach, i.e., analytical hierarchy process (AHP) - data envelopment analysis (DEA) - grey-complex proportional assessment (COPRAS-G). In the first phase, AHP was used for determining the priority weights' of criteria. Secondly, data envelopment analysis (DEA) for selecting the efficient service providers based on the AHP weights, and lastly COPRAS-G was applied for obtaining final ranks of 3PLSPs for fast moving consumer goods (FMCG) supply chain in the Indian context. The criteria used in this study were obtained by taking inputs from the experts of the case supply chain. A total of ten criteria were considered namely freight cost/km, fleet capacity, vehicle quality/order, driver's quality and acceptance rate/order, distance target achieved, flexibility capability, on-time delivery, financial strength/turn over, customer support and service, and training learning and growth. A criterion, namely freight cost/km, was found to be the most significant and out of thirty 3PLSPs a service provider namely V2 was found be the best one. This study forms guidelines for the academicians as well as practitioners for the smooth decision-making process of 3PLSPs evaluation and selection.
Keywords: third-party logistics; performance evaluation and selection; group decision making; analytic hierarchy process; data envelopment analysis; DEA; COPRAS-G; FMCG supply chains.
The role of public procurement to socio-economic development
by Intaher Marcus Ambe
Abstract: This paper investigates the role of public procurement plays to socio-economic development in a provincial government, South Africa. Since 2004, public procurement has gained significance in the country. It is used as an enabling mechanism by the South African Government to implement policies aimed at inclusive growth, socio-economic development and transformation. The paper is exploratory and descriptive in nature, based on a survey conducted among procurement practitioners. The findings revealed that public practitioners in the province do acknowledge the strategic role of public procurement in socio-economic development. However, public procurement practices are not adequately implemented in line with government imperatives to accelerate inclusive and socio-economic development. There is a need to re-organise and re-align organisational structures in the province to improve public procurement practices. It is therefore critical that an effective public procurement capacity development programme and professionalisation path be established; ethics and good governance be enforced; and the importance of strategic procurement be capitalised to accelerate socio-economic development.
Keywords: provincial government; public procurement; inclusive growth; socio-economic development; South Africa.
Incorporating risks and costs into global sourcing decisions
by Satyendra Kumar Sharma, Ravinder Singh, Rajesh Matai
Abstract: The aim of this research paper is to develop a cost model that incorporates the minor cost factors that are often ignored while making major sourcing decisions. Literature review and excerpts have been studied in detail showing the progress in research over the years. An appropriate methodology was designed to do so. Several subjective factors were also quantified in order to calculate the costs. The DEA approach was used to calculate the weighted sums of inputs and outputs and hence the efficiency rate. Based on the rate, the beneficial supplier was chosen. The company allocated 200 million INR for outsourcing. The method figured out that even with the best choice being selected, approx 112 million INR would actually be consumed, taking into account many factors. A well developed approach and strategy for offshoring greatly affects the total cost of outsourcing.
Keywords: strategic sourcing; total cost of ownership; TCO; landed cost model; DEA approach; global supply network.
An inventory model for non-instantaneous deteriorating items with variable holding cost under two-storage
by Ajay Singh Yadav, Anupam Swami
Abstract: This paper presents a two warehouse inventory model for non-instantaneous deteriorating items under assumption that the inventory cost (including holding cost and deterioration cost) in rented warehouse (RW) is higher than those in owned warehouse (OW) due to better preservation facilities in RW. The demand and holding cost, both are taken variable and as linear increasing function of time. Shortages are allowed in the OW and completely backlogged at the next replenishment cycle. This paper mainly dealt with non-instantaneous deteriorating items with linear time dependent holding cost and demand where transportation cost from RW to OW has been incurred and is depended upon the amount of goods transported irrespective of time, distance from RW to OW and the capacity of vehicle used for transporting commodities.
Keywords: two warehouses; non-instantaneous deterioration; time-dependent demand; variable holding cost and shortages.
Well-known scoring rules under conditions of low competition in tenders
by Irina Berezinets, Andrei Ivanov
Abstract: This paper studies the properties of some well-known scoring rules (linear scoring, highest bid - lowest bid scoring, and lowest bid scoring), which are applied in public procurement and public-private partnership scoring auctions to award contracts under conditions of low tender competition due to corruption and weak regulatory impact assessment. The proposed modifications to the agency model define a new approach to regulatory impact assessment. In the case of two bidders, the restrictions on criteria number and scoring weights are identified. The paper discusses several reasons to consider the quality of scoring rule as a critical success factor at procurement stage of public-private partnership projects as well for public procurement itself.
Keywords: scoring auctions; scoring rules; public procurement; public-private partnership; regulatory impact assessment; agency model; corruption; Russia.