FACTORS THAT INFLUENCE PROCUREMENT PROCESSES IN THE AIR TRAVEL INDUSTRY: A CASE STUDY OF KENYA AIRWAYS
Okeyo G. - Master, Student, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Kabare K. - Senior Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Procurement process is an integrated chain of activities spanning from the final consumer; management, supply chain, supplier, logistics and finally ends again with consumption. Throughout this chain; there are several factors both from the internal and external environment. These factors influence the execution of procurement process either positively or negatively. It is important to establish how these factors affect the process; this because the procurement process can be enhanced or curtailed by these factors. The purpose of this study was to evaluate how five key areas affect procurement process: namely; procurement function placement on the organization’s hierarchy, supplier relations, payment process, application of technology and regulatory framework. A case study of Kenya Airways was done to establish ways of harnessing them to enhance procurement performance service level’s efficiency. Target population for this study was the entire supplier base for Kenya Airways, buying staff and accountants at the expenditure section. Using convenience sampling the study concentrated on Procurement and Accounts payable staff. Also 32% of 300 suppliers were selected employing the rule of thumb. This gave a sample size of 96 respondents. By use of semi-structured questionnaires as instruments of data collection; the researcher interviewed procurement and accounts payable staff while using email technology suppliers filled in the questionnaires and mailed them back. The data collected was analyzed in narratives and represented on tables and pie charts. The study revealed that large percentage of firms has their Head of Procurement reporting to the CEO. This facilitates faster decision making and efficient procurement process. Improved supplier relations leads to prompt deliveries, payments improved cash flows and exchange of information. Communication problems, oversight, ignorance, corruption and cash flows are some of the reasons for delayed payments. Improved payment processes leads to timely deliveries, goodwill and attract best suppliers, good reference and faster response on quotation enquiries. Application of technology saves time, improves transparency, reduces cost, provides continuity, efficiency, reduces corruption and therefore contributes to better procurement processes. Regulatory framework can have an adverse effect on procurement for example bureaucracy, high staff turnover, long lead time and de-motivation. This will affect procurement process. All stakeholders need to apply concerted integrated initiatives to ensure that all factors that affect procurement process are harnessed to leverage on their positive aspects to ensure attainment of a world class procurement function.
