Procurement Outsourcing

Topics: Strategic management, Procurement, Business process outsourcing Pages: 33 (11225 words) Published: February 26, 2013
OUTSOURCING PROCUREMENT IN THE NIGERIAN INFRASTRUCTURE CONSTRUCTION INDUSTRY: A POTENTIAL FOR INCREASING PERFORMANCE This research is not concerned about procurement in terms of project delivery, but procurement as a business function concerned with securing the inputs to the construction process. Some theories use different terms when describing the purchasing process and structure. However, it is assumed that the terms Supply Management, Purchasing and Procurement have similar meaning. Thus, the term procurement will in most parts of the research work, be interchanged with the term purchasing. While the former refers to a broader term (with respect to scope), both terms are fundamentally the same. ABSTRACT

In 2006, Espino-Rodriguez & Padrón-Robaina, in their review of outsourcing from the Resource Based View (RBV), proposed a framework to outsourcing that relates the characteristics of a resource/business function to outsourcing and ultimately performance improvements. The application of RBV to outsourcing is a practically new field (Teece et al. 1997). For developments in this field, it is necessary to make this framework operational (Espino- Rodriguez and Padrón-Robaina 2006). Hence it is imperative to validate this framework to outsourcing decisions in specific economic sectors, geographical area and business function; and subsequently contribute to the development of complimentary functions that improves organisational performance. Outsourcing business processes in Nigeria is relatively new and saddened with the lack of information (Anaekwe 2011). There is, however, increasing interest in outsourcing part or all of the procurement function, but there exists little knowledge on the drivers for an outsourcing decision (Maltz and Ellram 2006). The Infrastructure construction industry would greatly benefit from procurement outsourcing (P.O), because it is an industry characterised by high-supplier power. In addition to the rising cost of construction, which is directly related to the huge cost of procuring materials and services, procurement managers should be able to deliver deeper business benefits and improve performance via procurement business process outsourcing ( To contribute to the development of a comprehensive literature on procurement outsourcing in Nigeria and also a development of a reliable framework that evaluates the strategic value of procurement functions as drivers for an outsourcing decisions and performance improvements, calls for a research aimed at validating Espino’s framework on Outsourcing and performance, relative to the infrastructure construction industry in Nigeria and the Procurement function. To achieve this, the proposed research would firstly, examine the business environment of the Nigerian infrastructure construction industry, and thus determine the key performance issues. Secondly, it would critically evaluate the correlation/ relationship between Performance and Procurement, relative to this industry. Thirdly, in line with Espino’s framework (propositions 2 & 4), determine the main drivers to a Procurement Outsourcing decision, in this context. Fourthly, following the preceding exercise, the research would draw inferences on the “performance-improvement” potential of Procurement Outsourcing in this industry. Basically, this research should avail us the opportunity to test Espino’s framework on Outsourcing and explore in particular, Procurement Outsourcing in the Nigerian Infrastructure Construction Industry. Methodological triangulation approach is proposed for the research methodology. This makes it possible for the utilisation of qualitative and quantitative methods of data collection, to compliment the lack of information and improve the validity and reliability of the study. The chosen data collection methods are interviews, questionnaires and Document analysis. The research would also employ a critical review into relevant literature. Although this...

References: ELLEGAARD, C., et al., 2010. Purchasing and Supply Management in the Construction Industry. Guest Editorial. Journal of Purchasing & Supply Management 16 (2010) 219-220
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ARABE, K.C. 2003. The Rise of Procurement Outsourcing. [online]. NewYork: ThomanNet News. Available from: [Accessed 5 September 2012]
PROSHARE. 2012. Concessioning in Nigeria: a Challenge to PPP. [online]. Lagos: Proshare. Available from:, [Accessed 4 December 2012]
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