E-Procurement, supplier integration and supply chain performance in small and medium enterprises in Gauteng Province

Abstract

The purpose of this study was to investigate the relationship between e-procurement, supplier integration and supply chain performance in Small and Medium Enterprises (SMEs) in the Gauteng Province of South Africa. Most studies on e-procurement, supplier integration and supply chain performance have focused on large companies. Current knowledge involving SMEs and e-procurement is still limited. This study, therefore, was conducted to fill this gap. With rapid changes in technology and globalisation of markets, firms, especially SMEs, need support to adapt to technology and make use of e-procurement functions to compete with larger firms. The paradigm used in this study was post-positivism. A quantitative research approach was adopted in this study. The target population for this study consists of all owners and managers who are currently employed in SMEs in the Gauteng Province, South Africa. To measure the study constructs, the survey material was designed in the form of a structured questionnaire. Participants were asked to complete three test instruments, namely, an e-procurement questionnaire, supplier integration questionnaire and supply chain performance questionnaire as well as their profile and SME profile. A total number of 350 questionnaires was distributed to the identified sample of SME owners and managers of which 294 responded and finally 283 questionnaires were usable and used for data analysis. The confirmatory factor analysis (CFA) was performed to establish scale accuracy. All measures conformed to acceptable model fit and composite reliability (CR) and revealed that the scales used in this study are reliable. The reliability results confirmed that all constructs reached the generally agreed upon minimum scale range for Cronbach’s alpha of 0.70. Finally, the structural model was tested; four out of seven hypotheses were supported. Validity in this study was achieved through face, content, convergent and discriminant validities. The principal finding of this study reveals that e-design has a positive and significant linear relationship with supplier integration. In addition, the results showed that e-sourcing has a positive and insignificant linear relationship with supplier integration. The insignificant relationship could be indicative of the fact that enterprises are not fully utilising the e-procurement systems in selecting their suppliers to effectively improve their collaboration with supply chain member firms. The findings further reveal that e-negotiation has a positive and significant linear relationship with supplier integration. The study’s empirical findings also indicate that e-evaluation has a negative and insignificant relationship with supplier integration. Further, e-informing was also found to have a negative relationship with supplier integration. The study additionally revealed that supplier integration has a positive and significant linear relationship with tangible supply chain performance. Lastly, the SEM findings show that supplier integration has a positive and significant relationship with the intangible supply chain performance. After reviewing the results, the conclusion was drawn that theoretically, this research has contributed to literature by providing additional information on supply chain management, e-procurement, supplier integration and supply chain performance. The results presented provide useful information about the relationship between e-procurement, supplier integration and supply chain performance in SMEs, with implications for supplier firms and other relevant stakeholders. These results contribute to the expanding body of knowledge on supply chain aspects. The current study added practical value by developing an integrative model which might be used by SME practitioners in South Africa. The study recommends that the collaborating firm owners and managers consider increasing the levels of supplier collaboration by having regular meetings, training workshops or courses and conferences to improve their supply chain performance. Furthermore, it is recommended that SME owners and managers must effectively implement e-design systems to increase the chance of integrating with their suppliers, thereby increasing the chance of improving performance as well as cutting supply chain costs. Areas for further research and limitations for this study have also been highlighted.