Buyer-supplier relationships and organizational performance of pharmaceutical manufacturing firms in Kenya

Abstract

This study was carried out to establish the effect of buyer – supplier relationships on organizational performance among pharmaceutical manufacturing firms in Kenya. Pharmaceutical industry in Kenya has been expanding overtime driven by the government’s efforts to promote local and foreign investment in the sector. This has resulted in Kenya being currently the largest producer of pharmaceutical products in the Common Market for Eastern and Southern Africa (COMESA) region. The study had three objectives, to determine the extent to which pharmaceutical manufacturing firms in Kenya have adopted the concept of buyer-supplier relationships, to determine the effect of these buyer –supplier relationships on organizational and to determine the challenges facing pharmaceutical manufacturing firms in Kenya as they implement these buyersupplier relationships. The research design involved a cross sectional survey of 30 pharmaceutical manufacturing companies in Kenya. A survey was done because the target population is quite small, that is only thirty firms operating in 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 three whereas correlation and regression analysis was used to analyze the relationship between buyer – supplier relationships and organizational performance among pharmaceutical 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 and can be explained by the five independent variables of trust, communication, co-operation, commitment and mutual goals. Lack of mutual goals between buyers and suppliers was the major challenge identified by the respondents. The study only focused on the pharmaceutical manufacturing companies in Kenya. Therefore, the researcher recommends further research on other firms that are not in pharmaceutical sector and also those 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. Pharmaceutical manufacturing companies highly rely on their suppliers for their raw materials for use in their production. Therefore, having good relationships with the suppliers is highly recommended for manufacturing companies to achieve competitive advantage.