Effect of Procurement Methods on Operational Performance of Firms in the Softdrink Industries: A Case Study of Kisii Bottlers Limited

Abstract

Procurement methods have been of concern for many years to commercial organizations worldwide. Procurement methods play a crucial role in enhancing effectiveness and efficiency in procuring goods and services. Firms have continually desired to enjoy sustainable competitive advantage and improved operations. Therefore, there has been need for commercial firms to embrace effective procurement methods so as to improve their operational performance. However, theoretical literature indicated a deteriorating trend in operational performance in the soft drink industry; in most cases 75% of the production processes in most firms are affected by the supply chain management practices adopted by firms which had led to huge wastage of financial and other resources. The growing need from the customers and the time frame for delivery in most firms is constrained by operational performance. The purpose of this study was to assess the effects of procurement methods on operational performance of firms in the soft drink industry with specific interest in Kisii Bottlers limited, Kisii County Kenya. The study was guided by the following specific objectives: to establish the extent to which  open tendering as a procurement method do influence operational performance, to find out the extent to which direct procurement method influence operational performance, to establish the extent to which restricted tendering as a procurement method  influence operational performance and to establish the extent to which specially permitted procurement method  influence operational performance of Kisii bottlers limited. The literature review was guided by the conceptual framework that indicates the direction of the variables in this study. The study adopted a case study design. The study target population was 125 respondents consisting of 9 respondents from human resources and administration department, 12 respondents from finance department, 26 respondents from sales department and 78 other firm employees working at Kisii bottlers Ltd. Nasiurma's model and stratified random sampling techniques were adopted to select the sample size of 56 respondents for this study. Primary data was collected using a questionnaire. Secondary data was obtained from the firm's procurement department's records relating to procurement of materials used by the firm to enhance its operations for the last 23 years since 1990 to 2013. Quantitative data was analyzed using descriptive and inferential statistics. Descriptive statistics involved the use of percentages and means, determination of regression equations to establish the relationship between variables in this study. The findings of this study indicated that procurement methods are adopted by Kisii bottlers Ltd. The study findings indicated a positive relationship between procurement methods and operational performance of soft drink firms. The study established that the application of procurement methods was significance in increasing operational efficiency of soft drink firms. With respect to these findings the study concludes that proper application of procurements enhance operational performance in the soft drink industry.