E-procurement Practices and Operational Performance of Pharmaceutical Manufacturing Firms in Nairobi

Abstract

E-business has become part of life in the current business world, as almost all form of large entities are applying it in conducting their trade for procurement and other processes. With – procurement systems in place, more efficiency will be experienced as goods and services in the supply chains can be easily tracked for data recording and retrieval. With a robust procurement system the operational performance will gain, lower production costs and overall efficiency and effectiveness hence increased competitive advantage. The main objective of the study is to evaluate the practice of e-procurement and the operational performance in pharmaceutical manufacturing firms within Nairobi. The specific objectives of this research are; to determine which e-procurement practices are employed by pharmaceutical manufacturing firms in Nairobi and establish the relationship between eprocurement practices and the operational performance of pharmaceutical manufacturing firms in Nairobi. The study used descriptive cross sectional survey design. The population of the study was 50 pharmaceutical firms operating in Nairobi. The study used primary data that were collected through self-administered questionnaires. The data was analyzed using descriptive statistics. The regression analysis was used to assess e-procurements practices and operational performance. The findings of the study were that E-planning practice enabled the pharmaceutical manufacturing firms to flag the drugs that are needed at a particular point and time and the distribution of the same drugs in different warehouses. It also helps the companies to controls the production of products whose expiry dates are closely monitored and the buyer and suppliers have a means that they can use to access information on the performance of the drugs they buy from the firm. E-supplier selection enabled the manufacturing firms to come up with a pool of qualified suppliers for real time requests, selection of suppliers for various products and services online without human intervention and online data in pricing of goods. E-tendering enables the firms track orders and rectify mistakes that are realized in past orders, enable staff to do other duties as a result of spending minimal time in procurement. E-procurement was found to have enabled the pharmaceutical manufacturing firms improve their operational performance though cost reduction, decreased transaction cost, improved order processing, reduced material lead time, decreased cost of delivery, improved product/service quality and increased order placement. The regression analysis established that E-planning, E-supplier selection, E-tendering and E-sourcing influences operational performance of pharmaceutical Manufacturing firms in Nairobi. It is recommended by this study that entities should invest more in e-procurement so as to experience optimal benefits from it such as widening the scope of suppliers. Limitation of the study was on confidentiality and this caused difficulties in obtaining all the required responses and consequently led to reluctance of participating in the data collection process by some respondents.