The Relationship between B2B E-Procurement Solutions and the Purchasing Portfolio: An Empirical Study

Introduction

Advantages of business-to-business (B2B) e-procurement make it an obvious choice for companies, either manufacturing-based or service-based. E-procurement has become an innovative strategy to enhance the business performance. Forrester Research has reported 10% growth in the e-procurement software market in 2014 (Bartels et al., 2014). E-procurement solutions enable purchasing organizations to find the right suppliers and purchase the right products at a fair price. The automated ordering process helps save substantial times and costs. Using e-procurement solutions also allows buyers to collaborate with suppliers throughout the purchasing process to cut the lead-time, reduce the probability of stock out, and lower the bullwhip effect. Last but not least, the supply chain visibility provided by e-procurement solutions enables both buyers and suppliers to track the movement of the items throughout the purchasing process in a real time manner, which helps control and save indirect costs (Wagner, 2013; Chang et al., 2013). E-procurement has attracted great attention from the academia and numerous studies have been conducted on benefits and risks of e-procurement (Ash & Burn, 2006; Bendoly and Schoenherr, 2005; Smith & Correa, 2005; Toktas-Palut et al., 2014; Trkman & McCormack, 2010), e-procurement adoption and impact factors (Abu-El Samen et al., 2010; Baternburg, 2007; Aboelmaged, 2010; Gunasekaran et al., 2008; Rashid, 2013; Wu et al., 2007), and e-procurement and supply chain performance (Dell, 1999; Presutti, 2003; Chang et al., 2013).

However, e-procurement platforms are not homogenous (Truong et al., 2012); and so are purchasing strategies (Wagner et al., 2013). In the supply management, a one-size-fits-all strategy will not work. Truong et al. (2012) classified B2B e-procurement platforms into three different types: third party markets, industrial sponsored markets, and private markets. These types of e-procurement have distinctive characteristics in relation to transactional costs and the buyer-supplier relationship. On the other hand, purchasing organizations may have different purchasing situations based on their supply needs, types of products, volume and size of orders, complexity of the purchasing process, and the importance of the products to their business objectives. The ultimate question would be: How do buyers choose a certain type of e-procurement solution based on their specific purchasing situation?

With a variety of e-procurement solutions available in the market, a successful supply manager needs to choose the right type of e-procurement depending on factors related to the company’s purchasing strategy (Wagner et al., 2013). While e-procurement has attracted a number of research studies, only a few of them actually addressed the effect of e-procurement types in their research models (Truong et al., 2012; Sharifi, 2006; Oh et al., 2011; Oh et al., 2014); none of which took the purchasing situations into account. The relationship between purchasing situations and types of e-procurement need to be examined to assist the supply manager to make the right sourcing decision.