INFLUENCE OF PROCUREMENT COST OPTIMIZATION ON PERFORMANCE OF MANUFACTURING FIRMS IN KENYA
INFLUENCE OF PROCUREMENT COST OPTIMIZATION ON PERFORMANCE OF MANUFACTURING FIRMS IN KENYA
Dr. Mwangi Nancy Waithira, PhD
ABSTRACT
The purpose of the study was to assess the influence of procurement cost optimization on the performance of manufacturing firms in Kenya. The objective of the study was to establish the influence of procurement cost optimization on performance of manufacturing firms in Kenya. The study focused on the transaction cost analysis theory and theory of constraints and competency theory. The study used cross sectional survey research design. Cross sectional design was justified on grounds that data of different manufacturing firms will be collected at a defined period. The study’s target population included supply chain managers in charge of procurement department in manufacturing firms in Nairobi County. The 499 supply chain managers in manufacturing firms were the population for this study. The sample of this study consisted of 222 supply chain managers in manufacturing firms in the Nairobi that were stratified and randomly selected from a list of 499 supply chain managers in manufacturing firms operating in Nairobi in Kenya. This study relied on both primary and secondary data sources. Secondary data was collected for performance of the selected manufacturing firms for the period of between 2012 and 2016. This study utilized a questionnaire on the other hand to collect primary data. Quantitative techniques were used in analyzing the data. A pilot study was conducted on 22 supply chain managers which constituted 10 per cent of the sampled 222 supply chain managers in manufacturing firms. The study used both descriptive and inferential statistics. Descriptive analyses used included: mean, standard deviation as an additional measure of variance and hence risk, frequencies and percentages, while the inferential statistics used were correlation analysis and regression analysis. The findings revealed that procurement cost optimization in this study was a significant predictor of performance of manufacturing firms in Kenya. This revealed that there is a significant positive relationship between procurement cost optimization and performance of manufacturing firms in Kenya. The study concludes that procurement cost optimization plays a significant role in the performance of the manufacturing firms. The study recommends that manufacturing firms should invest in procurement cost optimization to enhance their performance.
