Buyer-supplier relationships and organizational performance among large manufacturing firms in Nairobi, Kenya

Abstract

This study was carried out to establish the effect of buyer – supplier relationships on organizational performance among large manufacturing firms in Kenya. The study had three objectives, to determine the extent to which large manufacturing firms in Kenya have adopted the concept of buyer-supplier relationships, to determine the challenges facing buyer-supplier relationships and to determine the effect of buyer –supplier relationships on organizational performance. The research design involved a cross sectional survey of 56 large manufacturing companies in Nairobi, Kenya. Data was collected using a questionnaire that was administered through “drop and pick” method. Percentages and frequencies were used to analyze objective one and objective two whereas regression analysis was used to analyze the relationship between buyer – supplier relationships and organizational performance among large manufacturing firms in Kenya. The findings are presented in tables. It is clear that there is a significant relationship between buyer – supplier relationships and organizational performance represented by R2 value of 0.723 which translates to 72.3% variance explained by the five independent variables of trust, communication, co-operation, commitment and mutual goals. The study only focused on the large manufacturing companies in Nairobi. Therefore, the researcher recommends further research on other firms that are not located in Nairobi and are not in the manufacturing industry. The researcher has also recommended that all manufacturing companies and other organizations embrace buyer –supplier relationships so that they can reap the benefits. Manufacturing companies highly rely on their suppliers to supply their raw materials for use in their production. Therefore, having good relationships with the suppliers is a strategy for manufacturing companies to achieve competitive advantage.