PROCUREMENT OPTIMIZATION ON PERFORMANCE OF MANUFACTURING FIRMS IN NAIROBI CITY COUNTY

Abstract

In Kenya Many manufacturing companies are not able to manage their supply chain costs related to procurement and thus leading to poor performance. The general objective of the study is to establish the effect of procurement optimization on the performance of manufacturing firms Nairobi city County, Kenya. Specifically, the study sought to determine the influence of Outsourcing on performance of manufacturing firms in Nairobi city County, Kenya and to assess the influence of supply chain design on performance of manufacturing firms in Nairobi city County, Kenya. The study used descriptive research design which uses observation and survey methods. The targeted population of this study was 455 supply chain managers from large scale manufacturing firms in Nairobi City Kenya. According to KAM business directory (2016), there are 455 large manufacturing firms operating within Nairobi city. Stratified sampling technique was used to select 100 firms operating within Nairobi city. The study used primary data which was collected through use of questionnaires. This study adopted a descriptive data analysis and inferential data analysis. Descriptive data  analysis was adopted  for  this  study  because  descriptive  analysis  is  used  to describe the basic features of the data in a study. The study used SPSS and MS Excel to facilitate the analysis of data. SPSS is used to undertake calculations on the data. The study utilized SPSS to develop a multiple regression model to make inferences on the effect of each of the independent variables on the dependent variable. The study results were presented through tables and figures. The study concludes that outsourcing has a positive and significant effect on performance of manufacturing firms in Nairobi city County, Kenya. In addition, the study concludes that supply chain design has a positive and significant effect on performance of manufacturing firms in Nairobi city County, Kenya. From the findings, this study recommends that manufacturing firms should adopt a strategic approach to outsourcing that aligns with their core competencies and long-term business goals. Careful consideration should be given to which functions or tasks to outsource and which to retain in-house. In addition, the Firms should establish rigorous vendor selection criteria to choose reliable and capable outsourcing partners. Once selected, maintaining a healthy and collaborative relationship with outsourcing vendors is essential to ensure smooth operations and high-quality service delivery.