The Effect of Purchasing on Product Development for Beverage Manufacturing Firms in Nairobi, Kenya

Abstract

The ever changing customers tastes and preferences and growing demand for better, quality and superior products puts companies in dilemma of sustainable profit margins. Many manufacturing companies have experienced complex challenges which are precipitated by change in technology. This study set to determine the effect of purchasing on product development for beverage manufacturing firms in Nairobi, Kenya. To achieve this, the specific objectives included: establishing the extent to which purchasing function is involved in development of new products development and determining the effect of purchasing on new product development for beverage manufacturing firms in Nairobi, Kenya. The researcher applied descriptive survey design in carrying out the research. The study targeted 38 beverage manufacturing firms in Nairobi and its environs. The study relied on primary data collected using questionnaires. The study applied SPSS in analyzing data collected. The findings of the analyzed data indicated that there were no stock-outs resulting from late supplier delivery and this affected new product development to a large extent. Transparency, honesty, integrity and professionalism of purchasing staff was emphasized to a great extent as their means were above 4.0, the firm had clear and standardized purchasing procedures in place to a large extent with mean values being above 4.4. Vendor- supplier managed inventory system existed in the firm to a large extent. Supplier delivery reliability influenced new product development to a large extent with mean values of 3.8, purchasing procedures and policies had improved time to market of new product to a large extent as mean was above 4.2, supplier delivery reliability was significant at 5% level of significance as it had p-values of below 0.05. Competence of purchasing employees had significant effect on product development as the p value was 0.029. Purchasing procedures and policies significantly contributed towards product development as the p- value was 0.024. Purchasing IS has significant effect on product development as the p values 0.021. The study concluded that suppliers provided access to unique assets and resources. Cost savings were realized to a large extent through supplier delivery reliability, training of staff was a continuous process, purchasing policies and procedures informed decision making, technology was part of the strategy in new product development to a large extent and purchasing affected new product development. The study recommends that procurement departments of all beverage manufacturing firms and other companies operating in Kenya should largely embrace just-in-time approach in service delivery to enhance new product development. The top management of beverage manufacturing companies needs to raise deep concerns on staff‘s personal academic development. Beverage manufacturing firms in Kenya embrace the best technology practices in their respective companies to enhance new product development. The limitation of the study was that the researcher feared that some respondents may not be willing to share information that they deem as confidential and they may be reprimanded by their superior. The researcher further foresaw that some respondents may not fill the research instrument and return it in time, to curb this; the researcher got contacts of the respondents and kept reminding them to fill the research instrument in an effort to increase the response rate. The study suggests further studies in other sectors for example the public sector where efficiency and effectiveness is an issue. Similar other studies can be done among firms listed on Nairobi Security Exchange NSE by selecting specific counters or all the listed firms.