E-Procurement and Supply Chain Performance of Large Retail Chains in Kenya

Abstract

Despite high business turbulence recently witnessed, Retail Chains are one of the crucial retail sectors that contribute in achieving the Vision 2030. At a minimum, the industry is projected to contribute to the achievement of Vision 2030 by 10 % of GDP and 10% of total formal employment. However, based on the trend of performance, there has been a steady decrease in Retail Chains contribution to GDP from 8.0% in 2014 to 4.5% in 2018. In recent past, E-procurement has emerged as a new strategy to improve performance. However, there is no empirical evidence to support its use as a market strategy that can turn the large Chains industry's income in Kenya around with higher results. Hence this study sought to establish the relationship between e-procurement practices and supply chain performance in Large Retail Chains in Kenya. This study was guided by the following specific objectives: to examine the relationship between of electronic communication and supply chain performance of Large Retail Chains in Kenya; to determine the relationship between electronic contracting and supply chain performance of Large Retail Chains in Kenya; to evaluate the relationship between electronic ordering supply chain performance of Large Retail Chains in Kenya; and to establish the relationship between electronic payments and supply chain performance of Large Retail Chains in Kenya. The study also sought to establish the moderating effect of top management support on the relationship between e-procurement and supply chain performance of Large Retail Chains in Kenya. The study was guided by technology acceptance theory, resource based theory, disruptive innovation theory The Dynamic Capability Theory and Schumpeterian Theory of Creative Destruction. The study adopted descriptive research design and positivist research paradigm. The study targeted 12 Large Retail Chains in Kenya; they formed the unit of analysis while the unit of observation was heads of procurement department, logistics department, finance department and ICT department. Therefore, the target population for this study was 240 respondents. Census method was used in this study. A total of 24 respondents from Medium size Retail Chains in Kenya participated in the pilot test which represents 10% of target population. The study used research questionnaires to collect primary data. The Statistical Package for Social Sciences (SPSS) version 25 software was used to analyze the data. Qualitative data was analysed using content analysis and presented in prose form. Qualitative data was analysed using descriptive and inferential analysis. Descriptive statistics such as frequency, percentages, and means were used. Pearson correlation coefficient was used for testing strength and direction between the independent and the dependent variables. A multiple regression model was used to test the significance of the relationship between the independent variables and the dependent variable. The findings were presented in Tables and figures. The study concludes that electronic communication, electronic ordering, electronic contracting and electronic payments have a positive and significant effect on supply chain performance of Large Retail Chains in Kenya, Kenya. The study concluded Top management support has a significant moderating effect on the relationship between e-procurement and supply chain performance of Large Retail Chains in Kenya. Based on the findings, this study recommends that the management of large retail chains in Kenya should implement integrated Electronic Data Interchange (EDI) systems to enhance communication across their supply chains. This study also recommends that large retail chains in Kenya should implement an integrated electronic payment system that includes dedicated supplier portals. In addition, the management should actively foster strong top management support for their digital transformation initiatives.