EFFECTS OF CENTRALIZATION OF PROCUREMENT FUNCTIONS ON PERFORMANCE OF STATE ENTERPRISES: A CASE OF KENYA AIRPORTS AUTHORITY

Allan Muturi, Martin Ogutu

Abstract


Most organizations that practice centralized procurement functions face major challenges that hamper realization of increased organization performance. The general objective of this study was to investigate the effects of centralization of procurement functions on the performance of state enterprises, a case study of Kenya Airports Authority. The study specific objectives were; to assess how automation of procurement functions affects the performance of state enterprises, to investigate how communication affects the performance of state enterprises, to examine how the level of procurement regulations compliance affects performance of state enterprises and to establish how supplier relationship management affects performance of state enterprises. The study adopted a case study research design and the study population comprised of a total of 1490 staff working at Kenya Airports Authority offices in Nairobi. The study applied disproportionate stratified sampling technique coupled with purposive to select a sample size of 135 respondents. The study used questionnaires as the main data collection instruments and a pilot study was conducted to pretest questionnaires for validity and reliability. Descriptive statistics data analysis method was applied to analyze the gathered data using a statistical package for social scientists SPSS. The analyzed results were presented on tables and charts and correlation analysis was carried out to establish the relationship between the research variables. The study found out that centralized procurement functions played a great role towards determination of the state of the organization performance as it enhanced standardization of procurement procedures and discouraged existence of irregularities in execution of procurement functions. The study concluded that the key notable effects of centralized procurement functions that affects the performance of state enterprises includes; automation, communication, level of procurement regulations compliance and supplier relationship management. The study recommended that for state enterprises to realize increased organization performance, procurement functions should be automated through implementation of computerized procurement systems, effective communication channel should be employed, the level of procurement regulations compliance should be improved and finally strong supplier relationship should be developed.


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