FACTORS AFFECTING PROCUREMENT PERFORMANCE IN MOBILE TELECOMMUNICATIONS ORIGINAL EQUIPMENT MANUFACTURERS: A CASE STUDY OF ERICSSON KENYA LIMITED

Abstract

The procurement performance can hardly be ignored in any manufacturing organization. Strategic , Middle level and Tactical buying decisions all relate to the management of costs in one way or another and commitment to spend money to purchase inputs is done by the Procurement staff after getting the most competitive prices in the market .This includes the production costs of making the item itself and Trade costs for managing the transport logistics from the time the goods are ready at the factory of Origin until they reach the final customer. The aim of this study will be to find out the factors that influence Procurement performance in Mobile Telecommunications Original Equipment Manufacturers, a case study of Ericsson Kenya Limited. The specific objectives will be to determine the influence of Logistics capacity, Product Tariff Engineering, Inventory Management and Internal control. The study included theories, namely Iceberg Theory, Tariff Theory, Inventory Theory and Internal Control Theory .It included Research design, target population, sample size, data collection tools and method of analysis. The study adopted a descriptive survey research with a target population of 150 respondents from Ericsson Limited. Stratified random sampling technique was applied to draw samples from each grade stratum where a sample of 60 Respondents will be drawn. The questionnaires was used as the main instrument to collect the primary data. Regression Analysis was used to determine the relationship between the independent and dependent variables. The quantitative and qualitative data was tabulated and presented by use of charts and graphs and recommendation will be done based on the findings. The study concluded that logistics capacity positively affects procurement performance. This implies that increasing levels of logistics capacity by a unit would increase the levels of procurement performance by a unit. Logistics capacity factors such as Logistics costs, logistics lead times, transparency in freight Quotes and Logistics Efficiency affect Procurement performance. The study also concluded that Product Tariff Engineering has a positive effect of the procurement performance. The study further concluded that that inventory management positively affect procurement performance. The study finally concluded that Internal Control positively affect procurement performance. This implies that increasing levels of Internal Control by a unit would increase the levels of procurement performance by one unit. According to the study findings, internal control factors such as internal processes, legal compliance, and Procurement Audit and Control effectiveness affect Procurement performance. The study recommends that management of the Ericsson Kenya Limited should put in place the internal structure and systems that allow free and timely flow of information between individuals and departments to enhance the logistic capacity. The study also recommends that the priority of the product design decision should be to ensure that products are designed in such a way that assembly is enhanced. In particular designing products to reduce complexity and increase agility through postponement strategies should be the goal wherever possible which in turn enhances the procurement performance. The study further recommends the inclusion of inventory management in the strategic plans of the Ericsson Kenya Limited. Inventory management as evidenced in this study, of being capable to reducing costs of manufacturing, making sure there is full utilization of resources usage, reduces wastage of materials, improves quality of production, limits idleness in manufacturing plants, and improves customer service thus impacting positively on the procurement performance of the firms.Finally,it was recommended that for the organization to perform well, their internal control systems need to be improved, cultivated and implemented diligently.