EFFECT OF STRATEGIC SOURCING PRACTICES ON SUPPLY

CHAIN PERFORMANCE OF RETAIL SUPERMARKETS IN NAIROBI

CITY COUNTY, KENYA.

NAME; SIMON THIONG’O KIN'G’ORI

SUPERVISOR; DR. NELSON LAMBAINO

 Background of the Study
 Sourcing is one area where if any firm take efficient and effective measures can enhance a
dramatic change and great performance in an organization when done strategically.
 Traditional strategic sourcing methods urge execution to apply commoditization and
competition.
 When all these measures have been taken into key consideration , they lead to efficient and
effective performance in an organization which lead to a firm gaining competitive advantage
 The textile and apparel industry are one of USA best doing firm where its supply chain
involves all the activities of textile and apparel manufacturing as well as the functions of
distribution and retail operations to the end users/consumers.
 There is positive and very strong relationship between supplier relationship management
practices and all components of operations efficiency in dealing with business complexities
where it enhances buyers and suppliers thinking strategically.
 Kenya has the continent's second-largest retail industry, behind only South Africa, and is one
of the most mature in the region, generating considerable competition in the global market
 Statement of the Problem
 The contribution made by strategic sourcing operation is very fundamental to any business to
succeed, where it offers unique contribution to supply chain competitiveness, creating opportunities
for establishing better intra-and inter-firm relations for competitive advantages.
 Strategic sourcing does not concern only on selecting the best suppliers based on some standards set
but it is also about good relationship with suppliers.
 Additionally, strategic sourcing emerges as an important factor to support and integrate the suppliers
into the supply chain intelligently.
 A report by Morris (2020) stated that Tuskys , is on a government watchlist after it failed to pay its
suppliers on time due to constrain cash flow.
 Despite the significant advancement of research in strategic sourcing, to date, there are limited
research conducted on strategic sourcing in Kenya.
 Despite those studies have been conducted on strategic sourcing, not much has been done to relate
strategic sourcing to performance in retail business besides, there is a gap in real issues affecting
supply chain performance of retail business in modern trade.
 Due to this gap in information, this study therefore sought to ascertain the effect of strategic sourcing
practices on supply chain performance of retail supermarket in Nairobi City County, Kenya.
 Objectives Of The Study
General objective
The general objective of this study is to examine the effect of strategic sourcing practices on
supply chain performance of retail supermarkets in Nairobi City County, Kenya.
Specific objectives
i. To determine the effect of supplier collaboration relationship on supply chain performance
of retail supermarkets in Nairobi City County, Kenya.
ii. To establish effect of E-procurement on supply chain performance of retail supermarkets in
Nairobi City County, Kenya.
iii. To determine the effect of procurement plan on supply chain performance of retail
supermarkets in Nairobi City County, Kenya.
iv. To establish effect of strategic inventory management on supply chain performance of retail
supermarkets in Nairobi City County, Kenya.
 Theoretical Foundation

Resource‐Based View Theory

 The supply chain capabilities and resources are the key fundamental elements of supply chain strategy and the
potential sources of performance to the business which is highly determined by how efficient and effect a firm
source its resources strategically.
 The resource base theory stems from management philosophy that firm resources are key determinant of any
competitive advantage to be achieved by any firm.
 The research base theory explains that any success performance depends on uniqueness of resources sourced and
capability that a firm possess.
 The resource base view theory is one of the strategic management theories noted and which are very highly
applicable to today’s modern business environment to organizations
Real Option Theory
 Real options theory (ROT) applies the heuristics and valuation models originally designed for financial securities
to the domain of corporate investment decisions in a firm
 The theory has become a popular theme in most business schools across the world, as well as the boardroom,
especially within retail business in their strategic sourcing for growth and development
 A real option is a choice made available to the Procurement managers of a with respect to business investment
opportunities.
 Cont’
Agency Theory
 Agency Theory perceive on the underlying importance of relationship between the shareholders and the

agencies
 A firm can enhance strategic cost management by outsourcing its sourcing activities to another firm which will

enhance more efficiency and effectiveness performance in the firm

 In SCM we have several forces cited as driving the move towards more frequent and stronger relationship

between the firm principle and agents

Disruptive Innovation Theory
 Barahona &Elizondo (2012) discussed the disruptive innovation theory where they points out that e-

procurement is an innovation which requires continual improvement.

 The theory suggests that it requires critical resources , processes and values where critical resources includes

things which offers support to the business such as technology , product design, people ,customers and supplier
relationship , marketing and relationship management with client and suppliers.
 The theory calls for critical process which include decision making protocols and coordination patter that

support operation of an existing business operations besides organization cultures and values beliefs and
assumptions
Conceptual Framework
 Research Methodology
Research design
 The study employed a descriptive research design in investigating the effect of strategic sourcing
practices on supply chain performance of retail supermarket in Nairobi City County, Kenya.
Target population
 The target population of this study comprised of major retail supermarkets in Nairobi City
County registered in Retail Trade Association of Kenya (RETRAK) which are Naivas
supermarket, Carrefour supermarket, Quick mart supermarket and Chandarana Food plus
supermarket.
Sample and Sampling Technique
 The study used stratified random sampling technique because of different geographic location of
retail supermarkets in Nairobi City County serving different clienteles with different types of
product range in assortment.
Data collection instruments
 Questionnaires were most fit choice for undertaking this research.
 CONT’
Data Collection Procedure
 This research employed both primary and secondary methods of data collection. For primary data,
questionnaires were used with both closed and open-ended questions.
 The questionnaires were administered through drop and pick from respondents.
 This method is proposed by the study because it gives ample time to respondents to answer the
questionnaires while maintaining their anonymity (Stefan, 2019).
 Before data collection, the researcher ought to have a letter of introduction from the university.
 Secondary data was collected from retail supermarkets’ websites, published materials and journals to
validate information that was given by questionnaires.
Data Analysis and Presentation
 The collected data was checked first to enhance its completeness, comprehensibility and was subjected to
integrity test.
 Data was then be coded based on various elements of the content including length, complexity and variables
 The study used both descriptive and inferential statistics.
 Correlation analysis was used in the study
 Multiple regression analysis described below was used to make inference between collective effect of all the
variables
 CONT’
The research used multiple regression model shown below.
Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 + ε
Where,
Y= Supply chain performance of retail supermarket
β0=Constant
β1, β2, β3, β4= Beta Coefficient
X1=Supplier collaboration relationship
X2=E-procurement
X3=Procurement plan
X4=Strategic inventory management
Ε=Error term
CONT’ Total Variance Explained
 DIAGNOSTIC TEST
Multicollinearity
Model Collinearity Statistics
Tolerance VIF

Action Based Statement .726 1.378

Benchmarking .653 1.531
Portfolio Analysis .471 2.124
SWOT Analysis .452 2.212
Performance .634 1.578

Autocorrelation Test
Model Std. Error of the Durbin-Watson
Estimate
1 1.29748 1.990

Heteroscedasticity

Ho: Constant variance

Statistics Df Stat value p-value
Chi-squared 4 1.3457 0.3241
 Normality Assumption

Shapiro-Wilk

Statistic df Sig.

Action Based Statement .579 11 .127

Benchmarking .968 11 .607

Portfolio Analysis .988 11 .988

SWOT Analysis .966 11 .565

Performance .970 11 .665

 CONCLUSION

From the factor analysis findings, each item belonged to a factor and had Eigen values greater than 1.

This indicates that the questionnaire met content validity and was suitable to be used for further data
collection as is; no item was excluded.

 Also, All the variables were found to have Cronbach alpha value greater than 0.7.

This suggested that all the variables were reliable.

 Also, from the diagnostic tests, the data was found to meet the requirements for running regression analysis
an indication that the data collected can be used to run regression analysis.
Thank You