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Procurement Management Practices and Financial Performance of Listed Manufacturing Firms in Kenya

Daniel Misita Ndigwa, Evans Vidija Sagwa, Judith Nelima Wasike, Moses Wamalwa
DOI: http://dx.doi.org/10.21013/jmss.v21.n3.p1
Abstract
The field of supply chain management has, over the years, experienced tremendous and steady growth not only internally within the firms but also across the globe. This has led to the introduction of the procurement function, which has become a game-changer. As a result, this has made organizations remain strategic in how they operate and, at the same time, become competitive in the ever-dynamic business environment. In line with the paradigm shift and the emergence of a growing economy, firms, particularly in manufacturing, have continued to play a vital role. In order to achieve the Big Four Agenda by the government of Kenya, there has been a high level of engagement between the policy makers and the manufacturers to streamline procurement activities to reduce losses in the present and future. The objective of the study was to establish the effect of procurement management practices on the financial performance of listed manufacturing firms in Kenya. The Hypothesis was formulated based on this objective. This study was guided by the resource-based theory. The study utilized a descriptive research design due to its ability to explore both single and multiple variables at the same time. The unit of analysis of this study was all the listed manufacturing firms in Kenya, and the unit of observation of the study was the employees drawn from the 25 listed manufacturing firms in the Nairobi Securities Exchange (NSE). Respondents in the specific firms were selected using a proportionate selection method based on a stratified random sampling technique. Data was collected with a self-administered questionnaire, and a total response rate of 384(95%) respondents returned for analysis. The linear regression model and analysis of variance were used for data analysis with the help of the statistical package for the social sciences (SPSS) version 25. Data was analyzed using descriptive and inferential techniques and presented in tables, figures, and models. The findings of the study revealed a positive relationship between the independent variable (procurement management Practices) and the dependent variable (Financial Performance). The study recommended that manufacturers need to embrace the successful implementation of procurement practices into their operations in order to increase their financial performance. The study also revealed other areas in which academicians and future researchers need to explore in the manufacturing industry and the procurement management practices.
Keywords
Procurement management practices, financial performance, listed manufacturing firms
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