AN ASSESSMENT OF PROCUREMENT STRATEGIES AND OPERATIONS ON THE SUPPLY CHAIN PERFORMANCE (A CASE STUDY OF BUNS CONSTRUCTION COMPANY)

CHAPTER ONE

INTRODUCTION

1. Background of the Study

As the business environment keeps changing and becoming more complex, organizations search consistently for better means to remain relevant and competitive in their operations. Following the above statement, it therefore implies that end product/service delivery from firms to customers when they are needed and at a competitive price are imperative to ensure customers feel fair treatment. According to Bittel (1991), since virtually every organization purchase goods and services to operate, supply chain has attracted more attention than before due to the massive potential that exist for improvement in gaining the competitive advantage thus reducing cost and better product or/and service performance. One of the tools for the firm‘s competitiveness is strategic procurement which is seen to have a positive effect on the overall performance of the organization (unlike traditional purchasing driven by desire to cut costs of purchase) short-term-profit improvement, transactional rather than relationship behavior, and emphasis on price reduction, strategic procurement, by contrast, looks at how the purchasing of goods and services, including outsourcing of entire processes, can deliver long-term shareholder value. It involves reducing the supplier base, co-operative negotiation with suppliers, quality interaction with supplier, and developing long-term relationship with the best supplier both national and international (Anowor & Agbarakwe, 2015). Nevertheless, these procurement management behaviors are linked to better procurement performance, unlike traditional purchasing which is driven by the desire to cut costs of purchase and short term profit improvement, historically often resulting in supplier proliferation, transactional rather than relationship behavior, and emphasis on price reductions, strategic procurement, by contrast, looks at how the chain of goods and services, including outsourcing of entire processes can deliver better long term shareholder value (Anowor & Ogbe, 2019).

Importantly, consensus among scholars reveals that procurement management entails building alliance and consistency of actions that corroborates wide range of objectives and robust strategy through which the mission of procurement function is fulfilled ( Muiga & Kwasira, 2016). This can therefore be viewed as transformation of an organization‘s mission, goals and objectives into measurable activities which can be used in budget planning and managing the procurement function. The identified challenge as noted by Aliyu (2016) is that most organizations have not been able to apply the required procurement principles and practices that enhance the realization of organizations‘ set objectives. This informs the assumption that situation such as this and others have the potentials to make organizations turn counter-productive and can also affect records procurement management practices such as records management, cost management, and relationship management. Procurement management function as argued by Muiga and Kwasira (2016) has increasingly recognized the importance of strategic supply chain relationship that fosters competitiveness that generates positive effect on the firm‘s financial performance as well as business policy and strategic management. Strengthening this view, Aliyu (2016) contend that procurement has a long history, nevertheless its role as a strategic part of the organizational structure is recently identified. Procurement management can be approached from three main dimensions namely: (a) development and management of key suppliers, (b) internal operation of procurement function and coordination of purchasing with other functions within the firm, (c) and efforts to meet or exceed customer expectations. Procurement management is seen as a critical function of an organization with the potential to save cost, improve operational efficiency, sharing of best practices, enhance access to trusted supplier, and to improve quality of products/services (Magnus, 2006). Muiga and Kwasira (2016) in their postulation supported the above as they assert that procurement has evolved from a transactional function to one that is contributing to the current and future performance of organizations.

1. 1. Statement of the Problem

The issue of strategic procurement is as important as life itself and neglecting it could be as horrendous as a tornado. Poor procurement practice can result to business failure and ultimately lead to job lost. Like strategic management process, strategic procurement consist of; goal setting, analysis, strategic formulation, strategic implementation and evaluation and control. It is worthy to note that private sector procurement procedures and practices are not subject to the same oversight as those involving use of public funds. They focused on minimizing cost and maximizing profit without compromising quality. Ibanichuka, (2017). observed that short-term objectives of supply chain management are primarily to increase productivity and reduce inventory and cycle time, while long-term objectives are to increase market share and profits for all members of the supply chain

Contrarily most businesses do not utilize strategic procurement mechansism which is capable of affect business negatively. Ya'kob & Jusoh (2016) observed that some organization advertised contract jobs to very few suppliers who may not have the capacity to execute them professionally. Nlpa (2018) in the same assert that the tendencies of management board members wanting to assimilate all the suppliers they introduce into the company’s suppliers range causes excessive and indiscriminate buying and over time stores becomes obsolete and redundant. Although there are several studies regarding procurement process and its impact of firm growth, little attention has been focused on procurement strategies and operations on the supply chain performance . Upon this backdrop, this study seeks to assess procurement strategies and operations on the supply chain performance with reference to BUNS construction company.

1. 1. Objective of the Study

The broad objective of this study is to present an assessment of procurement strategies and operations on the supply chain performance: a case study of BUNS construction company. Other specific objectives includes:

1. To investigate the procurement strategies utilized by construction industry

2. To ascertain whether efficient procurement process has any influence on the operational performance of BUNS construction company

3. To determine weather purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company.

4. To investigate whether supplier relationship management improves the supply chain performance of BUNS construction company.

1. 1. Research Questions

The research is guide by the following questions:

1. What are the procurement strategies utilized by construction industry?

2. Does efficient procurement process has any influence on the operational performance of BUNS construction company?

3. Does purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company?

4. Does supplier relationship management improves the supply chain performance of BUNS construction company?

1. 1. Research Hypothesis

HO: There is no significant effect of procurement strategies and operations on the supply chain performance in BUNS construction company.

H1: There is a significant effect of procurement strategies and operations on the supply chain performance in BUNS construction company.

1. 1. Significance of the Study

Findings of this study will be relevant to construction industry and other private businesses and elighten them on the need to improve their procurement process. The result of the study will enlighten top management members on the need to build effective supply chains using ICT tools that are flexible, with dependable logistic systems that can enable organisations regroup quickly in response to unexpected needs of their passengers. Theoretically, the study will add to body of existing literature and as well serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1. 1. Scope of the Study

The scope of this study borders on an assessment of procurement strategies and operations on the supply chain performance. The study further discusses strategies utilized by construction industry, whether efficient procurement process has any influence on the operational performance of BUNS construction company, weather purchasing information system influences the value chain analysis required strategic procurement in BUNS construction company and whether supplier relationship management improves the supply chain performance of BUNS construction company. The study is however delimited to BUNS construction company.

1.8 Limitation of the Study

Besides time and resources constraint the researcher encountered some of the limitations that hampered the study revolves around gathering of primary materials and analyzing data. The Staff of Railway management Abuja unwillingness to release necessary data for the research work, however the researcher assured them of anonimity as the information obtained is vital to this study hence considered confidential. More so, the uncooperative attitude of the staff which led to the non-return of some questionnaires was another setback to the researcher. Despite the limitations the researcher painstaking ensured that these factors were downplayed.

1.9 Definition of Terms

Procurement: this refers to the action of buying goods, materials or services for the good of the public.

Process: This term refers to the procedure, the pattern, the way whereby a certain action has to be followed to arrive at an expected result. Process here has to do with the adopted pattern for procurement.