ROADBLOCKS TO ADOPTION OF E-PROCUREMENT (continued)

Last / Next  2009-02-07 03:21:31

EMPLOYEES
Employee buy-in is critical to the success of an e-procurement strategy, but many employees
are reluctant to participate. There are two categories of classic reasons that employees resist
changes in an organization: (1) resistance due to situational variables, and (2) resistance due to
social-psychological and personality variables.4 Some of the resistance due to situational
variables stems from an employee’s fear of losing position power or, more importantly, the position
itself. Other variables include reluctance to change habits, issues surrounding inertia, disruption
in the organizational culture and climate, experience with prior failed change efforts,
peer group pressure, and a lack of participation in the process.
Furthermore, resistance to change is often associated with an employee’s social-psychological
and personality variables, such as cognitive dissonance, risk aversion, lack of faith or
confidence, conservative outlook, or the “what’s in it for me” Machiavellian personality
characteristic.
As if the classic reasons for resistance to change were not enough, it has been suggested
that many employees also have an inherent fear of, or resistance to, technological advancement.
Alvin Toffler originally discussed this fear in 1970 and termed it “future shock.”5 His belief
is that, while a human being’s capacity to adjust physically, psychologically, and socially to
change is finite and quite limited, the pace of technological change is increasing and expanding
into more and more areas of individuals’ lives. Moreover, individuals are not asking for these
profound and endless changes; they stem from economic impulses of the marketplace rather
than from any kind of consumer demand. Future shock happens when people are no longer
able to cope with the pace of change. This fear can significantly affect productivity and seriously
hinder e-procurement efforts.
SUPPLIERS
The diffusion and adoption of e-procurement technology is impossible without the participation
and drive of suppliers. Diffusion theory explains “the flow of information, ideas, practices, products,
and services within and across cultures and subcultures, or markets and market segments.”
6 Adoption is “a component of the diffusion process [and] refers to an evaluation of the
results of a trial use of the innovation and a decision to continue using the innovation in the
future.”7 Little research exists about the role of hospitality suppliers in the diffusion and adoption
process, even though it is common knowledge that they occupy a critical position in the
procurement process.8 Unfortunately, it is also known that suppliers can hinder e-procurement
solutions due to their fear of “disintermediation” (the act of shutting out middlemen who are traditionally
involved in the process of selling something),9 and their unwillingness to let go of proprietary
computer systems in which they have invested heavily.
Hartmann10 raises the question of whether intermediaries are still needed in the purchasing
process in the Internet age. Hospitality intermediaries (primarily food distributors)
have traditionally put buyers (operators) and sellers (growers, manufacturers, or processors)
together. In today’s new markets, buyers and manufacturers
alike are looking to cut costs and communicate directly. Given this, intermediaries
have a real fear of disintermediation—either that their level of involvement in the procurement
function will lessen, or worse, that they will be eliminated from the supply chain.
Some suppliers are also reluctant to invest in new technologies. Many have already invested
considerable amounts of capital to develop what they thought would be their technological
opus and gateway to customers. Networks were constructed to allow supply managers access
to supplier inventories in an effort to streamline the procurement process and minimize the double
entry of orders and invoices that faxing required. These suppliers are now at the crossroads
of deciding whether to abandon these proprietary systems and jump on the e-procurement/emarketplace
bandwagon. In a situation analogous to employees’ fearing future shock, many
suppliers are apprehensive of investing in this technology because they fear its impending
obsolescence.
ORGANIZATIONS
Adoption hindrances may be due to organizational issues, such as problems with product
identification standardization, reluctance to work with third-party dot-com companies (Web
companies that develop software, such as e-procurement applications), a lack of resources to
monitor effectively an e-procurement solution, and possible feelings of depersonalization.
The issue of product identification standardization is one of the primary bottlenecks in eprocurement
adoption by hospitality operators.11 For years, the foodservice industry in particular
has been pushing for the development of identification standards on commercial foodservice
products. In an attempt to address this issue, reduce costs, and improve overall supply
chain effectiveness, members of the International Foodservice Manufacturers Association and
the International Foodservice Distributors Association, along with ten other large foodservice
industry associations, convened in 1994 and developed the Efficient Foodservice Response
(EFR) initiative.12
Although this initiative shows great potential for reducing organizational costs associated
with the purchasing function, it has been hindered by the inability of the foodservice and other
members of the hospitality industry to develop common terminology for products and standard
bar code identifiers. Because of this, organizations e-procuring a common produce item, such
as broccoli, find that it requires considerable effort to ensure that all bidding suppliers can interpret
an organization’s identifying codes. Even within a hospitality organization, many units may
not use the same terminology to identify or categorize broccoli. Some may categorize it under
produce, others under vegetables. Further, few operations use bar codes on these types of
fresh produce products to track them.
In addition to standardization issues, organizations still harbor concerns about doing business
with third-party dot-com companies. Some firms fail to see the benefits that e-procurement
can bring to the organization, while other firms continue to have concerns with the security of
transactions, the risks inherent in sharing critical information, and the added costs of switching
systems.13 Further, many hospitality organizations are just too small and lack the necessary time,
personnel, and equipment to properly monitor an e-procurement solution.
Finally, organizations also have to deal with the issue of depersonalization in the channel of
distribution.14 Many supply managers believe that online purchasing will depersonalize the
process. Part of the relationship with vendors is personal service: Managers are asking themselves,
“Who will be there for me after hours when I have an emergency?”
THE FUTURE OF E-PROCUREMENT
It is clear that e-procurement models are the future of hospitality purchasing. Although some
have argued that reverting to private networks will eliminate many of the risks associated with
public B2B e-marketplaces, the use of the Internet is hard to resist.15
The challenge is not to revert to a system that limits communication and severely impedes the
evolution of the procurement process. Rather, hospitality operators and suppliers should embrace
a free market where even the smallest operators can realize substantial benefits in product selection,
price, and use of their time, while suppliers have access to thousands of potential customers
and can take advantage of cost efficiencies associated with electronic transactions.
To overcome the roadblocks discussed above, some strategies that might resolve some of
the aforementioned issues are outlined below.
EMPLOYEES: COMMUNICATION IS KEY
Operators should discuss with their employees the impending implementation of an e-procurement
model. Care should be taken in identifying concerns regarding e-procurement, and
all employees in the purchasing function should be involved in the implementation process
through focus groups and committee membership.
SUPPLIERS: BUYERS ARE DRIVING SUPPLIER ADOPTION
Understand that buyers are driving suppliers’ pace of technological development. Many hospitality
operators will no longer do business with suppliers who do not have the ability to connect
to their e-marketplace. Simply put, keep up with the technological needs of your customers, or
they will go elsewhere. In the future, it is thought that the distinguishing factors between hospitality
suppliers will not be so much the products they sell (the major products are already very
close in quality and cost), but the services they provide and the technology they use.
ORGANIZATIONS: STANDARDIZATION ISSUES
MUST BE RESOLVED
Hospitality operators will continue to experience markets that are more competitive, slimmer
profit margins, a shrinking labor force, and less time to make key managerial decisions.
E-procurement models will help hospitality operators to overcome these obstacles and ultimately
contribute to the success of their businesses. However, the first step is to develop a system
of identification standards where the term “broccoli” and its associated identification code are
universally understood. This can be easily accomplished through database synchronization and
by following standards, such as those provided by the EFR initiative .


TAG: E-PROCUREMENT

 

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