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FACTORS INFLUENCING PROCUREMENT PERFOFMANCE IN
PRIVATE ORGANISATIONS.
(A Survey of bookshops in Nakuru Town)

BY
ELIZABETH NJERI
KIM/08182/14

A Research Project Submitted in Partial Fulfillment of the Requirement for
the Award of Diploma in Management (Purchases and Supply management
Option) of Kenya institute of management.

MARCH 2017

i

DECLARATION
This research project is my original work and has not been presented for any award in any other
institution.

ELIZABETH NJERI
KIM/08182/14
Signature: _________________________.

Date: ___________________________

DECLARATION BY THE SUPERVISOR
This work has been submitted for examination to the Institution with my approval as the
supervisor.

MR. WILFRED MBECHE
LECTURER, KIM, NAKURU BRANCH

Signature: __________________________

Date: __________________________

DECLARATION BY THE MANAGEMENT
For and on behalf of The Kenya Institute of Management

MS. ANNE NAIRO
KIM, NAKURU BRANCH
Sign ___________________

Date _____________
ii

DEDICATION
I wish to dedicate this work to my parents for their tireless effort, financial, spiritual and moral
assistance which has enabled me to go through this course. I also dedicate this work to my
supervisor for his encouragement and support.

iii

ACKNOWLEDGEMENT
I would have never been able to finish my research project without the help of the Almighty God
who gave me good health and providence in every aspect of my life.
I would like to express my deepest gratitude to my supervisor, Mr. Wilfred Mbeche for his
excellent guidance, caring, patience and providing me with excellent atmosphere for doing
research.
Finally I would like to thank the Management of organizations where I carried out my research
for allowing me to carry out my research and providing me with the necessary information.
May God bless you all abundantly.

iv

ABSTRACT
The purpose of the study was to determine factors influencing procurement performance in
private organizations and come up with recommendations on how to achieve efficient and
effective procurement performance. The objectives of the study were to determine the extent to
which availability of funds Influences procurement performance in private institution, to establish
the extent to which Procurement skills Influences procurement performance in private
institution. To determine the extent to which the top management involvement Influences
procurement performance in private institution. To determine the extent to which adoption of
ICT in organization influences procurement performance in private institution. The study
employed a survey research design. Census technique was applied to select sample size
of 60 respondents from all the 60 bookshops in Nakuru CBD. A questionnaire was used for
data collection. The data collected was edited, coded and analyzed using descriptive analysis
and other parts Microsoft excel program was used. The results of the study were presented in
tables, percentages, charts and bar graphs. The study established that procurement skills,
availability of funds, top level management involvement and adoption of information
communication technology Influences procurement performance in organizations. The findings
revealed that timely availability of funds influence the procurement procedures the study also
revealed that procurement plan influenced procurement performance by 60% and that 40% of
the respondents strongly agreed that the level of technology greatly influence the procurement
performance. The study recommends that the organizations should be organizing workshops and
trainings for procurement officers in order to improve their skills and knowledge, while
employing they should ensure key competencies and experiences are put into consideration.
Timely disbursement of funds is also recommended as it leads to acquisition of products on time
and to ensure steady service delivery.

v

TABLE OF CONTENTS
DECLARATION .............................................................................................................................. ii
DEDICATION ............................................................................................................................... iii
ACKNOWLEDGEMENT ................................................................................................................. iv
ABSTRACT.......................................................................................... Error! Bookmark not defined.
LIST OF TABLES ............................................................................................................................ x
LIST OF FIGURES.......................................................................................................................... xi
LIST OF ABBREVIATIONS............................................................................................................. xii
DEFINITION OF TERMS .............................................................................................................. xiii
CHAPTER ONE .............................................................................................................................. 1

1.0 INTRODUCTION .......................................................................................................... 1
1.1 Background of the study .................................................................................................. 1
1.2 Statement of the problem ................................................................................................. 2
1.3 Objectives of the study ..................................................................................................... 3
1.4 Research question ............................................................................................................. 3
1.5 Significance of the study .................................................................................................. 4
1.6 Limitation of the study. .................................................................................................... 4
1.7 Scope of the study ............................................................................................................ 4
CHAPTER TWO ............................................................................................................................. 5

2.0 LITERATURE REVIEW .............................................................................................. 5
2.1 Introduction ...................................................................................................................... 5
2.2 Review of Empirical Literature ........................................................................................ 5
2.2.1 Importance of procurement process ............................ Error! Bookmark not defined.
2.2.2 Procurement cycle ....................................................... Error! Bookmark not defined.
vi

2.2.3 Procurement function .................................................. Error! Bookmark not defined.
2.2.4 Determinants of Procurement Performance .................................................................. 6
2.2.4.1 Adoption of ICT on Procurement Performance ......................................................... 7
2.2.4.2 Procurement Skills on Procurement Performance ..................................................... 9
2.2.4.3 Top management Influence on Procurement Performance ...................................... 11
2.2.4.4 Availability of financial resources on Procurement Performance ........................... 14
2.3 Review of Theoretical Framework ................................................................................. 17
2.3.1AgencyTheory .............................................................................................................. 17
2.3.2TransactionCostsTheory .............................................................................................. 17
2.3.3NormativeEthicalTheory.............................................................................................. 18
2.3.4 NewPrivateManagementTheory................................................................................ 19
2.4 Summary and Gap to filled by the study ........................................................................ 22
2.5 Conceptual framework ................................................................................................... 22
CHAPTER THREE ......................................................................................................................... 24

3.0 RESEARCH METHODOLOGY ............................................................................... 24
3.1 Introduction .................................................................................................................... 24
3.2 Research Design ............................................................................................................. 24
3.3 Target Population ........................................................................................................... 24
3.4 Sampling Technique and procedures ............................................................................. 24
3.5DataCollectioninstruments and procedures ................................................................. 25
3.6DataAnalysis and presentation ........................................................................................ 26
CHAPTER FOUR .......................................................................................................................... 27

4.0 DATA ANLYSIS AND PRESENTATION OF FINDINGS ......................................... 27
4.1 Introduction .................................................................................................................... 27
4.2 Presentation of Findings ................................................................................................. 27

vii

4.2.1 Gender of respondents................................................................................................. 27
4.2.2 Age of the respondents ................................................................................................ 28
4.2.3 Education Level........................................................................................................... 28
4.2.4 Years of service ........................................................................................................... 29
4.3 The use of ICT in procurement ...................................................................................... 29
4.3.1 Challenges in using technology................................................................................... 29
4.3.2: Level of technology use in Organization ................................................................... 30
4.3.4 Technology influences implementation of procurement procedures .......................... 30
4.3.5 Extent to which technology influence implementation of procurement procedures ... 31
4.4ProcurementSkillsonProcurementPerformance .............................................................. 31
4.4.1 Skills and Knowledge required ................................................................................... 31
4.4.2 How often is procurement plan prepared in your organization. .................................. 32
4.4.3. Influence of procurement plan on procurement performance .................................... 32
4.4.4 Procurement staffs attend workshops to improve their skills and knowledge ............ 33
4.4.5 Factors influencing procurement performance ........................................................... 34
4.5 Top level management influence procurement performance ......................................... 34
4.5.1 Procurement procedures are influenced by top management...................................... 34
4.5.2 Ways of encouraging interference by top management .............................................. 35
4.5.3 Involvement of top management interference on procurement would improve the
efficiency of supplies ........................................................................................................... 35
4.5.4 To what extent does involvement of top management influence the implementation of
procurement procedures ....................................................................................................... 36
Figure 6: Extent to which involvement of top management influence the implementation of
procurement procedures ....................................................................................................... 36
4.6 Availability of funds in organizations ............................................................................ 37
4.6.1 Funds availability provided on time ............................................................................ 37
viii

4.6.2 The greatest advantage to timely funds ....................................................................... 37
4.6.4 Timely availability of funds affect procurement procedures ...................................... 38
4.6.5 Extent to which timely availability of funds affect procurement ................................ 38
CHAPTER FIVE ............................................................................................................................ 39

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS .................................... 39
5.1 Introduction .................................................................................................................... 39
5.2 Summary of findings ...................................................................................................... 39
5.3 Answer to Research Questions ....................................................................................... 39
5.3.1 Adoption of information communication technology Influences procurement
performance in private institutions? ..................................................................................... 39
5.3.2 Procurement skills Influences procurement performance in private institutions. ....... 40
5.3.3 Top management’s involvement Influences procurement performance in private
institutions ............................................................................................................................ 41
5.3.4 Availability of finances Influences procurement performance in private institutions.42
5.4Conclusionof thestudy ..................................................................................................... 42
5.5Recommendationsof thestudy ......................................................................................... 42
5.6RecommendationforFurtherResearch ............................................................................. 43
REFERENCES .............................................................................................................................. 44

ix

LIST OF TABLES
Table 1: Sampling Matrix ..............................................................Error! Bookmark not defined.
Table 2: Response Rate ................................................................................................................ 27
Table 3: Age of the Respondents .................................................................................................. 28
Table 4: Education Level .............................................................................................................. 28
Table 5: years of services .............................................................................................................. 29
Table 6: challenges in using technology ....................................................................................... 29
Table 7: Level of technology use in Organization ........................................................................ 30
Table 8: Skills and Knowledge required ....................................................................................... 32
Table 9: How often is procurement plan prepared in your organization ...................................... 32
Table 10: Procurement staffs attend work shops .......................................................................... 33
Table 11: Factors influencing procurement performance ............................................................. 34
Table 12: Top level management influence procurement performance ....................................... 34
Table 13: Ways of encouraging top management involvement.................................................... 35
Table 14: involvement of top management on procurement would improve the efficiency of
supplies. ........................................................................................................................................ 35
Table 15: Timely availability of funds influence procurement procedures .................................. 38

x

LIST OF FIGURES
Figure.1: Figure 1: Conceptual framework .............................................................................. 22
Figure 2: Gender of respondents .............................................................................................. 27
Figure 3: Effects of Technology on implementation of procurement procedures ................... 31
Figure 4: Extent to which technology Influences implementation of procurement procedures31
Figure 5: Impact of procurement plan on procurement performance ...................................... 33
Figure 6: Extent to which top management interference affect implementation of procurement
procedures ................................................................................................................................ 36
Figure 7: Availability of funds ................................................................................................. 37
Figure 8: challenges to timely availability of funds................................................................. 37

xi

ICT

LIST OF ABBREVIATIONS
Information Communication Technology

CBD

Central Business District

SPSS

Statistical Package for Social Sciences

IEBC

Independent Electoral & Boundaries Commission

SMEs

Small and Medium Enterprises

NPM

New Private Management

BVR

Biometric Voters Registration

PPDA

Public Procurement Disposal Act

xii

DEFINITION OF TERMS
Procurement

The act of obtaining or buying goods and services. The process includes
preparation and processing of a demand as well as the end receipt and
approval of payment.

E-procurement

is business to business or business to customer purchase and sale of
supplies, work and services through internet.

Performance -

is deemed to be the fulfillment of an obligation in a manner that releases
the act from all liabilities under the contract.

Top management

This is the highest ranking executives with titles such as, managing
director, executive director responsible for the entire enterprises

Technology

this is the collection of techniques, skills methods and processes used in
production of goods and services in the accomplishment of objectives

Private organization are self sustaining special interest groups, setup by people acting
exclusively outside their scope of official capacity as employees.
Procurement performance

xiii

CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the study
In Africa, challenges that engulf private procurement are skill development; effective recruitment
and retention of procurement professionals. Another challenge is the management of global
sourcing strategies. That is also a challenge in terms of processes, a linkage between the global
sourcing offices (Jason, 2006). Juma (2010) asserts in private sector as in the government
tenders, bribery and corruption is rife in procurement field. The author states that the problem is
that integrity has never been a guarantee from professionals. Banda (2009) however they are
factors influencing procurement performance in developed and in developing countries which
are different. “Private sectors in Africa are grappling with setting up the operational framework
of procurement processes while developed countries as United States and European Countries
the problem is how to make it efficient”.
Procurement is a function that is most prone to corruption, particularly in developing countries
and more in private companies where the process is experiencing lack of transparency and
competition. In Kenya, private sector procurement functional unit suffers from different
challenges drawn from internal and external factors in organization. Attracting and retaining
talent in the procurement space is among the top concerns for companies already dealing with
today's complex pricing pressures Berger & Humphrey (2007). According to Dale (2010), for
most of organizations, procurement is still seen as add on rather than core to business operations.
This therefore Influences the level of investment and resource allocation towards procurement
function in the private sector. In today's complex global economy, the procurement function in
private sector in Kenya must respond to a number of difficult issues, in no small part
compounded by the recent economic turmoil and the changing dynamics of the global supply
chain (Jason, 2006). With so much at stake it obviously makes sense to fill key procurement
roles with seasoned employees that have a keen understanding of how the commoditization
process works in today's environment of increasing complexity across the supply chain. Overall,
influencing

factors to procurement performance in Kenya must be looked into holistically by

private sector and other stakeholders for more value to be added in procurement processes and
activities (Jason, 2006).
1

Procurement processes irrespective of monetary valuation should follow a standard sequence of
actions as stipulated in the Public Procurement and Disposal Act 2007. In order to realize the
goals of the procurement function, the process has to follow the laid down procedures and this
eliminates the possibility of poor performance. In the entire world, every business organization
depends on conversion of inputs (goods/services) into outputs both tangible and intangible that
must be put in place in an effective logistical system to ensure its operations run effectively and
efficiently.
The legal frameworks in Kenya provides that to manage procurement efficiently and
effectively procuring entity’s should first consolidate procurement plan and be approved by
Accounting officer. (Industry Manual...


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