EFFECTS OF INDIRECT PURCHASING ON ORGANIZATIONAL PERFORMANCE IN SELECTED COMPANIES OF KENYAN ENERGY SECTOR
Koskei Joyce Chepkirui - Master of Science in Procurement and Logistics, Jomo Kenyatta University of Agriculture and Technology, Kenya
Kagiri A. Wairimu - Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
The key objective of this study was to establish the effects of strategic sourcing of indirect items, market knowledge, stakeholder management and technological innovation on organizational performance of key players in the energy sector in Kenya. The research study applied a descriptive research design. The target population of this study was the staff working in Kengen, Kenya Power, Iber Africa and Wärtsilä Eastern Africa Limited offices in Nairobi. There were approximately 228 top and middle level management staffs currently serving in the offices of selected firms in Nairobi and designated in the thermal production departments as well as maintenance departments in these institutions. A sample of 30% was selected from within each group in proportions that each group bears to the study population. This generated a sample of 68 selected for observation. The study collected both primary and secondary data for the purpose of analysing the comparative effects of indirect purchasing on organizational performance of players in the energy sector in Kenya. Primary data was collected using a questionnaire while secondary data was obtained from annual reports of the companies. The researcher dropped the questionnaires physically at the respondents’ place of work. The structured questions were used in an effort to conserve time and money as well as to facilitate in easier analysis as they are in immediate usable form; while the unstructured questions were used so as to encourage the respondent to give an in-depth and felt response without feeling held back in revealing of any information. Each questionnaire was coded and only the researcher knew which person responded. The coding technique was only used for the purpose of matching returned, completed questionnaires with those delivered to the respondents. The study concludes that indirect purchasing has a significant effect on the organizational performance of key players in the energy sector. The study deduces that category/market knowledge, shareholder management and technological innovation affect the organizational performance of the firms in the energy sector in Kenya. The study recommends that the firms in the energy sector in Kenya should endeavor to fully understand the risks involved in indirect purchasing as a means of enabling them to come up with sourcing strategies aimed at improving the overall performance. For the purchasing function to achieve its maximum level of effectiveness and efficiency, material flows, money flows and information flow throughout the entire chain must be managed in an integrated and holistic manner, driven by the overall service and cost objectives. The management of the firms should carry out a benchmarking activity against the best players in the market as a way of improving their category/market knowledge in the indirect purchasing practices. The energy sector firms should enhance the use technological innovations and information technologies that are compatible with their purchasing activities.
