INFLUENCE OF STRATEGIC SOURCING ON ORGANIZATIONAL POSITIONING

IN TYRE MANUFACTURING FIRMS IN KENYA:

A Case of Sameer Africa Limited

BY

JOHN MIRANGI KARIUKI

A RESEARCH PROJECT SUBMITTED TO SCHOOL OF BUSINESS MANAGEMENT

AND ECONOMICS IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF DEGREE IN PURCHASING AND SUPPLIES MANAGEMENT OF THE
DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY.

JANUARY 2018
 DECLARATION
This project is my original work and has not been presented to any institution of higher learning
for examination.

Signature……………………………. Date…………………………...

JOHN MIRANGI KARIUKI

B011-01-0353/2014

This project has been submitted for examination with my approval as university project supervisor.

Signature ……………………………. Date …………………….

DR. DAVID KIARIE

Chairman,

Department Of Procurement and Logistics.

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 DEDICATION
I dedicate this research project to my dad Charles Kariuki Mwangi, mum Elizabeth Wangari
Kariuki and my elder brother Anthony Karanja Kariuki for their unwavering support in my
academic career.

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 ACKNOWLEDGEMENTS
I wish to thank almighty God for the gift of life and strength to go through the entire course and in
particular this research exercise. I would like to take this opportunity to express my sincere
gratitude and appreciation to my research supervisor Dr. David Kiarie for his valuable assistance
and great guidance, all my friends and course mates for their contribution.
My sincere gratitude goes to my beloved family for giving unconditional support, unremitting love
and encouragements.

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 ABSTRACT
The main objective of the study was to determine the influence of strategic sourcing on
organizational positioning in tyre manufacturing firms in Kenya: A case of Sameer Africa Ltd.
The study found that supplier development, early supplier involvement, supplier relationship
management and contract management were the main determinants of organizational positioning
at Sameer Africa Ltd. That is; training of suppliers on aspects such as cost of delays enabled them
to enhance supply commitments, consultation of users during specification development led to
reduced wastage of purchased items in the organization, vertical integration with supply chain
partners enabled the organization to improve customer service in terms of timely delivery, supplier
site visits before selecting them enabled the organization to select competent suppliers. Finally,
the study found that incorporation of dispute management in the contract document helped to
improve supplier’s trust with the organization. The study used descriptive design where data was
collected through use of structured questionnaires. The study used a sample size of 116
respondents out of a target population of 165 employees, which constituted of departmental
managers and the other staffs in the selected departments. Data was analyzed using the Statistical
Package for Social Sciences (SPSS) version 21, due to its ability to predict for identifying groups
such as descriptive statistics, cross tabulation, frequencies, as well as bivariate statistics such as
Means, ANOVA and Correlation tests while data presentation was done by use of tabular
summaries and pie charts. The study recommends that procurement at Sameer Africa should take
advantage of transactional kind of relationship with suppliers who supply strategic items so as to
take advantage of best available prices in the market. The study further recommends that supply
chain management in line with top most management should ensure that the organization have a
supplier training program that is in line with the organization’s corporate objectives, the
organization should further consider supporting its suppliers not only financially but also through
expertise sharing which will guarantee a win-win outcome with suppliers, Supply chain
management in the organization should ensure that disputes management mechanisms such as
negotiation and mediations are incorporated in the contract document so as to protect supplier
relationships in the future. Finally, the organization should ensure that it involves suppliers early
especially those who supply strategic items such as coal and rubber products used during
manufacturing of tyres.

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Table of Contents
DECLARATION ............................................................................................................................ ii
DEDICATION ............................................................................................................................... iii
ACKNOWLEDGEMENTS ........................................................................................................... iv
ABSTRACT .................................................................................................................................... v
LIST OF TABLES ......................................................................................................................... ix
LIST OF FIGURES ........................................................................................................................ x
LIST OF ACRONYMS/ABBREVIATIONS ................................................................................ xi
OPERATIONAL DEFINITION OF TERMS .............................................................................. xii
CHAPTER ONE ............................................................................................................................. 1
INTRODUCTION OF THE STUDY ............................................................................................. 1
1.1Introduction ............................................................................................................................ 1
1.2Background of the Study ........................................................................................................ 1
1.2.1Strategic Sourcing ............................................................................................................... 2
1.2.1.1 Global Vs. Local Sourcing .............................................................................................. 4
1.2.2Organizational Positioning .................................................................................................. 5
1.2.2.1Tyre Manufacturing Firms in Kenya ................................................................................ 6
1.2.3Profile of Sameer Africa Ltd ............................................................................................... 7
1.3Statement of the Problem ....................................................................................................... 7
1.4Objectives of the Study .......................................................................................................... 9
1.4.1 General Objective ............................................................................................................... 9
1.4.2Specific Objective of the Study........................................................................................... 9
1.5 Research Questions ............................................................................................................... 9
1.6 Significance of the Study ...................................................................................................... 9
1.7 Limitation of the Study ....................................................................................................... 10
1.8 Scope of the Study............................................................................................................... 10
CHAPTER TWO .......................................................................................................................... 11
LITERATURE REVIEW ............................................................................................................. 11
2.1 Introduction ......................................................................................................................... 11
2.2 Theoretical review ............................................................................................................... 11
2.2.1Resource Based Theory..................................................................................................... 11
2.2.2 Partnership Theory ........................................................................................................... 12
2.2.3 Network Theory ............................................................................................................... 13
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 2.2.4 Agency Theory ................................................................................................................. 13
2.3 Empirical Review ................................................................................................................ 14
2.3.1 Supplier Development ...................................................................................................... 14
2.3.2 Supplier Relationship Management (SRM) ..................................................................... 15
2.3.3 Early Supplier Involvement (ESI) .................................................................................... 16
2.3.4 Contract Management ...................................................................................................... 17
2.4Review of Critical Literature and Research Gaps to be filled.............................................. 18
2.4.1 Research Gaps to be filled ................................................................................................ 19
2.5 Summary of Literature ........................................................................................................ 20
2.6Conceptual Framework ........................................................................................................ 21
2.6.1 Organizational Positioning ............................................................................................... 22
2.6.2 Supplier Development and Organizational Positioning ................................................... 22
2.6.3 Supplier Relationship Management and Organizational Positioning .............................. 22
2.6.4 Early Supplier Involvement and Organizational Positioning........................................... 23
2.6.5 Contract Management and Organizational Positioning ................................................... 23
CHAPTER THREE ...................................................................................................................... 24
RESEARCH METHODOLOGY.................................................................................................. 24
3.1 Introduction ......................................................................................................................... 24
3.2 Research Design .................................................................................................................. 24
3.3 Target Population ................................................................................................................ 24
3.4 Sample Design..................................................................................................................... 25
3.5 Data Collection Procedures ................................................................................................. 26
3.6 Data Analysis and Presentation ........................................................................................... 26
3.7 Ethical Considerations......................................................................................................... 28
CHAPTER FOUR ......................................................................................................................... 29
DATA ANALYSIS, PRESENTATION AND INTERPRETATION OF FINDINGS ................ 29
4.1Introduction .......................................................................................................................... 29
4.2 Presentation of Findings ...................................................................................................... 29
4.2.1 Response Rate .................................................................................................................. 29
4.2.2 Demographic Information ................................................................................................ 29
4.2.2.1 Distribution of Respondents by Gender ........................................................................ 30
4.2.2.2 Distribution by Age of Respondents ............................................................................. 30

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 4.2.2.3 Distribution by Level of Education ............................................................................... 31
4.2.2.4 Distribution by Average Years Worked ........................................................................ 31
4.2.2.5 Distribution by Respondent’s Department of Operation............................................... 32
4.2.3 Descriptive Statistics ........................................................................................................ 33
4.2.3.1 Overall Organizational Positioning of the Organization ............................................... 33
4.2.3.2 Supplier Development ................................................................................................... 35
4.2.3.3 Supplier Relationship Management .............................................................................. 37
4.2.3.4 Early Supplier Involvement .......................................................................................... 39
4.2.3.5 Contract Management ................................................................................................... 41
4.2.4 Correlation and Regression Analysis ............................................................................... 43
4.2.4.1 Regression Analysis ...................................................................................................... 45
4.3 Summary of Data Analysis ................................................................................................. 49
CHAPTER FIVE .......................................................................................................................... 50
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ....................... 50
5.1 Introduction ......................................................................................................................... 50
5.2 Summary of the Findings .................................................................................................... 50
5.2.1 Influence of Supplier Development on Organizational Positioning. ............................... 50
5.2.2 Influence of Supplier Relationship Management on Organizational Positioning. ........... 51
5.2.3 Influence of Early Supplier Involvement on Organizational Positioning ........................ 51
5.2.4 Influence of Contract Management on Organizational Positioning ................................. 51
5.2.5 Forecasting Model ............................................................................................................ 51
5.3 Conclusion of the Study ...................................................................................................... 52
5.4 Recommendations of the Study .......................................................................................... 52
5.5 Areas for Further Study ....................................................................................................... 53
References ..................................................................................................................................... 54
Appendix 2: Research Questionnaire............................................................................................ 57
QUESTIONNAIRES .................................................................................................................... 57

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 LIST OF TABLES

Table 3. 1 Target population ......................................................................................................... 25

Table 3. 2 Sample Population ....................................................................................................... 26

Table 4. 1Distribution by Age of respondents .............................................................................. 31

Table 4. 2 Distribution by Level of Education ............................................................................. 31
Table 4. 3Distribution by Average years worked ......................................................................... 32
Table 4. 4 Distribution by Respondent's Department of Operation……………………………...32
Table 4. 5 Influence of Strategic Sourcing on Organizational Positioning of the Organization .. 34
Table 4. 6 Effect of supplier development on organizational positioning .................................... 36
Table 4. 7 Effect of Supplier Relationship Management on Organizational Positioning ............. 38
Table 4. 8 Effect of Early Supplier Involvement on Organizational Positioning ......................... 40
Table 4. 9 Effect of Contract Management on Organizational Positioning .................................. 42
Table 4. 10 Correlation Analysis .................................................................................................. 44
Table 4. 11Regression Model Summary....................................................................................... 46
Table 4. 12 ANOVA ..................................................................................................................... 46
Table 4. 13 Regression Coefficients Table ................................................................................... 47

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 LIST OF FIGURES
Figure 2. 1Conceptual Framework ............................................................................................... 21

Figure 4. 1 Response rate .............................................................................................................. 29

Figure 4. 2Gender of Respondents................................................................................................ 30

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 LIST OF ACRONYMS/ABBREVIATIONS
SAL- Sameer Africa Ltd

COMESA- Common Market for Eastern and Southern Africa

SCM- Supply Chain Management

ICT- Information and Communication Technology

SRM- Supplier Relationship Management

ESI- Early Supplier Involvement

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 OPERATIONAL DEFINITION OF TERMS
Strategic Sourcing: Sislian and Satir (2000) defines strategic sourcing as a framework to assist
make versus buy decisions by considering the importance of a component in achieving competitive
advantage and the future opportunities in having the process needed for in-house production.

Organizational Positioning: It refers to positioning of an organization (unit) in the future while

taking into account the changing environment and also devising the desired future position on the
basis of present and foreseeable developments, and the making of plans to realize that positioning.
It is a way in which a business as a whole distinguishes itself in a valuable way from its competitors
and deliver value to specific customer segments (Wickham, 2001).

Supplier Development: It refers to any activity that a buyer undertakes to improve a supplier’s
performance and/or capabilities to meet the buyer’s short- or long-term supply needs (Lysons &
Farrington, 2006).

Supplier Relationship Management (SRM): refers to a comprehensive approach by an

organization to strategically plan for, and manage all interactions with firms that supply the
products and services it uses (Kleinbaum, 2008).

Early Supplier Involvement (ESI): (Mikkola and Skjott-Larsen, 2006; Van Wele, 2010) defines
ESI as a form of vertical collaboration between supply chain partners in which the manufacturer
involves the supplier at an early stage of the product development process.

Contract Management: Contract management refers to those activities related to contract

handling including invitation to and evaluation of bids; awarding and implementation of contracts;
measurement, and payment calculation (Kakwezi, 2012).

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 CHAPTER ONE

INTRODUCTION OF THE STUDY

1.1Introduction
This chapter provides the background information of the study, statement of the problem, the
objective of the study, research questions, significance, limitation and scope of the study.

1.2Background of the Study

The structure of the current global business context is changing quickly, generating a great deal of
uncertainty (Schalén, Lindén, 2012). This change is contributed by conditions such as changed
buyer preferences, shorter product lifecycles, technological changes and increased globalization
(Pressey et al. 2007). Due to changed market conditions, worldwide companies are driven to first
prioritize on cost and cycle-time reduction, quality improvement and focus on core activities (Van
Weele, 2010).In order to remain competitive in a competitive business environment, many
companies in the world have resorted to cost-cutting, lay-offs, restructuring, and increased
productivity measures to manage expenses and to increase profits. Senior executives in many
organizations have realized that on average, 50% or more of an organization’s operating budget is
spent on purchased goods and services (Pattni, 2006). Therefore, the decisions made by purchasing
professionals can help to determine the financial viability of the organization (Ball, 2005).

Porter’s, (1996) view that strategies are vital for companies future competitiveness and that they
can be used to benefit perception about markets companies operates in. Strategies exist in different
levels in an organization and are the direction and scope of an organization over the long-term,
which achieves advantages in a dynamic environment through its configuration of resources and
competences with the aim of fulfilling stakeholder expectations (Johnson et al. 2008, p. 3). The
competitive market conditions has led to a shift in companies’ strategy thinking. Strategies focus
mainly on core activities and business development. One effect of this is that organizations choose
to outsource activities they don´t consider to be core business. This has made management more
aware of the growing influence of purchasing functions in the business and its strategic role in the
overall corporate strategy (Van Weele, 2010; Thrulogachantar and Zailani, 2011). An
organization’s purchasing strategy can be developed by analyzing supplier’s power and the
principles of buyer selection. Organization’s then need to see to the stability and competitiveness

1
of the supply base, how they want to cooperate vertical with their suppliers and their distribution
among suppliers (Porter, 2004).

The purpose of purchasing actions is a determining factor of the level of strategic approach and
strategic intent with involved stakeholders (Ho et al. 2011). Strategic implementation is a process
with several aspects that consider strategic activities as internal competences which can lead to
capability improvement and stronger competitiveness (Chiang et al. 2012). Strategic approach is
defined in this study as an effort by the organization to create long-term goals, objectives and
strategies concerning management of supply base and purchasing functions. It is making decisions
on a management level that affect activities on an operational level and making the purchasing
department a central part of the information and material flow (Schalén, Lindén, 2012). Xu, (2010)
define supply chain as a set of activities ranging companies functions from the ordering and receipt
of raw material, manufacturing of products, through to the distribution and delivery to the
customer. An objective of a Supply Chain Management (SCM) for the buying organization is to
achieve sustainable competitive advantages by, among others, reducing cost and lead time and
enhance quality, delivery performance and effectiveness. Close relationships in the supply chain
could be a determining factor for the competitive positioning. For the supply chain to operate
efficiently all functions that are related need to operate in an integrated manner, including quality
management (Schalén & Lindén, 2012). To enable a working relationship between the supply
members the communication flow of SCM is vital (Chen et al, 2004) and information systems is
growing in SCM context for strengthen communication (Xu, 2010). Knolmayer, (2009) indicate
that SCM would not be possible without advances in information systems and technology (Achrol
and Kotler, 1999; Knolmayer, 2009). Short-term objective of SCM is to increase productivity and
reduce inventory and cycle times. The strategic long-term goal is to increase key deliverable´s
such as, customer satisfaction, market share and profits, but ultimately improving the total process
efficiency and effectiveness for all supply chain members (Williams, 2006).

1.2.1Strategic Sourcing
Sislian and Satir (2000) defines strategic sourcing as a framework to assist make versus buy
decisions by considering the importance of a component in achieving competitive advantage and
the future opportunities in having the process needed for in-house production. It involves taking a
strategic approach to the selection of suppliers an approach that is more aligned with the
organization’s competitive strategy. Sourcing refers to researching the market for potential input
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sources, securing the continuity of these sources, searching for alternative sources and keeping the
relevant knowledge up to date (Vollman, Berry, and Whybark, 2004). Ideally, the objective of all
companies is to sustainably and competitively sell goods and/or services. In order to produce goods
or services, inputs such as raw materials, skills, personnel and information are needed. Since all
these inputs originates from a certain place, this helps to bring sourcing decisions into place.
Reduction in sourcing costs helps in improving returns on investment by increasing both profit
margins and asset turnover rate (Dobler& Burt, 1996; Leenders&Fearon, 1997). Many companies
globally have realized the need for elevating traditional procurement function to modern strategic
sourcing for value addition across the supply chain. Sourcing costs signify 40 to 80 percent of the
total cost of goods traded, and 30 to 50 percent of revenues a ratio that has remained constant in
most industries for many years. Organizations excelling in strategic sourcing save almost10 to 20
times as much as it cost to operate their sourcing processes (Chepng’etich, Waiganjo and Karani,
2015). The effort required to reduce 10 percent of the sourcing cost is much less than gaining
similar amount of revenue (Chopra &Meindl, 2003).

Strategic sourcing comprises concepts of strategic purchasing, supplier development, information

sharing with suppliers and inter-functional integration of purchasing (Schalén, Lindén, 2012).
Decisions around strategic sourcing cannot focus only on operational level, such as cost, quality,
and delivery. It has to incorporate a strategic level and capabilities evaluation of suppliers, such as
highlighting quality management practices, long-term quality output, supplier´s strength, process
capabilities, management practices, cost reduction at the same time as increasing profit, design
and development capabilities (Talluri and Narasimhan, 2004; Rendon, 2005; Giunipero et al.
2006). Due to the increased competition, strategic sourcing need to consider the total cost of
ownership, company’s growth and profit making and comparing different alternative partners
(Faes and Matthyssens, 2009). Sourcing strategies helps with the procedure for organizations to
establish long-term relationships with their suppliers and achieve the considerations of strategic
sourcing (Chiang et al. 2011). When conducting a plan for strategic sourcing there are some aspects
to consider, such as technology, quality, availability, cost and fulfillment. Technology is a vital
part for more effective communication with suppliers. The strategic sourcing plan is performed in
an implementation phase (Van Weele, 2010).

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(Rendon), 2005 sees strategic sourcing process as a step in procurement process that incorporate
the identification and selection of the supplier whose cost, technologies, qualities, dependability,
timeliness and service best meet the organization’s needs. (Van Weele, 2010, p.6) argued that
procurement include all activities required in order to get the product from the supplier to its final
destination. It is related to organization’s value chain and is part of purchasing input, it could be
several factors such as raw materials or supplier (Van Weele, 2010). There are two main roles of
strategic sourcing; rebuilding the supply base and responding to purchasing needs reported from
manufacturing and other functions of the organization. There is no point in time when an
organization should design a supply base, it can be for either current business or establishing new
business (Johnsson, 2005). In the last two decades, the purchasing function has changed from being
a supporting role to becoming a strategic activity, and now makes a significant contribution to the
competitive advantage of an organization (Quayle, 2002; Carr &Smeltzer, 1997), therefore
sourcing if properly structured can efficiently combine the fundamental competencies of a given
firm with the skills and abilities of its suppliers. Sourcing decisions are important for any
organizations that want to leverage on its core competencies and outsource other activities in order
to gain and retain competitiveness (Chepng’etich, Karani and Waiganjo (2015).

1.2.1.1 Global Vs. Local Sourcing

The strategies are built based on whether the suppliers for the product are globally or locally
placed, depending on the requirement of the products and the supply market structure. Local is
often preferred when it comes to high-tech products that might require high flexibility on support,
changes and maintenance. (Van Weele, 2010) argued that the decision about what sourcing
strategy to choose should be based on considering the total cost of ownership. If an organization
manage to integrate and coordinate their supplier relationships on a global scale, they have a
chance of enhancing their competitiveness (Murray et al.2009). According to Monzcka, et al.
(2005, p.304), global sourcing refers to a proactive integration and coordination of common items
and materials, processes, design, technologies and suppliers across worldwide purchasing,
engineering and operating locations. Both small and large organization choose to outsource
activities that before was performed within the organization and sourced from domestic suppliers
(Murray et al.2009).

The choice of preceding a global sourcing strategy is not only to reduce price but also to enhance
reliability, quality and technology of products and components (Schalén, Lindén, 2012). How to
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source globally is based on strategic decisions that are affected by an organization’s capabilities
to compete (Kotabe and Murray, 2004). There are both advantages and disadvantages for the
organization practicing global sourcing. Advantages are mostly connected to costs and price
benefits such as lower unit costs and different productivity levels (Schalén, Lindén, 2012). The
importance is to also consider the possible advantages besides costs such as developing alternative
suppliers to stimulate competition, access to product and process technology, getting access to new
markets and enhance quality while lowering costs. (Handfield et al. 2009; Van Weele, 2010)
argued that it could give a competitive advantage if sourcing from suppliers that competitors might
not use, domestic could lead to the same supplier and the same advantages.

The disadvantages can be more complex since it is often a difference in culture, the distribution
and logistics is more complicated leading to increased handling costs (Van Weele, 2010). When
sourcing globally, there are some pitfalls to avoid for proceeding with the strategy and especially
with low cost countries there is a need for awareness of the fast changing political circumstances
that can affect supplier relationships. There are also local environmental effects which makes it
vital for greater flexibility (Kotabe and Murray, 2004).

1.2.2Organizational Positioning
(Wickham, 2001) defines organizational positioning as a way in which a business as a whole
distinguishes itself in a valuable way from its competitors and deliver value to specific customer
segments. Baines et al. (16) defines ‘position’ as a statement of where a company sits within its
supply chain network. They define ‘strategic positioning’ as being concerned with the process of
choosing those production‐centered activities that an organization should carry out internally, and
those that should be external and under the ownership and control of suppliers, partners,
distributors, and even customers. Baines et al. (16) propose an integrated positioning process that
guides manufacturers through organizational positioning decision. The decision process is aimed
to encourage a holistic view of supply chain opportunities and threats, appreciate the dynamics of
the organization and its environment, and link all organizational positioning decisions to
competitive strategy.

Hooley et al (2004) argues that positioning may occur at three distinct levels: the organization
level, product/service level, and brand level. Kotler and Andreasen (2006) caution that a
positioning strategy is a key component of the strategic marketing planning process and is aligned

5
with organizational goals/objectives, internal resource capabilities and external market
opportunities. Positioning is outward-focused, more fully recognizing the competitive and market
environment within which an organization operates (Hooley et al., 2004). Positioning defines an
organization’s specific niche within its sphere of influence. With a strong organizational position,
the organization is poised for ongoing success, sustainability, and distinct competitive advantage.
It defines the organization’s identity and helps to create distinction in a competitive environment.
Organizations that are well positioned have a presence which allows them to achieve strategic
goals in a seemingly effortless manner (Munene, 2013).

1.2.2.1Tyre Manufacturing Firms in Kenya

The formal Tyre industry in Kenya has been in existence for more than forty years. The pioneer
company was Firestone East Africa Limited (now Sameer Africa Limited) which enjoyed about
twenty years monopoly with its flagship brand „Firestone‟. Later, upon liberalization of the market
in the 1990‟s, other players joined the industry for example, Tread setters Tyres Limited, Auto
express Kenya Limited (formerly Nyanza petroleum Limited), Kingsway Tyres among others
(Kapkol, 2016). Currently, there are about ten major formal players in the market, some very
modest to large multinational business groups and numerous informal dealers some of whom
import different tyre brands with no particular loyalty to any brand. Most firms are owned by
indigenous Kenyans (Lewa & Makaya, 2008). A significant development in the local tyre industry
occurred since 1992, when the liberalization of the Kenyan economy took place. Entry barriers
exemplified by difficulties in importation of finished products and governments‟ support for local
manufactures, then Firestone East Africa Limited had slowed down the pace of new entrants. The
liberalization of the economy resulted into abolishment of these entry barriers and the rate of new
entrants increased with the number of industry players increasing to the current estimate of about
ten formal players and numerous informal players. There has been a sharp rise in the importation
of cheap tyres in this industry. This has adversely affected the demand for locally manufactured
tyres as customers opt for cheaper tyres (Shoreward E. A, 2015).
The liberalization of tyre market in Kenya have caused deregulation and removal of government
controls. According to (Shoreward E.A., 2015), There are over 30 tyre brands in Kenya today and
the biggest chunk is dominated by the Chinese and Indian tyres. This takes over 40% of the market
share while those produced locally take about 35%. Sameer Africa Limited have faced a
considerable decline in its sales revenue due to the entry of foreign tyres and increasing production

6
costs resulting from rising cost of energy and high taxation by the government. According to
Gitonga (2016), in the year 2015 the firm produced tyres worth Sh2.4 billion down from Sh3
billion in the previous year. This has forced the firm to reconsider its manufacturing business in
the wake of dwindling sales at home and all the regional markets of Burundi, Tanzania and Uganda
(Lewa & Makaya, 2008).

1.2.3Profile of Sameer Africa Ltd

Sameer Africa Limited, under the name Firestone East Africa (1969) Limited, was established in
Kenya in 1969 by Firestone Tyre and Rubber Company of the USA and the Government Kenya
to produce tyres for the East African market. The commercial distinctiveness changed to Sameer
Africa Limited in April 2005 after a fruitful negotiation of all the procedural and management
agreement with Bridgestone Japan (Kapkol, 2016). This transformation developed an independent
tyre manufacturer in Kenya whose aim is to provide the East African and the COMESA regions.
Until 30th September 2016, the company had a production capacity of 2400 tyres a day. It has over
500 direct employees and over 8,000 indirect employees. The company produces an all-inclusive
variety of tyres such as passenger car tyres, light and medium commercial vehicle tyres, heavy
truck and bus tyres, off-the-road tyres, under the brand name Yana Tyres (Kapkol, 2016). A market
survey conducted in 2015 by Shoreward East Africa, indicates that Sameer Africa Limited market
share of its locally manufactured Yana Tyre Brand has reduced to 25% in the total tyre market in
Kenya. As a result, the company closed down local production of tyres in 30th September 2016
and has since outsourced manufacture of Yana Tyre Brand to lower cost jurisdictions in China and
India, hence necessitating a change in its status from being a manufacturer company to a reseller
firm specializing in reselling of tyres manufactured from overseas. The outsourcing strategy has
enabled the organization to upgrade or revamp many of the Yana tyre patterns that had become
dated and also to incorporate all of the latest tyre technologies available. The company is also able
to take advantage of the economies of scale that large tyre manufacturers enjoy in terms of “factory
gate” production costs. This has enabled the firm to offer advanced quality and competitively
cheaper tyres to customers than its competitors in the tyre market, a strategy that is helping the
firm to enhance its overall positioning and the ability to achieve the strategic goals.

1.3Statement of the Problem

Outsourcing has been one of the major strategies that organizations utilize so as to remain
competitive in the current changing business environment. However, despite the growing emphasis

7
on outsourcing, several notable gaps in practice remain (Nyangau, Mburu & Ogollah, 2014). The
positioning of Sameer Africa Ltd in terms of sourcing of goods and services in the recent past has
been below expectation and this has raised eyebrows among the stakeholders. A survey by
Shoreward E. A (2015) on positioning strategies in sourcing efforts at Sameer Africa Ltd found
that there are many failures especially in controlling sourcing costs on energy and raw materials
during manufacturing which consequently contribute to rising costs of producing tyres hence
rendering them uncompetitive in the tyre market as consumers tends to prefer cheaper but low
quality tyres from Asian fair markets. These failures has negatively impacted the sales volume
leading to lessening profits as reported in Sameer Africa 2016 Integrated Annual Report and
Financial Statements showing that the firm recounted Sh15 million net loss in 2015 paralleled to
Sh66 million net loss in 2014. The survey found that the ‘dangerous mistakes’ in sourcing efforts
are largely contributed by poor sourcing strategies applied in the organization. The same survey
observed that poor positioning as a result of lack of strategic sourcing decisions will continue to
be witnessed in the company.
Outsourcing shows growth across manufacturing firms in global regions. The market has been
taking off in organizations mostly from United States, all of which have previously resisted the
trend. A survey by ITI Manufacturing Inc. (2014) on top five global companies excelling in
overseas manufacturing found that Apple Inc. outsourced manufacture of its popular products such
as iPhones and iPads to China where it used to take up to nine months for the company to source
experienced workers who could create apple’s products in the USA. In china, this took only fifteen
days. In 2010, just over a quarter of Cisco’s workforce consisted of overseas workers. However,
in the last four years, this number has dramatically risen to 46% of the company’s workforce who
are from China and India. This move enabled the firm to enjoy vast pool of skilled workforce
hence enhancing efficiency and performance of its products. IBM also outsourced much of
programming tasks to China, a move that enabled the company to bring down considerable amount
of costs both for the company and the consumers.
Indeed the regions could have performed better with a superior sourcing strategy. Due to this,
Sameer Africa Ltd have adopted the concept of overseas manufacturing by outsourcing
manufacture of tyres (Yana Tyre Brand) under licensing to China and Indian lower costs, high
quality and advanced technology tyre manufacturing factories in order to enhance efficiency,
profitability and product quality to achieve overall organizational positioning.

8
1.4Objectives of the Study

1.4.1 General Objective

The general objective was to assess the influence of strategic sourcing on organizational
positioning in tyre manufacturing firms in Kenya. A case study of Sameer Africa Ltd

1.4.2Specific Objective of the Study

i. To determine the influence of Supplier Development on organizational positioning at
Sameer Africa Ltd.
ii. To determine the influence of Supplier Relationship Management (SRM) on organizational
positioning at Sameer Africa Ltd.
iii. To establish the influence of Early Supplier Involvement (ESI) on organizational
positioning at Sameer Africa Ltd.
iv. To establish the influence of contract management on organizational positioning at Sameer
Africa Ltd.

1.5 Research Questions

1. To what extent does Supplier Development enhance organizational positioning at Sameer
Africa Ltd?
2. How does Supplier Relationship Management enhance organizational positioning at
Sameer Africa Ltd?
3. To what extent does Early Supplier Involvement enhance organizational positioning at
Sameer Africa Ltd?
4. How does Contract Management enhance organizational positioning at Sameer Africa Ltd?

1.6 Significance of the Study

The study findings will enable the management of Sameer Africa Ltd to understand how strategic
sourcing has affected positioning of the organization, and further shed more light on how they can
optimize on it in order to gain and retain competitive advantage in the volatile business
environment.
The study findings will enable other firms in the local manufacturing industry to consider potential
benefits that can be realized from including outsourcing in their corporate strategy.
The study findings will be used as a reference point by other researchers when undertaking further
research on subjects related to this study. Lastly, the study findings will contribute to the existing
literature in the field of strategic management for the manufacturing industry in Kenya.

9
1.7 Limitation of the Study
Some respondents declined to give information about their organization that they deem to be too
sensitive. The study assured them that all information collected was treated confidentially and was
only used for academic purpose and also persuaded the management that the study was of
importance to the firm if the recommendations made were adopted.
The problem of unwilling respondents who failed to return questionnaires for fear of victimization.
In order to address this problem, the researcher assured the respondents that the information sought
was used for academic purpose only.
Challenge of time owing to the busy working schedule which limited fast and comprehensive
study. The researcher addressed this problem by ensuring that the research was undertaken during
free time.

1.8 Scope of the Study

The study focused on the influence of strategic sourcing on organizational positioning with
particular focus on Sameer Africa Ltd. Thus, the study sought to establish the interplay between
the motive to outsourcing and the influence of such outsourcing on the organizational positioning.
The reason why the researcher chose Sameer Africa Ltd was because the company happened to be
the leading firm in provision of reliable tyre solutions in Kenya and have been utilizing the
outsourcing strategy for a long time. The study was carried out in Sameer Africa Ltd head office
in Nairobi targeting 165 employees and it took seven months. The departments of focus were
procurement & logistics, finance, receiving and raw materials management, human resource and
sales & marketing.

10
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction
This chapter comprised an overview of the relevant literature as postulated by other researchers
and authors. It explained in details the effects of strategic sourcing on organizational positioning
in tyre manufacturing firms in Kenya with respect to Sameer Africa Ltd as the area of study.

2.2 Theoretical review

This review helped in determining the connection or other relation between different research
results by comparing related studies in this area. It highlighted the empirical literature review,
critique of the review and the research gap. The review was meant to enhance a perception of the
previous contribution to the problem. The findings of the review helped the researcher to note the
knowledge gaps hence creating an entry point to this study.

2.2.1Resource Based Theory

According to resource-based theory, resources that are rare, valuable, non-substitutable and
difficult to imitate best position an organization for long term success (Barnley, 1991; Chi, 1994).
Valuable items help in improving the organization’s effectiveness and efficiency while at the same
time neutralizing the opportunities and threats of competitors, difficult-to-imitate resources mostly
involve legally protected properties such as trademarks, copyrights, patents and brand names
which require a lot of time to fully develop, non-substitutable resources only exists when the
resource combination of other organizations cannot duplicate the strategy provided by the resource
bundle of a particular organization and lastly rare resources are those that are held by few or no
other competitors. These strategic resources provides the foundation to develop the organization’s
capabilities that can lead to superior performance over time. Capabilities are needed to bundle,
manage and otherwise exploit resources in a manner that provides value addition to customers
hence creating a competitive advantage over competitors. These competitive advantages
eventually help the organization in enhancing profitability (Barnley, 1991; Wernerfelt, 1984).
Therefore a firm that has the capabilities of acquiring these resources stand to optimize it
positioning in a market than its competitors. For example, difficult to imitate resources can enable
tyre manufacturing firms to produce tyres with unique features that increases value to customers
thus maintaining them while at the same time attracting others. To ensure that the above features

11
are incorporated in the final product, the buying organization must involve the supplier at the early
stages of product development through supplier visits so as to ensure that the specifications are
clear to both parties. This will be key in guaranteeing best quality output which will ultimately
contribute to overall positioning of the buying organization. In short, early supplier involvement
will ensure achievement of the above.

2.2.2 Partnership Theory

This theory was developed in the 17th century by philosopher Hobbes who argued that in supply
chain, the common model through which theorists study the relationship between supplier and
buyer is known as the partnership theory (Basweti, 2017). In its basic nature, the partnership model
depicts the buyer and supplier as partners with a common interest which is customer satisfaction
(Kotabe et al., 2010). Partnership is a business relationship based on mutual trust openness, shared
risks and rewards that enables an organization gain competitive advantage leading in the
organization achieving a positioning that’s far much greater than the firm would have achieved
when operating as single entities. This model requires efficient information exchange between the
buyer and supplier which is a critical element of any partnership (Humphreys, McIvor & Cadden,
2010).

The theory further states that any partnership is always based on value and present for each other.
The solid and long term relationship simply implies continuous improvement of the organization
performance. Suppliers must provide better services that are of high quality than his competition
at a price reasonable and still achieve goals to remain in business. Partnership model according to
Gabbard (2014), increases organizational efficiency through way of cooperative; both parties
obtain cost reduction which leads to price reduction and therefore increasing the market share and
profit margin as well. This leads to an organization gaining a competitive edge and efficiency. The
character which forms the perceived attributes of partnership include the following; high level of
both formal and informal communication, cooperative attitude, trusting relations which are built,
problem solving that is win-win negotiation style, long term business agreement, open sharing of
information and there is always vendor certification and defect prevention approach. Motivation
factors, environment of operation, strength of operation and duration of operation vary in different
partnership formed. However there is never an ideal relationship that is recommended (Cummings
& Qiao, 2013).

12
The partnership theory has three elements which are drivers, facilitators’ and used components.
The drivers of each party must have a driver that is strong enough to provide them with realistic
expectation of significant benefits through strengthening of the relationship. Facilitators on the
other hand have included corporate compatibility, mutuality, managerial philosophy and
techniques and symmetry. The final element is the components which are the factors than can be
controlled in a partnership by the management. They include supplier optimization, strategic
alliances, communications, risk/reward sharing, trust and commitment, supplier development,
scope and financial investment (Cox, 2013). In conclusion in order to gain leadership position
against your competitors and ensure that the organization grows partnership; supplier development
can be used to achieve the above.

2.2.3 Network Theory

Network theory is key to the relationships a firm has with other organizations, and on how these
relationships influence organization’s behavior and outcomes (Thorelli, 1986). Network theory
inform on choice of which an organization chooses to buy from or engage with as alliance partners.
Centrality is a crucial concept within network theory. Centrality refers to how critical an
organization is within a network. High supremacy refers to an organization that is often sought out
as a partner. Such organizations enjoy high consideration and status among the network (Gulati et
al., 2000). Being central within a network would seem to offer the ability to enhance the four key
competitive priorities within supply chains: cost, quality, speed, and flexibility (Hultet al., 2006).
A highly central organization can tap its tight links in order to rush orders when required, make
seamless transitions over time and seek out the provider offering the best materials and lowest
prices. Enhanced supplier relationship management practices with strategic suppliers can enable
acquisition of best material at low price which will boost tyre manufacturing firms especially on
reducing production cost which will ultimately help to offer the final products (tyres) to customers
at competitive prices than the competitors hence better positioning. Also, an organization that is
able to rush customer orders is likely to improve their satisfaction and loyalty hence contributing
to long term success of the firm.

2.2.4 Agency Theory

Agency theory affirms that a firm outsourcing a function is the principal and the supplier is the
agent. It maintains that the make versus buy decision should be determined by the economic
relationship between production and transaction costs. If production costs are lower than

13
transaction costs, firms should produce and manage the process internally and vice versa.
Transaction costs include the actual outsourcing costs as well as additional monitoring and control
costs assumed by the principal. Monitoring costs are any costs incurred by the principal to ensure
that the agent is not engaging in activities detrimental to the principal, as well as ensuring the
principal is meeting the basic terms and conditions of the outsourcing contract. Control costs
represent the legal costs assumed by the principal to enforce the terms of the outsourcing contract
upon term violation (Eisenhardt, 1989; Jensen and Meckling, 1976). Agency theory tenets asserts
that lower transaction costs are driving firms away from sourcing internally and toward purchasing
or alliance outsourcing relationships. Several primary forces are cited as driving the movement
towards more frequent and stronger sourcing relationships between principals and agents.
Additionally, the increased use of outsourcing as a strategic tool has given many firms increased
experience in designing effective monitoring and control systems to manage agent behaviors.
Given the increased information available to sourcing principals, increased number of agents and
heightened competition among agents, agents assume higher risks for engaging in opportunistic
behaviors against principals (Logan, 2000, Zsidisin et…al, 2004). In order to achieve cordial
relationship between the principal and the agent in outsourcing contracts, contract disputes should
be noted and resolved timely enough so as to prevent adversarial relationship between the parties.
Also there should be an effective monitoring program to keep track of contractual duties between
the parties. A good contract management practice in an organization will ensure achievement of
the above.

2.3 Empirical Review

It explained the studies that have been done by others in the area of strategic sourcing. The
empirical looked at the main objectives which covered the independent variables of the study
which were supplier development, supplier relationship management, early supplier involvement
and contract management. It highlighted what other researchers had established in those key areas.

2.3.1 Supplier Development

Supplier development refers to any effort by a buying organization to enhance the performance
and capabilities of their supplier(s). It is the process of working collaboratively with suppliers to
enhance or expand their capabilities (Dominick, 2006). It is a bilateral effort by both the buying
and supplying organization to jointly improve the supplier’s performance in one or more of the
following areas: quality, technological advancement, delivery lead time, cost, safety and

14
environmental responsibility, managerial capability and financial viability (Krause & Handfield,
2011). A supplier development project involve developing a supplier's business such as helping
the supplier to evaluate and redesign their corporate strategy. Basically, this might be to align the
supplier very closely and on a long-term basis with the buying organization in a strategic alliance
or joint venture. Equally, there may be circumstances where it is more appropriate for the buying
organization to align its corporate strategy to that of the supplier. Whatever the form of the
alignment, this process may be a highly resource intensive exercise and involve commitments such
as, a steering group and various action teams each with action plans for allocated projects and
formal reporting procedures against time-scales. Both organizations must share a mutual
understanding, appreciation and desire to achieve the objectives of the supplier development
project. Supplier development is a subject in supply chain management which has been
significantly researched because manufacturers realized that supplier performance is crucial for
their establishing and maintaining competitive advantage. Supplier development has a critical role
when driving performance improvement in purchasing and contributes to overall organizational
effectiveness. Direct involvement in supplier development activities plays a key role in supplier
performance improvement (Li et al. 2011).
Therefore, tyre manufacturing firms should strive to ensure that their suppliers are fully developed
through financial, technical or training support so as to make them more aligned to the tyre market
requirements. This will guarantee them an upper hand in terms of competitive position in the
market hence delivering them viable achievements especially on sales and customer satisfaction,
retention and attraction.

2.3.2 Supplier Relationship Management (SRM)

Supplier Relationship Management (SRM) refers to a comprehensive approach by an organization
to strategically plan for, and manage all interactions with firms that supply the products and
services it uses. SRM is understood as the sourcing policy-based design of strategic and operational
procurement processes as well as the configuration of the supplier management (Kleinbaum,
2008). Supplier Relationship Management (SRM) plays a key role in the reduction of costs and
the optimization of performance in industrial enterprises (Caeldries, 2008). In an increasing
competitive marketplace, organizations are seeking new methods of improving competitive
advantage (Ihiga, 2004). Today, purchasing is becoming a strategic function and an important
factor in organizational positioning. With consolidation of firms within industries, supplier

15
relationships are becoming more significant in the future. Organizations have realized that
collaborative business relationships improve organization’s ability to respond to the new business
environment by allowing them to focus on their core businesses and reduce costs in business
processes (Johnson, 2009).
Supplier relationship management enhances organizational positioning by consolidating talent and
ideas from key supply partners and translates this into product and service offerings for end
customers. Practically, SRM expands the scope of interaction with key suppliers beyond traditional
buy-sell transactions to encompass other joint activities which are predicated on a shift in
perspective and a change in how relationships are managed, which may or may not entail
significant investment. Such activities include, Joint research and development, systematic, more
disciplined, and often expanded, information sharing and finally joint demand forecasting and
process re-engineering (Maraka, Kibet & Mike, 2015). Organizations have realized that they don’t
have the means to finance all activities on their own. Activities that were always perceived as
strong contributors to competitive advantage and were kept in-house (e.g. product development,
manufacturing, services, etc.) are now qualified for outsourcing (N.V.Alle, 2013).
Building strategic partnership and outsourcing of tyre manufacturing to lower cost and high quality
producers can significantly enable tyre firms to enjoy reduced production costs which will mean
lower prices and enhanced quality of their products (tyre) than the competitors. Lower prices will
contribute immensely to increased sales and wider market penetration hence building the overall
positioning in the competitive market.

2.3.3 Early Supplier Involvement (ESI)

Early supplier involvement refers to a form of vertical collaboration between supply chain partners
in which the manufacturer involves the supplier at an early stage of the product development
process (Mikkola and Skjott-Larsen, 2006; Van Wele, 2010). Many purchasing organizations view
coordination with critical suppliers through ESI as an important contributor to product, process
and supply chain structure development and a cost reduction measure (Millson and Wilemon
2002). Also, adopting ESI practices may offer additional benefits to the organization such as
management of supply risk in new product development and the upstream supply chain (Zsidisin
and Smith, 2005). For a supplier, participation may be embedded in the existing partnership or
alliance with the manufacturer, or a way of securing business (Leenders et al, 2002).

16
Early supplier involvement (ESI) is believed to be of high importance because decisions that are
made in the design phase have a major effect on product quality, cycle time, and costs (Handfield,
1994; Hartley, Meredith, McCutcheon, & Kamath, 1997). It is thus vital for organizations to bring
the right expertise in the design phase and leverage the skills of suppliers to reduce development
costs (Clark, 1989; Ragatz, Handfield, & Scannell, 1997). According to literature, there are several
reasons to involve suppliers early; suppliers can identify potential problems early on in the process
(Brown & Eisenhardt, 1995; Handfield, 1994; Hartley et al., 1997; Ragatz et al., 1997), suppliers
can identify opportunities to reduce costs (Hartley et al., 1997), involving suppliers at an early
stage can improve the communication between the supplier and the buyer (McIvor & Humphreys,
2004; Petersen, Handfield, & Ragatz, 2003), early involvement will increase suppliers perceived
contribution (Handfield, 1994), and when facing technology uncertainty (Ragatz, Handfield, &
Petersen, 2002), buyers can benefit from suppliers’ information and expertise (Petersen et al.,
2003). Brown and Eisenhardt (1995) found that extensive supplier integration in the early stages
(product design) could cut the complexity of the design and in turn create a more productive and
faster product development process. Supplier integration can therefore help tyre manufacturing
firms to achieve product performance improvements, which eventually contribute to a competitive
advantage and better positioning to an organization due to increased acceptability of their tyre
products by customers.

2.3.4 Contract Management

The effective practice of contract management in an organization is crucial in boosting the
organizational positioning. Contract management refers to those activities related to contract
handling including invitation to and evaluation of bids; awarding and implementation of contracts;
measurement, and payment calculation (Kakwezi, 2012). This also entails monitoring contract
associations, handling related issues, integrating essential contract modifications or changes
(Cherotich, 2014). This is meant to ensure that all contract parties exceed or meet each other’s
expectations and interact with contractor to attain the objectives’ of the contract. As Uher and
Davenport (2009) note, it also involves practical monitoring, management and review of terms of
contract established through the process of procurement, ensuring delivery is done appropriately.
Contract management activities aim at ensuring that parties comply with the contractual terms and
conditions, as well as documenting and accepting any necessary changes in the contract execution.

17
Common contract management practices include contract administration; contractor monitoring
and acceptance management; dispute resolution; managing the contractor relationship and contract
closure. Contractor monitoring and acceptance management is about ensuring that the contractor
is performing his duties and fulfilling his obligations in compliance with the contract. This also is
helpful to the contracting authority in identifying any issues or problems in advance that could
arise and offer timely solutions. Managing the contractor relationship enables the contracting
authority to ensure that all its actions and decisions improve the supplier relationship. On the other
hand, contract administration involves maintaining an updated form of the contract; controlling
and managing contract variations; paying the contractor; managing assets; drafting reports; and
terminating the contract. Dispute resolution entails management of all conflicts that may arise
between the two parties. Lastly, contract closure happens when all contractual terms and
obligations have been honored (Cropper, 2008).
Therefore, mutual understanding between tyre manufacturing firms and their supply partners can
significantly contribute in ensuring supply contracts are completed in time so as to guarantee
smooth flow of operations within the firm. This can entail handling imminent disputes in time and
also monitoring supplier’s contractual activities so as to ensure that they stick to the set guidelines
and standards. This will ultimately help to avoid supply risks that can lead to market gap thus
losing to competition.

2.4Review of Critical Literature and Research Gaps to be filled

Resource based theory argues that the strategy of an organization need to be based on the resources
it owns for it to have a better position in the competitive market. It offers a vital framework to gain
sustainable competitive advantage through developing and obtaining strategic resources that meet
criteria rareness, valuable, non-imitable and non-substitutable. However, the theory fails to explain
how these resources can be developed and obtained (Connor, 2002).
Priem & Butler (2001) and Collins (1994) cited that the resource based theory entails infinite
regress i.e. organizations which have a capability that can be put in practice best can be overtaken
by an organization which can develop that capability better (Collins (1994) calls this second-order
capabilities). Kraaijenbrink et.Al. (2010) criticizes the applicability of resource based theory using
three points. First, Connor (2010) argues that the theory does not apply to small firms because the
sustainable competitive advantage cannot be based on their static resources and therefore they fall
beyond the bounds of resource based view. Miller (2003) argues that the resources an organization

18
need to develop a sustained competitive advantage are precisely those resources that are hard to
acquire in the first place. He further argues that only firms that already possess strategic resources
can acquire and apply additional resources; otherwise competitors would acquire them with equal
ease. In conclusion, sustained competitive advantage is not achievable since organizations are in
dynamic environment where innovation and changing is needed to stay ahead of competition.
According to resource based theory, sustained competitive advantage can be achieved if the
resources are meeting the rareness, valuable, non-imitable, non-substitutable criteria. However, in
a dynamic environment, the competitive advantage will be temporary (Barney, 1991).
On the other hand, Donaldson (1990) criticized the agency theory dominance in terms of
methodology individualism, organizational economics and corporate governance’s defensiveness.
It fails to focus on how the principal and the agent can harmoniously work together so as to protect
interests of both parties and eventually reap mutual benefits.

2.4.1 Research Gaps to be filled

Local studies on the area have mainly focused on the effect of strategic sourcing on organizational
performance. A study by Musau (2016) on the impact of strategic outsourcing on organizational
performance of Bidco Africa Ltd found that the need to focus on core competencies was a major
reason why the company chose to outsource some of its activities. The study further found that
outsourcing had enabled the company to concentrate its key resources and capacity on building
and expanding its core competencies, which improved its competitive advantage, hence leading to
better organizational performance. A study done by Odhiambo(2013)on strategic sourcing
practices and factors influencing strategic sourcing practices of manufacturing multinational
corporations in Kenya found that the most outstanding strategic sourcing practice were strategic
purchasing, internal integration, and information sharing. (Chepng’etich, Waiganjo & Karani
(2015), conducted a study on the influence of strategic sourcing on organizational performance of
state corporations in Kenya where the study found out that supplier development and relationship
management have led to an overall reduction on the organizational costs hence better performance.
Nyagariet.al. (2014) have looked at the relationship between strategic sourcing and the triple
bottom line in commercial banks in Kenya. (Chiang, Hillmer, & Suresh (2012), has conducted a
study on the impact of strategic sourcing and flexibility on firm's supply chain agility, which the
study found out that strategic supplier partnership, supplier evaluation, sourcing flexibility and
trust in supply chain members are the key dimensions of strategic sourcing.

19
It is evident that there was no study that linked the influence of strategic sourcing on organizational
positioning in tyre manufacturing firms in Kenya. This shown that little research was done on the
area leaving a knowledge gap which necessitated this study where the researcher focused on
supplier development, early supplier involvement, contract management and supplier relationship
management as some of the key drivers to successful organizational positioning through strategic
sourcing.

2.5 Summary of Literature

Organizational positioning of tyre manufacturing firms through strategic sourcing is driven by
certain components which plays a significant role in enhancing its success. Some of those studied
in this chapter are supplier relationship management, contract management, supplier development
and early supplier involvement.
The study used resource based theory, partnership theory, network theory and agency theory to
guide on the research of the influence of strategic sourcing on organizational positioning in tyre
manufacturing firms in Kenya. According to (Barnley, 1991; Chi, 1994), resource based theory
asserts that possession of strategic resources provide an organization with a golden opportunity to
develop a competitive position over its rivals. The author defines a strategic resource is that which
is difficult to imitate, rare, valuable and non-substitutable. Partnership theory asserts that
partnership is a business relationship based on mutual trust openness, shared risks and rewards that
enables an organization gain competitive advantage leading in the organization achieving a
performance that’s far much greater than the firm would have achieved when operating as single
entities. Agency theory on the other hand maintains that the make versus buy decision should be
determined by the economic relationship between production and transaction costs and thus where
production costs is lower than the transaction costs, firms should produce and manage the process
internally and vice versa. Lastly, Network theory is core on the relationships a firm has with other
firms, and on how these relationships influence a firm’s behavior and outcomes (Thorelli, 1986).
Network theory inform on choice of which firms an organization chooses to buy from or engage
with as alliance partners (Chepng’etich, Waiganjo, & Karani (2015).
The chapter also contains the empirical review and critical literature which entails the key issues
which has not been addressed by the theories with accompaniment of the research gap identified.
Last is the conceptual framework and how the independent variables affect the dependent variable.

20
2.6Conceptual Framework
Mugenda and Mugenda (2003) defines conceptual framework as conceptualization of the
relationship between variables in the study and it is shown diagrammatically. According to Young
(2009), conceptual framework is a diagrammatical representation that shows the relationship
between dependent variable and independent variables. (Stratman& Roth, 2004) defines a
conceptual framework as set of wide ideas and theories that enables the researcher to identify
problems in the study, frame questions and discuss the relevant literature for the study. The
independent variables of the study are supplier development, contract management, supplier
relationship management and early supplier involvement (ESI) while the dependent variable is
organizational positioning.

Supplier Development
 Proper Training
 Financial Support

Supplier Relationship Management

 Vertical Integration
 Strategic Partnership
Organizational Positioning
 Quality
Enhancement
Early Supplier Involvement  Profitability
 Cost Minimization
 Development of
specification
 Supplier Visits

Contract Management
 Resolution of Contract
Disputes
 Monitoring Contracts

Independent Variables Dependent Variable

Figure 2. 1Conceptual Framework

21
2.6.1 Organizational Positioning
The establishment of an effective competitive position is a crucial stage in any marketing strategy.
Typically, positioning is measured in relation to products and their features but in manufacturing
firms, Current positioning strategies are examined from customer perspective and the result
suggest that despite attempts to gain a competitive edge over the competitors through strategies
such as product differentiation, tyre manufacturing firms still face a threat due to innovation
copying and counterfeit merchandises from cheap markets. Therefore, to facilitate better
organizational positioning against the competitors, organizations must pursue strategies such as
overall cost leadership so as to become the lowest cost producers in the industry (Yi Hua & Hai
Ming, 2011). This enables the firm to offer their products and services at a cheaper price than the
competitors hence building its positioning in the market. Also, quality enhancement helps a firm
to maintain customer satisfaction, loyalty and reduce risk and costs of replacing faulty goods.
Quality product makes an important contribution to long-term revenue and profitability. They also
enable an organization to charge and maintain higher prices.

2.6.2 Supplier Development and Organizational Positioning

According to (Lysons & Farrington, 2006), Supplier development refers to any activity that a buyer
undertakes to improve a supplier’s performance and/or capabilities to meet the buyer’s short- or
long-term supply needs. Therefore training suppliers on issues such as the impact of defects or
other setbacks such as delays on the end customer helps the organization to eliminate waste and
ultimately improve the efficiency and quality of their products resulting to enhanced customer
satisfaction and potential price premiums which eventually build the competitive position of an
organization (Quayle & Michael, 2008). Also, financial support to suppliers helps them to leverage
their working capital thus utilizing their capital in innovation and investing in their workers. This
helps to improve the quality of goods and services hence rendering them more competitive in the
market and ultimately enabling the organization to better position itself in the market against the
rivals (Helper, Jessica & Noonan (2014).

2.6.3 Supplier Relationship Management and Organizational Positioning

In order to enhance supplier relations, organization should seek to align themselves with their
suppliers and treat them as partners. This enables reduction in risks and enhance collaboration and
innovation which consequently contributes to improved reliability and cost reduction. This is key
in building a strong competitive position of the organization (Hinkka, 2013). Secondly, an

22
organization can also improve its supplier relations by gaining control over its suppliers through
vertical integration in order to increase its power in the marketplace. This enables the organization
to lower costs due to eliminated market transaction costs, improve the quality of supplies and
coordination in supply chain etc. (Martin & Perry, 2001). These benefits ultimately helps the
organization’s products to be more competitive in the market hence aiding it to acquire a wider
market share than its rivals

2.6.4 Early Supplier Involvement and Organizational Positioning

For achievement of effective organizational positioning through early supplier involvement,
organization should ensure that supplier visits are often undertaken by a cross functional team that
include a senior member of purchasing and experts on quality and production engineering. Each
member of the team is able to evaluate the supplier from a specialist point of view thus ensuring
shared responsibility for a decision to approve, improve or reject a supplier (Lysons & Farrington,
2006). Also, specification development through consultation with users to determine their needs
and also use of open and generic specification especially when there is trademarks or brand names.
This enables the supplier to understand the exact requirements needed for the final product without
defects thus ensuring that it fulfills the expectations of the target customer (Souquieres, 2003). By
this, the final product is more acceptable in the marketplace hence a better competitive position of
the organization.

2.6.5 Contract Management and Organizational Positioning

Contract management entails monitoring contract associations, handling related issues, integrating
essential contract modifications or changes. An organization can optimize its competitive position
though contract management by undertaking measures such as contract monitoring which ensures
that the contractor is performing his duties and fulfilling his obligations in compliance with the
contract. This helps the contracting authority in identifying any issues or problems in advance that
could arise and offer timely solutions. Also, resolution of contract disputes which entails
management of all conflicts that may arise between the two parties with an aim of reaching an
amicable solution for the better good of both the organization and supplier/contractor (Cherotich,
2014).

23
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction
This chapter covered the research design, target population, sample design, data collection and
data analysis.

3.2 Research Design

Thornhill et al (2003) refers research design as a general plan on how the researcher plans to
answer the research questions. This research adopted a descriptive design in which data was
captured through questionnaires. Descriptive design requires researchers to gather, present and
interpret information for purposes of clarification. It involves collecting data in order to test
hypotheses or answer questions regarding the participants of the study (Musau, 2016). The design
undertakes to ascertain, explain and describe characteristics of variables associated with a subject
population. It seeks to answer questions such as who, what, when, where and how of any provided
topic in its wake (Blumberg et al, 2008). The selection of the design facilitated the collection of
original data needed to realize the research objectives. The respondents were interviewed using
prepared questionnaires as a guide. The data collected was summarized and analyzed for easy
interpretation and presentation.
This study design was chosen because it was more effective in investigating the influence of
strategic sourcing on organizational positioning. The dependent variable was organizational
positioning which was measured by quality enhancement, profitability and cost minimization
while the independent variable was strategic sourcing (Supplier relationship management,
Supplier development, early supplier involvement and contract management).

3.3 Target Population

According to Mugenda and Mugenda (2008), target population refers to a complete set of
individual cases or objects with some common characteristics to which the researcher wants to
generalize the results of the study. Target population refers to collection of elements that possess
information sought by the researcher, Orodho (2005). The target population consisted of 165
employees of Sameer Africa Ltd from various department such as procurement & logistics,
finance, receiving and raw materials management, human resource and sales & marketing. This
population was categorized to their respective departments as shown in table 3.1 below.

24
Table 3. 1 Target population
Department Frequency Percentage (%)

Procurement & Logistics 40 24

Receiving & raw materials management 30 18

Finance 31 19

Human resource 32 20

Sales & Marketing 32 19

Total 165 100%

3.4 Sample Design

Sampling is a procedure, process or technique of choosing a sub group from a population to
participate in the study that is a representative of a larger group (Ogula, 2005). Purposive sampling
was used to select procurement & logistics, receiving and raw materials management, human
resource, sales & marketing and finance departments of Sameer Africa Ltd since they gave
accurate information on the influence of strategic sourcing on organizational positioning in tyre
manufacturing firms in Kenya.
In order to avoid biasness and ensure objectivity, simple random sampling was employed in this
study where a sample of 116 respondents was picked using simple stratified random sampling
techniques based on strata in various departmental units. This was important because the technique
gave all departments an equal chance of being selected. As (Mugenda & Mugenda, 2003) notes,
stratified sampling in this study was efficient due to different experience and level of motivational
expectations across the departmental units.
The sample size was obtained by calculating the sample from the target population using Cooper
and Schindler, (2003) formula.
n=𝑁/ {1+𝑁 (𝑒) 2}
Where: n= Sample size, N= Population size e= Level of Precision.

At 95% level of confidence and P=5

n= 165/ {1+165(0.05)2} =116

25
Table 3.2 below shows the sample population.
Table 3. 2 Sample Population
Department Target population Sample Percentage (%)

Procurement & Logistics 40 28 24

Receiving & raw materials management 30 21 18

Finance 31 22 19

Human resource 32 23 20

Sales & Marketing 32 22 19

Total 165 116 100%

3.5 Data Collection Procedures

The study used both primary and secondary data sources. Primary data was the data the researcher
obtained from the field and was collected using structured questionnaires which was self-
administered to all respondents with the help of research assistant in each departmental unit. The
questionnaires were used because they allowed the respondents to give their responses in a free
environment and also enabled the researcher to obtain information that might have not been
obtained if interviews were used. Each questionnaire was coded; the coding technique was only
used for the purpose of matching returned completed questionnaires with those delivered to the
respondents.

3.6 Data Analysis and Presentation

According to Mugenda and Mugenda (2014), data collected has to be processed, analyzed and
presented in accordance with the outlines laid down for the purpose at the time of developing the
research plan. The completed questionnaires were edited to ensure completeness and consistency,
then tabulated and analyzed. Editing involved going through the questionnaires to check if
respondents responded to questions and also if there were blank responses. Tabulation involved
counting the number of cases that fell into various classifications. For easy data analysis, the
questionnaires were first coded as per each variable in each question of study. (Collis & Hussey,
2013) defines coding as assigning a numerical value to a non-numerical variable to minimize the
margin of error and assure accuracy during the data entry. After data coding and entry into an

26
analysis software (SPSS version 21), descriptive statistics was used to analyze the data.
(Denscombe, 2012) refers descriptive statistics as a process of transforming a mass of raw data
into tables, charts, with frequency distribution and percentages which are a very vital part of
making sense of the data. Descriptive statistics such as mean, standard deviation was generated,
each for the independent variables and the dependent variable. Pearson correlation coefficient is a
correlation coefficient that was used in this study to indicate one on one association between each
of the independent variables to the dependent variable which is set out in the objectives of the
study.

Standard deviation represented the degree of variability in the responses. The study used Linear
Regression Analysis to investigate the relationship between the variables and strategic sourcing on
organizational positioning of Sameer Africa Ltd. Multiple regression analysis is adopted when the
researcher has one dependent variable which is assumed to be a function of two or more
independent variables (Basweti, 2017). In this research, organizational positioning of Sameer
Africa Ltd was the dependent variable while supplier development, supplier relationship
management, early supplier involvement and contract management were the independent
variables. The coefficient of determination (R2) resulting from the linear regression was used to
determine the goodness of fit. P-values for the t-test statistics were used to determine the
significance of the independent variables in the regression model. Those variables with a p-value
less than 0.05 are significant in the equation. A simple Regression model was used to show the
relationship between the independent variables and the dependent variable as shown in the
following equation:

Y = a + b1X1 + b2X2 + b3X3+ b4X4 + ℮ Where;

Y= Organizational Positioning

a = Constant Term

b1, b2, b3, b4 = Beta coefficients

X1 = Supplier Development, X2 = Contract Management, X3 = Early Supplier Involvement, X4

= Supplier Relationship Management, ℮ = Error Term

27
Statistical package for social sciences (SPSS) software version 21 was the preferred tool for data
analysis since it provided a more user friendly interface and can easily be linked with Microsoft
office utility programs. Data presentation was done by use of tabular summaries and pie charts
with their implications discussed for ease in understanding.

3.7 Ethical Considerations

Babbie and Mouton (2002:522) caution that conducting a research requires good ethical
considerations. Saunders et al (2009), argued that research ethics is the appropriateness of your
behavior in relation to the rights of those who become the subject of or are affected by your work.
In conducting the study the researcher should adhere to the ethical research principles.

The managers and staffs were informed of the objective of the research project. The supporting
letter obtained from Department of Procurement and Logistics was presented. The researcher
ensured that the covering letter contained information about the investigation, the objectives of the
measuring instrument, assurance regarding confidentiality and anonymity, the voluntary
participation of the respondents, the intention to reveal the findings up on completion of the study
and the contact details of the researcher.

28
 CHAPTER FOUR

DATA ANALYSIS, PRESENTATION AND INTERPRETATION OF FINDINGS

4.1Introduction
This chapter present the findings of the study with a specific focus on the research questions
outlined while using the data collected from the respondents.

4.2 Presentation of Findings

4.2.1 Response Rate

Out of the 116 respondents, 85 of them participated in the study. This constitutes a response rate
of 73.3%. Out of these questionnaires, 80 were considered usable for the study. This accounted for
69% of the respondents. The other 5 questionnaires had considerable levels of missing information.
The remaining cases represented a substantial response rate for the precision and confidence
required in this study. The figure below shows the response rate.

Response Rate

Non-Usable
Questionnaires
31% Usable Usable Questionnaires
Questionnaires
69% Non-Usable
Questionnaires

Figure 4. 1 Response rate

4.2.2 Demographic Information
This section presents the personal details of the respondents and it provides data regarding the
research study and is necessary for the determination of whether the individuals in a particlar study
are a respresentative sample of the target population and testing appropriateness of repondent in

29
answering the questions for generalisation. The study sought to determine the demographic
characteristics of the respondents as they are considered as categorical variables which give some
basic insight about the respondents. The characteristics considered in the study were; gender, age,
level of education, average years worked and their department of operation.

4.2.2.1 Distribution of Respondents by Gender

The study also determined the gender of the respondents. The results are submitted in figure 4.2
where 57 % of the respondents were male while 43 % of the respondents were female.

Gender of Respondents

Female
43%

Male
Male Female
57%

Figure 4. 2Gender of Respondents

4.2.2.2 Distribution by Age of Respondents
The table below represents the study findings regarding the age brackets of the respondents. The
study revealed that a larger percentage of the respondents were aged between 25 and 30 years
(33%) and between 31 and 35 years (29%). A proportion of 23% were below 25 years, while the
least at (15%) were above 36 years. The age of the respondent is vital in research as people who
are old in age may have different opinion than young people due to experience gained. Also people
of different age may have varying ideas about certain issues.

30
Table 4. 1Distribution by Age of respondents
Age in years Frequency Percentage
Below 25 years 19 23%
25-30 years 26 33%
31-35 years 23 29%
36 and Above 12 15%
Total 80 100%

4.2.2.3 Distribution by Level of Education

Table 4.2 below presents the study finding regarding the respondents’ educational levels.
According to the findings, most of the respondents had the first degree (38%) followed by those
who had diplomas (29%). Those with post-graduate qualifications amounted to 21% and the least
category of the respondents had certificate (12%). This shows that majority of the respondents had
significant educational qualifications hence capable of understanding the purpose of the study.
Table 4. 2 Distribution by Level of Education
Level of Education Frequency Percentage
Certificate or Other 10 12%
Diploma 23 29%
Degree 30 38%
Masters and Above 17 21%
Total 80 100%

4.2.2.4 Distribution by Average Years Worked

The table below presents the study finding regarding the number of years worked by different
respondents in the company. From the findings, most of the respondents (42%) had stayed in their
organization for a period between 3-5 years, followed by 26% who had stayed in their organization
for below 2 years and 20% who had worked in the organization for 6-8 years. The study shows
that those who had long experience with their current organizations for more than 8 years were the
least at 12%. The level of experience indicated below is significant because Chandler, (2004)
argued that the credibility of the information gathered in any study is largely informed by the many

31
years of the respondent’s service to the company. The experience proves the validity and reliability
of the information gathered. Their skills, knowledge and expertise had been tested for a long period
hence their perception on the matter under study had been largely influenced by their experience.

Table 4. 3Distribution by Average years worked

Number of Years Worked Frequency Percentage
Below 2 years 20 26%
3-5 years 34 42%
6-8 years 16 20%
Above 8 years 10 12%
Total 80 100%

4.2.2.5 Distribution by Respondent’s Department of Operation

The table below presents the study findings regarding the department under which the individual
respondents operates in the organization. According to findings, Most of the respondents (23%)
work in the procurement and logistics department followed closely by (21%) of respondents who
operates under the human resource department. (20%) of the respondents work in the sales and
marketing department and (18%) of the respondents work in finance department, lastly is (18%)
of the respondents who operate under the receiving and raw materials management department.
This show that the composition of the respondents is adequate and capable of providing necessary
information especially on knowledge about the research study.

Table 4.4: Distribution by Respondent’s Department of Operation

Respondent’s Department of Operation Frequency Percentage

Procurement & Logistics 19 23%

Receiving & Raw Materials Management 14 18%

Finance 14 18%

Human Resource 17 21%

Sales & Marketing 16 20%

Total 80 100%

32
4.2.3 Descriptive Statistics
The study set out to examine the influence of strategic sourcing on organizational positioning of
tyre manufacturing firms in Kenya. To this end, overall organizational positioning was
conceptualized, the four variables were also conceptualized as components of positioning of
Sameer Africa Ltd. These include; Supplier development, Supplier relationship management,
Early supplier involvement and Contract management.

4.2.3.1 Overall Organizational Positioning of the Organization

The respondents were requested to indicate how strategic sourcing influenced organizational
positioning in a likert scale. The range was ‘0-20% (1)’ to ’81-100%’ (5). The scores of ‘0-20%’
and ‘21-40%’ have been taken to represent a variable which had a mean score of 0 to 2.5 on the
continuous likert scale. The scores of ’41-60%’ have been taken to represent a variable with a
mean score of 2.5 to 3.4 on the continuous likert scale and the score of both ‘61-80%’ and ‘81-
100%’ have been taken to represent a variable which had a mean score of 3.5 to 5.0 on a continuous
likert scale. A standard deviation of >0.9 implies a significant difference on the impact of the
variable among respondents. The results are presented in table 4.5 below

33
Table 4. 5 Influence of Strategic Sourcing on Organizational Positioning of the
Organization

Statements 0- 21- 41- 61- 81- Mean SD

20% 40% 60% 80% 100%
Strategic sourcing has led to
increased profitability than
0(0%) 11(14%) 25(31%) 36(45%) 8(10%) 3.513 .857
our competitors by the
following percentage
Strategic sourcing has led to
reduction in product quality 3(4%) 13(16%) 25(31%) 31(39%) 8(10%) 3.35 .995
defects by the following
percentage
Strategic sourcing has led to
increased customer 0(0%) 16(20%) 36(45%) 22(28%) 6(7%) 3.225 .856
attraction by the following
percentage
Strategic sourcing has led to
reduced manufacturing 3(4%) 13(16%) 25(31%) 31(39%) 8(10%) 3.35 .995
costs by the following
percentage
Sales has consistently
improved in the last two 0(0%) 12(15%) 41(51%) 18(23%) 9(11%) 3.3 .863
years by the following
percentage
Average Mean 3.3476

The results obtained from the study on the respondents to find out the influence of strategic
sourcing on organizational positioning show that the average mean was 3.3476 which implied that
strategic sourcing moderately influenced organizational positioning at Sameer Africa Ltd. This is
because the average mean ranged between 2.5 to 3.4 which was rated “41-60%”. A majority of
45% of the respondents agreed with the statement that strategic sourcing has led to increased

34
profitability than the competitors by 61-80% (Mean of 3.513), 39% of the respondents agreed that
strategic sourcing has led to a reduction in product quality defects by 61-80% (Mean of 3.35), A
majority of 45% moderately agreed that strategic sourcing has led to increased customer attraction
by 41-60% (Mean of 3.225), 39% of the respondents agreed that manufacturing costs has been
reduced through strategic sourcing by 41-60% (Mean of 3.35) and finally a majority of 51% of the
respondents moderately agreed that strategic sourcing has led to consistent sales improvement in
the last two years by 41-60% (Mean of 3.3).

4.2.3.2 Supplier Development

The first objective of the study was to assess the influence of supplier development on
organizational positioning at Sameer Africa Ltd. The respondents were requested to indicate how
supplier development influenced organization’s positioning in a likert scale. The range was
‘strongly disagree (1)’ to ‘strongly agree’ (5). The scores of ‘strongly disagree’ and ‘disagree’ have
been taken to represent a variable which had a mean score of 0 to 2.5 on the continuous likert scale
;( 0≤ S.D<2.4). The scores of ‘neutral’ have been taken to represent a variable with a mean score
of 2.5 to 3.4 on the continuous likert scale: (2.5 ≤N<3.4) and the score of both ‘agree’ and ‘strongly
agree’ have been taken to represent a variable which had a mean score of 3.5 to 5.0 on a continuous
likert scale; (3.5≤ S.A<5.0). The results are represented in table 4.6 below.

35
Table 4. 6 Effect of supplier development on organizational positioning

Statements Strongly Disagree Neutral Agree Strongly Mean SD

Disagree Agree

Supplier training
has improved the 5(6%) 2(3%) 3(4%) 52(65%) 18(22%) 3.95 .967
commitment of
suppliers in terms of
prompt delivery.
Financial support
offered to suppliers 3(4%) 2(3%) 6(7%) 44(55%) 25(31%) 4.075 .911
has enabled
suppliers to supply
quality items.
Supplier
development has 2(3%) 4(5%) 1(1%) 25(31%) 48(60%) 4.413 .937
led to enhance
organizational
positioning of the
company.
Purchasing costs
have reduced 1(1%) 5(6%) 3(4%) 46(58%) 25(31%) 4.113 .842
considerably as a
result of financial
support to suppliers.
Rejection rate of
supplied items has 5(6%) 2(3%) 0(0%) 52(65%) 21(26%) 4.025 .968
reduced due to
improved supplier
training.
Average Mean 4.115

The results obtained from the study on the respondents to find out the influence of supplier
development on organization’s positioning show that the average mean was 4.115 which implied
that supplier development greatly influenced organization’s positioning. This is because the
average mean ranged between 3.5≤ S.A. <5.0 which was rated “strongly agree”. 65% of the
respondents agreed that supplier training has improved the commitment of suppliers in terms of
prompt delivery (Mean of 3.95). Also 55% of the respondents agreed with the statement that
financial support offered to suppliers has enabled them to supply quality items (Mean of 4.075).
On average, 58% of the respondents agreed that purchasing costs have reduced considerably as a

36
result of financial support to suppliers (Mean of 4.113). Finally, 65% of the respondents also
agreed with the statement that rejection rate of supplied items has reduced due to improved supplier
training (Mean of 4.025).

4.2.3.3 Supplier Relationship Management

The second objective of the study was to assess the influence of supplier relationship management
at Sameer Africa Ltd. The respondents were requested to indicate how supplier relationship
management influenced organization’s positioning in a likert scale. The range was ‘strongly
disagree (1)’ to ‘strongly agree’ (5). The scores of ‘strongly disagree’ and ‘disagree’ have been
taken to represent a variable which had a mean score of 0 to 2.5 on the continuous likert scale ;(
0≤ S.D<2.4). The scores of ‘neutral’ have been taken to represent a variable with a mean score of
2.5 to 3.4 on the continuous likert scale: (2.5 ≤N<3.4) and the score of both ‘agree’ and ‘strongly
agree’ have been taken to represent a variable which had a mean score of 3.5 to 5.0 on a continuous
likert scale; (3.5≤ S.A<5.0). A summary of the descriptive statistics from this section is tabulated
in the table below.

37
Table 4. 7 Effect of Supplier Relationship Management on Organizational Positioning

Strongly Disagree Neutral Agree Strongly Mean SD

Statements Disagree Agree

Collaboration with
suppliers has led to 2(3%) 1(1%) 5(6%) 54(68%) 18(22%) 4.063 .752
improved supply
commitments and
reduced risks.
Vertical integration
with supply chain 4(5%) 3(4%) 5(6%) 58(73%) 10(12%) 3.838 .878
partners has led to
improved customer
service in terms of
timely delivery.
Supplier relationship
management 3(4%) 5(6%) 9(11%) 45(56%) 18(23%) 3.875 .960
enhances
organizational
positioning of the
company.
Arm's length
relationship with our 3(4%) 7(8%) 8(10%) 54(68%) 8(10%) 3.713 .903
suppliers enables us
take advantage of the
best available prices.
Market transaction
costs have reduced as 2(3%) 5(6%) 12(15%) 45(56%) 16(20%) 3.85 .901
a result of vertical
integration with
suppliers.
Average Mean 3.8678

The results obtained from the study on the respondents to find out the influence of supplier
relationship management on organization’s positioning show that the average mean was 3.8678
which implied that supplier relationship management moderately influenced organizational
positioning. This is because the average mean ranged between 3.5≤ S.A. <5.0 which was rated
“strongly agree”. 68% of the respondents agreed that collaboration with suppliers leads to
improved supply commitments and reduced risks (Mean of 4.063), a larger 73% agreed that
vertical integration with supply chain partners has led to improved customer service in terms of

38
timely delivery (Mean of 3.838), 68% agreed with the statement that arm’s length relationship
with our suppliers enables the organization to take advantage of the best available prices (Mean of
3.713) and finally 56% agreed that market transaction costs have reduced as a result of vertical
integration with suppliers (Mean of 3.85).

4.2.3.4 Early Supplier Involvement

The third objective of the study was to establish the influence of early supplier involvement on
organizational positioning at Sameer Africa Ltd where the respondents were requested to indicate
how early supplier involvement influenced organization’s positioning in a likert scale. The range
was ‘strongly disagree (1)’ to ‘strongly agree’ (5). The scores of ‘strongly disagree’ and ‘disagree’
have been taken to represent a variable which had a mean score of 0 to 2.5 on the continuous likert
scale ;( 0≤ S.D<2.4). The scores of ‘neutral’ have been taken to represent a variable with a mean
score of 2.5 to 3.4 on the continuous likert scale: (2.5 ≤N<3.4) and the score of both ‘agree’ and
‘strongly agree’ have been taken to represent a variable which had a mean score of 3.5 to 5.0 on a
continuous likert scale; (3.5≤ S.A<5.0). The table below presents descriptive statistics of some of
responses given by the respondents.

39
Table 4. 8 Effect of Early Supplier Involvement on Organizational Positioning

Statements Strongly Disagree Neutral Agree Strongly Mean SD

Disagree Agree

Sites visits to the

suppliers’ premises
before selecting them 0(0%) 3(4%) 4(5%) 48(60%) 25(31%) 4.188 .695
has improved chances
of selecting competent
suppliers.
Quality of supplied
items has improved
due to continued 1(1%) 5(6%) 6(7%) 46(58%) 22(28%) 4.038 .849
guidance of suppliers
through supplier
visits.
Early supplier
involvement helps to 2(3%) 4(5%) 4(5%) 46(57%) 24(30%) 4.075 .883
improve
organizational
positioning of the
company.
The company has
recorded reduced 3(4%) 4(5%) 5(6%) 52(65%) 16(20%) 3.925 .897
wastage due to users’
consultation during
specification
development.
Engagement with
suppliers during 1(1%) 0(0%) 4(5%) 38(48%) 37(46%) 4.375 .700
specification
development has led
to reduced lead times.
Average Mean 4.1202

The result indicated that on average the respondents strongly agreed that early supplier
involvement influenced organization’s positioning (Mean of 4.1202). This is because the average
mean ranged between 3.5≤ S.A. <5.0 which was rated “strongly agree”. 60% of the respondents
agreed that site visits to the suppliers’ premises before supplier selection has improved chances of
selecting competent suppliers (Mean of 4.188), 58% agreed with the statement that guidance of

40
suppliers through supplier visits has contributed to improved quality of supplied items (Mean of
4.038), a larger 65% agreed that specification development through user’s consultation has led to
reduced wastage (Mean of 3.925) and finally 48% of the respondents agreed that engagement with
during specification development has led to reduced lead times (Mean of 4.375).

4.2.3.5 Contract Management

The fourth objective was to determine the influence of contract management on organizational
positioning at Sameer Africa Ltd where the respondents were asked to give their thoughts on
contract management in regard to organizational positioning in a likert scale. The range was
‘strongly disagree (1)’ to ‘strongly agree’ (5). The scores of ‘strongly disagree’ and ‘disagree’ have
been taken to represent a variable which had a mean score of 0 to 2.5 on the continuous likert scale
;( 0≤ S.D<2.4). The scores of ‘neutral’ have been taken to represent a variable with a mean score
of 2.5 to 3.4 on the continuous likert scale: (2.5 ≤N<3.4) and the score of both ‘agree’ and ‘strongly
agree’ have been taken to represent a variable which had a mean score of 3.5 to 5.0 on a continuous
likert scale; (3.5≤ S.A<5.0). A summary of descriptive statistics is tabulated in the table 4.9 below.

41
Table 4. 9 Effect of Contract Management on Organizational Positioning
Statements Strongly Disagree Neutral Agree Strongly Mean SD
Disagree Agree

Key performance
indicators (KPIs) are 0(0%) 3(4%) 4(5%) 32(40%) 41(51%) 4.388 .755
set to monitor
performance of
suppliers.
Continued monitoring
of contracts has led to 1(1%) 0(0%) 5(6%) 56(70%) 18(23%) 4.125 .624
completion of
projects within set
budget and period.
Contract management
enhances 4(5%) 3(4%) 6(7%) 48(60%) 19(24%) 3.938 .959
organizational
positioning of the
organization.
Resolution of contract
disputes has enabled 0(0%) 7(8%) 3(4%) 50(63%) 20(25%) 4.038 .803
suppliers to enhance
supply commitments.
Incorporation of
disputes management
in the contract 0(0%) 0(0%) 10(12%) 48(60%) 22(28%) 4.15 .618
document has
improved suppliers’
trust with the
organization.
Average Mean 4.1278
The results obtained from the study on the respondents to find out the influence of contract
management on organization’s positioning show that the average mean was 4.1278 which implied
that contract management greatly influenced organizational positioning. This is because the
average mean ranged between 3.5≤ S.A. <5.0 which was rated “strongly agree”. 51% of the
respondents strongly agreed that key performance indicators (KPIs) are set to monitor performance
of suppliers (Mean of 4.388), a larger 70% of the respondents also agreed that continued
monitoring of contracts has led to completion of projects within set budget and period (Mean of
4.125). 63% of the respondents agreed with the statement that supply commitments has been
enhanced by suppliers due to resolution of contract disputes (Mean of 4.038). Finally, 60% of the

42
respondents agreed that incorporation of disputes management in the contract document has
improved suppliers’ trust with the organization (Mean of 4.15).

4.2.4 Correlation and Regression Analysis

The data obtained from summarizing the responses obtained from the research questions was
further analyzed by use of both Pearson’s correlation and multiple regression models. The findings
are summarized in table 4.10 below.

43
Table 4. 10 Correlation Analysis

Correlations
Supplie Early Contrac Organizat
r Supplier Supplier t ional
Develo Relationship Involvem Manage Positionin
pment Management ent ment g
Pearso
n
Supplier Correla
development tion 1
Sig. (2-tailed)
N 80
Pearso
Supplier n
relationship Correla
management tion .675** 1
Sig. (2-
tailed) .000 .000
N 80 80
Pearso
Early n
supplier Correla
involvement tion .615** .410** 1
Sig. (2-
tailed) .000 .000 .000
N 80 80 80
Pearso
n
Contract Correla
management tion .285** .754** .261** 1
Sig. (2-
tailed) .001 .000 .016 .000
N 80 80 80 80
Pearso
Organization n
al Correla
positioning tion .637** .430** .469** .351** 1
Sig. (2-
tailed) .000 .000 .000 .001 .000
N 80 80 80 80 80
** Correlation is significant at the 0.05 level (2-tailed).

Pearson correlation analysis was conducted to examine the relationship between the variables. The
measures were constructed using summated scales from both the independent and dependent

44
variables. The correlation coefficients denoting the interrelationships between the variables are
above 0.4 and below 0.8. This shows that the strength of the correlations is medium to strong
(Musau, 2016). Since the highest correlation coefficient is 0.754 which is less than 0.8, there is no
multi-collinearity problem in this research (Table 4.10).
The correlations between the four independent variables were all positive, with supplier
relationship management and contract management having the strongest relationship (r = 0.754)
closely followed by supplier development and supplier relationship management (r = 0.675),
supplier development and early supplier involvement (r=0.615), supplier relationship management
and early supplier involvement (r=0.410) and lastly early supplier involvement and contract
management had the weakest relationship (r=0.261). This shows that supplier relationship
management has a strong dependence on contract management, supplier development and early
supplier involvement such that the absence of these three would lead to a significant decrease in
supplier relationship management. The correlation between supplier development and early
supplier involvement was also strong (r = 0.615), therefore denoting that in as much as enhancing
early supplier involvement would lead to better organizational positioning, it would have a
significant impact on its own, without efforts to enhance supplier development.
All the independent variables (Supplier development, Supplier relationship management, early
supplier involvement, Contract management) had a positive correlation with the dependent
variable (Organizational Positioning). Supplier development had the strongest correlation to
organizational positioning (r=0.637, p< 0.05) followed closely by early supplier involvement
(r=0.469, p< 0.05) then supplier relationship management (r=0.430, P<0.05) Contract
management had the lowest correlation to organizational positioning with a correlation of
(r=0.351, p< 0.05). This indicates that all the variables were statistically significant at the 95%
confidence interval level 2-tailed. This shows that all the predictor variables under consideration
had a positive relationship with the dependent variable.

4.2.4.1 Regression Analysis

In this study, multivariate regression analysis was used to determine the significance of the
relationship between the dependent variable and all the independent variables pooled together.
Regression analysis was conducted to find the proportion in the dependent variable
(Organizational positioning) which can be predicted from the independent variables (Supplier

45
development, Supplier relationship management, early supplier involvement and Contract
management).

Table 4.11 presents the regression coefficient of independent variables against dependent variable.
Table 4. 11Regression Model Summary

Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .708a 0.501 0.475 0.285
a .Predictors: (Constant), contract management , early supplier involvement , Supplier
development , supplier relationship management
b. Dependent Variable: Organizational Positioning
The results of regression analysis revealed there is a significant positive relationship between
dependent variable and the independent variable. The independent variables reported R value of
0.708 indicating that there is perfect relationship between dependent variable and independent
variables. R square value of 0. 501 means that 50.1% of the corresponding variation in
organizational positioning of Sameer Africa Ltd can be explained or predicted by supplier
development, supplier relationship management, early supplier involvement and contract
management.

The adjusted R square in the table 0.475 is called the coefficient of determination which indicates
how organizational positioning varied with variation in effects of factors which includes; supplier
development, supplier relationship management, early supplier involvement and contract
management. The results of regression analysis revealed that there was a significant positive
relationship between dependent variable and independent variables at (β = 0.285), p=0.000 <0.05).

Table 4. 12 ANOVA

Model Sum of squares df Mean square F Sig.

Regression 6.111 4 1.528 18.855 .000b

Residual 6.077 75 0.081
Total 12.188 79
a Dependent Variable: Organizational positioning
b Predictors: (Constant), contract management , early supplier involvement , Supplier
development , supplier relationship management

46
The ANOVA illustrates whether the model can predict organizational positioning of Sameer
Africa Ltd using the independent variables. The F statistic (F=18.855) was significant at a 95%
confidence level (Sig. F < 0.05) with a p-value of 0.00. This means that the model has predictive
power. There exists a statistically significant relationship between supplier development, supplier
relationship management, early supplier involvement, contract management and organizational
positioning.

Table 4. 13 Regression Coefficients Table

Coefficientsa
Mode Unstandardized Standardized
l Coefficients Coefficients T Sig.
Std.
B Error Beta
(Constant) 1.014 0.394 2.571 0.012
Supplier development 0.619 0.113 0.762 5.459 0.00
Supplier relationship
management -0.279 0.098 0.519 2.851 0.00
Early supplier
involvement 0.06 0.047 0.133 1.284 0.020
Contract management 0.359 0.1 0.504 3.596 0.001
a. Predictors: (Constant), Supplier development, Supplier relationship
management, early supplier involvement, Contract management
b. Dependent variable: Organizational Positioning

The research used a multiple regression model

Y = a + b1X1 + b2X2 + b3X3+ b4X4 + ℮ Where;

Y= Organizational Positioning

a = Constant Term

b1, b2, b3, b4 = Beta coefficients

X1 = Supplier Development, X2 = Contract Management, X3 = Early Supplier Involvement, X4

= Supplier Relationship Management, ℮ = Error Term at 95% level of confidence

The established multiple linear regression equation becomes:

47
Forecasted Organizational Positioning

=1.014+0.619S.Development+0.359C.Management+0.06E.SupplierInvolvement-0.279S.RelationshipManagement

The regression equation above has established that taking all factors into account (Supplier
development, supplier relationship management, early supplier involvement and contract
management) constant at zero, organizational positioning of Sameer Africa Ltd will be at an index
of 1.014. The findings presented also shows that taking all other independent variables at constant,
a unit increase in Supplier development will lead to a 0.619 increase in organizational positioning.
The P-value was 0.00 which is less than 0.05 and thus the relationship was significant.

The study also found that taking all other independent variables at constant, a unit increase in
supplier relationship management will result to 0.279 decrease in organizational positioning
meaning that when supplier relationship management is at zero, organizational positioning of
Sameer Africa Ltd will be negative. The P-value was 0.00 and thus the relationship was significant.
In addition, the study found that a unit increase in early supplier involvement will lead to a 0.06
increase in the organizational positioning. The P-value was 0.0203 and thus the relationship was
significant. The study also found that a unit increase in contract management will lead to a 0.359
increase in organizational positioning. The P-value was 0.001 and hence the relationship was
significant since the p-value was lower than 0.05.

The beta coefficients indicate the relative importance of each independent variable (Supplier
development, supplier relationship management, early supplier involvement and contract
management) in influencing the dependent variable (Organizational Positioning). Supplier
development is the most important in influencing organizational positioning since it has the highest
beta value (beta=0.762). The second most influential is supplier relationship management with a
beta value (beta=0.519) then followed by contract management (beta=0.504). Early supplier
involvement has the weakest influence on organizational positioning with a beta value
(beta=0.133).

Lastly, the t-value of constant produced (t = 2.571) was significant at 95 per cent confidence level
(Sig. F<0.05), thus confirming the fitness of the model. Therefore, there is statistically significant
relationship between supplier development, supplier relationship management, early supplier
involvement, contract management and organizational positioning of Sameer Africa Ltd.

48
4.3 Summary of Data Analysis
This chapter provides a presentation of the study findings. The chapter has employed the use of
pie charts and tabular summaries to present the results of the findings that were derived from the
study. The chapter has also shown that the response rate for the study was 73.3%, which is
sufficient to facilitate the acquisition of data that can be generalized among the population.

In this chapter, the researcher has provided the findings with regards to the information issued by
the respondents. The first section provides the results in terms of the respondent’s background,
which is followed the main components of strategic sourcing and the determination of the
positioning of the organization. Finally, the study summarizes the findings regarding the effect of
supplier development, supplier relationship management, early supplier involvement and contract
management on organizational positioning of Sameer Africa Ltd as per the research questions that
guided the study.

The study findings revealed that indeed the major boosting forces for organizational positioning
of Sameer Africa Ltd through strategic sourcing are supplier development, supplier relationship
management, contract management and early supplier involvement in that order of importance.
There is a clear indication that the company has a significant overall positioning as measured by
profitability, quality enhancement and cost minimization over the recent past. In the same manner,
it was established that supplier development, supplier relationship management, early supplier
involvement and contract management all have a positive effect on organizational positioning. The
findings further show that these four factors are interrelated such that none can have a significant
impact without the presence of the other.

49
 CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction
This is the final chapter of the study. The chapter provides the summary and discussion of the
major findings of the study as shown in chapter four and relates them to the concepts and literature
discussed in chapter two. It also highlights the conclusions based on specific research questions
and the recommendations made thereof. It finally offers the areas for further study.

5.2 Summary of the Findings

The purpose of this study was to establish the influence of strategic sourcing on organizational
positioning in tyre manufacturing firms in Kenya: A case of Sameer Africa Ltd. The study was
guided by four research questions, namely; To what extent does Early Supplier Involvement
enhance organizational positioning at Sameer Africa Ltd?, How does Supplier relationship
management enhance organizational positioning at Sameer Africa Ltd?, To what extent does
Contract management enhance organizational positioning at Sameer Africa Ltd?, How does
Supplier development enhance organizational positioning at Sameer Africa Ltd?.
The study adopted a descriptive research design. From the population of 165 employees, a sample
of 116 respondents was given questionnaires for data collection. The response rate for the study
was 73.3%. Data was analyzed using descriptive statistics, Pearson correlation and regression
analyses. The data was organized according to the research objectives and presented using tabular
summaries and pie charts.

5.2.1 Influence of Supplier Development on Organizational Positioning.

The study found that supplier development has a great influence on organizational positioning at
Sameer Africa. The study concluded that supplier training has enhanced commitment of suppliers
in terms of prompt delivery. Also, the quality of products in the organization has improved
considerably as a result of proper training of suppliers which contributed to enhanced acceptability
of products by customers hence improved sales and profitability. It also concluded that suppliers
are financially supported hence leading to reduced purchasing costs which ultimately enabled the
organization to lower the prices of its final products to customer. This eventually contributed to
increased sales. Finally, the study concluded that supplier training has led to reduced rejection rate
of supplied items in the company.

50
5.2.2 Influence of Supplier Relationship Management on Organizational Positioning.
The study found out that supplier relationship management has a significant influence on
organizational positioning at Sameer Africa. The study concluded that vertical integration with
supply chain partners enabled the organization to improve customer service in terms of timely
delivery. Also, it concluded that supply commitments and risks has significantly reduced as a result
of supplier collaboration. In addition, the study concluded that arms’ length relationship with
suppliers enabled the organization to take advantage of best available prices. Finally, market
transaction costs has reduced due to vertical integration with suppliers.

5.2.3 Influence of Early Supplier Involvement on Organizational Positioning

The study found that early supplier involvement has a considerable effect on organizational
positioning at Sameer Africa. The study found that sites visits to the suppliers’ premises before
selecting them has led improved chances of selecting competent suppliers. In addition, it was found
that consultation of users during specification development led to reduced wastage of purchased
items in the organization. Also, it was found that engagement with suppliers during specification
development led to reduced lead times. Finally, it was found that guidance of supplier through
supplier visits led to improvement in quality of supplied items in the organization.

5.2.4 Influence of Contract Management on Organizational Positioning

The study found out that to a great extent contract management influenced organizational
positioning at Sameer Africa. That is, Incorporation of disputes management in the contract
document improved suppliers’ trust with the organization. Also, resolution of contract disputes has
enabled suppliers to enhance supply commitments especially on strategic items hence enabling
continuous operations. The study also found that continued monitoring of contracts led to
completion of projects within set budget and period and finally Key performance indicators (KPIs)
were set to monitor performance of suppliers.

5.2.5 Forecasting Model

Regression and correlation analysis indicated that the independent variables (Supplier
development, supplier relationship management, early supplier involvement, contract
management) were significantly related to dependent variable (Organizational Positioning), that
is, 50.1% of the variation in organizational positioning of Sameer Africa Ltd could be explained
by the changes in supplier development, supplier relationship management, early supplier
involvement and contract management. It was found that there exist a strong positive correlation

51
between the dependent and independent variables. Each independent variable was individually
linearly related to organizational positioning (P-value<0.05) and therefore a four predictor variable
model could be used in forecasting organizational positioning in tyre manufacturing firms in
Kenya.

5.3 Conclusion of the Study

The study conclude that supplier development, supplier relationship management, early supplier
involvement and contract management were the main determinants of organizational positioning
of Sameer Africa Ltd. The study further concluded that the established regression model was good
for forecasting and could be used in predicting organizational positioning in other tyre
manufacturing firms which were not included in this study.

5.4 Recommendations of the Study

The study recommend that the organization should ensure collaboration with suppliers so as to
enhance supply commitments and reduce risks. The researcher further recommends that
procurement should take advantage of transactional kind of relationship with suppliers who supply
strategic items so as to take advantage of best available prices in the market.
Supply chain management in line with top most management should ensure that the organization
have a supplier training program that is in line with the organizational corporate objectives. The
organization should further consider supporting its suppliers not only financially but also through
expertise sharing which will guarantee a win-win outcome with suppliers.
The organization should ensure that it involves suppliers early especially those who supply
strategic items such as coal and rubber products used during manufacture of tyres. The researcher
further recommend that the organization should keenly consider the issue of supplier site visits so
as to ensure that only the competent suppliers are selected.
Supply chain management in the organization should ensure that disputes management
mechanisms such as negotiation and mediations are incorporated in the contract document so as
to protect supplier relationships in the future. The study further recommend that the organization
should be strict with suppliers who do not finish their contract in time and also reward those who
finish in time as a way of motivating the suppliers.
The researcher further recommend the use of other data collection methods such as interviews as
they would help the researcher to get responses that are relatively free from bias. This is because
the interviews allows the researcher to have an opportunity to diminish fears and concerns that the

52
respondents may have. The researcher may also offer clarifications when needed and also help the
researcher go through difficult tasks.

5.5 Areas for Further Study

The study was limited to the organization under study; other similar firms in the manufacturing
industry were not studied. Similarly, the company under study was privately controlled entity and
therefore there is limited information on whether the findings can be inferred on the public entities
in Kenya. The researcher therefore acknowledges that there were limitations that stood in the way
of the study hence recommend further studies on the influence of strategic sourcing in the area of
public manufacturing firms in Kenya.
The researcher concentrated on supplier development, supplier relationship management, early
supplier involvement, contract management and their contribution to organizational positioning.
From the findings, it was evident that there are other aspects that affects organizational positioning.
Further researchers can investigate the influence of information sharing, strategic purchasing,
information technology and inventory management on organizational positioning.
Further researchers can try to look at the distribution sector.

53
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Appendix 2: Research Questionnaire
The researcher is an undergraduate student pursuing Bachelor of Purchasing and Supplies
Management in the department of Procurement and Logistics, School of Business Management
and Economics at Dedan Kimathi University of Technology. This research is meant to examine
the influence of strategic sourcing on organizational positioning in tyre manufacturing firms in
Kenya. You have been selected as a respondent for the study. Kindly read through the instructions
and respond to all the questions as required.

QUESTIONNAIRES
Please tick on the spaces provided.

SECTION 1: DOMEGRAPHIC DATA

(Tick appropriately)

1. What is your gender?

a) Male b) Female

2. What age bracket are you within?

a) Below 25 years b) 25-30years

c) 31- 35years d) Above 36 years

3. What is your level of education?

a) Certificate or other b) Diploma

c) Degree d) Masters and Above

4. How many years have you worked in this firm?

a) Below 2 years b) 3-5 years

c) 6-8 years (d) Above 8 years

5. Which department do you operate?
Procurement & Logistics [ ] Finance [ ] Human Resource [ ] Receiving & Raw Materials
Management [ ] Sales & Marketing [ ]

57
SECTION 2: ORGANIZATIONAL POSITIONING AT SAMEER AFRICA LTD.
6. On a scale of one to five where (5 =81-100%. 4=61-80%, 3=41-60%, 2=21-40%, 1= 0-20%,
please indicate the extent to which you would rate the following statements on the influence of
strategic sourcing on organizational positioning in your company.
1 2 3 4 5

ORGANIZATIONAL POSITIONING 0- 21- 41- 61- 81-

20% 40% 60% 80% 100%

Strategic sourcing has led to increased profitability

than our competitors by the following percentage
Strategic sourcing has led to reduction in product
quality defects by the following percentage
Strategic sourcing has led to increased customer
attraction by the following percentage
Strategic sourcing has led to reduced
manufacturing costs by the following percentage
Sales has consistently improved in the last two years
by the following percentage

SECTION 3: SUPPLIER DEVELOPMENT

7. Indicate the extent to which you agree with the following statements about strategic sourcing
in regard to supplier development on organizational positioning in your company.
Give your rating on a scale of one to five where 5= strongly agree, 4=Agree, 3=Neutral,
2=Disagree, 1=strongly disagree

1 2 3 4 5
SUPPLIER DEVELOPMENT

Supplier training has improved the commitment of suppliers

in terms of prompt delivery
Financial support offered to suppliers has enabled suppliers
to supply quality items
Supplier development has led to enhance organizational
positioning of the company
Purchasing costs have reduced considerably as a result of
financial support to suppliers

58
 Rejection rate of supplied items has reduced due to
improved supplier training

SECTION 4: SUPPLIER RELATIONSHIP MANAGEMENT

8. On a scale of one to five where, 5= strongly agree, 4=Agree, 3=Neutral, 2=Disagree,
1=strongly disagree, please indicate the extent to which you agree with the following statements
about strategic sourcing in regard to supplier relationship management on organizational
positioning in your company
1 2 3 4 5
SUPPLIER RELATIONSHIP MANAGEMENT

Collaboration with suppliers has led to improved

supply commitments and reduced risks

Vertical integration with supply chain partners has led

to improved customer service in terms of timely
delivery
Supplier relationship management enhances
organizational positioning of the company

Arm's length relationship with our suppliers enables us

take advantage of the best available prices
Market transaction costs have reduced as a result of
vertical integration with suppliers

SECTION 5: EARLY SUPPLIER INVOLVEMENT (ESI)

9. On a scale of one to five where5= strongly agree, 4=Agree, 3=Neutral, 2=Disagree,

1=strongly disagree, please indicate the extent to which you agree with the following statements
on the influence of early supplier involvement on organizational positioning in your company

1 2 3 4 5
EARLY SUPPLIER INVOLVEMENT

Sites visits to the suppliers’ premises before

selecting them has improved chances of selecting
competent suppliers.

59
 Quality of supplied items has improved due to
continued guidance of suppliers through supplier
visits.
Early supplier involvement helps to improve
organizational positioning of the company

The company has recorded reduced wastage due to

users’ consultation during specification
development.
Engagement with suppliers during specification
development has led to reduced lead times

SECTION 6: CONTRACT MANAGEMENT

10. On a scale of one to five where5= strongly agree, 4=Agree, 3=Neutral, 2=Disagree,
1=strongly disagree, please indicate the extent to which you agree with the following statements
on the influence of contract management on organizational positioning in your company

1 2 3 4 5
CONTRACT MANAGEMENT

Key performance indicators (KPIs) are set to

monitor performance of suppliers

Continued monitoring of contracts has led to

completion of projects within set budget and
period
Contract management enhances organizational
positioning of the organization

Resolution of contract disputes has enabled

suppliers to enhance supply commitments

Incorporation of disputes management in the

contract document has improved suppliers’
trust with the organization.

60