Procurement category management among fast Moving consumer goods companies in Kenya

Abstract

This study sought to establish the benefits associated with implementation a category management strategy among FMCGs multinationals in Kenya. The environment in which organizations conducts business is turbulent and gets more competitive by the day. This leads to shrinking profitability, procurement category management comes up with innovative activities to create more value and reduce cost to the business. This improves organization profitability in a sustainable manner. In this study, FMCGs mmultinationals were considered since they have local manufacturing operations in Kenya therefore their annual spend on Capital and Operating expenditure is high. Category management concept is particularly beneficial to high spend organisations. This study thus sought to determine the extent of procurement category management adoption and challenges associated with the successful implementation of category management strategy among FMCGs multinationals in Kenya. Primary data for the study was collected from five selected multinationals in Kenya including East African Breweries, Unilever Kenya, Nestle Foods, GlaxoSmithKline and British American Tobacco Kenya Limited. Data collection was through a selfadministered questionnaire and analysis conducted through descriptive means as well as content analysis. The study showed that all the organizations under study had adopted procurement category management over the past three to five years. The study found out that the major benefit associated with category management is sustainable cost savings to the organization while category management has little effect in the use of technology and management information as well as improving the optimal procurement operating model. The greatest challenge in the implementation of category management strategy is lack of qualified personnel and the high cost of implementation. The study recommends adoption of category management among companies, government and government agencies who have not implemented procurement category management. The study also suggests investment in the right human resource, development of the correct change management process and appropriate communication mechanism as the levers to successful implementation of category management.