Assessment of purchasing contribution to the development and growth of SMEs, evidence from Tanzania

Abstract

The contribution of purchasing to the development and growth of small- and medium-sized enterprises (SMEs) and the overall performance of supply chain has been neither rigorously examined nor empirically substantiated. This paper provides empirical evidence on how purchasing variables (relationship, product quality and quantity, and price) contribute to the development and growth of SMEs in Tanzania. In this study, it was found that poor relationships between suppliers and SMEs and low quality of products sold by SMEs affect the provision of service to customers and lead to poor development and growth of SMEs while high prices of products and low quantity of goods have no direct effect. Conclusions drawn include: SMEs can improve the supplier relationship, e.g., by finding alternative product sources at low prices but not at the expense of quality, and by ordering the products from suppliers on time to avoid late delivery and stock depletion.