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The Impact of E-Procurement Practices on Supply Chain Performance: A Case of


B2B Procurement in Pakistani Industry

Article in SSRN Electronic Journal · January 2019


DOI: 10.2139/ssrn.3510616

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The Impact of E-Procurement Practices on Supply Chain
Performance: A Case of B2B Procurement in Pakistani
Industry

Muhammad Faheem
Research Scholar
Karachi University Business School, University of Karachi, Pakistan
Muhammad_Faheemkubs@yahoo.com

Dr. Danish Ahmed Siddiqui


Associate Professor
Karachi University Business School, University of Karachi, Pakistan
daanish79@hotmail.com

Abstract
The purpose of the present research is the study of the association amidst the practices of
electronic procurement and their impact on supply chain performance. We analyzed four prime
practices of e-procurement that known as electronic design, electronic sourcing, electronic
negotiation, and electronic evaluation. Data was collected from 239 respondents doing jobs
related to supply chain management using Likert scale Questionnaire that was an adopted from
(Chang, Tsai, & Hsu, 2013) The data was analyzed using Structural Equation Modeling as well
as Confirmatory Factor analysis. The results suggested that electronic design and electronic
evaluation shown positive and significant impact on supply chain performance whereas, electronic
negotiation and electronic sourcing didn’t show significant impact on supply chain performance.
Hence, the findings imply that compare to electronic sourcing and electronic negotiation,
electronic design and electronic evaluation has more effect on supply chain performance. The
administration must focus more on electronic design and electronic evaluation than electronic
sourcing and electronic negotiation. Furthermore, the study advocates integration among supply
chain members is equally important as to focus on joint learning practice because it leads to
augment the supply chain performance. In addition, the study advocates that the electronic
procurement is at the side of input of supply chain system, therefore, it is more valuable for the
industry to develop an innovative and effective process which satisfy all the needs of
organizational supply chain.

Keywords: E-procurement, electronic procurement, electronic design, electronic sourcing,


electronic negotiation, electronic evaluation, supply chain management, supply chain
performance, Pakistan, SEM, CFA

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1. Introduction
1.1 Background to the study
An e-procurement, also electronic procurement, is a system of organizational purchasing
depending upon a certain information technology which is considered as at the input side of a
supply chain management (Presutti, 2003). Recent researches has revealed that technologies like
e-procurement has massively integrated in the businesses and implanted along with other factors
for developing organizational growth (Vaast & Walsham, 2009).
Electronic procurement has been initially explored by Global Public Procurement focusing on
the initial time of sourcing and during the process of industrial development for upgrading the
system to professional efficiency. It is the internet that mainly effect the industrial procurement
practices and following, the innovations of B2B (business to business) flea market, supply chain
networking through internet, procurement based on internet, and procurement through
communities and hubs on internet. The electronic procurement system has been distributed in
late 1990s which has transformed the whole supply chain and procurement system. Slowly and
gradually, the innovative system is replacing and substituting the conventional procurement and
supply chain practices into it. This system has significantly improved the procurement
effectiveness and efficiency while decreasing the procurement/supply chain cost along with
maintaining the quality requirement of the organization. It is the tendering process happening
through the help of internet which saves efforts, time, and cost as compared to manual
procurement system (Watuleke, 2017). Similarly, in developing countries, the small and medium
enterprises are now moving from traditional procurement system to advanced electronic
procurement system rapidly (Watuleke, 2017).
The two important trends that increased the procurement through internet are multi-vendor
catalogue and decentralized procurement (Watuleke, 2017).
In the past few years, electronic procurement system was promoted to be a strategic supply chain
management view (Nelson, Moody, & Stegner, 2002). This agreement has a rational which is in
line with concrete and practical implementation. For example, supply chain management and
inventory system which Wall-Mart has developed benefits itself as well as its partners. Similarly,
supply chain management and inventory system developed by Mattel enhances its association
with channel partners and also improves efficacy of their production (Johnson, 2002).

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1.2 Problem Statement
A single fleabag in the procurement process can create a significant effect in the organizational
and supply chain performance. The reasons in procurement deficiencies are because of lacking in
understanding as well as due to lacking in knowledge about market demand (Qrunfleh &
Tarafdar, 2013).
With emerging trend of electronic procurement, procurement process has turned to be more
diverse than before. Therefore, the callousness and existence of procurement process disruptions
has been amplified in number in past few years. These disruptions can be worst for the
organizations and their supply chain performance, these disruptions also restrict the
organizations in achieving responsiveness in collaboration with its supply chain and procurement
strategy. In this regards, the example of PC manufacturing firm will be more suitable when
reason of failure of Compaq was that they were unsuccessful in replying quickly and that was
due to inefficient procurement and supply chain process (Qrunfleh & Tarafdar, 2013).
In recent disorder in the country’s economics, it is essential to count every second and to make
every move productive and beneficial for the organization. The organizations nowadays cannot
bear any type of wastage related to internal and/or external processes, because every move takes
a heavy amount of monetary value, time, and struggles. However, the organizations can save
these resources through increasing the efficiencies and responsiveness in procurement as well as
in supply chain management.
Economic disorders affects the flow of procurement and supply chain processes specifically in
international procurement process/practices and supply chain management system. Value
deficiency in national currency can negatively affect the end consumer and discourage them to
buy our products because their spending and/or purchasing power has decreased enormously.
Additionally, the organizations can also lose reliability of their suppliers and decrease the
procurement and supply chain performance (Qrunfleh & Tarafdar, 2013). Thus, the practitioners
should review this matter thoroughly and should resolve these issues through observing the
procurement practices, procurement activities, and procurement strategies in order to gain
highest level of responsiveness and efficiency in supply chain and procurement system.
1.3 Gap Analysis
Different scholars have presented different studies with different perspectives along with
different drivers of e-procurement practices (Kim & Shunk, 2004; Croom, 2000; Presutti, 2003;

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Tatsis, Mena, Wassenhove, & Whicker, 2006; Sain, Owens, & Hill, 2004). It has been clearly
stated that electronic procurement subsidizes the performance of overall supply chain operations
(Dell, 1999; Timme & Timme, 2001; Presutti, 2003; Nelson, Moody, & Stegner, 2002; Turban,
Lee, King, & Chung, 2002).
Most of the old researches has emphasized on highlighting the advantages of e-procurement over
supply chain performance (Presutti, 2003; Dell, 1999; Turban, Lee, King, & Chung, 2002;
Timme & Timme, 2001). However, there are processes unknown by which electronic
procurement add value to SC performance. In the context of academic research, electronic
procurement is relatively new concept in the field of business which requires to be examined
systematically (Dong, Xu, & Zhu, 2009; Presutti, 2003; Jonsson & Gunnarsson, 2005).
Hence, the literature still fails to identify the issue of the process by which an electronic
procurement system increases the performance of supply chain operations and scholars are
starving to identify this unknown issue. Nevertheless, the present research is an efficient attempt
to identify that issue by presenting a research model, which explains the logical flow of present
research and shows that how the study resolves the issue of enhancing the supply chain
performance by explaining the association amidst such processes.

1.4 Research objective


The present research was carried out to investigate the impact of e-procurement practices on
supply chain performance for Pakistani industry. In the course of the study, the effectiveness of
e-procurement, e-procurement practices, and supply chain performance has been highlighted. In
the present research, the consideration was only on the practices of e-procurement and its impact
on supply chain performance. The present research particularly investigates how these four e-
procurement practices take part in supply chain performance in a particular market of Pakistani
industry. This argument was grounded on an old research that has proved these four practices are
essential e-procurement practices (Presutti, 2003).
most prior applications of e-procurement (e-evaluation, e-negotiation, e-sourcing, and e-design)
are being incorporated into the proposed research conceptual model in order to show the logical
flow of the present research since these four practices show the e-procurement applications and
show how it actually works and add value to the supply chain performance.

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The boundaries of the purpose of the present research can be measured as it is the study of the
association amidst the practices of electronic procurement and their impact on supply chain
performance. In detail, the present study finds the determinants of the practices of electronic
procurement and investigates their impact on supply chain performance. Additionally, the
present research shares the outcomes of this investigation in terms of how supply chain gets
influenced by electronic procurement practices. The presents research also recommend
administrative allegations through which organizational as well as supply chain performance can
be improved.
In line with the objective of the present research to investigate and understand the issue, the
present research aims to provide the advantageous implications for supply chain managers and
practitioners.

1.5 Research Questions


1 What are the determinants of e-procurement system?
2 What are e-procurement practices?
3 How e-procurement practices contribute in improving performance of supply chain?
4 What is the status of supply chain management and e-procurement in Pakistan?

1.7 Significance of the study


Significance of the present research can be assess through the available literature on supply chain
management of Pakistani industry. The chapters of Pakistani industry in the literature of supply
chain management with focus on examining the impact of e-procurement practices on supply
chain performance, are empty. Literature fails to share the knowledge about the said problem of
this study. Therefore, the present research secures a unique place in the literature and fills an
empty gap. This part of the context enhances the significance of the present research. The present
research develops the exceptional knowledge for its targeted audience for example procurement
practitioners, supply chain professors, supply chain students, and business consultants.
Moreover, this research targets the Pakistani industry, therefore, the study will be beneficial for
the Pakistani industry. Further, the present research has only focused on four basic dimensions of
e-procurement practices and intentionally neglected the other variables that might also impact the
supply chain performance.

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2. Literature review

2.1 Supply Chain Performance


In the literature related to supply chain, the SC performance is also declared as the evaluation of
the management of supply chain, however, it also declared as the evaluation of the cost spent on
supply chain activities including tangible factor and the capacity utilization of supply chain as
intangible factor includes (Tan, 2001; Presutti, 2003; Croom & Johnston, 2003; Eng, 2004). E-
procurement is a form of a systematic electronic procurement which means to procure the
supplies, materials, and other organizational purchases through electronic medium. E-business
(electronic business) is a wider context of the application of electronic procurement. In the
context of e-business, all the business activities and procedures implemented through by using
digital technologies on the extranet or on the internet. In other words, E-business uses extranet or
internet for implementing the organizational activities and processes by using digital
technologies such as personal computers, laptops, tablets, mobile phones, etc. (Amit & Zott,
2001). There are several applications of e-business for example e-procurement, e-logistics, e-
transaction, and e-collaboration (Mena & Stewart, 2005). E-procurement is one of the most
essential and critical business application amidst other applications and the present research is
focusing on this particular application of e-business. In the available literature we have found
that the reasons why e-procurement is essential to study in depth. First reason is that e-
procurement adds value to the efficacy of operational processes as well as limpidity of supply
chain functions (Puschmann & Alt, 2005). Indirectly, it can be declared that e-procurement
system have more crucial as well as critical considerations amid other applications of e-business,
this approach gets more importance when the purpose is to study the performance of supply
chain management.
The second reason is that in aiming to enhance the supply chain performance the process of
creation and provision of value added services is essential keeping in view the current business
and economic environment (Wiengarten, Fynes, Humphreys, Chavez, & McKittrick, 2011). The
expectation can be made that functional and operating features of electronic procurement are
capable to lead the organizations to enhance the efficacy of the processes of creation and
provision of value added services.

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The present research considers the electronic procurement as e-procurement which consists of
four fundamental functions in it. Those four fundamental functions include e-evaluation, e-
negotiation, e-sourcing, and e-design, the same four basic functions of e-procurement has been
cited by several examiners for example (Kim & Shunk, 2004; Croom, 2000; Presutti, 2003;
Tatsis, Mena, Wassenhove, & Whicker, 2006; Sain, Owens, & Hill, 2004).
Under the first function, e-design, the supply chain officials prepare the requirements of all the
organizational purchases through an electronic system of procurement. In the process of e-
sourcing, the supply chain officials select a list of available suppliers in the market, collect the
information about them, analyze the information, and select the best supplier amid several
through an electronic system of procurement.
In e-negotiation, the supply chain officials create contractual agreement with the selected
supplier through an electronic system of procurement.
Lastly, in the process of e-evaluation, the supply chain officials collects the information about
pledged suppliers and information about their progress for the purpose of evaluation and
planning for further transactions.
Through these capabilities, supply chain management can be benefited by the strategic functions
provided by electronic procurement,

Some of the studies also provide some different perspectives through which the performance of
supply chain can be connected to electronic procurement such as supply chain integration,
information sharing, or partners association create bridge between functions of electronic
procurement and performance of supply chain.
Walters (2008) proved and suggested that three fundamental strategies which ca be useful and
implemented in supply chain management through business functions based on any technology,
three strategies include joint learning strategy, relational exchange theory, and information rich
theory. In the end it can be assumed that joint learning strategy, relational exchange theory, and
information rich theory are the very basic and fundamental business strategies which
organizations can integrate at the time of entering into e-procurement technology assuming that
these strategies will have a great effect on the performance of supply chain (Walters, 2008). In
adding to these concepts, the literature also suggests that implementation of joint learning
strategy, relational exchange theory, and information rich theory enable the e-procurement

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practices to affect the supply chain performance and these strategies also reflects e-procurement
practices i.e. e-evaluation, e-negotiation, e-sourcing, and e-design (Kim & Shunk, 2004; Croom,
2000; Presutti, 2003; Tatsis, Mena, Wassenhove, & Whicker, 2006; Sain, Owens, & Hill, 2004).
In particular, relational exchange and informational enrichment strategies focus on continuous
association with parties, flow of information for example acquisition of information, distribution
of information, and information exploitation (Walters, 2008), while focus of joint learning
strategy is on mutual collaboration amid parties and creation of joint competencies (Walters,
2008).

2.2 E-Procurement practices and Hypotheses development


Literature provides several e-procurement process which form a distinctive procurement system
comprises on high and low level of operational activities. This particular system is well-known
in articulating and identifying the areas where an organization can enhance organizational and
supply chain performance (Kim & Shunk, 2004).

However, the models which are the most representative in the available literature are based on
four phases of business transactions and/or processes which has been calculated as information
collection, negotiation process, settlement of agreement, and after sale evaluation (Kim & Shunk,
2004). (Gebauer & Scharl, 1999; Kraut, Steinfield, Chan, Butler, & Hoag, 1998). These
researches has just extended the proposition of (Schmid, 1993) and presented these four phases
of electronic business transactions for procurement.

2.2.1 Information collection


It contains search for the items required and search for suppliers who can proide that particular
items, it also contains the selection of best items as well as suppliers amidst several alternatives.
In the past, catalogs spread by the suppliers in the market are the starters of purchases, catalogs
specify which supplier is suitable for strategic procurement. However, nowadays other medium
of item and supplier selection are available for example websites, mobile applications, and other
electronic adertising medium through which the buyer can collect abundant of information
needed about require items and suppliers. The buyer, afterwards, prepares the list of available
suppliers who can deliver the required items.

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2.2.2 Requisition
E-sourcing has been presented as requisition of purchase and approval of requisition. Both terms
refer to the process of purchase acquisition from the selected suppliers through e-mailing or
intranet by using any enterprise resource planning (ERP). In electronic procurement process
distant employees can also place the requisition efficiently. Distant ordering can be promoted by
providing the employees with some devices for example personal digital assistance (PDA) and
other wireless devices which facilitate the employees to place order requests and to specify the
location for delivery. In this way the usage of technology and placing order electronically saves
the time and cost of the organization which ultimately improves the performance of supply chain
and overall organization (Gebauer & Scharl, 1999; Kraut, Steinfield, Chan, Butler, & Hoag,
1998).
In addition, the approval of requisition is also a part of sourcing when business transactions are
moved on electronically (Chang, Tsai, & Hsu, 2013). Sometimes requisitions need approval
when the ordered itemor even the quantity of order placed is not mentioned in pre-contract
catalog then the suppliers need to get approval from higher authority. Any approval for
requisition depends upon the end consumer’s demand or cost limits of consumers. The supplier
somitimes provides automatic approval system for requisitions for standardized quantity and
specifications. Such systems create profiles of the users/buyers and the specifications of the
goods/services to be ordered, profile of suppliers, and other relevant factors. This automatic
system influence the quantity of employees specify for reiewing and approving the requisitions,
and this quantity of employees reduces due to this automatic system. This sourcing and
automatic requisition approval system greatly influence the efficiency of supply chain
management (Gebauer & Scharl, 1999; Kraut, Steinfield, Chan, Butler, & Hoag, 1998).

2.2.3 Negotitions
Thirdly, negotition is confined on arrangement of terms, negotiating the terms with suppliers,
negotiating the actual contract, and confirmation of contract or settlement of contract.
Standardized requisitions automatically get approval and proceeded to purchase, while non-
standardized requisitions need to be negotiate on different terns and conditions set by both
parties (buyer and seller). However, the literature shares someof the mechanisms for negotiation

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for setting suitable price. First, e-procurement system offers group buying which means customer
aggregation, aggregation of demadn, and/or power buying, these are the international standard
mechanisms for e-procurement through them the consumer can hold the negotiation power over
the suppliers. Scondly, two-sided negotation which held directly amid buyer and seller through
personal messaging system or through emailing are also useful mechanim for negotiation for e-
procurement. Thirdly, mutual auction, bid and ask, two way auction, and mutual exchange,
fourthly, reverse auction also known as competitive bidding, dutch auction, and open bidding,
are all useful and practical negotiation mechanism for e-procurement. In the results, the study
found that these mechanisms save time and manpower of the organizations, which significantly
influence the supply chain performane (Gebauer & Scharl, 1999; Kraut, Steinfield, Chan, Butler,
& Hoag, 1998).

2.2.4 E-Evaluation
Lastly, for e-evaluation, the study found extensive literature for deeloping the hypothesis related
to e-evaluation. When a transacton is done the back office or the procurement management
system saves the data and all the records about transaction for keeping the history of purchasing,
for evaluating the perfromance of suppliers, for analyzing the pattern of buying, for providing
foundation for associating the industrial purchases, for better control the negotiation on prices
with the best supplier, for improving position for bargaining in upcoming transactions, and for
collecting the important information for preparing the management report and documentation.
The study found that with preparation of these records the organzation may face delays in
delivery, low supplier performance, and communication issues. Hence, at this position picking
up the data, storing, and organizing the data is crucial for organization to gain better perfromance
(Gebauer & Scharl, 1999; Kraut, Steinfield, Chan, Butler, & Hoag, 1998).
2.3 Similar criteria for e-procurement
Presutti (2003) proposed a similar criteria for e-procurement which confined from defining the
organizational requirements, selecting the supplier, preparing contract agreement, and evaluation
of supplier’s performance (Presutti, 2003).
Defining organizational requirement consists of development of product specification,
preparation of EPI/ESI, and preparation of cross-functional teams. Selection of supplier consists
of examining pre-qualification of supplier preparing RFP, and selection of qualified supplier.

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Contract agreement consists of negotiation on prices, terms, and conditions, formalizing the
contract, developing the order, defining routines and/or transactions purchases. Lastly, the
evaluation of supplier consists of assessment of performance of the suppliers, rating the
suppliers, and keeping the records of suppliers.
Hence, we proposed the following four hypotheses;
H1 There is a positive impact of e-design on the supply chain performance.
H2 There is a positive impact of e-Sourcing on the supply chain performance.
H3 There is a positive impact of e-negotiation on the supply chain performance.
H4 There is a positive impact of e-evaluation on the supply chain performance.

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3. Theoretical framework

Figure 1

E-Design

E-Sourcing
Supply Chain
Performance
E-Negotiation

E-Evaluation

Source of model: (Chang, Tsai, & Hsu, 2013)


Figure 1 shows conceptual research model that has been designed with the reference of previous
research. It shows electronic design, electronic sourcing, electronic negotiation, and electronic
evaluation on left hand side, whereas supply chain performance on the right hand side. Both
extremes has been connected with the arrows which show the relationship dimension amidst the
variables (Chang, Tsai, & Hsu, 2013)

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4 Research Methodology
4.1 Research Design
The population which has been covered in the present research were limited on some
characteristics for example age limit that this research focused on was 20 to 55 years old
employees in Pakistani enterprises which depend on supply chain management.

Two platforms were used for survey which consists the personal survey as well as online survey.
Initially, the paper form of the questionnaire has been spread and let the participants fill the
forms. In the meanwhile, the online questionnaire on google form has been made and spread
through emailing and texting the link of online questionnaire to the experts in supply chain field.
Hypotheses were tested through regression analysis.
4.2 Sampling
The present research we have utilized convenience sampling technique for contacting the
participants.
4.2 Respondents
Barreiro and Albandoz (2001) has proposed a sample matrix table for defining the size of
required sample (Barreiro & Albandoz, 2001). The present research holds sample size of 239
participants and the number was distributed on the people from multiple enterprises who have
experience in supply chain profession. The sample size was quite sufficient for statistical
analysis, such bigger sample size substantially reduces the error included.
4.4 Questionnaire Designing
It was an adopted questionnaire from an old research (Chang, Tsai, & Hsu, 2013) which used the
same questionnaire with seven point likert scale approach. But, in the present research the
questionnaire was proceeded with five point scale. There were two section of this questionnaire,
first section holds the items which address the hypotheses and/or variables for measurement,
while second section holds personal information about participants. The questionnaire was made
according to the format of likert scale up to five points. According to five points, 1 represents
strongly disagree, 2 represents disagree, 3 represents neutral, 4 represents agree, and 5 represents
strongly agree.
Two platforms were used for survey which consists the personal survey as well as online survey.
Initially, the paper form of the questionnaire has been spread and let the participants fill the

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forms. In the meanwhile, the online questionnaire on google form has been made and spread
through emailing and texting the link of online questionnaire to the experts in supply chain field.

4.5 Demographic Analysis

Demographic analysis of the present research is following in tabular format and it gives the
several tables which include frequency statistics, gender, age, education, and occupation relation
stats and percentages. Let’s see below for demographic analysis of the present research.
Frequency statistics (the first table) shows the 239 valid members were in the present research
and no member was missing in the present research. Similarly, gender, age, education, and
occupation distribution of the members in the present research can be seen under each table
along with their distribution percentages.

Table 1: Demographics

Gender
Cumulative
Frequency Percent Valid Percent Percent
Valid Female 125 52.3 52.3 52.3
Male 114 47.7 47.7 100.0
Total 239 100.0 100.0

Age
Cumulative
Frequency Percent Valid Percent Percent
Valid 21 to 30 180 75.3 75.3 75.3
31 to 40 41 17.2 17.2 92.5
41 to 50 11 4.6 4.6 97.1
Above 50 2 .8 .8 97.9
Less than 21 5 2.1 2.1 100.0
Total 239 100.0 100.0

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Education
Cumulative
Frequency Percent Valid Percent Percent
Doctorate 24 10.0 10.0 10.0
Graduate 171 71.5 71.5 81.6
Intermediate/A level 4 1.7 1.7 83.3
Undergraduate 40 16.7 16.7 100.0
Total 239 100.0 100.0

Occupation
Cumulative
Frequency Percent Valid Percent Percent
Employee 119 49.8 49.8 49.8
Self employed 29 12.1 12.1 61.9
Student 91 38.1 38.1 100.0
Total 239 100.0 100.0

4.6 Descriptive Statistic

Further, in next table there are descriptive statistics of all the numbers of the questions which
were stated on questionnaire requesting the members to respond according to their level of
knowledge and experience related to supply chain practices and supply chain performance.
However, the responses which members have given has been analyzed and descriptive analysis
of those responses has been presented below in the table of descriptive statistics in detail.
Descriptive statistics comprises on means of every question with standard error, it also shows
variance and standard deviation of every question. Below are the details of descriptive statistics
for present research.

Table 2: Descriptive Statistics

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Descriptive Statistics

Std.
Mean Deviation Variance
Std.
Statistic Error Statistic Statistic
E-Design
Our company uses an electronic system to gather information at the procurement request stage. 3.7573 .05335 .82484 .680
Each department within the organization shares the same network platform for purchasing requests. 3.5105 .07283 1.12594 1.268
Each department within the company requests purchases from one specific department unit. 3.4770 .07330 1.13320 1.284
The design of the purchase requirement or the standardized purchasing norm between the organization 3.4937 .06626 1.02437 1.049
and the supplier will be communicated or negotiated via the internet.
Our company designs the format of marketing demands using the information system. 3.6276 .06217 .96113 .924
E-Sourcing
Our company selects the most appropriate supplier through the information system. 3.6360 .06594 1.01941 1.039
Our company gathers the demand proposals about procurement information or related information 3.5858 .06522 1.00835 1.017
through the information system.
Our company releases the company requirements or rules via the information system. 3.6820 .05957 .92089 .848
Our company notifies the supplier on the arrival of an authorized procurement contract via the 3.6444 .06202 .95875 .919
information system.
E-Negotiation
Our company negotiates with the supplier through the internet. 3.5774 .06138 .94894 .900
Our company confirms the procedures concerning daily purchases with the supplier through the 3.5607 .06146 .95017 .903
internet.
Our company negotiates the general procedures for purchasing with the supplier through the internet. 3.5272 .06544 1.01164 1.023
E-Evaluation
Our company documents past purchasing information in an electronic form. 3.4895 .07063 1.09184 1.192
Our company sets up a database about procurement and utilizes it in the purchasing process. 3.6485 .06636 1.02588 1.052
Our company evaluates the performance of suppliers from past purchasing information in the 3.5481 .06485 1.00251 1.005
information system.
Supply Chain Performance
Our company manages costs well. 3.6092 .06953 1.07260 1.150
Our company manages a profit well. 3.7741 .06015 .92989 .865
Our company manages the cash turnover well. 3.6946 .06144 .94980 .902
Our company predicts customers’ potential needs accurately. 3.5481 .06776 1.04760 1.097
Our company utilizes capacity well. 3.7071 .05802 .89700 .805
Our company manages product quality well. 3.7071 .05832 .90167 .813
Our company manages inventory turnover well. 3.6067 .06536 1.01051 1.021
Our company has sufficient material availability. 3.6946 .06559 1.01398 1.028
Our customers are satisfied. 3.6820 .06045 .93448 .873
Our company manages lead time well. 3.6303 .05947 .91739 .842
Our company manages deadlines for products/services well. 3.6862 .06351 .98190 .964
Our company reacts to customer problems effectively. 3.6904 .06374 .98537 .971

4.7 Quantitative Techniques

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Smart-PLS has been integrated for analyzing the hypotheses. Under Smart-PLS CFA and SEM
has been incorporated, where CFA stands for confirmatory factor analysis and SEM stands for
structural equation modeling. These analysis used for analyzing quantitative data and
information (Monecke & Leisch, 2012).

4.8 Structural Equation Modeling

To test the study hypothesis we have used the structural equation model (SEM) whereas the testing
has been gone through Smart PLS software. Moreover, to evaluate the indirect and direct effects
of all the constructs the testing was done. The use of (SEM) structural equation model has been
observed to be a foremost procedure that has been used below different regression models and
methods (Baron & Kenny, 1986). It used to evaluate the structural relationship between exogenous
and endogenous variables. It includes factor analysis and multivariate analysis. Moreover, the
equation of regression targets at explaining each construct to assess the cause and effect
relationship while all of the factors in the causal model could demonstrate their cause and effect at
exact time. Likewise, the idea of using this model ensures to apply technique of bootstrapping
which has been viewed as reasonable for both small and large sample size and does not require
any kind of indirect effect (Hayes, 2013). In order to check the all direct and indirect effects, a
technique has been implemented which is known as bootstrapping (Shrout & Bolger, 2002).
4.8.1 Measurement of Outer Model
The goal of measure of fit in the measurement model is to study about the reliability and validity
of the instrument and to check its reliability and validity we perform test of convergent validity
and discriminant validity in software naming Smart PLS.
4.8.2 Composite Reliability
Reliability implies stability of questionnaire outcomes. For the similar target population, at
whatever point the questioner reutilize the questionnaire it will give similar outcome. It
demonstrates inside consistency & repeatability of the survey is high. The primary measure for
unwavering quality is to maintain a strategic distance from unfairness in research. In this manner,
it tends to be improved by testing the pursuit procedure and investigation, as is done utilizing

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diverse research and examination techniques or different researchers. This also incorporates the
dependability and legitimacy of the exploration.
Reliability of the measurement instruments was evaluated using composite reliability. All the
values were above the normally used threshold value i.e. 0.70. This is the accepted reliability
value range. Estimation of reliability can be done by degree of constancy that lies amongst
various variables (Hair , 2010). Below is the table of composite reliability.

Table 3: Reliability

Variables No. of items Reliability


Supply chain performance 12 0.678
Electronic design 5 0.543
Electronic sourcing 4 0.348
Electronic negotiation 3 0.448
Electronic evaluation 3 0.491

Only electronic sourcing has lower level of required reliability which is 0.4, remaining all factors
have equal or above reliability than required. In addition, the reliability analysis showed that
reliability of all variables is 0.752 which is acceptable and depicts that questionnaire is practical.

4.8.3 Factor loadings significant


Below is the mentioned table of (CFA) confirmatory factor analysis with the loadings. Construct
with the loading of .5 are consider as strong loading variables whereas the constructs with the
loading of below .5 are considered as less are better to be removed from the table.

Table 4: Factor Loading

Table 5: Outer Loading from PLS Algorithm


Supply Chain
E-Design E-Evaluation E-Negotiation E-Sourcing
Performance
ED1 0.658

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ED2 0.760
ED3 0.570
ED4 0.470
ED5 0.461
EE1 0.662
EE2 0.639
EE3 0.796
EN1 0.475
EN2 0.858
EN3 0.635
ES1 0.644
ES2 0.436
ES3 0.591
ES4 0.622
SCP1 0.487
SCP10 0.550
SCP11 0.532
SCP12 0.512
SCP2 0.601
SCP3 0.358
SCP4 0.421
SCP5 0.264
SCP6 0.387
SCP7 0.421
SCP8 0.401
SCP9 0.609

Table 7: Outer Loading from Bootstrapping


Original Sample Standard
T Statistics
Sample Mean Deviation P Values
(|O/STDEV|)
(O) (M) (STDEV)
ED1 <- E-Design 0.658 0.639 0.095 6.951 0.000
ED2 <- E-Design 0.760 0.738 0.074 10.224 0.000
ED3 <- E-Design 0.570 0.558 0.109 5.222 0.000
ED4 <- E-Design 0.470 0.461 0.142 3.319 0.001
ED5 <- E-Design 0.461 0.443 0.123 3.762 0.000
EE1 <- E-Evaluation 0.662 0.654 0.091 7.300 0.000
EE2 <- E-Evaluation 0.639 0.634 0.081 7.912 0.000
EE3 <- E-Evaluation 0.796 0.791 0.046 17.291 0.000
EN1 <- E-Negotiation 0.475 0.444 0.189 2.519 0.012
EN2 <- E-Negotiation 0.858 0.838 0.080 10.732 0.000
EN3 <- E-Negotiation 0.635 0.610 0.157 4.037 0.000
ES1 <- E-Sourcing 0.644 0.607 0.125 5.153 0.000
ES2 <- E-Sourcing 0.436 0.402 0.206 2.121 0.034
ES3 <- E-Sourcing 0.591 0.548 0.189 3.127 0.002
ES4 <- E-Sourcing 0.622 0.586 0.192 3.244 0.001
SCP1 <- Supply Chain Performance 0.487 0.480 0.071 6.830 0.000
SCP10 <- Supply Chain Performance 0.550 0.539 0.063 8.666 0.000
SCP11 <- Supply Chain Performance 0.532 0.525 0.066 8.055 0.000
SCP12 <- Supply Chain Performance 0.512 0.498 0.068 7.544 0.000
SCP2 <- Supply Chain Performance 0.601 0.591 0.063 9.578 0.000
SCP3 <- Supply Chain Performance 0.358 0.354 0.099 3.612 0.000
SCP4 <- Supply Chain Performance 0.421 0.417 0.085 4.932 0.000

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SCP5 <- Supply Chain Performance 0.264 0.254 0.094 2.800 0.005
SCP6 <- Supply Chain Performance 0.387 0.376 0.106 3.631 0.000
SCP7 <- Supply Chain Performance 0.421 0.416 0.084 5.007 0.000
SCP8 <- Supply Chain Performance 0.401 0.399 0.100 3.994 0.000
SCP9 <- Supply Chain Performance 0.609 0.599 0.064 9.529 0.000

Table 8: Outer Weights from Bootstrapping


Original Sample Standard
T Statistics
Sample Mean Deviation P Values
(|O/STDEV|)
(O) (M) (STDEV)
ED1 <- E-Design 0.416 0.406 0.108 3.836 0.000
ED2 <- E-Design 0.448 0.431 0.095 4.721 0.000
ED3 <- E-Design 0.256 0.257 0.110 2.319 0.021
ED4 <- E-Design 0.277 0.274 0.129 2.150 0.032
ED5 <- E-Design 0.239 0.222 0.107 2.234 0.026
EE1 <- E-Evaluation 0.391 0.390 0.090 4.347 0.000
EE2 <- E-Evaluation 0.436 0.434 0.078 5.598 0.000
EE3 <- E-Evaluation 0.580 0.576 0.064 9.027 0.000
EN1 <- E-Negotiation 0.257 0.240 0.177 1.447 0.148
EN2 <- E-Negotiation 0.722 0.705 0.124 5.826 0.000
EN3 <- E-Negotiation 0.407 0.393 0.156 2.609 0.009
ES1 <- E-Sourcing 0.440 0.416 0.139 3.156 0.002
ES2 <- E-Sourcing 0.284 0.263 0.193 1.472 0.142
ES3 <- E-Sourcing 0.472 0.439 0.181 2.605 0.009
ES4 <- E-Sourcing 0.505 0.478 0.195 2.586 0.010
SCP1 <- Supply Chain Performance 0.150 0.149 0.044 3.445 0.001
SCP10 <- Supply Chain Performance 0.210 0.205 0.045 4.651 0.000
SCP11 <- Supply Chain Performance 0.207 0.204 0.048 4.321 0.000
SCP12 <- Supply Chain Performance 0.250 0.235 0.055 4.545 0.000
SCP2 <- Supply Chain Performance 0.225 0.221 0.053 4.229 0.000
SCP3 <- Supply Chain Performance 0.135 0.132 0.066 2.025 0.043
SCP4 <- Supply Chain Performance 0.125 0.126 0.051 2.449 0.015
SCP5 <- Supply Chain Performance 0.098 0.092 0.053 1.864 0.063
SCP6 <- Supply Chain Performance 0.119 0.112 0.067 1.762 0.079
SCP7 <- Supply Chain Performance 0.134 0.136 0.056 2.391 0.017
SCP8 <- Supply Chain Performance 0.156 0.156 0.058 2.697 0.007
SCP9 <- Supply Chain Performance 0.240 0.232 0.049 4.928 0.000

4.8.4 Convergent Validity

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Convergent validity is the level of agreement in at least two measures of a similar construct
(Carmines & Zeller, 1979). Convergent validity was assessed by inspection of variance mined for
each factor (Fornell & Larcker, 1981). Conferring to Fornell and Larcker (1981), if the, variance
extracted value is greater than 0.5 then convergent validity is established and the result is drawn
that the loadings are good but less than 0.5 are termed as less effective for the study.
Following table displays the result.

Table 9: Convergent Validity


Cronbach's Composite Average Variance
Variables Alpha Reliability Extracted (AVE)
E-Design 0.539 0.725 0.354
E-Evaluation 0.491 0.743 0.494
E-Negotiation 0.447 0.703 0.455
E-Sourcing 0.346 0.664 0.335
Supply Chain Performance 0.677 0.767 0.223

4.8.5 Discriminant validity


Discriminate validity can be defined as any single construct when differs from other constructs in
the model (Carmines & Zeller, 1979). Discriminate validity results are satisfactory when the
constructs are having an AVE loading more than 0.5 which means that minimum 50% of
variance was took by the construct (Chin, 1998). Discriminate validity is established if the
elements which are in diagonal are significantly higher than those values in off-diagonal in the
parallel rows and columns. Discriminant Validity tests are being conducted in order to see
whether non-related ideas or measurements are in fact unrelated or not. An effective assessment
of discriminant legitimacy demonstrates that a trial of an idea isn't exceptionally associated with
different tests intended to quantify hypothetically various ideas. The table for Discriminant
Validity is given below:

Table 10: Discriminant Validity

Supply Chain
E-Design E-Evaluation E-Negotiation E-Sourcing
Performance
E-Design 0.595
E-Evaluation 0.248 0.703
E-Negotiation 0.185 0.279 0.674
E-Sourcing 0.246 0.278 0.172 0.579

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Supply Chain
0.279 0.354 0.254 0.242 0.472
Performance

4.8.6 Model fit measures


The fitness of the model in SEM-PLS is defined by various measures such as standardised root-
mean-square residual (SRMR), and the exact model fits like d_ULS and d_G, Normed Fit Index
(NFI), and χ2 (Chi-square). The model fit measures consisting the measured value of both
saturated model as well as the estimated model is reported in above Table. The saturated model
assesses the correlation between all constructs. The estimated model, on the other hand, takes
model structure into account and is based on total effect scheme.

Table 11: Model Fit

Fit Summary
Saturated Model Estimated Model
SRMR 0.084 0.084
d_ULS 2.637 2.637
d_G 0.557 0.557
Chi-Square 726.280 726.280
NFI 0.258 0.258

4.9 Hypothesis Testing


In PLS-SEM, bootstrapping is one of the key stride, which gives the data of constancy of factor
guesstimate. Sub-tests are drawn everywhere from the first example including substitution, in
this process (Hair, Matthews, Matthews, & Sarstedt, 2017). Bootstrapping provides the
information of stability of coefficient estimate. In this process, a large number of sub-samples are
drawn from the original sample with replacement (Hair, Matthews, Matthews, & Sarstedt, 2017).
After running the bootstrap routine, SmartPLS shows the t-values for structural model estimates
derived from the bootstrapping procedure. The results of path coefficients for all the hypothesis
are shown in the following table. The t-value greater than 1.96 (p < .005) shows that the
relationship is significant at 95% confidence level (α = 0.05). Paths showing whether the
relationship between measured and latent variables are significant or not. The path diagram
showed in figure 2.

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Table 12: Hypotheses Testing

Standard
Hypotheses Deviation T –values P -values Decision
(STDEV)
There is a positive impact of e-design on the supply chain performance. 0.069 2.392 0.017 Accepted
There is a positive impact of e-evaluation on the supply chain performance. 0.071 3.447 0.001 Accepted
There is a positive impact of e-negotiation on the supply chain performance. 0.075 1.828 0.068 Rejected
There is a positive impact of e-Sourcing on the supply chain performance. 0.069 1.605 0.109 Rejected

Table 3 suggested that electronic design and electronic sourcing has T-values greater than 1.96
while electronic negotiation and electronic evaluation has T-values below 1.96 which means the
first two hypotheses (related to electronic design and electronic sourcing) has been accepted in
the PLS-SEM, and last two hypotheses (related to electronic negotiation and electronic
evaluation) has not been accepted in the PLS-SEM analysis. Similarly, in the next column, there
are P-values related to all four hypotheses. We can see that P-values of electronic design and

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electronic sourcing are lower than 0.05, therefore, these two hypotheses has been accepted in the
PLS-SEM analysis. While, P-values of electronic negotiation and electronic evaluation are
greater than 0.05, therefore, these two hypotheses has been rejected from the PLS-SEM analysis.
In this reference, it is proved that electronic negotiation and electronic evaluation were rejected
and other two variables/hypotheses were accepted in PLS-SEM analysis. It means supply chain
performance significantly influenced by electronic design and electronic sourcing, and has not
been influenced by electronic negotiation and electronic evaluation.

5 Discussions
The four hypotheses were based on four certain variables and examined based on some adopted
constructs mentioned before. We found that electronic design and electronic evaluation showed
positive and significant impact on supply chain performance, whereas electronic negotiation and
electronic sourcing showed insignificant impact on supply chain performance. Theoretically, the
electronic negotiation and electronic sourcing should also bring the significant impact on supply
chain performance but they failed. The result connected to electronic negotiation and electronic
sourcing is contrary to the literature (Presutti, 2003; and Kim & Shunk, 2004). Different
eficiencies in methodology might be the reasons of such result.
In addition, the other two dimentions of electronic procurement showed significant and positive
impact on supply chain performance. But there was a difference amidst the relatie impact of
these two dimensions. Electronic evaluation showed the highest impact, whereas electronic
design showed least impact than other electronic evaluation on supply chain performance.
However, in a broader way, these results are consistent with past literature related to supply
chain management (Park, 2005).
The present research was led to know how electronic procurement subsidizes the supply chain
performance. Electronic procurement, also e-procurement, is known as a management function
based on some technologies which use to procure the supplies an organization needs. This
technological procurement function consists of four basic dimensions; electronic design,
electronic sourcing, electronic negotiation, and electronic evaluation (Croom, 2000; Kim &
Shunk, 2004); Presutti, 2003; Chang, Tsai, & Hsu, 2013). The data collected has also revealed
that all the four dimensions are essential for efficient e-procurement and for contributing in
supply chain performance. The empirical analysis has alos confirmed the importance of these

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dimensions in supply chain management and e-procurement and these e-procurement dimensions
contributes in improving supply chain performance. This result is consistent with a study
(Walters, 2008).

5.1 Conclusion
It has been analyzed that previous studies tested different strategies of procurement and supply
chain management and their influence on firm as well as supply chain performance but the
previous research studies don’t provide the empirical and theoretical insights about how
procurement practices are useful in deploying supply chain and procurement strategies
effectively and how to increase their influence on supply chain performance (supply chain
responsiveness). This present research has attempted to express the effect of four electronic
procurement practices on supply chain performance in Pakistani manufacturing sector. The four
practices of electronic procurement were electronic design, electronic sourcing, electronic
negotiation, and electronic evaluation (Chang, Tsai, & Hsu, 2013). In doing so, the present
research study introduced a theoretical framework of proposed matching among four electronic
procurement practices and supply chain performance.
In this regards, the present research has effectively covered the gap in the academic literature
related to supply chain and electronic procurement practices. Through the help of partial least
square and structural equation modeling (PLS-SEM), the present research study has
authenticated the impact of four electronic procurement practices on supply chain performance in
Pakistani manufacturing sector. In the results section the present research has revealed that
electronic design and electronic evaluation has positive impact on supply chain performance
while electronic negotiation and electronic sourcing has no significant impact on supply chain
performance. These results partially agreed as well as partially contradict with the findings of
previous research (Chang, Tsai, & Hsu, 2013).
For managerial suggestions, the present research found that the four dimensions of e-
procurement are essential factor which can reduce uncertainty in supply chain functions, increase
supply chain responsiveness, fulfilment ratio of orders, and improve SC performance finally
(Lin, Huang, & Lin, 2002).
Supply chain is known as all the connected activities from acquisition of raw material to end
customer. Integration among these activities is vital for increasing cooperation, SC association,

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and competencies. E-procurement is known as input function in a supply chain that develops
efficiency in other functions as well, therefore, understanding e-procurement and its drivers is
vital for the managers (Handfield & Nichols, 1999).
Managers ought to consider the electronic procurement implementation system from
administration because they can maximize the effectiveness of implemented process and also can
minimize the cost of the process. Lastly, it was also mentioned that the projected benefits of the
electronic procurement also depend on the size of the company.

5.2 Limitations
In the present research, some of the fundamental features of companies has not been examined
because we have obtained information from multiple industries. That’s why the administrative
category of participants has been found low.
Literature on supply chain management reveals that SC integration is very important factor for
approaching the best level of supply chain performance, but the present research has not directly
focused on SC integration. Hence, a separate research can be design to know how SC integration
can be enhanced.
The present research only focus on four functions of e-procurement while neglecting other
variables that might also impact supply chain performance.
In the present research, we used two dimensions to calculate the SC performance which are
intangible and tangible. Whereas, in future research, SC performance can be calculated with
other dimensions available in literature for example flexibility or agility.
Lastly, the present research has specified for organizations, future research can be designed to
investigate the individual performance with the same context of e-procurement (Swafford,
Ghosh, & Murthy, 2008; Lockamy & McCormack, 2004).

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