Contract Management Practices and Supply Chain Performance of Commercial State Corporations in Kenya

Abstract

Efficient contract management is essential for timely and cost-effective acquisition of goods and services, ensuring the supply chain remains agile and responsive to changes. Effective contract management reduces lead times, minimizes supply disruptions, and boosts overall supply chain flexibility. The study main objective was to determine the effect of contract management practices on supply chain performance of commercial state corporations in Kenya. The study’s specific objectives were; to determine the extent of implementation of contract management practices by commercial state corporations in Kenya, to establish the effect of contract management practices on supply chain performance of commercial state corporations in Kenya and to determine the challenges faced in the implementation of contract management practices by commercial state corporations in Kenya. The study was anchored on agency theory, systems theory and transaction cost theory. Contract management practices, the independent variable was measured through contract administration, contract relationship management, contract cost management and contract closure management while supply chain performance was measured through quality, flexibility, timeliness, reliability and cost. A descriptive survey research design was employed, targeting 47 commercial state corporations in Nairobi, Kenya, with a census conducted due to the relatively small population size. Primary data was collected using questionnaires, and the analysis involved regression, mean, and standard deviation calculations. The results revealed that commercial state corporations have implemented contract administration, contract relationship management, contract cost management and contract closure management to a large extent. The findings also established that all the four independent variables have a significant and positive influence on supply chain performance. It was established that the complexity of contracts makes it difficult to implement effective contract management, limited availability of resources (time, personnel, budget) is also a significant challenge in implementing contract management practices. There is lack of proper technology and tools that hinder the implementation of efficient contract management practices. There is insufficient stakeholder engagement and communication which pose challenges to effective contract management practices and that navigating regulatory compliance issues is a major challenge in the implementation of contract management practices. The limitation of the study was that it primarily used firsthand data collected through a mix of ―drop-and-pick later‖ and online questionnaires, encountering some resistance from respondents who were concerned about the misuse of their information. To address this, confidentiality was assured with the support of a letter from the University explaining the academic purpose. Additionally, due to respondents' busy schedules, follow-up reminders were necessary to ensure a higher response rate. Future research could investigate the impact of emerging technologies like blockchain and Artificial Intelligence on contract management and supply chain performance in Kenya's commercial state corporations, focusing on transparency, efficiency, and risk management. Studying the role of sustainable contract management practices that emphasize environmental, social, and governance criteria could provide insights into enhancing supplier performance and overall supply chain resilience, contributing to Kenya's sustainability goal