Procurement performance measurement systems: A survey of large manufacturing companies in Nairobi
Abstract
The Procurement function can hardly be ignored in any manufacturing enterprise.
Modem manufacturing thinking highly associate prudent procurement practices to
profitability of the enterprise. This is because most financial commitments an
organization makes pass through a procurement process. Available literature indicates
that the efficiency and effectiveness of the procurement function is the least measured in
many enterprises despite its contribution to the profitability of enterprises.
The aim of this study was to explore and establish if Kenyan manufacturing firms
measure procurement performance, measurement systems they use, the performance
dimensions that guide their measurement and the indicators they commonly use. A
census of large manufacturing firms in Nairobi (68 firms) was undertaken. The collected
data was analyzed using descriptive statistics and presented using tables charts and
graphs. Findings of the study showed that 60% of Kenyan manufacturing firms measure
the efficiency and effectiveness of their procurement process. As regards the
performance measurement systems used in measuring procurement performance the
study shows that 66.7% of large manufacturing firms in Nairobi use the non-traditional
performance measurement systems in measuring their procurement performance. The
study further revealed that these firms measure their procurement performance based on
varied dimensions and indicators. Those who measure also showed that they enjoy
various benefits, which their counterparts may not be enjoying. On the other hand the
study found out that many firms encounter various challenges, which in a way hamper
their effort to sustain continuous and objective procurement performance measurement.
Such challenges include lack of professionalism in procurement, lack of defined
measurement indicators and poor data management systems.
Sponsorhip
University of NairobiPublisher
School of Business, University of Nairobi