Cost Savings in Private Sector Procurement

The research is focused on cost savings into the private sector procurement in terms of the organizational culture, responsibilities of the supply chain along with involvement of the organizational activities. The mission of procurement function is to manage delivery of goods as well as services in public and private sector organization. It is identified that there are various innovative aspects into the private sector procurement. The private procurement is being characterized by means of high level of public disclosure and high reliance on bid processes as compared to private sector organizations.

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Salford Business School
Cost savings in the private sector procurement
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A dissertation is submitted in partial fulfillment of the requirements
of the University of Salford for the degree of MSC Procurement,
Logistics and Supply Chain Management
March - May 2019

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Programme& Year MSC Procurement, Logistics and Supply Chain Management (2019)
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Name (print) Olugbenga Apetor Joseph Date: May 2019
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Abstract
The research is focused on cost savings into the private sector procurement in terms of the
organizational culture, responsibilities of the supply chain along with involvement of the
organizational activities. The mission of procurement function is to manage delivery of goods as
well as services in public and private sector organization. It is identified that there are various
innovative aspects into the private sector procurement. The private procurement is being
characterized by means of high level of public disclosure and high reliance on bid processes as
compared to private sector organizations. The finding of this study is focused on procurement
process in the private sector to achieve the cost savings. Cost savings theories are also analyzed
in this thesis paper. The selected data collection method for this study is primary where the
data are collected through survey methods. Quantitative data analysis is performed by means
of reliability analysis to check validity and reliability of collected raw data. From the data
analysis, it is found that the procurement process is required sufficient control to ensure
maverick spending is eliminated. The procurement plan will help to make better procurement
planning. The procurement team performance is high to boost private sector organization’s
performance. It is found that sharing of past data will help the organization in purchasing and
lead to cost savings.
Keywords: Cost savings, procurement, private sector organization, maverick spending,
purchasing.

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Acknowledgement
Conducting this research has been one of the most enriching experiences of my life. The
contribution of this research to enhance my knowledge base and analytical skill has been
paramount. It gave me the opportunity to face challenges in the process and overcome them.
This would not have been possible without the valuable guidance of my professors, peers and
all the people who have contributed to this enriching experience. I would like to take this
opportunity to thank my supervisor Prof Stuart Wallace for the constant guidance and support
provided to me during the process of this research. It would not be justified if I did not thank
my academic guides for their important and valuable assistance and encouragement
throughout the research process. I would also like to thank my friends who had provided me
with help and encouragement for collecting primary data and valuable resources. Finally, I
would like to thank the professionals from the industry who have participated in the research
survey and provided with valuable inputs into the subject. The support of all these people has
been inspiring and enlightening throughout the process of research in the subject.
Heartfelt thanks and warmest wishes,
Yours Sincerely,

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Table of Contents
Abstract............................................................................................................................................2
Acknowledgement...........................................................................................................................3
Chapter 1: Introduction...................................................................................................................8
1.1 Background of the study........................................................................................................8
1.2 Aim of the study.....................................................................................................................8
1.3 Objectives of the study..........................................................................................................9
1.4 Research questions................................................................................................................9
1.5 Problem statement..............................................................................................................10
1.6 Rationale of the study..........................................................................................................10
1.7 Structure of the study..........................................................................................................11
1.8 Chapter summary................................................................................................................12
Chapter 2: Literature Review.........................................................................................................13
2.1 Introduction.........................................................................................................................13
2.2 Procurement process in the private sector to achieve cost savings...................................13
2.3 Challenges for cost savings for the sustainability in private sector....................................18
2.4 Benefits of transparency in public procurement.................................................................19
2.5 Summary..............................................................................................................................22
Chapter 3: Research Methodology................................................................................................23
3.1 Introduction.........................................................................................................................23
3.2 Research strategy................................................................................................................23
3.2.1 Justification of selecting appropriate strategy.............................................................24
3.3 Research design...................................................................................................................24

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3.3.1 Rationale for choice of methodology...........................................................................25
3.4Research process..................................................................................................................26
3.4.1 Data collection procedure............................................................................................26
3.4.2Data analysis techniques...............................................................................................27
3.5 Sample size and sampling....................................................................................................27
3.6Ethical considerations...........................................................................................................28
3.7 Research limitations............................................................................................................28
3.8 Summary..............................................................................................................................29
Chapter 4: Data Analysis and Findings..........................................................................................30
4.1 Introduction.........................................................................................................................30
4.2 Quantitative Data Analysis..................................................................................................30
4.3 Discussion on the findings...................................................................................................48
4.4 Summary..............................................................................................................................51
Chapter 5: Conclusion and Recommendations.............................................................................52
5.1 Conclusion............................................................................................................................52
5.2 Linking with the research objectives...................................................................................52
5.3 Recommendations...............................................................................................................55
5.4 Limitations of research study..............................................................................................55
5.5 Scope of further study.........................................................................................................56
References.....................................................................................................................................57
Appendix........................................................................................................................................63
1. Questionnaire........................................................................................................................63

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Table of Figures
Figure 4.1: Gender.........................................................................................................................30
Figure 4.2: Age group.....................................................................................................................31
Figure 4.3: Experience...................................................................................................................32
Figure 4.4: Procurement process includes sufficient control........................................................33
Figure 4.5: Procurement plan makes better procurement planning............................................34
Figure 4.6: Procurement process requires long term agreement.................................................36
Figure 4.7: Procurement team boosts organizational performance.............................................37
Figure 4.8: Past performance data helps in purchasing................................................................39
Figure 4.9: Outsourcing of supplier improves cost savings...........................................................40
Figure 4.10: Combination of centralized and decentralized procurement...................................42
Figure 4.11: Training for the staffs help to achieve savings..........................................................43

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Table of Tables
Table 4.1: Gender..........................................................................................................................30
Table 4.2: Age group......................................................................................................................31
Table 4.3: Experience.....................................................................................................................32
Table 4.4: Procurement process includes sufficient control.........................................................33
Table 4.5: Procurement plan makes better procurement planning..............................................34
Table 4.6: Procurement process requires long term agreement..................................................35
Table 4.7: Procurement team boosts organizational performance..............................................37
Table 4.8: Past performance data helps in purchasing.................................................................39
Table 4.9: Outsourcing of supplier improves cost savings............................................................40
Table 4.10: Combination of centralized and decentralized procurement....................................42
Table 4.11: Training for the staffs help to achieve savings...........................................................43
Table 4.12: Summary output of regression analysis conducted for hypothesis...........................45
Table 4.13: ANOVA table of regression analysis conducted for hypothesis.................................45
Table 4.14: Coefficient table of regression analysis conducted for hypothesis............................45
Table 4.15: Summary output of regression analysis conducted for hypothesis...........................46
Table 4.16:ANOVA table of regression analysis conducted for hypothesis..................................46
Table 4.17: Coefficient table of regression analysis conducted for hypothesis............................46

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Chapter 1: Introduction
1.1 Background of the study
The research study is based on impact of cost savings in the private sector procurement.
Fernandes and Vieira (2015) stated that the business organization and partners are focused on
procurement strategies to diminish environmental foot print of the procurement as well as
supply chain activities. The partners of supply chain are concerned to design as well as
implement sustainable procurement guidelines focused on ecological issues. The possible input
of the private procurement towards sustainability is reflecting on size as well as impact of the
private sector in terms of the proportion share of GDP of the nation. Vaidya and Campbell
(2016) discussed that managers into the public agencies are facing legal and procedural
constraints. The internal furthermore external stakeholders have influence on achievement of
the sustainability plans. The study in development of procurement in the private sector is
included investigation of drivers, barriers and techniques for cost savings in the private sector
procurement.
Seidman and Atun (2017) argued that the procurement manager is positioned as they
positively and negatively impact the environmental as well as social performance throughout
service specifications, selection of supplier and evaluation of service provider’s performance.
Arena et al. (2015) discussed that there is relevancy to drive and guide sustainable procurement
proposals. The paper presents significant argument of the sustainable procurement as an idea
and practice to carry an implication in executing the procurement processes. Patrucco, Luzzini
and Ronchi (2016) observed that sustainable procurement is obtained a higher degree of
salience into the policy surrounds internationally. Sustainable procurement is development to
acquire of supplies in addition to services from the trader to present mixture of cost as well as
benefits to meet with goods and services requirements.
1.2 Aim of the study
Cost savings is one of the key significant motives to create procurement services for the
private sector organization. The research study will discuss key benefits of the procurement

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processes and highlight barriers to effective procurement. The aim of this study is to identify
importance of cost savings in the procurement process in private sector in Nigeria.
1.3 Objectives of the study
The private sector organization is facing an increasing pressure to reduce the cost as
well as improve the financial plus operational performance. The contracting process is
presented challenges to the organization. It requires identifying contractual issues which cause
damage to the loss of business revenue, inflated costs and unmanaged risks. Following are the
objectives of this research study such as:
 To identity the different challenges for cost-saving sustainability in private sector
procurement.
 To identify how effective negotiations are being carried out in private sector
procurement.
 To identify different techniques for cost saving in private sector procurement
 To consider stakeholder’s views in the private sector procurement on the benefit of
having transparent bidding process.
1.4 Research questions
The purpose of private sector organization is to make profits in sustainable way. Private
sector procurement plays a key role to achieve recurrent profits. One of the key significant
factors to achieve business result is laid to cost effective procurement as well as making of cost
savings. The purpose of procurement savings is constrained down the procurement prices,
progressed over supplier terms in addition to reduce the prices of products. Following are the
research questions:
1. How effective the procurement process in the private sector to achieve cost savings?
2. What are the challenges for cost savings for the sustainability in private sector
procurement?

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1.5 Problem statement
Procurement is part of fiscal policies directed towards achievement of effective public
financial management. As an economical instrument, planned as well as implemented has
potency towards contribution to realization of improving mobilization of resources, promotion
of debt sustainability as well as management of debt. It enhances nationwide income
generation plus decrease economical in addition to financial dependency. The private sector
organization faces challenges regarding cost saving sustainability throughout adverse business
conditions like as recession and inflation where the prices of the commodities, technologies and
labour fluctuate. Removal of unnecessary business cost is also a big beneficial for the private
sector. The prime drawback related to this thesis paper is that it only argues the characteristic
of cost-saving sustainability from the point of view of the internal stakeholders such as the
project managers.
1.6 Rationale of the study
The rationale of the topic selected for this thesis paper is impact of cost savings in the
private sector procurement. A sustainable procurement is implemented into the private sector
which helps to cost the cost, shorten the project timescale, enhance relationships with the
project stakeholders, increase in sales and reduces the project risks. There are benefits to the
organization due to adoption of the sustainable procurement policy. The benefits are control of
cost, improve internal plus external standards throughout performance assessments and
comply with the environmental regulations. There is building of sustainable supply chain for the
future of private sector procurement. There is existence of the procurement strategy and value
of the research outcomes which can improve social, environmental in addition to economic
impacts. In the private sector, compliance with both international as well as national
sustainability standards plus regulations is implemented in the organization. The research topic
helps to better analyze the barriers of cost savings along with its benefits in the private sector
procurement. Therefore, this study will help to effectively evaluate the sustainable sources of
the supply of procurement in the country.

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1.7 Structure of the study
Chapter 1- Introduction:The first chapter provides overall introduction of the
procurement processes, aim and objectives of the research study. This chapter provides the
background of the study with overview of the procurement practices plus cost savings
opportunities in the private sector procurement process. The research questions are also
provided in this section so that the reader can understand the subject related to the paper. This
section helps to improve understanding of chosen research topic.
Chapter 2- Literature review:The second chapter provides review of existing literature
on the selected topic. It provides a discussion of the cost savings from the supply chain
management techniques, procurement strategies and different techniques for cost saving in
private sector procurement. In this section, models are ideas are also provided which help the
researcher to understand the topic properly. By means of literature sources, the researcher
tried to evaluate importance of cost savings in private sector procurement.
Chapter 3: Third chapter provides the methods and techniques which are used to collect
data using questionnaire method and interview method. The sample of the respondents is
selected for the survey based on relevance to research focus and purpose. The selected
research methods help to guide the researcher towards path that can improve study on
selected topic. The research techniques are also monitored with proper justifications.
Chapter 4: This chapter provides an analysis of the data and research results from the
collected raw data. The data are collected through participant’s responses and the collected
data are analyzed by means of regression analysis.
Chapter 5: This chapter describes the findings from the data analysis with discussion of
the research results. It provides detailed review of the entire findings from the participant’s
responses for better analysing the selected questions related to chosen topic.
Chapter 6: The final chapter describes the findings of the research questions,
recommendations as well as conclusion of based on entire research study. Based on selected
objectives, the researcher tried to regulate the research level.

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1.8 Chapter summary
It is summarized that different types of cost savings are important for the private sector
procurement as it helps the business organization to reduce the cost and make competitive
advantage over the private organizations. The selected research questions help to make
recommendations regarding ways of sustainability in addition to cost savings into the private
sector procurement. The main purpose of this study is to focus on the management skills of the
project like ability of negotiation; abilities can have a significant impact on the growth along
with productivity of the private sector organization. It is summarized that cost savings is the
business perspective which are increasing used in the public sector industries. The mainly
significant benefit of this paper is that the data which are obtainable all focused on critical
examination in addition to the data are occupied from consistent sources. The research study is
based on collecting data for examining the causes of the project delay; assess effects of act on
the cost savings in addition to expenditures. Throughout the procurement process, shifting of
the customer’s expectations, new channels for the customer’s communication, involvement of
the third party as well as digital transformations are main recommendations for the strategic
cost reduction in the private sector organization. In this section, the private procurement
principles are also to be discussed.

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Chapter 2: Literature Review
2.1 Introduction
In this chapter, it discusses about effective procurement process which is the top most
priority in the public sector industries. Agarchandand Laishram (2017) agreed that there are
various categories of cost which are required in public sector industries like overhead cost and
maintenance cost. Badiand Pryke (2016) contrasted that as funding of the project is an overlong
process, therefore it is required to maintain control over various cost from the initiation phase.
This study will also highlight potential barriers to effective procurement process and how those
are overcome by the procurement manager which will lead to unlock the hidden cost savings in
the project procurement process. This literature study is based on the research questions of
how effective the procurement process in the private sector to achieve cost savings and
challenges for cost savings for the sustainability in private sector procurement.
Buniaminet al. (2016) discussed that importance of bidding process regarding managing
of external stakeholders of the organization are suppliers those are delivering raw materials
and teams of sales and marketing. In this paper, the researchers are focused on management
skills of the project like negotiation management which provides an impact on growth in
addition to productivity of the public sector organizations. The limitation of literature review is
that it is not providing any case study to understand real time applications of bidding processes.
2.2 Procurement process in the private sector to achieve cost savings
Hanson (2015) agreed to discuss how to achieve cost savings from the private sector
procurement process. This study tried to demonstrate proven techniques that can achieve cost
savings from the procurement management and provides information on how to apply those
processes in public sector organizations. Most of the business professionals have knowledge to
procurement management, still they are finding difficulties to achieve actual cost savings from
this concept. Meehan and Bryde (2015) disagreed that procurement process is part of supply
chain management and this process can follow unique techniques to attain cost savings.
Patrucco, Luzziniand Ronchi (2016) argued that procurement process is well structured which

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appeared to be complex and hide inefficiencies. This section will discuss the procurement
processes and cost of savings opportunity.
Molavi and Barral (2016) agreed that the companies are examining the hidden costs for
the transactions. Testing of the transactional cost plus the performance based specification
(PBS) theories into the private sector shows real cost savings which are delivered from proper
process changes. The theories regarding decisions are taken at proper levels and there is
reduction into communication plus documentation by use of performance based specification
and also supported. Bretschneider and Hsueh (2018) contrasted that after sourcing, the client is
hoped that the cost of project management is lower than in-house cost. The client is not aware
of the transactional costs prior to the outsourcing and therefore they are not aware of current
costs. Using this theory, it would allow the project manager to match authority requirements
for controlling the sub-contractors which lead to improve quality of the project.
Apart from this theory, there is transaction cost theory which is based on formulation of
the public policies, especially in policies designed to the public sector and resulted in improper
policies. Patrucco, Luzzini and Ronchi (2016) contrasted this theory with PBS theory and
analyzed that transaction cost theory improves stability of the markets. This theory recognizes
that it is unlikely to become economical optimal to get perfect knowledge. Extra cost of extra
information is weighed against extra benefits. The modelling which is associated with this
theory is static and minimalist in the nature.
Step 1: Recognition of need
The public and private sector organizations are buying things to fulfil requirements of
the customers. The organization is used materials to manufacture a particular product, but
sometimes it is possible that the organization has not enough materials in the stock to produce
the product. Prier, Schwerin and McCue (2016) compared that the public sector organization is
not performing a task cost effectively as service provider such as courier service. In this stage,
the user and client has to decide either they have to do for manufacturing or outsourcing.
When the client will go for manufacturing, then a business case analysis is required. Roman
(2017) contrasted that the procurement professional provides valuable information regarding

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cost details, legal problems, guidelines and others to the client. Manufacturing resource
planning is a process in this stage which can save money, time, warehouse cost and production
time. In this stage, the client has to take decisions regarding outsourcing of their product
(Ruparathnaand Hewage 2015). In case of outsourcing, it contributes to cost savings and causes
increase in business efficiency. In this stage, the client has scope to identify the cost savings
following activities:
1. Identification of need at right time. Sometimes, the purchaser requester can raise a
request of purchase later, then the buyer can fail to achieve the cost savings as he has
to process the purchase in short period of time (Uttamand Roos 2015).
2. The purchase requester can involve in cost savings. The price of commodity items can
vary in year. In this particular case, if the requester can identify need at least for 1 year
and buy the items in off pick season, then they should get goods on half of its actual
price (Venkateshand Luthra 2016).
Step 2: Description of the need
Young, Nagpal and Adams (2016) agreed that when a need of the product and service is
determined, then it should be done in written form. The written description is a need which is
stated as specifications. It is important as it can serve to communicate requirements of
purchase to the purchasing department as well as supplier. This specification is also included
acceptance criteria. Basuet al. (2017) disagreed that acceptance criteria indicates conditions
that the product and services should meet to accept and pay for. It should be measurement of
product, level of its performance plus results of provided services. Good planning and
description of need before undertaking the procurement process is a key contributor towards
project success. Ruparathnaand Hewage (2015) mentioned that significant procurement
process is a strategy which lead to better value of the money, higher quality of the project plus
better service delivery. It can also improve opportunities for the sustainable procurement.
Step 3: Investigation and selection of potential supplier

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In this particular phase, the buyer identifies the bidder. Before performing the
procurement process, the buyer should find out about the supplier those are going to approach
and deliver products for their business operations. Bag (2016) disagreed that the professional
buyer should go for manufacturer and authorized distributor for getting right supplier. When
there is a chance to get economics of scale, then the buyer should go to manufacturer for
getting discounted price. The buyers can circulate pre-qualification questionnaire to get right
supplier which will lead to save time and cost. Preparation of bidding documents is a process to
deliver supply of right goods and services at proper place and time. Another significant step to
prepare the bidding document is setting the evaluation criteria. Ashworth and Perera (2015)
agreed that some of the products will lower initial cost has higher maintenance cost. Therefore,
life cycle costing is done to make selection of contractors and it will reduce the total cost.
Step 4: Preparation and issue of purchase order
After selection of the supplier, now next phase is issue of contract. The contracts are
accomplished as per terms as well as conditions which will set in bids plus negotiations. Stritch,
Bretschneiderand Hsueh (2018) discussed that the buyer should issue purchase order and
agreement is settled down among the bidder and client. Framework agreement is used in the
public sector organization by which they agree to purchase estimated quantities for same years.
Hawkinset al. (2015) agreed that framework agreement will help to achieve cost savings. Due to
economics of scale, the suppliers are offering best prices of the products and services. For
longer period of time, the buyer is not required to run full tendering processes that can lead to
save time and also cost of management. There is also minimization of duplication of work. The
buyer is required to review the price in each year and at particular time. Due to materials and
input cost, there is a decrease in price and the buyer should lose cost savings if they have to pay
same price.
Step 5: Follow-up the order
According to Stritch, Bretschneiderand Hsueh (2018), contract management is a stage
for implementation of project work, delivery of the goods as well as completion of the entire
project work. The contract management is being guided by means of terms and conditions

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which are outlined into the contract documents. The buyer has followed with supplier on
regular basis. In some of the cases, it is required to get approval from the supplier. Hayden
(2016) discussed that the supplier has to buy goods for the buyer. In that case, the buyer gives
suggestions to vendors to get better price. The cost will require to bear by buyer, therefore it
contributes to cost savings. When there is delay in work of supplier, additional hidden cost has
bear through the buyer. By management of the contract, the buyer can make control over the
cost besides can bring cost savings.
Step 6: Processing discrepancies and rejections
Fleming (2019) examined that after completion of delivery of products and services, the
buyer can investigate whether the delivery is done as per the contract or not. The public sector
organizations are conducted pre-delivery inspections. When the buyer can arrange pre-delivery
inspections as well as receives goods after getting the release note, therefore it is safe for the
buyer to get additional cost. Myerson (2018) compared that good negotiation is required for
discrepancy. When the supplier is failed in inspections, then non-compliance as well as supplier
can correct for faults. The supplier is required to bear extra inspection cost. In case of delay, the
supplier is required to offer backup plan.
Step 7: Auditing and closing transactions
After completion of above mentioned procurement processes, the buyer can process for
the transactions. At the time of doing the payment, the buyer can audit entire transactions,
whether the suppliers are proving goods and services as per the contract. After getting approval
from the client, the buyer can release the payment of the goods and services. The buyer can
hold percentage of the payment as the retention cost (Papke-Shieldsand Boyer-Wright 2017). It
makes sure that liability from side of supplier and secures the buyer. Holding money provides
an impact on the fund.
Step 8: Maintenance of records
Sorunke, Omojolaand Adeleke (2016) agreed that the public sector organizations
perform closing of contract at the final stage of procurement process. The procurement

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department can gather lessons from all the phases and then provides feedback to the business
organization. The buyer can share experiences in addition to achievements of procurements to
the internal staffs. They can figure out the cost savings which can achieve in the future.
2.3 Challenges for cost savings for the sustainability in private sector
Arenaet al. (2015) discussed that cost reduction is a top concern in the private sector
organizations at the time they are handling technologies, services and distribution channels
which can boost cost plus complexity. Fernandes and Vieira (2015) agreed that there are
different challenges that the private sector faces regarding cost savings of sustainability. The
challenges are regarding recession and inflation where the commodities cost, technologies
furthermore labor are fluctuated. Less production of goods and services can lead to lower GDP
and there is also lower average of incomes. Patrucco, Luzziniand Ronchi (2016) argued that in
recession, there is less demand of the buying fixed assets. The key significant purpose of
procurement process is to reduce the cost for the purchased goods as well as services.
In most of the developing countries, they are facing challenges of cost savings to achieve
economic growth. Due to economic crisis, it is required for the government to use fund and kick
start growth into the economy and also improve productivity. Economic pressure around the
entire world is causing the organization to put it on negotiators. Venkateshand Luthra(2016)
stated that both the buyers and suppliers are asked to cut the cost as well as there is an
increase in efficiencies. The key challenges of procurement negotiation are as follows:
Time pressure: The public sector organizations negotiators are straightforward whether
both the parties have to reach an agreement in short period of time. It can lead to a strict
deadline where the party can finish the work. Those circumstances can lead to negotiate under
time pressure. Seidman and Atun (2017) discussed that negotiations under the pressure can
lead to strategic mistakes and unwanted concessions. It also leads to bad agreements. Vaidya
and Campbell (2016) determined that there are two types of pressure such as deadline and
time cost. Negotiation rule is that there is 80% concessions and 20% of time availability.
Powerful suppliers: In the public sector organizations, the balance of powers are shifted
from side of buyers to suppliers. The buyer is in difficult position as they contain only one

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supplier. De Araújoet al. (2017) stated that it is complex and risky to change the suppliers in a
mid-time unless there is change in the procurement requirements. Small orders are not
important to large vendors, therefore there is a disadvantage of purchaser and supplier
relationship. In order to save the cost, it is required to have stronger relations among suppliers
and buyer/purchaser.
Digital procurement trends:Mwangi, Kiarieand Kiai (2018) stated that the procurement
organizations are inundated with larger amounts of data. It is required that the procurement
leaders can understand what data are required, employ tools to analyze those data, employ the
negotiators with knowledge and procurement skills and understand informed decisions. At the
time of determining effective procurement companies, the crucial factor is come down to the
digital technology. Nojavan, Zareand Mohammadi-Ivatloo (2017) argued that in most of the
organizations, there is digital transformation of procurement in data analytics, artificial
intelligence and others. The digital procurement comes in capability to outpace as well as
outperform the business that are not taking advantage of the digital technology. According to
Agarchandand Laishram (2017), procurement negotiation functions are relied on big data as
well as data analytics to drive insights and decision making. Without using advanced
information system, capability in addition to agility is not possible. With digital procurement
capabilities, it takes three-five years to collect data, develop system, procurement processes
and build analytics, artificial intelligence. Building of digital procurement organization also
requires a huge amount of cost investments. The benefits of digital procurement is substantial.
2.4 Benefits of transparency in public procurement
Testaet al. (2016) highlighted that the resources can deliver desired products to the
customers. Removal of unnecessary costs is an advantage for the public sectors. Reduction into
working capital as well as increase in usage of asset utilization are two of the aspects related to
cost savings sustainability. Khamidullinaand Puryaev (2016) discussed that the main drawback
of this paper is that it discusses about the aspects of cost savings in private sector procurement
from point of view of project manager. Weerasingheet al. (2016) stated that in most of the
public sector organizations, cost savings is considered as huge business perspective. Benefits of

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transparency into the public procurement is linked to tangible results like saving of time as well
as money. Venkateshand Luthra(2016) determined that transparency is a role to deter culture
and create conditions for the open competitions. Yu (2018) presented bias towards initiatives
which can render direct impact in addition to efficient to measure. There are various
opportunities to achieve cost savings from procurement process which was already identified in
section 2.2. The benefits of transparency is achieved throughout change into the cultural
mindset of the public sector organization. The workforces are required to understand that what
they want in ad-hoc way. The business organization is required to become effective and
sufficient control for ensuring maverick spending which is eliminated (Hawkinset al.2015). The
client is preferred for avoiding maverick spending as it can kill time for core jobs.
Warner (2017) stated that the public sector organization’s procurement processes are
ad-hoc as well as there is lack in transparency. While ad-hoc is not a best way to buy goods as
well as services. The prices of those goods and services are based on the individual those are
purchasing from the organization. The organizations are looking away from ad-hoc approaches
and combine for similar orders which can achieve better costing. Designed procurements are
also ensured single orders across the business organization which are made at similar time.
Introduction of e-procurement process is better as the user can share data contains standard
and the buyer can also combine it based on product specifications. Mazijn (2016) discussed that
the employees are buying products as well as services from pre-agreed suppliers. It particular
approach can create online shop, maximize the compliance and make sure about best value
from negotiation contracts. The buyer will go for framework agreement with agreed suppliers.
Diamantopoulos (2016) argued that sometimes there is risk that the supplier is not able to
deliver services and goods on time. In this particular case, the buyer is required to issue a
framework agreement with more than one supplier to avoid any issue related to unavailability.
According to Igarashi, de Boerand Michelsen (2015), the individuals into the organization can
choose to buy products from preferred sources. There is also a way to use technology for
guiding the users to get best deals which have been negotiated on their side.

21
Long term agreement is not the best tool as price factor, it is not possible to keep fixed
due to change into the digital technology and add on cost. In order to do capital investments,
the objective is to make sure about best value of money (Varajão, Colomo-Palaciosand Silva
2017). In that case, off contract is most appropriate. Long term contracts with the choices of
exit condition with the service provider monetarily benefits the purchaser. The purchaser needs
to lock the service provider for the supply duty and the cost in the uncertain condition. For the
items with larger amount of vulnerability in volume and cost will give more budgetary
advantage than that of stable interest items (Ogundeet al. 2017). When there is fallen of
demand as well as decrease in price radically than that of expected, at that point long term
contract would have risk of losing monetarily. All things considered purchaser necessities to
practice the exit clauses when the agreement was finished with keeping arrangement for that.
It depends from item to item and administrations to administrations. According to
Dhurandharet al. (2015), by building as well as investigating into performance procurement
terms, the procurement organizations are lead to boost the performance. Ajayiet al. (2017)
argued that most of the organizations are improving procurement performance as the function
is not provided responsibility to lead and create a business value. Top quality spends an
analytics technology which can aggregate purchasing data as well as provides the executives
with insight in cost savings opportunities plus compliance concerns. Leading the procurement
organizations can communicate regarding what the functions are delivered to the business
organization in terms that the business can understand by using the financial organizations. The
buyer as well as client can get interest to know the data of the purchase (Rendonand Rendon
2015). It is possible that the e-procurement system is used to perform the procurement of the
business organization to make improvement in the productivity in addition cost savings.
In this paper, the researchers had provided recommendations on sustaining and
improving the cost savings procedures into the public sector organizations. Young, Nagpal and
Adams (2016) argued that shift in expectations of customers, new medium of communication
between stakeholders and customers, digital transformations and finally involvement of third
party in border operations are recommendations for strategic reduction in cost for
procurement. Venkateshand Luthra(2016) mentioned that strategic partnership with the

22
suppliers is one of the way to sustain and improve cost savings into the public sector. The most
significant advantage of this literature study is that it provides critical analysis of the selected
research objectives and questions and the data are taken from reliable sources (Vaidya and
Campbell 2016). The main limitation is that it is not focused on importance of transparent of
the bidding processes ensures to protect confidential information about business. The public
procurement principles like accountability in addition to integrity is not discussed in this
particular literature study.
2.5 Summary
The above literature study reviewed on various aspects of cost savings from the
procurement process. The study tried to explore that cost savings has an impact on growth and
productivity of business organization. There are three major challenges of the cost savings in
the procurement process such as time pressure, digital technology trends as well as powerful
suppliers. Those are becoming barriers into the business organization. There are different types
of cost which are required for the private sector procurement as it is helpful to survive in
adverse business situations as well as there is also competitive advantages over other private
organizations. It is summarized that this research study is regarding ways of sustainability and
improving the cost saving in the private sector procurement to make economic growth in
addition business productivity.
The advantages of transparencyis accomplished all through change into the social
mindset of the public sector organization. The cost will require to hold up by purchaser, in this
manner it adds to cost investment funds. At the point when there is delay in work of service
provider, extra hidden expense has bear through the purchaser. By the executives of the
agreement, the purchaser can make command over the expense other than can bring cost
investment funds. The workers are purchasing items just as administrations from pre-agreed
suppliers. Its specific methodology can make online shop, augment the consistence and ensure
about best an incentive from exchange contracts. The computerized procurement comes in
ability to outpace just as outperform the business that are not exploiting the advanced
innovation.

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Chapter 3: Research Methodology
3.1 Introduction
Procurement approach has been evolved into the critical partners just to fulfill the
business functionalities and company requirements. It is mandatory for the project head and
company executives to adopt most suitable research methodologies before implementing the
procurement strategies to save the overall project cost. The chapter research methodology
helps to define appropriate approaches those are required to be adapted for attaining the
detail procurement process.
The procurement strategies are focused on structural activities improvements. It will
help to save the overall project functionality and operational cost. It will also help the private
sectors to acquire competitive advantages and balanced business performance. The project
compliance will be improved with operational effectiveness and operational efficiencies. Most
of the organizations from the private sectors are facing major challenges due to the inaccurate
contracting processes. The research a methodology is comprises of research philosophy,
approach, design, data collection and data techniques. These collective activities will identify
the procurement issues and possible risk management approaches as well. Kumar(2019) stated
that, if proper research methodologies are not considered then it may lead to some common
errors. Moreover, it can help to evaluate a better analysis for private sector to influence
decision making of the organization.
3.2 Research strategy
Three different types of research strategies are there in terms of positivism, realism and
interpretivism. The application of research strategy helps to determine accurate manner of
gaining details of the procurement strategies for business success (Silverman 2016). The
research strategy needs to be aligned to the research topic so that it can process the thinking of
the researcher. The research strategies would determine the actual hidden facts.

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The research instruments are the tools which are developed by the researchers to
achieve the objectives when carrying out the research study. The research instruments are the
designed tools which can aid collection of data for purpose to analyze collected data. There are
two types of research instruments which are used such as questionnaire which included
structured questions and interview which is structured questions to be asked to the managers
over the phone. In this particular study, questionnaire research instrument is used.
3.2.1 Justification of selecting appropriate strategy
After analyzing details of the research topic “cost savings in the private sector
procurement” it is determined that positivism is the best suited philosophy. All the hidden facts
would be logically evaluated in a scientific manner with the application of this specific research
strategy. In order to enable the knowledge collection and observation details the positivism is
used so that the metaphysics can be easily rejected. The complex structure concept is
supported by epistemology mode of interpretivism. The interpretivism study is focused to
define the things and natural concept laws those may also abandon the scientific approaches.
For this specific research topic the researcher needs to select positivism to analyze all the
hidden facts.
3.3 Research design
This particular section details the research methods and construction of research
instruments. The research methods are helpful to determine the positive impact of cost savings
mainly in the private sector. The professional procurement strategies those are needful to
lessen the environmental foot prints of supply chain as well as procurement activities (Mackey
and Gass 2015). The supply chain partners are focused on design and implementation of
sustainable procurement guidelines that are completely focused on ecological challenges. The
research design adopted for this research topic is descriptive. In order to gather and evaluate
the data related to the research topic mixed data collection approach is being applied. In order
to get a better quality analysis result 50 sample size is nominated.
For conducting the research study topic the research approach method is used that has
to be chosen must align to the research aim and objectives. The two different and broad ways

25
or available research approaches are deductive and inductive (Taylor, Bogdan and DeVault
2015). The inductive research approach is referred to as a study that helps to learn the research
topic when enough amounts of data are not available. The very initial phase of this inductive
approach is called observation that helps to obtain related data so that research path can be
built accordingly. In order to build the new theories regarding any topic the inductive approach
is the mist suitable one (Alvesson and Sköldberg 2017). On the other hand, the deductive
approach is referred to as a process which describes all practical applications related to the
studied theories those may obtain access of the content of data examination. Though, using the
research approach a better analysis regarding the research topic become possible.
There are three different types of research design such as descriptive, exploratory and
explanatory are available in the field of research and analysis. It is role of the researchers to
choose most suitable design (Quinlan et al. 2019). The research design aims to design and
develop a framework to make the analysis and selection pattern mush effective. While
collecting data from the research sources, researcher needs to identify only the reliable sources
only. In order to describe the research design much precisely or in a better way particular
approach must be selected by the researchers. The Exploratory design helps to acknowledge
the collective thoughts and research ideas. The research work becomes absolutely limited
because of the mere explanation of the cause and effect relationship (Fletcher 2017). The
descriptive research is focused to obtain proper theoretical and logical description related to
the research topic “impact of cost savings in private sector procurement”.
3.3.1 Rationale for choice of methodology
In order to evaluate the impact of cost savings in private sector procurement the most
suitable approach is terms of deductive should be selected. The study result obtained from the
topic using this approach will provide a clear understanding with a precise manner, but the
inductive approach may fail to meet the objectives if the researchers fail to emphasize the new
concepts and theories as a whole. Further, the impact of cost savings in private sector
procurement helps to understand the detailed concept in an accurate manner.

26
For this specific research topic, the explanatory research design is avoided because it
always supports the longitudinal study concept. In order to evaluate the impact of saving cost
specifically in the private sector procurement explanatory design is avoided. On the other hand,
details process involved in the procurement processes can be effectively scrutinized with the
descriptive design.
3.4Research process
3.4.1 Data collection procedure
In order to study any research topic data collection is referred to as one of the most
effective steps that has to be followed eventually as per the research needs. Data are collection
of facts and information useful to study the relevant research topic. According to Walliman
(2017), data collection is useful to derive proper result to process or conduct the research that
can enable the standard format of the research work.
Data sources used
For this specific research topic “impact of cost savings in private sector procurement”
mixed data sources are used which means that both the primary and secondary data sources
are used to gather needful information. For penetrating the research topic or retrieve data
based on the research requirements selection of proper data sources is very crucial.
Appropriate data sources will provide all helpful materials detailing the research topic. In order
to collect raw data the primary data sources are very helpful on the other hand, to widen the
research topic towards a theoretical level the secondary sources are very helpful (Smith 2015).
Primary data can be gathered by the researcher based on research requirements. Though,
before using the primary data their reliability needs to be clarified.
For this specific research work, the used primary data sources include appropriate
interaction in terms of survey using questionnaires. Participants who will take part in the survey
are first nominated in the initial phase of primary data collection.On the other hand, the
secondary data sources considered for the research study include journals, articles, blogs and
websites. Both online and offline secondary sources are used as research tools to gather to

27
identify the impact of cost savings in the procurement sector. Therefore, for this research work
mixed data sources are used by the researcher.
3.4.2Data analysis techniques
For recording narrative data forms for a much better description the qualitative data
technique is very crucial to be utilized. For adding theoretical concept with the practical field if
research qualitative data technique is beneficial (Alvesson and Sköldberg 2017). A collaboration
of theoretical and practical concept related to procurement strategies and impact of cost
savings in private sector procurement can be understood in a much better way with the help of
qualitative technique.
On the other hand, the quantitative data technique helps to record statistical
information even if the sample size is found to be extreme large also. Besides this, the article,
journal sources can also be considered as output obtained from the secondary information set.
For this specific topic mixed approach for both the qualitative and quantitative are utilized
(Mackey and Gass 2015). The research participants are employees those are working in the
private sector of Nigeria are considered to conduct the quantitative research work as only
survey will be used to gather information. The sample size taken for conducting the research
work is 50. Some nominated employees from the Nigerian private sector are asked to take
participation in the survey. The selected data using primary data collection method are
analyzed by means of using regression analysis. The regression analysis is used to check validity
as well as reliability of collected data. For this particular researchtopic, no qualitative data
technique will be used rather only quantitative data technique is applied by the researcher to
gather and analyze the impact of cost saving in private sector procurement.
3.5 Sample size and sampling
The sample frame is source material from which the sample is being drawn. It is
consisted of list of population those are sampled and included individuals. The selected sample
size for this study is 50 and the sample population is taken from employees working in Nigeria’s
private sector organizations. The sampling method is a procedure which is used to select
sample members from the population. For this particular study, the selected sampling method

28
is random sampling. In this method, each of member of population has equal right to be
selected as subject. The sampling process is done in single step where each subject is being
selected independently of other members of population.
3.6Ethical considerations
While processing the research methodology the researcher requires maintaining a code
of conduct which helps to identify both the correct and wrong behavioral set. The ethical
aspects considered for the research work are mentioned and elaborated in the below section:
Data application: In order to realize the impact of cost savings in private sector
procurement the data obtained from the research study is very crucial. Through saving the
functional and operational cost in private sector procurement commercial application of the
information are completely avoided to limit the findings absolutely academic.
Involvement of the respondents: The researchers must avoid all external forces or
influence while conducting the research work.
Anonymity of the research respondents: The researcher should ensure avoidance of any
sort of mental and physical harassment. The researcher should follow the above mentioned
ethical considerations while conducting the survey.
3.7 Research limitations
Research reliability: The respondents involved in the survey were not externally forced
or even influenced. The research requires to be biased towards the procurement strategies.
Therefore, issues related to reliability may negatively impact the research work.
Finance constraints: Due to financial limitation the SPSS software is not used and
regression analysis is applied for analyzing the data. Thus, due to financial limitations some
issues are faced by the researcher.
Time constraints: The researcher has faced issues with time limitation due to the cross-
sectional nature of the study. Most of the deep study analysis were avoided due to the cross-
sectional study nature.

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3.8 Summary
This specific chapter demonstrates different tools selected for conducting the research
work or determine the impact cost savings in private sector procurements. In this chapter the
research has tried to create an alignment to nature of the study materials along with the most
suitable research methodologies. The details of the research methodology in terms of research
philosophy, design, approach, data sources and data techniques are elaborated in detail in this
research methodology chapter. It is identified that for this research topic mixed data collection
approach is used along with a time horizon, research limitation and ethical considerations as
well. The mentioned data sources are used to gather information related to the selected
research topic.

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Chapter 4: Data Analysis and Findings
4.1 Introduction
In this chapter, the researcher was demonstrated data analysis based on the “Cost
Savings Sustainability in Private Sector Procurement”. By means of quantitative data analysis,
the analyses of collected data were being carried out which helped to determine quality of the
data besides investigating the chosen thesis topic. The researcher was being opted to get
quantitative data from the employees of the private sector organization through using survey
questionnaire data collection methods. This method was used to triangulate primary research
in order to add evidences related to the literature study. The selected data analysis technique
was involved with data manipulation plus data complexities. The respondents of the private
sector organization provided feedback to achieve information related to cost savings in
procurement process and validate the collected data if it was reliable or not.
4.2 Quantitative Data Analysis
In this section, the employees of private sector organization were selected to perform
quantitative analysis to achieve the required research outcomes. The selected population or
respondents for this study were 50 while others were not interested to provide feedback and
become a participant of survey; therefore, they were discarded from the sample population.
Section 1: Demographics information
1. Gender
Options No of responses Total respondents Percentage of
responses
Male 27 50 54%
Female 23 50 46%

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Table 4.1: Gender
Figure 4.1: Gender
Findings:
From the above chart, it was found that 54% of the respondents are female and 46% of
them are male. In this way, it was analyzed that both male and female participants were
interested in the study while most of the participants interested are female.
2. Age group
Options No of responses Total respondents Percentage of
responses
25-29 years 18 50 36%
30-34 years 14 50 28%
35-39 years 11 50 22%
More than 40 years 7 50 14%

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Table 4.2: Age group
Figure 4.2: Age group
Findings:
From the above chart, it was found that mostly respondents, 36% are those who were
participated in the feedback were age group of 25-29 years. It was found that 28% of them
between 30-34 years, 22% of them age group between 35-39 years and 14% were more than 40
years. Thus, most of the participants were young age.
3. Experience
Options No of responses Total respondents Percentage of
responses
1 year 14 50 28%
2 years 17 50 34%
3 years 12 50 24%
More than 3 years 7 50 14%

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Table 4.3: Experience
Figure 4.3: Experience
Findings:
From the above chart, it was found that 34% of the respondents had experience of 2
years, 28% has 1 year and 24% had 3 years. It was also found that 14% of the respondents were
more than 3 years experience. Therefore, it was analyzed that most of the respondents had
experiences to provide their feedback.
Section 2: Cost savings in the private sector procurement
4. How far do you agree that procurement process requires including sufficient control to
ensure maverick spending is eliminated?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 3 50 6%
Disagree 10 50 20%
Neutral 12 50 24%
Agree 23 50 46%
Strongly agree 2 50 4%

34
Table 4.4: Procurement process includes sufficient control
Figure 4.4: Procurement process includes sufficient control
Findings:
From the above chart, it was found that46% of the respondents were agreed that
procurement process requires including sufficient control to ensure maverick spending is
eliminated. It was found that 24% of the respondents were neither agree nor disagree with the
question, 20% were disagree, 6% were strongly disagree and 4% were strongly agree.
As per the survey respondents, Maverick spending is biggest challenge that the
procurement management team faces which is closely related to issues identified by the supply
chain management. Rather than aim to prevent maverick spending, the business uses
opportunity to achieve deeper understanding of entire procurement processes; it allows the
organization to improve the procurement plan. It is surveyed that there is greater influence in
the organization to improve control over the indirect spending. There should be
implementation of procure-to-pay system which is a way to track spending. These services will
help to make growth in the private sector organizations. There should be integrated nature of
the business organization which serves a link among procurement as well as financial teams.

35
5.How far do you agree that getting procurement plan on time from department will help to
make better procurement planning?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 4 50 8%
Disagree 10 50 20%
Neutral 9 50 18%
Agree 23 50 46%
Strongly agree 4 50 8%
Table 4.5: Procurement plan makes better procurement planning
Figure 4.5: Procurement plan makes better procurement planning
Findings:
From the above chart, it was found that 46% of the respondents were agreed
thatgetting procurement plan on time from department will help to make better procurement
planning. It was found that 18% of the respondents were neither agree nor disagree with the
question, 20% were disagree, 8% were strongly disagree and 8% were strongly agree.

36
As per the respondents, the procurement plan will be helpful as it provides details of the
procurement processes such as type of contracts and metrics used to measure the performance
of contractors. There should be mention of planned delivery dates for the products, standard
documents of the company and number of vendors involved to manage the procurement plan.
The procurement plan also maintains good and stronger relationships among the suppliers in
addition to project clients. One of the key significant qualities of procurement plan is to reduce
the cost while there is procurement of the items that the company requires. It leads to manage
products as well as services focused on reduction of expenses.
6.How far do you agree that the procurement process will require long term agreement?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 3 50 6%
Disagree 9 50 18%
Neutral 10 50 22%
Agree 20 50 40%
Strongly agree 7 50 14%
Table 4.6: Procurement process requires long term agreement

37
Figure 4.6: Procurement process requires long term agreement
Findings:
From the above chart, it was found that 40% of the respondents were agreed that the
procurement process will require long term agreement (LTA). It was found that 22% of the
respondents were neither agree nor disagree with the question, 18% were disagree, 6% were
strongly disagree and 14% were strongly agree.
As per the respondents, LTA permits to lock into the price of the procurable materials
from the suppliers which can help buyer to portion available funds for remaining costs. LTA can
eliminate unnecessary costs for the retendering and sourcing plus re-negotiations. It can reduce
burdens of the buyers such as logistics procedures plus organizational exercises. Both the
parties can secure as long as there should be mutual interests under the long-term agreement.
It can avoid feeling of insecurities with new buyers at each time. LTA can provide opportunities
for building better relationships due to increase in interaction for long period that can boost
trust as well as faith which assist to make outlook strategic partnerships. The buyers can gain
time to focus on improving the supplier performance in addition to increase in business
efficiency. LTA with the supplier for the procurement of goods as well as services are required.
It is an efficient plus productive way to plan and procure the goods. It is analysed that prices are
being predetermined where the supplier is at risk to increase in cost price. The procurement
process requires long term agreement for increase in business efficiency as well as
communication. The suppliers provide the customers with better understanding of the
customer’s markets and businesses. It also allows a greater integration of the business
processes, financial processes with increase in effective involvement of the project stakeholders
from both the parties. By establishing long term relationships, it cuts and reduces the cost with
so that both the parties can avoid unnecessary costs raised from re-tendering and re-
negotiation.

38
7.How far do you agree that investigating in high performance procurement team will boost
the organizational performance?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 3 50 6%
Disagree 13 50 26%
Neutral 10 50 20%
Agree 20 50 40%
Strongly agree 4 50 8%
Table 4.7: Procurement team boosts organizational performance
Figure 4.7: Procurement team boosts organizational performance
Findings:
From the above chart, it was found that 40% of the respondents were agreed that
investigating in high performance procurement team will boost the organizational
performance. It was found that 20% of the respondents were neither agree nor disagree with
the question, 26% were disagree, 6% were strongly disagree and 8% were strongly agree.

39
As per the respondents, as a function of the strategic role, purchasing as well as supply
chain management department requires to find ways for improving efficiency plus
effectiveness. One of the ways to address efficiency targets is outsourcing parts of purchasing
procedures. Outsourcing is increased which has transformational impacts on how the
organizations can manage global operations plus supply chains. It continued to pose key
significant challenges of the managerial levels and the businesses failed to realize benefits of
anticipated from the outsourcing initiatives. Most of the organizational design is addressed
degree of the centralization. There should be potential relationship among the organizational
design plus outsourcing into the project management functions. The procurement process
reduces the cost while there is obtaining items of the company as required. With the contracts
being part of the purchasing process, it is required to make sure that a comprehensive system is
placed to create as well as review the orders. It helps the company to process once it is being
made to the purchasing and makes easier to review contracts plus makes sure that the orders
are to be up-to-date.
8.How far do you agree that sharing past performance data of the organization will help in
purchasing?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 5 50 10%
Disagree 11 50 22%
Neutral 13 50 26%
Agree 19 50 38%
Strongly agree 2 50 4%

40
Table 4.8: Past performance data helps in purchasing
Figure 4.8: Past performance data helps in purchasing
Findings:
From the above chart, it was found that 38% of the respondents were agreed that
sharing past performance data of the organization will help in purchasing. It was found that
20% of the respondents were neither agree nor disagree with the question, 22% were disagree,
10% were strongly disagree and 4% were strongly agree.
As per the respondents, the past organizational data can provide the procurement
groups with an ability to meet with the organizational expectations as well as project related
requirements. The data helps the customers in their purchasing behaviour. With the
performance data, the procurement makes data-based decisions regards to the direct
spending. It helps to make collaboration with the suppliers to create a new value to the
business. It drives to create a mutually relationships with the project suppliers. Technology
helps to keep track of the information about the suppliers in one place. The business
organization is required to install purchase order management software that is used to create,
organize as well as process purchase orders with the project suppliers. The solutions of this
software such as purchase control can integrate the supplier management solutions in same
platforms. It can also make strong relationships with the suppliers by keeping them informed
along with up-to-date with the procurement plan strategy which helps the company to gain

41
productivity plus profitability in the organization. A strong as well as deeper relationship helps
to make improvement in the purchasing behaviors of the customers.
9.How far do you agree that outsourcing of supplier is beneficial for procurement process to
improve cost savings?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 4 50 8%
Disagree 10 50 8%
Neutral 10 50 20%
Agree 22 50 44%
Strongly agree 4 50 8%
Table 4.9: Outsourcing of supplier improves cost savings
Figure 4.9: Outsourcing of supplier improves cost savings
Findings:
From the above chart, it was found that 44% of the respondents were agreed that
outsourcing of supplier is beneficial for procurement process to improve cost savings. It was

42
found that 20% of the respondents were neither agree nor disagree with the question, 20%
were disagree, 8% were strongly disagree and 8% were strongly agree.
As per the survey respondents, the outsourcing procurement helps to save the cost
savings. It requires a greater deal to be focused on the cost savings, maximization of the profit
plus compliances. The procurement outsourcer can influence the economics of scale and it has
experience as well as trained the staffs to cut the project costs in addition to enhance the
business efficiencies. Outsourcing is beneficial for the supplier into the procurement process for
reduction of cost from training as well as computerization. It can allow market leverage by
providing better discounts for the procurement items. The transactional costs per purchase are
being lessened by economics of scale. There are highly skilled staffs those can specialize into
purchasing. Negotiation by the procurement expert into the field is effective plus profitable.
Outsourcing management is required on continuous basis which ensured compliance to the
project contracts and service level agreement.
10.How far do you agree that combination of centralized and decentralized procurement can
allow savings in cost and technology?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 5 50 10%
Disagree 10 50 20%
Neutral 12 50 24%
Agree 18 50 36%
Strongly agree 5 50 10%

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Table 4.10: Combination of centralized and decentralized procurement
Figure 4.10: Combination of centralized and decentralized procurement
Findings:
From the above chart, it was found that 36% of the respondents were agreed that
combination of centralized and decentralized procurement can allow savings in cost and
technology. It was found that 24% of the respondents were neither agree nor disagree with the
question, 20% were disagree, 10% were strongly disagree and 10% were strongly agree.
As per the respondents, in centralized purchasing, the shipments are being consolidated
with reduction of transport cost. There is minimization of inventory investments through entire
centralization of purchases. With the technology, there is maintenance of centralized records.
The centralized store can maintain under the centralized purchasing. The decentralized
procurement reduces incentives and can reduce scope of mistakes. It can refer to purchasing
materials by the procurement departments as well as branches to meet with project
requirements. The purchasing is occurred when the procurement departments in addition to
branch purchases disjointedly plus independently. Therefore, both the procurement processes
allow greater business efficiently plus better control over the purchasing functions.

44
11.How far do you agree that training for the staffs will help to focus on process and
achievement of savings?
Options No of responses Total respondents Percentage of
responses
Strongly disagree 3 50 6%
Disagree 10 50 20%
Neutral 13 50 26%
Agree 17 50 34%
Strongly agree 7 50 14%
Table 4.11: Training for the staffs help to achieve savings
Figure 4.11: Training for the staffs help to achieve savings
Findings:
From the above chart, it was found that 34% of the respondents were agreed that
training for the staffs will help to focus on process and achievement of savings. It was found
that 26% of the respondents were neither agree nor disagree with the question, 20% were
disagree, 6% were strongly disagree and 14% were strongly agree.

45
Training as well as development remains a key significant factor which can lead to
success of the business. The staffs those have lack of development opportunities in the
business leads to have negative impact on the business. Training plan ensures to provide
successful business continuity. It provides benefits to personal evolution of the employees but
also provides positive impact on the productivity plus productivity of the company. It can
reinforce goodwill of the business organization, permit to maintain a competitive edge plus lead
to higher rate of customer satisfaction. Training in the procurement process helps in cost
savings as the employees can make better decisions for making company’s progress.
In order emphasize the relationship between the dependent and independent factors
linked with the hypothesis are as follows:
H0: There is high impact of cost savings in private sector procurement.
The regression model of the hypothesis can be stated as follows:
Dependent variable of hypothesis = A + B* independent variable of hypothesis
Where, A= Intercept of the Model
And B= Coefficient of “relationship between cost savings and procurement process”.
Here, the independent variables are experience, long term agreement and procurement
plan. The dependent variables are procurement process.
The details of the regression analysis conducted on the above-mentioned model has
here being presented in the table below:
SUMMARY
OUTPUT
Regression
Statistics
Multiple R 0.522659647
R Square 0.273173107
Adjusted R Square 0.225771353
Standard Error 0.89397627
Observations 50

46
Table 4.12: Summary output of regression analysis conducted for hypothesis
ANOVA
df SS MS F Significance F
Regression 3 13.81709575
4.60569
9
5.76293
2 0.001966965
Residual 46 36.76290425
0.79919
4
Total 49 50.58
Table 4.13: ANOVA table of regression analysis conducted for hypothesis
Coefficients
Standard
Error t Stat P-value
Intercept 1.441475259 0.509189583
2.83092
1
0.00686
1
Experience 0.05971841 0.125718885
0.47501
5
0.63702
4
long term
agreement 0.406905426 0.156273471
2.60380
4
0.01237
2
Procurement plan 0.082642687 0.156213904
0.52903
5
0.59932
5
Table 4.14: Coefficient table of regression analysis conducted for hypothesis
The null and alternative hypotheses associated with hypothesis are as follows:
Null hypothesis (H0): There is no high impact of cost savings in private sector procurement
Alternative hypothesis (H1): There is high impact of cost savings in private sector procurement
An analysis of the findings of the regression method indicates that the value of the
Significant F, for this particular hypothesis, is 0.0019. In this case the value of the Significant F,
as obtained through regression analysis, is found to be less than 0.05, the null hypothesis has
to be rejected essentially. Now, the value of the Significant F factor for this hypothesis is much
less than 0.05: hence the null hypothesize sated in the section above has to be rejected.
Thus, it can be said that it has been proved that the statement “There is high impact of cost
savings in private sector procurement.” holds true.

47
The selected hypothesis is also validated by independent variables such as high-
performance procurement team, sharing past performance data, outsourcing of suppliers and
combination of centralized and decentralized procurement. Dependent variable is cost
savings.The details of the regression analysis conducted on the above mentioned model has
here being presented in the table below:
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.69330693
6
R Square
0.48067450
8
Adjusted R Square
0.43451224
2
Standard Error
0.84928523
2
Observations 50
Table 4.15: Summary output of regression analysis conducted for hypothesis
ANOVA
df SS MS F Significance F
Regression 4 30.04215674
7.51053
9
10.4127
1 4.67554E-06
Residual 45 32.45784326
0.72128
5
Total 49 62.5
Table 4.16: ANOVA table of regression analysis conducted for hypothesis
Coefficients
Standard
Error t Stat P-value
Intercept
0.85346250
5 0.451172209
1.89165
6 0.064983
high performance procurement team
0.02872771
8 0.156879644
0.18311
9 0.855527
sharing past performance data
-
0.01150847
3 0.16458344 -0.06992 0.944563
outsourcing of supplier 0.37327545 0.198833408 1.87732 0.066965

48
7 8
combination of centralized and
decentralized procurement
0.37365716
1 0.142479152
2.62253
9 0.011869
Table 4.17: Coefficient table of regression analysis conducted for hypothesis
The null and alternative hypothesis associated with hypothesis is as follows:
Null hypothesis (H0): There is no high impact of cost savings in private sector
procurement.
Alternative hypothesis (H1): There is high impact of cost savings in private sector
procurement.
An analysis of the findings of the regression method indicates that the value of the
Significant F, for this hypothesis, is0.000004. In this case the value of the Significant F, as
obtained through regression analysis, is found to be less than 0.05, the null hypothesis has to
be rejected essentially. Now, the value of the Significant F factor for this hypothesis is less than
0.05: hence the null hypothesize sated in the section above has to be rejected. Thus, it can be
said that it has been proved that the statement “There is no high impact of cost savings in
private sector procurement.” holds true.
4.3 Discussion on the findings
In this thesis paper, it is discussed that there are various opportunities to achieve a cost
saving from the procurement process. A huge benefit is likely to achieve throughout change
into the cultural mindset of private sector organization. Before starting to work into the
procurement process organization, the procurement manager should keep in mind the issues to
attain cost savings and work effectively.
RQ1: How effective the procurement process in the private sector to achieve cost savings?
Based on the data analysis findings and research question mentioned above, it is
discussed that some of the private organization procurement processes are lack transparency
as well as ad-hoc. Ad-hoc purchasing is a best way to buy the goods and services. The cost is

49
based on which the individual is purchasing from the private organization. The organizations
are moving away from ad-hoc approach and consolidating the orders can start to achieve a
better cost pricing (Fernandesand Vieira 2015). As per most of the respondents, it is stated that
getting a procurement plan on time for each of the department can help to make better
procurement planning leads to save the cost. It is discussed that long-term agreement is not an
effective tool as the price factor. For the capital investment where the supply objective is to
make sure to best value for the money, therefore oneoff contract is appropriate. Long term
contracts with choices of the exit clause with contractor financially benefits the buyers.When
the demand falls and decrease in price than of expected, then the long term contract would
threat to loss financially.
Linking with findings from the literature review, cost reduction is a challenge into the
private sector organizations at the time of handling technologies. While savings the cost in the
private sector, they are facing challenges such as recession and inflation, technology and
fluctuation of labor (Smith 2015). In order to achieve economic growth, the company is facing
challenges of cost savings. Time is a concern in the organization due to missed deadline and
time cost. The employees are provided opportunity to control sourcing cost; the buyer is
required right tools to help in staff managing (Buniaminet al. 2016). An integrated procurement
process tool helps to make sure that the business is being sourcing from cost effective
suppliers.
The procurement practitioners as well as professionals are focused on initiatives based
on three dimensions such as cost, quality and time. The contract control is a form of business
procedure to realizes administrative cost savings as well as provide platform for ongoing cost
savings. As per the findings, it is discussed that there is advantage is price as well as quality
assurance which gets economics of scale and reduce lead time of direct sourcing required
getting better forecast such that the manufacturer can produce against forecast and reducing
the lead time (Hanson 2015). The organization is arranged for quarterly training program on the
cost savings. As per the survey, the buyer is suggested of training facility for the employee help
to focus on the process and cost savings is achieved. Most of the respondents stated that cost

50
saving is an outcome which can reduce the project budget. Outcomes are cost savings when it
is realized that it is quantifiable and can lead to increase in market share, increase in business
profitability, improve the cash flow and reduce the organizational costs (Hayden 2016). The
purchasing professionals are encouraged to promote entire value add in the organization and
use extensive range of performance measures to converse the benefits of efficiently performed
purchasing in addition to supply chain action.
RQ2: What are different techniques for cost saving in private sector procurement?
From the findings, it is discussed that irrespective of the industry sector, size of the
enterprise and procurement discipline, the cost savings is one of the key significant objectives
of the procurement function. In most of the private and public sector organization, the revenue
percentage which is spent on the procurement process is shown to be 50-70% based on the
type of business. Most of the reason for increase in cost savings is continued trend of
outsourcing of the tasks performed in the organization. Therefore, procurement techniques
provide huge impact on profitability of the business organization. For the larger organizations,
reduction of maverick buying between 5-10% can generate millions of dollars of the cost
savings. It is discussed that cost controlling is significant shared responsibility of procurement as
well as finance (Mazijn 2016). Linking with the findings from the literature review, in the
outsourcing of the services, the clients are not aware of transactional costs, therefore they are
not aware of current cost required to complete the work. The respondents surveyed that
transaction cost theory is based on formulation of public related policies designed into the
public sector. This theory improves stability of the markets and identifies to become
economical best to get perfect knowledge.
In order to make improvement in profitability of an organization, it is required to
measure as well as report the procurement cost savings. Insight into the price trends as well as
extent to which the procurement is familiar with how to deal with them, it highlights on
deviations from planned results. Effective cost control shows added value on the procurement
functions. It is found that procurement is a relationship among the organization and suppliers,
therefore a good track record into the cost savings will improve credibility of the procurement.

51
It helps procurement process to get involved in new initiatives which will lead to new spending
(Ogundeet al. 2017). It is seen that the organization is capable to link realization of the cost
savings with KPI which a best way is to motivate the buyers to purchase goods and services.
Linking with the findings from the literature review, good planning is required before
commissioning the procurement process is a key provider towards project success. It leads to
improved value of the money, superior quality of the project plus enhanced service delivery. It
can also get better opportunities for the sustainable procurement. Life cycle costing is
performed to make selection of contractors which will reduce the total cost. Due to economics
of scale, the suppliers are contributed best prices of the goods in addition to services. By
management of procurement contract, the buyer can make control over cost besides can bring
the cost savings (Seidman and Atun 2017). The private business organization is necessary to
become successful along with adequate control for ensuring cost savings to be benefited in
their business functions.
4.4 Summary
It is summarized that the procurement process plays a key role to achieve the recurrent
profits. One of the factors to achieve the business results are laid on cost effective procurement
as well as make the cost savings. It is concluded that the procurement savings are driven down
the procurement costs, improvement over the supplier terms as well as decreases in the
product prices. A cost-effective procurement plan in the private sector organization is helped to
generate millions of dollars of the cost savings each year. The procurement process monitors
compliance to the negotiated terms as well as puts control in place. It is also summarized that
the operation management helps to perform transparent processes with the internal
transactional costs plus failure costs. The procurement process can cut down the delivery cost
plus purchasing documents. It can also cut down excess as well as storage costs to make sure
that the company can make procurement cost savings.

52
Chapter 5: Conclusion and Recommendations
5.1 Conclusion
It is concluded that effective procurement management is a top most priority into the
private sector procurement. Into the project, from initiation phase, it is needed to maintain
control over different cost. Procurement process is part of supply chain management which is
followed various techniques to achieve cost savings. In the research study, procurement
process is identified as bottom line driven activity which can contribute throughout reductions
in the end products costs plus found suppliers with new and advanced innovation. Approach
towards procurement is required to improve so that the organization can gain cost savings. The
organization can deliver 15% cashable cost savings into the procurement process by means of
effective negotiations, improved contract management plus stronger engagement with the
suppliers plus markets. The public organization can improve procurement processes and lead to
cost savings when there are implementing procurement techniques and tools to create
improvements. It is a good practice to report on cost savings to achieve contract. Through the
contract, reporting on cost savings help to track actual delivered savings into the contract and
take account of the price variances if any into the contract. From this study, it is concluded that
the buyer can benchmark as well as compare the service improvements in the private sector
organizations. Reporting on the cost savings at contract and procurement savings at end of
contract will help to lean from earlier practices.
5.2 Linking with the research objectives
Based on the data collection processes, the researcher will identify the linked obtained
from the research objectives and practical applications of this research study. Based on
identified objectives in research study, the researcher should try to link related data such there
is improvement over credibility as well as success rate.
Linking Objective 1:To identity the different challenges for cost-saving sustainability in private
sector procurement

53
The reduction of cost is a concern into the private sector organization as it is difficult to
handle technologies, services plus distribution channels. It can lead to complex cost savings.
There are challenges regarding recession and inflation where there is fluctuation of
technologies and labors. When there is lower production of goods as well as services, it can
lead to lower rate of GDP and lower average of the incomes. The procurement process is based
on reduction and savings of cost for goods and services. The developing countries are facing
challenges of cost savings in order to attain economic growth. From the findings of literature
study, it is seen that there are key challenges of procurement negotiation are time pressure,
powerful suppliers and digital procurement trends. Time pressure is occurred when the
employees of the organization has to work under strict deadline to finish its work. It can lead to
negotiate under time pressure. Into the organization, the balance of powers is shifted from side
of the buyers to the suppliers. For the large vendors, small orders are not important; therefore
there is no strong relationship between the purchaser and supplier. The procurement
negotiation functions are based on big data and data analytics to drive insights and decision
making. Therefore, without usage of advanced information system, it is not possible to achieve
capability in addition to agility.
LinkingObjective 2:To identify how effective negotiations are being carried out in private sector
procurement
Into the public sector organizations, there is importance of bidding process where it can
manage external stakeholders of the organizations such as suppliers to deliver raw materials. In
this research study, the researcher is focused on management skills of the project such as
negotiation management that can provide impact on economic growth and productivity of the
public sector organizations. Negotiation into the private sector procurement is relied on big
data and data analytics to drive insights along with decision making. It is found that building of
digital procurement into the organization is required higher amount of cost investments. A
good negotiation is required for discrepancy. Into the private sector procurement, when a
supplier is failed into inspections, in that case non-compliance as well as supplier can able to
correct the faults.

54
LinkingObjective 3:To identify different techniques for cost saving in private sector
procurement
In the private sector organization, performance-based specification (PBS) theories is
used which can show real cost savings. According to this theory, on right time the procurement
manager has taken decisions regarding supply chain operations of their business. There is
reduction of documents and interaction based on this theory. The project manager is allowed
to match with authority needs to control the sub-contractors make improvement over quality
of project work. Other cost savings technique is transactional cost theory is based on
formulation of public policies designed for the public sector. This theory stated that it can
improve stability of markets. This theory is accounted for definite cost of outsourcing
production of products and services included transactional cost, coordination cost as well as
contracting costs. The inclusions of costs are considered at the time of making decisions
furthermore not immediately the marketplace prices.
LinkingObjective 4:To consider stakeholder’s views in the private sector procurement on the
benefit of having transparent bidding process
It is found that there is higher benefit of transparent bidding process into the private
sector procurement. It provides benefit as competitive bidding is a process to issue public bid in
intent that the company can put best proposal as well as complete all work for particular
project. Competitive bidding can produce transparent environment which is open as well as
fair. Transparent procurement method bids from challenging the contractors, traders and
vendors. Competitive transparent bidding process aims to obtain goods as well as services at
lower prices by means of motivating the competition in addition to avoiding preference. As per
the view of project stakeholders, bidding process is fair and transparent and considered as
second element into the bidding processes which can eliminate improper influence. In the
current marketplace, the projects are ensured that there are no single sourced with using
established thresholds for bidding that can fall in accepted industry standards. The trade
contractors are working on project which is constituted of 80-90% of work and it deserves to be
treated as fair in addition to transparent way.

55
5.3 Recommendations
The procurement professionals are taking minor steps towards large purchasing
efficiency. The project executives should go for continuous improvement in procurement area
so that they can turn towards expert advices as well as technologies outlined in this thesis
paper. Improvements around purchase requisitions along with orders are implemented without
key significant process of changes. The improvements are required significant overhaul of the
processes. From the entire analysis of the research study, two of the solutions are being
proposed. Firstly, the solution is to introduce new procurement practices in each stage of the
procurement processes. Second is introduction of e-procurement solutions into the private
sector organization. Details of the recommendations are provided as below:
Introduction of new procurement practices in procurement processes: The organization
should implement supply chain in their business functions so that it can maximize effectiveness
as well as bring commensurate benefits to the public organization. The organizations are served
by means of embedding supply chain management professionals in different business units. The
centralized operations are effective so that they can adopt hybrid approaches to combine
centralized strategies to expand agreement with decentralized execution in order to get better
procurement services.
Introduction of e-procurement solutions: The public sector organization is required to e-
procurement services so that they can they can conduct business-to-business services, sale of
the suppliers, works as well as services required throughout entire internet and information like
electronic data interchanges. The e-procurement solutions which are required to adopt into the
business organization are e-informing, e-tendering, vendor management, integration of
purchase order, shipping notices, e-invoicing as well as e-payments. There should be proper
request for information as well as request for proposal along with request for quotation.
Therefore, e-procurement solution will lead to cost savings into the private sector organization.
5.4 Limitations of research study
The research study was limited to private sector organization, but no particular
organization is selected. The study is based on only cost savings into the private sector

56
procurement. As there are limitations of time, therefore it is not allowed participation of larger
sample size for getting better quality of data analysis. There are also restrictions of financial
budget in this research study due to limitation of quality of this study.
5.5 Scope of further study
In the future, it is seen that there is huge scope of this research in cost savings in private
sector procurement. This study is being conducted with limited sample size; therefore, in the
future the researcher should take larger sample size so that they can get valid and reliable data.
The extensive study is being conducted in future based on a single industry so that there is
proper research on the cost savings factors in terms of procurement process. Only few
categories of private organization are taken under this research study.

57
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Appendix
1. Questionnaire
Dear Participants,
You are invited to participate into the survey, entitled “Cost savings in private sector
procurement”. The purpose of this study is to discuss key benefits of the procurement
processes and highlight barriers to effective procurement. It is used to identify importance of
cost savings in the procurement process in private sector in Nigeria. We estimate that the
survey will take 30 minutes to complete the questionnaire. We have taken reasonable
measures for protection of your identity as well as responses. Our participation is much
appreciated and your answers will be treated confidentially and will be used for academic
purpose only.
Thank You.
Topic: Cost Savings Sustainability in Private Sector Procurement
1. Gender
 Male
 Female
2. Age group
 25-29 years
 30-34 years
 35-39 years
 More than 40 years
3. Experience

64
 1 year
 2 years
 3 years
 More than 3 years
4. How far do you agree that procurement process requires to include sufficient control to
ensure maverick spending is eliminated?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
5. How far do you agree that getting procurement plan on time from department will help
to make better procurement planning?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
6. How far do you agree that the procurement process will require long term agreement?
 Strongly disagree
 Disagree

65
 Neutral
 Agree
 Strongly agree
7. How far do you agree that investigating in high performance procurement team will
boost the organizational performance?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
8. How far do you agree that sharing past performance data of the organization will help in
purchasing?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
9. How far do you agree that outsourcing of supplier is beneficial for procurement process
to improve cost savings?
 Strongly disagree
 Disagree
 Neutral

66
 Agree
 Strongly agree
10. How far do you agree that combination of centralized and decentralized procurement
can allow savings in cost and technology?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
11. How far do you agree that training for the staffs will help to focus on process and
achievement of savings?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree