Research proposal writer

THE EFFECT OF COOPERATIVE PURCHASING ON THE ORGANIZATIONAL PERFORMANCE OF LUWEERO HEALTH CENTRE IV

BETWEEN (2013& 2015)

CHAPTER ONE: INTRODUCTION

1.0 INTRODUCTION

The study is about the Effect of Cooperative purchasing on the performance of Kasana Health Centre IV between 2013&2015. The research proposal consists of three chapters’ namely General introduction, Literature Review and methodology. This ongoing chapter will comprise of the General introduction, Background of the study, Statement of the problem, Purpose of the study, Objectives of the study, Research questions, Scope of the study, significance of the study 

and definition of the key terms.

1.1 BACKGROUND OF THE STUDY 

Worldwide, Cooperative purchasing has its roots in the cooperative movements of early 19th century in England and USA (Wooten, 2003). The idea started when several smaller organizations interested in similar items realized that aggregating their requests together will lead to emergence of one large organization procuring the same item. This was so common in case where the supply manager would go through the competitive process to award the bid. This competition among the competing bidders would expose them to readily available products and other benefits. Not only that, Wooten also stated that these cooperatives were roughly designed to gather power of many small voices which were being exploited in the market to make one big voice which wouldn’t be exploited in the market. Their formation and daily operations were based on democracy, equality, equity& solidarity, responsibility and values of self-help (Wooten, 2003).Tella et al, (2004) stress that cooperatives have been widely used in the public sector and also in the retailing sector, but recently also the industrial sector has adopted it. All this can be seen in the business purchasing operations of the world’s biggest economies like USA, China, Britain, Germany, Japan, Russia et cetera. Cooperative purchasing and its programs are not so much self-help groups, they are rather methods supply managers’ use to more efficiently acquire materials Tella urges. Cooperative purchasing world widely has been employed in various areas like in but majorly in the schools, offices et cetera to procure school and office supplies, large ticket items; cars, services and insurance et cetera (Bishop, 2003). For example let’s take a case of USA, the first healthcare GPO was established in 1910 by the Hospital Bureau of New York. For many decades, healthcare GPOs grew slowly in number, to only 10 in 1962.Medicare and Medicaid stimulated growth in the number of GPOs to 40 in 1974. That number tripled between 1974 and 1977. The institution of the Medicare Prospective Payment System (PPS) in 1983 focused greater scrutiny on costs and fostered further rapid GPO expansion. In 1986, Congress granted GPOs in healthcare “Safe Harbor” from federal anti-kickback statutes after successful lobbying efforts. By 2007, there were hundreds of healthcare GPOs, “affiliates” and cooperatives in the United States that were availing themselves of substantial revenues obtained from vendors in the form of administrative fees, or “remuneration.” 96 percent of all acute-care hospitals and 98 percent of all community hospitals held at least one GPO membership. Importantly, 97 percent of all not-for-profits, non-governmental hospitals participated in some form of group purchasing.

With healthcare costs rising sharply in the early 1980s, the federal government revised Medicare from a system of fee-for-service (FFS) payments to PPS, under which hospitals receive a fixed amount for each patient with a given diagnosis. Other insurers also limited what hospitals could charge. The result was a financial squeeze on hospitals, compelling them to seek new ways to manage their costs. Nevertheless, they are also facing challenges like changing organizational environments, lack of trust, fear of parasites and sharing sensitive information et cetera which are greatly impacting on their performance.

According to Jürgen Schwettmann, (2014), cooperative purchasing in Africa owes its roots to the way of life of Africans from the beginning up to date especially to the clans and communities. For example they always embraced togetherness in every activity that they did. This continued interaction created informal cooperation can be further seen among the way the African farmers helped each other in carrying out agricultural activities like bush clearing, harvesting et cetera which made early agriculture possible because of the mutual aid among the farmers. This continued informal cooperation led to the birth of informal cooperatives which were characterized by solidarity, cooperation, reciprocity and mutuality. These traits are more vibrant up to date in the rural areas and the urban informal associations ROSCAS also referred to as “Tontines” in French. These ROSCAS  can been seen today in all African countries like Uganda, Kenya, Tanzania, Nigeria, Ghana, Tunisia, Algeria and others which are performing wonders up to date. Formal cooperatives were later introduced in African countries in the 20th century by their colonialists respectively according to their patterns of rule, structure. Later on the colonialists brought in a new feel by making the their administration undertake systematic efforts to develop cooperatives into powerful businesses that through vertical structures, they controlled much of the agricultural production, marketing and processing in rural areas in particular regard to export crops which has been described as “United Cooperative Model). This experience enabled the Africans to learn how to relate with other people, not only that also it made them to value efforts of a group over individual efforts. This experience laid down a firm foundation for the development of groups to buy and not to sale their products, for example these agricultural cooperatives enabled farmers to be exposed to relatively cheap farm equipment and tools due to the bulk purchases which earned them trade discounts. This lead was later adopted by the African governments mainly in the health sector, this vice started to be adopted in the official matters like mainly in the public sectors (Wanjiru, 2015; Gray, 2002; Tella et al, 2004). This was seen by the African governments sourcing third parties to be buying for the health centres supplies; this was because of the increase of the supply of counterfeit drugs which were endangering the citizens’ lives. The strategy was also adopted by certain private entities most especially the business men who imported goods from outside, they came together to source from outside in the run to reduce on the costs incurred, attract suppliers due to bulk purchases, be exposed to quality goods et cetera( Schotanus& Telgan, 2007). The strategy success is relatively high in the public sector because of the uniformity in many variables like culture, values, reporting, mission, which is not the case in the private entities because of   the challenges which face the implementation like; different cultures, values, limited resources, fear of parasites et cetera (Gray, 2002; Williamson, 1985) which negatively affect their performance.

In East Africa, cooperative purchasing owes its excellence way back to the colonial period where the colonialists introduced formal agricultural cooperatives (Jürgen Schwettmann, 2014). According to Jacquiline Emodek, 2015’s New Vision article, the actual group purchasing activity was ushered in by 1979, after the Uganda-Tanzania liberation war that led to the overthrow of President Idi Amin’s regime; there were a number of donors supporting each health unit. However, they were doing this individually; some were supporting more than one, but without a distinct coordinated structure. This realization led to the Roman Catholic Church and the Church of Uganda through their medical arms (the Uganda Catholic Medical Bureau and Uganda Protestant Bureau respectively), making the decision to set up the Joint Medical Stores (JMS). “This was so that it could support the supply chain for the mission health units; to ensure that they get good quality products in time and also co-ordinate donations,” Dr Bilard Buguma JMS, the executive director, says. Previously each health centre in Uganda was purchasing its own drugs and supplies which proved too costly, the centres kept on running out of stock and they were also exposed to counterfeit drugs which were harmful to the lives of the citizens. In pursuit to mitigate those problems government decided to form National Medical Stores in 1993, to be responsible for sourcing the drugs for the health centres. From then JMS has become a third party which helps private medical centres to source drugs from outside the country.NMS got its full authority to procure, store and distribute medical supplies and medicines to all public health facilities in the country, army, police and prisons in 2012. The use of the third parties to procure medical supplies and drugs led cost reduction, increase the product availability, exposure to quality goods and others (Schotanus&Telgan, 2007; Tella et al, 2004). The accumulated benefits by the medical sector attracted the business men in Kikuubo who also adopted the vice in their importing of goods from outside. Putting aside the benefits accrued, the strategy is faced with faced with challenges like differences in cultures, values, motives; fear of parasites and sharing of sensitive information, fear of loss of control et cetera ( Gray, 2002; Schotanus et al, 2005) which have influenced the performance of organizations.

In Luweero Health Centre IV, cooperative purchasing is a practice evidenced by the use of the third party, NMS. The HCIV has greatly benefited through cost reduction, increased product availability, improved efficiencies, better compliance with the statutory laws et cetera (Schotanus& Telgan, 2007; Kivisto, 2003). However, putting the benefits aside, the HCIV is also faced with many challenges like trust and cooperation issues, delivery of wrong drugs, stock outs, bureaucracy, limited staff involvement, conflicting motives, different organizational cultures; values et cetera (Gray, 2002; Williamson, 1985). These have negatively influenced the performance of the HCIV.

1.2 PROBLEM STATEMENT

With the growing modernity, flexibility and global village, embracing of cooperative purchasing has made purchasing operations real, convenient and easy for entities. Adopting cooperative purchasing helps to improve on effectiveness, reduce costs and duplication of roles, improve responses from vendors et cetera (Kamann, 2004; Schotanus et al, 2005). Despite the fact that many organizations have succeeded in adopting cooperative purchasing in their operations, they still face challenges in their operations such as poor employee motivation, limited supply base, limited cooperation and trust, higher fees et cetera (Gray, 2002; Williamson, 1985). 

Luweero Health Centre IV, at 100 percent has implemented cooperative purchasing through a third party, NMS. However, the LHCIV in 2012 faced challenges like limited involvement of its staff members in the process, delivery of wrong drugs, bureaucracy, and loss of existing relations with existing suppliers. In pursuit to mitigate the identified challenges, the health centre advocated for its procurement staff to take part in the process, made proper specifications and sent earlier orders. But according to the Observer article by Moses Talemwa on 23rd October 2013, there was persistence in delivery of wrong drugs, non staff involvement in the process leading to performance characterized by poor service delivery, low levels of output from the employees, stock outs. It is therefore upon this that the researcher seeks to examine “The effect of cooperative purchasing on the performance of Luweero Heath Centre IV between 2013&2015”

1.3 PURPOSE OF THE STUDY

The purpose of the study is to examine the effect of cooperative purchasing on the organizational performance of Luweero HCIV.

1.4 SPECIFIC OBJECTIVES OF THE STUDY

1. To establish the benefits of using cooperative purchasing as a purchasing strategy.
2. To identify the critical success factors in implementation of cooperative purchasing in the LHCIV.
3. To establish the relationship between cooperative purchasing and the performance of LHCIV.

1.5 RESEARCH QUESTIONS

1. What is the relationship between cooperative purchasing and organizational performance of Luweero HCIV?
2. What are the benefits of adopting of cooperative purchasing in the daily business operations of Luweero HCIV?
3. What critical success factors needed in the implementation of cooperative purchasing in the HCIV?

1.6 SCOPE OF THE STUDY

According to Wangusa (2007), the scope of the study demarcates the area to be covered by the study; the area could for instance a specific period or a geographical territory or particular texts, themes or data.

1.6.1 Subject Scope

The researcher will restrict the study on the effects of cooperative purchasing on the performance of Luweero HCIV. However it will specifically look at the benefits and critical success factors in the implementation of cooperative purchasing.

1.6.2 Geographical Scope

The research study will be carried out in Luweero Health Centre IV located in Luweero District along the Kampala-Luweero-Gulu Highway opposite MTN Service centre Luweero branch.

1.6.3 Time scope

The research will cover the literature review of 3 years that is to say between 2010& 2013. However the researcher intends to use 5months of field work study that is to say from May to September 2018. This time frame will be enough to collect all the necessary data concerning the study.

1.7 SIGNIFICANCE OF THE STUDY

The study is expected to be of great significance to the researcher, public and private institutions and to other perspective researchers on the same topic in some of the following ways;

1. The researcher will help to expose procurement managers of various organizations an understanding of the benefits of cooperative purchasing. This will help procurement managers to lay a foundation for the basis to advocate for the adoption of cooperative purchasing so that they can enjoy the benefits.
2. The study will help to show the challenges that are hindering the effectiveness of cooperative purchasing to both the procurement and top level managers of an organization.
3. The study will establish the various measures to mitigate the challenges facing cooperative purchasing in organizations.
4. To the academicians, the study will assist future researchers and students willing to undertake research on the effect of cooperative purchasing on the organizational performance. For example, it may be used as a reference book as it will add to the existing literature on the efficiency of cooperative purchasing.
5. The study will help the government and policy makers in guiding them on formulation of policies concerning cooperative purchasing. Not only that, but also come up with cooperative agreements, this is because the study will avail the required information which can be consolidated to establish the challenges hindering the adoption of cooperative purchasing, basing on that they can develop policies and agreements to encourage adoption of cooperative purchasing.
6. The study will also aid the researcher to fulfill the requirement for the award of a bachelor’s degree of Procurement and Logistics Management from Kyambogo University