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Gurgun, A.P.; Kunkcu, H.; Koc, K.; Arditi, D.; Atabay, S. E-Procurement Procedures in Construction Supply Chains. Encyclopedia. Available online: https://encyclopedia.pub/entry/55973 (accessed on 21 April 2024).
Gurgun AP, Kunkcu H, Koc K, Arditi D, Atabay S. E-Procurement Procedures in Construction Supply Chains. Encyclopedia. Available at: https://encyclopedia.pub/entry/55973. Accessed April 21, 2024.
Gurgun, Asli Pelin, Handan Kunkcu, Kerim Koc, David Arditi, Senay Atabay. "E-Procurement Procedures in Construction Supply Chains" Encyclopedia, https://encyclopedia.pub/entry/55973 (accessed April 21, 2024).
Gurgun, A.P., Kunkcu, H., Koc, K., Arditi, D., & Atabay, S. (2024, March 07). E-Procurement Procedures in Construction Supply Chains. In Encyclopedia. https://encyclopedia.pub/entry/55973
Gurgun, Asli Pelin, et al. "E-Procurement Procedures in Construction Supply Chains." Encyclopedia. Web. 07 March, 2024.
E-Procurement Procedures in Construction Supply Chains
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The growing interest in digitalization signals a need for technology-oriented supply chain operations in the construction industry. Electronic procurement (e-procurement) aims to convert traditional procurement approaches into web-based/online platforms.

supply chain performance online procurement digitalization construction industry

1. Introduction

There is a growing interest in information and communication technologies (ICTs)-based tools [1][2] as a result of the digitalization of the processes in the construction industry. ICT is the integration of hardware, software, and networks to improve the quality of information flow, promote effective communication, and eventually facilitate the decision-making process [3]. Robust ICT implementations can enhance the effectiveness of many organizational processes, including tendering and awarding, project monitoring and controlling, and material purchasing and storage [1][4]. Although various obstacles have often been encountered in the application of these technologies across the industry [5], successful implementations of ICT offer a chance to explore new models, procedures, and products, particularly in logistics and supply chain management [6].
Robust supply chain management initiatives have become increasingly important in the construction industry due to the industry’s project-based environment and multi-stakeholder process [7][8]. Collaborative relationships among the involved parties improve efficiency and quality in coordinating supply chain activities and improving the production process [7][9]. In other words, effective material flow management reduces cost overrun, time escalation, and quality defects [10]. However, it must also be noted that several adversities have been reported in supply chain management and have been recognized as a significant burden in achieving the targeted objectives in construction projects [11]. For instance, past research addressed problems such as project managers usually having significant concerns about inefficient payment practices, lack of trust between supply chain partners, and site layout/material handling issues that hamper supply chain performance [10][12][13][14]. Here, the setbacks in the improvement of supply chain processes can be attributed to three sector-related issues: (1) the temporary nature of construction projects [15], (2) variations in design and inadequate production processes [16], and (3) the multiple and different needs of the many stakeholders in construction projects [17]. Given the high level of uncertainty in the industry, innovative supply chain activities that introduce more connected, secure, transparent, and flexible solutions [18] may have a critical role both in facilitating supply–demand connections and in improving overall supply chain performance [14][19].
One of these innovative applications involves using electronic supply chain (e-supply chain) processes, which has drawn significant attention among researchers [20][21]. The e-supply chain can be defined as an integration of Internet technologies across all processes in the supply chain, such as production, planning, procurement, inventory management, distribution, and logistics [21][22][23]. Among a plethora of e-supply chain processes, e-procurement (that is, an electronically performed set of procurement activities), is an indispensable element [24] since issues encountered in traditional procurement might incur hidden risks that can pose threats to the subsequent processes of supply chain management [25]. E-procurement platforms present important opportunities for industry practitioners to minimize a wide range of issues, such as order errors, conflicts between stakeholders, and timeouts in material delivery, beyond traditional procurement operations [26][27]. Despite the strategic and operational advantages of electronic applications [28][29], industry stakeholders usually raise concerns about the use of electronic applications in supply chain management [30][31]. Indeed, companies report experiencing challenges relative to capacity, cost, quality, and customer service under competitive market conditions [32]. As a result, procurement systems may have a significant impact not only on cost and time but also on dispute propensity in construction projects [26][33].

2. The Role of E-Procurement in Digital Supply Chains

A supply chain is defined as a network of organizations that are involved in executing different operational processes and activities to add value (through upstream and downstream relationships) in delivering products and/or services to customers [34][35]. Having a robust supply chain network is very important for construction companies [36] since delivery on time, cost reduction, and managerial efficiency are ensured by effective supply chain practices [37][38]. Innovative technologies in supply chain management lead to rapid improvements in handling supply chains and allow companies to gain a competitive edge and satisfy the rising demands of customers [39]. In the digitalization era, the “e-supply chain” is regarded as a key innovative element of a company’s business model designed to improve supply chain management [23]. The concept of the “e-supply chain” has significant potential not only in ensuring decision making and process efficiency [40][41] but also in monitoring and controlling business operations [42].
Digital transformation and automation in the procurement process in the construction supply chain can be achieved via Internet-based technologies such as e-procurement or e-commerce [28][43]. As an inseparable part of data-driven supply chain management [44], e-procurement can be defined as a web-based application enhancing packages, tools, workflow systems, and procedures, aiming to automate procurement processes [45]. The Internet/web-based technologies can further provide companies and their supply chain partners with various opportunities and ways to develop new e-business models [46]. Implementations of e-procurement can enable faster delivery of orders, elimination of errors, and healthy exchange of information [47]. Hence, according to Atluri et al. [48], establishing web-based, data-driven, and technology-enabled practices in supply chain operations is likely to offer more responsive, agile, and resilient business models. Overall, Pourmorshed and Durst [49] claim that companies with digitalized supply chains can increase long-term organizational sustainability and continuity.

3. Past Studies on E-Procurement Implementation

There has been extensive research focusing on multiple aspects of electronic systems used to improve procurement processes. The impacts of e-procurement systems on supply chain performance were specifically investigated in many of the studies. For instance, Pattanayak and Punyatoya [14] employed structural equation modelling (SEM) to delineate the impacts of e-procurement and supply chain technology internalization on supply chain performance in the construction industry. The researchers found that e-procurement implementation had a significant impact on supply chain performance. A similar research question was also raised by Wijaya [50] to assess whether there is a positive association between e-procurement implementation and supply chain performance for small and medium-sized enterprises (SMEs). They found a positive and significant link between the two concepts and highlighted the role of transparency and effectiveness of the system in the successful implementation of e-procurement practices. For SMEs, Madzimure et al. [47] examined the relationships among diverse forms of e-procurement (e-sourcing, e-design, e-informing, e-negotiation, and e-evaluation), supplier integration, and tangible and intangible aspects of supply chain performance. The researchers discovered that e-sourcing, e-evaluation, and e-informing did not improve supplier integration within SMEs but increased overall supply chain performance significantly. Similarly, Chang et al. [51] investigated the contribution of e-procurement to supply chain performance (in terms of cost and capacity utilization) through partner relationships, information sharing, and supply chain integration. Other researchers underscored the positive impact of e-procurement on firm performance, in addition to supply chain performance [52][53].
Even though e-procurement is considered to be one of the instruments boosting firm performance, understanding the issues and/or hindrances of adopting e-procurement is essential for companies [19]. As in traditional procurement systems, practitioners may encounter issues such as data security, poor integration with existing systems, and transparency in supply chain operations [54]. The literature highlights that, unlike e-procurement in other industries, such as manufacturing, e-procurement in construction involves highly complex and challenging system operations [55]. While Eadie et al. [31] investigated how drivers and barriers to construction e-procurement vary from country to country, Eadie et al. [27] examined the drivers and barriers to e-procurement and their perceived differences between public and private organizations. In both studies, it was found that the importance of drivers of and barriers to an e-procurement system depends on the subjective perceptions of the individuals who participated in the study. Although past efforts examined e-procurement implementations in construction as well as their effects on the performance of the supply chain, none of the past studies ranked the barriers to e-procurement on the basis of project performance criteria such as time, cost, quality, and construction owner satisfaction.

4. Studies on Barriers to E-Procurement Adoption/Implementation

Several studies have been conducted to identify the barriers that hinder e-procurement implementation in the construction industry [27][30][56]. In one of the studies, Yevu et al. [56] performed a systematic literature review to discover the nature of the relationships among barriers to e-procurement in the construction industry and found that organizational/individual resistance to change, which was found as one of the critical barriers, was strongly associated with lack of trust and inadequate technical capability. Similarly, the findings by Isikdag [30], who investigated e-procurement barriers grouped into four categories, namely technological, organizational strategy, marketing, and human and process factors in the Turkish construction industry, also underlined the barrier of “lack of trust”. Yevu et al. [26] pursued a different research direction and compared barriers to and strategies for e-procurement in the construction industry in developed and emerging economies. The researchers concluded that practitioners in both developed and emerging economies had similar views on the importance of barriers related to unethical practices (electronic authentication issues), financial concerns, and technical capabilities.
Investment in e-procurement includes initial cost, maintenance cost, hiring cost, training cost, and Internet service cost [56]. The high cost of using e-procurement systems causes organizations to focus on cost rather than performance gains, which, in turn, leads to cost/benefit concerns [24]. Aduwo et al. [43] and Farzin and Nezhad [57] considered high investment costs to be a key economic/financial barrier. Other studies examining barriers to e-procurement highlighted a variety of issues, such as potential cyber-attacks on the supply network [28], security concerns [24], cultural attitudes [58], insufficient ICT infrastructure [43][55], and unreliable power supply [43][55].
Although multi-criteria decision-making (MCDM) methods can be powerful for evaluating several and sometimes conflicting criteria, such as benefits and/or barriers related to a particular issue, there have been only a few attempts to adopt MCDM tools in the pertinent literature. For instance, the ICT-related risks of e-procurement were ranked by Ramkumar [59] by means of a modified fuzzy analytical network process (fuzzy ANP). Similarly, Ramkumar et al. [60] identified the risks of e-procurement by using SWOT analysis, and they then used a modified fuzzy ANP to assess the risks of e-procurement in manufacturing industries. In another study, fuzzy analytical hierarchy process (AHP) [61] was used to rank the factors affecting green e-procurement through a cloud model in hospitals [62]. MCDM tools were not used in any study to rank e-procurement barriers by their relative importance in the construction industry.

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