Electronic Procurement and Cost Saving in the Fast Moving Consumer Goods: A Case Study of Retail Sector in Zimbabwe

Abstract

In this paper, the authors explored the use of e-procurement in Zimbabwe's fast moving consumer goods industry. There are several studies that have been done in developed economies regarding e-procurement in retail sector. However, the literature was scanty on issues of e-procurement cost saving in the fast moving consumer goods industry in developing countries. It is against this background, that we sought to close the gap in the literature on the use of internet in Zimbabwe's fast moving consumer goods industry. We utilized an economic order quantity (EOQ) theoretical framework to demonstrate that an adoption of e-procurement could save cost in Zimbabwe's fast moving consumer goods industry. We carried out a survey of firms in the fast moving consumer industries in Zimbabwe. A cross-sectional study design was employed to collect data from 56 respondents from DCK, OK Zimbabwe and Spar retailers, chosen using simple probability sampling method in the course of January 2014 to March 2015. We examined e-procurement operations of these retailers located in selected major towns of Zimbabwe. The hypothesis tested was that e-procurement does not exist in Zimbabwe's retail sector. The results indicate little e-procurement use in Zimbabwe's retail fast moving consumer sector. It was expected that these results should shed light to policy makers in the private sector and government and thereby encourage them to embark on policies that enhance e-procurement in the fast moving consumer goods industries. Subsequently, we conclude that the adoption of e-procurement should lower administrative ordering cost and thereby improving the profit margins of firms in the retail sector.