Purchasing Practices and Procurement Performance of State Corporations in Kenya

Abstract

Millions of dollars get wasted due to inefficient and ineffective procurement structures, policies and procedures as well as failure to impose sanctions for violation of procurement rules thus resulting in poor service delivery. Purchasing practices are strategies that may be followed when making company purchasing decisions. Implementing procurement practices may therefore significantly improve the effectiveness of purchasing decisions. The most significant purchasing practices may be improving the relationship between the buyers and suppliers. Procurement department, like all other departments in a company, is an element of the overall organization, which must contribute to the achievement of the corporate goals. The Constitution of Kenya (2010), which makes it very clear that the procurement must support national development objective, in pursuit of the necessary task, it requires that proper policies, procedures be implemented. The study sought to answer the question: what state corporations use purchasing practices in Kenya? Is there a relationship between purchasing practices and procurement performance of state companies in Kenya? The following objectives guided this study: To determine the purchasing practices and to establish the relationship between purchasing practices and procurement performance of state corporations in Kenya. The study used descriptive research design. The target population for this study was all heads and senior procurement officers in 253 parastatal in Kenya where 45 parastatals from a total of 253 parastatals in Kenya were randomly selected. Primary data was used in this study; it was collected using a self-administered questionnaire. The study used descriptive statistical package for social sciences to analyze the data. The study established application of the following purchasing practices by state corporations: planning, monitoring and evaluation, ICT adoption, ethics, training and professionalism, management support, legislative, internal control, outsourcing, contract management. The independent variables in the regression model with positive coefficient have a direct relationship with the dependent variable. Therefore, procurement performance in State Corporation in Kenya varies directly with purchasing all the variables had positive coefficients practices. Purchasing practices (planning, monitoring and evaluation, ICT adoption, ethics, training and professionalism, management support, legislative, internal control, outsourcing, contract management) explains 84.3% of observed change in the procurement performance in state corporation in Kenya. The study concludes that procurement performance of state corporations in Kenya is influenced by purchasing practices that include. The study recommends that State Corporation can enhance procurement performance by ensuring that all stakeholders are committed to procurement and support at the earliest possible stage of the purchasing process. The study recommends that state corporations can improve procurement by ensuring that the supplier selections go deeper to examine the capabilities of suppliers and establishment of long-term relations. A positive relationship with suppliers is a critical factor in sustaining a competitive advantage.