Literature review is a critical component during the research process.

Conduct a min
literature review on a topic of your choice. In the presentation ensure that proper citing
and quoting tenets are practiced.(25)

TOPIC: Analysis on the role of effects of contract management on the supply chain
performance in Mpilo Central Hospital

1.0 LITERATURE REVIEW.

1.1 Introduction

In this chapter the use of preliminary literature that will answer the research questions. The
chapter presents the past studies and theories which are related the effects of contract
management on the supply chain performance. CIPS, (2016), considers that contract
management is increasingly gaining some recognition due to pressure in the public sector
when it comes to improvement of financial and operational performance and as regulatory
requirements, complexity and increasing contract volumes has led to more structured
contractual processes and procedures. The study uses different views from different authors
and studies on how to solve identified problems on contract management which can hinder
public health service delivery.

1.2 PRELIMINARY REVIEW

It is the literature that will answer the research questions, when citing the researcher will use
inverted commas. It provides identification of major literature that supports and formalize the
topic.

There are two types of frameworks which are Theoretical and Conceptual used when writing
the background of the study. Theoretical and Conceptual framework explain the path of a
research and grounds firmly in theoretical constructs. The frameworks make research
findings more meaningful and acceptable on the research field and ensure generasability.
Imelda, (2014), supports saying both Theoretical and Conceptual frameworks gives life to a
research.

However, both frameworks makes it easy for readers to determine the academic position and
the underlying factors to the researcher’s hypothesis.
Contract management

These are activities related to contract handling which include invitation and evaluation of
bids, awarding and implementation of contracts, measurement and payment calculation,
Kakwezi, (2012).This also entails monitoring contract associations, handling related issues,
integrating essential changes, Chetorich, (2014), this ensures that all parties meet each other’s
expectations and interact with the supplier or contractor to attain contract objectives. While
Lowe, (2013), page 268, considers that contract management is the process of managing and
administrating the contract from the time it has been agreed at the contract award, through the
end of the service period.

According to Sanderson et al, (2015), contract management is the decision to award the
contract to a provider or supplier, to the process of agreeing contractual terms and conditions,
and to efforts to ensure that those terms and conditions are honoured either through
monitoring and enforcement or, where necessary, dispute resolution. However. according to
all the above definitions contract management is a process to award contract, monitoring the
performance. Menzies et al (2016), and states that there are gaps on contact management. For
instance MCH as an entity follows all the stated procedures but at the expiry of the contract
there is no supplier appraisal. According to Sanderson et al, (2015), terms and conditions
need to be honoured by both parties, the concept of trust, supplier opportunism and
contractual mechanisms, can lead to frequent uncertainty.

Contract management activities ensure parties comply with the contractual terms and
conditions as well as documenting and accepting any necessary changes in the contract
execution. Uher & Davenport, (2009), and resolution of contract conflict in a peaceful
solution for the best of both parties the organization and the supplier. In Mpilo contracts are
implemented, executed, but supplier appraisal is not considered on contract closure, the
management of contracts becomes difficult due to lack of resources. Menzies, (2016), states
that there are gaps in the public procurement activities such as contract management, due to
lack of resources, contract monitoring and supplier appraisal and restrictions to contributions
which may give solutions to contract management challenges.

Public contract service is increasingly recognized as essential in service delivery, Kavua and
Ngugly, (2014). Baquery, argues that traditional procurements focus on internal procurement
process rather than performance. Notably the traditional contracts were not effectively
managed and were affected by insuffient resources and misconduct.
To achieve the strategic objectives of business, are dealing with projects through
management skills and expertise, Kerzner & Kerzner, (2017). Organisations deal with
complex and difficult situations to gain competitive advantage over their competitors.
Mowlaci, (2017), Ardalan & Tabazadi, (2017), Kucuk-kocaoglu & Bozkurt, (2018), have
identified various benefits of contract management to the organisation. Effective contract
management reduces shortages, risks and uncertainty to the organization and the customer,
Weingarten, (2016).

2.0 Theory of public contracts

Theory of public contracts was developed by Spiller, (2008), to analyse how public entities
create and improve contracts. The theory helps to understand the analysis of contract
management in the case of MCH on the supply chain performance. Spiller’s theory evaluates
contradictory interests and develop formal and informal contract through agreement. This
theory indicates that public procurement contracts appear to be more characterised by formal,
consistent, bureaucratic, inflexible processes. According to Tan and Lee, (2015), The public
procurement contracts usually seen to be more rigid, necessitating, regular formal,
negotiation, with greater propensity to litigate, and giving weaker incentives.

2.1 Theory of constraints

According to Ochieng, (2014) Theory of Constraints (TOC) is a philosophy of management

and improvement. It is the ability of linking the weakest link in any complex system at any
point in time to a goal. The constraint must be identified and the whole system must be
managed to attain any significant improvement for that system.

3.0 Contract management practices and their influence on supply chain performance

Procurement contract management can improve the customer services since there will be
continuous flow of goods and services. Inter-organizational governance mechanisms such as
formal contracts, but also more informal mechanisms such as trust and these relational
norms, are important on the supply chain setting, Cao& Lumineuau, (2015), where there is
effective deployment of these mechanisms does not only affect the performance of the focal
firms but also their suppliers and customers, Madhok& Wu, (2006). Inter-organisational
(IOR) and contracting in particular, continues to attract many academic and practitioner
interest, Lumineuau, (2017). However effective contract management improves supplier
relationships and also fulfils the needs of the end user at the same time reducing supply chain
risk.

Effective contract management and appropriate strategic decision fulfils the five rights of
purchasing which are the right quality, right quantity, right price at the right place an at the
right time. According to Aluonzi et al, (2017), contract management entails different aspects
and achievement of three goals of the product, quality quantity, and being with in the budget.

3.1 Positive influence

The idea of contract management is directly associated with the performance of the
organization, Kucuk Kocaoglu & Bozukurt, (2018). Contracts must be tailored for local
circumstances and needs. W. Zou (2019), states that the buyer’s following up management of
contract processes positively increased contract management has a positive relationship with
influence perceived supplier performance. Chetorich, (2012), states that contract monitoring
and administering, dispute resolution, conflict management and to also ensure parties
commitment, compliance, with the contractual terms and conditions, as well as
documentation and accepting necessary changes in contract execution.

3.2 Negative influence

When setting up a contract both parties must take into account the terms and conditions and
other important issues which can hinder the contract. Sanderson et al (2015), states that a
contract is affected by the power of both negotiating parties, the concept of trust, supplier
opportunism and contractual mechanisms. Poor contract management may lead to
inefficiency which may lead to uncertainty and incomplete contracts.

4.0 Effectiveness of contract management on supply chain performance

Contract is an instrument through which the supply chain seek to determine performance,
value for money, and quality. The conditions for the stipulation and enforcement of contract
include specification of expected performance and identifying clear responsibility and
penalties such as non-payment or not renewing the contracting relationship.

Effective contract management must have appropriate contract administration, management

of goods, ensuring good supplier relationships, conflict management, risk management,
contract monitoring and proper contract termination procedures. Contract management
creates flexibility and improves MCH's relationships with suppliers. However, it ensures
continuous flow of goods for the hospital to offer quality services to gain competitive
advantage.

5.0 Supplier performance and Hospital efficiency

Developing organisational procurement performance is a journey, and level of performance

describes location in the journey, Aplyo and Mburu, (2014). March & Sutton (2015), argues
that high performance by organisation is an indication of progress towards set objectives
identifies areas of strengths and remains national priority. Marungu, (2012), also argues that
to perform is to produce value results.

According to Rajab, (2018), the process of tendering and contract management is vital
process as far as the organisational is concerned, therefore it should be upheld on the basis of
having the best supplier or contractor and having such suppliers on our records for future
reference. To provide quality health services, MCH must ensure that the tendering process is
done according to the PPDPA Act to maintain transparency, honesty, and fairness to choose
the right contractor with the right quality, quantity at the right time.

6.0 Supplier commitment and performance

According to the transaction economics TCE, view purchases should pursue opportunism in
buyer and supplier relationship, and hence increase the risk of poor supplier performance.
Even though suppliers rely on buyers to define their needs, requirements, and the context of
use, buyers lack skills to articulate these elements to suppliers, Aarikka Steno’s & Jaakkola,
(2012). Stainie et al ,(2014), conducted a research and found that the challenges related to
information asymmetry in buyer and supplier relationships was due mainly to moral hazard,
which which is a way of opportunism in contract. However, when setting up a contract both
parties must take into account the terms and conditions and other important issues which can
hinder the contract.

7.0 Empirical Review

Lydia Jepkemei, Kurgat, (2021), carried out a study about to investigate the influence of
contract management on the supply chain performance at Moi Teaching and Referral
Hospital in Kenya which revealed that monitoring of contracts, handling related issues and
integrating of essential contract changes attain the objectives of the contract. The findings
revealed that contract management ensures that there is practical monitoring, management
and review in terms of contracts to ensure timely deliveries thereby leading to a superior
supply chain performance. The findings also revealed that suppliers are delivering the right
quantity and shortened lead times and integrity to contract changes by willing to adjust
products or services7.1 Nyaga and Mangagi, (2019)

Nyaga and Mangagi also carried out a study on the influence of contract management
practices on the performance of the public sector. The findings of the study indicated that
procurement entities were not properly managing contracts and failure to appoint committees
to inspect delivered goods in terms of quality, quantity and contractual requirements. The
study also noted that for contracts to be successful both parties must consider appropriate
administration. Managing relationships with suppliers, monitoring contracts and effective
termination procedures accordingly with the Public Procurement and Disposal of Assets Act
(PPDPA). Erikson & Westerberg, (2017), supports that contract administration, supplier
monitoring on performance and commitment, relationship management and effective contract
closure are very important in contracts.

7.2 Njoki., G.C., Ismael &Osoro, (2021)

A study conducted by Njoki, G.C.Ismael &Osoro study sought to assess the influence of
contract management on the performance of state corporations in Kenya. The study sought to
establish the contract administration, contract monitoring, and contract documentation as the
main aspects of contract administration as an aspect of contract management not effectively
done as required by the Act, hence putting most of state corporations at the edge of losing
trust and collaboration from suppliers. The findings revealed that contract management
through administration, contract monitoring and contract documentation significantly
influenced the performance of state corporations

8.0 Summary of Literature Review

This study is an analysis of contract management on the supply chain performance, it

focusses on in time. It also reveals the negative and positive influence of contract
management on the supply chain performance.supplier commitment, relationship and
performance, conflict management and addresses problems
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