AN ASSESSMENT OF FACTORS AFFECTING PROCUREMENT …
Transcript of AN ASSESSMENT OF FACTORS AFFECTING PROCUREMENT …
AN ASSESSMENT OF FACTORS AFFECTING PROCUREMENT STRATEGY ON
THE PERFORMANCE OF MANUFACTURING FIRMS IN KENYA CASE OF
COCACOLA KISII BRANCH
THOMSON DIVINAH NYACHAMA
A RESEARCH PROJECT SUBMITTED TO SCHOOL OF BUSINESS AND
ECONOMICS IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF A WARD
OF DIPLOMA OF PROCUREMENT OF SCHOOL BUSINESS AND ECONOMICS
KISII UNIVERSITY
NOVEMBER, 2017
DECLARATION AND RECOMMENDATION
DECLARATION
The research project is my original work and has not been presented to any other institution/ university for the award of diploma.
Signature------------------------ Date-----------------
THOMSON DIVINAH NYACHAMA
CB05/10177/16
RECOMMENDATION
This research project has been submitted for examination with approval as the university supervisor.
SIGNATURE------------------------- DATE.........................
Mr. Wycliffe Otera
Assistant Lecturer school of business and economics
Kisii University
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DEDICATION
To my parents thanks for your love and tireless support has added a value to my life. My friends thank them for touching my life in a positive way, to my entire supervisor Mr. Wycliffe Otera for his support in my academic work.
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ACKNOWLEDGEMENT
I acknowledge almighty God and my supervisors Mr. Wycliffe Otera for his assistance in this
research project preparation and I appreciate throughout the research project.
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ABSTRACT
The recent global procurement trends show that a company can only purchase in the market ifit adopts procurement strategies effectively. Procurement strategy is the approach used by theorganization to fix modernization of the purchasing operations. It acts as a tool used toevaluate the firm’s performance in the business change. The procurement strategies to beused procurement strategies was negotiation strategy, order strategy and technologicalprocurement strategy, companies which have applied the procurement strategies haveprospered fully in procurement performance unlike those which have not. The study objectsto; find out the effects of negotiation strategy, to determine the effects of Purchase orderstrategy on procurement performance and to establish the effects of technological strategy onperformance. The area of the study is coca cola kisii branch in Kisii town. The targetpopulation of the study includes all 520 employees whereby which 52 employee was used asthe sample size in the study. Purposive sampling techniques were used to choose people withinformation. Data was collected by use of closed end questionnaires by drop and pick methodand administered by the researcher. Validity was verified by researcher’s supervisors andreliability of the instrument was verified by test retest coefficients. Data collected wasanalyzed by descriptive statistics such as percentage and frequencies and the findings werepresented by use of tables and figures. The respondent were asked to indicate relevantinformation that relates to Purchase order strategy in procurement decision in your firm bylevel of agreement and found that Creation of new product or qualitative improvement inexisting product were highly strongly agreed and Application of new industrial process wasfollowed by Development of new material sources or other new inputs. The findings showthat application of new industrial process and new forms of industrial procurement steps wasstrongly used. The study findings show and recommended that most of the respondents wereto increase new supplier market openings and development of new material sources or othernew inputs. The study should be used to assess the extent to which technological procurementstrategy decision affect performance. The study show that service delivery and timelines wasstrongly used as performance indicators. The study suggested that the study to be conductedon the effect of technological procurement power on performance. The study also suggestedfor development of the procurement decision and technological procurement is developed byprocurement and were adopted with procurement program team is composed together verywell company power drive.
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TABLE OF CONTENTS
Contents
DECLARATION AND RECOMMENDATION.......................................................................ii
DEDICATION.............................................................................................................................iii
ACKNOWLEDGEMENT...........................................................................................................iv
ABSTRACT..................................................................................................................................v
TABLE OF CONTENTS.............................................................................................................vi
LIST OF TABLES.......................................................................................................................ix
LIST OF FIGURES......................................................................................................................x
List of Abbreviations...................................................................................................................xi
CHAPTER ONE.........................................................................................................................1
INTRODUCTION.......................................................................................................................1
1.1 Background of the Study......................................................................................................1
1.2. Statement of the Problem....................................................................................................2
1.3 Objective of the Study..........................................................................................................2
1.4 Research Questions..............................................................................................................3
1.5 Significance of the Study.....................................................................................................3
1.6 Scope of the Study...............................................................................................................3
1.7 Limitation of the Study........................................................................................................3
1.8 Assumptions of the Study.....................................................................................................4
1.9 Operational Definitions of the Study...................................................................................4
CHAPTER ONE.........................................................................................................................5
LITERATURE REVIEW...........................................................................................................5
2.1 The Concept of procurement................................................................................................5
2.2 Theoretical Framework........................................................................................................5
2.2.1 Expectancy Theory............................................................................................................5
2.2.2 Roger’s Theory..................................................................................................................6
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2.2.3 Productivity Theory...........................................................................................................6
2.3 Empirical Literature.............................................................................................................7
2.3.1 Negotiation Planning Strategy..........................................................................................7
2.3.2 Purchase order strategy.....................................................................................................8
2.2.3 Technological Strategy....................................................................................................10
2. 3 Knowledge gap..................................................................................................................11
2.4 Conceptual Framework......................................................................................................12
CHAPTER THREE..................................................................................................................13
RESEARCH METHODLOGY...............................................................................................13
3.1 Research Design.................................................................................................................13
3.2 Study Area..........................................................................................................................13
3.3 Target population................................................................................................................13
3.4 Sampling Techniques and Sample Size..............................................................................13
3.5 Data Collection Instruments...............................................................................................14
3.5.1 Reliability of the instruments..........................................................................................14
3.5.2 Validity of Instruments....................................................................................................14
3.6 Data Collection Procedures................................................................................................14
3.7 Data Analysis Techniques..................................................................................................14
CHAPTER FOUR.....................................................................................................................15
DATA ANALYSIS AND PRESENTATION............................................................................15
4.1 The Response Rate.............................................................................................................15
4.2 Demographic Characteristics.............................................................................................15
4. 2.1 Level of education..........................................................................................................15
4.2.2 Title in the firm................................................................................................................16
4.3 Purchase Order Strategy.....................................................................................................16
4.4 Technological Procurement Strategy................................................................................18
4.5 Performance.......................................................................................................................19
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CHAPTER FIVE......................................................................................................................20
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS...........................................20
5.1 Summary............................................................................................................................20
5.2 Conclusions........................................................................................................................20
5.3 Recommendations..............................................................................................................20
5.4 Areas of future study..........................................................................................................20
References...................................................................................................................................21
Appendices..................................................................................................................................23
Appendix I: Questionnaire......................................................................................................23
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LIST OF TABLES
Table 4.1: Response Rate
Table 4.2 Level of Education
Table 4.3 title in the firm
Table 4.4 purchase order
Table 4.5 Negotiation Planning Strategy
Table 4.6 Technological strategy
Table 4.7 performance
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LIST OF FIGURES
page
Figure1 Conceptual Framework………………………………………………………13
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LIST OF ABBREVIATIONS
IS Procurement strategies
ID procurement decision
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CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Procurement strategy requires procurement of getting new purchasing ideas about the service
to be offered in the firm procurement of material in relations to change of technology.
Procurement strategy is an approach of modernizing procurement ideas on overall
performance, for procurement growth and that of workers at all the business changes.
Procurement strategy is the action of new tools to improve benefit from increasing
procurement due product modification and developing negotiation planning selling and
technological strategies to look new purchasing of product in the market in order to improve
firm’s performance, for procurement to survive and firms must grow it more quickly than the
competitors do eventually than business ideas (David, 2015), changing previous
technological procurement techniques to the new form of technological procurement in the
modernization way to the instrument of procurement, organization goals and objectives to
operating managers in the factory. Strategic procurement is a procurement dimension along
with strategic procurement systems. It assists the organization to solve issues effective
managerial performance measurement, the rise of intangible assets and the challenge of
implementing strategy to procurement performance (Caracell, 2006).
In Mexico strategic managers must plan significant contest of procurement strategy in
international standards of specifications for effective and efficient modernism of
procurement. Strategy procurement is a decision which is developed through market research
to break barriers to international trade. Strategic procurement idea has operated for centuries
in different parts of the world for example that of China, One of the earliest days and longest
serving purchasing strategies organization providing strategic purchasing idea slowly to
become a widespread tradition of about all over Ireland in less than one decade. The main
purpose procurement tactic is to improve new purchasing ideas with interest for short periods,
experimenting with ideologies of economics ( Sirkin 2007). In Malaysian companies
procurement strategy is declining due to the rapid economic growth in which generated
higher profitable business opportunities in Malaysia. procurement managers have helped to
reduce poverty levels among the poor communities by training purchaser similarly , Andew
and (Sirkin 2007) in his study on Grameen Bank’s clients in Banglandesh noted that about
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90% of clean revealed improvement of the procurement strategy. The study also was
conducted the procurement in Bonsinia and Heregovina indicated significant positive impact
on household, business investment, business registration and post war transition (Molleman,
2007).
1.2. Statement of the Problem
Coca Cola Company limited is a manufacturing industry which is competing with difficulties
in other firms of procurement strategy in terms of its negotiation planning selling and
technological strategies in product available in the manufacturing sector is in dilemma,
because of stiff competition in procurement strategy in the target market. This leaves coca
cola companies a challenge to operate in Kisii town with no option other than entering into
procurement strategy as an alternative way to improve the firms performance. In order to stay
in the market there is need for procurement strategy in terms of negotiations planning strategy
and technological strategy.
Johnesn (2011) did a study on the effects of performance institutions on procurement
systems and the study did not talk of procurement strategy on procurement so this study is
anticipated adoption of procurement strategies to facilitate the technological procurement
strategies. However the procurement strategy is ineffective after several trials to introduce it
in the department proved unsuccessful. Based on the procurement technology gaps of the
procurement don’t encourage collaboration and information sharing in the manufacturing
firms as a consistence tools for technological procurement. In this study the researcher will
assess the effects of procurement strategies on performance of manufacturing firms.
1.3 Objective of the Study
The study was to assess the effects procurement strategies on performance in Kenya using a
case study of Coca-Cola in Kisii branch. In the study, the researcher focused the following
specific objectives of the study was to
i. To examine the effect of negotiation strategies on performance of Coca-Cola
companyii. To find out the effects of purchasing order strategies on performance of Coca-Cola
company.iii. To establish the effects of technological strategy on performance of Coca-Cola
company
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1.4 Research Questions
i. What is the consequence of negotiation strategies on performance of Coca-Cola
company ii. What are the effects of order strategies on performance of Coca-Cola companyiii. What are the effects of technological strategy on performance of Coca-Cola
company
1.5 Significance of the Study
The researcher hopes that the study finding was used in the following ways; the researcher
hopes to generate new knowledge to management of procurement officers and a government
policy on performance was of benefit performance in making decisions. The findings of the
study was used by firms in other private sectors and public sectors like in banks and
education sectors of Kenya for research and firms clients in making decision regarding new
procurement policies. At the same time, researcher found as a source of information to further
study.
1.6 Scope of the Study
This study was conducted in Coca-Cola in Kisii branch and it is located in Kisii County. It
targeted the section heads in the firms and other sections within the firm and assess the
influence of procurement strategies on performance. The researcher focused on the effects of
the procurement strategies in Coca-Cola Kisii branch, because there are other numerous firms
in the area was to focus on. The study used questionnaire to collect data from the field for
analysis purposes, however, it was on the perception of the researcher which is that there are
still gaps in the research so far done. This study was therefore; tried to establish the linkage
between procurement strategy and performance.
1.7 Limitation of the Study
The study was carried out in Kisii bottler and generalization of the findings was not truly
reflecting the actual problem in the firms because of the uniqueness of each firms since they
are in different geographical locations. The other limitations are that of this topic which is
only restricted to on procurement strategies on manufacturing company in which the
researcher was have to adhere to the time schedule and minimize on the cost through control.
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1.8 Assumptions of the Study
The researcher was conducting an intensive study to come up with findings which can easily
be generalized to other areas. The researcher was to work across the time schedule to reduce
the cost and time over run.
1.9 Operational Definitions of the Study
Procurement purchasing practices
Procurement Strategies-- the use of ability to improve method of purchasing in relations to
procurement
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CHAPTER ONE
LITERATURE REVIEW
2.1 The Concept of procurement
Procurement is a way to put new ideas on procuring goods used for determining positive
performance and new changes. Strategically new is on new actions put in an extensively way
which regarded as the sources of sustainable competitive gain in an ever more changing
situation, because it leads to product and process of improvement which makes advances that
helps firms to survive, allows firms to grow more quickly, be more efficient, and ultimately
be gainful than non-innovators, (Jiill Jusko, 2009).
According to Norton (1999) described procurements as procurement strategy by use of
balanced score card to activate procurement strategy was to act as a systematic an attempt to
measure the relationship between procurement activities of an organization and performance
to communicate the organization’s goals and objectives to operating managers. From the
findings of the study he concluded that the strategic procurement may be regarded as both a
performance measurement and management of supply and purchase. However, the theory is
used to explain procurement strategy is few. This study will seek to explain the concepts of
procurements in relations to procurement performance. The theory is adopted explain the
need for procurement strategy on procurement performance.
2.2 Theoretical Framework
2.2.1 Expectancy Theory
It was proposed by Vroom in 1964, and it is based on the assumption that every organization
expects good rewards in the future. Individuals try to work hard to performance and to show
the way towards rewards. This theory is used is this study to recognize the relationship
between procurement ideas and procurement performance and derived rewards in the
organization. Under expectancy, individual’s view is to put awareness on a particular
achievement to generate good results. Under instrumentality, individual’s beliefs are to the
efficient of performance rewards. Under valence its whereby an individual’s believes to offer
attractive rewards. These issues are jointly related to create motivating influence which
will inspire an entity to put more effort to achieve high level of financial performance, in
addition to achievements of rewards at the end of activity (Misati, 2010), It entails that work
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performance follows efficient buying and selling services awarded fairly than on the other
way round. It is accompanied through development of financial performance, where the
organization management strategies have been put down on emphasis.
2.2.2 Roger’s Theory
It was proposed by Rogers in 1995. It is applied in airline organization as a strategy of
supply chain management. These theories require purchase strategy to be reinvented in the
organization to continue processes. The active dynamic to the firm is to adopt change of
endeavoring for excellence of performance with strong improvement of the company.
Organization strategy is very important for every organization to overcome rival competitive
in the present economic needs. Manufacturing firms have become very competitive in nature
of permanence. Rogers developed this theory as diffusion model of the organizations
strategies in different activities. The acknowledged that technology is changing and it can
lead to five types of determinant of comprise of 1st type of the determinant is put on the center
of attention to perceived quality of the company’s strategic plans, it focuses on the simplicity
of the comparative advantage, the 2nd type of determinant is set on the effects of organization
strategies adopted which clear the firm’s attributes by management techniques. 3 rd type of the
determinant is to aim at communication control, it tells the function of management strategies
(Kwamboka, 2014).
2.2.3 Productivity Theory
This is how the productivity of the day is arrived in the organization. The procurement
strategies relate to employees turn out which suggests that technological procurement control
to the amount of strategies which give out to the firm depending on the existing process and
available security or substitute for security of work done. Consumers will make buying
strategic decision to buy or not to depending on the type of brand that has been obtainable to
them by a firm. If consumer spends cost at high rates, they attract riskier saving alternatives
to security provides avenue of defaulting paying from repaying since their relationship with
the user is not as strong when security is involved. The strategies of portion theory suggest
that price rate is very significant in determining the quantity of bottlers that will be willing to
produce and determine the ability to pay the procurement strategies (Rubera, 2012).
Johnsen (2001) regards the procurement to some extent as an extended model of management
by objectives (MBO). He asserts that long term monetary performance generically attributed
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to increased consumers loyalty and further more argue that the promotion of the procurement
is the use of style which is not reasonable on any technical grounds. The procurement
strategy in the ability of the company to articulate the mission which is associated in
procurement strategies as a major challenge in implementing the balanced strategy of
procurement, further more procurement strategy highlights out that any firm may face
challenges regarding the adoption of procurement strategy on procurement performance
( Schalm 2007).
2.3 Empirical Literature
2.3.1 Negotiation Planning Strategy
Negotiation Planning involves setting new standards of procurement price negotiations skills
to be adopted in various institutions as a purchasing strategy. Martin (2014) in his a study on
the effects of the effectiveness of planning procurement on emerging economy, the main
objectives of the study was to determine the effects of procurement performance on
procurement processes. The study referred as to as planning for procurement as a practical
tool based on the internal business knowledge and external skills on procurement in the
number of dimension critical to sustainable business and profitable needs thoughts. Planning
is the centre of converting ideas into money. The specific objectives were to solve the
problem of management changes and optimization of business procurement efforts. The study
assessed Cobb Douglas technological procurement function on various procurements. The
study revealed that there is a strong disparity is in terms of planning procurement spending.
The findings suggested that positive effects of business procurement are connected with
different business producing units. The force for procurement should be practical with goals
oriented for business achievement, Bruces Hererson the founder of Boston consulting group
about thirty years ago he argued that the majority of new product are of cash traps and will
take up more cash over their life span than they will produce. Transformation of ideas
certainly has non cash benefit including brand development and organization strength but for
most companies the proof is in the revenue profit margin and competitive advantages that
procurement creates over time, put ideas to the test with a three page scored on expected
revenue, technical feasibility, and relevance to the brand and market trends. This helps to
ensure that new products have the capability to be successful with revenue and performance
as the final measure (Niven 2003).
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Schumpeter (2014) in his study concluded that purchasing procedures follows strategy with
the intention of change in business model. Although procurement planning assumptions that
underpin procurement theory are highly suspect it is still widely accepted that the normative
objectives of procurement management is the maximization of shareholders wealth. Strategic
financial management that was there to satisfy this procurement as a point of companionship
requires a long term course of action in which procurement strategy fits in. the function of
procurement strategy act as the area of managerial policy that determines the venture and
procurement strategy decision which are preconditions for shareholder wealth maximization.
Each kind of decision can be subdivided into two types long term strategic and short term
operational. The previous may be unique typically involving significant fixed assets
expenditure, but uncertain future gains (Sapieza, 2008).
In set multiplicity of procurement planning ideas it tend to be reappearance of infinitely needs
for funds may be get by a hand on little. Asking price and income are usually quantifiable
form accessible data and selection of a large amount of profitable firms in the absolute terms.
The planning strategy assists industry to classify new controls to the attainment of
performance. In procurement strategic decision need implosion of the global free market
depository system throughout worldwide rehired consideration of the assumption that
underscores modern procurement strategic theories Rick 199). Kester 2009) concentrate on
the empirical studies from Asian countries also scrutinize the link between technological
procurement of product booms assets price cycles and procurement crisis across the East
Asian countries. They go back to the research on the data analysis on technological
procurement booms against assets prices and procurement crisis to strategic decisions. The
study found that there is a strong relationship between technological procurement planning
and assets price changes. They stated that there is planning growth expectation, heavily
capital inflows, inadequate corporation’s dominations and reliance on interdiction by under
regulated banks all led to rapid strategic growth especially in the business are larger, the
supply is more and the market is therefore more defective. Therefore need for procurement
strategy on performance.
2.3.2 Purchase order strategy
Purchase order strategy involves the methods of ordering products from different sourrces to
meet consumer needs. Management is looking ways on how to increase order for successful
procurement strategy. Harvard (2008), studied the effects of selling mix objective of what
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customer needs in order to sell to them. Purchase order strategy tell what consumers needs
better than competitors do builds sustainable. Achieving consumer centric procurement is not
an innate outcome of tactical results but is with time. A study published in business report had
completed that even companies spend more time on procurement ideas for both consumer’s
improvement and market capitalization. They go on to explain how consumer centric
procurement to put effort to the people who are in front line with consumers. Most
manufacturers adopt traditional product development but procurement lead to new
technological procurement methods control market niche. Procurement centric starts with
selling of infrequent goods and services in unusual (Oliver 2008).
The study done by Oliver (2007) showed that order on consumer in the concept of product co
creation and enabling consumer’s confidence. The objective was consistent with both
procurement orders and skills. Through, specific objective was to analyze the effects of new
market design models to pleasure consumer’s fidelity in form of competitive improvement in
advanced margins. The findings of the study showed that procurement strategy improves
market centric on new product efforts by ensuring consumer success, in order to use these
companies improve product differentiation in consumer experience at the centre of the
procurement, but the study did not solve the problem of procurement in the Purchase order
strategy (Cisco 2007).
Hayes (2005) studied the effects of ordering in procurement in business decision but based on
a basic business models to achieve goals of the firm, especially procurement action on
business transaction. The data analysis adopted statistical inferences and the findings are of
new ideas for strategic decision. The conclusion indicated that there is no single individual to
control all phases of ordering in procurement. The incompatible functional responsibilities of
initiating procurement process are the custody of assets which should be the responsibility of
separate individuals. Strategic duties are considered to be incompatible if a single person can
carry out and control errors and or irregularities in the course of performing day to day
activities. Recommendation was assignment of duties should provide a cross check of
responsibilities to avoid incompatibilities of procurement. Lack of proper strategic decision
of duties may result in procurement criticism if it creates a material weakness in the strategic
decision. Of this study there is no solution of procurement strategies in manufacturing firms
material weakness is one in which significant errors or irregularities may occur and not be
detected timely by employees in the normal course of performing their assigned function.
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Kester (1999) argued that procurement strategy is depends on selling performance in which
the specific objective is as part of the consumer monitoring actively of a firm and the
efficiency with which the unit of the organization are performing their assigned procurement
functions. Recommendation lead to the strategic decision which is an independent specific
objectives were declaration and consulting action procurement to add value and advance an
organization‘s new operations and draws the conclusions that state that an organization has to
achieve its objectives by brings a regular restricted new approach to asses and get the
effectiveness of technological procurement management risk control and control process.
Whittington management is normally concerned in formative whether a department has a
clear understanding of its consumers task, is sufficiently staffed maintains good work and
cooperate cordially with consumers to other department of procurement normally reports to
the top management of which they did not talk of related research problem solution in Kenya
manufacturing firms which is revealed Rosenbusch, (2011).
2.2.3 Technological Strategy
Technological strategy is the process of adopting technological techniques of purchasing
technology is used so to inform and to attract suppliers. It is the reaction of the corporate
strategy which depends on the company strength in decision which affects technological
procurement criteria. It has impacted all purchasing operations function and other divisional
areas of the business. Even though the approach of information and completion are
inextricable linked of both are different. The strength of the company is A is procurement of
everything in strategy formation which is positioning of forces earlier than the exploit and
bills strategy implementation of management forces. Poor performances depend on the
company technological procurement strategy which is blamed for a number of strategies of
failure. Depending on the company plan those put into practice of procurement strategy will
probably be a much more diverse set of people than those who formulate it. Studies of Sikrin
(2007) on the effects on technological procurement divisions in practical section effort with
their member manage budget and procedures for the procurement technological procurement
strategy.
A study carried out by Rick (2010) indicated that there is a relationship between price
technological procurement strategy and performance, because the objective of the study was
to examine online pricing management in relations to technological procurement process in
strategic improvement sustainability. The results from the study revealed that the
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procurement technological quotations methods affect outreach strategic market rise in the
period of one year on the average by 29%. It identified that reach the poor technological
procurement in terms of sales their reach to the needy particularly to women is limited up to
38%. From the procurement sustainability, it finds purchasing as strategy in an procurement
operational and sustainable as it measured by return on asset and return on equity and the
industry‘s performance is improving profit over time. The study also established that
procurement decision to the procurement (Andrew 2007).
Another empirical online procurement is seen from banking procurement looked at bank size
strategy and additional look at the bank procurement structure in Asian proceeding to the
procurement crisis of 1997. The study found out that during procurement decision making in
technological procurement ratio increased the level of risk. They also found that some
countries such as Indosia ,Korea and Thailand apply the strategy, also in banks shows a
strong lending performance but weaker productivity ratios which may have led to the
procurement disaster. The study also observed that bank size matters technological
procurement by profits preferences with the technological procurement size and capital
adequacy to decrease loss (the world Bank 2010). Another study was done by (Molleman
2005) on whether there is a relationship between the Asian procurement management crisis
and weakness of other decisions in current market technological procurement level in the
Asian procurement crisis.
Wanja (2011) argued by his study on the effects of technological procurement management in
business assets in sugar companies in Kenya and the findings from the study reveals that the
spread of procurement management affects the technological procurement in commercial
banks by increasing the cost of lending strategy charged on the technological procurement as
a strategy. When the cost of loans is high there are high chances of purchases and a like hood
of heaving a huge non performing loans portfolio this apply in strategic decisions when in
strategic decision when do borrowing from procurement decisions. There is no further
revealed information on procurement strategy on strategic decision in Kenya on performance.
2. 3 Knowledge gap
Most studies (David, 2015, Caracell, 2006), Andew and (Sirkin 2007) have been reviewed
but most of them have concentrated other sections of procurements strategies in management
leaving, selling, planning strategy and technological procurement strategy in procurement
performance with unclear findings and this creates knowledge gap from various scholars
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which point out that the meaning of procurement strategies has a positive outcome to the
company’s survivals and competitiveness, However Rick (2005) did a study of principle
effecting strategic management of a company. The used regression analysis to arrive at the
findings he proposed in a form of how the procedures of procurement strategies the take
place in the association including all the factors and steps that have to be taken in
consideration by buyer oriented companies .
2.4 Conceptual Framework
The framework focuses on independent and dependent variables which affect procurement
performance of the company.
Independent variable Depended Variable
Intervening variables
Figure 2.1 Conceptual framework
Researcher (2017)
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Purchasing Order strategy;
Order from organizations Procurement Performance
Sale volume output efficiency
Negotiation Planning Strategy; set of new purchasing process
new works Development
policy
Technological strategy;
Online quotations/ pricing
CHAPTER THREE
RESEARCH METHODLOGY
3.1 Research Design
The researcher design adopted a descriptive study because it was used to explain the situation
as it is in the present. For this study the research design was to enable the researcher to
identify the procurement strategy that the procurement department is putting into practice to
ensure proper purchase of the resources (Mugenda 2003).
3.2 Study Area
The study was conducted in Coca Cola Company Kisii branch in Kisii town, because it has
procurement sections which apply various strategic processes of acquisitions.
3.3 Target population
The target population of the study included all 520 employees comprising managers and
subordinates of Coca Cola kisii branch in Kisii town.
Table 3.1 Target Population
Category Total
Managers 40
Subordinates 480
Total 520
Source; Human resources records (2017)
3.4 Sampling Techniques and Sample Size
A sample is a set of data collected and selected from a population by a defined procedure this is
according to (Mugeda and Mugeda 2003) 10% and 30% was used in sampling to select the sample
size of 52 employees by section under study as in table 3.2. A purposive method was applied and
these gave each associate of the population an opportunity of being included in the ideas.
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Table 3.2 Sample Size
Category Total
Managers 4
Subordinates 48
Total 52
Researcher (2017)
3.5 Data Collection Instruments
The main research instruments were research questionnaires. Data was collected by the use of
research questionnaire which was administered by the researcher by drop and pick method.
3.5.1 Reliability of the instruments
The reliability ensured by method of what is supposed to measure. Crobach Karlinger (2006)
alpha coefficient if more than 0.7 is acceptable and if less than not acceptable since is the
measure of reliability.
3.5.2 Validity of Instruments
Validity is consistency of research flow with content, purpose and the topic in line with
objectives. The items in the questionnaire were structurally checked in relations to objectives.
Validity is verified by expert supervisors.
3.6 Data Collection Procedures
The researcher was distributed to all selected respondents to fill in by the researcher was
herself administering and collect questionnaires filled daily to get required information.
3.7 Data Analysis Techniques
A data analysis was quantitatively analyzed by descriptive statistics using by means,
frequencies and percentages in tables form and was presented by use of tables.
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CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION
4.1 The Response Rate
The study asked the response rate from 52 questionnaire issued and found out that from 52
questionnaires issued to respondents, only a total of 40 questionnaires were returned
indicated 76% response rate while 26% of the respondents did not show there response, The
response rate was highest from due to is large populations in Coca Cola Kisii branch, this
indicated that all majority of the respondents were in agreement under the study as it was
suitable and the results were presented in table 4.1.
Table 4.1: Response Rate
Response Rate Number of Response %
Response rate 40 76
Non response rate 12 24
Total 52 100
Source: Researcher (2017)
The study show that there was positive response of the results
4.2 Demographic Characteristics
4. 2.1 Level of education
The study wanted to find out level of education and found that level of education has requiredfrom the results showed that the study revealed that number of respondents had gone through education as the majority with diploma as in table 4.2.
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Table 4.2 Level of Education
Level of education No. of respondents Percentage
Degree 14 35
Diploma 22 55%
Masters 4 10%
Certificate 0 0
Total 40 100
Source: Field data (2017)
4.2.2 Title in the firm
The study asked the respondent to indicate their Title in the firm and found that supervisor at 55% followed by executive by masters with 35% and 10% respectively. The findings show that the majority of the respondents were supervisor.
Table 4.3 title in the firm
Title in the firm No. of respondents Percentage
Executive 14 35
Supervisor 22 55%
Masters 4 10%
Total 40 100
field data (2017)
The findings show that majority were supervisors in the company
4.3 Purchase Order Strategy
The respondent were asked to indicate relevant information that relates to Purchase order
strategy in procurement decision in your firm by level of agreement and found that Creation
of new product or qualitative improvement in existing product were highly strongly agreed
and Application of new industrial process was followed by Development of new material
sources or other new inputs. The findings show that application of new industrial process and
new forms of industrial procurement steps was strongly used with 4.25 and 4.55 respectively.
16
Table 4.4 purchase order
Aspects (1) 2 (3) (4) (5) fx fx/f
Creation of new product or
qualitative improvement in
existing product
0
9
4 0 14 22 174 4.35
Application of new industrial
process
2 0
4
0 22 16 170 4.25
New supplier market openings 9
4
8 6 14 3 96 2.4
Development of new material
sources or other new inputs
1
4
3 9 13 14 150 3.75
New forms of industrial
procurement steps
0
4
0 0 18 22 182 4.55
Field data (2017)
The study findings show that new forms of industrial procurement steps 4.35 and creation of new product or qualitative improvement 4.55 were strongly used. The study recommended that most of the respondents were to increase new supplier market openings and development of new material sources or other new inputs
4.4 Negotiation Planning Strategy
The sought to examine whether it is acceptable that consumers withdraw away from taking best negotiation planning practices of procurement change.
Table 4.5 Negotiation Planning Strategy
Aspect of best practices (1)2 3 (4) (5) F Fx fx/fStart with customer procurement 5
9
8 0 14 13 40 142 3.55
Have simple process for gathering
ideas
8 3 4 0 14 15 40 145 3.62
Engage the end consumer
immediately prototypes
0
4
0 0 18 22 40 182 4.55
Successful team effort. 1
4
0 9 14 16 40 164 4.1
Technology collaborations 25 7 14 12 40 149 3.75
Field data (2017)
17
The findings show that engage the end consumer immediately with simple concepts and prototypes 4.55 and Successful procurement is a team effort at 4.1. The study recommended that the firm have to use simple process for gathering ideas and Start with the customer with 3.55 and 3.62 respectively.
4.4 Technological Procurement Strategy
The study sought to assess the extent to which technological procurement strategy decision
affect performance.
Table 4.6 Technological strategy
Aspect (1) (2) (3) (4) (5) f fx fx/fDecision of new online
improvement in existing
documentation.
9 8 0 14 9 40 125 3.25
Use of quotation by
email process
8 2
4
0 14 16 40 148 3.7
Outcome of
markets openings
0
4
0 10 8 22 40 172 4.3
Development of
new raw-material sources or
other new inputs
4
4
0 9 14 13 40 152 3.8
Power of industrial
purchasing networks
6
4
9 8 8 9 40 125 3.125
Field data (2017)
The study show that some important aspects of company technological procurement
management were strongly recognized with Outcome of markets openings and Use of
quotation by email process with 4.3 and 3.7 respectively.
The study also indicated that technological procurement power are involved in the
development of the procurement decision and technological procurement is developed by
procurement and were adopted with procurement program team is composed together very
well company power drive.
The study was related to Martin (2014) who argued on the effects of the effectiveness of
planning procurement on emerging economy, the main objectives of the study was to
determine the effects of procurement performance on procurement processes. The study
referred as to as planning for procurement as a practical tool based on the internal business
knowledge and external skills on procurement in the number of dimension critical to
sustainable business and profitable ne
18
4.5 Performance
The study sought to examine procurement strategy affect productivity and service quality and
found that performance was highly identified with timeliness and quality at 3.875
Table 4.7 performance
Aspect (1) (2) (3) (4) (5) f fx fx/fOutput efficiency 9 8 5 9 9 40 85 2.125 Financial strength 8 1
4
17 14 0 40 117 2.925
Service delivery 1
4
6 7 14 12 40 150 3.75
Timeliness and quality 2
4
5 9 14 12 40 155 3.875
Field data (2017)
The study show that service delivery and timelines was strongly used as performance
indicators as table 4.8.
19
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary
The respondent were asked to indicate relevant information that relates to Purchase order
strategy in procurement decision in your firm by level of agreement and found that Creation
of new product or qualitative improvement in existing product were highly strongly agreed
and Application of new industrial process was followed by Development of new material
sources or other new inputs. The findings show that application of new industrial process and
new forms of industrial procurement steps was strongly used.
5.2 Conclusions
The study findings show that new forms of industrial procurement steps 4.35 and creation of new product or qualitative improvement 4.55 were strongly used. The study recommended that most of the respondents were to increase new supplier market openings and development of new material sources or other new inputs
5.3 Recommendations
The study recommended that whether it is acceptable that consumers withdraw away from
taking best negotiation planning practices of procurement change. The study should be used to
assess the extent to which technological procurement strategy decision affect performance. The
study show that service delivery and timelines was strongly used as performance indicators
5.4 Areas of future study
The study suggested that the study to be conducted on the effect of technological
procurement power on performance. The study also suggested for development of the
procurement decision and technological procurement is developed by procurement and were
adopted with procurement program team is composed together very well company power
drive.
20
References
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22
Appendices
Appendix I: Questionnaire
Questionnaire No…
Questionnaire One
Dear respondent, I am Thomson Divinah Nyachama carrying out a research under the supervision of Kisii University. The effects of procurement strategies on procurement performance of coca cola company in Kisii town.
Please spare about 30 minutes and help complete this questionnaire. There is no correct or
wrong response. All the information gathered is confidential and shall be used for academic
purposes only.
SECTION A: BACKGROUND INFORMATION
1. Please indicate the level of your education
Certificate [ ] degree [ ]
Masters [ ] Others [ ]
2. Please indicate your title in the firm.
Executive [ ] middle level management [ ]
Supervisor [ ] others [ ]
23
SECTION B : PURCHASE ORDER STRATEGY
3. Please tick (√), the appropriate box any relevant information that relates to Purchase
order strategy in procurement decision in your firm.
5 Strongly disagree, 4 Disagree 3 Neutral disagree 2 Agree 1 strongly disagree
Aspects (1) (2) (3) (4) (5)Creation of new product or qualitative
improvement in existing productApplication of new industrial process New supplier market openingsDevelopment of new material sources or other
new inputs New forms of industrial procurement steps
SECTION C NEGOTIATION PLANNING STRATEGY
4 It is acceptable that your consumers withdraw away from taking best negotiation planning
practices of procurement changes as in the table below. 5 Strongly disagree, 4 Disagree
3 Neutral 2 Agree 1 strongly disagree
Aspect of best practices (1) (2) l (3) (4) (5)Start with the customer procurementHave simple process for gathering ideasEngage the end consumer immediately
with simple concepts and prototypessuccessful procurement is a team effort.Technology procurement collaborations
SECTION D : TECHNOLOGICAL PROCUREMENT STRATEGY
5 Strongly disagree, 4 Disagree 3 Neutral disagree 2 Agree 1 strongly disagree
7. Tick (√), the extent to which technological procurement strategy decision affect
performance \
24
Aspect (1) (2) (3) (4) (5)Decision of new online improvement in
existing documentation.
Use of quotation by email processOutcome of markets openings Development of new raw-material
sources or other new inputsPower of industrial purchasing networks8. Please tick (√), the appropriate box I regard to some important aspects of company
technological procurement management. 5 Strongly disagree, 4 Disagree 3 Neutral
disagree 2 Agree 1 strongly disagree
Aspect (1) (2) (3) 4) (5)technological procurement power are
involved in the development of the
procurement decision technological procurement is developed by
procurementProcurement program team is composed
together very well company power driveProcurement strategy is implemented by
experts
SECTION E PERFORMANCE
5 Did procurement strategy affect productivity and service quality
5 Strongly disagree, 4 Disagree 3 Neutral disagree 2 Agree 1 strongly disagree
Aspect (1) (2) (3) (4) (5)Output efficiency Financial strength
25
Service deliveryTimeliness and quality
26