An Assessment Of Procurement Strategies And Operations On The Supply Chain Performance (A Case Study Of BUNS Construction Company)

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An Assessment Of Procurement Strategies And Operations On The Supply Chain Performance (A Case Study Of BUNS Construction Company)


Abstract


The broad objectives of the study boarders on an assessment of procurement strategies and operations on the supply chain performance using BUNS construction company as case study. The study further discusses strategies utilized by construction industry, whether efficient procurement process has any influence on the operational performance of BUNS construction company, weather purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company and whether supplier relationship management improves the supply chain performance of BUNS construction company. Survey research design was employed for the study and with aid of convenient sampling thirty-five (35) staff of BUNS construction company were selected as the participant of the study. The sources of data collection was both primary and secondary with the application of questionnaires as an instrument to gather the necessary data. The questionnaires were properly completed as well returned by only 30 respondent after being administered. Textbooks, journals, articles, law reports, newspapers publications, were collected as secondary data, and also limitations to the study were indicated. Data was analyzed using simple percentage presented in frequencies and tables. Hypothesis test was conducted using Chi-Square Statistical Package for the Social Sciences (SPSS v.23). Findings of the study reveals that effective procurement strategies involves supplier optimization & relationship building, value chain analysis, adoption of purchasing information system and efficient procurement process. The study thus concludes that efficient procurement process has an influence on the operational performance of BUNS construction company, purchasing information system influences the value chain analysis required strategic procurement as well supplier relationship management improves the supply chain performance . The study therefore recommends that organization should further improve on its procurement practices in order to improve more on vendor‘s performance, while emphasis should be laid more on cost effectiveness as that is where impact has been felt most.


Table of Content


Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • REFERENCES
  • APPENDIX

Chapter One


Introduction

1.1 Background of the Study

As the business environment keeps changing and becoming more complex, organizations search consistently for better means to remain relevant and competitive in their operations. Following the above statement, it therefore implies that end product/service delivery from firms to customers when they are needed and at a competitive price are imperative to ensure customers feel fair treatment. According to Bittel (1991), since virtually every organization purchase goods and services to operate, supply chain has attracted more attention than before due to the massive potential that exist for improvement in gaining the competitive advantage thus reducing cost and better product or/and service performance. One of the tools for the firm‘s competitiveness is strategic procurement which is seen to have a positive effect on the overall performance of the organization (unlike traditional purchasing driven by desire to cut costs of purchase) short-term-profit improvement, transactional rather than relationshipbehavior, and emphasis on price reduction, strategic procurement, by contrast, looks at how the purchasing of goods and services, including outsourcing of entire processes, can deliver long-term shareholder value. It involves reducing the supplier base, co-operative negotiationwith suppliers, quality interaction with supplier, and developing long-term relationship with the best supplier both national and international (Anowor & Agbarakwe, 2015). Nevertheless, these procurement management behaviors are linked to better procurement performance, unlike traditional purchasing which is driven by the desire to cut costs of purchase and short term profit improvement, historically often resulting in supplier proliferation, transactional rather than relationship behavior, and emphasis on price reductions, strategic procurement, by contrast, looks at how the chain of goods and services, including outsourcing of entire processes can deliver better long term shareholder value (Anowor & Ogbe, 2019).

Importantly, consensus among scholars reveals that procurement management entails building alliance and consistency of actions that corroborates wide range of objectives and robust strategy through which the mission of procurement function is fulfilled ( Muiga & Kwasira, 2016). This can therefore be viewed as transformation of an organization‘s mission, goals and objectives into measurable activities which can be used in budget planning and managing the procurement function. The identified challenge as noted by Aliyu (2016) is that most organizations have not been able to apply the required procurement principles and practices that enhance the realization of organizations‘ set objectives. This informs the assumption that situation such as this and others have the potentials to make organizations turn counter-productive and can also affect records procurement management practices such as records management, cost management, and relationship management. Procurement management function as argued by Muiga and Kwasira (2016) has increasingly recognized the importance of strategic supply chain relationship that fosters competitiveness that generates positive effect on the firm‘s financial performance as well as business policy and strategic management. Strengthening this view, Aliyu (2016) contend that procurement has a long history, nevertheless its role as a strategic part of the organizational structure is recently identified.

Procurement management can be approached from three main dimensions namely: (a) development and management of key suppliers, (b) internal operation of procurement function and coordination of purchasing with other functions within the firm, (c) and efforts to meet or exceed customer expectations. Procurement management is seen as a critical function of an organization with the potential to save cost, improve operational efficiency, sharing of best practices, enhance access to trusted supplier, and to improve quality of products/services (Magnus, 2006). Muiga and Kwasira (2016) in their postulation supported the above as they assert that procurement has evolved from a transactional function to one that is contributing to the current and future performance of organizations.


1.2 Statement of the Problem

The issue of strategic procurement is as important as life itself and neglecting it could be as horrendous as a tornado. Poor procurement practice can result to business failure and ultimately lead to job lost.Like strategic management process, strategic procurement consist of; goal setting, analysis, strategic formulation, strategic implementation and evaluation and control. It is worthy to note that private sector procurement procedures and practices are not subject to the same oversight as those involving use of public funds. They focused on minimizing cost and maximizing profit without compromising quality. Ibanichuka, (2017). observed that short-term objectives of supply chain management are primarily to increase productivity and reduce inventory and cycle time, while long-term objectives are to increase market share and profits for all members of the supply chain.

Contrarily most businesses do not utilize strategic procurement mechansism which is capable of affect business negatively. Ya’kob & Jusoh(2016) observed that some organization advertised contract jobs to very few suppliers who may not have the capacity to execute them professionally. Nlpa(2018) in the same assert that the tendencies of management board members wanting to assimilate all the suppliers they introduce into the company’s suppliers range causes excessive and indiscriminate buying and over time stores becomes obsolete and redundant. Although there are several studies regarding procurement process and its impact of firm growth, little attention has been focused on procurement strategies and operations on the supply chain performance . Upon this backdrop, this study seeks to assess procurement strategies and operations on the supply chain performance with reference to BUNS construction company.


1.3 Objective of the Study

The broad objective of this study is to present an assessment of procurement strategies and operations on the supply chain performance: a case study of BUNS construction company. Other specific objectives includes:

  1. To investigate the procurement strategies utilized by construction industry
  2. To ascertain whether efficient procurement process has any influence on the operational performance of BUNS construction company
  3. To determine weather purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company.
  4. To investigate whether supplier relationship management improves the supply chain performance of BUNS construction company.

1.4 Research Questions

The research is guide by the following questions:

  1. What are the procurement strategies utilized by construction industry?
  2. Does efficient procurement process has any influence on the operational performance of BUNS construction company?
  3. Does purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company?
  4. Does supplier relationship management improves the supply chain performance of BUNS construction company?

1.5 Research Hypothesis

HO: There is no significant effect of procurement strategies and operations on the supply chain performance in BUNS construction company.

H1: There is a significant effect of procurement strategies and operations on the supply chain performance in BUNS construction company.


1.6 Significance of the Study

Findings of this study will be relevant to construction industry and other private businesses and elighten them on the need to improve their procurement process. The result of the study will enlighten top management members on the need to build effective supply chains using ICT tools that are flexible, with dependable logistic systems that can enable organisations regroup quickly in response to unexpected needs of their passengers. Theoretically, the study will add to body of existing literature and as well serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.


1.7 Scope of the Study

The scope of this study borders on an assessment of procurement strategies and operations on the supply chain performance. The study further discusses strategies utilized by construction industry, whether efficient procurement process has any influence on the operational performance of BUNS construction company, weather purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company and whether supplier relationship management improves the supply chain performance of BUNS construction company. The study is however delimited to BUNS construction company.


1.8 Limitation of the Study

Besides time and resources constraint the researcher encountered some of the limitations that hampered the study revolves around gathering of primary materials and analyzing data. The Staff of Railway management Abuja unwillingness to release necessary data for the research work, however the researcher assured them of anonimity as the information obtained is vital to this study hence considered confidential. More so, the uncooperative attitude of the staff which led to the non-return of some questionnaires was another setback to the researcher. Despite the limitations the researcher painstaking ensured that these factors were downplayed.


1.9 Definition of Terms

Procurement:

This refers to the action of buying goods, materials or services for the good of the public.

Process:

This term refers to the procedure, the pattern, the way whereby a certain action has to be followed to arrive at an expected result. Process here has to do with the adopted pattern for procurement.


1.10 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows.

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary

The broad objectives of the study boarders on an assessment of procurement strategies and operations on the supply chain performance using BUNS construction company as case study. The study further discusses strategies utilized by construction industry, whether efficient procurement process has any influence on the operational performance of BUNS construction company, weather purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company and whether supplier relationship management improves the supply chain performance of BUNS construction company.

Survey research design was employed for the study and with aid of convenient sampling thirty-five (35) staff of BUNS construction company were selected as the participant of the study. The sources of data collection was both primary and secondary with the application of questionnaires as an instrument to gather the necessary data. The questionnaires were properly completed as well returned by only 30 respondent after being administered.

Textbooks, journals, articles, law reports, newspapers publications, were collected as secondary data, and also limitations to the study were indicated. Data was analyzed using simple percentage presented in frequencies and tables. Hypothesis test was conducted using Chi-Square Statistical Package for the Social Sciences (SPSS v.23).


5.2 Conclusion

Procurement management implies sorting desirable strategic approach to supply chain relationship that can advance efficient product quality, profitability, and cost effectiveness. Since virtually every organization purchase goods and services to operate, strategic procurement which is seen to have a positive effect on the overall performance of the organization (unlike traditional purchasing driven by desire to cut costs of purchase) short-term-profit improvement, transactional rather than relationship behavior, and emphasis on price reduction, strategic procurement, by contrast, looks at how the purchasing of goods and services, including outsourcing of entire processes, can deliver long-term shareholder value.

Findings of the study reveals that effective procurement strategies involves supplier optimization & relationship building, value chain analysis, adoption of purchasing information system and efficient procurement process. The study thus concludes that efficient procurement process has an influence on the operational performance of BUNS construction company, purchasing information system influences the value chain analysis required strategic procurement as well supplier relationship management improves the supply chain performance .


5.3 Recommendation

From the findings of the study, the researcher recommends thus:

  1. Strategic procurement process should be aggressively pursued. The length of the process should not be too long. It should be open and competitive. Only suppliers with the lowest cost and most responsive bid should be considered.
  2. Management should sustain its supplier relationship management strategy which is aim at saving cost and obtaining quality and uninterrupted supplies. Greater collaboration with suppliers creates access to information not readily available in the organization allowing for better decisions to be made when drawing up specifications.
  3. ICT should be consolidated in BUNS construction company since it reduces the number of physical contact among employees and also between employees and vendors thereby curtailing rate of corruption. It also saves time and quick disseminations of information which is necessary for effective control of the entire procurement process
  4. Since strategic procurement is an organization-wide process and hence It requires input from all departments and functional areas in the organization. Organizations should set up a strategic procurement team. This team sets the overall direction for procurement, aligned with the business strategy.
  5. The organization should further improve on its procurement practices in order to improve more on vendor‘s performance, while emphasis should be laid more on cost effectiveness as that is where impact has been felt most. Attention should as well not be shifted away on further improvement of product quality and profitable level.
  6. On a similar note, the organizations should also target other areas where vendors could also impact on their performance. Such areas include: rate of turnover, prompt product delivery and among others focusing on forming strategic alliances with the vendors and staff development.

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