CHALLENGE OF PURCHASING ACTIVITIES IN CASE OF ROBE

TOWN IMAN HOSPITAL

MADDA WALABU UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT

A RESEARCH SUBMITTED TO DEPARTMENT OF MANAGEMENT IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FOR BACHELOR OF ART (BA) DEGREE
IN MANAGEMENT

Prepared By: FIROMSA MUSTEFA

Advisor: DR. TAMIRU

FEBRUARY, 2023

BALE ROBE, ETHIOPIA

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 Table of Contents
ACRONOMY.............................................................................................................................................iv
ABSTRACT................................................................................................................................................v
CHAPTER ONE......................................................................................................................................1
INTRODUCTION...................................................................................................................................1
Background of the study......................................................................................................................1
1.2 Statement of the Problems.............................................................................................................2
1.3 Research Questions........................................................................................................................3
1.4 Objectives of the Study..................................................................................................................3
1.5 Significance of the Study...............................................................................................................3
1.6 Scope of the study..........................................................................................................................4
1.7. Limitation of the Study.................................................................................................................4
1.8. Operational Definition..................................................................................................................4
1.9 Organization of the Study..............................................................................................................5
CHAPTER TWO.........................................................................................................................................6
REVIEW OF RELATED LITERATURE...............................................................................................6
2.1 Theoretical Review........................................................................................................................6
2.1.1. Definitions of Terms..................................................................................................................6
2.1.2 Public Procurement.....................................................................................................................7
2.1.3 Procurement Methods.................................................................................................................7
2.3 Procurement Procedures................................................................................................................7
2.3.1 Need Identification.....................................................................................................................8
2.3.2 Planning and Specification of Goods or Services Required........................................................8
2.3.3 Sourcing, Awarding and Supplier Management.........................................................................8
2.3.4 Placing Orders and Contracting..................................................................................................8
2.4 Training.............................................................................................................................................9
2.5 Record Keeping.................................................................................................................................9
2.6 Challenges in Public Procurement...................................................................................................10
2.7 Empirical Literature.........................................................................................................................11
2. 7.1 Purchasing Practice Problems in Addis Modjo Edible Oil Factory..........................................11

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 2.7.2 Evaluating the Purchasing Procedure in Ethiopian Grain Trade Enterprise (Biruk, 2006)............12
CHAPTER THREE...................................................................................................................................13
RESEARCH METHODOLOGY...........................................................................................................13
3.1. Description of Study Area..............................................................................................................13
3.2. The Research Approach..................................................................................................................13
3.3 Research Design..............................................................................................................................13
3.4. Data Source....................................................................................................................................14
3.5. Method of Data collection..............................................................................................................14
3.6 Target Population............................................................................................................................14
3.7 Sampling Technique and Sample Size.............................................................................................14
3.7.1 Sampling Technique.................................................................................................................14
3.7.2 Sample Size..............................................................................................................................15
3.8 Data Analysis and Presentation.......................................................................................................15
CHAPTER FOUR..........................................................................................................................................16
DATA ANALYSIS PRESENTATION AND INTERPRETATION.......................................................................16
4.1 Demographic characteristics of respondents..............................................................................16
4.2 Interview with the manager............................................................................................................23
CHAPTER FIVE............................................................................................................................................24
CONCLUSION AND RECOMMENDATION...............................................................................................24
5.1, Conclusion..................................................................................................................................24
5.2, Recommendation...........................................................................................................................24
REFERENCE............................................................................................................................................26
APPENDICES...........................................................................................................................................28

List of Table
Table 1: demographic characteristic of respondents...................................................................................16
Table 2: work experience of respondents...................................................................................................17
Table 3: marital status of respondents........................................................................................................17
Table 4: The problem of purchasing activities...........................................................................................18
Table 5: Respondent’s perception of the time factor to processing materials requirement.........................18
Table 6: Current purchasing performance of the hospital..........................................................................19

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Table 7: Purchasing policy.........................................................................................................................19
Table 8: The applicability of principles and standard of purchasing activities.........................................20
Table 9: Factors affect effectiveness of purchasing activities....................................................................20
Table 10: The relation between purchasing department and other departments.........................................21
Table 11: The capacity to purchase required materials..............................................................................21
Table 12: The purchasing procedures........................................................................................................22
Table 13: Purchasing activity of the hospital is in line with the organizations purchasing policy..............22

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 Acknowledgement

First of all I would like to thanks my almighty Allah for his assistance still today. And, also I
would like to provide my gratitude to the college of business and economics, department of
management for giving this vital course by considering the necessity.

Next I would like to express great thanks to Instructor Dr. Tamiru for his useful and continuous
guidance/ advice. Finally, special thanks are extended to my mother, for his overall treatment
financially as well as moral support not only in the accomplishment of this paper, but also
throughout my learning process

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 ACRONOMY
GDP=Growth Domestic Product

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 ABSTRACT

Purchasing is one of the major activities of all organization to function and run.
Purchasing Function covers the sourcing end of supply chain management interfacing with the
delivery end of the suppliers, The general objective of this study is to assess challenge of
purchasing activities in case of robe town Iman hospital. This study was conducted in Robe
town, Robe, also called. as Bale Robe, is a town in south-central Oromia Region, Ethiopia. The
researcher also intended to examine detail assessment of purchasing practices. The design is
used for analyzing the major part of the research project such as the samples, measurement of
variables, treatments or controls, and methods of assignment work, all these elements try to
address the key research questions. In order to accomplish the objective of this study the
researcher was used both primary and secondary source of data. In order to collect the primary
data the researcher was used both questionnaires. The whole set of the universe from which a
sample taken is called the population To determine the sample size the researcher was used
probability methods of sampling that is simple random sampling. For this Study, the researcher
will use qualitative and quantitative data analysis techniques, because the verbal data gathered
through questionnaires, observation and interviews was mostly qualitative and quantitative in
nature.
..

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 CHAPTER ONE

INTRODUCTION

Background of the study

Purchasing is one of the major activities of all organization to function and run. Purchasing
Function covers the sourcing end of supply chain management interfacing with the delivery end
of the suppliers, while the classical definition of purchasing is ‘to obtain materials and/or
services of the right quality in the right quantity from the right source, deliver them to the right
place at the right price. (Alijan, 20013). Traditional research on purchasing practices was
concerned with identifying the best selection ways of suppliers based on supply characteristics
(Kraljic, 2015).

Further recognized that the key role of purchasing lies in managing relationships, not only
between buyers and suppliers but also in the wider supply chain network. Based on these
contributions, marketing and supply chain scholars have examined developments in purchasing
with reference to relationship management and supply chain networks respectively. With respect
to measurement of purchasing performance, a recently developed framework helps us to a better
awareness of how organizations relate to their supply markets (Lind green, Van Raaij,
Vanhamme, and Johnston, 2013).

The standard statement of the overall objectives of the purchasing function is that it should
obtain the right materials in the right quantity, for delivery at the right time and place from the
right sources the right service (after and before sale) and the right price. Efficiency procurements
procedures has become one of the crucial factor for determining organization efficiency as
inefficiently procurement procedures not only reducing organization profit margins but also
impact on overall success of organizations. In this aspect, procurement is considered to be of
major strategic importance for organization successfulness. (Paul raj et al,.2006). In this study,
the researcher tires to assess the purchasing practice and its challenges in the case of Iman
hospital at the Robe town.

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1.2 Statement of the Problems

Public procurement systems are very weak and ineffective governance of the public sector is at
the center of strong challenges (Thai, 2009). Moreover, in developing country, many
procurement activities still suffer from neglect, lack of proper direction, poor coordination, slow
with a number of bureaucracy, lack of open competition and transparency, lack of accessibility,
differing levels of corruption and not having a cadre of trained and qualified procurement officer,
who are capable to conduct and manage the procurement process in a professional, timely and
cost effective manner (Wanyonyi, 2015). Mamiro, (2010), described on findings that one of the
major setbacks in public procurement is poor procurement planning and management of the
procurement process which include needs that are not well identified and estimated, unrealistic
budgets and inadequacy of skills of procurement staff.

In Ethiopia, most project works are being affected due to the lack of effective procurement
process, which is the main cause of insufficient service delivery in all public sectors (Anteneh,
2015). The purchasing/procurement steps followed in the corporation are too long and inflexible,
incomplete purchasing plan, lack of budget, lack of accurate description of desired goods or
services on time are the problem. Since the corporation has undertaking different types of road,
dam and building projects in different parts of the country, lack of efficient delivery of goods and
services resulted in cost and schedule overrun of the corporation in general and the projects in
particular and creates dissatisfaction from the clients.

The above elaborated paragraph explains the statement of the problem that this study tries to
assess. Public procurement systems are very weak and ineffective. Governance of the public
sector is at the center of strong challenges (Thai, 2009). Moreover, in developing country, many
procurement activities still suffer from neglect, lack of proper direction, poor coordination, slow
with a number of bureaucracy, lack of open competition and transparency, lack of accessibility,
differing levels of corruption and not having a cadre of trained and qualified procurement officer,
who are capable to conduct and manage the procurement process in a professional, timely and
cost effective manner (Wanyonyi, 2015). (Mamiro, 2010), described on findings that one of the
major setbacks in private procurement is poor procurement planning and management of the
procurement process which include needs that are not well identified and estimated, unrealistic

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budgets and inadequacy of skills of procurement staff. Because of this in this study too proof the
above problem in case of Iman Hospital and to assess challenge of purchasing activities in case
of robe town Iman Hospital.

1.3 Research Questions

The research questions are stipulated as below: -

What look like the current purchasing practice of the Sabian primary hospital?
What are the major factors effecting the effectiveness of the purchasing practice in the
hospital?
What types of purchasing systems procedure and principle are used in sabian primary
hospital?
How the purchasing process is performed in this hospital?

1.4 Objectives of the Study

1.4.1 The General Objective

The general objective of this study is to assess challenge of purchasing activities in case of robe
town Iman hospital.

1.4.2 Specific Objectives

In addition to general objective, this study has the following specific objectives:-

To assess the purchasing practice in the case of Iman Hospital

To assess the major factors affecting the effectiveness of purchasing practice in Iman
Hospital
To assess the types of purchasing system, procedures and principles used in this hospital
To identify the procedure of the purchasing perform in hospital.

1.5 Significance of the Study

The purpose of this research anticipates the following benefit.

First, to add the current existing knowledge in purchasing this contributes to the main department
in developing knowledge regarding the effects of purchasing practice in the organizations.

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The findings of the study also will assist other organizations to utilize the best practices as
suggested throughout this study.

To ensure work improvements and lead to better utilization of resources in regard to improving
processes for procurement and general organization performance.

And finally, the findings shall provide useful information’s in regard to policy makers for the
same in view of taking necessary action address challenges facing procurement practitioners so
as to bring about an easily implementable suggestions in this focused area of the study.

1.6 Scope of the study

The focus of this study was limited to the purchasing challenges in Iman hospital at in Robe
town. Specifically, on the assessment of purchasing practice and its challenges such as
purchasing procedures, purchasing plan and purchasing performance. This study starting from
January, 2023 to June, 2023. The scope of study included geographically, this study is limited
only Robe town Iman Hospital. Methodologically, this stud was limited only simple random
sampling and descriptive research design. Conceptually these study was limited only the
challenge of purchasing activities. Time the study starting from the month of January title
selection through many advisory consultants up to month June presentation of findings of the
study.

1.7. Limitation of the Study

In this finding there is a lack of time, internet connection and budgets.

1.8. Operational Definition

Right Price: - purchased item with reasonable costing

Right Quantity: - purchasing of goods or items without less or more quantity delivery
Right Time: - Deliver the purchased item at the right time
Right Quality: - purchased item with the desired specification
Right Source: -purchase items from right supplier who has equal quality for money value
Efficiently: -The best procurement is simple and swift, producing positive results without
protracted delays (Thai: 2009)

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1.9 Organization of the Study

This study was organized in five chapters. Chapter one entail introduction, background of study,
statement of problem, objectives of study, research questions, significant of the study, scope and
Limitation of the study, Operational Definition and Organization of the study. Chapter two
covers literature review, chapter three covers research design and methodology; meanwhile
chapter four is foresee to cover data analysis, presentation and interpretation. Chapter five is
specifically for summary of the findings, discussions, conclusions and recommendations.

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 CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Theoretical Review

2.1.1. Definitions of Terms

It is common to see people confusing the terms purchasing and procurement. On the other hand,
some use terms like acquisition, public contract and supply management equivalently to
procurement. According to (Dobler and Burt), purchasing comprises the essential activities
associated with the acquisition of the materials, services and equipment used in the operation of
an organization. Public procurement, on the other hand, comprises a wider range of supply
activities than those included in the purchasing function. It typically includes a broadened view
of the traditional buying role, with more buyer participation in related material services (Dobler
and Burt: 1998). The terms purchasing and procurement are used interchangeable and also
referring as material management, logistic, etc. It may therefore be helpful to start by clarifying
some of these terms and concept.

Purchasing: - Defined as the activity responsible for getting the right material to the right place,
at the right time, in the right quantity, at the right price (Herel, Encyclopedia: 994). The process
by which an individual, a company (or other organization) contracts with third parties to obtain
the goods and services required to fulfill its business objectives in the most timely and cost-
effective manner (Timothy: 2001).

Procurement: - According to Dobler and Burt (1998) procurement can be defined as “…the
acquisition, whether under formal contract or other wise of goods, services and works from third
parties by contracting authority. “According to the Ethiopian Public Procurement Proclamation
(No 649/2009),procurement means “obtaining goods, works, consultancy or other services
through purchasing, hiring or obtaining by any other contractual means.
Right quality: - Quality is defined as simply 'fitness for purpose' or the British standard
institution defines "the totality of features and characteristics of a production or service that bear
on its ability to satisfy a given need" (Nair, 1990).

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IV. Right quantity: - The right quantity is more relevant to the purchase of consumables or parts
or assemblies for manufacturing than for project buying. Fulfilling these objectives will enable to
provide a continuous and uninterrupted material at the minimum cost. In most organization the
decision of how much to purchase is more important by the close relationship of purchases
quantity and schedule use (Parson, 1982).

2.1.2 Public Procurement

Public procurement is the process of the acquisition, usually by means of a contractual

arrangement after public competition, of goods, services, works and other supplies by the public
entity. The public procurement process spans the whole life cycle from initial conception and
definition of the needs through to the end of the useful life of an asset or the end of a contract.
The Federal Democratic Republic of Ethiopia, Public Procurement and Property Administration
Agency (2011, PP: 6). Public procurement is a process, which the governmental entity hiring or
purchasing works, goods and services from other parties (Michael and Juanita, 2006).

2.1.3 Procurement Methods

The Federal Democratic Republic of Ethiopia, Public Procurement and Property Administration
Agency (2011, PP: 47) by quoting Proclamation Article 33: list the following methods of
procurement. The following methods of procurement shall be used in public procurement:
Bidding (tendering), Request for Quotations, Request for Proposals, Restricted Bidding and
Direct Procurement

The Federal Negarit Gazeta (2005, pp 2963) sates that except as otherwise provided in this
Proclamation, the procuring entity shall use open bidding method as the preferred procedure of
Procurement. Even though it is common that each method has its own advantage and drawback,
the Ethiopian government prefers the bidding method of purchasing especially; open bidding
way to perceive the advantage gained by such method.

2.3 Procurement Procedures

Shaw (2010) points out that the procurement process can be wrapped into three steps. These are
need identification, planning and specification of goods or services required, and sourcing,
awarding, and supplier management to facilitate timely delivery.

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2.3.1 Need Identification

Procurement is done to desire to accomplish a specific task. Given that resources are always
scarce, the task to be accomplished should be important to an organization (Nakamura, 2004)

2.3.2 Planning and Specification of Goods or Services Required

Once the needs have been identified, the procurement department should develop or
communicate a plan on how to deliver the service or goods required. The plan must be developed
in collaboration with the other functions within the organization, so that it is integrated into the
organization’s strategy and therefore provided for adequately (Shaw, 2010). To be able to
purchase the right goods or services, the specifications of what the organization needs must be
clear. These specifications are used to communicate to the supplier what is needed and what
should be supplied. It is therefore important to have clear, precise and accurate specifications.

Most organizations have standard specifications for the most regularly procured items and
services such as medical and construction (Shaw, 2010. Thai, Araujo, Carter and Callender
2005) provide that a specification is a detailed description of the design, the service, or materials.
It describes in detail the requirements to which the supplies or services must conform. The basic
requirement of a good specification is to clearly identify the service or product to stakeholders.
The specifications must be clear to all parties. That is the user, procurement and the
supplier. Factors to consider in specifying a product include physical attributes, technical
specification, and intended use (Thai et al, 2005).

2.3.3 Sourcing, Awarding and Supplier Management

Hinson and McCue (2004) say that sourcing is the process of identifying sources of supply that
can meet the organization’s immediate and future requirements for goods and services. The
sourcing. For instance, in a sudden on-set emergency the need to respond quickly to the
emergency will mean there will be limited time to gather sourcing information and approve
suppliers; therefore, an organization may make use of existing suppliers.

2.3.4 Placing Orders and Contracting

After evaluating and awarding of tender, the next step in the process involves placing orders for

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the goods or services with the supplier or establishing contracts which need to be sent to
suppliers. In emergency situations the approval levels and limits are adjusted, based on an
approved process, to speed up the process of acquiring goods and services. Under normal
circumstances, the approval processes may be more elaborate. The orders establish contractual
relationships between the organization and the supplier (Shaw, 2010).

2.4 Training

Training in Procurement improves and imparts knowledge and required skills to staff
performance also enable the staff to be prepared for future challenges such as changes in
legislatives, regulations as well as technological in procurement industry. Furthermore, through
training concerned staff grows in their career and expertise.

Trained employees normally make the best use of available resources and enable working with
confidence with minimum supervision from their superior’s. Skilled staffs are the most important
and valuable assets of any organization, in view that without skillful workforce any technology
or practice is absolutely not bring any positive result in organization due to deficiency of
technical know-how. As business became competitive better trainings apart from enhancing
organization performance shall also enable organization win competition from opponents on the
same industry, good trained staff enable organization gain competitive advantage.

Unfortunately, the majority of governmental, private organization and international organizations

are not recognizing the importance of training to increase their employee's productivity and when
the economy slows or when profits decline, many organizations first seek to cuts in their training
budgets (McGill, 2007). In regard to procurement related functions a person or an
office/team whom are not conversant with required regulation will have a negative contribution
to organization growth as procurement industry is among of fast changing professionalism hence
acquiring of new skills is paramount for better performance.

2.5 Record Keeping

Record keeping is one of crucial elements in facilitating efficiency procurement functions. This
function can be performed either traditional means (paperwork-based applications) or
electronically in view of analyzing the previous decision made for awarding, performance or

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termination of underperforming tender. Through record keeping the lesson learned, good
practices as well as mistakes done in the past can be analyzed for future and continual
improvements; learning process is a continual endeavor so as record keeping for procurement. In
2016 the finding of internal audit report shows that poorly record keeping for procurement of
different materials in the organization.

2.6 Challenges in Public Procurement

Krol (2012) indicated that the current economic crisis puts pressure on governments to cut
spending and reduce deficits. With public procurement often accounting for 10-15 percent of a
country’s GDP and for up to 65 percent of public sector budgets, governments are faced with the
challenge to keep adding maximum value while at the same time rigorously reduce their
spending. This implies that many government organizations need to shift from a budget driven to
a value driven way of thinking and acting, but this also means that there is an important role for
the procurement function to fulfill.

Political environment: In a democracy many individuals, groups, and organizations in the private
sector including trade associations, professional associations, and business firms or
companies (commonly known as interest groups) are actively involved in all aspects of the
public procurement system. Having various interests, objectives and beliefs, interest groups are
involved in the public procurement system in several ways such as lobbying legislative bodies to
pass or alter procurement statutes, influencing implementation of these statutes, and influencing
budget authorization and appropriations processes. Normally, a government program that is
eventually adopted is a compromise among different views of interest groups, policy makers and
management.

In this democratic environment, there are cases of a strong coalition of policy makers,
bureaucrats and interest groups in their effort to get their programs adopted. Social, economic
and other environmental force: While some countries impose social policies on their public
procurement practices (such as a policy placing a fair proportion of government acquisitions with
woman/minority owned small business, or economically disadvantaged areas), most government
al entities -be it a developed or developing country or federal, state, and local governments- use
their large procurement outlays for economic stabilization or development purposes by

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preferring national or local firms over firms from other countries or other geographic locations.
Public procurement practitioners may be in a favorable economic environment or market (with
many competing tenderers in their country or local areas) or an unfavorable economic
environment (where competition hardly exists). This environment would have a great impact on
their practices as they may face an imperfect competitive market.

2.7 Empirical Literature

This part presents the assessment of research papers written in purchasing area. The papers were
selected below are because of their similarity with the study in the assessment of the purchasing
practices and its challenges of organization. The researchers tried to find out the gaps which exist
in the purchasing process that hinders the effectiveness of its procedures with the common
objective of examining the steps involved in the purchasing process and make feasible
recommendations and improve the purchasing practice and procedure.

2. 7.1 Purchasing Practice Problems in Addis Modjo Edible Oil Factory

(Tewodros, 2006) A senior essay prepared by Tewodros Walelgne and presented to Addis Ababa
University College of Commerce procurement and Supplies management department. The paper
presents a list of problems which badly influence the company's purchasing performance. The
major challenges are continuous price fluctuations in the supply market, shortage of raw
materials, poor quality purchases, delayed purchases and unreliable suppliers. To address the
above stated problems the researcher developed research objectives, which are analyzing the
effects of purchasing on organizational performance and its process and learn about source of
supply. The research findings shows that the absence of permanent suppliers is related to
unreliable source of supply, which is bringing poor quality purchases, the existence of weak
relationship between purchasing and other departments together with unskilled purchasing staff
is delaying the purchasing process, the least price selection criteria the company is currently
using are bringing poor quality materials. Based on the analysis made the paper recommends
solutions assumed to improve the challenges. The researcher proposes further research on the
area to come up with viable solutions. Besides this, employing skilled manpower, and
establishing permanent source of supply are recommended.

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 2.7.2 Evaluating the Purchasing Procedure in Ethiopian Grain Trade Enterprise
(Biruk, 2006)

The paper discusses the problems hindering the efficient purchasing practice in the organization.
The main problems in the enterprise were poor quality of grain purchases because of suppliers
deceiving purchasers, continuous price fluctuations, unclear purchasing procedures and incompetent
purchasing staff. The paper presents a general research objective analyzing the purchasing
procedures and understanding the relationship between purchasing and other units of the
organization.

The research findings show that the poor quality of grain is attributable to the fact that no technical
specifications are given to purchasers and disloyal act of suppliers. The paper discusses unreliable
suppliers are causes of inefficient purchasing since the enterprise has no permanent source of supply.
Further the problem of unclear purchasing procedure is mentioned as a research finding. Thus
developing a clear purchasing procedure is recommended for speedy purchasing process. Also,
development of specification for purchases and training the purchasers on the application of
specification is recommended. Although the problem of unreliable and disloyal suppliers is presented
as the critical problem possible ways of solving this problem are not suggested.

Purchasing performance
With five Rights of

Purchasing planning Purchasing Purchasing procedures

performance

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 CHAPTER THREE
RESEARCH METHODOLOGY

3.1. Description of Study Area

This study was conducted in Robe town, Robe, also called as Bale Robe, is a town in south-
central Oromia Region, Ethiopia. Located in the Bale Zone, this town has a latitude and
longitude of 7°7′N 40°0′E with an elevation of 2,492 metres (8,176 ft) above sea level. It is
located about 430 kilometres by road from the capital Addis Ababa. Robe shares Robe
Airport (ICAO code HAGB, IATA GOB) with neighboring Goba. Ethiopian Airlines has a
scheduled flight four times a week connecting it to the capital Addis Ababa and to the southern
city Arba Minch. The main market day is Thursday, with a smaller market working on Tuesdays
and Sundays at another place in the town. Notable tourist attractions include the Sof Omar
Caves, which lie to the east.

3.2. The Research Approach

In order to capture the best of both qualitative and quantitative data, the research is constructed
based on mixed method research approach. The researcher also intended to examine detail
assessment of purchasing practices. The advantage of using mixed methods is that it enables to
triangulate and support the data and result collected by questionnaire (Greener, 2008 and
Saunders et.al, 2007).

3.3 Research Design

The design is used for analyzing the major part of the research project such as the samples,
measurement of variables, treatments or controls, and methods of assignment work, all these
elements try to address the key research questions. Jackson (1994), through understanding
educational research argues that all research is partly descriptive in nature, insofar as the
descriptive aspect defines and describes the researchers who, what, when, where, why, and how,
which are exactly some of the questions raised in the study. It also intended to describe
observations as it exists. In this aspect, descriptive research design was used as it is suitable for

13
the study. The descriptive research design also saving both time, because it needs less concepts
and simple understanding.

3.4. Data Source

In order to accomplish the objective of this study the researcher was used both primary and
secondary source of data. The primary data are a questioner which was collected from graduated
students of the university for the first time and thus happens to be original in their character. The
secondary data was collected from different source that was already existed like book, journals,
internets and other related materials.

3.5. Method of Data collection

In order to collect the primary data the researcher was used both questionnaires. The
questionnaire was organized in to both open ended and close ended form because open ended
questionnaire help the respondents in order to express their idea in unlimited way and the close
ended questionnaire also provide actualize question to the respondent and the researcher would
also prepare structured interview to collect the relevant and necessary data from the graduated
class students of the university. The secondary data was collected from different and already
existed materials, by referring a preliminary study on which was conducted related issue etc. Due
to this, they was believed to give the required and relevant information in more certain reliable
manner

3.6 Target Population

The whole set of the universe from which a sample taken is called the population (Saunders et
al., 2007). Target population refers to the larger population to which the researcher
ultimately will like to generalize the results of the study (Mugenda, 2003). The target Population
of this study was total number of Employer who works in the function and managers.

3.7 Sampling Technique and Sample Size

3.7.1 Sampling Technique

To determine the sample size the researcher was used probability methods of sampling that is
simple random sampling. The data was collected from Iman Hospital. It includes and taking

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simple random sampling in station and the reason is that to give equal chance for all employees
in the office.

3.7.2 Sample Size

By using The following Formula (Yemane, 1997) Calculate the sample size of employers in
Imaan Hospital.

N 49
N= 2 2 = 43
1+ N (e) 1+ 49( 0.05)

Where

N= Total Population

N= sample size

E= error

3.8 Data Analysis and Presentation

For this Study, the researcher will use qualitative and quantitative data analysis techniques,
because the verbal data gathered through questionnaires, observation and interviews were mostly
qualitative and quantitative in nature. These data indicate what people have in their word about
their experiences and interaction in natural setting and after careful analysis, the data provide the
useful and depth answer to the research questions of decision makers and information users.
Through Quantitative used Descriptive statistics by using chart Graph, Frequency Distribution.

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 CHAPTER FOUR
DATA ANALYSIS PRESENTATION AND INTERPRETATION
4.1 Demographic characteristics of respondents

This includes respondents’ sex, age, and level of education. This helps to understand that from
which age group sex category and level of education the data are obtained.

Table 1: demographic characteristic of respondents

Measurements Frequency Percentage

Sex Male 28 65.1%
Female 15 34.9%
Total 43 100%
Age 18-25 10 23.8%
26-35 18 42.8%
36-45 12 28.6%
46 and above 3 4.8%
Total 43 100%
Educational level 10 and 12 completed 5 11.6%
Diploma 20 46.6%
Degree 18 41.8%
Masters and above - -
Total 43 100%
Source: computed from survey data, June, 2023

Concerning the sex structuring in above table, out of 43 respondents, 65.1% of the respondents
were male and 34.9% of the respondents were females. The majority of respondents profile
indicates in academic work unit of the organization are male and the number of females is small.
This indicates that the organization is dominated by males.

According to the above table 4.1, 41.8% of the respondents were between 26-35 age and 27.9%
of them were between 36-45 ages, 23.4% of the respondents also between 18-25 and 6.9% of

16
them were above 46 ages. This implies that most of the respondent’s age is 26-35 in this
organization. This means the employees of academic work units are youngest.

As it can be understood in the above table 4.1, education level of respondents none of them are
masters and above, 46.6% were diploma holders, and 41.8%, 11.6%of the respondents were first
degree holders, 2nd degree and 10 and 12 completed respectively. This indicate that majority of
respondents work within this organization are diploma holders.

Table 2: work experience of respondents

Year of experience Number of respondents Percentage

0-2 years 4 9.31%
2-4 years 9 20.93%
4-7 years 12 27.9%
Above 7 years 18 41.86%
Total 43 100%
Source: computed from survey data, June, 2023

According to the above table 41.86%, 27.9%, 20.93%, 9.31% have a work experience of above 7
years, 4-7 years, 2-4 years and 0-2 years respectively. This shows that most of respondents stay
with this organization and acquire more experience. For this reason academic unit of employers
are familiar with the organization environment and they perform their work properly.

Table 3: marital status of respondents

Marital status Number of respondents Percentage

Single 15 34.88%
Married 28 65.12%
Divorced - -
Total 43 100%
Source: computed from survey data, June, 2023

17
As it can be seen clearly the above tables out of 43 respondents 34.88% are single, 65.12% of
them are married and none of respondents are divorced. This indicates that most of the
employees in academic and administrative work unit of the organization were married.

Table 4: The problem of purchasing activities

Question Option No of respondents Percentage

Do you encounter any problems Yes 34 79.06%
of purchasing activities? No 9 20.94%
Total 43 100%
Source: computed from survey data, June, 2023

The above table shows that 79.06% of the respondents agree that encountered problems of
purchasing activities whereas, 20.94% of the respondents have not experienced any incidence
and results from problem of purchasing activities.

This indicates the majority of respondents encountered the incidence of the problem of poor
materials and the purchasing process waiting for a long period of time and also it requires along
procedures and knowledge of personnel.

Table 5: Respondent’s perception of the time factor to processing materials requirement

Question Option No of respondent In percentage

Do you get the materials at required Yes 8 18.60%
time? If your response is ‘no” what No 35 81.40%
are the reasons Total 43 100%
Source: computed from survey data, June, 2023

As shown in the above table, 18.60 %( 8) of the respondents believe that the required material
arrive on time but, 81.40% (35) respondents believe that the required materials do not arrive on
time. This implies that the materials of the organizational do not delivered at the required time
because of the following reasons:-

 The longer purchasing process

 Higher delivery cost incurred
 Unreliability of supplier

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  Long time purchase and
 After process to item purchased

Table 6: Current purchasing performance of the hospital

Question Option No of respondent In percentage

How you express the current Excellent - -
purchasing performance of the Very good
hospital? Good
Poor 23 53.48%
Very poor 20 46.52%
Total 43 100%
Source: computed from survey data, June, 2023

As depicted in the table 4.6, 53.48% of respondent said that purchasing performance of the
hospital poor and 43.52% of respondent agrees the purchasing performance of hospital is very
poor. This implies that the purchasing performance of the hospital is not good. This has the
implication that the purchasing performance in the hospital is poor and should have to be revised.

Table 7: Purchasing policy

Question Option No of respondent In percentage

What type of Centralize 21 48.83%
purchasing policy Decentralize 8 18.62%
your organization Both 14 32.55%
applied Total 43 100%
Source: computed from survey data, June, 2023

As it is indicated in the above table 48.83% of the respondents replied that purchasing policy of
this hospital is centralized where as 18.62% decentralized, 32.55% of respondents said
combination of both. Generally, this organization applied centralized system of purchasing
policy mostly.

19
Table 8: The applicability of principles and standard of purchasing activities

Question Option No of respondent In percentage

How do you think the Highly applicable 18 41.86%
applicability of principles Moderately 25 58.14%
and standards of purchasing Applicable -
activities in Iman Hospital? Poorly applicable - -
Not applied at all - -
Total 43 100%
Source: computed from survey data, June, 2023

As it is understood from the table 4.8, 58.14% of respondents said that organization moderately
applies the principles and standards of purchasing whereas 41.86% of the respondents said
highly applicable and others are none. Therefore, the principles and standards of purchasing are
applicable in the organization at all.

Table 9: Factors affect effectiveness of purchasing activities

Question Option No of In percentage

What are the major
factors that affect
effectiveness of
purchasing activities?
Source: computed from survey data, June, 2023
respondent
Lack of adequate supplier 28 65.11%
selection
Less personal relationship 7 16.27%
Lack of good contractual - -
agreement
Poor administrative process - -
Not delivery on time 8 18.6%
Total 43 100%

The data in the above table shows, lack of adequate supplier selections, not delivery on time and
less personal relationship are the factors that affect the effectiveness of purchasing activity as the
following percent respectively, 65.11%, 18.6% ,16.27%, and others are none . So, as I
understand from this the lack of adequate supplier selection is the most factors that affect the
effectiveness of the purchasing activities in this organization when compared with the others.
20
Table 10: The relation between purchasing department and other departments.

Question Option No of respondent In percentage

What look like the Excellent 7 16.27%
relationship between Very good 22 51.16%
purchasing department and Good 14 32.56%
others Poor - -
Total 43 100%
Source: computed from survey data, June, 2023

The above table reflected that 51.16% of the respondents agree that relationship of purchasing
department with other department is very good. The respondents replied that 32.56% and 16.27%
of the respondent’s relationship is good and excellent respectively and there is no respondents
replied poor relationship. This indicates that there is smooth integration between purchasing and
other departments. This is mainly indicated other departments are actively involved.

Table 11: The capacity to purchase required materials

Question Option No of respondent In percentage

Do you think that your organization Yes 18 41.86%
fully utilize the capacity to No 25 58.14%
purchasing the required materials Total 43 100%
Source: computed from survey data, June, 2023

As it is shown in the above table, 25(58.14%) of the respondents answered “no” whereas
18(41.86%) respondents replied ‘yes”. From this we can understand that the majority of the
respondents said that organization does not fully utilize the capacity to purchase the required
materials. So this organization does not fully utilize the capacity to purchase the required
materials.

Table 12: The purchasing procedures

Question Option No of respondent In percentage

Do you follow the purchasing Yes 43 100%

21
procedure when you procure/ No - -
purchase the items? Total 43 100%
Source: computed from survey data, June, 2023

As it can be seen in the table 4.12, the respondents were asked the procedures existence in their
organization, 100 %(43) respondents replied ‘yes” whereas none of the respondents who replied
“no”. Generally, the respondents clearly state that they totally follow the procedures of the
purchasing activity in the procurement of the items.

Table 13: Purchasing activity of the hospital is in line with the organizations purchasing
policy

Question Option No of respondent In percentage

Do you think that the Yes 36 83.73%
purchasing activities of the No 7 16.27%
hospital are in line with the Total 43 100%
organization’s purchasing
policy?
Source: computed from survey data, June, 2023

As we can see from the above table, out of the total, 43 respondents, 36(83.73%) were assured
that the hospital purchasing activity is in line with the hospitals purchasing policy the rest
7(16.27%) of the respondents were provide their response in opposite direction that means it is
not in line with the hospitals purchasing policy.

According to the data in the above table majority of the respondents know about the purchasing
policy. This reflects they have better to know how about the purchasing activity of the hospital.

22
4.2 Interview with the manager

1. Purchasing process
As the manager said Iman Hospital purchasing department use different types of step when it
make purchasing, these are:-

Identify the need for a product to be purchased, select specific product to meet the needs, put a
team together to manage the purchase process, including finding the list of required item at
required technical specification for the product to ensure it meets the hospitals need, establish a
budget for the purchase, Research the various product types that fit the need along with their
supplier to identify the most durable model at the best price, Solicit bids for the manufacturer
and supplier of the identified product that meets all required technical specifications and finally
Select suppliers from the bids submitted and award the purchase contract.

In short, as the purchasing manager said, it described as identify the need, selects specific
product, appoint purchase team, specify technical specifications, budget for purchase, research
potential suppliers and award contract.

2. Mechanisms to purchase materials

The manager said that, this organization use different types of purchasing mechanisms. The
following data shows the mechanisms

1. Open bid: a type of purchase mechanism which is applied with the following requirement
I. The invitation for bid must be announced on the media and published on newspaper.
II. The announcement must clearly describe information like the purchasing institute
name, location of item to be purchase.
2. Closed bid: which involve only selected supplier to participate in the bid.
3. Nature of purchasing

As the manager said the purchasing policy of the hospital is described as centralized This means
different department raise question to purchasing department then the purchasing departments by
using different types of step purchase the materials. These types of nature of purchasing staff

23
there by reduction of overheads costs. It is also an advantage for supplier to deal with centralized
purchase department rather than with several departments.

CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
5.1, Conclusion

Based on the analysis and interpretations made in the above chapter the following conclusions
are drawn:-

 All most all of the respondents respond that they meet problems of the purchasing
activity such as; difficulty to perform invoice, long procedures of purchasing, problems
of transportation and some of the materials are not enough as much as possible; this
makes the purchasing activity weak.
 Almost all of the employees responded the current purchasing performance is not good
in the hospital
 Majority of the respondents replied that the required materials are not arrived on time this
directly impact on the performance of the hospital
 The standards and principles of purchasing are moderately applied in the hospital.
 Lack of adequate supplier selection and delivery on time are the major factor that hinders
the effectiveness of purchasing activity in the hospital.
 The relationship between purchasing and other departments is effective which leads to
better performance of the organization.

5.2, Recommendation
The researcher suggested the following recommendations to for the betterment of the hospitals
purchasing practice

 The hospital is using centralized purchasing policy. But for better efficiency the hospital
is better use both type of policies.
 The hospital must encourage women participation because the number of women is few
when compared with number of men.

24
 The hospital must be improving educational level of employees because most of them are
diploma holders.
 Since the current purchasing performance is not good, the hospital must work hard to
make it as excellent as possible in the future.
 The organization must reduce the problems related with the purchasing such as:
inadequate supplier selection, lack of delivery on time, and transportation cost in order to
improve effectiveness of purchasing activity.
 The hospital must be fully utilizing the capacity of purchase the required materials in
order to reduce the problems related with purchasing practice.
 Even though there is a good relationship between purchasing and other departments, it
must improve better than before.
 Generally, the hospital must improve its purchasing activity by adopting the comments
given in the recommendation to be effective in the future. Therefore the it should have to
try to do better than before by correcting the given comments.

25
 REFERENCE

Alijan George.(1973), Purchasing Handbook.2nd edition. New York: Mc Grow Hill Inc.

Biruk, (2006), evaluating the purchasing procedure in Ethiopian Grain Trade Enterprise
Senioressay Addis Ababa University college of Commerce procurement and supplies
management department.

Cooper, J., & Schindler, M. (2008), Perfect Sample Size in Research. New Jersey: Macmillan.

Creswell, W. (2003). Research Design: Qualitative, Quantitative and Mixed Methods

Approaches, (2nd Ed.), London: Sage Publications Inc.

Ethiopian Construction Works Corporation Procurement Manual updated on September 2017.

Federal Democratic Republic of Ethiopia (FDRE), (2009), Ethiopian Federal Government

Procurement and Property Administration Proclamation No. 649/2009.

Fearon,E and England,B (1992), Purchasing and Material Management, 9th edition, New Print
India Pvt. Ltd. New Delhi, India.

Federal Negarit Gazeta (2005), determining procedures of public procurement and establishing
its supervisory agency proclamation, Proclamation No. 400/2005 Addis Ababa Ethiopia.

Glass, G. V., & Hopkins, K. D. (1984),'Descriptive research in Qualitative and quantitative

Research' Journal of Education, communication and Technology, 3(1), 45 – 57.

Johnson and et al (2006), Purchasing and Supply Management with 50 supply chain cases, 13 th
edition, McGraw Hill/Irwin, New York, USA.

Kothari, C. R. (2004), 'Research Methodology (2nd Edition)', New Delhi: New Age International
(P) Ltd.

26
Leenders et.al.(1989), Purchasing and Materials Management. Richard D. Erwin, Inc., USA

Lysons,K and Farrington.B (2006), Purchasing and Supply Chain Management, 7th edition, the
Chartered Institute of Purchasing & supply, Great Britain

Mesfen,T (2007), Evaluation of Purchasing Practice at Addis Ababa University college of

Commerce, Addis Ababa, Ethiopia.

Ministry of Finance and economic Development (MoFED). 2011. Ethiopian Public Procurement
Manual , MoFED, Addis Ababa, Ethiopia.

Mamiro, G. (2010). 'Value for money, the limping pillar in public procurement experience-from

Paulraj, A., Chen, I. J. & Flynn, J. (2006). 'Level of strategic purchasing: Impact on supply Chain
Integration and Performance'. Journal of purchasing and supply Management, 12(3), 107-122.

Shaw, F N. (2010), The power to procure: A look inside of the city of Austin procurement
program, MA Thesis in Public Administration, Department of Political Sciences. Texas State
University, USA.

Yonas Dubale,(2014). Evaluation of procurement process: the case of Addis Ababa Water and
Sewerage Authority, MA Thesis in Public Management and Policy, Addis Ababa, Ethiopia.

27
 APPENDICES

MADDA WALABU UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS
DEPARTEMANT OF MANAGEMENT
Questionnaire Prepared For Respondents under the Challenge of Purchasing Activities in
Case of Iman Hospital

Dear Respected Respondents

My name is Firomsa Mustefa and I am carrying out an academic research on the Challenge of
Purchasing Activities in Case of Iman Hospital The information you provide is used for
research purpose only, and will be kept confidential at all level. I appreciate taking your time to
complete the survey and kindly request you to remember that the quality of this work is
completely dependent up on your frank opinions. Please consider each statement carefully before
you give it an evaluation.

Please put tick mark (√) on your choice(s).

No need to mention your name (anonymous)

Part I: Demographic data/ Respondent Profile

1. Sex: Male Female

2. Age: 18-25 26-35 36-45 46 and above

3. Educational level: 10 and 12 completed Diploma Degree Masters and

above

4. Year of experience: 0-2 years 2-4 years 4-7 years above 7 years

5. Marital status of respondents: Single Married Divorced

Part II: Question Related with problem of purchasing activities

6. Do you encounter any problems of purchasing activities?

Yes No

7. Do you get the materials at required time? If your response is ‘no” what are the reasons
28
 Yes No

8. How you express the current purchasing performance of the hospital?

Excellent Very good Good Poor Very poor

9. What type of purchasing policy your organization applied?

Centralize Decentralize Both

10. How do you think the applicability of principles and standards of purchasing activities in
Iman Hospital?

Highly applicable Moderately Applicable Poorly applicable Not applied

at all

PartII: Factors affect effectiveness of purchasing activities

12. What are the major factors that affect effectiveness of purchasing activities?

Lack of adequate supplier selection Less personal relationship

Lack of good contractual agreement Poor administrative process

Not delivery on time

13. The relation between purchasing department and other departments.

Excellent Very good Good Poor

14. The capacity to purchase required materials

Yes no

15. The purchasing procedures

Yes No

16. Purchasing activity of the hospital is in line with the organizations purchasing policy

Yes No

29
17. Do you think that the purchasing activities of the hospital are in line with the organization’s
purchasing policy?

Yes No

30
 PartIV: Interview for manager

1. What is the Purchasing process in your organization?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

2. Which types of mechanism Follow Mechanisms to purchase

materials?...........................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
.................................................................................

3. Nature of purchasing in your

organization…………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………….

31