E-PROCUREMENT PRACTICES AND PERFORMANCE OF LARGE MANUFACTURING FIRMS IN NAIROBI COUNTY
Purpose of the study: The purpose of the study was to assess the impact of e-procurement practices on organizational performance in large manufacturing firms in Nairobi County.
Problem statement: In the today’s dynamic global competitive business environment, technology based innovation has turned out to be essential for organizations to furnish their clients with cost-effective total solution and better consumer loyalty with imaginative thoughts and strategies. However, some challenges in e-procurement such as costs owing to the cost needs of setting up such as system key among them; budgeting and costs, change management, as well as need of training and resources has led to a sluggish adoption of the eProcurement practices(Amani, 2015).
The manufacturing sector in Kenya, which is dominated by subsidiaries of multinational corporations, contributes to an average of 9.2% towards the Gross Domestic Product (GDP). In most of the projects undertaken by large manufacturing firms, there is delay in the start of projects and realization of the goals due to delays in procurement process. This causes losses in terms of monetary value and time.
Study methodology: The study used a descriptive research, which involved the measurement, classification, analysis, comparison and interpretation of the data obtained from the study. The target population for the study was 50 large sized manufacturing firms in Kenya where the unit of analyses were procurement managers and procurement supervisors. The study adopted a census approach on all the procurement managers and procurement supervisors in the 50 large manufacturing companies in Nairobi County. Therefore, the total sample size of the study was 100 respondents. Primary data, original data gathered from research subjects was collected using questionnaires. The researcher employed a quantitative approach to data analysis. With regard to the data obtained using standard questionnaires; the researcher used SPSS software for analysis.
Results of the study: Regression analysis results indicated that E-bidding (β=.124,p=0.002, E-tendering (β=.111, p=0.005) E-purchasing and performance, the regression analysis revealed a positive and significant relationship (β=.089, p=0.023) E-sourcing (β=.125, p=0.004) were positively and significantly related with performance pf large manufacturing firms in Nairobi County.
Conclusion: The study concluded that large manufacturing firms in Nairobi County adopt various E-procurement practices which includes; E-bidding, E-tendering, E-purchasing and E-sourcing as a way of improving their financial performance.
Recommendations: The study recommends that the large manufacturing should adopt E-procurement practices owing to their immense benefits to the performance of the firm which include; improved financial performance, timely submission of purchase requisitions by department for approval, transparent price information, reduced inbound lead time and efficiency and increased procurement volumes processed. The study further recommends that large manufacturing firms contemplating adopting E-procurement practices should integrate their systems since lack of system integration is a major challenge to E-procurement.
Keywords: E-Procurement Practices, Performance, Large Manufacturing Firms & Nairobi County.
Adams, D. A., Nelson, R. R., & Todd, P. A. (1992). Perceived Usefulness, Ease of Use, and Usage of Information Technology: A Replication. MIS Quarterly, Vol. 16, No. 2, 227-247.
Al-Yahya, M., Skitmore, M., Bridge, A., Nepal, M., & Cattell, D. (2017). E-tendering readiness in construction: an a priori model. International Journal of Procurement Management.
Amani, S. (2015). Supporting public procurement from smallholder farmers. Washington DC.
Amit, R., & Zott, C. (2001). Value creation in e‐business. Strategic management journal, 22(6‐7), 493-520.
Armstrong, C. P., & Sambamurthy, V. (1999). Information technology assimilation in firms: The influence of senior leadership and IT infrastructure. Inform. Systems Res., Vol. 10, No. 4.
Baker, W. E., & Sinkula, J. M. (2015). Market Orientation and Organizational Performance: A New Product Paradox?. In Creating and Delivering Value in Marketing (pp. 254-254). Springer, Cham.
Berger, A. J., Gattorna, J., & Gattorna, J. L. (2011). Supply chain cybermastery: building high performance supply chains of the future. Gower Publishing, Ltd.
Bhardwaj, A. S. (2000). A resource-based perspective on information technology capability and firm performance: An empirical investigation. MIS Quarterly, Vol. 24, No. 1.
Davis, F. D. (1989). Perceived Usefulness, Perceived Ease Of Use, and User Acceptance of Information Technology. MIS Quarterly, Vol. 13, 983-1003.
Eadie, R., Perera, S., G., H., & Carlisle, J. (2007). Drivers and Barriers to Public Sector e-procurement within Northern Ireland’s Construction Industry. IT con Journal, Vol. 12, 103-120.
Fiedler, F. E. (1964). The Contingency model: H Theory of Leadership Effectiveness. Small Groups: Key Readings, 369.
Friedman, J., Berquist, T. P., Debiase, C., Kahl, S., & Lim, C. (2015). Technology: B2B Software. Goldman Sachs, 23.
Gebauer, J., Beam, C., & Segev, A. (1998). Impact of the internet on purchasing practices. Acquisitions Review Quarterly, Vol. 5, No. 2, 167-184.
Government of Kenya. (2010). Constitution of Kenya. Nairobi: National Council for Law Reporting.
Gunasekaran, A., Patel, C., & McGaughey, R. E. (2014). A framework for Supply Chain Performance Measurement. International journal of production economics, 87(3), 333-347.
Hawking, P., Stein, A., Wyld, D., & Forster, S. (2004). E-procurement: Is the ugly duckling actually a swan down under? Asia Pacific Journal of Marketing and Logistics, Vol. 16, No. 1, 1-26.
Hubbard, G. (2016). Measuring organizational performance: beyond the triple bottom line. Business strategy and the environment, 18(3), 177-191.
Kamande, M. W. (2011). The Impact of Clean Production on the Performance of Kenya Manufacturing Firms. Ph.D. (Economics). Dissertation. University of Dar es Salaam: Tanzania.
Kamotho, K. (2014). E-procurement and procurement performance among state corporations in Kenya. Journal of Supply Chain Management, 23(4), 43-54.
Kenya Association of Manufacturing (K.A.M) (2016). The Kenya Association of Manufacturing Industrial Business Agenda, Priority actions to build competitive local industry to expand employment in Kenya.
Kilonzo, G. M. (2014). Procurement best practices and organizational performance: case study of Cadbury’s Kenya limited., University of Nairobi.
KNBS (2017). Economic Survey, 2017.
Knutsson, H., & Thomasson, A. (2014). Innovation in the Public Procurement Process: A study of the creation of innovation-friendly public procurement. Public Management Review, 16(2), 242-255.
Kumar, A., Nair, A., & Piecha, J. (2015). Measuring efficiency in international public procurement. Journal of Public Procurement, 15(3), 365-389.
Laryea, S., & Ibem, E. O. (2016). Patterns of Technological Innovation in the use of e-Procurement in Construction. Journal of information Technology in Construction, 19, 104-125.
Lysons, K., & Gillingham, M. (2009). Purchasing and Supply Chain Management, 780pp. FT Prentice Hall, England.
Matunga, D. A., Nyanamba, S. O., & Okibo, W. (2013). The Effect of E-Procurement Practices on Effective Procurement in Public Hospitals: A Case of Kisii Level 5 Hospital. American
International Journal of Contemporary Research, Vol. 3, No. 8, 103-111.
Mose, J. M. (2012). E-procurement adoption among large scale manufacturers in Nairobi, Kenya (Doctoral dissertation).
Muraguri, E. K., Waweru, E., & Musyimi, P. K. (2015). Application and practice of sustainable procurement in Kenya.
Namusonge, G. S. (2016). Influence of Information Technology Practices in Procurement on Organization Performance in Public Institutions in Kenya. International Journal of Economics, Commerce and Management, 4(5).
Ngunyi, I. W. "Procurement practices and the performance of parastatals in Kenya." University of Nairobi (2014).
Odero, J. A., & Ayub, S. E. (2017). Effect of Procurement Practices on Procurement Performance of Public Sugar Manufacturing Firms in Western Kenya. International Journal of Management Research and Reviews, 7(4), 521.
Rogers, E. W., & Wright, P. M. (2015). Measuring organizational performance in strategic human resource management: Problems, prospects and performance information markets. Human resource management review, 8(3), 311-331.
The World Bank. (2003). Electronic Government Procurement (e-GP): World Bank Draft Strategy. Washington, D.C.: The World Bank.
Wang, Y., Yan, H., & Wan, J. (2016). Electronic Commerce Platform of Manufacturing Industry Under Industrial Internet of Things. In International Conference on Industrial IoT Technologies and Applications (pp. 137-143). Springer, Cham.
Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: A balanced approach. Cengage Learning.
World Bank Group. (2015). World development indicators 2014. World Bank Publications.
World Bank. (2013). E-Procurement in Government of Andhra Pradesh, India. Washington, DC: World Bank.