Supplier selection criteria and performance of manufacturing firms listed in the Nairobi Stock Exchange
One of the most important processes that organizations perform today is the evaluation, selection and continuous measurement of suppliers. Increasingly, firms are allocating more resources to their core competences, and encouraging the outsourcing of non core activities, which increases their reliance and dependence on suppliers. This increases the importance of effective supplier selection and assessment. Consequently, in the current global competitive environment, many manufacturers are focusing on supplier management as a means for achieving long term competitive advantage. In-spite of this little is known on supplier selection criteria and its relationship to organizational performance. This study sought to find out what criteria are used by manufacturing companies listed on the Nairobi Stock Exchange in selection of their key suppliers, and the relationship between supplier selection criteria and organizational performance. The target population was all the 17 manufacturing companies listed in the Nairobi Stock Exchange as at September, 2010. A structured questionnaire was used to collect data. The data collected was analyzed using mean scores, factor analysis and multiple correlations. The study found that quantitative factors such as the suppliers' technical expertise, commitment to quality and ability to meet delivery due dates were ranked higher in supplier selection than qualitative factors such as suppliers' willingness to share confidential information. The study also found a positive relation between effective supplier selection and organization performance.