Strategic Sourcing as a Tool for Improving Firm’s Performance

Abstract

Purpose The purpose of this paper is to investigate effectiveness of strategic sourcing for improving firm’s performance. Design/Methodology/Approach A cross-sectional approach was adopted with primary data collected. The data yielded a response rate of 375 from electricity firms in Kenya. The data collected were put through rigorous statistical analysis to test content validity as well as reliability. Further, simple linear regression model was used to test relationships between strategic sourcing and firm’s performance. Findings The finding suggests that a successful implementation of strategic sourcing improves firm’s performance through adoption of multiple sourcing strategies as well as maintaining manageable supply base. Further, the paper reveals that wrong choice of suppliers can negatively compromise the quality of products and services of the firm. Research limitations/implications Strategic sourcing is complex and very sensitive issue. While the study show the effect is generally accepted strategic sourcing strategies for improving firm’s performance, not all strategic sourcing strategies are covered in the study. Also, the study can be carried on in other sector in order refine the study findings. Originality/Value The study provides an empirical analysis on the strategic sourcing strategies and their effect on firm’s performance. Again the study seeks to provide a research agenda which meets the needs of today’s business sourcing requirements. Keywords: Strategic sourcing, Performance of electricity firms in Kenya, Simple regression, Reliability