INFLUENCE OF STRATEGIC SOURCING ON PROCUREMENT PERFORMANCE OF KENYAN COMMERCIAL BANKS

Abstract

The purpose of this study was to find out the influence of strategic sourcing on the performance of the procurement function of commercial banks in Kenya. This study explored how key sourcing decisions, Supplier selection and buyer supplier partnerships influence procurement performance. The population consisted of 40 commercial banks that are licensed by Central bank of Kenya (CBK) as at July, 2016. Since the number of banks was relatively small a census was done to collect primary data through interviewing bank procurement managers using questionnaires whilst secondary data was from earlier works on the subject through a comprehensive literature review. Descriptive and inferential statistics were used in data analysis with the Statistical package SPSS being used in analysis of data. Correlation analysis using Spearman correlation coefficient techniques was used to establish the kind of relationship that existed between variables to draw key findings and inform recommendations for further research. The study concluded that if properly structured, strategic sourcing can effectively combine the core competencies of a given firm with the skills and capabilities of its suppliers. The study maintained that strategic sourcing is increasingly being recognized as an integral part of business strategies and practices in banking institutions. From the results it was established that proper sourcing strategies greatly improve the performance of these institutions. It was also found out that an increasing reliance on suppliers leads businesses to be more exposed to uncertain events, which explained why supplier selection is a critical process in procurement performance. The study recommended that banking institutions should improve their sourcing strategies and benchmark them with best in practice organizations and ensure they enter into buyer supplier relationships that are fostered on trust and goodwill on both parties in order to maintain and improve organization performance. This study contributed immensely towards filling gaps in knowledge and information in the area of strategic sourcing as it related to procurement performance of commercial banks in Kenya. Key Words: Sourcing Decisions, Supplier Selection, Buyer Supplier, Procurement Performance

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