The Impact of Information and Communication Technology on Procurement Performance in Manufacturing Firms in Kenya

Abstract

Despite the great impact that the industrial segment plays in the Kenyan economy it is still faced with challenges. The main objective was to establish the factors affecting procurement performance in manufacturing firms in Kenya, a case of Nzoia sugar company Ltd. The study sought to establish whether all the four independent variables that include, Managerial style, Information communication technology, employee competency and procurement policy had significance to the procurement performance. The study was conducted using a descriptive research design with a target population of 526 respondents, which translated to a sample size of 220 from Procurement, Finance, Human Resource, General administration and information communication technology departments. The study anchored variables on different theories for which 5-point Likert scale questionnaire was the main instrument of data collection for the study and data collected ‘analyzed using SPSS version 24. Findings indicated Nzoia Sugar Company Ltd lacks a good ICT infrastructure, leans more towards autocratic leadership and hardly adheres to procurement policy. On exploration of prevailing initiatives to address employee competence, it was found out that employee International Journal of Academic Research in Business and Social Sciences Vol. 8 , No. 9, Sept. 2018, E-ISSN: 2222-6990 © 2018 HRMARS 607 competency was not a priority. The study concluded that managerial style remains central to procurement performance and thus employee involvement is paramount and has direct impact on procurement performance of manufacturing firms. Thus the autocratic leadership style adopted has failed to foster communication and collective participation resulting to poor performance. On addition, procurement policy is crucial for fostering procurement processes of which most of manufacturing firms remain lax on such policies that eventually results in poor procurement performance. Also technical competence of procurement personnel is fundamental for procurement performance therefore there is need to have continued education and development of procurement personnel. The study recommended that there is need to adopt a participatory managerial style that can encourage quick and efficient accomplishment of procurement role and adoption of EDI to streamline the procurement process. In addition, the research recommends that the firm come up with mechanisms that will boost growth and development of employees and enforce compliance of procurement policy. Introduction Procurement performance is an on-going, never-ending, integrated process requiring continuous reassessment and reformation. Procurement is the nerve center of performance in every institution, whether public or private and thus needs a tight system to be followed and adopted. Procurement performance measurement is the process by which procurement establishes criteria, based on strategic planning goals, for determining the results and quality of its activities. It involves creating a simple, effective system for determining whether the procurement is meeting its objectives (Wanyonyi&Muturi, 2015).This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary (Kerzner, &Kerzner, 2017). Statement of the Problem Despite the core role that the manufacturing sector plays in the economic prosperity of the country, evidence shows that the industry is awash with challenges ranging from legal to monetary (Anzetse, 2016; Ogot, 2014). Besides, studies have shown that the manufacturing experiences challenges in terms of procurement processes that in turn affects procurement performance (Moenga, 2011; Osoro, 2016). Interest among industry stakeholders and researchers ought to focus more on this industry that is vital to the country’s economy, with a view to discerning factors that are deterring its growth. The present study, therefore, examined factors affecting procurement performance (viewed as an antecedent to sector growth)in manufacturing firms, and in particular Nzoia Sugar Company Limited. Evidence in extract literature shows that manufacturing firms in Kenya have been facing a variety of challenges, Anzetse (2016) for instance argues that manufacturing firms in Kenya are relatively underdeveloped considering that their growth has on average been growing at a rate lower than the economy.According to Ogot (2014), informal sector micro-enterprises allied to the manufacturing sector experience challenges in form of inadequate capital, production cost, and competition. International Journal of Academic Research in Business and Social Sciences Vol. 8 , No. 9, Sept. 2018, E-ISSN: 2222-6990 © 2018 HRMARS 608 According to (Moenga, 2011) study on procurement and supply chain practices and performance of small scale tea sector in Kenya; found that the challenges affecting the sector were procurement performance and supply chain visibility, increasing customer demands, risk management, globalization and cost containment. In order to attain optimal procurement performance, various factors have to be taken into consideration by firms. Most available are from developed countries and the few available does not touch the areas of my study. The study is done in Kenyan context order to bridge the gap. In view of the foregoing this tends to bridge the gap by creating new knowledge to enhance the better performance of manufacturing in Kenya; most importantly the procurement performance to improve in these firms. Objective of the study The objective of this study was to evaluate the impact of information communication technology on procurement performance in Nzoia sugar Company. Research Question What is the effect of information communication technology on procurement performance in Nzoia sugar Company? LITERATURE REVIEW The study was guided by planned behavior theory. Theory of Planned Behavior According to Ajzen, (1991) the dominant issue in the Theory of Planned Behaviour (TPB) is the person’s purpose to execute a particular act that is improved the Theory of Planned Behaviour. The sturdier the purpose to involve in the act, thus the yield would result in more output as opposed to not achieving. TPB hunches that a person’s aim is to act in a certain way guided by three aspects: determinants: boldness, individual norm, and apparent action mechanism. The significance of the factors would vary across the various happenings (Ajzen and Fishbein, 1980). The way a person acts portrays their negative and positive attributes in life. This is seen by their attributes on how they perform at work. The individual is subjected to adaptable behaviour’s. at the very end the last factor is called the perceived behavior control. Thus TPB forecasts how one would act in their life as such they would be some level of conforming to certain aspects in life such as how one perceives issues and using them as a management function showing an element of professionalism. An individual therefore should be courageous and also show that they are in control with how they act in life. The hypothesis is used in the acceptance of the acceptable behaviours that can be incorporated in the procurement systems of which is in line with the services that are provided for instance Nzoia Sugar Company Ltd. A number of researchers allude to the aspect of the TPB to be more focused on mental processing capabilities. The theory has been critiqued on that basis. Some academicians have also levelled accusations on the theory being self-vested as opposed to focusing on the needs of an individual. For instance a person with the right attitude might want to feed on beef but order another type of food when hungry. International Journal of Academic Research in Business and Social Sciences Vol. 8 , No. 9, Sept. 2018, E-ISSN: 2222-6990 © 2018 HRMARS 609 In another perspective a person might abhor taking alcohol yet they have very little intent to drink. These persons will still have the opportunity of taking alcohol in order to seek approval of a certain group (Mai, 2016). Theory of planned behaviour is thought to be relevant for this study since it focuses on individuals behaviour and explicit to use ICT respectively. In addition the TPB theory establishes the nexus between data and communication technology and the enactment of industrial firms in Kenya; hence it gives a theoretical background for this study. CONCEPTUAL FRAMEWORK To implement these study independent and dependent variables was defined for the conceptual framework. Independent Variable Dependent Variable Information and Communication Technology Electronic procurement in the broadest sense refers to B2B or B2C or B2G that being the buying and selling of supplies, labour, and facilities such as data network and information mechanisms. This relates to the information exchange and scheduling (Muhia & Afande, 2015). There are various parts of e procurement which include electronic contracts, data, orders; sourcing. The e procurement can be termed as the process of integrating and streamlining procurement processes through the institution (Muhia & Afande, 2015). According to Lysons & Farrington (2012), EDI is a technique based on agreed standards that facilitate business transactions in the standardized electronic form in an automated manner directly from a computer application to an application in another computer. Data elements and codes are described in a directory relating to the message standard used, thus allowing organizations to trade electronically.Although there are still many EDI standards, only two, namely ASCx12 and EDIFACT are used. The Accredited Standards Committee of the American National StandardsInstitute, which defines data formats and encoding rules for business transactions, created ASCx12 in 1979. United Nations developed EDIFACT (EDI for Administration Commerce and Tran