Role of Purchasing Consortia in the Tea Industry in Kenya: Case Study of Region Five of the Kenya Tea Development Agency Ltd

Abstract

This study sought to determine the role of purchasing consortia among the tea processing companies in Kenya. It was guided by two objectives; to determine the benefits and challenges resulting from use of purchasing consortia in the tea industry as a buying strategy and to determine the factors influencing success of purchasing consortia as a buying strategy. The study employed a descriptive research design. The population consisted of 12 tea factories under Region 5 of Kenya Tea development Agency Ltd. Primary data was collected from Finance, procurement and quality control managers using both structured and semi-structured questionnaire. Data was analyzed using SPSS with the main analysis tools being mean and standard deviation and factor analysis. Two variables that influence the success of purchasing consortia as a buying strategy were identified through factor analysis. This paper found out that high economies of scale, higher quality products lower transaction costs better prices, better access to markets, reduced workload, improved relation with suppliers, lower transaction costs, shared expertise and sharing of information and lower supply risks are the major benefits resulting from use of using purchasing consortia as a buying strategy. Further, losing control on purchases, trust related problems among members, disclosure of sensitive information, increased complexity of purchasing process, losing existing relations with suppliers, cost of coordinating transaction among members and lack of members‟ commitment were all found to major challenges facing purchasing consortia as a buying strategy.This study recommends that since the present study focused only the Tea processing firms, future studies should major sectors of economy in Kenya with an intent to assess the strategies being utilised in their supply chain management to avoid generalization.