An Assessment of Procurement Activities on Network Equipment projects of

Ethio-telecom. The case study on Addis Ababa

BY

ALEMAYEHU…………

ID:

A THESIS SUBMITTED TO YOM INSTITUTE OF ECONOMIC DEVELOPMENT

UNIVERSITY, SCHOOL OF GRADUATE STUDIES IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF
PROJECT PLANNING AND MANAGEMENT

MAY, 2022 ADDIS ABABA, ETHIOPIA

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An Assessment of Procurement Activities on Network Equipment projects of
Ethio-telecom. The case study on Addis Ababa

By

Alemayehu…….
APPROVED BY BOARD OF EXAMINERS

----------------------------- ---------------------
Dean, Graduate Studies Signature & Date
---------------------------- ------------------------
Advisor Signature & Date
---------------------------- ------------------------
External Examiner Signature & Date
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Internal Examiner Signature & Date

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 DECLARATION

I, the undersigned, declare that this thesis is my original work, prepared under the guidance of
Dr……………….. All sources of material used for the thesis have been duly acknowledged. I
further confirm that the thesis has not been submitted either in part or in full to any other higher
learning institutions for the purpose of earning any degree.

_________________________ ______________________

Name Signature

Yom Institute of Economic Development University August/2022 G.c

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 ENDORESEMENT

This thesis has been submitted to Yom Institute of Economic Development University, School of
Graduate Studies for examination with my approval as a university advisor.

---------------------------------------

Dr. ………………..

Yom Institute of Economic Development University, Addis Ababa August, 2022

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Table of Contents
ACKNOWLEDGMENTS.............................................................................................................................7
List of Acronyms...........................................................................................................................................8
List of figures.................................................................................................................................................9
List of Tables................................................................................................................................................10
Abstract........................................................................................................................................................11
CHAPTER ONE- INTRODUCTION..........................................................................................................12
1.1 Background of the study....................................................................................................................12
1.3. General objective..............................................................................................................................17
1.3.1 Specific Objectives.........................................................................................................................18
1.4 Research Questions............................................................................................................................18
1.5. Significance of the Study..................................................................................................................18
1.6. Scope of the Study............................................................................................................................18
1.7 Organization of the Research Report...............................................................................................20
CHAPTER TWO: LITERATURE REVIEW..............................................................................................21
2.1. The Theoretical framework...................................................................................................................21
2.1.1 Definitions and concepts.................................................................................................................24
2.1.1.1 Definition of Project Procurement Management.....................................................................24
2.1.2.2. Project Procurement Management Process.................................................................................24
2.2. Definition of Procurement............................................................................................................24
2.3. Organizational Purchasing................................................................................................................25
2.4. The role and the scope of purchasing...............................................................................................27
2.4.1. Overall Goals.............................................................................................................................27
2.5. Public procurement...........................................................................................................................30
improvement (Kaizen)............................................................................................................................30
2.6. International Purchasing...................................................................................................................30
2.7. Domestic versus International Purchasing........................................................................................31
2.8. Procurement Methods.......................................................................................................................31
2.8.1Types of bid.................................................................................................................................32
2.9. Specification of Goods......................................................................................................................33
2.10. Evaluation of potential source........................................................................................................35
2.11. Negotiation......................................................................................................................................36
2.12. Contract Administration..................................................................................................................36

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4. Conceptual Framework............................................................................................................................40
CHAPTER -THREE....................................................................................................................................43
RESEARCH METHODOLOGY.................................................................................................................43
3.1. Introduction.......................................................................................................................................43
3.2. Research Approach...........................................................................................................................43
3.3. Research Design................................................................................................................................43
3.4. Data sources and Data Collection Instruments.............................................................................43
3.4.1. Primary data source....................................................................................................................44
3.4.2 Secondary Data Source...............................................................................................................44
3.5. Population.........................................................................................................................................44
3.6. Sampling Procedure..........................................................................................................................44
3.6.1 Sampling Size.............................................................................................................................44
3.6.2 Sampling Technique...................................................................................................................45
3.7. Data Collection Instrument...............................................................................................................45
3.8. Data Analysis and presentation.........................................................................................................46
3.9.1. Qualitative Analysis...................................................................................................................46
3.10.2. Quantitative Analysis...............................................................................................................46
3.11. Ethical consideration.......................................................................................................................48
CHAPTER FOUR........................................................................................................................................49
DATA PRESENTATION, ANALYSIS, AND INTERPRETATION........................................................49
4. Key takeaways from the interview answered by supply chain sourcing department managers............0
CHAPTER FIVE...........................................................................................................................................2
CONCLUSION AND RECOMMENDATION.............................................................................................2
5.1 Summary of the Major Findings..........................................................................................................2
5.2. Conclusion..............................................................................................................................................3
5.3. Recommendations...................................................................................................................................4
Reference.......................................................................................................................................................6
APPENDIX I...............................................................................................................................................10
APPENDIX II..............................................................................................................................................15

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ACKNOWLEDGMENTS

7
 List of Acronyms

SIM Card: Subscriber Identity Module Card

CDMA: Code Division Multiple Access

EVIDO: Evolution Data Optimization

IT Equipment’s: Information Technology equipment

MoFED - Ministry of Finance and Economic Development

FDRE - Federal Democratic Republic of Ethiopia

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 List of figures

Figure 1. A purchasing chart. Reproduced with permission of Mc-Graw Hill Education, from Dobler and
Burt (1996, p. 37); permission conveyed through Copyright Clearance Center, Inc.

Figure 2. A strategic process model, based on Monczka (1999). Reproduced with permission of NEVI,
source: NEVI, 2002.

Figure 3. A cyclical process model. Reproduced with permission of Cengage Learning SO, from
Monczka et al. (2002, Exhibit 2.2, p. 29); permission conveyed through Copyright Clearance
Center, Inc.

Figure 4. Conceptual frame work Diagram for Procurement practical Activity

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 List of Tables

Table 1. Time Table

Table 2. Research Budget

Table 3. Cronbach's Alpha Coefficient for total questionnaire

Table 4: Demographic characteristic of respondents

Table 5 -: Frequency Distribution of Performance Assessment of the Purchasing Department

Table 6: - Frequency Distribution of purchasing policy procedure

Table 7: - Overall purchasing process of the department

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Abstract

This study's goal is to evaluate the procurement processes for Ethiopian Telecom's network
equipment projects. The topics covered in the study include identifying factors that have an
impact on network equipment projects, determining whether or not those factors have an impact
on how well Ethio-telecom services are delivered, and determining the degree to which those
factors are being implemented. In order to achieve this, the researcher gathered information
from primary sources using questionnaires, interviews, and references from secondary sources,
such as procurement guidelines and other papers pertaining to purchasing in the Ethiopian
telecom industry. Secondary sources have also aided in the data collection. This study was
created with a descriptive methodology. The study's main conclusions point to the need to close
the gap between the purchase of network equipment and the rising demand for Ethiopian telecom
services.

Key Word; Procurement, Public procurement

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 CHAPTER ONE- INTRODUCTION

1.1 Background of the study

Procurement consists of the complete processes of acquiring goods and services and it begins
with identification of wishes and preparing the procurement plan and the procurement technique.
it also includes chance evaluation, identification and assessment of opportunity solutions,
contract award and control, receiving the procured assets or acquiring the services and settling of
bills ((Ngugi & Mugo, p.2317). Consistent with Arrow smith (n.d.), public procurement is an
detail of government’s activities of buying items and offerings which it desires to carry out its
functions. phases of public procurement approaches are: identification of procurement wishes,
procurement planning, bid strategies and putting of the contracts and agreement control. in step
with the Ethiopian Public Procurement Proclamation (No 649/2009), procurement approach
“obtaining items, works, consultancy or different offerings through buying, hiring or obtaining
through some other contractual method.” From the above definitions, the overall duties of
procurement is to reap goods, works, consultancy offerings and different offerings on the right
quality, in the proper quantity, from the right resources, on the proper time, location and price to
achieve an organizational goals.

Public procurement is a crucial tool for advancing goals of an economic, environmental, and
social character that have attracted significant attention internationally over the past few decades.
It significantly contributes to the optimum use of public resources in developing nations since it
is one of the key tools for achieving development goals including reducing poverty and
providing health, infrastructure, education, and other services. According to Mlinga (2009),
procurement budgets in developing nations make up around 20% of total government spending.
To reorganize and harmonize the legislative and institutional framework, several governments
have begun to overhaul their procurement systems. Abebe (n.d.) states that "studies have
revealed that out of the total public resources, procurement of products, works, and services
account for roughly 70% of the total public expenditures in Sub Saharan African Countries."
Additionally, in Ethiopia, purchasing goods and services accounts for more than 60% of all
public spending (Tesfahun, 2011). Enhancing the public procurement system would undoubtedly
have a significant impact on Ethiopia's expanding economy and lead to budgetary savings and

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increased efficiency in government spending, which will lead to the creation of wealth and the
reduction of poverty. The previous financial proclamation No. 57/1966 continued to govern the
nation after the Derg dictatorship was overthrown in 1991, and the Ministry of Finance (MOF)
was given charge of overseeing the procurement system. Ethiopia has, nevertheless, made an
effort in recent years to remedy flaws in its public procurement procedure by passing a number
of monetary and legal instruments.

Project procurement management is one of the ten knowledge areas listed in PMBOK (2013) that
a project manager has to be knowledgeable about for a project to be implemented successfully. It
is required to obtain the goods, services, or outcomes required for the project. Implementing
projects effectively depends on procurement methods, whereas badly managed project
procurement has a negative impact on project performance.

According to Kirai et al. (2016), procurement is the hub of performance in any institution and
requires the adoption and adherence to a strict system. Various levels of corruption, bureaucracy,
lack of open competition and transparency, neglect, lack of proper direction, poor coordination,
bureaucracy, and a lack of trained and qualified procurement specialists that are capable of
managing the procurement process in a professional, timely, and cost-effective manner are all
problems that plague many procurement activities. The procurement of week projects in Ethiopia
was hampered by inadequate planning, a lack of funding, and the timing of significant purchases
(Karlsson, 2011).

Through the telephone connection built from Addis Ababa to Harar, Emperor Menelik II
introduced telecommunication service to Ethiopia in 1894. Over the years, the telecom service
underwent name and organizational changes. "Central Administration of Telephone and
Telegraph System of Ethiopia" was the name used from 1890 to 1907. Since 1907–1909, it has
been known as "the Central Office of Post, Telegraph and Telephone System of Ethiopia." It was
reestablished in 1952 under the name "Imperial Board of Telecommunication of Ethiopia" with
the aim of rehabilitating, extending, repairing, and maintaining the telecommunication facilities
of Ethiopia as well as to engage in the business of telecommunication for profit after Ethiopia
gained independence from Italian occupation.

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The Ethiopian Telecommunication was renamed under the Derg government (1974–1991) as
"The Provisional Military Government of Socialist Ethiopia Telecommunication Service" in
1975 and then again as "Ethiopian Telecommunication Authority" in 1981, which it kept up until
1996. The telecommunications industry had undergone a significant technological revolution at
this time, moving from automated to digital technologies.

The telecommunications industry was divided into two organizations known as the "Ethiopian
Telecommunication Authority" and the "Ethiopian Telecommunication Corporation" under the
FDRE.

(ETC)" on 1996. Ethio Telecom was founded on November 29, 2010, with the goals of
connecting Ethiopia through cutting-edge telecom services, offering high-quality, innovative,
and affordable telecom products and services that enhance the development of the country,
developing a reputable brand known for its customers' consideration, developing its managerial
capability and manpower's talent that enables Ethio Telecom to operate at an international level,
and supporting community and environmental development. Ethio Telecom has 64.4 million
mobile users, 1.2 million fixed line subscribers, and 16.5 million internet members, according to
a report published on May 18, 2018. Additionally, the business was able to receive 27.79 billion
Birr, of which 75.3% came from mobile customers, 17.1% from data and internet, and the
remaining 5.2% came from other sources from global services.

Of the 16 departments, the Program Management Department is responsible for managing

project management methodologies, skills, and tools within the organization. His main goal is to
achieve all project goals and objectives while respecting pre-conceived project constraints. The
goal is also to streamline the distribution and integration of inputs required to achieve predefined
goals. The department's authority is limited to following up on projects that meet his one or
combination of the following parameters: The total cost of the project he must be over 10 million
birr, the scope of the project he must cover two or more departments and/or the project must be
of strategic importance to the company I have. Other projects that do not meet any of the above
requirements will be placed under the supervision of their respective departments. There are two
types of projects that the program management department calls hardware projects: infrastructure
expansion projects related to the company's network department, and software projects related to
the information systems department.

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 Procurement and Equipment Division He consists of three divisions. The procurement
department organizes the purchase control and delivery of goods and services in accordance with
the company's strategic plans and budgets within reasonable limits. Manage company
relationships with suppliers and partners. This section is responsible for both ongoing operations
and project procurement. The logistics department facilitates merchandise management by
optimizing logistics resources, optimizing warehouse management, facilitating shipment of
merchandise, and performing inventory management. The Facilities and Fleet division provides
facilities and fleets across the company.

Ethio-Telecom is one of Africa's leading telecommunications industry leaders with a vision of

becoming a world-class telecommunications service provider. Telecommunications is not only
one of the key supporting services required for the rapid growth and modernization of various
economic sectors, but also attracts investment, creates market opportunities, enhances
competitiveness and promotes regional economic integration. The Ethiopian government has
invested heavily in improving the quality of the service as it is one of the services required for
promotion. , Telecom Sector Coverage and Institutional Capacity (NBE, 2017). As the company
undertakes such a nationwide contribution through huge investments, it is important to assess
procurement practices for Ethio Telecom's network equipment projects in the Addis Ababa
region.

1.2 Statement of the problem

According to the Federal Democratic Republic of Ethiopia (FDRE, 2009), compliance is key to
achieving procurement goals such as transparency, competition, value for money, accountability,
and efficient use of resources. Power of the state. On the other hand, non-compliance with the
procurement law is considered a major obstacle to the effectiveness of the Baily law, et al.,
(2005). Since hardware is the lifeblood of any organization, responsible procurement is critical to
the smooth flow of hardware. However, because the process is not strict, some problems arise in
the field of procurement, especially the integrity of the business, the quality of the purchased
items, and the competence of the specialists. In addition, procurement is one of the most
vulnerable areas of corruption in the alliance with Land Management and Distribution, the
Ethiopian Customs and private sector, the World Bank Public Procurement Assessment Report.
Gender (2002, p. 10). Similarly, many stakeholders complain about the procurement process.

15
Preliminary investigation revealed many cases where purchased items did not match the
requested items (poor quality) and some purchased items were found in the company's inventory
with little or no year of service. Ethio Telecom's earnings grew during the year at an annual rate
of 7% and 31% respectively. While impressive, this growth has come from a very low level. In
addition, the analysis shows that this revenue has not kept pace with the expansion of the
network and subscriber base. The lack of innovation also means that Ethio Telecom's revenue is
not growing at the same rate as competitive markets in other countries.

Ethio's revenue of $1.38 billion with 40 million subscribers is two and a half times lower than
the productivity of the Kenyan and Nigerian markets.

Effective procurement is essential for successful project execution. Depending on the specific
type of project being managed, more than 50% of total project costs can be attributed to
purchased parts, supplies, and services, and for many high-tech projects, the percentage of This
purchase can be as high as 90% (Morris & Pinto, 2007).

According to Wyman (2013), most global telecommunications operators are upgrading their
sourcing capabilities to build better supplier relationships, improve risk management, and
increase business opportunities. Rapidly growing association. They need to improve their
sourcing practices as their purchasing portfolios are increasingly diversified, from simple items
like switches and routers to a wider range of products like software, IT solutions, and more.
Maintenance and technical escrow resale. Because technology moves so quickly, their buyers
expect to find compatible suppliers that give them flexibility and quick response. For example,
traditional telecom providers like Ericson and Nokia have seen their profit margins drop
significantly, due to stiff competition from newcomers like Huawei and ZTE.

Therefore, this study was initiated with the aim of bridging the gap between the purchase of
network equipment and the increase in demand for ethio telecommunications services.
According to the report of the Procurement and Property Administration of Ethiopia (PPA), of
the total public spending, more than 60 with cents go to buy goods public and services. Supplies
play an important role in improving performance and achieving organizational goals by
delivering the right quality inputs to the right users at the right time and at the right cost.

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However, the preliminary interview of the employees indicated that, the purchasing department
of ethio telecom.

Among the other stocks, ethio telecom industry sourcing guide ; Revised Works Procurement
Policies and Procedures (WPPP), Policies and Procedures have been developed under the Prior
Award (referring to in Volume I) and Post-Award (mentioned in Volume I) Volume II) is not
done correct in ethio telecommunications Addis Ababa. Due to failure to implement WPPP
correctly, current procurement practices ineffective out of provided required goods, equipment,
materials, works and services in of correct quality and quantity , at the right time, at the right
price, and creating fair and equal opportunities for contractors. In addition, transparency in the
procurement process and timely actions were not taken into account that all actions are directed
towards awarding the contract and its implementation on a fair and equitable basis. Consistency
and transparency, and 4244 based on the highest quality standards. ethics.Therefore, by
considering the above hindering problems of the organization, this study has been initiated with
the intention filling the gap between the procurement of network equipment and the increase
demand of ethio-telecom services.

The following observed problems are motivating to conduct this research study
and the problems are stated as following:-
1) Delay procurement Activity for network equipment with Negotiation six
Month with Restricted types of procurement 45-90 days.
2) Lack of local supplier in the country.
3) Lack of Quality. A proxy of voice quality of service data shows that the answer-seizure
ratio (ASR) that measures call success rates (that is, the percentage of answered
telephone calls to the total call volume) was 32% in 2017 (Ethio Telecom Business Plan,
2017)

1.3. General objective

The general objective of the study is to assess Procurement Activities on Network Equipment
projects of Ethio-telecom.

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1.3.1 Specific Objectives

 To identify factors that affect procurement of network equipment projects.

 To assess whether procurement of network equipment’s has directly affect service delivery
of Ethio-telecom or not.
 To assess the level of implementation of procurement network equipment project practices
of Ethio-telecom.

1.4 Research Questions

 What factors affect the procurement of network equipment projects?

 Does procurement of network equipment’s has directly affect service delivery of Ethio-
telecom?
 What is the level of implementation of procurement of network equipment projects
practices at Ethio telecom? In terms of time, quality.

1.5. Significance of the Study

The study aims to contribute to the existing body of knowledge on evaluating the project's
network equipment procurement practices, in order to maximize the contribution of Ethio-
telecom's procurement function to the goal. of the company. In addition, research
recommendations can help improve overall sourcing practices, which can be of great benefit to
various stakeholders; for managers to take corrective actions and review practices, for
researchers to act as facilitators for further investigations, and in particular that this research will
help improve organizational performance of Ethio Telecom.

1.6. Scope of the Study

Procurement includes the entire process of purchasing goods and/or services, and also extends to
the final disposal of an asset at the end of its useful life. While it is important to cover all of these
areas due to impracticability from a time and resource perspective, the aim of this study was only
to survey ethio network equipment procurement practices. -telecom, in doing so, the researcher
was restricted to ethio-telecom's headquarters and some branches in the Addis Ababa District
because most goods and services are centrally procured.

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TABLE 1: TIME TABLE

DATE Action

Feb. 1 – Feb 28/2022 Literature search

Primary research (talk to relevant people

March 1- 5 Develop and pilot questionnaire

Continue literature search

March 6-March 31 Analyze pilot work and revise

Questionnaire Ask relevant people of
comments

April 1 – April 30/2022 Send out questionnaire

Categories returned questionnaires

May 1-10/2022 Send out reminder letter for

nonresponses.
Continue to categories returned
questionnaires

May 30/2022 Data input

Data analysis

June 1 - 10/2022 Write report Prepare oral presentation

June 10 - 20/2022 Requires approval of advisors

June 25-30/ 2022 Final conclusion and Recommendation

submit Document.

July 15, 2022 Final Defense presentation

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TABLE 2: RESEARCH BUDGET

RESOURCE COST
Good quality personal wireless headphones 1000.00
Two copies with book-form binding and softcopy of their thesis, 3000.00
and do-file in CD
For questioner print out 500.00
Flash Disk purchase 500.00

For software installation and upgrading 500.00

Stationery – paper, envelopes, paper clips, ring binder, scissors 1000.00

Travel expenses – petrol, overnight stay at five locations 1500.00
Total Expenditure 8000.00

1.7 Organization of the Research Report

This paper is organized in five chapters. The first chapter presents introduction, brief statements
on the research problem and the study purpose and the scope and limitation of the study. Chapter
two presents review of related literature. Chapter three of the paper describes

The research design and methodology to be used in the study. The results and discussion is
presented in fourth Chapter. Data analysis and explanation is the theme of the study paper and it
is included in this chapter. Chapter five of the paper also draws major findings, conclusion and
possible recommendations. This will be followed by questionnaires and bibliography
(references)

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 CHAPTER TWO: LITERATURE REVIEW

This chapter presents the literature review for the theoretical, Empirical and Conceptual review
of points related to Procurement activities are discussed. Definitions of procurement are
presented which is the base for the study onwards.

2.1. The Theoretical framework

Cyclical process models

Linear PPM may be suitable for project-related purchases or other one-time purchases. However,
very few purchases start from a blank page. The purchasing organization usually has experience
procuring the materials and services it needs, and it usually has some understanding of the
market suppliers. This is information that can and should be used in a purchasing situation.
Therefore, models highlighting the cyclical aspect of a purchase have been proposed where, once
the sequence of steps is completed, the process restarts for a future purchase. For example, this is
documented in the PPM of Monczka et al. (2002) (see Figure 1). It shows how evaluating
supplier performance leads to the identification and prediction of future material and service
needs. We also identify PPM originally developed and used by IBM Consulting (Buter and Loa,
2008), referred to as van Weele's “extended purchasing process model” (2014, p. 43; 2018, p.
33) and was used as the basis for van Raaij's PSM process wheel (2016, p. 14). The PSM
process wheel, as published in van Raaij (2016), combines strategic, tactical, and operational
activities (see Figure 2). In the outer ring, strategic and tactical activities translate into portfolio
sourcing strategy and contracting with one or more suppliers for that purchasing portfolio.
Contracts are the beginning of operational activities, generating invoices. Invoices are entered for
cost analysis (which is one of the procurement analyses). The inner ring is the supply facility
management activities that are considered strategic. Taken together, the inner and outer rings
define what the PSM entails. Other cycle patterns include the CIPS procurement cycle (2018),
the healthcare contracting cycle by Clark et al. (1995), multi-cycle PPM (de Boer, 1998) and
dual cycles of strategic planning and tactical procurement in healthcare contracts by Duran et al.
(2005).

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Fig. 1. A purchasing chart. Reproduced with permission of Mc-Graw Hill Education, from Dobler and
Burt (1996, p. 37); permission conveyed through Copyright Clearance Center, Inc.

65
Fig.2. a strategic process model, based on Monczka (1999). Reproduced with permission of NEVI,
source: NEVI, 2002.

Figure3. A cyclical process model. Reproduced with permission of Cengage Learning SO, from Monczka
et al. (2002, Exhibit 2.2, p. 29); permission conveyed through Copyright Clearance Center, Inc.

23
2.1.1 Definitions and concepts

2.1.1.1 Definition of Project Procurement Management

According to PMBOK, project procurement management is one of the ten knowledge areas of
project management that includes the processes required to purchase or obtain required products,
services, or outputs outside of the team. Project. Another definition of project procurement
management is the processes for controlling and managing contracts and purchase orders from
sources outside the project organization (Karlsson, 2011). According to Heagney (2012), project
procurement management is concerned with deciding what to buy, making a request for tenders
or quotes, selecting suppliers, managing contracts, and closing when the work is completed.
Complete.

2.1.2.2. Project Procurement Management Process

PMBOK (2013), identifies four project procurement management processes, namely planned
procurement management, procurement execution, procurement control, and procurement
closing. Procurement management planning is the process of documenting project procurement
decisions, specifying how to approach and identifying potential suppliers. While conducting
procurement is the process of collecting supplier feedback, selecting suppliers and awarding
contracts. Purchasing control is a process for managing supply relationships, monitoring contract
performance, and making changes and modifications to the contract as required. Finally, a
rigorous procurement process involves the completion of each procurement activity.

Wysocki (2014), Morris et.al (2007), Luckey (2006), Fleming (2003) and PMBOK, (2000),
have identified six stages of project procurement management, that is, purchasing planning
procurement, solicitation planning, solicitation, source selection, contract administration and
closing. This classification will be used in the following section by reviewing the sourcing
policy of the studied company. PMBOK (2013), assumes that to say that a project supply exists,
the buyer of an item for the project is assigned to the project team and the seller is an
organization outside the project team. It is also assumed that a formal contractual relationship
will be developed and exist between the buyer and the seller.

2.2. Definition of Procurement

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Like Kerzner (2009), Definition of sourcing is the acquisition of goods and services involving
two parties, a buying customer and a selling supplier with different goals interacting in a market
segment. Certain. Supply is characterized as being the most active and dynamic with short-term
goals that often conflict with long-term goals (Dimitri, Piga, & Spagnolo, 2006).

Another definition of procurement is the management of a series of processes related to an

organization's desire to obtain goods and services needed to produce a product, convert inputs
into outputs, or operate indirect actions of the organization. These processes involve identifying
and analyzing user needs and purchasing patterns, supplier selection, contract negotiation,
supplier-user communication, and evaluation and create strategic alliances with suppliers (Morris
& Pinto, 2007). His functions extend to supplier acquisition, pricing, purchasing, and contract
management. It also involves storage, logistics, inspection, transportation, transportation and
handling of raw materials and supplies. According to Laby et al. (2014), a procurement process
includes a series of activities such as purchasing, shipping, warehousing and purchasing.

Because it is economically difficult for companies to produce all the materials they use,
procurement processes are used to ensure that buyers receive goods, services, or jobs at the right
level. The best possible price, when aspects such as quality, quantity, time and place are
concerned. Comparison (Wikipedia, 2010). It is also a practice that can increase business
profitability by taking advantage of quantity discounts, minimizing cash flow problems and
sourcing quality (Kerzner, 2009). According to Dimitri et.al (2006), efficient procurement is a
core necessity for firms` profitability as well as survival. But the problem is that most companies
see the procurement process as tactical rather than strategic and as cost rather than a benefit to
the company (Neef, 2001).

2.3. Organizational Purchasing

As Van Weele (2006) defines organizational purchasing as a decision-making process in which

organizations formally establish product needs, identify, evaluate, and choose between brands
and alternative supplier.
When we analyze the purchasing process, we must take into account what the procurement
function includes. It is really important to have a clear definition and in doing so understand the

25
role sourcing plays in the purchasing function. As we can see in Van Weele (2006), sourcing is a
tactical part of the purchasing and sourcing process.
According to Van Weele (2006), the purchasing function includes activities to define purchasing
specifications based on fitness for purpose, to select the best possible supplier, and to develop
procedures and processes. to be able to do so, prepare and conduct negotiations with suppliers to
establish an agreement and draft legal contracts, place orders with selected suppliers or develop
ordering processes Efficient ordering and processing, tracking and controlling orders to ensure
delivery (acceleration), monitoring and evaluation.
To understand these activities of the procurement process, it is best to provide the reader with
this clear explanation from Van Weele (2006):
 Determining the purchasing specifications (in terms of required quality and quantities) of
the goods and services that need to be bought. In the case of the case company we have to
keep in mind that goods and service are bought for a third party; the business customer
for his stores.
 Selecting the best possible supplier and developing procedures and routines.
 Preparing and conducting negotiations with the supplier in order to establish an
agreement and to write up the legal contract.
 Placing the order with selected supplier and develop efficient purchase order routines.
 Monitoring and control of the order secure supply.
 Follow up and evaluation (supplier rating and ranking). Van Weele defines this activity
“expediting” as following up on a purchase order to make sure that the supplier is going
to perform as it has confirmed through his purchase order confirmation.

65
As pointed out from these initial definitions, the purchasing function does not include
responsibilities for material requirements planning, materials planning, inventory management,
inbound checking, and control. Quality. The purchasing process is used to identify user needs,
efficiently and effectively assess user needs, identify suppliers that can fulfill that need, develop
Negotiate with those suppliers, develop order mechanisms, ensure payments are made in a timely
manner, ensure demand is actually fulfilled. Respond to and drive continuous improvement. At
each stage of this process, managers are challenged to ensure that internal users are satisfied with
both the process and the results, Baily, et al., (2005).

2.4. The role and the scope of purchasing

2.4.1. Overall Goals

To understand the role and responsibilities of the purchasing it starts with the primary objectives.
According to Monczka et al. (2008) they are divided in three categories:

i. Overall goals

ii. Tactical responsibilities

iii. Strategic Role Common goals include: sourcing continuity, procurement process
management, supply facility management, stakeholder engagement, and development of supply
strategies. Tactical responsibilities include: forecasting and planning requirements, supplier
identification and selection, order control/preparation, receipt and inspection, invoice settlement
and payment, maintenance profiling, measure supplier performance, improve P2P (buy-to-pay)
processes. Strategic roles include: Demand Management, Product Strategy, Contract
Management, Cost Management, Purchasing Manager, Purchasing Improvement for Payments,
Supplier Relationship Management .

Monczka et al. (2008) asserts that the purchasing department has limited resources to manage
the purchasing process and must continuously work to make better use of these resources.
Limited resources include staff, work in the department, budget, time, information, and
knowledge. As a result, organizations are constantly looking for people who have developed the
skills needed to tackle the many different tasks facing procurement. Previously, the "dogma" for

27
every buyer was to buy the right quality ingredients, at the right time, in the right quantity, from
the right source, at the right price. This simple statement does not take into account some of the
measurable goals and how the business environment has changed in our opinion. In addition, it
does not consider customer needs as the primary source of information for buyers. Peter Baily
(2005) makes the following general statements about common purchasing goals:

 To supply the organization with a flow of materials and services to meet its needs.
 To ensure continuity of supply by maintaining effective relationships with existing
sources and by developing other sources of supply either as alternatives or meet emerging
or planned needs.
 To buy efficiently ad wisely, obtaining by any ethical means the best value for every
pound spent.
 To maintain sound co-operative relationships with other departments, providing
information and advice as necessary to ensure the effective operation of the organization
as a whole.
 To develop staff, policies, procedures and organization to ensure the achievement of
these objectives. In addition, we share some even more specific objectives from Baily
that also sourcing managers have to keep in mind:
 To select the best suppliers in the market.
 To help generate the effective development of the new products.
 To protect the company’s cost structure.
 To maintain the correct quality/value balance.
 To monitor supply market trends.
 To negotiate effectively in order to work with suppliers who will seek mutual benefit
through economically superior performance.
 To adopt environmentally responsible supply management.

65
Colin Coulson and Thomas (2008) list the importance of purchasing strategies that divide the
company into winners and losers based on their approach. We think this is a smart approach for
the reader to understand the role of procurement in organizations. The losers tend to see
procurement as a relatively low-status administrative activity that sometimes causes management
and quality problems. For the winners, purchasing is a source of competitive advantage. They
work with their suppliers to reduce costs, innovate and improve quality, or speed up delivery.
Engaging in procurement and prioritizing suppliers earlier in the new product development
process can often reduce the time it takes to bring a new product to market by a quarter. Colin
Coulson and Thomas, (2008). Today, the purchasing function is becoming more and more
strategic to a company's success. The purchasing function has become important in supply chain
management due to factors such as globalization, increasing value-added provision, and rapid
technological change. Baily, et al., (1994). Innovation also plays an important role in the
purchasing function. The pace of change has accelerated over the years. Organizations must be
able to develop new methods and products quickly and efficiently. This turning point requires
significant improvements in the internal interface between purchasing and production,
marketing, finance, and more. on the other hand, as well as with external suppliers and
customers. Purchases should be prepared to help and initiate new ideas and developments, Peter
B et al., (2005).

To develop strategic sourcing, the traditional purchasing function cannot cope with new
demands and fast-paced supply chains. The role of purchasing has changed in nature. The old
perception was based on the idea that buying and selling was centered on simple exchanges,
where buyers and sellers interacted with each other at their fingertips. The primary concern of
the buyer in this rather simple scenario is to obtain as many resources as possible for as little as
possible, Peter B et al., (2005).

29
Procurement in its broadest sense is increasingly recognized as a strategic issue, as sourcing and
outsourcing decisions have a critical influence on the success of an organization Carr and
Pearson, (2002). According to author Peter Baily, a new way to add value in the supply chain,
and more specifically in the purchasing process, is to develop a mutual buyer-supplier
relationship where the benefits of Doing business together is also rooted in shared ideas such as
exchange. The steps in the process can vary between organizations, depending on the nature of
the item being purchased. New items may initially require more time, while repeat items often
already have an approved source. The buying process can be divided into two parts: the pre-
ordering process and the post-ordering process. We show you in the image below a very helpful
pre-ordering process for this C search. Scott et al., (2011).

2.5. Public procurement

Public procurement is the process of acquiring goods, services, works, and other supplies by a
public entity, usually through a contractual arrangement after public competition. The public
procurement process covers the entire lifecycle, from initial design and requirements definition
through to the end of the asset's useful life or contract termination. Federal Democratic Republic
of Ethiopia, Authority for Public Procurement and Assets (2011). Again, Baily et al (2005)
identified proposals for the public sector [public procurement] including; Looking to develop a
team of world-class professional sourcing professionals, Looking to showcase lifetime cost
savings best practices, benchmarking to the highest standards, Partnerships with contractors and
sourcing within competitive limits, driving continuous improvement (Kaizen).

2.6. International Purchasing.

Thai, (2009 International procurement is the process of obtaining goods or services that are
available in markets or markets, access to which involves the crossing of international borders.
Such an economic situation is desirable to enable the business to operate and operate
competitively

65
 Continuing its description, the Branch said the main reason for adopting an international
purchasing strategy instead of using supplier’s local level is to enhance the added value of a
product or service. For the consumer, the decision is related to the product's life cycle: it can be a
factor of price, quality, technology, availability, innovation, standards, design or fashion., global
sourcing is not simply a purchasing function; it is the process of obtaining the right
product/service for consumer demand and technology, thus enhancing the attractiveness, profile,
quality or added value.

2.7. Domestic versus International Purchasing.

as a Thai. (2009) states that international purchasing refers to commercial purchasing

transactions between buyers and suppliers located in different countries. This type of purchase is
usually more complicated than domestic purchases. Organizations have to deal with longer
material pipelines, stricter rules and regulations, currency fluctuations, customs clearance
requirements, and many other variables such as language and time.

International shopping is about using global resources. That means finding top quality bargains
from anywhere in the world. From a supply chain management perspective, international
procurement requires companies to build global manufacturing chains to develop rational
procurement plans and purchase high-quality goods at reasonable prices. According to Sollish &
Somanik, (2005), in contrast to domestic purchases, international modes involve higher purchase
volumes, higher risks, lower purchase prices, and the need for systematic criteria in supplier
selection and stable supply. Features purchase channels.

2.8. Procurement Methods

The Federal Democratic Republic of Ethiopia, Public Procurement and Property Administration
Agency (MoFED 2011) by quoting Proclamation Article 33: defines six methods of public
procurement these are:-

 bidding
 two stage bidding
 request for quotation

31
  request for proposal
 restricted bidding, and
 Direct procurement.

The Federal Negarit Gazeta (2005) states that, except as otherwise provided in this declaration,
the procuring entity will use open competitive bidding as its preferred procurement procedure.
Although each method generally has its own advantages and disadvantages, the Ethiopian
government is particularly fond of competitive bidding; urge contractors to be aware of the
advantages gained by such a method.

Competitive Bidding (Bidding)

According to Lysons and Farrington (2006), a procurement procedure whereby potential

suppliers are invited to make a firm and clear offer on price and terms for which they will
provide specific goods or services, which, when accepted, form the basis for a subsequent
contract. In addition, Lewis (2005) explains as a formal offer in writing to perform work or
provide services for a stated price is called tender.

2.8.1Types of bid
As to Lysons and Farrington (2006,) tender are alienated in to the following ways:

65
2.8.1.1 Open Tender:

Potential suppliers are invited to compete for a contract advertised in newspapers or on the
internet - the lowest bid is usually accepted, although advertisers often state that they are not
bound to accept Get the lowest bid or any other offer. Similarly, the Public Procurement and
Asset Management Authority of the Federal Democratic Republic of Ethiopia (2011) indicated
that all interested company bidders received full notice of the contract requirements. Contract
and all qualified bidders have an equal opportunity to submit an offer. The public authority must
adequately inform potential bidders of the possibility of bidding in order to identify their interest
and prepare bidding documents.

2.8.1.2 Selective Tender:

Call for tenders from suppliers on the approved and previously checked lists according to their
capacity and financial situation. Serial Bidding: Potential suppliers are solicited on an open or
selective basis for an initial program on an on-base basis, subject to satisfactory performance
and financial contingencies Anticipated, a work program will be issued to the successful bidder,
rate and price for the first job. Basis of the respite program.

2.8.1.3 Negotiated tender:

A tender is negotiated with a single supplier to eliminate competition. This type of contract is
common. In the case of local governments, this would require a waiver of the standard order.
Therefore, the Ethiopian government normally only applies two procurement methods; open and
limited/selected bidding.

2.9. Specification of Goods

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Specifications should be distinguished from standards and codes of practice. According to
Lysons and Farrington (2006), specification is defined in three statements as it is a statement of
product or service attributes, a statement of requirements, and a statement of a need to be met. by
acquiring external resources. The standard is a specification intended for routine use. Standards
differ from specifications in that although every standard is a specification, not every
specification is a standard. Codes of practice are less specific than official standards and provide
guidance on accepted best practice in engineering and construction and operations such as
installation, maintenance, and service provision.

On the other hand, Dobler and Burt (1997) explain how standardization reduces costs because
the use of standards allows a company to purchase fewer items, in larger quantities, and at lower
prices. As a result, fewer items are handled and stored. This reduces the cost of purchasing,
receiving, checking and paying. Stocking fewer items makes inventory control easier and less
expensive. Therefore, purchasing standard materials saves money in four ways: lower prices,
lower processing costs, reduced inventory, carrying costs, and fewer quality problems. In
contrast, the use of non-standard items, often referred to as "specials", almost always result in
higher total acquisition and ownership costs for the company.

Baily et al. (2005) state two approaches to specification: performance and suitability. An
operational specification is a statement that clearly indicates the purpose, function, application,
and expected performance of a material or service to be provided and that the supplier is
authorized or encouraged to provide. suitable product. Compliance specifications are regulations
for which the procurement organization establishes clear and unambiguous requirements that
must be met. The specification is for the product, not the application. Specification is also used
as a means of comparison. According to Sollish & Somanik, (2005). For many companies, price
has traditionally been the dimension by which suppliers are compared. There are many other
vendor characteristics such as specifications.

Sollish & Somanik specification data source, (2005). There are three main sources from which
specifications can be derived: 1. Individual standards: these require extensive consultation
between users, engineering, purchasing, quality control quality, suppliers, marketers and
ultimately the end consumer. This means the task can be very arduous and expensive.

65
2. Standard specifications: They have been developed through long experience and research by
governmental and non-governmental organizations, and considerable efforts have been made to
promote them. . Government standards: [it is fair] to ensure that purchased product meets
government requirements.

2.10. Evaluation of potential source

As described by Sollish & Somanik, (2005). Developing a source assessment in a potential

source assessment attempts to answer two key questions

1. Can this supplier satisfy the buyer's requirements in the short and long term? Period?

2. Is this supplier motivated to meet these requirements in the way that buyers expect in the
short and long term?

The first question can largely be answered on technical grounds. The second is related to the
human aspect. On the other hand Baily et al. (2005) can evaluate a supplier by the following
parameter

Past performance: - it is used for supplier selection when items are purchased in bulk from a
single supplier. Supply number. Buyers use this information not only to provide more business to
better suppliers and eliminate non-conforming suppliers, but also to encourage weak suppliers to
improve performance their activities.

Reputation: - Experienced buyers gain a wealth of market knowledge, which they supplement
by talking to colleagues, sales representatives and buyers from other organizations.

Professional Visits and Inspections: - this is a supplier visit to assess quality capability, a quality
control officer, purchasing officer or an inter-ministerial team may make the visit. Third-party
certification: - Third-party certification is the term used to refer to visits and assessments
conducted by an independent agency - not first, buyer or second party, nor the seller - whose
results are then published or made available to the customer. Or subscriptions as a quality
assessment certificate.

Sample Product Evaluation: - it is satisfactory delivery by the supplier and accepted by the
customer, thus completing the transaction once the payment is made.

35
2.11. Negotiation

Negotiation is an occasion where one or more representatives of two or more parties interact in a
clear effort to reach an acceptable position on one or more controversial issues on which they
wish to agree. Lysons and Farrington (2006).

As public agencies sign more and more contracts with private and nonprofit organizations,
negotiation skills become increasingly important for procurement officers and program
managers.

Negotiation is applied in many different contexts and experiences. They are highly appreciated
when reaching agreement on issues where there are differences of opinion between the parties
involved. The goal of effective or successful negotiation should always be a fair outcome, based
on objective standards, and concluded in a friendly and efficient manner.

By contrast, the negotiations of the Public Procurement and Asset Management Authority of the
Ministry of Finance and Economic Development of the Federal Democratic Republic of Ethiopia
(2011) will include discussions on the terms reference, approach and methodology, organization
and staffing, work plan and public agency contributions. . Particular attention should be paid to
clearly identifying contributions and facilities provided by public authorities. The negotiations
will not significantly change the original terms of reference, otherwise the integrity of the
negotiations, the content and the conclusions of the technical assessment report may be
questioned.

2.12. Contract Administration

According to Dobler et al. (1997), purchasing requires close monitoring of the supplier's progress
over time, complexity and urgency of the order. At the time of placing an order or awarding a
contract, the buyer must decide whether regular or special attention is required. Similarly, the
Department of Finance and Economic Development of the Federal Democratic Republic of
Ethiopia's Property and Public Procurement Authority (2011) Effective contract management is
essential to ensure that the objectives of procurement process is met and all contractual
obligations and activities are effectively performed by both parties to the contract. The procuring
entity must ensure regular monitoring of all existing contracts so that prompt corrective actions
can be taken if problems arise or preventive actions are taken when problems arise. Subject.

65
According to Lysons and Farrington (2006), to be valid, a contract must satisfy the following
essential elements;

Intent: - both parties must intend to enter into a legal relationship

Agreement: - in the event of a dispute, the court must be satisfied that the contracting parties
have reached a firm agreement. Sure and not yet in the process of negotiation.

Form: - certain exceptional types of agreement are only valid if made in a particular way, such
as in writing.

Definite terms: - there will be no contract if it is not possible to determine what has been agreed
between the parties.

Legality: - some agreement, such as contracts to defraud or immoral contract, such as

agreement to fix prices or regulate supplies, while not illegal are void under the competition acts,
unless the parties can prove to the restrictive practices court that their agreement is beneficial in
the public interest. Additionally, Federal, Public Procurement Directive (2010) public bodies
have to ensure that the performance of a procurement contract is completed with the terms and
conditions of such contract being complied with and other transactions incidental to such
contract being finalized. The Federal Democratic Republic of Ethiopia Ministry of Finance and
Economic Development Public Procurement and Property Administration Agency (2011)
Contract amendment may become necessary as a result of the application of price variations
specified in the contract, the resolution of disputes, additional or reduced requirements by the
public body, agreements to extend the time schedule, or from accepted increases or decreases in
prices. The contract may allow the public body to modify contract values by a pre-determined
percentage when this is in the public interest and essential for the work of the public body.

3. Empirical Literature Review

In this field of study, the researcher aims to explore from the various studies or studies that have
been done or written related to the field and draw insights from what has been talk about this
topic. Because of the interest of this research, many different studies have been drawn from
different authors, scholars, institutions and organizations and have resulted in ideas and even
recommendations for further studies. Based on the assessment carried out in the National

37
Procurement Assessment Report (CPAR) of the procurement system by the Public Procurement
Authority - Final report conducted in September 2007, the report raised various questions about
the entire systematic procurement process in Tanzania. Among other things that have been
revealed in the review will be discussed here under the following aspect of the Budget Law and
financial procedures that support the timely procurement, performance and payment of contracts.
Funds are usually released from the Treasury on a monthly basis, but for priority sectors it can
also be quarterly or semi-annually. Billing standards are provided by the Public Finance Act and
its provisions, and invoices are processed according to mandatory local orders (which can be
generated from IFMS) and certificates respective delivery. Payment is made by MDA after
internal approval of invoices or progress reports. The review also found that a number of
contracts were not approved in the budget allocation. Approximately 10% of the contracts
evaluated were not within the approved budget, 9% had no data to disclose whether the contracts
were within the approved budget, while 1% of the contracts were approved. Awarded under a
PPP arrangement such as collection of local taxes/revenues. Government agencies. Pursuant to
Section 45 of the Public Procurement Act 2004 and Regulations 47 and 25 of GNs 97 and 98
respectively, procuring entities are required to prepare a procurement plan to avoid emergency
procurement where possible and reinforce the requirements for procurement. Their needs to get
value for money and reduce procurement costs.

Payment Schedule

The assessment shows that, of the appraised bidding documents, 40% have no provision on
payment schedule. It has also been found that Local Purchase Orders (LPOs) drafted by LGA do
not have provisions specifying payment schedules, which has contributed to the increase in the
proportion of contracts with no payment schedule. From the above findings, it can be seen that
STD is modified to remove payment schedule provisions to satisfy certain ES requirements due
to uncertain cash flows. In addition, it is noted that there is a delay in payment that exceeds the
payment schedule according to the contract. This does not reflect the actual situation as only 15
contracts out of the total (388) evaluated revealed that. Stakeholder interviews indicated that in
the case of delay, they did not claim benefits because they feared becoming victims of EPs.

65
Procurement Actions not initiated Without Budget Appropriations

According to the law on public finance, it is necessary to have available capital for procurement.
Similarly, Regulation 62 of GN 97 requires funds to be "voted or committed" before
procurement can begin. The review revealed that; 80% of the contracts are within the approved
budget, 10% are not, 9% have no data to disclose while 1% of the contracts are public-private
partnerships (tax collection).

Cost of Tender Process

The assessment found that the cost of preparing referendum documents in EP ranges from Tshs
3,000 (lowest) to Tshs 150,000 (highest). From the case examples, the average is 48,000 Tsh. In
some cases, documents were sold to Tshs. 200,000 regardless of the volume/footprint of the
document. The reasons given by PES are that they charge more to cover the administrative costs
of procurement that for some organizations are not funded. GN97 Rule 82(3) requires that
solicitation materials be sold for a price that includes only the cost of printing, copying, and
distributing the document without including any profit element. Seeing this, some ministries
have assigned sub-voices to the PMUs. In addition, PPRA has issued guidance on how to reduce
procurement administration costs. Another area of concern is the costs associated with the
procurement process, including the cost of the notice of invitation to bid, the cost of the review
committees, and the cost of the procurement committee meetings. The review also revealed that
the highest administrative costs reached Tshs. 9,870,000 while the lowest is Tshs. 210,000 per
contract. For some contracts, the ratio of administrative costs for procurement is 9% of the
contract price. Implementing Article 45 of the law and monitoring to ensure that EPs prepare
annual procurement plans, thus requiring global requirements, will reduce the administrative
costs of procurement.

Adequacy of Organization, Funding, staffing, and Level of Independence and Authority to

Exercise the Duties

The PPRA is staffed at the appropriate level but cannot perform all the functions assigned to it as
the government needs to appreciate the benefits of a good procurement system in terms of cost
reduction and thus to gain sufficient experience. Costs for PPRA to set up and monitor the
system.

39
Separation and Clarity to Avoid Conflict of Interest and Direct Involvement in the
Execution of Procurement Transactions

The PPRA is only involved in execution of its own procurement transactions and not involved in
the undertaking procurement of other PEs.

System for Collecting and Disseminating Procurement Information and Accessibility

PPRA has its own website that disseminates procurement information. Furthermore on June
2007 Procurement journal registered “Tanzania Procurement Journal” preparation of articles for
the journal in progress. PPRA has also prepared a Procurement Management Information system
which shall be used to collect and share procurement information.

Systems for Collecting and Monitoring National Procurement Statistics

There is a systematic gathering of procurement information. The system has been tested in five
pilots PEs and it is being rolled out in other procuring entities effective from July 2007.

Strategy and Training to Provide Training, Advice and Assistance to Develop the Capacity

PPRA is offering training on PPA 2004 and its regulations in five different modules to PEs.
Currently PPRA is in the process of employing a Consultant to disseminate PPA 2004 MDAs &
LGAs. PEs and general Public are offered advisory services in the following areas: Use of
standard documents, use of guidelines, interpretation of PPA 2004 and its regulations.

4. Conceptual Framework

The conceptual framework outlines an important process, useful in indicating the direction of
research, the company's supply chain department responsible for procuring goods and services in
both local and international markets according to end-user requirements

There are different types of goods and services purchased in the supply chain department with
varying degrees of importance and budget implications. The main categories of goods currently
purchased through overseas shopping are SIM cards, vouchers and services, and network items.

65
 Much of the supply budget allocated to these goods is based on the researcher's preliminary
information collection.

Effective procurement requires the use of sound business practices that maximize value for the
organization through the acquisition of goods and services. This follows the old adage that the
role of the purchasing department is to deliver the right material or service in the right quantity to
the right place at the right time and at the right price Sollish & Somanik, (2005).

As mentioned earlier, a larger budget is allocated and spent on overseas purchases. This implies
that the company's logistics capacity for the above goods depends on the international supply
market. To maintain this sustainable capacity in the internal and external growth of a skilled
workforce, international sourcing practices must be efficient and effective. It takes excellent
procurement processes, systems and guidelines to meet end-user needs for goods and services
with the right quality, in the right quantity, from the right supplier at the right time. Since this
search was planned and the researcher tried to find previous studies on this specific and similar
title and area of study, very little research was found.

The Ethiopian Study by Yonas (2014) conducted a study on the procurement process of Addis
Ababa Water and Sewerage Authority. The study used descriptive research design and analyzed
quantitative and qualitative data. The findings of the study show that the government has no
procurement strategy and policy. Therefore, the researcher recommends that senior managers
should protect department employees from misperception about the procurement department and
help the department avoid a corrupt process with little negative impact. . The department, with
the involvement of top management, should modify the procurement process and avoid
unnecessary steps and bureaucratic steps to make the organization's material flow efficient. In
addition, the internal control system needs to be revised to be more effective. Yirga (2011)
conducted a study on public procurement reform in Ethiopia.

The objective of the study is to provide insight into the challenges and prospects of the public
procurement system and to assess the nature and practice of public procurement and the
underlying factors impeding the operation of the public procurement system. Public procurement
in Ethiopia. The study was designed as an unstructured descriptive interview conducted with
different stakeholders. In addition, the researcher uses a variety of secondary data. Therefore, the
results of this study represent a remarkable achievement

Conceptual frame work Diagram for Procurement practical Activity

41
 Identify the
requested for
goods& service

Identify
&Evaluate

Procurement practical Activity

Negotiate the
contract with
selected supplies

Raise a purchase
requisition &
purchase order

CHAPTER -THREE

RESEARCH METHODOLOGY
3.1. Introduction

This chapter will outline the research methodology which describe the study area, research
design, study population, sample size and sampling techniques, types and sources of data, data
collection methods, validity issues, and data analysis methods applied in this study.
65
3.2. Research Approach

Kothari (2004), "Quantitative research is based on the measurement of quantities or quantities

and applies to phenomena that can be expressed in numbers". Qualitative research is essentially
interpretive; this means the researcher interprets the data. This includes developing a description
of an individual environment, analyzing data for topics or categories, and finally providing an
explanation or drawing conclusions about what it means. This study used a mixed approach
combining a qualitative and quantitative approach.

3.3. Research Design

The research design of the study employed a mixed research method in which both quantitative
and qualitative data are used. A research design is a master plan that specifies the methods and
procedures for collecting and analyzing the needed information. A research design provides a
framework or plan of action for the research Kothari, (2004).Mainly mixed approach is used to
provide strength that offset the weakness of both quantitative and qualitative research, since the
main purpose of the study to make an assessment on the purchasing practices in ethio telecom,
the descriptive design is appropriate to this study. Descriptive research is aimed simply at
describing phenomena and is not particularly concerned with understanding why a behavior is
the way it is, Adams &et al (2007).

3.4. Data sources and Data Collection Instruments

In order to achieve the study objectives the researcher has used both primary and secondary
data.

3.4.1. Primary data source.

To get the required information and data for this study, Primary data were collected through
well-structured questionnaire, interview and observation were used. It includes close ended
questions. This instrument of data collection is quite popular, particularly in case of big enquiries
Kothari, (2004).

43
3.4.2 Secondary Data Source

The secondary data were collected from the company’s work processes, Company’s reports,
policies, procedures, forms, other documents and also from different literatures on the area.

3.5. Population

The target population of this research were consisted those individuals who are working in
Sourcing Department. Based on the company’s headcount report as of June, 2020 it has 240
Permanent employees in Sourcing Department at head quarter of the company with six
hierarchical levels i.e., 1 CEO, 5 D/CEO, 24 Supervisors & 209 Staffs. The first two levels are
classified as management group whereas the last two levels are categorized as non-management
group.

3.6. Sampling Procedure

3.6.1 Sampling Size

The sample size was 193 respondents out of a target population of 240 sourcing and supply
division. To determine the sample size, a formula of Yamane (1997) was used. The researcher
has used this formula to calculate the sample sizes and meet the 95% confidence level. The
formula to find the sample size is:

n=N

1 + (N * e2) Where;

N= population size

e= Tolerance at desired level of confidence, take 0.05 at 95% confidence level n= sample size.
How the formula is used is shown below

n = 240

(1+ (95*0.05*0.05))

n= 193

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3.6.2 Sampling Technique

For this study, the sampling technique preferred to use a purposive sampling method from non-
probability technique to gather data both from questionnaires and interview. Purposive sampling
is selected based on the knowledge of the population and the purpose of the study. The subjects
are selected based on some characteristics, Kothari, (2004). For the purpose of this study, the out
of the total population of the company which fulfills the research purpose is at head office, the
sample draw from head office from the whole sourcing and facility employee, it is because the
head office it has a great experience in the area of procurement practices most of the goods and
services of telecommunication purchases. The number of employees relevant to the research
objectives is 240 who work in four sections. 100% of the subject i.e. 240 is taken from the
sourcing and facility division. Out of which 225 (87.5%) are staffed and 30 (12.5%) are members
of the division at different managerial levels. Therefore, the choice of Purposive sampling,
sometimes referred as judgmental by the researcher enabled to have adequate representation of
all groups can be ensured.

3.7. Data Collection Instrument

In advance prepared semi- structured interview and structured questioner has been ready in
English. After official permission was secured from concerned officials, interview and or
questioner was conducted in order to collect the required data from respondents in a face to face
interview sessions arranged with the schedules of the respondents. Secondary data was also
collected from reports, manuals.

3.8. Data Analysis and presentation

This is done using qualitative data analysis technique. The data collected was checked by the
researcher on daily bases for incompleteness or inconsistency. For incompleteness or
inconsistency corrections has been made by returning back to the respondent’s, data entry was
managed using predesigned worksheets to minimize error during entry. Data has checked for
validity and reliability. The worksheet is created using the data type and size.

45
3.9.1. Qualitative Analysis
The qualitative data generated from the study guide were categorized in themes in accordance
with research objectives and reported in narrative form along with the quantitative presentation.
The qualitative data has been used to reinforce the quantitative data.

3.10.2. Quantitative Analysis

Quantitative data analyzed through the use of frequency distribution and mean scores. These
analyses were used to address specific objectives with the help of Statistical Package for Social
Science (SPSS 20) the findings were presented in the form of percentages, frequency distribution
tables, bar charts, and pie charts. The data were summarized according to the study's specific
objectives.

3.10.2.1. Data Reliability Test and Cronbach’s alpha (α) coefficient

To test the reliability of the Likert scale used in this study, reliability analysis was done using
Cronbach‘s Alpha as the measure. A reliability co-efficient of α ≥ 0.7 was considered adequate.
In this case, a reliability co-efficient of 0.76 was registered indicating an Adequate level of
internal consistency for the Likert scale used in the study.

The Cronbach’s alpha coefficient is used to check the reliability of the collected data through
questionnaires. The coefficient is put on a scale of 0-1.0 and indicates the tendency of
respondents to give similar answers or ratings to the same question. For example, if all
respondents answer the same to all questions the Cronbach’s alpha coefficient will be 1 if on the
contrary it will be 0.An accepted value for the alpha is 0.7 and if this value is below this
threshold it indicates that there is a rampant inconsistency and will deem the data collected as
being unreliable. The formula for Cronbach’s alpha is the following.

Where = Cornbrash’s alpha

K= the number of items or groups

65
 = The variance in the score recorded

= the sum of variance for each item

In any research results, the issue of validity and reliability are important confidence measures.
The validity of the instrument was and found valid Cronbach's alpha is one of the most
commonly accepted measures of reliability. It measures the internal consistency of the items in a
scale. It indicates that the extent to which the items in a questionnaire are related to each other
Fubara and Mguni, (2005). The normal range of Cronbach’s coefficient alpha value ranges
between 0-1 and the higher values reflects a higher degree of internal consistency. Different
authors accept different values of this test in order to achieve internal reliability, but, satisfactory
value is required to be more than 0.6 for the scale to be reliable (Sekaran, 2003 as cited by Sirbel,
2012).

Table 3. Cronbach's Alpha Coefficient for total questionnaire Access to finance factors

Cronbach's Alpha Total Number of variables combined

taken for consideration
0.92 27

Source: SPSS Out Put version 26 and Own Survey (2022) n=197

Case Processing Summary

N %
Cases Valid 184 93.4
a
excluded 13 6.6
Total 197 100.0
a. List wise deletion based on all
variables in the procedure.

Reliability Statistics
Cronbach's
Alpha N of Items

47
 .092 27

92% your data is reliable

In the study the Cronbach’s alpha coefficient was calculated of the questionnaire. Above shows
the values of Cronbach’s Alpha of the questionnaire and the entire questionnaire. For the fields,
the values Cronbach's Alpha is 0.76 or 76%. This is considered as good. Hence, the result
ensures the reliability of the questionnaire which indicates very good reliability. Therefore, it can
be said that the above questionnaire is adequately reliable.

3.11. Ethical consideration

Data collection has been undertaken after permission is obtained from the concerned body. Study
participants will be asked for verbal consent before being asked for any information and written
and informed verbal consent were obtained from every study participant. The objectives of the
study will be explained for every participant and they were asked to give information only after
they give their consent. No person obliged to participate in the study without his/her consent.
The information provided by each respondent will be kept confidential. Study subjects will be
fully authorized to withdraw from the study at any time of their involvement. Interview 30 of
study subjects has been made in a way to maintain their privacy. Moreover, any information that
can be perceived as spoiling the goodwill and the reputation of the company under study is will
not include the report of the study.

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS, AND INTERPRETATION

The aim of this chapter is to present, analyze and interpret the data obtained from the primary
and secondary data sources. The primary data was obtained from the questionnaire and
interview, which serves to collect the necessary data to answer the research questions from the

65
respondents that are directly related to the network equipment project process. For the purpose of
this study, data was collected through questionnaires and semi-structured interviews, and the
next step was to analyze the collected data and present the results. The questionnaires were
distributed to 197 respondents who were specifically selected and have responsibilities directly
related to procurement. Of the 197 questionnaires distributed, 147.45 completed questionnaires
were returned; representing a response rate of 74.85%, and one interview was conducted with six
department heads each from focused respondents who directly participate in the process of
procurement activities for network equipment projects.

Table 4: Demographic characteristic of respondents

Item Description Category Frequency Distribution

Male 103 52.28%

Gender Female 94 47.72%
Total 197 100%
20-29 90 47.12%
30-39 62 32.46%
Age
40-49 39 20.42%
Total 191 100.00%
Staff 111 56.35%
Specialist 65 32.99%
Position Supervisor 13 6.60%
Manager 8 4.06%
Total 197 100.00%
under 2 years 26 13.20%
3 to 5 years 64 32.49%
Working 6 to 10 years 57 28.93%
Experience 11 to 15 years 14 7.11%
Over 15 years 36 18.27%
Total 197 100.00%

The table above shows that the summary of respondents accounts for demographic factors
appropriately, item 1 of the table indicates from the gender mapping of the sample of
respondents the procurement department employees for whom the research was conducted. As
shown in the table, 52.28% were men while the remaining 47.72% were women. This implies
that there is gender inequality in the company.

49
Point 2 of the age status table: 47.72% of the employees are between 20 and 29 years old, the
other 32.46% are between 30 and 39. Also, 20.42% of the employees are 40 years or older,
which indicates that the department is staffed with young and energetic employees. In other
words, most employees are in the productive age group.

Item 3 of the tables related to the sample of procurement staff respondents for whom the research
was conducted. As shown in the table, 56.35% were N5, 32.99% specialists were N-4, 6.60%
were supervisors (N-4), and 4.06% were managers.

Point 4 of the table relating to respondents' work experience or years of service in the
organization shows that 13.20% of respondents have been working in the organization for less
than 2 years, 32.49% for 3 to 5 years and 28, 93% have been working for 6 to 10 years, 7.11%
have been working for 11 to 15 years and 18.27% have been working for over 15 years.
Therefore, the majority of the respondents have been working in the organization for 3 to 5
years, which matters for the robustness of the data provided by the respondents, as those who
have stayed longer in the organization know more about it and can be certain that they could
provide accurate information.

65
Frequency Distribution of Overall purchasing process of the department

51
The figure above shows that 80-74% of respondents agree that the items available in the store
have been requisitioned and purchased and that purchasing management is perceived as a
systematic process to improve business performance. However, respondents strongly disagree +
disagree with choices you can make yourself? (There are incentives to encourage efficient and
timely purchases)? They were represented with 39 and 21% respectively.

65
 Table 5 -: Frequency Distribution of Performance Assessment of the Purchasing Department
Strongly
Frequency Distribution of Performance
Strongly Strongly Strongly Dis agree+
Assessment of the Purchasing Agree Neutral Disagree Total Neutral
Agree Disagree agree Disagree Strongly
Department
agree
There is proper linkage between the
organization mission, vision, strategic
18% 46% 33% 3% 0% 100% 3% 33% 64%
objectives and values with your
department strategic Objective.

Purchasing management is perceived as

systematic process of improving 0% 74% 7% 19% 0% 100% 19% 7% 74%
organizational performance.

The department has clear goals and

7% 51% 39% 3% 0% 100% 3% 39% 58%
objectives

There are job descriptions for purchasing

staff members, including qualifications 0% 40% 39% 21% 0% 100% 21% 39% 40%
required

The management evaluates your

performance based on the FIVE RIGHTS
of purchasing? (Right quality, right 0% 56% 33% 11% 0% 100% 11% 33% 56%
quantity, right price, right time and right
source).

The procurement unit regularly conducts

market surveys to update their knowledge
0% 55% 28% 17% 0% 100% 17% 28% 55%
of usual sources and prices for the
required products

There are incentives to encourage

0% 20% 20% 39% 21% 100% 60% 20% 20%
efficient and prompt purchases

Average 4% 49% 28% 16% 3% 100% 19% 28% 53%

53
The table shows the performance evaluation of the purchasing department. Accordingly,
respondents strongly agree, ranging from 74% to 64% agreeing, that there is an appropriate link
between the company's strategic goals and the goals of the department, provided that the
department has clear goals and objectives and well-worded job descriptions for Purchasing staff,
including qualifications, however, most respondents felt that the department had not conducted
regular market research to update its knowledge of common sources and prices for the required
products and services, and that there were no incentives to to promote efficient and quick
purchases up to the age of 20 and 60 % or The procurement strategy should be aligned with the
corporate strategy and its goals. This ensures that the efficient procurement methods are also
defined in the corporate strategy, which helps in measuring and monitoring the effectiveness of
procurement (Monczka, 2008). Regarding KPIs, Patrick Kakwezi and Sonny Nyeko also
concluded that organizations with established KPIs for their procedures, processes, and plans
experience less customer dissatisfaction and employee turnover than those that don't. This can be
done by establishing clear rules and procedures within the procurement processes.

65
 Table 6: - Frequency Distribution of purchasing policy procedure

Strongly
Strongly Dis
Frequency Distribution of Strongly agree+
Strongly Agree Agree Neutral Disagree Total agree Neutral
purchasing policy procedure Disagree Strongly
+Disagree
agree
Tender evaluation conducted
according to predetermined set 26% 46% 17% 11% 0% 100% 11% 17% 72%
criteria in the bid document
Contract management is conducted
according to the bidding and
26% 40% 15% 15% 5% 100% 20% 15% 65%
contract document terms and
condition
Procured items are tested and
inspected accordingly at a time of 8% 53% 36% 4% 0% 100% 4% 36% 60%
delivery
Difficulty to identify the right
foreign suppliers created the delay 9% 34% 38% 19% 0% 100% 19% 38% 43%
of necessary supplies
Purchasing less quality has affected
the service quality of the 21% 42% 29% 8% 0% 100% 8% 29% 63%
Organization
The delay in the delivery of
supplies ordered affected timely 24% 48% 22% 6% 0% 100% 6% 22% 72%
delivery of the services
Average 19% 44% 26% 11% 1% 100% 12% 26% 63%

55
As shown in the table above, 6 items were used to measure the level of agreement with the
purchasing policy process. Accordingly, the group average value of the user's role from the point
of view of the purchasing staff is 12%, which is interpreted as a user's very poor performance in
purchasing policies. In particular, related to the evaluation of the offer, carried out according to
the criteria set out in the offer document, and the delay in the delivery of the supplies ordered,
72% affected the timely provision of services, and 20% have clear indications of problems
arising reflected in the performed contract management according to the terms of the offer and
contract documents. 53% of purchased items are now tested and checked at the time of delivery.
Arij Jan van Weele points out those product specifications should be given in objective terms;
they should not reflect a preference for any particular supplier. Any industrial buyer should
therefore be aware that technical drawings and specifications do not refer to specific supplier
product codes or specific brand or product names. Despite the general fact regarding the
purchasing policy process, it shows that they have a good bid evaluation conducted according to
the specified criteria set out in the bid document.

65
 Table 7: - Overall purchasing process of the department

Frequency Distribution of Overall purchasing Strongly Strongly Strongly Dis Strongly agree+
Agree Neutral Disagree Total Neutral
process of the department Agree Disagree agree+Disagree Strongly agree

In Ethio-telecom procurement system, proactive

18% 34% 32% 14% 3% 100% 16% 32% 52%
annual procurement plan used
Is there proper linkage between the plan and the
14% 35% 34% 17% 1% 100% 18% 34% 49%
actual purchase
Do you think the division has sufficient and well
developed procurement manual so as to deal with 8% 50% 29% 12% 1% 100% 13% 29% 58%
all aspect of foreign procurement process
Are there instances that for the items which are
available in the store, purchase requisition issued 8% 61% 8% 17% 6% 100% 23% 8% 69%
and purchases were made
Is there work flow process for every activity done
10% 50% 28% 12% 0% 100% 12% 28% 60%
in procurement unit
Does the procurement procedure shows the end to
18% 42% 24% 15% 0% 100% 15% 24% 60%
end responsibilities of purchasing staff

Is there is decisions that can be made by your

own? (Does the procedure gives you an authority 0% 52% 22% 18% 9% 100% 26% 22% 52%
to make some level of decision
Does the supply chain department adequately
0% 31% 53% 16% 0% 100% 16% 53% 31%
equipped with the required facilities
Is there any clear line of responsibility and
authority have been established from supply 0% 61% 28% 11% 0% 100% 11% 28% 61%
chain department
Is there enforcement of a relevant ethics policy to
ensure ethical behavior from the purchasing 0% 70% 27% 3% 1% 100% 4% 27% 70%
department
Average 8% 49% 29% 13% 2% 100% 15% 29% 57%

57
The table above shows the purchasing process of the department. Accordingly, respondents
totally agree, ranging from 70% to 69% agreeing that there is an enforcement of a relevant
ethics policy to ensure ethical behavior from the purchasing department and there are
instances where for the items sold in the store are available, requisitions are issued and issued
Purchases have been made, but most respondents felt the department had no authority to
make decisions that they could make themselves (26%). The procurement strategy should be
aligned with the corporate strategy and its goals. This ensures that the efficient procurement
methods are also defined in the corporate strategy, which helps in measuring and monitoring
the effectiveness of procurement (Monczka, 2008). Regarding KPIs, Patrick Kakwezi and
Sonny Nyeko also concluded that organizations with established KPIs for their procedures,
processes, and plans experience less customer dissatisfaction and employee turnover than
those that don't. This can be done by establishing clear rules and procedures within the
procurement processes.

4. Key takeaways from the interview answered by supply chain sourcing department
managers
Knowing that the procurement of network equipment projects is an extensive and highly
complex activity compared to local procurement activities, ethio-telecom has developed a
procurement procedure that supports and facilitates the implementation of such procurement
activities. As a result, the researchers developed interview questions and surveyed the five
corresponding areas of sourcing managers: about the main problems in the procurement
process of network equipment projects on the end-user side, the main problems in the
procurement process of network equipment projects from your employees and your
organization, reflection on global procurement challenges affecting ethio-telecom, and if so,
to what extent, reflection on suppliers regarding the delivery of goods and services in
accordance with the contract? If no, what do you think are the reasons for the good
performance in the procurement process? If no, what are the challenges?

4.2.1 What are the main problems in network equipment procurement projects of your
employees and organization?

As respondents replied, the organization lacks sufficient and well-trained staff. In addition,
the organization has some efficiency problems, starting from the preparation of the quotation
to receiving the goods and services and closing the contract. E-procurement and market
research were not practiced to facilitate international procurement practices. Also, due to the
open bidding process in procurement of network equipment projects, there is no supplier list

65
register. Equip employees with the skills needed to cope with the dynamics of overseas
purchases. Interviewees also noted that the lack of training modules specifically for
purchasing staff makes it difficult to improve on-the-job skills. The managers concern the
user department's response to the purchasing staff's skills in relation to the department's needs
and their technical knowledge of goods/services that could be procured in their particular
area. According to Gelderman and Van Weele (2005), now more than ever, there is broad
consensus that procurement professionals need a variety of skills to make effective decisions,
i.e. skills required for planning; A screen; to implement; Promoting relevant relationships and
managing risk. This implies the inefficiency of the purchasing department in achieving its
basic functions. The weakness of the cross-departmental integration is also mentioned as a
major problem of the department.

4.2.2 Do you think the global sourcing challenges affect your business and if so, to what
extent?

A majority of respondents responded that the finding can conclude that ethio-telecom's
network equipment project sourcing has been affected by global sourcing challenges such as
different legal systems, exchange rate fluctuations, political and environmental changes,
availability of suitable suppliers and sources of supply, lack of sufficient knowledge of
international business practices of Procurement staff, lack of logistical support for dangerous
goods were the main challenges affecting the organization in foreign procurement practice.

4.2.3 Do you believe that your suppliers deliver goods and services according to the
contract? If not, what do you think are the reasons?

Almost all cross-examined managers responded to the supply side's level of performance in
terms of on-time delivery, repeatedly requesting reasons for payment and specification of
items that deliver quality products that left much to be desired.

4.2.4 Do you think your stakeholders are doing well in the procurement process? If no,
what are the challenges?

Like all respondents' responses that it took a long time from the banking side to get foreign
currency, dalliance on a commodity team order, attribution of expertise and quick response to
requests for clarification and final goods control work delivery of goods they fall into default
damages.

1
 CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

Based on the data presented and analyzed in the previous chapter, the study used primary data
using questionnaires, interviews and secondary data review, including Ethio-Telecom
procurement manuals, which from both sources revealed that Ethio-Telecom's procurement
of network equipment projects practice has gaps and inefficiencies, therefore The researcher
presents conclusions, main findings of the study and recommendations based on the findings
as follows, and also recommends the study for further study.

5.1 Summary of the Major Findings

Primary sources including structured questionnaires, interviews and observations were used
to gather information for the paper, and secondary sources including procurement, manuals
and reports were also revised. Both the primary and secondary sources revealed that the
procurement practices for network equipment projects have faced many challenges that affect
their efficiency and effectiveness.

Thorough analysis of network equipment project procurement practices summarized and

revealed the main challenges. The key findings are summarized as follows:

 The quality of the purchased items is not only limited to meet the specification, but
also means that they will serve their intended purpose over time. The 5R principle of
procurement, the right quality, the right quantity, the right procurement, the right price
and the right timing could not be guaranteed in practice, as it cannot be recognized or
ensured at almost all levels of decision-makers. The Director of Procurement and
Supply explained that Ethio-Telecom had difficulties in assuring the quality of the
items purchased, which was directly related to the initially set specifications for the
items, which were not clear. In addition, specifications become ambiguous when the
specification submitted by the requesting entity is either too long, complex, or with
insufficient information about delivery specification and targeting specific products.

 As there is no training to improve the skills of procurement professionals developing

an awareness of global procurement practices and activities to bring themselves up to
date on all matters?

65
  The organizational structure of end users is not conducive to getting responses in a
timely manner. The experts and specialists can be found at various locations and
departments. As a result, some end users' response to clarification requests is more
often weak. The examination of the delivered goods and services is delayed.

 The result shows that the purchasing staffs of ethio-telecoms from the survey do not
have sufficient knowledge in all relevant areas related to the company's procurement
process and technical knowledge for the respective procured goods. This implies that
there are indications of knowledge gaps in these areas that need to be adequately
addressed by the company. In addition, ethio-telecoms procurement staff did not have
sufficient negotiation and communication skills to deal effectively with suppliers

5.2. Conclusion

 Supply planning is one of the most important steps in any supply cycle. The sourcing plan is

expected to list all requirements that are the responsibility of a particular procuring entity and
that are expected to be sourced over a period of time when the organization in which the study
was conducted has not yet fully prepared the sourcing plan that is non-compliant and could be
submitted in a timely manner.

 An exact specification of the physical properties, the quality or the desired results of a

product to be procured should be formulated so precisely and precisely that a supplier

must be able to produce or deliver in order to be considered for an order, the study
there has shown is a Problem creating clear and complete specifications.

 This study found that the procurement process begins with needs assessment, where

users submit their inputs to the procurement plan. The delivery of the procurement
unit by advertisement or request for quotation 46 supports the results showing that
during the determination of requirements there is a problem in requesting a specific
item, even though the material is in stock and the purchase requirement does not reach
the purchasing department on time.

3
  As the survey result shows, ethio-telecoms' purchasing staff does not have sufficient

knowledge in all relevant areas related to the company's procurement process and the
technical knowledge for the respective procured goods. This implies that there are
indications of knowledge gaps in these areas that need to be adequately addressed by
the company. In addition, ethio-telecoms procurement staff did not have sufficient
negotiation and communication skills to deal effectively with suppliers.

 According to the finding, the procurement process policy and procedure lacks clarity

to show the end-to-end responsibilities of purchasing personnel and management.

 The outcome of the finding shows that there is little evidence of an adequate

forecasting process that would help procurement personnel plan purchases. The lack
of a forecast leads to high inventories and logistics costs and increases the risk of
obsolescence.

5.3. Recommendations

In order to alleviate the problems that were identified by the study, the following
recommendations were forwarded.

In order to maximize end-user performance in creating well-outlined and up-to-date

procurement specifications, timely and planned preparation of the annual procurement
request, conducting reception, inspection, providing coaching opportunities and
capability maximization programs is important. When appropriate and acceptable
coaching is provided to procurement staff and end users, the procurement
department's bargaining power is increased. The training is intended to specialize in
global procurement practices and procedures following international trade practices.
The training program should be continuous, taking into account technological and
environmental changes.
When an easy-to-procure good/service is given in the first place, a lot of time, value
and energy are saved. Requesting units and thus the procurement team must observe
the specifications of the products to be purchased. Procurement units should consult

65
with technical persons to verify the requests and therefore the specifications before
forwarding the approved request to the procurement department.
As it turned out, most of the acquisition staff were business graduates and less
competent in the technical aspects of the finished product to be procured. In order to
help in the development of clear procurement specifications, to create well-founded
technical assessments and to process completely different clarification requests easily
and in a timely manner, the research assistant recommends that the procurement
department should build up its operational staff from completely different disciplines
such as technical learning space, communication fields that is.

5
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9
APPENDIX I

Questionnaire to be filled by: Employees and Managers of the Sourcing

Department, Ethio-telecom

Dear Respondents My name is Alemayehu Gezahagne and the questionnaire is designed by

a graduate student from Yom‟s University to conduct a study in partial fulfillment of a
master’s degree program in General Business Administration. As part of the requirement for
the award of the degree, I am expected to undertake a research study on an assessment of
Procurement Activities on Network Equipment projects of Ethio-telecom. I’m therefore,
seeking your assistance to fill the questionnaires attached. The attached questionnaire will
take about twenty minutes to complete. Please kindly answer all the questions.

The outcome of this study will enhance knowledge on analysis of Procurement Activities on
Network Equipment projects of Ethio-telecom. Participation in this study is voluntary, and all
who participate will remain anonymous. Your name is not needed. All information offered
will be treated confidentially, and the results will be presented in such a way that no
individuals may be recognized.

Thank you in advance for the available information you are sharing and the precious time you
are going to spend for this purpose

General Instruction

1. Please indicate your response by circling the numbers in the column using the following
rating scale (Likert Scale) on the answer that best reflects your view.

2. Please be notified that 1 = Strongly Disagree, 2 = Disagree, 3 = Neutral, 4 = Agree and 5 =

Strongly Agree.

Part I – Demographic Information

1. Gender: (A) Male (B) Female

2. Age (A) Less than 20 (B) 20-29 (C) 30-39 (D) 40- 49 (E) 50 and above

3. Educational Background: (A) Certificate (B) College Diploma (C)BA/BSc (D) Masters (E)
Above

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 4. Work Experience: (A) Under 2 years (B) 3 to 5 years (C) 6 to 10 years (D) 11 to 15 years
(E) over 15 years

5. Position (A) Staff (N-5) (B) Specialist (N-4) (C) Supervisor (N-4) (D) Manager (N-3) If
any other Please specify________________________________________

Part ll. Overall purchasing process of the department

No. Statement scale

1 In Ethio-telecom procurement system, proactive annual

procurement plan used
1 2 3 4 5

2 Is there proper linkage between the plan and the actual purchase

1 2 3 4 5

3 Do you think the division has sufficient and well developed

procurement manual so as to deal with all aspect of foreign
procurement process
1 2 3 4 5

4 Are there instances that for the items which are available in the
store, purchase requisition issued and purchases were made
1 2 3 4 5

5 Is there work flow process for every activity done in procurement

unit
1 2 3 4 5

6 Does the procurement procedure shows the end to end

responsibilities of purchasing staff
1 2 3 4 5

7 Is there is decisions that can be made by your own? (Does the

procedure gives you an authority to make some level of decision
1 2 3 4 5

8 Does the supply chain department adequately equipped with the

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 required facilities 1 2 3 4 5

9 Is there any clear line of responsibility and authority have been

established from supply chain department
1 2 3 4 5

10 Is there enforcement of a relevant ethics policy to ensure ethical

behavior from the purchasing department
1 2 3 4 5

Part III Performance Assessment of the Purchasing Department

Note: Performance Assessment is conducted with the interaction of employee and supervisor
for evaluating the extent to which the desired behavior and results are met during the specific
period of performance review.

1 = Strongly Disagree 4 = Agree 2 = Disagree 5 = Strongly Agree 3 = Neutral

No. Statement scale

1 There is proper linkage between the organization mission, vision,

strategic objectives and values with your department strategic
1 2 3 4 5
Objective.

2 Purchasing management is perceived as systematic process of

improving organizational performance.
1 2 3 4 5

3 The department has clear goals and objectives

1 2 3 4 5

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4 There are job descriptions for purchasing staff members, including
qualifications required
1 2 3 4 5

5 The management evaluates your performance based on the FIVE

RIGHTS of purchasing? (Right quality, right quantity, right price,
1 2 3 4 5
right time and right source).

6 The procurement unit regularly conducts market surveys to update

their knowledge of usual sources and prices for the required
1 2 3 4 5
products

7 There are incentives to encourage efficient and prompt purchases

1 2 3 4 5

Part IV purchasing policy procedure

To what extent do you agree procurement procedure influence procurement

performance in the organization?

1 = Strongly Disagree 4 = Agree 2 = Disagree 5 = Strongly Agree 3 = Neutral

No. Statement scale

1 Tender evaluation conducted according to predetermined set

criteria in the bid document
1 2 3 4 5

2 Contract management is conducted according to the bidding and

contract document terms and condition
1 2 3 4 5

3 Procured items are tested and inspected accordingly at a time of

delivery

1 2 3 4 5

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4 Difficulty to identify the right foreign suppliers created the delay
of necessary supplies
1 2 3 4 5

5 Purchasing less quality has affected the service quality of the

Organization
1 2 3 4 5

6 The delay in the delivery of supplies ordered affected timely

delivery of the services
1 2 3 4 5

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APPENDIX II

Interview question to managers of Supply Chain division

It includes Interview Data List Gender M, Position Specialist, Education level
MSC, and Experience 6-10. Interview all status of Procurement practice in
Ethio telecom at Head Quarter
1) Delay procurement Activity for network equipment with Negotiation
six Month with Restricted types of procurement 45-90 days.
2) Hard currency shortage waiting in queue for length of time more than
three Month for procurement Network equipment’s.
3) Due to Network equipment is bulk and heavy in nature in the shipment
lack of containers is problem.
4) Shipment with Cargo this heavy Network equipment is so expensive.
5) The procurement of Network equipment BID time is long.
6) Lack of local supplier in the country.
7) Lack of Quality.

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