Procurement 4.0 and Organizational Performance in the Malaysian Construction Industry

Introduction

All organizations are striving towards the best performances. Moreover, within this quick-paced and high competitiveness from the competitors, organizational performance can best be regarded as the organization's overall effectiveness in fulfilling the identified needs in all parts of the organization, management and technical, and applying systematic efforts for its improvements (Attia, 2015). Othman et al., (2015) classified two classifications: performance can be measured financially and non-financially. It was stated that performance measured within the financial aspect can only cover a small part of the organization and is regarded as narrow compared to non-financial aspects. This is because non-financial aspects are broader and more practical in presenting the overall performance. Consequently, with more improvements implemented into parts of the organization, a higher ability to gain competitive advantages can be achieved. Therefore, procurement and supply chain performance is measured in this study as closely related to procurement 4.0.

Malaysia is still classified as a developing country. There is a higher growth potential because the industries are still not fully developed. Rashidi and Ibrahim (2017) estimated that 1.2 million workforces represent 9.5 percent of the national workforce within Malaysia's construction industry. Other than that, the construction industry can be considered the catalyst for growth and sustainability for more than 120 other industries in Malaysia. Therefore, this signifies that the construction industry must be developed in its technologies, abilities, and workforce. Rashidi and Ibrahim (2017) also mentioned that the Construction Industry Development Board of Malaysia (CIDB) motivates the advancement of technology, such as the usage of information and communication technology (ICT) in daily activities within the organization thus, improve the professionalism of the workers to develop a sustainable industry. Therefore, the presence of Industrial Revolution 4.0 (IR 4.0) can bring significant changes toward digitized development (Alaloul et al., 2018). As the elements of IR 4.0 are implemented into the procurement, it will change into procurement 4.0. Hence, the implementations will move the improvements into digitalized technologies, such as applying Artificial Intelligence (AI) to supply chain management. Subsequently, by practicing procurement 4.0 in the organization, the construction industry will be regarded as construction 4.0 (Maskuriy et al., 2019).

Bag et al., (2019) stated that procurement 4.0 is a new term expressed first by Bienhaus and Haddud in 2018. Therefore, implementing and developing a new practice in the organization can be challenging as it will have more barriers within its procedures, capabilities, and capacities. Subsequently, the adoption will be slow (Muriuki et al., 2019) as it will face low acceptance from the management. Moreover, the lack of awareness and support from the management will disrupt the implementation process, and this happens because the management needs to consider how much it will cost the organization and what benefits it will bring. Muriuki et al., (2019) also stated that this is related to the lack of unreliable information related to the complexity of the procurement 4.0 procedures. Therefore, its effectiveness and efficiency cannot be determined and brought to a decision to update or replace the current procurement system (Galli, 2020). Apart from that, to improve the competency needed to manage the system, the organization must provide the necessary training to the procurement technical staff (Muriuki et., 2019; Arora & Panchal, 2021).