Strategic Management of Procurement Processes and Operational Efficiency of Major Oil Companies in Kenya

Abstract

Procurement, being a very critical process in the organization, needs effective and strategic management as it is a great determinant of revenues and costs of an organization and that an effective procurement can give competitive advantage. Effective strategic management is therefore very critical in creating efficient procurement processes of any organization as procurement is mostly, linked to production whereby it plays an increasingly important role for an organization’s profitability. The purpose of this study was to investigate the effects of strategic management on procurement processes and operational efficiency of major oil companies operating in Kenya. The study adopted a descriptive research design. The study targeted the major oil companies in Kenya (See Appendix I). Since there were only five, the study adopted a census approach and targeted one top level manager from the finance, procurement, risk management and operations department in all the five companies. This gave us a target population of 20 respondents. The study collected both primary and secondary data. The primary data collection instrument was a questionnaire, which had both open and closed ended questions. Before processing the responses, the completed questionnaires were checked for completeness to ensure consistency. The data was then coded and analyzed using Statistical Package for Social Sciences (SPSS V. 20) and Microsoft Excel. From the findings the study concluded that there is a significant relationship between strategic management in procurement and operational efficiency. The study also concluded that strategic management in procurement affects operational efficiency by leading to competitive pricing of oil products on the market, reduced wastages in the management of oil products, increased oil product output for the company, eliminated product shortages on the market and increased competitive advantage for the organization. The study recommended that the management of these companies embrace strategic management in procurement to cut on cost and gain competitive advantage thus better performance of the organization. The study also recommended that the management of these organizations to come up with strategies that will ensure reduced wastage of resources and thus prevention of losses through the wastage of these resources.