Supplier development, integration and procurement performance of steel manufacturing firms in Kenya

https://doi.org/10.35912/ijfam.v5i1.1592
Published: Aug 24, 2023

Abstract:

Purpose: This study examined how supplier integration moderates the relationship between supplier development and procurement performance in steel manufacturing firms within Nairobi City County, Kenya.

Research methodology: A mixed method research design and positivism approach were adopted for this study. A census with a population of 360 employees within the 10 steel firms in Nairobi City County, Kenya was conducted. Primary data was collected using questionnaires. The collected data was analyzed using SPSS V.26.0 and SmartPLS 4.0 programs to test for both direct and joint effects of the variables.

Results: The results of the study revealed that supplier selection (?=0.50, t=8.309, p<0.05), supplier partnership (?=0.136, t=2.872, p<0.05), and supplier evaluation (?=0.127, t=2.884, p<0.05) have a positive and significant impact on the procurement performance. On the other hand supplier training (?= -0.086, t=1.683, p>0.05) had an insignificant effect on procurement performance. The study findings also show that supplier integration had significant negative effects on supplier partnership (?= -0.497, t=10.702, p<0.05), supplier evaluation (?= -0.097, t=2.323, p<0.05) and supplier training (?=0.264, t=4.988, p<0.05). However, the results indicate that supplier integration has no significant impact on supplier selection (?= -0.079, t=1.108, p>0.05). The indirect effect analysis showed that supplier integration (?= -0.142, t=1.108, p<0.05) has a negative and significant impact on procurement performance.

Contributions: Steel manufacturing firms need to emphasize the significance of supplier selection, efficient communication and collaboration with suppliers, and continuous performance monitoring and risk management to improve procurement performance. These factors enhance the reliability, quality, and cost-effectiveness of their procurement operations, resulting in better outcomes and a competitive advantage in their respective markets.

Keywords:
1. supplier selection
2. supplier evaluation
3. supplier training
4. supplier partnership
5. supplier integration
Authors:
1 . Kevin Gudda
Business Management Department, Maasai Mara University, Kenya
2 . Pauline Jeruto Keitany
University of Kabianga, Kenya
3 . Maurice Ombok
Business Management Department, Maasai Mara University, Kenya
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How to Cite
Gudda, K., Keitany, P. J., & Ombok, M. (2023). Supplier development, integration and procurement performance of steel manufacturing firms in Kenya. International Journal of Financial, Accounting, and Management, 5(1), 113–132. https://doi.org/10.35912/ijfam.v5i1.1592
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Vol. 5 No. 1 (2023): June
Articles
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References

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    Ahmad, S., Zulkurnain, N., & Khairushalimi, F. (2016). Assessing the validity and reliability of a measurement model in Structural Equation Modeling (SEM). British Journal of Mathematics & Computer Science, 15(3), 1-8.

    Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16, 74-94.

    Baily, P., Farmer, D., Jessop, D., & Jones, D. (2014). Purchasing Principles and Management: Prentice Hall.

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    Design4Service. (2020). Resource Based View of the Firm. Retrieved from https://design4services.com/concepts/resource-based-view-of-the-firm/

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    Madzimure, J. (2020). Examining the influence of supplier integration on supply chain performance in South African small and medium enterprises. The Southern African Journal of Entrepreneurship and Small Business Management, 12(1), 7.

    Maguto, E. K. (2019). Supplier Partnerships and Customer Satisfaction. A Case Study of the Sarova Hotels. University of Nairobi.

    Manyega, V., & Okibo, W. (2015). Effects Of Supplier Selection On Procurement Performance Of Public Institutions. International Journal of Economics, Commerce and Management.

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    Mohd Nawi, M. N., Nadarajan, S., Ibrahim, S. H., & Mustapha, R. (2017). Procurement performance and supplier management measurement issues: a case of Malaysian private company. International Journal of Supply Chain Management (IJSCM), 6(1), 246-253.

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    Mutai, J. K., & Okello, B. (2016). Effects of supplier evaluation on procurement performance of public universities in Kenya. International Journal of Economics, Finance and Management Sciences, 4(3), 98-106.

    Mwale, H. (2014). Supply chain management practices and organizational performance of large manufacturing firms in Nairobi, Kenya. University of Nairobi.

    Nasiche, F. A., Ngugi, P. K., Kiarie, D., & Odhiambo, R. (2020). Influence of supplier training on performance of sugarcane enterprises in Kenya.

    Nenavani, J., & Jain, R. K. (2022). Examining the impact of strategic supplier partnership, customer relationship and supply chain responsiveness on operational performance: the moderating effect of demand uncertainty. Journal of Business & Industrial Marketing, 37(5), 995-1011.

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    Olokundu, M. (2014). The link between the resource-based theory and corporate politics Retrieved from https://www.grin.com/document/286623

    Ouko, S., & Juma, D. (2020). Effect of Supplier Evaluation on Performance of The Procurement Function of Private Health Institutions in Kisumu County, Kenya. The Strategic Journal of Business & Change Management, 7(2), 40-57.

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  40. Ngechu, S. (2017). Effect of Kenya bureau of standards regulations on organizational performance of steel companies in Kenya. Kca University.
  41. Olokundu, M. (2014). The link between the resource-based theory and corporate politics Retrieved from https://www.grin.com/document/286623
  42. Ouko, S., & Juma, D. (2020). Effect of Supplier Evaluation on Performance of The Procurement Function of Private Health Institutions in Kisumu County, Kenya. The Strategic Journal of Business & Change Management, 7(2), 40-57.
  43. Ringle, C. M., Wende, S., & Becker, J.-M. (2022). SmartPLS 4.
  44. Rodriguez, D. (2019). Four Basic Stages of Supplier Selection. Retrieved from https://precoro.com/blog/four-basic-stages-of-supplier-selection/
  45. Schumacker, R. E., & Lomax, R. G. (2015). A Beginner's Guide to Structural Equation Modeling (4th ed.). New York: Routledge.
  46. Sedyaningrum, M., Prasetya, A., & Mawardi, M. K. (2019). The effect of strategic supplier partnership on supply chain integration, supply chain performance and farmers performance. Wacana Journal of Social and Humanity Studies, 22(1).
  47. Taherdoost, H., & Brard, A. (2019). Analyzing the process of supplier selection criteria and methods. Procedia Manufacturing, 32, 1024-1034.
  48. Tentama, F., & Anindita, W. D. (2020). Employability scale: Construct validity and reliability. International Journal of Scientific & Technology Research, 9(4), 3166-3170.
  49. Waluke, S. W. (2018). Effect of Supplier Development Management Practices on Organization Performance in Manufacturing Firms in Kenya Moi University.
  50. Xometry, T. (2023). 5 Key Factors to Consider When Conducting a Supplier Evaluation. Retrieved from https://www.xometry.com/resources/procurement/conducting-a-supplier-evaluation/
  51. Yun, N. S. (2018). 5 Key Criteria for Supplier Evaluation in the Construction Sector. Retrieved from https://publication.sipmm.edu.sg/5-key-criteria-supplier-evaluation-construction-sector/
  52. Zhang, M., Lettice, F., Chan, H. K., & Nguyen, H. T. (2018). Supplier integration and firm performance: the moderating effects of internal integration and trust. Production Planning & Control, 29(10), 802-813.