Abstract
Across the globe, organizations have realized the importance of procurement performance in establishing and maintaining their competitive advantage. Supplier’s development was considered as one of the aspect that can enhance organization competitive advantage which would eventually result to effective organization performance. The study determined the effect of supplier selections on organizational performance in manufacturing firms in Kenya. The study adopted mixed research approach with both exploratory and descriptive survey design. The target population of this study was 151 SMEs in food and beverage industry which operated in Nairobi and practiced supplier development management practices. Stratified random sampling was employed to select a sample size of 399 respondents. The study used primary data which was collected using questionnaire. The collected data was coded through statistical analysis tool using SPSS version 21 to test for content, construct, and criterion-related validity, as well as reliability analyses. Further, a structural equation model was developed to test the relationships between the variables. In addition, regression analyses and ANOVA was performed to analyses the effects of various relationships at the sub-construct level as well at item level. The study concluded that food and beverage firms in Kenya employ several criteria in supplier development processes. These majorly included selection based on the following criteria; quality standards of products of the supplier, financial position of the supplier, flexibility of the supplier, supplier efficiency in service delivery, supplier charges, good market reputation of the supplier and increase in cost of operation. The study recommended that the food and beverage firms should train their supplier selection committees or procurement managers on how best to select the suppliers. This enabled the firms to get the right suppliers who will lead to harnessing the benefits associated with the practice that is shortened lead times, customer satisfaction and higher profit margins
Highlights
Theories Grey Theory Grey system was originally developed by Deng (1989) on the basis of grey sets, is an important methodology for solving problems which involve uncertainties and aims at handling systems with unknown or incomplete information
According to Li., Yamaguchi and Nagai (2007) in recent years, a fuzzy-based approach has been proposed to deal with the supplier selection problem under uncertainty, but the advantage of grey theory over fuzzy theory is that grey theory considers the condition of the fuzziness; in other words, grey theory can deal flexibly with the fuzziness situation (Zadeh, 1965)
The factor loadings from the factor analysis revealed that the items to retain were, Suppliers selected are the once who meets the least cost criteria of the firm (0.820), supplier selected are the only one who possess positive market reputation (0.796), selected suppliers’ are only the ones who can meet quality standards of the firm (0.763), the determination of the supplier has always been guided by least cost consideration (0.677), assessment process has always identified suppliers meeting firms quality standard(0.605) and the criteria for firm selection ensures that only suppliers with high performance reputation are contracted
Summary
Theories Grey Theory Grey system was originally developed by Deng (1989) on the basis of grey sets, is an important methodology for solving problems which involve uncertainties and aims at handling systems with unknown or incomplete information. When a relatively few parts are procured externally, the total demand can be provided by only one supplier Such a sole sourcing scenario appears to be tenable especially in the last decade, which has seen an important shift in the sourcing strategy of many firms, moving from the traditional concept of having many suppliers to rely largely on one supplier with which a long term win–win partnership is established. Supplier selection is a multiple-attribute decision making problem, since it involves various criteria to be considered Besides it includes both quantitative and qualitative criteria which some of them may include uncertainty and sometimes they may be conflicting (Bali, Kose & Gumus, 2013).
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