PROCUREMENT PRACTICES AND FINANCIAL PERFORMANCE OF KENYA

MEAT COMMISSION

AMINAZAHRA MOHAMUD SIGAT

D53/0L/GAR/32452/2017

A RESEARCH PROJECT SUBMITTED TO THE SCHOOL OF BUSINESS IN

PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF
DEGREE IN MASTER OF BUSINESS ADMINISTRATION (PROCUREMENT
AND SUPPLY CHAIN MANAGEMENT) OF KENYATTA UNIVERSITY

OCTOBER, 2020
 DECLARATION

The project is my original work and has not been presented for any award in any other

University. No part of this research should be reproduced with my authority or the

authority of Kenyatta University.

Signed: ___________________________ Date ____________________

AMINAZAHRA MOHAMUD SIGAT

D53/OL/GAR/32452/2017

The research project has been submitted for examination with my approval as the

university supervisor.

Signed: __________________________ Date_________________

Dr. Perris Wambui Chege (Phd)

Department of Management Science,

School of Business,

Kenyatta University.

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 DEDICATION

I would like to appreciate the work of my husband, the support, the guidance and

protection. It is my prayers that God will bless you abundantly. To my parents, thank you

for your prayers and support. You were always there when needed most. To my

children, thank you for unwavering support and encouragement.

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 ACKNOWLEDGEMENT

I would like to acknowledge my supervisor Dr. Perris Wambui Chege for her support,

advice and encouraging words during the project writing. I acknowledge the support and

timely responses from management of Kenya Meat Commission. I also wish to thank the

almighty God for the blessing of good life and good health. To my friends and family

members may God bless you all.

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 TABLE OF CONTENT
DECLARATION............................................................................................................... ii
DEDICATION.................................................................................................................. iii
LIST OF TABLES ........................................................................................................... iv
LIST OF FIGURES ....................................................................................................... viii
OPERATIONAL DEFINITION OF TERMS ............................................................... ix
ABBREVIATIONS AND ACRONYMS ......................................................................... x
ABSTRACT ...................................................................................................................... xi
CHAPTER ONE: INTRODUCTION ............................................................................. 1
1.1 Background of the Study .............................................................................................. 1
1.1.1 Procument Practices .......................................................................................... 4
1.1.2 Financial Performance ...................................................................................... 6
1.1.3 Kenya Meat Commission................................................................................. 8
1.2 Statement of the Problem ............................................................................................ 10
1.3 Research Objectives .................................................................................................... 12
1.3.1 General Objective of the Study ....................................................................... 12
1.3.2 Specific objectives of the Study...................................................................... 13
1.4 Research Questions ..................................................................................................... 13
1.5 Significance of the Study ............................................................................................ 14
1.6 Scope of the Study ...................................................................................................... 15
1.7 Limitations of the Study.............................................................................................. 16
CHAPTER TWO: LITERATURE REVIEW .............................................................. 17
2.1 Introduction ................................................................................................................. 17
2.2 Theoretical Literature Review .................................................................................... 17
2.2.1 Resource-Based View Theory ........................................................................ 17
2.2.2 Agency Theory................................................................................................ 18
2.2.3 Balanced Score Cared ..................................................................................... 20
2.3 Empirical Literature Review ....................................................................................... 21
2.3.1 Tendering Practices and performance............................................................. 24
2.3.2 Supplier Assessment Practices and Performance ........................................... 26

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 2.3.3 Material Control Practices and Performance .................................................. 28
2.4 Summary of the Literature Review and Research Gaps ............................................. 30
2.5 Conceptual Framework ............................................................................................... 33
CHAPTER THREE:RESEARCH METHODOLOGY .............................................. 34
3.1 Introduction ................................................................................................................. 34
3.2 Research Design.......................................................................................................... 34
3.3 Target Population ........................................................................................................ 34
3.4 Sampling Technique ................................................................................................... 35
3.5 Data Collection Instrument ......................................................................................... 36
3.5.1 Validity of Research Instrument ..................................................................... 36
3.5.2 Reliability of Research Instrument ................................................................. 36
3.6 Data Collection Procedure .......................................................................................... 37
3.7 Data Analysis and Presentation .................................................................................. 37
3.8 Ethical Considerations ................................................................................................ 40
CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSSION .......................... 41
4.1 Introduction ................................................................................................................. 41
4.2 Response Rate ............................................................................................................. 41
4.3 Pilot Study Results ...................................................................................................... 42
4.4 Demographic Characteristics ...................................................................................... 43
4.4.1 Gender of Respondents ............................................................................................ 43
4.4.2 Age of the Respondents ........................................................................................... 44
4.4.3 Working Experience ................................................................................................ 45
4.5 Descriptive Analysis ................................................................................................... 46
4.5.1 Tendering Practices ................................................................................................. 46
4.5.2 Supplier Assessment ................................................................................................ 47
4.5.3 Material Control Practices ....................................................................................... 49
4.5.4 Financial Performance ............................................................................................. 50
4.6 Diagnostic Tests .......................................................................................................... 51
4.6.1 Multicollinearity Tests ............................................................................................. 51
4.6.2 Normality Tests........................................................................................................ 52

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4.6.3 Heteroskedasticity Tests .......................................................................................... 53
4.7 Inferential Analysis ..................................................................................................... 54
4.7.1 Correlation Analysis ................................................................................................ 54
4.7.2 Regression Analysis ................................................................................................. 56
CHAPTER FIVE:SUMMARY,CONCLUSION AND RECOMMENDATIONS .... 60
5.1 Introduction ................................................................................................................. 60
5.2 Summary of Study ...................................................................................................... 60
5.3 Conclusion of the Study .............................................................................................. 61
5.4 Recommendations of the Study .................................................................................. 62
5.5 Suggestion for Further Study ...................................................................................... 63
REFERENCES ................................................................................................................. 64
APPENDICES ................................................................................................................. 68
Appendix I: Introduction Letter ........................................................................................ 68
Appendix II: Research Questionnaire ............................................................................... 69
Appendix III: Graduate school Authorization .................................................................. 73
Appendix IV: NACOSTI PERMIT .................................................................................. 75

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 LIST OF TABLES
Table 2.1: Summary of the Literature Review and Research Gaps .................................. 30
Table 3. 1: Target Population............................................................................................ 36
Table 3.2: Sample Size...................................................................................................... 38
Table 4.1 Age of the Respondents .................................................................................... 43
Table 4.2 Working Experience ......................................................................................... 44
Table 4.3 Level of Education ............................................................................................ 45
Table 4.4 Reliability Results ............................................................................................. 46
Table 4.5 Tendering Practices........................................................................................... 46
Table 4.6 Supplier Assessment ......................................................................................... 48
Table 4.7 Material Control................................................................................................ 49
Table 4.8 Financial Performance ...................................................................................... 50
Table 4.9 Collinearity Statistics ........................................................................................ 51
Table 4.10 Correlation Analysis ....................................................................................... 53
Table 4.11 Model Summary ............................................................................................. 54
Table 4.12 ANOVA .......................................................................................................... 55
Table 4.13 Regression Analysis........................................................................................ 56

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 LIST OF FIGURES
Figure 2. 1: Conceptual Framework ..................................................................................29
Figure 4.1 Response Rate ..................................................................................................41
Figure 4.2 Gender of Respondents.....................................................................................42

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 OPERATIONAL DEFINITION OF TERMS

Financial Performance Measurement of an organizations (Kenya Meat

Commission) Sales level, net profit and total assets.

Material Control Procedure It is a systematic control over purchasing, storing and

consumption of materials, inventory quantity levels,
material handling and physical distributions that helps the
organization to maintain a regular and timely supply of
materials by avoiding over and under-stocking.

Procurement It is the process of finding and agreeing to terms, and

acquiring goods, services, or works from an external
source, often via a tendering or competitive bidding
process.

Procurement Practices It’s the series of processes that Kenya Meat Commission
follow in the acquisition of products or services from their
suppliers. Procurement practices will be measured by
supplier assessment, tendering procedure and material
control procedure.

Supplier assessment This is the process of assessing and approving potential

suppliers by quantitative, qualitative assessment, supplier
capacity, turn-around time, supplier competence and
consistence. The purpose is to ensure a portfolio of best in
class suppliers is available for use.

Tendering Practices It is a process which involves open, restricted and single

source forms of tendering used by the Kenya Meat
Commission to invite suppliers to supply goods or services
to the organization.

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 ACRONYMS AND ABBREVIATIONS

CPAR : Country Procurement Assessment Review

EU: European Union

GDC: Geothermal Development Company

KMC: Kenya Meat Commission

NACOSTI: National Commission for Science, Technology and Innovation

PPA: Public Procurement Authority

PPD: Public Procurement Directorate

PPOA: Public Procurement Oversight Authority

SPSS: Statistical Package for Social Science

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 ABSTRACT

Effective implementation of procurement practices significantly improves the

effectiveness of purchasing decisions and thus improved firm performance. To achieve
this goal, procurement Practices must be fair, competitive and must control costs. if
procurement is well managed, it adds value to an organization and save time and money
as well. Key benefits of proper procurement management include value for money,
protection and enhancement of the environment, more efficient use of resources, greater
social inclusion improved supplier relationships. However, in spite of the immense
attention given to procurement Practices and financial performance and the relationship
that exist between the two constructs many organisations both private and public continue
to experience mixed performance. Anchored on the balanced score card, the resource
based theory and agency theory the study sought to determine the effect of procurement
practices on financial performance of the Kenya meat commission. Descriptive Research
Design was used. The study population comprised of 71 employees working in Kenya
Meat Commission headquarters in Athi River, Ladhies branch in Nairobi, Mombasa
deport and the user department in Athi River. Since the population was small and of
manageable sizes, a census study was done. Semi structured questionnaires were used to
collect primary data. A multiple regression model was used to present the relationship
between the dependent and independent variables. It was established that in Kenya meat
commission, majority of the department and branches used open tendering method. It was
an indication that majority of the tenders were open to the public to participate in. The
findings indicated that the consistency of suppliers was vital at explaining the
performance of Kenya meat commission. It was evident that material control practices
significantly affected the performance of Kenya meat commission. The study concludes
that the relationship between tendering practices and the financial performance of Kenya
meat commission was positive and significant. The supply assessment relationship with
financial performance in Kenya meat commission was insignificant and positive. The
relationship between material control and financial performance of meat commission was
positive and significant. The study suggests that further research to be done on inter-
organizational factors affecting success of KMC.

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 CHAPTER ONE
INTRODUCTION
1.1 Background of the Study

Procurement entails acquiring services and goods at the best form of total cost of

ownership in terms of quantity and quality in the right place, at the right time, from the

right sources for the direct or indirect use of the Corporation the government and

individuals. Simple procurement may involve nothing more than repeat purchasing.

(Singh, Darwish, & Potočnik, 2016). However, Coviello, Guglielmo and Spagnolo (2017)

argued that the manner in which the firm conducts its procurement process may have an

impact on firm performance. Additionally, albano Cesi and Lozzi (2017) outlined that

effective implementation of practices in procurement and procedures improved

significantly the purchasing effectiveness and decision-making thus resulting to improved

performance of the companies. The key benefits of proper procurement management may

include; protection of the environment, value for money and protection of environment

social and greater inclusion of the supplier relationship competitive Edge in the industry

flexible supply chain and more efficient use of resources (Coviello, Guglielmo &

Spagnolo, 2017).

The national government in United States of America have had tremendously

complicated and highly scrappy procurement structures. According to Drabkin (2013), in

USA the procurement processes operate within non-dependent frameworks which is

normally administered by the checks of the constitution and balances of power from the

government units and also the governments procure a variety of services and goods

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which range from paper channels to advances in technologies. When managing

voluminous goods, the ventral government employees’ diverse employees with different

expertise over a hundred thousand expertise programs contract and procurements

program administrators’ quality purchasing inspections traffic managements show no

facilities logistics property disposal storage and managements are all ideal for proper

procurement process management (Khi, 2013).

In regional perspectives, Ghana mainly deals their services deliveries as they directly

involve in brands new and sophistication of procurements processes. They also invested

in the inventions of new incentives like contracts to encourage the introductions of new

facilities in the non-governmental sectors (Debe, 2004). Ghana Civic procurement is 24%

of the international account and imports for 50% to 70% of its budget and this does not

include the personal benefits without the inclusion of Its donates about 14% to the gross

domestic product. It is evident that public procurements sectors are growing and

becoming the biggest domestics markets in the countries which are developing.

The experience of the international trade centres in the developing countries accounts

only have 50% to 70% of its imports (Hunja, 2003). Majority of the stakeholders such as

African Development Bank World Bank and other economic activities are helping the

countries which are normally in the process of doing development to access changes in

their procurement laws. Countries such as Bangladesh, Afghanistan, Peru, Ghana,

Rwanda, Tanzania, Sierra Leone and Uganda which are some of the developing countries

2
in Africa have all implemented program and laws which are new since the Year 2001 and

this has been because of the reaction of the World Bank demands on the procurement

regulations (Gelderman, 2006). According to Duffor (2006) argued that public

procurements sectors will directly influence the gross domestic product of a country’s

which cannot be underscores.

In Uganda public procurement reforms was perceived as part of the package policy

focusing on strategic to eradicate poverty in the country through the creation of

appropriate policy framework that orientate the government spending in crucial sectors.

These reforms involved and were based on the findings of the study which was carried

out by the development and public procurement on action plan by the country's system of

procuring goods services and works. Our neighbors Tanzania had procurement Act 2001

which was enacted by the parliament and subsequently assented by the president in 2001

(GoT, 2001). This forms the reference for all the public procurement. Public procurement

in reference to the enactment of the central tender board which unlike the past is an

organization which is independent of the ministry of finance as witnessed a lot of

changes. The act established a regional ministerial District local authority and

parastatal tender board. Public act 2001 which was also enacted in 2001 April is a

complimentary of public procurement act and it provides a clear guideline on the

registration guidelines for the use of finances to the public in Tanzania the two acts spells

out the deterrent measures for any non-compliance

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Kenya and Uganda who are left behind by Tanzania in the enactment of two important

bills which were appointed to the country's commitment to put in place more effective

and efficient public procurement system (PPOA, 2007). In Rwanda, the public

procurement authority (RPPA) is a public body which was established in 2008 February

through the Rwandan laws (Republic of Rwanda 2008). This act was created to replace

the national tender board during which the process of reform is the public Financial

Management was launched by the government of Rwanda in which the public

procurement reform was one of the most significant components

In Kenya the public procurement system has undergone numerous reforms since the mid-

1980s to make it consistent with the global trade. It is worth noting that in 1997 the

country procurement assessment review in Kenya which was reveals that there were very

serious irregularities and drawbacks in the Kenyan public procurements systems by

enhancing the centralities of the public procurements. This assessment laid down the on-

the-ground the public procurement reforms which were later launched in 1998 whose

pillars were accountability, transparency and value for money to the tenders (Rotich &

Okello, 2015). Segment of the Exchequer and the Audit act procurement public

procurement in 2001 was aimed at organizing and governing the procurement in the

public sector and which lake Down the creation of public procurement directorate which

oversees the public processes of procurement in Kenya. Public procurement complaints

review and Appeals Board (PPCRAB) also was mandated to handle the tendering

disputes.

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However, an independent procurement review(IPR) in two thousand and five point that it

was vital to further extend the reforms in procurement and have a legal sound framework

through enactment of the Parliament. Forthwith the public procurement and disposal act

(PPD) of 2005 was passed and it was established Public Procurement Oversight

Authority (PPOA), Public Procurement Administrative Review Board(PPARB), Public

Procurement Oversight Advisory Board (PPOAB) and repeated all other laws relating to

public entities procurement by ensuring that our procurement was done by one body

(Ayoyi & Mukoswa, 2015). It is the work of public procurement authority to make the

public procurement more efficient fair transparent that it is established five basic Pillars

which guide the public procurement which includes transparent legal an institutional

framework, standardize procurement and clear procedures and tender documents which

are standard, measures of anti-corruption procurement measures which are independent

and procurement staff with a proficient.

1.1.1 Financial Performance

Financial performance according to Richard, Devinney, Yip and Johnson (2009) relate to

the results of an organization as compared to the expected results for the period. This

financial performance is often observed in two main aspects profitability and sales level.

Traditionally business organisations have relied on profitability such as profit after tax

and operating profit to measure performance. However, modern firms have attempts to

indicate performances of enterprises by utilising modern models such as the balanced

scorecard in which case performance is measured through different varying dimensions

which are financial in nature (including profitability and return on investment), and non-
5
financial such as service to customers, responsibilities to the society (outreach to the

community and corporate responsibilities) and stewardship by employees. Hence,

Modern firms use a combination of financial performance (profits, return on assets, return

on investment, etc.); product market performance (sales, market share, etc.) and

shareholder return (total shareholder return, economic value added) (Kuloba, 2016).

Profit oriented organisations measure performance in terms of productivity and profit.

However, this is not the case in public sector organisations. Private firms endeavour to

maximise their profitability while public institutions aim to offer services more

efficiently, satisfy the user and the continuously improve their services. Consequently,

performance in the public sector is viewed in terms of effectiveness and efficiency of

utilisation of scarce resources and how they use the tax payers’ money to provide services

(Kingei, 2015). Public sector organizations according to Boland and Fowler (2010) may

therefore adopt various measure of performance such as productivity, customer service,

and employee retention, levels of absenteeism, motivation, innovations and surpluses.

Upadhaya, munir and blount (2014) indicated that non-financial measures may be used

together with organizational effectiveness over majority of the institution focus on using

performance measures concerning the internal business processes and please let's

embassies on using customer or employee related measures of performance since they are

considered less vital to the organizational effectiveness. Juma and Mibey (2018) India

study consider the use of organizational culture and performance of the organization and

measures which were used were customer satisfaction financial measures such as return

on assets and internal processes.

6
In order to meet its objectives, KMC has benchmarked its products and services to

compete with the very best in the world. Aimed at maintaining the highest standards of

hygiene and product excellence, as well as customer care and service. The commission

has also upgraded its plant and machinery to be in tandem with the very best standards of

global meat processing. The commission aim at increasing efficiency, effectiveness and

innovation (Kingei, 2015). To improve performance, the commission, conduct training

for training for its staff through build the capacity required to meet the ever changing

market needs.

1.1.2 Procument Practices

Procurement Practices according to Saussier and Tirole (2015) are a group of directives

that detail what can and cannot be done as well as how each activity must be undertaken.

Procurement procedure are part of the procurement process which relate to the guidelines

for acquiring of appropriate goods and services at the best possible cost to meet the needs

of the organization in terms of quality, quantity, time and location. Farrington and Lysons

(2012) viewed procurement practices as the sequential steps or techniques for getting a

task done while Amann and Essig (2015) stated that procurement practices involves

decision making where the authority in charge of the process compares several purchase

requisitions that have been sent in reaction to a necessity, against pre-determined

conditions prior to picking one or denying all of them.

During bid evaluation, each offer must be carefully considered, on an equal basis, against

the published evaluation criteria. The process must follow the approach and methodology

set out in the procurement documents. The evaluation panel must determine the best
7
supplier based on the information provided by suppliers in their offer. The evaluation

should take into account capability, capacity and value for money over the whole-of life

of the procurement.

Several scholars have operationalized procurement practices in different ways. For

instance, Uttam and Roos (2015) summarized procurement practices into open practices

restricted practices and competitive negotiated practices. Open practices involve calling

for tenders where all economic operators may submit their tender bids. Contracts are

awarded based on the specified contract notice and no negotiations take place. Under

restricted practices, after tenders are advertised, all economic operators may ask to submit

a tender, but only those who satisfy the selection criteria may be invited to do so.

Subsequently only shortlisted candidates reply to the contract notice. Similarly, in this

procedure no negotiations are allowed. The method stipulates that parties involved must

go through a formal procedure with detailed invitation to tender documents. Finally, the

competitive negotiated practices involve the contracting authority inviting candidates of

its choice to submit tenders and from the technically compliant tenders, it selects the one

that offers the best value for money. Thus the procedure involves procurement from a

supplier without any competition (Gnanih, 2012).

Onyango and Muturi (2016) operationalized tendering practices, supply regulation

practices, ethical practices and operating practices. Kuloba (2016) measured procurement

practices through tendering practices, supplier assessment practices and material control

practices but the European Union (EU) indicated that procurement practices to be

8
adopted by member countries should be open practices and restricted practices. Mizuno

(2014) operationalized procurement practices into selection of suppliers to be invited to

tender, request for and submission of tenders, technical evaluation, negotiation and award

of contract and delivery, inspections, and payment.

On the other hand, Amann and Essig (2015) observed that in any organization there are

standard procurement practices that are always defined relating to procurement cost

levels, purchase requisitions ethical codes (including gifts and inducements, declaration

of interest, supplier interaction and confidentiality), standard agreements, value for

money, tendering, E procurement and Ad hoc purchases. While Jeptepkeny (2015)

measured procurement practices into specification definition, bid invitation, bid

evaluation and contract negotiation.

In this study, procurement practices measured through tendering practices, supplier

assessment and material control. The indicators of tendering practices will be; open

tendering, restricted tendering, competitive tendering and single source tendering.

Supplier assessment was measured by supplier capacity, turn-around time, supplier

consistency and supplier competency. Material control practices was measured by;

inventory quantity levels, inventory planning control system, material handling and

storage and physical distribution.

1.1.3 Financial Performance of Kenya Meat Commission

The Kenya Meat Commission (KMC) was formed in 1950 through an act of parliament

with an objective of providing a ready market for livestock farmer and providing high

9
quality meat and meats products to customers. It is a public institutions and by far the

oldest and the most experienced meat processors in Kenya and the larger East Africans

regions. KMC is a fully integrated meat process or whose strengths lies in the unrivalled

efficiencies of its meat processing plants along with its ability to processes high volumes

of qualities meat in line with consumer’s taste and preference (Kingei, 2015).

The parastatal has fixed operating costs of Sh20 million per month including Sh10

million for salaries and Sh4 million for electricity. Due to financial challenges the

commission was shut down in 1991. In 2006, KMC was re-opened with the objective of

promoting the meat industry in Kenya, both domestic and for export. However, since it’s

re-opening in 2006. KMC has been struggling to meet its costs and is currently facing

bankruptcy and its racing against time to stay afloat. Cash-strapped Kenya Meat

Commission (KMC) sold products worth Sh127.5 million in the nine months (June 2018

to March 2019) as it continues to operate below capacity.

Despite the government having pumped in over Sh4.1 billion in 13 years since 2006 with

Sh2.3 billion of it being for development, the cash-strapped meat processor runs on

archaic machines that are manually operated, pushing up labor costs and has consistently

made losses over the years. During the financial year 2018, KMC posted a net loss of

Sh228.1 million, a slight improvement from the Sh309.2 million loss made a year earlier

(2017).Its debts stand at Sh1.1 billion, which include livestock farmers’ dues of Sh254.4

million and outstanding payroll deductions totaling Sh144 million. In an attempt to raise

funds KMC formed a task force to spearhead collection of debts as it moves to settle

liabilities. It is also noted that the state-owned meat processor does not operate optimally
10
and only slaughters 200 cattle per week which is equivalent to a day’s capacity. This fact

may be attributed to inability of the abattoir to attract livestock from suppliers due to

failure to pay livestock farmers for their deliveries which has disrupted its supplies. These

has been attributed to the possibility of poor procurement practices.

1.2 Statement of the Problem

Over the year’s scholars and consultants have sought to establish what really affects the

financial performance of an organisation. Many factors such as organisation culture,

resource availability, efficiency and effectiveness of the management team, management

strategies, employee motivation, knowledge management among others (Kingei, 2015).

Despite the significant contribution of Kenya Meat Commission in Kenyan economy, it is

not clear the contribution of various variables such as procurement practices on its

financial performance especially in Kenya Meat Commission.

Empirical studies reviewed for instance, Musau (2015) conducted a study on procurement

practices and procurement performance of security firms in Nairobi and found that

procurement practices greatly affected procurement performance in the security firms.

The study presented a contextual and conceptual gap in that the study sought the effect of

procurement practices on procurement performance in security firms while the current

research bridges the identified unfilled gaps on procurement practices effect financial

performances of KMC. Khisa (2015) sought to determine the influences of procurements

processes on completions of road constructions projects in Kenya and concluded that the

procurement process significantly affected completion of road construction projects. The

study’s dependent variable was on road construction project that presenting a contextual
11
gap since the current study will be on financial performance of Kenya Meat Commission.

Mutai and Chirchir (2015) sought to establish the impact of procurement policies and

practices on supply chain performances of commercial bank in Kenya. The study

concludes that procurement policies and practices has a significant impact on supply

chain performances while Kuloba (2016) sought to establishes the effect of procurement

practices on organizational performances based on Moi teaching and referral hospital to

conclude that their strong relationship amongst material planning and performances while

tendering, supplier assessment are insignificant on performances. The studies by Mutai,

Chirchir and Kuloba presented empirical gap, contextual and conceptual gaps. The

studies dependent variables were on supply chain performances of commercial banks and

organization performances while the concentration of this study will be on financial

performance of Kenya Meat Commission.

The dwindling trend of financial performance of Kenya Meat Commission reflected in

the total assets and net sales and reviewed literature presents an evidence that shortage of

empirical literature does exist on the effect of procurement practices on financial

performances. The studies reviewed also presented gaps; Contextual, conceptual and

empirical gaps. The study therefore intended to fill the identified gaps by determining the

effect of procurement practices on financial performance of the Kenya Meat

Commission.

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1.3 Research Objectives

1.3.1 General Objective of theStudy

The general objective of the study was to determine the effect of procurement practices

on performance of the Kenya meat commission.

1.3.2 Specific objectives of the Study

Specifically, the study sought to achieve the following objectives;

i. To establish the effect of tendering practices on financial performance of the

Kenya meat commission;

ii. To analyse the effect of supplier assessment practices on financial performance of

the Kenya meat commission;

iii. To assess the effect of material control practices on financial performance of the

Kenya meat commission

1.4 Research Questions

The study sought to answers to the following research questions;

i. How does tendering practices affect financial performance of the Kenya meat

commission?

ii. To what extent does analyse supplier assessment affect financial performance of

the Kenya meat commission?

iii. In which ways does material control affect financial performance of the Kenya

meat commission?

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1.5 Significanceof theStudy

The study would be of great significant to numbers of stakeholders. The board of

managements at KMC, the government of Kenya, consultants in supply chain

management as well as scholars and researchers.

The management team of KMC would benefit from these study findings as the findings

would enlighten the management on the relationships that exist between procurement

practices and KMC performance. These would assist in formulation and implementation

of guidelines and framework for supporting effective implementation of procurement

practices at the state abattoir. It is noted that among the many challenges affecting the

commission relate to lack of supplies of animals as supplies take long before they are

paid their dues. Consequently, the board of management will be in a better position to

reorganise their procurement department and put in place better procurement practices.

The study findings would be vital to the Kenyan government as it would enable them to

better understand the concept of procurement practices and its effect on State firm

performance. Subsequently, the government and its agencies will develop policies that

will enhance efficiency, transparency, objective and value for money, protection of public

resources, improved supplier relationships and accountability which have a bearing on

firm performance. The government through the legislature would also ensure that there

are adequate policies and guidelines to govern and enhance procurement processes in

state parastatals.

14
The study findings would also be of great importance to importance to procurement

professionals and consultants in various industrial sectors since it shows the relationship

that exists between the constructs of procurement practices and organisational

performance. Therefore, the professionals and consultants would be in a better position to

offer guidance to their clients. Finally, the study findings would be of great significance

to scholars and researchers since the study findings would add to the body of knowledge

and theory the relationship that exist between procurement practices and organisational

performance. Thus, scholars and other researches would find the findings of the study as

necessary reference materials and show research gaps. Researchers would thus carry out

more studies on the constructs to advance knowledge on procurement practices.

1.6 Scope of the Study

The study aimed at determining the effect of procurement practices on performance of

the Kenya meat commission. The study focused on procurement practices which entailed;

tendering practices, supplier assessment practices and material control practices and

financial performance of KMC. The study was guided by resource-based view theory,

agency theory and balanced score card theory. The study targets the procurement

department team in Athi River headquarters, Ladhies Depot, Kibarani Mombasa branch

and user departments in Athi River Headquarters. The study was conducted in Kenya

Meat Commission based in Machakos County. Primary data was collected by the use of

questionnaire.

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1.7 Limitations of the Study

The study anticipated to encounter a number of challenges. First the study found through

literature review that the construct of procurement practices has been operationalized

differently by various scholars and therefore there was no universally accepted way of

operationalizing the concept. The study was limited to tendering practices, supplier

assessment practices and material control practices. The study encountered reluctance

from some of the respondents. Persuasion was done and respondents were promised that

the data was for educational purposes only.

Secondly, the study targeted the user department heads who were also among the

management team of KMC who had busy schedules. However, to improve on the

response rate, the researcher adopted drop and pick technique in data collection. The

current study was a case study and therefore, the findings of the study related to KMC

only and may not be generalised to other parastatals in Kenya. The conclusions and

inferences made related to this period only and different results would be obtained if

different methodological practices are adopted, for this reason, the study findings may not

be generalised in longitudinal studies of other studies adopting secondary data.

16
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter reviews theoretical and empirical literature previously done by other

scholars on literature related to procurement practices. The section examined literature on

tendering procurement, supplier assessment, material control, and financial performance.

The section also presents the summary of the literature reviewed and the research gaps.

Conceptual framework is also presented which includes the variables and their indicators.

2.2 Theoretical Literature Review

This study was anchored on three theories namely: the balanced score card theory, the

contingency theory and agency theory.

2.2.1 Resource-Based View Theory

This theory was designed by Grant in 1991 and earlier supported by Hill (1989). The

theory supposed that the extensive analysis and the operating capabilities and

competencies of the firm a based on the firm's capabilities and Resources. The theories

based on the capability and the concept to the firm can use to slice the economic

resources of the company and the view of the company to use the collection of its cover

abilities and employees within the firm. The theory supports the view that strategies and

integration of activities in the form must be placed before any other mechanism such as

decisions making not based on the resources available (Kay, 2005).

17
Resource-based view over the fundamental and critical insight into why majority all the

companies and institutions with very valuable in mid-table rare and valuable resources

are well-organized and major superior performance other than their competitors who has

less of the latter (Barney, 1995). Resource based analysis is applicable in general terms in

any principles to any resources anywhere in the farm and be applicable in this study. Its

applicability at the same time presents both weaknesses and strength with former which

is the strength being the ability for it to be broadly applicable to many analysis dealing

with the resources of the farm and being a weakness is the generality of resource-based

view which means may not be specific to a certain matter in a study. Meaning of utilized

resource-based view in application on how the managers utilize the resources for the

purposes of choosing a certain Direction and one more important available resources in

the firm. One significant critical views of this Theory is that resource-based view may not

be clear on what sufficient about all the resources in the company may be utilized to

create value and that operationalization of these resources may be difficult that has such

factory not been answered by many researchers (Priem & Butler, 2001).

The resource-based view of the company builds itself around the competence internal to

the firm. He argues that the competitive advantages in the firm is rooted within the firm

and its assets that are valuable and cannot be imitated results to the generation of revenue.

it is therefore that the scarce resources which are not substitutable and difficulty to

imitate organization must exploit the opportunities with those resources and provide

competitive advantages which are unique to the firm (Barney, 1991). There could be

barriers which are explicit and which can be introduced by the internal strategy of the
18
company or by the government intervention and this may facilitate the inevitability of

resources and rareness of resources. Advantage in size, superior performance, sides lags

in time and information preference access and superior of information and Resources

which are complex to copy are the possible barriers which may cause lack of imitation to

the competitors (Barney, 1991).

According to Barney (1986), Russo and Fouts (1997) internal competencies nurturing and

applying this appropriate and external companies’ environment can develop a good

strategy to exploit the opportunities and reduce the threats which may affect the

company's success. This theory will be in a position to explain the procurement practices

and how they will affect the financial position of Kenya meat commission. It will explain

the relationship between the independent and dependent variable and it will help in

guiding the establishment of the relationship between the supplier assessment, tendering

procedures, material control procedures, record-keeping with financial performance in

Kenya meat commission

2.2.2 Agency Theory

The agency theory advocated by Donahue (1989), explains how procurement managers

must play the agency role. The procurement department takes the role of agents on behalf

of their institutions. The Principal-Agent model main concept is the premise the Principal

is so busy that they can’t execute a certain task, making it important to hire an agent, but

the principal cannot supervise the agent ideally because he or she is busy. Agency Theory

explains how to best organize relationships in which one party determines the work while

another party does the work. In this relationship, the principal hires an agent to do the
19
work, or to perform a task the principal is unable or unwilling to do." According to the

agency concept the principals (owners) must supervise and be in command of agents

(managers) to guard the owners’ outstanding claims from the extremes of self-centred

agents, Bansal, (2013)

In this study, the principal is the CEO’s or the managers and the entrepreneurs of the

Kenya Meat Commission while the agents represent the procurement professionals. In

order for an organisation to achieve best performance, it must ensure that all the

stakeholders work with the same cognitive dissonance to ensure there is utmost

performance in any entity. Procurement practices must be embraced by both the principal

and the agent to avoid agency conflicts (Flynn & Davis 2014).

Agency theory is helpful to companies in a variety of industries and contexts. For

example, fully functioning supply chains are crucial for nearly every business, but supply

chains can develop problems. The managers, especially those in the procurement

department need to understand and resolve abnormal behaviours across supply chains,

Procurement can be seen as having a minimum of two components with two different

objectives--a buyer and seller in competition for contracts. Nonetheless, on top of the

agency connection that the buyer and competing vendors have, several internal

stakeholders with potentially conflicting interests may also exist, increasing the

sophistication of the procurement process. This is where resource-based view theory and

agency theory may be helpful in decision making. Agency theory also explains how best

to organize relationships in which one party, called the "principal," determines the work

20
and in which another party, known as the "agent," performs or makes decisions on behalf

of the principal, according to Schroeder, (Rungtusanatham & Golstein 2011).

However, Agency theory assumed both the principals and the agent are motivated by

self-interested. This assumption of self-interests dooms agency theory to inevitable

inherent conflicts. Thus, if both parties are motivated by self-interests, agents are likely to

pursued self-interested objectives that deviates and even conflicts with the goals of the

principals. Yet, agents are supposed to act in the sole interests of their principals. This

theory will be anchored on financial performances and will explains the interests and

contributions of KMC managers in improving sales and profitability.

2.2.3 Balanced Scorecard

Kaplan and Norton (1992) who are the pioneers of balanced scorecard. Balanced

scorecard was proposed to decrease the over dependency of the outdated accounting

methods. It was aimed at converting to strategy to performance by aligning the measures

to strategy. Balance scorecard helps at breaking the organizational mission into specific

achievable objectives. It helps in breaking values the organizational all-inclusive

approach that helps in evaluating the predictability and all-inclusive approach that can be

taken for future improvement (Kaplan & Amina, 1992). According to Biazzo and

Garengo (2012) this model helps in providing the Enterprise view of the organization

overall performance to the integration of financial measures with other performance

indicators which are internal businesses customer perspectives nation learning and

organizational growth. This study will assess supply assessment, material control,

tendering procedures and procedures for procurement. It will help in making

21
recommendation to the Kenya meat commission on the proper procedures of procurement

in order to achieve optimum performance. It will help in linking the company's strategy

by bringing in the performance management concept in connection with managerial

actions.

Balanced scorecard is based on four major pillars which measures performance of the

organization and these Pillars include growth learning internal processes and customer

and financials (Kaplan & Norton 1992). The balanced scorecard financial aspect will

provide the farm to succeed financially through meeting the gas shareholders demand and

delivering the profitability through the return on asset return on equity and customer

share index and other measurable cash flow measures (Rugelsjoen, 2010). The

perspective which has been used widely by majority of them firms to measure

performance and therefore needed to be mixed with other measures of balanced

scorecards.

The perspective of the customer dwells with meeting the customer demands through the

utilization of the available resources. Usually involves translating the X which can be

measured in handling the customer’s services and products and issues raised by the

customers and this will entail how long you take to place order, all customer queries are

answered and responded to and how fast the customer’s complaints are being handled.

The farm use of bleached or has the responsibility to periodically review the customer

satisfaction index through surveys and implement any suggestion mint and

communication of the survey being recommended (Tayler, 2010).

22
The perspective on internal measures indicate how the shareholders and the customers are

being handled as being satisfied and the Firm chooses the right processes and policies

which will help in delivering their unique and more especially the customer demands

(Niven, 2011). These policies which are internal to the business may include the mission

oriented which will focus on the overall mission support oriented which mainly Focuses

on task which are repetitive to the employees and which are being carried out in the

course of their business. The internal perspective and shows that the time taken to

respond and spend on prosperity and the amount of the work required in a certain task is

being minimized (Hosque, 2014). According to Northeott and Ma'amora (2012), the

growth and learning perspective describes how the Firm will achieve its mission

sustaining sustainability and its ability to change with the Vision. It helps in guiding the

organization to where and how to focus in fund training and the concentration of its

employees in training to improve performance. The perspective will ensure that these

creations and maintenance of corporate cultures attitudes that will definitely results to be

achieving of these Visions through strategies implementation. The current study will use

the balanced scorecard theory to support performance of Kenya meat commission.

2.3 Empirical Literature Review

The sections reviews existing literatures from scholars relating to on tendering

procurement, supplier assessment, material control and record keeping.

2.3.1 Tendering Practices and Financial performance

Kisurkat (2017) sought to evaluate the effect of tendering on the performance of

organizations in the case of public entities in Kajiado County. The study adopts

23
descriptive research design on all public entities in Kajiado County. Primary data was

collected using a. The study utilised primary data which was collected using a

questionnaire. The collected data will be analysed using descriptive statistics and

presented in charts, graphs, percentages and frequency tables. The study findings

revealed that tendering services affects the performances of public entities in Kajiado

County. However, this study was a case study research on all public entities in Kajiado

County and therefore its findings are applicable only to public entities in Kajiado County

and cannot be inferred in the current context.

Murigi and Okello (2017) sought to examine public tendering practices and operational

performance of energy sector parastatals. The purpose of the study is the examination of

effects of national open competitive tender practices, direct procurement tendering

practices, request for quotation tendering practices, and restricted tendering practices.

The study utilized the descriptive research design and targeted procurement officials and

senior operations officers of Kenya Power, Geothermal Development Company (GDC),

and Kenya Electricity Generating Company (KenGen) within Nakuru County. From the

study findings, it was found that short time required to procure items have no impact on

operational performance while breakdown of critical items have a great effect on

operational performance. The current study focused on KMC.

Awozum (2010) conducted a study to assess the role of tendering in Procurement and

Supply Chain Management in Public organizations. The study assumed an exploratory

and descriptive approach. The target population for the study comprised of twenty (20)

MoH-PU officials. Data was collected using detailed interviews through structured and
24
semi-structured questionnaires. The Statistical Package for Social Sciences (SPSS) and

excel were used for data entry and analysis of the data collected the study findings

discovered that procurement function is not considered as a profession and procurement

activities are sometimes performed by people who are not trained in procurement. This

study was conducted in Ghana and focused on medical sector and therefore its findings

may not be applicable in Kenyan contexts.

Kimutai (2013) conducted a study to determine the effects of tendering practices on

quality of rural access roads in Elgeyo Marakwet County. Explanatory research design

was on 13 Construction Companies in Elgeyo Marakwet County. A census of all the 13

Construction Companies was conducted. The study data was collected using a semi-

structured questionnaire. Multiple regressions were used to determine the effect of

tendering practices on quality of rural roads. The findings revealed that quality of tender

document enhances quality of roads, similarly, qualification requirement was also shown

to positively affect the quality of roads.

Ayoti (2012) investigated factors influencing effectiveness in tendering processes in

public sectors, the case of Nyeri County, Kenya. The study was confined to Road

Construction Industry. The study adoption of description surveys research designs using

both qualitative and quantitative research paradigms. Data was collected using self-

administered questionnaire and analysed using descriptive statistics and inferential

statistics and the results revealed that there were practices of favouritism, tribalism and

nepotisms in the tendering processes in public sectors in Nyeri County. This study was

confined to Road Construction Industry only and therefore it’s finding are only applicable
25
to round construction industry and other related industries in the public sector and may

not be generalizable to the Kenya meat commission. Moreover, tendering practices was

treated in this study as a dependents variable while in the current study tendering process

will be the independent variables.

2.3.2 Supplier Assessment Practices and Financial Performance

Epainitus (2018) sought to examine selected factors of supplier prequalification on

organization performance a case study of Danish Refugee Council. The study employed

descriptive research design and targeted 40 employees working for the Danish Refugee

Council in Kenya. Primary data was collected using questionnaire. Data collected was

analysed and the results showed that the selected factors of supplier prequalification

mainly supplier capacity, supplier pricing, professional ethics and financial status had an

influence on the prequalification processes.

Mwangi (2014) sought to assess the effect of supplier relationship management on

operational performance of sugar firms in Kenya. The study utilised descriptive

researches designs on a target population comprising of all the employees of the 13,

currently operational, sugar companies in Kenya. Primary data was using questionnaires

and analysed using SPSS. The findings revealed that trust-based relationships,

information sharing and supplier collaboration in NPD positively impact operational

efficiency in the sugar sector in Kenya.

Magutu, Mogikoyo and Dolo (2017) established the supplier evaluation relationship to

attributes with supply chain performance. The researcher adopted both quantitative and

26
qualitative research designs untargeted 40 respondents from 20 Commercial Street

operations. Data from the primary source were collected using questionnaires and

analyzed using stepwise regression analysis (SLA). The findings indicated that these

commercial state corporations do pay a lot of attention to the financial health of the

suppliers and autonomy, security of the suppliers, chain experience of suppliers, perfect

cultural fit programs on training and the human resource management policies quality

supplier relationship beneficiaries’ efficiency of cost in an effort to improve chain

performance. The current study sought to establish the relationship between the attributes

of suppliers in evaluation and supply chain performance but failed to indicate the

suppliers’ evaluation attributes which are affecting the organizational overall

performance.

Wachiuri (2019) assessed a study to investigate the influences of supplier evaluation

criteria on the performances of state corporations in Kenya. The study adopted cross-

sectional survey design using both quantitative and qualitative approaches on 187 state

corporations in Kenya. The study employed a census approach and utilized primary data

collected using questionnaires. Descriptive statistics, Statistical Packages for Social

Sciences, regression and correlation analysis were used for data analysis. The study

findings indicated that supplier quality commitment, supplier competence, supplier

financial viability and supplier capacity have appositive and significant association with

performance of state corporations.

27
2.3.3 Material Control Practices and Financial Performance

Oyebamiji (2018) examined the effect of materials managements on the performances of

manufacturing industry with particulars reference to the selected cement industry. 30

respondents were selected for the study. Structured questionnaires and a personal

interview were used to collect data. Data analysis was conducted with the aids of multiple

regression analysis. The result revealed that materials management dimensions jointly

contributes significantly to firm performances. The findings further revealed that

materials inventory, materials procurements and inter-departmental collaborations have

an insignificant effect on firm performances.

Ibegbulem and Okorie (2015) study on handling of organizations material management.

The study found that the organizations can handle the problems which are connected to

effective material management to increase the profitability in Nigeria. Study revealed that

the material management in Nigeria was used for the purposes of increasing profitability

for the majority of the companies to ensure storage facilities are adequately use without

interruption and production processes among other things are kept intact. Study

recommended that there should be a good record system connected to material for the

purposes of good operations of the organization which ensures productivity and training

of employees to acquire better knowledge and skills for the work of the organization and

benefits of the shareholders in general.

Keitny, Wanyoike and Ricu (2014) sought to assess the role of materials managements on

organizational performances of the New Kenya Cooperative Creameries, Eldoret, Kenya.

28
The study targeted 49 employees from different departments including productions,

purchasing, quality Controls, Warehouse/stores, Human Resources Developments,

Finances and audits and physical Distributions departments. Data was collected through a

structured questionnaires and analyses through descriptive statistics. The findings showed

that there were significant increases in organizational performances as a results of

inventory controls systems involvement. Further, results showed that lead time was

highly significant to organizational performances through acquiring and delivering the

needed materials within the shortest time possible.

Ondiek and Odera (2012) studies the recognition of manufacturing companies in Kenya

by giving to material management and the benefits of adopting good material

management practices. The study found that there's a long-term success and the survival

of these companies who depend on where management of the material costs. The study

did a survey of large and medium manufacturing companies which were based in Kenya

Nairobi. Sampling technique was used which was stratified and selected 55 companies

while data was collected using questionnaires which were open-ended questionnaires.

Data was analyzed through the description measures. 23% of these companies found to

have recognized material management is the head in charge reported directly to the chief

executive. The study found that Kenyan manufacturing firms were not practicing

professionalism in management and Material Handling going to the amount increasing or

resources that were committed to material and related activities.

29
2.4 Summaryof the Literature Review and Research Gaps
The summary of the literature review and the research gaps identified are as summarized in Table2 .1

Table 2.1: Summary of the Literature Review and Research Gaps

Author/s Research Topic Research Finding Research Gaps Focus of Current
Study
Awozum The role of tendering in Procurement function is This study was The current study is a
(2010) Procurement and Supply not considered as a conducted in Ghana case study of Kenya
Chain Management in Public profession and and focused on Meat Commission. The
organizations. procurement activities medical sector and study sought to
are sometimes their ore its findings investigate the effects of
performed by people may not be applicable procurement practices
who are not trained in in Kenyan context. on performance of
procurement. Kenya meat
commission.

Ayoti (2012) Factors influencing effective The results revealed that In the study, Tendering practices was
ness in tendering process in there was practice of tendering practices operationalized as an
public sector, the case of favouritism, tribalism was operationalized independent variable.
Nyeri County, Kenya and nepotism in the as a dependent The study will be a
tendering processes in variable but will be case study of Kenya
public sector in Nyeri measured as an Meat Commission.
County. independent variable
in the current study

30
Kimutai (2013) The effects of tendering The findings revealed The study only This study seeks to
practices on quality of rural that quality of tender examined the role of establish the effects of
access roads in Elgeyo document enhances tendering practices procurement practices
Marakwet County. quality of roads, but failed to show on the performance of
similarly, qualification how these practices Kenya Meat
requirement was also influence Commission.
shown to positively performance of
affect the quality of Construction
roads. Companies.
Keitany The role of materials Materials management The study was a case The current study is a
Wanyoike and management on significantly affected study of Kenya case study of Kenya
Richu (2014) organizational performance: performance of Kenya cooperative Meat Commission and
A case of new Kenya cooperative creameries creameries limited in will only while the
cooperative creameries limited in Eldoret. Eldoret which has a current study included
limited different line of other procurement
The results showed that operation from KMC. practices such as
lead time was highly The study focused on supplier assessment
significant to materials practices and tendering
organizational management. practices.
performance.
Kisurkat (2017) Effect of tendering on the The study findings However, this study The current study was
performance of organizations revealed that tendering was conducted on all broader in scope to
in the case of public entities services affects the public entities in include other
in Kajiado County performance of public Kajiado County and procurement practices
entities in Kajiado therefore its findings unlike this study which
County. are applicable only to concentrated on
public entities in tendering process only.
Kajiado County and
cannot be inferred in
the current context.

31
Mogikoyo Relationship between supplier The study findings This study sought to The current study
Magutu, and evaluations attributes and revealed that establish the sought to establish the
Dolo (2017) supply chain performance. commercial state relationship between effects of procurement
corporations pay a lot of supplier evaluations practices on the
attention to the attributes and supply performance of Kenya
suppliers’ financial chain performance meat commission.
health and autonomy, but failed to show
the supplier’s physical how supplier
security and the evaluation attributes
supplier’s supply chain affected the overall
experience. performance of the
organisation.
Epainitus Selected factors of supplier The results showed that In the study, supplier The study sought to
(2018) prequalification on the selected factors of prequalification was determine the effects of
organization performance a supplier prequalification treated as a dependent tendering practices,
case study of Danish Refugee mainly supplier variable. supplier assessment
Council capacity, supplier practices and material
pricing, professional control practices as
ethics and financial independent variables
status had an influence on the performance of
on the prequalification Kenya Meat
processes. Commission.
Oyebamiji Effect of materials The findings revealed The study was The study focused on
(2018) management on the that materials inventory, conducted in Nigeria material management
performance of materials procurement and therefore its only while the current
manufacturing industry with and inter-departmental findings may not be study included other
particular reference to the collaboration have an generalizable to the procurement practices
selected cement industry insignificant effect on study conducted in such as was conducted
firm performance. Kenya. in Kenya.

32
Wachiuri Influence of supplier The study findings The study was a cross The study was a case
(2019) evaluation criteria on the indicated that supplier sectional very of state study of Kenya Meat
performance of state quality commitment, corporations. Commission.
corporations in Kenya. supplier competence,
supplier financial
viability and supplier
capacity have a positive
and significant
association with
performance of state
corporations.
Source: Researcher and Literature Review (2020)

33
2.5 Conceptual Framework
A conceptual framework is a basic structure representing the systematic characteristics of

the operationalization of the study variables. The framework presents the interrelation

between procurement practices and financial performance of Kenya Meat Commission.

The indicators of procurement practices are tendering practices, supplier assessment and

material control practices. Financial performance was measured by sales level, net profits

and total assets.

Independent Variables

Dependent Variable
Tendering Practices
 Open tendering
 Restricted tendering
 Single source tendering

Supplier Assessment Procedures Financial Performance of

 Supplier capacity Kenya Meat Commission
 Turn-around time  Sales level
 Supplier consistency  Net profits
 Supplier competency  Total assets

Material Control Practices

 Inventory quantity levels
 Inventory planning control system
 Material handling and storage
 Physical distribution

Figures 2.1: Conceptual Framework

Source: Researcher (2020)

34
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introductions
The chapter explains the methodology used in the study. Specifically, the chapter

presents; research designs, target populations, sampling procedures, data collection

instruments, validity and reliability of research instruments, data collection practices as

well as data analysis and finally the ethical considerations.

3.2 Research Designs

This study adopted descriptive research design. According to Mugenda and Mugenda

(2013) descriptive research is a research that attempts to gather facts from a population so

as to establish the existing status of the respondents in regards to the variables. The study

utilized primary data that was collected using questionnaires from the Kenya Meat

Commission staff members.

3.3 Targets Population

A study population is a set of members that belong to a group within which research is

carried out and possess similar observable characteristics Creswell (2014). The study

targeted Kenya Meat Commission Headquarters in Nairobi, Ladhies Procurement

department, Mombasa Deport and the user department in Athi river branch. There are

1015 employees in KMC. The study targeted 13 employees in the Ladhies procurement

department, 21 employees from Athi River Headquarters procurement department, 11

employees from Mombasa Depot, and 26 employees from user departments in Athi River

35
in Machakos County. A total of 71 respondents was targeted. Table 3.1 below shows the

target population of the study.

Table 3. 1: Target Population

Procurement Department Frequency Percentage

Athi River HQ Employees 21 29.6

Kibarani Employees 11 15.5

Landhies Employees 13 18.3

User Department 26 36.6

Total 71 100

Source: Kenya Meat Commission (2020)

3.4 Sampling Technique and Sample Size

Sampling is normally done when the population is large and the researcher is unable to

collect data from every single member of the population (Mugenda & Mugenda, 2013).

Since the population was small and of manageable size the researcher used a census.

3.5 Data Collection Instruments

Semi structured questionnaires were used to collect the primary data. The tool contained

two sections. The first section entailed Gathering the Democratic characteristic of the

respondents. The second section contained question regarding the study variables the

stated specific objectives. Both closed and open-ended questionnaire were captured in

this document and captured matters related to the Research questions in section 1.4. Open

ended questions gave the respondent’s profound time while the closed-ended questions
36
gave the respondents and evaluated view of the research. It also enabled the respondents

an easier way of responding to them questions and data required that's enabling the

researchers to analyze the data with ease. Closed-ended questions enabled the researcher

to code with ease and present the data in a quantitative manner.

3.6 Pilot Study

The aim of the pilots’ study is to test the questionnaires consistencies ensured and that

they measured what they intended to measure. According to Cooper (2010), a pilot tests

is necessary for testing the whether the data collection instruments can be used to answer

the research questions. The researcher selected a pilot group of 7 (10%) individuals from

the management of Kenya Meat Commission to test the research instrument. According

to Mugenda and Mugenda (2013) 10% of the sample is a good representation for a pilot

tests. The pilot sample was not included in the actual study. The pilot study allowed for

pre-testing of the research instruments. The result helped the researcher to correct

inconsistencies that were seen to arise from the instruments.

3.6.1 Validity of the Research Tools

Csikszentmihalyi and Larson (2014) argued that the duty of the research instrument helps

in determining whether the interpretation of the data and the meaningfulness and

accuracy of the data is determined. Content and face validity were tested by the use of

the 9respondents. Face validity helped in looking at the representation of the instruments

and the face value and it helped in structuring a good instrument. According to Bryman

and Bell (2015) it helps in determining if the instruments covered and what should be

covered. Content validity on the other hand sought to infer from a similar title that was

37
drawn from similar items like those tested in the research. The researcher sought more

assistance from the supervisors, experts and lecturers in Kenyatta University to determine

the validity of the research instruments.

3.6.2 Reliability of a Research Instruments

Cronbach alpha tests was used to determine the reliability of the current research

instruments. It measured how well the instruments gave the same results once repeated

under similar circumstances. According to the Tomioka, Iwamoto, Saeki and Okamoto

(2011) it shows how consistence in measuring study objectives. The researcher accepted

the Cronbach Alpha coefficient which is more than 0.7 and this was determined by the

adequacy reliability suggested by field (2009).

3.7Data Collection Procedures

Drop and pick method was used to administer the questionnaire in this study which

allowed the respondents to have an adequate time to respond to the research questions.

The researcher made telephone calls to make appointment with the respondents prior to

the data collection. The researcher was accompanied by the introduction letter from

Kenyatta University. Moreover, the researcher had a permit from National Commission

for Science and Technology and Innovation. The questionnaires were picked after 14

days.

3.8 Data Analysis and Presentation

Data collected from the field was first edited, cleaned and evaluated to establish

accuracy, completeness, consistency and usefulness. Once data was cleaned it was coded

and fed in to the analysis software. Data was analysed statistically using Statistical

Package for Social Science (SPSS) version 23. Both quantitative and qualitative data was
38
collected in this study. The study employed descriptive statistics such as frequency

distributions, percentages, mean and standard deviation to analyse the quantitative data.

The qualitative data from the open ended questions was analysed using content analysis

and results presented in prose form. This involves organising, sorting out, coding and

thematically analysing, searching for meaning, interpreting and drawing of conclusions

based on concepts. In addition to descriptive statistics, inferential analysis was conducted

using multiple regression model to determine the effect of procurement practices on

performance of KMC. The regression model was of the form: Y = β0 +β1.X1 + β2.X2 +

β3.X3 +ε

Where: - Y = Financial Performance

β0 = constant, -

β1 , β2…β5 = Beta coefficient of the study variables

X1 = Tendering Practices

X2 = Supplier Assessment Practices

X3 = Material Control Practices

ε = Error-term.

3.9 Diagnostic Tests

Diagnostic tests were done through the use of multicollinearity tests, normality tests and

heteroscedasticity tests. Multicollinearity tests help in predict whether the independent

variables are highly correlated to each other. According to Field (2008) variables are

39
highly correlated when Pearson correlation values of more than 0.8. VIF and Tolerance

were used to test multicollinearity.

Heteroscedacity occurs in the subpopulations that have different variability from each

other. Heteroscedasticity test was done with the help of Breusch Pagan Godfrey test. To

test whether there was a normal distribution population in the study normality test was

done.

3.9 Ethical Consideration

The researcher obtained relevant permission to carry out research in KMC from relevant

authorities such as NACOSTI and the graduate school, Kenyatta University. The

respondents were allowed to participate in the research voluntarily and confidentiality

assured. Citation was done to all reviewed literature in the study to acknowledge the

work of other scholars.

40
 CHAPTER FOUR

RESEARCH FINDINGS AND DISCUSSIONS

4.1 Introduction

This section presents the findings and discussions on procurement practices and financial

performance of Kenya meat commission. The study considered three indicators of

procurement practices which were supply assessment practices material control

practices and tendering practices and three indicators of financial performance which

were sales level, net profits and total assets. Mean and standard deviation are used to

describe the data tables and figures were used to present the data.

4.2 Response Rates

Figure 4.1 shows the response rate. The researcher gave out 71 questionnaires. Out of 71

issued questionnaires 60 were completely filled and this represented 85% of the response

rate. According to Mugenda and Mugenda (2013) this was an excellent response rate

and the researcher proceeded with the data to do with that analysis. The findings in figure

4.1 indicates a non-response rate of 15%. The respondents constituting the 15% were

unreachable, some of the questionnaires were partially completed and some had

contradicting responses in the statements presented to the respondents. The results are

reflected in the figure 4.1.

41
 R e s po ns e R a t e
Completed Questionnaires UnCompleted Questionnaires

15%

85%

Figure 4.1: Response Rate

Source: Research Results, (2020)

4.3 Pilot Study Results

The study carried out a pilot study to test the validity and reliability of the research

instruments.

4.3.1 Validity Tests

The researcher selected 7 (10%) individuals from the management of Kenya Meat

Commission to test the research instrument. The researcher was able to test the content

and construct validity of the research instruments. Sections under the questionnaire which

were not clear to the respondents were corrected by using simpler language or rephrasing

the sentences.

42
4.3.2 Reliability Tests

Reliability tests results were presented in table 4.1. The table presents the Cronbach alpha

score and remarks. Cronbach alpha tests was used to determine the reliability of the

current research instruments. Cronbach test was done through the use of 7 managers in

KMC. The researcher accepted the Cronbach Alpha coefficient which is more than 0.7

and this was determined by the adequacy reliability suggested statistician (Field, 2009).

Table 4.1 Reliability Tests

Variables Cronbach Alpha Score Remarks

Tendering Practices .856 Accepted

Supplier Assessment .871 Accepted

Material Control Practices .849 Accepted

Financial Performances .893 Accepted

Source: Research Results (2020)

The results in table 4.1 indicates that tendering practices cronbach alpha score was 0.856,

cronbach alpha score for supplier assessment was 0.871, material control practices

cronbach alpha score was 0.849 and cronbach alpha score of financial performance was

0.893. The findings present that the research instruments were reliability since all

variables cronbach score was more than 0.7.

4.4 Demographic Characteristics

The study sought to establish the age the gender the working experience at the highest

level of education of the respondents.

43
4.4.1 Gender of the Respondents

Gender of the respondents were presented in figure 4.2. The figure presents gender of the

respondents whether male or female. The results indicated that majority of the

respondents (77%) were male while the minority were female (23%). This indicated that

majority of the workers in the procurement department in Kenya meat commission were

men and that the organization did not meet the constitutional threshold of one third

gender rule. This an implication that majority of the employees required in the Kenya

Meat commission are male probably are male because of the nature of responsibilities

which require muscles.

Gender

23%

77%

Male Female

Figure 4.2 Gender of the Respondents

Source: Survey Data (2020)

44
4.4.2 Age of the Respondents

The respondents were requested to indicate their age. Various age brackets were included

and the respondents were requested to indicate the age range. The findings are presented

in Table 4.2.

Table 4.2: Age of the Respondents

Years Frequency Percentage

18-25 9 15

26-35 10 17

36-45 27 45

More than 46 14 23

Total 60 100

Source: Researcher, (2019)

The findings indicated that majority of the respondents were between 36 to 45 years old

age(45%). 23% of the respondents who had above 46 years of age. 17 percent were

between 26 and 35 years’ age. The respondents with 18 to 25 years of age were the

minority 15%. Findings indicated that majority of the respondents and more than 36 years

old. It was a clear indication that French majority of the respondents and worked for

many years in Kenya meat commission and this could translate to more experienced

workers in Kenya meat commission.

4.4.3 Working Experience

The study sought to establish the number of years the respondent had work in Kenya

meat commission. The results were presented in table 4.3.

45
Table 4.3: Working Experience

Frequency Percentage
Below 1 Years 7 11.67

2-3 Years 3 5.00

4-5 Years 19 31.67

More than 6 years 31 51.66

Total 60 100
Source: Researcher, (2020)

The findings in table 4.3 above indicates that majority of the workers in Kenya meat

commission had worked for more than 6 years (51.66%). 31.67% of the respondents had

worked for a 4 to 5 years. Angie11.67% of the respondents targeted had worked for less

than 1 year and the minority of the respondent (5%) had worked for two to three years.

This an indication that majority of the respondents had enough experience to respond to

the questions raised

4.4.4 Level of Education

The researcher request of the respondents to indicate the highest level of education. The

findings were presented in Table 4.4.

Table 4.4: Level of Education

Frequency Percent
Masters holders 3 5
Degree holder 52 86.67
Diploma 5 8.33
Total 60 100
Source: Survey Data (2020)

The findings indicate that most of the respondents had a degree certificate as the highest

level of education (86.67%). 5% of the respondents had a Master as the highest level of

46
education. 8.33% of the respondents targeted had a diploma as the highest level of

education. It is argued that the academic qualification of workers in an organization will

enhance the ability to handle their duties efficiently for they have the working formula

due to the experience gained over the years. The findings in this study indicated the

employees had the relevant skills and knowledge required in the procurement department.

4.5 Descriptive Results Analysis

The section below presents the descriptive analysis on data collected related to tender

practices, supply assessment practices and material control practices. The section used

standard deviation and mean to describe the data collected.

4.5.1 Tendering Practices and Performance of Kenya Meat Commission

The first objective of the study was to establish the tendering processes effects on

performance of Kenya meat commission. Various statement measuring tendering

process were presented to the respondents and the results were summarized in Table 4.5.

Table 4.5: Tendering Practices and Performance of Kenya Meat Commission

Statements Mean Std. Dev

Open Tendering 4.27 1.181
Restricted Tendering 1.13 1.039
Single Source Tendering 1.51 1.119
Source: Research Data, (2020)

The results on tendering practices done by Kenya meat commission indicates that

majority of the department and branches within the Kenya meat commission used open

tendering method (Mean 4.27, Standard Deviation 1.181). Restricted tendering was

found to be less practiced by Kenya meat commission as indicated by a mean of 1.13 and

standard deviation of 1.039. Single sourcing was also found to be less practiced by Kenya
47
meat commission as evidenced by a low mean of 1.51 and a standard deviation of

1.119. This was a clear indication that majority of the tenders were open to the public to

participate in. The study findings support Kimutai (2013) that quality of a tender

document and when qualification requirements were open positively affect the quality of

work in the road industry. The findings disagree with Ayoti (2012) findings that open

tendering may not result to quality of work being done for it will be very hard for

organization to select the best supplier of services or products in an open tendering

process.

4.5.2 Supplier Assessment Practices and Performance of Kenya Meat Commission

The research sought to establish how supplier assessment practices affect performance of

Kenya meat commission. The respondents were supplied with various statement

measuring supplier assessment practices and this statement included supplier

capacity, turnaround time, suppliers’ consistency and supplier competency. The results

were presented in table 4.6.

Table 4.6: Supplier Assessment Practices

Statements Mean Std. Dev

Supplier capacity 3.89 .871

Turn-around time 4.33 .999
Supplier consistency 3.21 1.021
Supplier competency 4.73 1.231
Source: Survey Data, (2020)

The results indicated supplier capacity greatly affected performance of Kenya meat

commission (Mean =3.89, Standard Deviation 0.871). The respondents argued that the

48
ability of the suppliers to supply large quantities required by KMC enables

the commission to perform at its optimum level. The study also found that turnaround

time is paramount in ensuring that the performance of Kenya meat commission is at the

level supposed to be (Mean=4.33, Std deviation=.999). The findings indicated that the

consistency of suppliers was vital at explaining the performance of Kenya meat

commission as evidenced by a mean of 3.21 and a standard deviation of 1.021. The

consistency was vital in explaining the need for the suppliers it consistently supply the

required material at the right time. The results also indicated that competence of suppliers

is an important aspect in explaining the performance of Kenya meat commission (Mean

4.73, Standard deviation 1.231).

The findings supports study done by Epainitus (2018) on supply prequalification on

organizational performance (a case of study of Danish Refugee Council). The findings

indicated that supplier capacity, professional ethics, financial status and supplier pricing

influences the pre-qualification process. The study also supports the findings by Mwangi

(2014) that trust-based relationship between supplier and organization, sharing of

information and supplier collaboration positively affects operational efficiency in sugar

sector in Kenya

4.5.3 Material Control Practices and Performance of Kenya Meat Commission

The study sought to establish the extent to which material control practices affected the

performance of Kenya meat commission. Indicators of material control practices used

were inventory quantity levels, inventory planning control system, Material Handling and

storage and physical distribution. The respondents were requested to indicate the extent
49
to which the indicators affected the performance of Kenya meat commission. The results

were presented in table 4.7.

Table 4.7: Material Control Practices and Performance of Kenya Meat Commission

Statements Mean Std.Dev

Inventory quantity levels 4.15 .983
Inventory Planning control systems 4.75 .899
Material handling and storage 4.17 1.007
Physical distribution 4.00 1.213
Source: Survey Data, (2020)

The result shows that inventory quantity levels greatly affected performance of Kenya

meat commission as indicated by a mean of 4.15 and a standard deviation of .983. The

respondent argued that the inventory quantities are very important in ensuring that these

effective and efficiency in the operation of Kenya meat commission and ensuring that

there is constant supply of meat to the users in Nairobi and its environment. It was

evident that inventory planning control system greatly affected the performance of Kenya

meat commission as indicated by a very high mean of 4.75 and a standard deviation of

.899. The respondents argued that planning helps in controlling the stock levels in

insuring that the cost of handling and the cost of transport is maintained at optimum level

and also ensure that the cost of stock out was minimized. The respondents were requested

to comment on material handling and storage process and how it affected the

performance of Kenya meat commission and argued that how materials are handled in

Kenya meat commission and the storage process greatly affects the performance of

Kenya meat commission (Mean=4.17, Std Deviation=1 007). The finding on distribution

material in Kenya meat commission indicated that it greatly affected the financial
50
performance of Kenya meat commission(Mean=4.00, Std. Deviation=1.213). The

findings agree with Ondiek and Odera (2012) study finds that the long-term success and

survival of any company depends on how the management of the material cost are

done. The study also agrees with Keitny, Wanyoike and Ricu (2014) control system

involvement affects greatly the organizational performance.

4.5.4 Financial Performance of Kenya Meat Commission

The findings on financial performance of Kenya Meat commission was presented in

Table 4.8. Log of sales, net profit and total asset figures were presented in the table.

Table 4.8 Financial Performance of Kenya Meat Commission

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Sales 5 7.71 9.05 8.2311 .54603
Net Profit 5 -8.52 -7.12 -7.9681 .58620
Total Assets 5 7.56 9.45 8.8024 .78445
Valid N (listwise) 5

Source: Researcher (2020)

The findings in the table 4.8 indicates that there was a great sales drop from 9.05 in 2014

to 7.71 in 2018. The drop was greatly associated with poor assets and depreciating old

machineries and equipment’s. The drop in sales caused net losses to increase further

from -7.12 to -8.52. The net profit and sales decline was associated with a decline in

assets (from 9.45 to 7.56). Lack of new technology machines and accumulation of non-

efficient vehicles and equipment resulted to low turnover in Kenya Meat Commission.

51
4.6 Diagnostic Tests

Before regression analysis, the study carried out diagnostic tests to the study hypotheses

and to ensure that assumptions of regression are not violated. Multicollinearity was

conducted.

4.6.1 Multicollinearity Tests

These tests help in predict whether the independent variables are highly correlated to

each other. According to Field (2008) variables which are highly correlated when

Pearson correlation values of more than 0.8. VIF and Tolerance were used to test

multicollinearity. Tolerance indicates the percent of variance in the independent variable

that cannot be accounted for by the other independent variable while variance inflation

factor (VIF) is the inverse of tolerance.

Table 4.9 Collinearity Statistics

Tolerance VIF
Financial Performance 0.452 4.625

Tendering Practices 0.224 5.211

Material Control 0.515 4.124

Supplier Assessment 0.473 6.126

Source: Survey Data (2020)

Table 4.9 shows that tolerance values ranged between 0.224 and 0.515 with

corresponding VIF values ranging between 4.124 and 6.126. Since tolerance values were

above 0.1 and VIF below 10, there was no possibilities of multicollinearity in the model.

4.6.2 Normality Tests

A graph was used to examine the normality tests and results were presented in figure 4.3.
52
Figure 4.3: Normality Tests

The results in figure 4.3 indicates that the results were normally distributed since all the

data fall under the normal curve. The graphical examination method indicates that the

residuals were normally distributed.

4.6.3 Heteroscedasticity Test

The data collected were subjected to the test against the violation of homoscedasticity

assumptions. The study used a test by Breusch Pagan to check the possibility of

heteroscedasticity.

Table 4.10: Heteroscedasticity Results

Breuch Pagan/Cook Weisberg Test

Ho: Constant variance

Variables: fitted values

chi2 (1) = 1.03

53
Prob > chi2 = 0.2065

Table 4.10 results presents that the null hypothesis on homoscedasticity error term was

not rejected as it is supported by the fact that the study’s p-value of 0.2065 was greater

than critical P value of 0.05.

4.7 Inferential Analysis

This sub-section presents the correlation between variables, Model summary, analysis of

variance and regression coefficients. The study aimed to establish the correlation between

the predictor variable and the predicted variable. The predictor variables were material

control procedures, supplier assessment practices and tendering practices. The predicted

variable was the financial performance of Kenya meat commission. The study used Karl

Pearson correlation coefficient.

Table 4.11: Correlation Analysis

Correlation table presents the nature and strength of relationship amongst variables. The

variables considered in the study were tendering practices, supplier assessment, material

control and financial performance of Kenya Meat Commission. The nature of relationship

could be positive or negative. The strength of relationship could be weak or strong and

ranges from 0 to 1. The closer the values are to 1 the stronger their relationship.

54
 Material Control
Performance

Assessment
Tendering
Financial

Practices

Supplier
Financial Performance Pearson Correlation 1

Sig. (2-tailed)
Tendering Practices Pearson Correlation .622 1

Sig. (2-tailed) .032

Supplier Assessment Pearson Correlation .551 .112 1

Sig. (2-tailed) .0221 .0514

Material Control Pearson Correlation .656 .015 .021 1
Sig. (2-tailed) .014 .072 .145

Source: Survey Data, (2020)

The correlation between tendering practices and financial performance (Pearson = 0.622,

P<0.05) was strong and significant. The correlation between supplier assessment and

financial performance (Pearson = 0.551, P<0.05) was strong and significant. The

correlation between material control practices and financial performance (Pearson =

0.656, P<0.05) was strong and significant. The results indicated that the relationship

amongst the independent variables (tendering practices, supplier assessment and material

control practices) were weak and insignificant (Pearson Correlation<0.5, P>0.05) and

therefore independent variables did not have similar observable characteristics.

55
4.7.1 Regression Analysis

Regression analysis will present the relationship between dependent and independent

variable. The dependent variable was performance of Kenya meat commission on the

independent variable were material control procedures, assessment practices selling

practices.

The model summary was used to present the correlation coefficient and the coefficient of

determination. Correlation coefficient measures the strength and nature of the

relationship between variables while the coefficient of determination measures the extent

to which the independent variable will determine the changes in the dependent variable.

The results were presented table 4.12.

Table 4.12: Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .776 a .602 .516 .23415

a. Predictors: (Constant), Tendering practices , Supplier assessment, Material Control

Source: Survey Data, (2020)

It is evident that tendering practices supply assessment and material control contributed

to 51.6% changes in the financial performance of Kenya meat commission(Adjusted R-

squared of 51.6%). It is true that 48.4% all the changes of financial performance of

Kenya meat commission was determined by other factors not considered in the

study. Relationship between the independent variable (Tendering practices, supply

assessment and material control) was found to be positive and strong (correlation

coefficient=R=.776).

56
Analysis of variance presents the overall significance of the model. The results were

presented in table 4.13 below.

Table 4.13: Analysis of Variance

Indicator Sum of Squares Df Mean Square F Sig.

Regression 15.507 3 5.169 33.348 0.001
Residual 8.68 56 0.155
Total 24.187 59
Source: Research Data (2020)

The findings on analysis of variance in table 4.13 indicate that the overall model was

significant since the F critical (33.348) was significant (P<0.05). These results indicated

that tendering practices, supplier assessment and material control were good predictors of

financial performance of Kenya meat commission.

Regression coefficients shows the magnitude and the direction in the dependent variable

as a result of one unit change in the independent variable. The results were presented in

Table 4.14.

Table 4.14: Regression Coefficients

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
(Constant) 13.308 2.243 1.236 1.215
Tendering Practices 1.236 0.301 0.217 3.423 .002
Supplier Assessment 0.823 0.516 0.210 3.352 .771
Material Control 0.999 0.215 0.231 3.112 .001
Source: Survey Data, (2020)

The model used was;

57
Y= 13.308+ 1.236X1 + 0.823X2 + 0.999X3 +ε

The regression coefficients present that holding factors considered in the model constant

(tendering practices, supply assessment and material control) changes in the financial

performance of Kenya meat commission result to a 13.308 units marginal increase (β0 =

13.308).

Using the tendering practices coefficients generated in table 4.14, it is clear that the

relationship between tendering practices and the financial performance of Kenya meat

Commission was positive and significant (β1 =1.236, P=.002). A unit changes in the

tendering process would result to marginal 1.236 units’ changes in the financial

performance of Kenya meat commission. The study findings support Kimutai (2013) that

quality of a tender document positively and significantly affect the quality of work. The

findings disagree with Ayoti (2012) findings that tendering process is insignificant in

explaining changes in performance.

Table 4.14 results in supply assessment relationship with financial performance Kenya

meat commission indicated that their relationship was insignificant and positive.

(β2 =.823, P=.771) and therefore supply assessment insignificantly affect the financial

performance of Kenya meat commission. The findings disagree with Epainitus (2018) on

supply prequalification on organizational performance (a case of study of Danish

Refugee Council) which found that supplier capacity and supplier assessment

significantly affects performance.

58
The results on the relationship between material control and financial performance of

meat Commission was positive and significant (β 3 =.999, P=.001). The results also

indicate that a marginal unit change in the material control would result to 0.999 marginal

changes in the financial performance of Kenya meat commission. The findings support

Ondiek and Odera (2012) findings that material control positively and significantly

affects financial performance. The study also agrees with Keitny, Wanyoike and Ricu

(2014) material control affects greatly the organizational performance.

59
 CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter presents the summary of the data findings on procurement practices and

financial performance of Kenya meat commission. The study considered three indicators

of procurement practices which were supply assessment practices material control

practices and tendering practices.

5.2 Summary of the Study

The study aimed to establish the effect of procurement practices on financial

performances of Kenya Meat Commission. The findings on various variables were

summarised in the subsequent subsections.

The first objective was to determine the effect of tendering practices on financial

performance of Kenya Meat Commission. The results on tendering practices done by

Kenya meat commission indicates that majority of the department and branches within

the Kenya meat commission used open tendering method. Restricted tendering was found

to be less practiced by Kenya meat commission as indicated by a low mean and lower

variation. Single sourcing was found to be less practiced by Kenya meat commission. It

was clearly indicated that majority of the tenders were open to the public to participate.

The second objective was to assess the effect of supplier assessment practices on

performance of Kenya Meat Commission. The results indicated supplier capacity greatly

affected performance of Kenya meat commission. The respondents argued that the ability

60
of the suppliers to supply large quantities required by KMC enables the commission to

perform at its optimum level. The study also found that turnaround time is paramount in

ensuring that the performance of Kenya meat commission. The findings indicated that the

consistency of suppliers was vital at explaining the performance of Kenya meat

commission. The results also indicated that competence of suppliers is an important

aspect in explaining the performance of Kenya meat commission.

The third objective was to establish the extent to which material control practices affected

the performance of Kenya meat commission. The respondent argued that the inventory

quantities are very important in ensuring that these effective and efficiency in the

operation of Kenya meat commission and ensuring that there is constant supply of meat

to the users in Nairobi and its environment. It was evident that inventory planning control

system greatly affected the performance of Kenya meat commission. The respondents

indicated that planning helps in controlling the stock levels in ensuring that the cost of

handling and the cost of transport is maintained at optimum level. The finding on

distribution material in Kenya meat commission indicated that it greatly affected the

financial performance of Kenya meat commission.

5.3 Conclusion

Based on the summary of the study, the study concluded that the relationship between

tendering practices and the financial performance of Kenya meat Commission was

positive and significant. The quality of a tender positively and significantly affect the

quality of work done. The study concluded that open tendering processes was the most

61
practiced form of tendering in Kenya meat commission. The restricted and single source

tendering were only used on special occasions.

The study concluded that supply assessment relationship with financial performance

Kenya meat commission was insignificant. Therefore, the changes of supply

assessment insignificantly affect the financial performance of Kenya meat commission.

From the descriptive results the study concluded that supplier capacity, supplier

competency, supplier consistency and turn-around time were major and vital in

determining the financial performance in Kenya Meat Commission.

The study concluded that the relationship between material control and financial

performance of meat Commission was positive and significant. The study also concluded

that material control would result to positive marginal unit changes in the financial

performance of Kenya meat commission. The study concluded that inventory quantity

levels, inventory control systems, material handling and physical distribution of resources

were significant contributors to financial performance of Kenya Meat Commission.

5.4 Recommendation

Based on the conclusions of the study, the following recommendations were made. The

study recommended that tendering process should consider open method of tendering

which is fair to all. The researcher recommended that the management of Kenya meat

commission should ensure fairness in tendering process by having an open systems. This

would ensure that there is competitiveness in the tendering process in Kenya Meat
62
Commission. The research also recommends that the Government should ensure that

process of material control and supplier assessment process in Kenya meat commission is

clear and that there is a unit responsible for each step.

There was poor utilization of the available assets and capacity in KMC and therefore the

research recommends that the County government together with the national government

should work together to ensure there is proper utilization of the available assets and the

capacity. The study recommends that the government should consider privatising Kenya

Meat Commission if no considerable measures can be put in place to revive its full

operations.

5.5 Suggestions for Further Research

This study investigated on effect of procurement practices on financial performance of

Kenya meat commission. The study considered three indicators of procurement practices

which were supply assessment practices material control practices and tendering

practices. The study suggests that further research to be done on inter-organizational

factors facing success of KMC. The study considered three independent variables (supply

assessment practices material control practices and tendering practices) which according

to the findings contributes to 51.6% of financial performance of KMC as represented by

the adjusted R2 . The study therefore suggests further study to establish the contributors of

48.4% on financial performance of KMC.

63
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 APPENDICES
APPENDIX I: COVER LETTER
Kenyatta University
P.O. Box 43844-00100
Nairobi,
Kenya.
Tel: +254 20 870 Ext 4000/3000

Dear Sir/Madam,

REF: Invitation to Participate in a Research

I am a student at Kenyatta University currently conducting a research on effects of

procurement procedures on performance of Kenya Meat Commission (KMC). I humbly

request that you spare a few minutes off your schedule to complete the attached

questionnaire. The questions seek your opinions regarding your organization relationship

marketing and customer satisfaction. Kindly respond with your most honest opinion.

Your anonymity is assured and the information you provide will remain confidential.

Thank you for participating in this study. Your cooperation and contribution in this

research is appreciated.

Yours faithfully,

Aminazahra Mohamud Sigat

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 APPENDIX II: RESEARCH QUESTIONNAIRE
This questionnaire is designed to collect data on procurement procedure and performance
of Kenya Meat Commission. All information provided will be treated with
confidentiality.
Answer all questions as indicated by either filling in the blank or ticking the option that
applies.
Part one: Demographic Information
1) What is your gender? Male [ ] Female [ ]
2) What is your age?
18-25 years [ ] 26-35 years [ ]
36-45years [ ] 46 years and above [ ]

3) For how long have worked for KMC?

Below 1 years [ ] 2-3 years [ ]
4-5years [ ] 46 years and above [ ]

4) What is your designation in the organisation?

Top Manager [ ]
Middle level Manager [ ]
Lower level Manager [ ]

5) What is your highest level of education?

Post graduate [ ] Undergraduate [ ]
Diploma [ ] Certificate [ ]

PART 2: Procurement procedures and performance of Kenya Meat Commission

Tendering Procedures
6) To what extent do you think tendering procedures affect the Performance of
Kenya Meat Commission?
Very great extent [5] Moderate extent [3] Very low extent [1]
Great extent [4] Low extent [2]

69
7) To what extent do the following aspects tendering procedures affect the Performance
of Kenya Meat Commission?
Use a scale of 1-5 where 1= Very great extent; 2 Great extent; 3= Moderate extent;
4= Low Extent and 5= Very Low Extent

Aspects of Tendering Procedures 1 2 3 4 5

Open tendering
Restricted tendering
Competitive tendering
Single source tendering
8) In your opinion how do the aspects tendering procedures affect the performance of
Kenya Meat Commission?

………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………
Supplier Assessment Procedures
9) To what extent does supplier assessment procedures affect the performance of Kenya
Meat Commission?

Very great extent [5] Moderate extent [3] Very low extent [1]
Great extent [4] Low extent [2]

10) To what extent do the following aspects of supplier assessment proceduresaffect the
Performance of Kenya Meat Commission?
Use a scale of 1-5 where 1= Very great extent; 2 Great extent; 3= Moderate
extent; 4= Low Extent and 5= Very Low Extent

70
Aspects of Supplier 1 2 3 4 5
Assessment Procedures
Supplier capacity
Turn-around time
Supplier consistency
Supplier competency
11) In your opinion how do the aspects of supplier assessment proceduresaffect the
performance of Kenya Meat Commission?
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………
Material Control Procedures
12) To what extent does material control procedures affect the Performance of Kenya
Meat Commission?

Very great extent [5] Moderate extent [3] Very low extent [1]
Great extent [4] Low extent [2]

13) To what extent do the following aspects of material control procedures affect the
Performance of Kenya Meat Commission?
Use a scale of 1-5 where 1= Very great extent; 2 Great extent; 3= Moderate
extent; 4= Low Extent and 5= Very Low Extent
Aspects of Material control 1 2 3 4 5
procedures
Inventory quantity levels
Inventory planning control system
Material handling and storage
Physical distribution
14) In your opinion how do the aspects of material control procedures affect the
performance of Kenya Meat Commission?

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………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………
Performance of Kenya Meat Commission
15) What is your level of agreement with how projects in Kenya meat commission have
met the outlined criteria?Use a scale of 1-5 where 1= Very great extent; 2 Great
extent; 3= Moderate extent; 4= Low Extent and 5= Very Low Extent
2014 2015 2016 2017 2018
Sales
Net Profit
Total Assets

End of Questionnaire
Thank you for participating.

72
73
74
 NATIONAL COMMISSION FOR
SCIENCE,TECHNOLOGY &

Ref No:61104 Date of Issue:

1 /November
201
RESEARCH LICENSE

This is to Certify that Ms.. AMINAZAHRA SIGAT of Kenyatta University, has been licensed to conduct rese
the topic: PROCUREMENT PRACTICES AND FINANCIAL PERFORMANCE OF KENYA MEAT COMM
period ending :
License No:
NACOSTI/P/19/286

61104
Applicant Identification Director
Number NATIONAL COMMISSION FOR
SCIENCE,TECHNOLOGY &
INNOVATIO

Verification QR

NOTE: This is a computer generated License. To verify the authenticity of this document,
Scan the QR Code using QR scanner
75
THE SCIENCE, TECHNOLOGY AND INNOVATION ACT, 2013

The Grant of Research Licenses is Guided by the Science, Technology and Innovation
(Research Licensing) Regulations, 2014

CONDITIONS

1. The License is valid for the proposed research, location and specified period
2. The License any rights thereunder are non-transferable
3. The Licensee shall inform the relevant County Director of Education, County
Commissioner and County Governor before commencement of the research
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clearence from relevant Government Agencies
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(thesis) within one of completion of the research
8. NACOSTI reserves the right to modify the conditions of the License including
cancellation without prior notice

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