Influence of Strategic Procurement on the Performance of Public Enterprises in Kenya: A Case of Kenya Power Company Limited, Nairobi
Okong’o, Nicodemus Nyabuto
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Strategic procurement is the process of creating alignment and consistency of action that establishes the long range objectives and overall strategy by which procurement function fulfills its mission. It entails the transformation of an organization’s mission, goals, and objectives into measurable activities to be used to plan, budget and manage the procurement function. During the last two decades procurement has undergone profound changes. Policy makers, academicians and practitioners alike share the broad view that procurement has evolved from a clerical signoff-ridden set of activities to a strategic public administrative tool that can enhance efficiency in public organizations. Today, procurement is recognized as the most single function that contributes immensely to organizational performance and accounts for huge proportion of total expenditure in many countries. However, despite significant expenditure in resource allocation to procurement, there is a growing concern that organizational performance by many public enterprises in developing countries is becoming a challenge. Poor distribution of electricity by KPCL in Kenya for example, can be attributed to ineffective procurement systems within the organization. Consequently adoption of strategic procurement as suggested by many researchers may offer part of the solution. The objectives of this study were; to establish the extent to which strategic procurement has been adopted at KPCL, to examine the extent to which strategic procurement influences the performance of Kenya Power Company and to establish the challenges that face Kenya Power Company in implementing strategic procurement. The study was based on institutional, socio-economic and systems theories. The research problem used a case study. The population of interest was employees working in Kenya Power Company Limited head office, Nairobi. Purposive sampling was used to pick the primary sample of 55 out of the total population of 110 employees. The study used both primary and secondary data. Primary data was collected using semi-structured questionnaire and secondary data from research proposals, internet, journals and books. The questionnaires correctly filled were coded; the data entered into statistical package for social sciences and analyzed based on descriptive statistics. Study findings indicated that strategic procurement has a positive impact on the performance of public enterprises; such as reduced costs, improvements in quality of goods and services in the organization. Challenges of implementing strategic procurement in public enterprises include changes in technology, employees' lack of requisite skills to undertake strategic procurement, lack of management commitment to strategic plans and weak governing policies and regulations. Lack of cooperation and teamwork during implementation and corruption are also major impediments. The study recommends that strategic procurement should always be considered pivotal to an organization’s performance. Organizations should ensure they have competent employees in procurement and strategic management to chart a way forward for the procurement function. The extent of the study was limited to Kenya Power Company Limited headquarters Nairobi. The findings may not be applicable to all the other enterprises but can be generalized in Kenya and the world at large. The questionnaires provided limited information due to confidentiality concerns.