Procurement in the public organization refers to how government regulations govern the procedures to get the goods, services or works required to facilitate their business processes, including for public higher education institution. The main difference between procurement in the private and public sectors are located in different objectives. Procurement in the public sector not only for financial gains but also include objectives such as providing education, research excellence, community development and provide other public goods that are adjusted to the needs of a diverse work units (Arlbjørn & Freytag, 2012; Currie & Vidovich, 2000). There are three main points in the higher education institution procurement, namely the importance of procurement relationships with other functions in their respective institutions; importance of choosing the supplier of goods/services and customer relationship management; and the importance of incorporating procurement activities as activities that adding value. Good procurement activities require whole life-cycle management, procurement staff training, awareness and priority to the purchasing function, more accurate data, benchmarking and the value of purchasing consortia (Quayle & Quayle, 2000).
Public higher education institutions will be faced with a relatively tighter supervision in the future and therefore it should have the procurement function better and can help accountability and greater transparency (Glock & Broens, 2011). However, public higher education institutions are still less concerned with the importance of the procurement function compared to higher education in the private sector (Glock & Broens, 2011; Quayle & Quayle, 2000). While good procurement activities are a major component of organizational strategy (Young, Nagpal, & Adams, 2015).
Public higher education institutions in conducted procurement activities have had some challenges, such as the form of government environment and strict regulations (Glock & Broens, 2011) and complex procurement business relationships (Larson, 2009; Murray, 1999). Improvement in the procurement process needed to solve the challenge and long working time of procurement process. Improving this process can be done with the use of information systems (Rinaldi, Montanari, & Bottani, 2015).
The information system has been widely used in almost every area of life and education is no exception. Instead, technology and information systems have been applied quite widely in the field of education. In addition, management information systems can improve the competitiveness of the university itself (Dachyar & Dewi, 2015). The information system has become a basic factor to improve the performance of business processes (Silva & Oliveira, 2015). Information systems have become part of the strategy and activities of the organization. The using of information system in college give a positive impact on financial management (Silva & Oliveira, 2015) and knowledge management (Dachyar, Alam, & Pratama, 2016), and able to enhance the innovation of universities (Dachyar, Yadrifil, & Pratama, 2015).
Information system that has capability to support the business processes and also the procurement process of higher education is the Enterprise Resource Planning (ERP) system. ERP systems consist of software that supports manufacturing, orders, accounts receivable and payable, general ledger, procurement, warehouse, movement of goods and human resources. Enterprise Resource Planning system is used by worldwide companies and continues to expand into software that needed by a wide range of users, including higher education institutions.
ERP systems have the ability to be used in various kinds of conditions. A single set of software such as ERP systems are able to meet the business needs of an organization. ERP aims to reduce costs and improve business processes to be better with best practice. There are many reasons why using ERP, one of which is to increase the flow of a process and organization control. There are five benefits of using ERP systems in higher education, namely cost reduction, increase of the company's processes, reduce work and inconsistencies, integrate management and eliminate the limitations in linking the information systems of various fields (Silva & Oliveira, 2015). However, ERP systems that commonly used in commercial enterprises or not used in education field is not enough to meet the needs of higher education institutions (Noaman & Ahmed, 2015). There is a special needs to meet the academic functions of higher education institution. These needs led to the ERP system needs to be adapted to business processes of higher education institution. In another study also states that the differences forms of organization between universities and multi-national companies lead the ERP system can not be used casually in educational organizations (Pollock & Cornford, 2004). Procurement activities of the public higher education institution will also experience problems in the use of ERP systems such as adjusting the system with business processes, using problems by the user, requiring additional modules that alter the ERP system and changes in the ERP system that is too far will affect the way of working and procurement strategies becomes more difficult to implement (Pollock & Cornford, 2004).
The difference between best practice of ERP system and higher education institution business processes lead to employees need to rethink the new business processes in accordance with the comercial enterprises (Pollock & Cornford, 2004). The method that could help higher education to adjust their business processes with the ERP system is a business process re-engineering (BPR) method. BPR will help the higher education in showing inefficiency, reduce paper use, improve efficiency, and achieve operational improvements by reducing the workload and costs (Abdous & He, 2008).
Higher education should pay attention to four (4) elements of the implementation of BPR: Focus on fundamentals; radical redesigning; potentially give dramatic results; and business process orientation (Hammer & Champy, 1993). There are five (5) steps in BPR, namely preparing for re-engineering, as-is process analysis and criticality identification, data collection, development of the simulation model, and design of the to-be processes (Rinaldi, Montanari, & Bottani, 2015).
This study used the Business Process Reengineering (BPR) for designing the procurement system. The study consisted of three (3) steps, namely prepare for re-engineering, map and analyze as-is process, and the to-be design process.
Prepare for re-engineering is a stage that aims to understand the initial state of the procurement process in public higher education institution. There are three (3) types of procurement in the public higher education institution, the procurement price of goods/services below 200 million by direct election, procurement price of goods/services over 200 million through public auctions and procurement through e-catalogue. After understanding the initial conditions of the procurement system, followed by map and analyze as-is process stage. This stage is the mapping and analysis of the initial condition of the procurement process. Mapping and analysis used unified modeling language (UML) modeling techniques, use case diagrams and activity diagrams. Furthermore, the procurement process model analyzed and evaluated.
Design to-be process stage is a step that aims to design new procurement process. Stage design a new procurement process based on the initial state of the procurement process and the analysis in the previous section and Enterprise Resource Planning (ERP) system. Model of new procurement process design simulated using iGrafx to see the change from As-Is procurement process.
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