Influence of e-procurement on organizational performance: the case of kenya association of manufacturers firms in nairobi county, kenya

Abstract

E-Procurement is more than just a system for making purchases online. It has been advocated as a key performance indicator that can improve performance and competence of firms. Some companies implement e-procurement and succeed while others fail. There are some fundamental things the purchasing company needs to achieve when it comes to procurement. These include reducing the time employees spend looking for a product, service or suitable supplier, reducing the time and cost of administering purchases, reducing cycle times, increasing volume with a few preferred suppliers to get better pricing and other conditions, as well as limiting choices to only a number of pre-qualified suppliers to ensure quality. The purpose of this study was to examine the influence of e-procurement on organizational performance, the case of Kenya Association of Manufacturers (KAM) firms in Nairobi County, Kenya. This study had four objectives: to determine the influence data transmission on organizational performance; to determine the influence of buyer/supplier collaboration on organizational performance, to examine the influence of systems management on organizational performance and to establish the influence of billing management on organizational performance of KAM firms in Nairobi County. The study adopted a descriptive approach to establish the influence of e-procurement on organizational performance of manufacturing firms. A sample size of 102 respondents was selected from a list of 499 manufacturing firms in Nairobi, Kenya. Data was collected from the respondents through a questionnaire. The collected data was analyzed by employing descriptive statistics and inferential analysis using statistical package for social science (SPSS) and multiple regression analysis. The data was then presented in tables and charts. The research concludes that a majority of the manufacturers in Nairobi, Kenya have adopted e-procurement strategy to improve organizational performance. The findings indicate that there is a significant positive relationship between the components of e-procurement namely; data transmission, buyer/supplier collaboration, systems management and billing management of the e- procurement process with the organizational performance of manufacturing firms in Nairobi County Kenya. The study recommends that manufacturing firms in Nairobi need to incorporate all the e-procurement components into the system to enable them to improve the overall performance of their firms. The study also recommends that future research will need to be carried in other industries and countries in order to show if the link between eprocurement components and organizational performance can be generalized. These findings of the study will enable managers in manufacturing firms to formulate e-procurement policies that will ensure a positive impact on strategic performance of the firms.