EFFECT OF STRATEGIC PROCUREMENT PLANNING ON ORGANIZATIONAL PERFORMANCE OF STATE OWNED CORPORATIONS IN COASTAL AND LOWER EASTERN REGIONS OF KENYA

Abstract

Strategic procurement is the process of creating alignment and consistency of action that establishes the long range objective and overall strategy by which procurement functions fulfils its mission. It encompasses transformation of organizations mission, goals and objectives into measurable activities used for planning, budgeting and management of the procurement function. Strategic procurement contributes enormously to organizational performance. However, lack of transparency, excessive delays in procurement process, over expenditure, poor records management, inadequate accountability for government decisions and unnecessary bureaucracies are still evident in public entities. All these are manifestations of poor procurement functions. The effectiveness of the Strategic Procurement Planning is debatably a result of a relationship among four variables namely: Government Policy/regulations, Quality, and Time and Cost effectiveness. Few studies have been carried out on the effect of Strategic Procurement Planning in the Coastal and Lower Eastern Regions of Kenya. Therefore, the purpose of this study was to evaluate the effect of strategic procurement planning on organizational performance in Coast and Lower Eastern Regions of Kenya. The study was embedded on two theories: Principal- Agency Theory and the Balance Score Card Theory. The study adopted a descriptive research design to analyze data. The study adopted a census approach in data collection process which covered all the 33 State Owned Corporations in Coastal and Lower Eastern Regions of Kenya. The study used structured questionnaires to collect data. MS Excel and Statistical Package for Social Sciences (SPSS) were used to carry out data analysis. The instruments were tested using Cronbach alpha and the values were greater than 0.700 thus, the study constructs were reliable. The findings were presented in tables and charts. It was observed that 97% of the respondents were aware of regulations regarding procurement. Furthermore, 57.1% of the respondents claimed that time taken to deliver goods influences the performance. It was also observed that 65% of the respondents had the prerequisite qualifications for the position of a procurement officer. It further observed that 87% of the organizations had been in operation for at least six years thus conversant to the processes which decrease setbacks over time. Further observations were made with 90.6% and 87.5% agreeing that cost effectiveness influenced the organizational performance and that value of money was the core principle underpinning public procurement respectively. Diagnostic tests for normality, multicollinearity and autocorrelation were done and found to be okay. The Pearson Correlation coefficient was used to test the strength of the relationship between the variables. Government Policy, Quality, Time and Cost effectiveness correlated positively. Multiple regression analysis was done and the adjusted R2 was 69.4%. The study concludes that Government Policy, Quality and Cost effectiveness correlated positively as measures of enhancing Organizational Performance. Therefore, the study recommends that: the government does a follow up on the adherence to various policies regarding public procurement in State Owned Corporations. Secondly, there is need for standardized measures on product/service pricing as well as periodic audits on the product quality by the government to ensure that customers get value for their money