MZUMBE UNIVERSITY

DAR ES SALAAM CAMPUS COLLEGE

DERPARTMENT OF PROCUREMENT AND LOGISTIC MANAGEMENT

PROGRAMME

: MASTER OF SCIENCE IN PROCUREMENT AND

SUPPLY CHAIN MANAGEMENT (MSc PSCM)

COURSE TITLE

E-PROCUREMENT AND E-SUPPLY CHAIN

MANAGEMENT

COURSE CODE

: LOG 5652

SUBMITTED BY

: SHIJA KABOLA

REG. NUMBER

: 210250007/T.14

LECTURER

: DR. MUSABILA A.K

TASK: Assignment (individual)

1 .Discuss in Detail the current trend in e-procurement Adoption (Global Perspectives)
2. Why is the take up of e-procurement still logging behind expectation in Tanzania?
DATE OF SUBMITTING: 11th April, 2015.
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1 .Discuss in Detail the current trend in e-procurement Adoption (Global Perspectives)

1:0 INTRODUCTION
Purchase of goods or services electronically is called e-procurement and is considered as an
essential piece of the generally strategic procurement strategy in the current business environment.
The plan consists of, but is not restricted to tactical sourcing and vendor validation, switching from
manual procurement to automation/electronic system procurement and participation in one or more
marketplaces at the same time. The emphasis is on streamlining business processes with long
construction of a digitized product profile and to automate the request for quotes (RFQs) based on
the purchasing process while providing integration with planning in corporate supply chain
resource management systems. It is believed that with adoption of e-procurement system the
purchase order cost will be greatly reduced and the choice of suppliers will increase. This kind of
compromise and flexibility will allow the organization to become more profitable, held broader
competition between suppliers, enjoy transparency, get great rates and bring market efficiency.
For decades, the globe has changed and a radical change in management functions and business
services was noted. It has been observed that organizations are also quickly adapted to new market
trends and functions of specialized services (Hasan et al, 2010). To get objectives of the strategic
business, for example efficiency in operations, sustainability alongside profitability and evolution
of many organizations in the e-system is clear. They turned to the improvement, development and
integration of support functions. The global economic downturn has also forced organizations to
embrace change and move their business tactics.
The purpose of this assignment is to show in detailed the current trends in e-procurement adoption
which is essential in the Procurement and supply chain. The adoption should be considered as a reengineering process from an innovative perspective.
1:1 DEFINITIONS OF THE KEY TERMS
E-procurement (electronic procurement) sometimes also known as supplier exchange) is the
business-to-business or business-to-consumer or business-to-government purchase and sale of
supplies, work, and services through the Internet as well as other information and networking
systems, such as electronic data interchange and enterprise resource planning. David Caffey,
(2009).

E-procurement defined as the digitalization of important aspects of the purchasing process, such as
search, selection, communication, bidding or awarding of contracts (Sun et al,2012)

E-procurement meant the integration of technological tools into purchasing activities taking place
within supply chains while performing their operations ( Hatice and Mehmet, 2012)

E-procurement was about using the internet to operate the transactional aspects of requisitioning,
authorising, ordering, receipting and payment processes for the required services or products
(CIPS, 2009).

E-procurement as incorporating all purchasing activities such as purchaser request, authorization,

ordering, delivery and payment by utilizing electronic means such as internet, web technology and
e-commerce (David, 2009)

E-procurement as the use of information technologies to facilitate business to business (B2B)

purchase transactions for materials and services (Wu et al, 2007).

E-procurement as integration, management, automation, optimization and enablement of an

organizations procurement process, using electronic tools and technologies, and web-based
applications (Tatsis et al., 2006).
(Electronic-Procurement Purchasing online. E-procurement systems are used to obtain materials
and parts via the Web or using traditional EDI standards either for internal manufacturing (direct
procurement) or office supplies and equipment (indirect procurement)

Trend can be defined as a move in particular way; to show a tendency or movement toward
something or in particular direction. (Encarta dictionary Microsoft, 2009)
Business Dictionary (2006) ; defined the word trend as a general direction of change : a way of
behaving, proceeding, etc., that is developing and becoming more common.

1:2 HISTORY OF E-PROCUREMENT

The rise of e-procurement in the late 1990s led to the development of new opportunities related to
procurement: e-procurement, spend management, outsourcing and joint product design (Lancioni,
Smith, and Oliva, 2000). The advent of the Internet as a business systems platform has been a
catalyst for major changes in the operation and status of organizational procurement. Information
Technologies have changed the way organizations and governments operate. As noted by Nelson
et.al. (2001), the majority of organizational spending consists of purchasing. In order to decrease
the total costs spent on purchasing process, internet technologies are used and e-Procurement has
become popular to implement in the latest era by both governments and enterprises. Although the
opportunities for improvement seem abound, both private and public sector are still cautious as far
as the adoption of electronic technologies is concerned (Zheng, Caldwell, Harland, Powell,
Woerndl, and Xu, 2004). Ward and Peppard (2003) indicate that 60% of Information Technology
application in procurement initiatives and projects do not deliver the expected benefits.

The use of Information Communication Technologies (ICTs) has dramatically changed services,
business models and peoples expectations of the quality and efficiency of information sharing and
service delivery (Brown, 2005; Maniam, 2005).
Development in information and communication technology, especially the Internet helps the
application of alliances used by the manufacturers to become more effective through the integration
of firms information technology (IT) infrastructure. One of the information systems that helps
revolutionize the supply chain activities is e-procurement. European Scientific Journal May 2013
edition vol.9, No.13 ISSN: 1857 7881 (Print) e - ISSN 1857- 7431 37 7
The electronic procurement (e-procurement) system is a key system that facilitates effective
communications between buyers and suppliers whilst also providing opportunities for making the
system more flexible and efficient. It enhances the selection of products, and makes information
more effortlessly accessible. There have been many studies on e-procurement systems. According
to these studies, e-procurement allows enterprises to decentralize operational procurement
processes and centralize strategic procurement processes as a result of the higher supply chain
precision supplied by e-procurement systems.

The increased adoption of the internet for business uses globally, has influenced the function of
procurement to migrate from traditional paper-based processes to e-procurement. The unique
features of the internet and related web-based technologies can potentially support the activities of
procurement, and at the same time provide improvements to the procurement process. It is on this
ground that e-procurement has, in recent years, been used as a means to significantly reduce costs
because of its ability to reduce transaction costs and manage the inventory in a more efficient
manner. In its most basic definition, e-procurement is the streamlining of procurement/purchasing
processes by eliminating traditional paper-based documents such as purchase orders, requisition
forms, invoices etc. and replacing them with electronic based paperless processes. It is a powerful
business tool that can revolutionize the buying function of an organization by streamlining and
automating the labour intensive procurement routines which in return enable employees to gain
direct access to their suppliers' systems, visually confirm technical specifications and view product
pictures, price points, and detailed product descriptions (Commission of the European
Communities, 2004).
Companies that use e-procurement technologies save 42% in purchasing transaction costs due to
the simplification in the purchase process and the reduction in purchasing cycle time, which in turn,
increases flexibility and provides more up-to-date information at the time of placing a purchase
order. Thus, e-procurement tends to leverage the bargaining power of companies willing to
establish contracts with their preferred suppliers and as a result, the overall maverick buying is
lower (Hawking et al, 2004).
The introduction of an e-Procurement system has been identified as a mechanism for many
countries to improve their procurement processes and thereby reduce the cost of procurement and
deliver better value for money. E-procurement is the use of secure web-based platforms by the
government as a buyer to communicate with bidders in a paperless environment, free from the
inconveniences, delays, and physical insecurities of any kind.
However the phrase "e-Procurement" can cover a number of elements including:

The ability to download bidding documents from a website

Submission of bids through an electronic tender box

The development of Management Information Systems to assist with procurement reporting

as well as oversight and monitoring

The publication of contract awards on the website of a procurement regulatory or oversight

body (Bruno et.al, 2005).
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The acceptance of e-procurement, especially in Africa, has been a bit patchy since its inception in
the 1990s where it was launched as a method of conducting simple purchasing transactions over the
Internet. It has nonetheless evolved into a complex marketplace with many players offering a
variety of services from catalogue maintenance and hosting to managing tenders and auctions on
behalf of clients (Almeida & Smith, 2004).

1:3 COMPONENTS OF E-PROCUREMENT

Different authors came up with different view on components for adoption of e procurement:

E-sourcing
E-sourcing defined as process of finding new possible suppliers using the internet in general or
more specific marketplace. It identified new sources of supply increases the competitive forces
during the tendering process (Paulo, 2009). E-sourcing discovered and accessed new suppliers
through internet and web technology (Damavandi, 2011). e -sourcing or contract management
encompassed all aspects of the commercial process from market analysis, advertising, tendering
including auctions, evaluation, contract negotiation, award and management (MoD procurement
Strategy and Plan, 2008 -2012).
E-sourcing was one of the procurement activities which can be defined as the process of
determining long-term demand requirements in goods or services, finding sources to fulfill those
requirements through a faster and more efficient way, selecting suppliers to provide the
requirements, negotiating the purchase agreements through a web-based platform and managing the
suppliers subsequent performance (Mandela, 2007)
E-tendering
E-tendering defined as the process of sending request for exchange to suppliers and receiving the
responses using the Internet. The data concerned e tendering focused on the product or service.
Here, it was also possible to have and initial screening process where a selected number of suppliers
qualify for the negotiation phase. That process phase did not include closing of the contract. Took
place in the invitation to tender phase of the procurement process (Paulo, 2009). According to
Damavandi, (2011), e-tendering requested of information and price from suppliers and receiving
feedback electronically. Daniel, (2009) elaborate e-tendering as the capability for the organization
to receive tender submissions from potential suppliers.
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E-awarding
That involved secure tender opening (e.g being only able to open tenders which had been submitted
by the closing date and time), tender evaluation and tender award. That was facilitated by electronic
procurement system (Daniel, 2009)
E-contracting
That involves the establishment of an agreement with suppliers and can result of e tendering and eaward stage (Daniel, 2009).
E- Auctioning
E-reverse auctions enabled the purchasing company to buy goods and services from the supplier
that had the lowest price or combination of lowest price and other conditions as well via internet
technology. The auction was most often traded in real-time and ends in a closing bid between the
buyer and the supplier. Took place in the negotiation phase of the procurement process. (Paulo,
2009)
E-Informing
E-informing is a part of e-procurement that did not involve transactions or call offs but instead it
handled gathering and disseminating of purchasing related information. E-informing is hard to link
to one single phase in the procurement process. It took place anywhere in the procurement process
(Paulo, 2009) According to Alan, (2010) different ideas as the tools to facilitate the e- procurement
in the supply chain.

1:4 E-PROCUREMENT TREND

Procurement has been increasingly recognized as a critical element for manufacturers since
procurement processes are costly and complicated as it might involves many suppliers located
either locally or abroad. Procurement covers not only purchasing (the actual buying of materials or
components), but also associated activities such as transportation, warehousing and inbound
receiving. During the 1970s and 1980s, procurement was characterized as a slow manual business
procedure and, at the same time, involved problems such as errors in ordering, delivering, costing
and invoicing, which were time-consuming and costly to trace (Rudzki, Smock, Katzorke, and
Stewart, 2005). After internal company initiatives such as Just in Time (JIT), Total Quality
Management (TQM), Kanban and many others reached the maximum level of cost reduction,
businesses then shifted their attention to their supply chain networks to determine how to further
reduce the cost. They then began to realize that cost, and even time savings, can be achieved by
having a link with their major suppliers through private networks such as an electronic data
interchange (EDI).
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Next came the Internet era and it created more opportunities for companies to reduce their costs
further. The Internet enabled global firms to centralize their globally scattered procurement and
logistics systems that were previously conducted in every country in which they operated to a
single or only a few optimal locations. The e-procurement system was first introduced by large
corporations from various industries during the last few years to connect and integrate their order
management activities with their partners within one inter-connected system. General Electric, for
example, reports that the firm has saved over $10 billion annually through its e-procurement
activities (Hawking, Stein, Wyld, and Foster, 2004), while FedEx also saved millions of dollars by
automating its procurement operations (Dalton, Violino, and Mateyaschuk, 1999). Currently,
setting up an e-procurement system is even cheaper with the Internet, and even small or medium
size companies can take advantage of this technology. E-procurement is not exclusive to giant
manufacturers only, as it is widely used by smaller firms too (Bharati and Chaudhury, 2006). Eprocurement consists of many different tools and firms may implement all of them or just some
applications that is relevant to their business needs. Six type of e-procurement applications are esourcing, e-tendering, e-informing, e-reverse auction, e-MRO/Web-based MRP and e-collaboration
(De Boer, Harink, and Heijboer, 2002).
1:5 E-PROCUREMENT TRENDS IN THE PRIVATE SECTOR
The private sector business organizations are being held responsible too for focusing too narrowly
on the technology based procurements and taking it for granted. An analysis by KPMG Consulting
(2001, p.1) concluded that "there has-been significant confusion in the marketplace about how these
tools (online procurement) should be appropriately applied. In part, this has been the product of
market assertive advertising and planning, but it has resulted from a jump towards perceived
technology panaceas without paying attention to the basic procurement ". Jaya and Selang (2014)
described that externally hosted e-procurement services are part of a growing clearly trend. Some
specialize by industry sector like those serving the oil and gas, pharmaceutical and mining
industries all of which have embraced e-procurement more other than the industries.

1:6 E-PROCUREMENT TRENDS IN THE GOVERNMENT SECTOR

Governments should focus on the general welfare of the subjects. Only efficiency should not be the
sole objective of public procurement. As indicated in the report on electronic contracts by the
Miami-Dade County, Florida (2000, p 10.): "Unlike the private sector hiring, purchasing private
sector must work within the rules and policies established to meet the social and economic
objectives desirable. Purchases in private sector should include global competition instead of using
a small number of suppliers with whom a relationship of trust has been established. "One of the
most serious problems facing large procurement offices today is digital divided minority business
owners."Like many companies take advantage of the promise of the Internet, minority
entrepreneurs (many small business owners) are struggling to harness the power of computers,
information technology and electronic commerce" (Anonymous, 2000). According to the Bureau of
Minority Business Development, Department of Commerce, U.S, about half of all minority-owned
companies are involved in electronic commerce. Some governments in mature economies are
adopting e-procurement more broadly, providing structure, audit trails and transparency of
transactions. However, governments in emerging markets are not aware of the benefits that eprocurement can provide (Jaya and Selang, 2014).
Public Procurement Regularity Authorities around the world (PPRA)s website reiterated that the
world have revolutionized its economies through e-procurement systems. Over the time a strong
need has been felt in the Government arena to develop an e-Procurement system in order to
achieve economies of scale, transparency, economy, quality and efficiency in public procurements.
Nick Cater (2013) noted that an increasing number of firms in the developed business segment to
make the Internet an essential part of your sales and marketing for business-related support to
governments, the United Nations (UN) and charities around the world. Procurement for assistance
needs, development projects such as the construction of roads for emergency aid to refugees, has
always involved companies in countries, particularly in the local purchase of goods and basic
services through negotiations face-to-face and paper-based transactions.

1:7 ADOPTION OF E PROCUREMENT

Private and public sector organizations have been utilizing Information Technology (IT) systems to
streamline and automate their purchasing and other processes over the past years. It is only in the past
decade that e-Procurement systems have attracted attention. While there is debate about how recently eProcurement has emerged, (Dai & Kauffman, 2001; Koorn, Smith & Mueller, 2001), there is no doubt
that the use of the Internet in e-Procurement provides several advantages over earlier interorganizational tools. For example, Electronic Data Interchange has been providing automated
purchasing transactions between buyers and their suppliers since it was launched in the 1960s.
Enterprise Resource Planning (ERP) followed in the 1970s, and then came the commercial use of the
Internet in 1980s. It was only in the 1990s that the World Wide Web the multimedia capability of the
Internet - became widely enabled and provided the essential resource for the automation of procurement
(OGC, 2002).

In the modern competitive business environment, organizations need to embrace information

communications technology in order to remain competitive. E-procurement is among the Supplyside activities that have been identified as a key area where information systems enabled
innovations are likely to yield significant benefits for organizations (European Commission 2005b
2006). The success of any e-procurement application will depend on a variety of factors. Some
organizations implement e-procurement technologies and they succeed whereas others fail in the
same. This diverse nature of the outcomes in adoption of e-procurement systems has attracted a
number of researchers who want to understand the reasons for this diversity.
A number of researchers have conducted studies on e-procurement. For instance Vaidya, Sajeev
and Callender (2006) conducted a study on the critical factors that influence e-procurement
adoption success in the public sector. The study concluded that if e-Procurement initiatives in the
public sector are to assist the development of e-Procurement across the information economy, there
should be wider discussion and agreement on what constitutes the relevant CSFs and how the
achievement of success can be assessed.

Another study was carried out by Batenburg (2007) on e-procurement adoption by European firms.
It was established that there are indeed country differences with respect to e-procurement adoption,
and that firms from countries with a low uncertainty avoidance such as Germany and the UK are
the early adopters of e-procurement, while countries that are less reluctant to change such as Spain
and France have lower adoption rates.
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Greunen, Herselman, and Niekerk (2010) also carried out a study on the adoption of regulationbased e-procurement in the Eastern Cape provincial administration. The study found that
measurable benefits of supply chain management have not yet been realized due to general limited
understanding of how supply chain management concept works within government environment.
E-procurement is not a new process and there had been several attempts to automate the process of
procurement for the buyer using e- procurement systems (EPS), workflow systems and links with
suppliers through EDI. It is important that the value creation of e-procurement was spread and
emphasized that it is not only a web based platform and that it implicates in some beneficial
changes to the procurement process (Mandela, 2007.)

1:8 POTENTIAL DRIVERS IN ADOPTION OF E-PROCUREMENT

In seeking to explain differences in e-procurement adoption between organizations, several factors
are identified in various literatures. There are three main types of factor that appear to influence the
adoption of e-procurement:-

1. TECHNOLOGICAL FORCES
Information technology related constructs such as technology infrastructure, country level
technology innovation, and technology readiness had been demonstrated as important factors for eprocurement development by many past studies. Combining variables related to technology, we
propose technology dimension as one of them constructs that affect the national level e-business
development (Kim et all, 2011).In adopting any new technology across the country or single
organization the technological aspect could not be kept aside, for the purpose of this study and
Tanzania context the research focused more on Perceived benefits, Technological infrastructures,
Technology readiness, Technological Complexity, and Technological Compatibility as the
independent variables to ward influencing e-procurement adoption

Perceived Benefits
Technological drivers involved Perceived benefits which were the anticipated or expected
advantages that could be provided to organizations, direct benefits included reduction in transaction
errors and transaction costs, improved data accuracy and information quality, and faster application
process. On the other hand, indirect benefits were associated with the impact of adopting eprocurement for management of business process and relationships. Indirect benefits included
better customer services and improved relationship with business partners.
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There were also cost considerations by organizations in adopting e-procurement. Perceived cost
These costs include the potential administrative and implementation costs which would be
incurred as companies utilize e-procurement, (Thomson, 2008, Karnali and Kurnia, 2011)

Technological infrastructures
Infrastructure referred to technologies that enable internet-related businesses. ICT Infrastructure
had influence on the volume of a nations Internet Transactions or on the number of e-business
websites in a country. A better ICT Infrastructure enhanced e-business development (Kim et all,
2011). Technological infrastructure could be the structure adjustment inside the organization in
order to enable the internet accessibility and also could be outside the organisation, Tanzania is the
best example of technological infrastructure is continuing construction of National fibre
optical(NFO) since 2009.

Technological Compatibility
Compatibility was defined as the degree to which an innovation was perceived as consistent with
the existing values, needs, and past experiences of the potential adopter (Sarkar, 2009). It was clear
that the higher compatibility, the less changes or adjustment would be needed and the lower the
possible level of resistance to the technology when it was adopted e-procurement had its roots in
the modern ICT, so the existing IT infrastructure (technological compatibility) of the organization,
the nature of organizations work practices and the consistence of values, culture and legal
framework (organizational compatibility), all can impact the decision to adopt e-commerce (Jian,
2010).

Technological Complexity
In general, the higher complexity of e-procurement and its related infrastructures, the bigger the
negative influence over the adoption of e-procurement. However, the rapid advancement of the
ICT, the availability of fast broadband and easier access to new technology all act to lower the
complexity of e-commerce ( Jian, 2010). The adoption of an innovation, as in e-commerce
technology, depended on the time the firms take to understand the intricacies of e-commerce
technology mechanism, its application, and the advantages and benefits that could be harvested
through its proper utilization in their individual businesses. Basically, the easier to understand the
technology and its application, the faster and more immediately the adoption process and vice
versa. (Almoawi, 2011)
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Technological Policy
Public procurement could be a mean to support government policies. This could be done through eprocurement and traditional processes. In the public domain, electronic procurement makes it
possible to support the delivery of public procurement policy. E-procurement is a policy tool, which
improves transparency and efficiency (Joni, 2009)

2. ORGANIZATIONAL FORCES
The organization context in adopting new technology differ from one country to another and from
one organization to another, for the purpose of this study the researcher was focused more on size
of organization, knowledge management capabilities, Management Attitudes and support , Relative
advantage and User Involvement.

Size of the organization

Large firms were more likely to undertake innovation. Three major arguments support the positive
role of firm size in determining IT adoption: the benefits of the new IT, the greater availability of
funds and the quicker capture of economies of scale. However, larger firms had multiple levels of
bureaucracy and that could impede decision-making processes about new ideas and projects (
Uliveira and Martin, 2010)

Knowledge management capabilities

If the owner was well versed with the technological developments and the benefits that could be
harnessed from these technological advancements, then he or she would be more likely to adopt
technology in the form of e-commerce. Lack of technological knowledge on the owners part would
inhibit the adoption (Almoawi, 2011). Individual characteristics of CEO, such as education, age,
experience, and psychological trait had been found to strongly influence innovation adoption
(Sakar, 2009)

Management Attitudes and support

Almoawi quote different authors who stated that previous studies had also show that
managements attitude and support of the owners had a positive relationship with the e-commerce
adoption. The need for commitment and support from the owners or top management during the
process of assessment of the innovation or technology was of utmost importance.
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This commitment and support ensures that there was an obligation within the resources, which in
turn would create conducive environment within the firm for the adoption process of the technology
(Almoawi, 2011). Top management was a key responsible agent for ensuring that strategic, tactical
and operational rules to govern their business activities and Ecommerce initiatives were in place
(Kabanda and Brown, 2011). The support from top management was the precondition for
successful implementation of systems. The top management support facilitated the adoption and
implementation of information systems (Sarkar, 2009).

User Involvement
User involvement also reduced resistance to changes and increases user acceptance for the new
system. User involvement in innovation implementation positively influenced the implementation
process (Sarkar, 2009).
The resistance to change could occur in different context, it might appear due to asymmetry of
information concerning the perceived usefulness of new technology, it might occur due to
uncertainty of expected technology but also it may occur due to opportunism of user, example in
Tanzania there was a common behavior of corruption for supplier to offer 10% to influence
supplies officer either to offer a public tender in return, so if user will accept this new technology
there is possibility for them to lack 10% from the supplier in future period that why they create
resistance.

3. ENVIRONMENTAL FORCES
The changing environment was forcing organizations to change and innovate new ways of value
creation. External pressure, supplier dependence; customer power, competitive pressure;
dependence, exercised power, government pressure and industry pressure had been named more by
several authors as the main environmental factors for organization to adopt e-procurement (Pani
and Agrahari,2007).

Normative pressure
In the context of e-procurement, normative pressures were particularly relevant because the early
growth stage of e-procurement was characterized by the popular hype of cost efficiency and process
effectiveness. Normative pressures could potentially hasten e-procurement assimilation across the
transactional and strategic procurement processes, depended on the specific kinds of pressures
exercised by entities within the business environment (Pani and Agrahari, 2007)
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Mimetic pressure
From a mimetic isomorphic point of view, government organizations model themselves after their
parent organizations or similar organizations which they perceived to be more legitimate and
successful. By imitating these other organizations, which had already implemented e-procurement
initiatives successfully, they enhanced their legitimacy by demonstrating that at least the
organization was trying to improve the procurement performance. In the emerging economies,
mimetic pressures occurred by imitating the e-government initiatives in the advanced economies
(Pani and Agrahari, 2007)

Coercive pressure
Empirical evidence suggested that coercive pressures on organizations might stem from a variety of
sources including resource-dominant organizations, regulatory bodies, and parent corporations, and
were built into exchange relationships. Organizations might also receive coercive pressure from
parent corporations in addition to resource-dominant trading partner (Teo et al, 2003).

1:9THE REASONS FOR ADOPTING AND IMPLEMENTING E-PROCUREMENT.

Prior to emergence and origination of e-procurement, organizations used to spend too much on their
supply chain management, so e-procurement has significantly changed this attitude supporting the
whole process of supply chain ranging from reducing the procurement overheads to value creation
and overall efficiency and effectiveness. The necessity or significance of adopting e-procurement is
tremendously high since adoption of e-procurement will result in reduced administrative costs,
price reduction, shorter process cycle times, enhanced contract compliance, boosted inventory
management, minimized operation and inventory costs, improved decision making, reduced
negotiation unit costs, enhanced market intelligence, easy sourcing of products, services or
suppliers from the ideal place for the reasonable or lowest possible price and etc. E-procurement
can also help improve visibility of customer demands, enhance visibility of supply chain capacity
and increase accuracy of the production capacity.
Some disadvantages of traditional procurement process, such as complex error prone purchasing
processes, administrative costs, expensive human resources etc can be avoided with adopting eprocurement systems and methods. Moreover, enterprises can achieve the benefit of performing
easily most of the sourcing activities, rapid flow of data between suppliers and purchasers in
addition to increasing the transparency and enhancing cycle time of the over-all process.
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E-procurement allows on time interaction and communication between all sourcing project
resources and knowledge and suggestion sharing from the previous participants of sourcing project.
Therefore, we can simply say that e-procurement creates improved process transparency, efficiency
and compliance.
In addition, any organization can attain numerous benefits and advantages through the proper
utilization of e-procurement, for instance, transactional benefits, compliance benefits, management
information benefits, price benefits, payment benefits and so on. It is merit mentioning that such
benefits will definitely contribute hugely in improving profitability, productivity and efficiency.

1:10 CONCLUSSION
As mentioned above the innovation of Internet has significantly changed many organizations
operations and become a universal source for general public, private, government and business
communities. Such an Information Technology (IT) in Procurement field creates a competitive
environment among organizations at both locally and internationally and become a global open
market for everyone. Currently many organizations around the world are focusing on shifting their
operation from traditional to an e-procurement, in order to reduce costs and improve the delivery of
goods and services. In addition, e-procurement has been found to facilitate decentralization of
procurement and, thereby, enable purchasing professionals to focus more efforts on strategically
important issues.

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2. Why is the take up of e-procurement still lagging behind expectation in

Tanzania?
2:0 INTRODUCTION OF E-PROCUREMENT IN TANZANIA
Tanzanian public procurement Act of 2011 would enable introduction of e-procurement in the
country. To enable that, Government had to amend the determination, developing, introducing,
maintaining and updating systems to support public procurement by means of information and
communication technologies (PPRA, 2010).Implementation of 2003 policy of building National
ICT Broadband Backbone (NICTBB) across the country was another critical driver toward
adoption of e-procurement in Tanzania.Kowero (2012) argued that National ICT Broadband
Backbone( NICTBB) would deliver several advantage in the country but the main focus was to
enhance E-government services which mean to include e-services comprising of e-education, eschools, e-learning, online studies, e-health, Telemedicine, e-agriculture, e-tourism, e-procurement
and other applications such as video conferencing.
In Tanzanian Procurement Regulatory Authority some new features have been used since 2010 in
PPRA website as the main indicator of evolution of e-procurement, those including Tender portal
where suppliers can view all tender available, access to information concerning the award of
contracts from different procuring entities (PEs) and PMIS-Procurement management information
system. The system enables e checking and e-monitoring of procurement processes; it is a webbased system for online submission of annual procurement plans and reports to PPRA (PPRA,
2010).
Tanzania Infrastructures and adoption of e-procurement
In recent years, Tanzania had made a significant progress in ICT and adoption of e-procurement.
The government was reporting the completion of Phase I of implementing fibre optic broadband
network in the country about 8,060 Km. (Yonazi, 2012).The Technological infrastructures which
enabled the Government of Tanzania to embark of e-procurement adoption was:
National fibre optic cable Network
In 2003, the Government of Tanzania started a National ICT policy which among other issues
included the application of ICT in the Government services like e-procurement, the embarked on
the National information and Communication Technology Broadband Backbone (NICTBB)
Project, the NICTBB began in 2009 with an aim was of creating service point at all regional and
district headquarters as well cross border connections for all neighboring countries.
16

By June 2009, the first phase was completed with a network reach 16 regions and phase II covering
the central and southern parts of the country with connections to Malawi and Zambia commenced
in August 2010. The installation of the National Fiber Optic Broadband Backbone connectivity
would enable able to get fast, reliable and affordable internet connections (Kowero, 2012).
Mobile networks
The number of licensed telecommunications operators increased from 5 in 2003 to 62 in 2009.
Most of these were issued under the Convergence Licensing Framework (CLF), which the TCRA
affect in 2006 (TCRA, 2011). Voice subscribers (mobile and fixed-line) increased from about 1.5
million in 2003 to 17 million in 2009, while tele-density increased from 4% to 43% during the same
period (Mary and Bitrina, 2010), According to TCRA, (2011), the Tanzania telecommunications
market had been characterized by huge growth in mobile markets which contrasts with relative
stagnation in the fixed line sector. The market was very competitive with the following operational
service providers:

Fixed network operators:

Tanzania Telecommunications Company Limited and Zanzibar Telecommunications

Limited which include Vodacom Tanzania Limited,

MIC Tanzania Limited,

Airtel Tanzania Limited,

Benson Informatics Limited,

Availability of Internet Service Providers (ISP) and Internet Cafes in Tanzania access to the
Internet had slowly increased considerably in recent years, however, much had to been done to
reduce costs and improve the quality of the services since affordable access was a key to
development. Internet access was also provided via access points in schools, hospitals and offices
of local government.
In general a number of factors might hinder or influence the adoption of e-procurement particularly
in Tanzania including; inadequate technological infrastructure, lack of skilled personnel, inadequate
technological infrastructure of partners, lack of integration with business, implementation costs,
company culture, inadequate business processes to support e-procurement, regulatory and legal
controls, security, co-operation of business partners capacity, inadequate e-procurement solutions,
upper management support (Chipiro, 2009).
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2:1 THE REASONS WHY IS THE TAKE UP OF E-PROCUREMENTNSTILL LAGGING

BEHIND EXPECTATION IN TANZANIA
Apart from all the achievement of e-procurement, the process hasn't been smooth in Tanzania. Its
adoption and implementation has been facing many challenges in both public and private sectors.
The adoption of e-procurement in Tanzania is a new phenomenon although some initiatives have
already been undertaken by few private companies especially owned by foreign investors in large
part. Public procurement is still lagging behind as the initiatives slowly progressing and mostly
things are done manually through following the traditional procurement.
This calls for a total country approach whereby the whole procurement system in the country will
be integrated electronically. Although a considerable body of work, with regard to the uptake and
application of electronic procurement, has already been assembled, however, existing studies tend
to adopt narrow conceptualizations of e-procurement, typically centered upon a specific type of
technical artifact, such as EDI (Min and Galle, 2003); e-auctions or electronic markets (Z, 2005).
E-procurement practice is not well established in emerging countries like Tanzania. There are
barriers in terms of transportation, financial, telecommunication, and legal infrastructures. Also, a
lack of a qualified workforce, cultural barriers, and security problems hinder the development of eprocurement activities
E-procurement offered an opportunity of communication, ordering and pricing for supplies, through
online transacting (Alan, 2010), However Edie et al (2007) mention the main challenges for most
developing countries to adopt e-procurement included;

1. Legal difficulties as one of the main barriers to e-procurement, such as lack of specific legal
regulation, different national approaches and validity, enforceability and evidentiary problems.

2. Information Technology (IT) difficulties , the reason might be due to high costs involved in
installing the proper IT system to have all the benefits of e-procurement process

3. Lack of security, Security is a major concern when working on the internet. Most developing
and developed countries governments would like to implement public e-procurement technology in
such a way, as to enhance transparency and accountability in government procurement processes
but the legal, technical and organizational barriers that may result from procurement online are one
of the greatest challenges for policy makers (Anelise, 2007).
18

According to Sijaona (2010), the most key challenges that hinder the adoption of e-procurement in
Tanzania included;

1. Policy and Legislative framework - Amend procurement act and/or regulations and other
associated laws such as sale of goods act, contact act.

2. Institutional structures - Establish necessary structures to implement e-procurement such as

national e-procurement committee, project management unit

3. Procurement processes - update existing standard operating procedures and user guides, define
and implement standard item codes, establish clear process for blacklisting, improve performance
metrics

4. ICTs- Undergo rigorous software selection, strengthen IT support and build capacity, define
standards and technical requirement for data Centre required for e-procurement

5. People - develop change management and capacity building plan, establish training centres,
develop and implement framework for evaluation of effectiveness of training and capacity building
programmes.

Liang, (2007) and Mark, (2011), identified several challenges that hinder the adoption of new
technology in Tanzania especially ICT which were the main driver for e-procurement adoption.
Those were included:

Financial challenges -Cost of connectivity via VSATs was high. Strategies to reduce costs of
connectivity and bandwidth use must be pursued, more efforts were required to ensure greater
outreach, and poor community participation was a point of concern.

Organizational challenges - Technical support for tele-centres is often inadequate, marketing of

services had been limited. Technical challenges- Telephone lines were often noisy and disturb
connections, frequent thunder strikes could damage equipment, Technical support for
troubleshooting was lacking, Speed of the internet access is often slow, and a strict anti-virus policy
needs to be in place.
19

Cultural challenges- Resistance to change is reported in some communities, Gender imbalance in

services, Language is often a barrier, Content development and availability, Computer literacy was
also often a barrier .

Connectivity: Like many African countries, Tanzania suffers from poor infrastructure for
communications, power and transport. Broadband communications were not yet available in much
of the country, while the lack of power supply in rural areas makes it difficult to ensure
communication links.

Content: As in other African countries, the amount of local content available on the internet was
limited. Much of the Tanzanian content that was available is in English rather than Kiswahili. It
was infrequently updated, limiting its value to local users and leading to significant user
dissatisfaction.

Organization: There were weaknesses in the quality of leadership, planning, organizational

momentum and implementation of ICT projects which had been undertaken. This weakness at a
project level matches the failure, at national and sector level, to translate policy ideas into
implementation strategies.

People: There were three main challenges for the people of Tanzania: many Tanzanians, especially
in rural areas and local government offices, do not had adequate skills and awareness to operate
computers and other ICT equipment, government and other organizations also lack skilled
personnel, older people, including some decision-makers found it hard to grasp the potential of
ICTs to transform their areas of activity (Mark, 2011).

However, Base on literature read, the researchers have categorized the current challenges facing
Tanzania in adopting e-procurement as:

Policy framework challenge

The main policies guiding developments in the telecommunications sector were the National
Telecommunications Policy (1997), the National ICT Policy (2003), The National Postal Services
Policy (2003) and the National Information and Broadcasting Policy (2003).
20

Lack of an overall ICT Policy and poor harmonization of initiatives had previously led to the
random adoption of different systems and standards, unnecessary duplication of effort and waste of
scarce national resources on the one hand, and lack of strategies for the utilization of ICT as a
driving force for national development on the other. The ICT policy articulates ten main focus areas
in harnessing ICT in Tanzania: strategic ICT leadership, ICT infrastructure, ICT industry, human
capital, legal and regulatory framework, productive sectors, service sectors, public service, local
content and universal access (URT,2003).

Regulatory framework challenge

The main challenge in the regulatory environment was building capacity to maintain a proactive
legal framework that could keep pace with the rapidly changing telecommunication technology and
e-procurement environment. The areas that needed attention included data access rights, privacy
protection, computer frauds & crimes, security and privacy of e-transactions, establishment of rules
governing e-transactions, and delivery of e-opportunities to the wider population.
Tanzania Communication Regulatory Authority (TCRA) had been instrumental in the development
of the Electronic and postal communications Bill, which had provisions for these (Mary and
Bitrina, 2010). Legal and regulatory framework in developing countries was far behind the
technology.

Cyber security challenge

Cyber security includes threats to data, equipment, networks, and people, and respective measures
intended to address them. Cyber security becomes even more important as ICT inventions and
innovations are increasing and advancing in Tanzania. The legal environment in Tanzania is still
inadequate for cyber security in the country. This is because the existing laws were developed
before the development of computer technology.
The laws were made to facilitate the traditional paper based business environment. This situation
posed a serious challenge to Tanzania to accommodate modern cybercrimes such as fraud, theft of
data, laundering, transmission of harmful codes, unauthorized access to information, impersonation
(Yonazi, 2012). Security was a major issue for all kinds of e-business and m-business applications.
In emerging countries like Tanzania this problem was exacerbated by insufficient and out of date
legal system (Pani and Agrahari, 2007).
21

Tanzania needs to fast track the development and enactment of a comprehensive legal framework to
ensure a safer cyber Tanzania (Yonazi, 2012). That could achieve by;

Adopting an effective legal framework to combat cybercrime and other misuses of

information technology,

Enact enforceable cyber laws in a well-defined geographical boundaries that are either
national or regional,

Fostering international cooperation, information sharing, and investigative assistance and

ensure the involvement of relevant stakeholders in cyber law initiatives through
international cooperation framework.

Advancement of the availability of fibre optic connection in the country provided new cyber
security challenges. The challenges included the increase of opportunities for utilizing the
power of fast fibre connectivity to commit crimes and the possibility of vandalizing the fibre
cable itself. So far, reports on the increase of cybercrimes due to the implementation of the
National ICT Broadband Backbone (NICTBB) were still unavailable (Yonazi, 2012).

Procurement legal framework challenge

The basic commercial laws in Tanzania are derived from the 19th century. The laws were designed
to facilitate paper-based transactions. Despite the changes and regulatory reforms made by the
country since independence, most of the laws enacted since British Colonial rule before the 1960s
were still in force. Regulatory steps to secure electronic transactions such as digital signatures,
reforms to contract law, dispute settlement and others have not yet been promulgated.
PPA 2004 and 2011 bill does not support in advance the application of e procurement in the public
sectors. The PPA 2004 did not support at all the application of e-procurement practice in the public
sector. The new bill tried to accept the application of e-procurement in the government sectors by
direct the government to make the new regulation for the e-procurement activities in Section 105.

Inappropriate technology challenge

Many of the smaller rural Internet Service providers (ISPs) lack the necessary technical know-how
and experience to deploy the most appropriate technologies. For example, a simple billing solution
was of paramount importance. An ISP with technical capabilities could deploy Open Source
Software (OSS) that would perform this function satisfactorily. An ISP without these skills had to
go for more expensive proprietary software which increases investments and operational costs.
22

Some ISPs did not deploy technologies to optimize the use of their resources, such as bandwidth
management systems. As a result, network congestion occurs and the ISP had to purchase more
bandwidth. Again, the extra costs were borne by customers instead of simply managing the limited
resources more effectively, (Suhail, 2007)

Power supply challenge

Poor electricity supply was a major problem. Efficient power supply was only guaranteed by power
generators. That increases the costs where the fuel was very expensive, constituting a barrier to
growth and development of e-procurement. While availability had grown, this had not been
matched by quality of service (Mary and Bitrina, 2010). Therefore the use of information
technology for executing procurement process would be a problem, also the connectivity of internet
was not reliable and include power off of electricity mgao wa umeme was a nation critical
problem.

2:2 CONLUSSION
From the findings above, commitment by senior managers, availability of e-procurement
operations, involving suppliers in e-procurement adoption, changing manual procedures in favor of
e-procurement, designing new process for automation, acquiring e-procurement system
competitively, competitive bidding, employee willingness to use e-procurement system, staff
readiness to make e-procurement succeed, regular e-procurement performance measurement,
observation of procurement guidelines, compliance with rules and regulations, system buyers trust,
up to date procurement information and efficient risk management have slowly been adopted by
United Republic of Tanzania . This indicates that these factors if well and fast adapted by Tanzania
are critical in the success of e-procurement adoption.

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