Strategic Procurement Practices and Performance in Multinational Corporations in Kenya

Abstract

Procurement is increasingly becoming one of the critical and strategic functions of every organization with the potential to contribute positively to the success of operations leading to reliable service delivery and competitiveness. Strategic procurement indeed as a tool for a firms competitiveness has a positive effect on the overall performance of the organization and sets in motion the entire acquisition/ procurement process of all the purchases by multinational companies. Despite this importance limited scientific research has been done on strategic procurement practices and performance in multinational corporations in Kenya. This study looked at the role of strategic procurement practices on procurement performance of multinational companies in Kenya. Specifically the study reviewed ten strategic procurement practices and how they contribute to success of procurement function in these companies. The practices discussed mainly comprised; established procurement council, proper staffing, technology use, strategic sourcing, total cost of ownership, established levels of control, Social responsibility & sustainability, supplier alliance, contracts under procurement function, company inventory and how they affected the procurement performance of the foreign multinationals in Kenya. It was hypothesized in the study that strategic procurement practices, positively affect the procurement performance of the companies. Empirical data was collected from procurement officers of the 60 respondents from the targeted population of 70. The empirical data was analyzed both quantitatively and qualitatively to examine the relationships between strategic procurement practices and procurement performance. The key findings of the study indicated that only twenty seven percent (27%) of the variation in procurement performance were explainable by the ten procurement practices. Despite this low significance in the relationship between the variables, we recommended that the existing procurement practices be revised and strengthened to further improve the companies’ procurement performance. The study recommended further research to determine the effect of supply chain strategy on performance among the all multinational companies in Kenya, both local and foreign