Procurement practices and performance of the oil marketing firms in Kenya

Abstract

The traditional procurement system involving the separation of design and construction services has served the public well over the past century. This separation of design and construction services can foster adversarial relationships between the agency, designers, and contractors, can restrict innovation, and result in high cost/time growth and therefore may not necessarily provide the best value to the Department for all project types. The increasing population has created tremendous pressure to move critical projects quickly through the planning stage and into design and construction, without a commensurate increase in available funding. Underlying these external pressures is the basic requirement to include quality concepts in all phases of the highway program. Procurement practice entail the exercise of acquiring goods and services for an organization as per the set policies that govern the choice of suppliers, products and methods that aim to utilize sound business practices which maximize value of the organization. Application of procurement practices is the solution to improving the procurement system as well as the overall performance in a firm or an organization. This study sought to establish the procurement practices carried out and their effect on performance. It was guided by two objectives which were to establish the extent of application of procurement practices and the effect of the procurement practices on performance. The population included 58 oil marketing companies as listed in appendix III downloaded from www.erc.go.ke, 2013. The study targeted all the departments. The answering of questionnaires meet a lot of resistance which prompted the use of information and reports published by Petroleum Insight East Africa quarterly each year. From the research it was found that all the Independent Petroleum Dealers practiced almost all of the procurement practices we had researched about. The practices that were used to a large degree are as follows, Supplier relationship management, E-technology, Green supply chain management, Ethical procurement, whole factory view point. These practices affected positively on performance on the levels of ability to meet demand, high quality products, customer satisfaction and stability of prices. It was found out that all organizations experience the challenges identified however they differed in terms of degree of experience in each organization.