Coventry University: E-procurement Implementation at Woodside Report

This report examines the strategic importance of e-procurement and its impact on a company's competitive advantage and administrative efficiency. The report begins with an introduction highlighting the potential cost savings and efficiency gains of e-procurement, followed by a literature review defining e-procurement, discussing its benefits (such as increased productivity, visibility, and cost reduction), and exploring the challenges of implementation (including resistance to change and integration complexity). The report then analyzes Woodside Energy as a case study, providing background information on the company and detailing its approach to implementing e-procurement, including redesigning its organizational structure and the expected benefits. The implementation section describes the restructuring of the company's departments and the roles they play in the e-procurement process. The report concludes with recommendations and a summary of findings, emphasizing the significance of e-procurement in modern business operations. The report uses various sources for the literature review, including journal articles, company websites, and media reports, to provide a comprehensive overview of the topic.

Running Head: PURCHASING AND PROCUREMENT
Purchasing and procurement
Student’s Name
University Name
Author Note

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Table of Contents
1. Introduction..................................................................................................................................3
2. Literature Review........................................................................................................................3
2.1 Meaning of E-procurement....................................................................................................3
2.2 Benefits of implementing e-procurement..............................................................................4
2.3 Challenges in implementing E-procurement.........................................................................5
2.4 The evolution and implementation process of E-procurement..............................................5
3. Company analysis........................................................................................................................6
3.1 Company background............................................................................................................6
3.2 Implementing E-procurement at Woodside...........................................................................6
4. Implementation of E-procurement at Woodside..........................................................................7
4.1 Redesigning of organizational structure on basis of service and product market.................7
4.2 The major benefits for implementation of the e-procurement strategies...............................9
5. Recommendations and Conclusion............................................................................................11
Reference List................................................................................................................................13

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1. Introduction
Implementation of e-procurement strategy is of strategic and not tactical importance. this
policy can be considered as one of the most essential part of the e-procurement strategy of our
chosen organization. The enormous expenditure and the need for potential savings of the
company make the implementation of the e-procurement strategy very important. This paper will
discuss that many of the organizations spend up to 30% of the revenue proportion for purposes
like indirect procurement and that is consumed in non-production objective fulfillments. For
many of the UK based companies, this extensive pen and paper process consume $100 dollars on
an average only for the purpose of purchasing an order. This proportion is applicable for any
moderate sized firm and that is also applicable for any medium sized order of the organization.
The target of the report is to show how the utilization of the e-procurement strategy might help in
the cost savings which can have a boosting impact on the bottom line management of the
organization. However, the report will also shed light on the issue that despite the added benefits
of utilizing the e-procurement strategy, some organizations incorporate complex implementation
process because of which multiple functions as well as departments cannot be incorporated in the
development of impactful procurement strategies. These identified gaps are all addressed in this
research study in order to assimilate the solutions that can be helpful in bridging the gap.
2. Literature Review
2.1 Meaning of E-procurement
According to Davila et al. (2013), the term E-procurement implies purchasing of business
to business with the help of internet online through the digital media platform or digital network.
In other words the business transactions are often done with the help of modern technologies,

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vendor partnership and business. The word E-procurement is often associated with terms like
supply chain management and supply change. The concept of E-procurement includes various
business activities like purchasing, warehousing, transportation and inbound receiving. The E-
procurement mainly has three approaches including e-sourcing, e-auction and e-procuring non
production goods and services. The interface with e-procurement is often associated or set up in
a way that facilitate or encourages commercial transactions which includes specialized invoicing,
shipping and payment tools, purchase orders.
2.2 Benefits of implementing e-procurement
As mentioned by Graham et al. (2013), the benefits and advantages of E-procurement are
more evident as it involves high level of understanding of many users. The major advantages and
benefits of using E-procurement are to increase the productivity of the organization, provide
visibility to the company which enables them to analyze their day to day transactions. It also
enables the company to provide the supplies to the users in an easier way. However the process
of implementing the E-procurement has many challenges and it is time consuming as it requires
time to fully accept it. The main advantages and benefits of E-procurement are reduction in the
cost, visibility of day of day transactions of the business, enhanced productivity, using and
implementing technologies and taking control over the business activities. As stated by Mose et
al. (2013), having a structured supplier relationship the costs of the company can be reduced by
leveraging the volumes and by implementing system improvements. E-procurement reducing
errors and eliminates paperwork. E-procurement ensures compliance and enables full report on
the requisitions, order processed and payments. According to Puschmann and Alt (2015), the
formal workflow in E-procurement ensures that there is correct level of authorization in every
transaction involved. The major advantage of E-procurement is that the software tools helps to

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make standard procurement documentation. These include e-request for proposal, electronic
requests for information and requests for quotations. Therefore, the advantages of E-procurement
include process efficiency, cost reduction, compliance and spending controls.
2.3 Challenges in implementing E-procurement
As mentioned above there are various challenges that the company can face while
implementing the Challenges in implementing E-procurement. It involves high level of
complexity, integration of various functions and activities and in redesigning the process of
procurements. It also involves engaging with the suppliers of the company. According to Vaidya
et al. (2016), the major challenge that is faced by the business organization as per the surveys are
resistance to change. Most business organization are resistant to change, therefore implementing
the Challenges in implementing E-procurement strategies is highly challenging. Moreover, As
mentioned by Piera et al. (2014), the system that is to be implemented is difficult to understand
for most business organization with the present IT system. Furthermore implementing E-
procurement requires training of the employees, so that they have the right potential and the
capability to operate in an effective way. It also requires supplier migration to the internal and
other online platforms for transactions. Therefore, as per the research, it has been analyzed that
the major challenge of implementing E-procurement in the day business operations to adapting
and implementing it as there are issues regarding change management and it demands a user
friendly environment. There are other risks involves such as lack of time for training, learning to
handle new system, risks of loss of control and using technologies apart from investing.
2.4 The evolution and implementation process of E-procurement

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According to Davila et al. (2013), the evolution and implementation process of E-
procurement requires multiple sources for collecting data, compilation of the collected data and
information from various company website, media reports, booklets and others. The process and
evolution of implementation process of E-procurement involves assessing the current process of
procurement, documenting the desired strategy for procurements, identifying the gaps of the
existing strategies and the desired strategies of the company, the system solution is determined to
bridge the exiting gaps, developing the key performance indicators required for measuring
success, creating a business case, securing an executive sponsorship, developing the plan and
allocating the resources of the company, selecting the optimal E-procurement solution, creating a
plan for implementation, executing the plan and measuring the benefits.
3. Company analysis
3.1 Company background
Thee company Woodside energy is one of the leading Australian resource company, the
company was founded in the year 1954 and has expanded its business activities in the year 1963.
The company is planning the directions for e-procurement. The main task for this company is to
enable its department to initiate effective communication with the suppliers of the business and
to get them involved in the process of E-procurement (Graham et al. 2013). The IT department of
the company is involved in purchasing the software’s and hardware’s for the company, license
and other contract management. The contracts and service department of the company is
involved in financial, logistics, insurance and issues dealing with the suppliers.
3.2 Implementing E-procurement at Woodside

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The business development is responsible for research and development in procurement.
The main tasks performed by the department is redesigning the process of procurement in the
company and monitoring the new development for the business organization (Mose et al. 2013).
In order to enhance the process of procurement and increase efficiency, the business organization
intends to implement E-procurement. By implementing E-procurement, it will be able to reduce
the rogue spending that is expenditure of procurement contracts. It will enable the company to
better analyze the transactions, track its spending and facilitate the collection and analysis of
spending the data (Puschmann and Alt 2015). The other benefit expected by the company is
lowered prices of the goods purchased from the suppliers by cutting down some of the
distributions. It is facilitate the company to go straight to the source of manufacturing. Further,
the company will be able to optimize the logistics to reduce the transportation costs and also
facilitate advanced planning (Vaidya et al. 2016). This in turn the company will be able to
improve its maintenance by integrating the E-procurement and other software’s. However, the
company being a manufacturing firm, maintenance of exploration and operation is critical for its
success.
4. Implementation of E-procurement at Woodside
4.1 Redesigning of organizational structure on basis of service and product market
In the initial phase, a separate division, named Shared Services had been established
based on detailed analysis of the goods as well as services that it procures, spending on procuring
as well as on the existing procurement processes. The two major guiding issues needed for
organizational structuring are goods market, the procured services, as well as the e-procurement
services (Chomchaiya and Esichaikul 2016). This division will now be responsible for the

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coverage of most essential functions as well as activities and it would be suitable to incorporate
90 members in the team differentiated between 9 working groups in the team.
The segregation is already developed in the team and they would be responsible for research,
development and other aspects of business development. There are specific tasks which
incorporate redesigning, monitoring for new developments, e-procurements as well as planning
and directing other e-procurements strategies. As advised by Chibani et al. (2018), this business
development team will also be responsible for the communication with the suppliers so that they
are also well-incorporated with the e-supply line.
The second responsible group in the team would be Communication and IT who would be very
crucial for the establishment for the infrastructure of e-procurement strategy. This team will be
responsible for the control of expenditure in the telecommunication as well as the other allied
areas of IT as of the purchase of software and hardware along with license and management of te
specific areas of IT. There are about 1500 specialized personal computers operating in the
organization. Hence the organization involves substantial investment in communication as well
as IT. As per the ideas of Zahra et al. (2017), the next responsible team in this context would be
that of Contracts and Services. The e-procurement responsibilities of this team will include legal,
financial, logistics as well as insurance issues in terms of dealing with the subject. This team
would be liable for the management of all forms of contracts as well as services needed for the
sustenance of the other activities of the division of shared services.
The next groups that are the team operating in the Plant should be situated in a natural plant of
gas treatment that is differentiated from the main city by 1300 kilometers. However, Ibem,
Aduwo and Ayo-Vaughan (2017), advises that this team would be basically operating on a

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virtual basis. The main task for this team would be the management of the procurement process
of the MRO for the plant, management of the warehouse as well as the logistics and the
inventory management. The other important teams are that of Topsides. This team will be liable
for the provision of support in terms of goods procurement for the entire offshore asset of the
organization; primarily the platforms as well as the floating production and storage offload
facility. Such goods as well as services incorporate maintenance contract, paintings, as well as
procurement of spare parts as rotating equipment as well as inventory management.
The procurement support group will be responsible for two major functions which are accounts
payable management as well as cataloguing. Accounts Payable has been a part of the finance
organization of the company before the implementation of the e-procurement. The main
responsibilities of the Catalogue team incorporate the maintenance as well as updating of the
catalogues, centrally. This also needs some research effort for ensuring that the newly
incorporated items will be fitting the technical specifications as well as the safety equipments.
Currently, the organization has almost 8000 line items under the catalogue for the organization.
as per Albano et al. (2015), another essential task for the Cataloguing team would be to search
for the original equipment manufacturers for purchase of MRO that will be needed to cut off the
middlemen or the dis-intermediate channels so that the costs can be driven down.
The last group incorporated in the Shared Services division is the exploration group. In
order to initiate the process of drilling, a 3D seismic survey of the sea bed needs to be done for
the purposes of determining whether geographic strata of the sea bed lends itself to the drilling
program.
4.2 The major benefits for implementation of the e-procurement strategies

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Woodside purports to benefit from the implementation of e-procurement in five ways.
The first intention is capturing as well as reducing the rogue spending. It has been pointed out in
research findings that there are many stakeholders who would be liable for the spending of funds
outside of the official contracts.
The nest outcome that is projected to be achieved as an outcome of implementation of the
strategy of e-procurement is better analysis along with the facilities like better spending tracking
as well as better contracting prices. The implementation of the e-procurement strategy can
facilitate collection as well as analysis of the data expenditure. This might help in ensuring the
better tracking of the procurement spending. Hence, the organization would be able to conduct
better tracking of the procurement spending. Therefore, the organization would be able to
consolidate spending as well as leverage aggregated purchased volume for ensuring a better deal
from the suppliers (Naoum and Egbu 2015). This would enable the organization to gain more
robust contracts. Hence, the bottom line in the organization should be improved by means of
extraction of many overheads from their procured goods as well as services by means of e-
procurement.
The next most feasible benefit against the implementation of this strategy is cutting out the
distributors for driving down the prices. Another big advantage that the organization expects out
of implementation of e-procurement is to reduce the prices of the purchased goods by reduction
of some of the distributors as well as the middle men. E-procurement gives the opportunity to the
organization to drive straight to the manufacturing source. Presently, it is difficult to do so and a
large section of the suppliers pressurize it to be delivered from the end of an agent who have
been typically putting on their 10 to 15%.

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Another benefit is the optimization of the logistics as well as reduction of the transport costs and
lastly facilitating advanced planning for maintenance by integrating e-procurement with ERP and
other e-business applications.
4.3 Critical Factors for implementation of e-procurement
There are some of the critical factors regarding the implementation of e-procurement strategy in
the Woodside Company. Firstly, it deserves mention that ensuring of the e-procurement is
compatible with back procedure of ERP. This is a manufacturing firm who is also liable for the
maintenance of their operations as well as explorations which are factors critical to the success of
the organization. The second most critical factor for this organization is good preparation as also
active monitoring and learning. Thirdly, it was necessary to undertake a well framed analysis of
the procurement spending which was also necessary to ensure that the e-procurement strategy
have been working properly for the firm also. Communicating both internally and externally is
also a critical factor for successfully implementing e-procurement. Also, competent people are
needed who can implement the process.
5. Recommendations and Conclusion
The first implication as well as recommendation, which can be derived, after the above
conducted organizational analysis is that, the organizational hierarchy needs redesigning. The
processes of redesigning also need to be conducted along with the caution that the organization
needs to confirm that the functions that are covered under e-procurement are not overlapped.
That is the reason why the new department of Shared Service is going to be beneficial for the
organization. in summarization of this report, it can be recommended that the organization, in the
future should be emphasizing on the four following issues. the first is that the employees need to

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be compliant with the renegotiated contracts for improving the procurement effectiveness. the
second benefit is the leveraging of the consolidated spend data so that the organization gets the
best price from the suppliers. Thirdly, it is the dis-intermediation of the distribution channels so
that the procurement from the middlemen can be avoided thereby reducing the prices of the
goods that have been purchased. The last aspect is the collaboration with the existing players so
as to facilitate the aggregation of the goods procured for driving down the cost of logistics.