INFLUENCE OF SUPPLIER SELECTION CRITERIA ON PERFORMANCE OF MANUFACTURING COMPANIES IN KENYA

Abstract

The study aimed to link supplier selection criteria to the performance of manufacturing firms in Kenya. Specifically, the focus was on financial status evaluation, technical capability evaluation, supplier's capacity evaluation and suppliers' culture and how they influenced performance of manufacturing firms. The study focused on suppliers' financial status, technical capability, capacity and culture evaluation. The variables were motivated by the Lean Supplier Competence Model. The study adopted a descriptive survey design. The target population was the manufacturing firms registered by the Kenya Association of Manufacturers by June 2017. Yamane formula was used to determine a sample size of 87. The head of procurement functions from each firm was considered for the study. Quantitative primary data was used for analysis. The findings revealed that supplier evaluation criteria had a positive and significant influence on performance of manufacturing firms in Kenya. All the four variables positively and significantly influence performance. The study recommended that manufacturing firms operating in Kenya should aim to enhance their financial status evaluation practices so as to record an improvement in performance because financial status evaluation helped establish whether the supplier can have continuity in supply before being bankrupt. Some of the financial indicators to be evaluated were credit worthiness, level of financial accountability and financing mode. The study recommended that manufacturing firms operating in Kenya should aim to enhance their technical capability evaluation practices so as to record an improvement in performance. Some of the technical capabilities to be evaluated in a supplier were labour force capacity, technical knowledge of operation and staff level of expertise so as to enhance quality production by competent staffs. The study recommended that manufacturing firms operating in Kenya should aim to enhance their supplier capacity evaluation practices so as to record an improvement in performance. There is a need to evaluate the supplier's capacity ranging from the production capacity, storage capacity as well as distribution capacity so as to avoid shortages that may arise due to lack of enough capacity.