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SUPPLIER RELATIONSHIP MANAGEMENT AND PROCUREMENT PERFORMANCE

A CASE STUDY OF ROOFINGS INDUSTRIES

Table of content

Table of content 2

SECTION ONE.. 4

BACKGROUND OF THE STUDY.. 4

1.1 Introduction. 4

1.2 Background of the study. 6

1.3. Purpose of the study. 15

1.4 Specific Objectives of the Study. 15

1.5. Research Questions. 16

1.6 Hypotheses. 16

1.7. Scope of the study. 17

1.8. Significance of the study. 17

1.9 Conceptual framework. 18

SECTION TWO.. 19

LITERATURE REVIEW… 19

2.0 Introduction. 19

2.1 Theoretical review.. 19

2.2 Empirical literature review.. 21

2.2.1 Procurement performance. 21

2.2.2. Performance monitoring. 22

2.2.3. Supplier Segmentation. 23

2.3 Empirical Review.. 28

SECTION THREE.. 33

METHODOLOGY.. 33

3.1 Introduction. 33

3.2 Research Design. 33

3.3 Study Population. 34

3.4 Study Sample. 34

3.5 Sampling Techniques and Procedure. 35

3.6 Data Collection Methods. 35

3.7 Data Collection Instruments. 37

3.8 Validity and Reliability of the Research Instruments. 38

3.9 Data Collection Procedure. 40

3.10 Data Analysis. 40

3.11 Measurement of variables. 41

3.9 Ethical considerations. 44

WORK PLAN.. 44

REFERENCES. 46

Questionnaire. 52

APPENDICES. 55

APPENDIX 1: Krejcie and Morgan Table. 55

SECTION ONE

BACKGROUND OF THE STUDY

1.1 Introduction

Effective procurement practices are essential for the smooth functioning of organizations in today’s competitive business landscape. Procurement performance, is a critical aspect of organizational success, encompassing various metrics such as cost reduction, quality improvement, and supply chain resilience (van Weele, 2018). Optimizing procurement performance involves not only ensuring the timely acquisition of goods, services, and resources but also achieving these at minimal costs while maintaining high-quality standards (Cousins et al., 2008).

Globally, procurement performance faces several challenges including fluctuating market conditions, geopolitical tensions, and regulatory changes, which impact procurement efficiency and effectiveness (Schiele, 2007). Regionally, supply chain disruptions, varying economic stability, and regional trade policies pose significant challenges (Trent & Roberts, 2009). Nationally, factors such as local regulations, economic conditions, and the availability of suppliers influence procurement activities (Bals et al., 2018). At Roofings, a leading company in the sector, specific challenges include managing supplier relationships, ensuring consistent quality, and mitigating costs in a highly competitive market.

To address these procurement performance challenges, various interventions have been implemented both globally and at Roofings. Globally, companies adopt strategies such as diversifying supplier bases, implementing advanced technologies for supply chain management, and engaging in collaborative partnerships (Monczka et al., 2015). Regionally, efforts include enhancing regional trade agreements and improving infrastructure (Christopher, 2016). Nationally, interventions focus on regulatory compliance and fostering local supplier development (Handfield et al., 2011). At Roofings, current interventions include adopting supplier relationship management (SRM) practices aimed at improving supplier collaboration, performance, and innovation.

Key components of SRM include supplier segmentation, contract management, and collaboration, all aimed at fostering positive and mutually beneficial partnerships with suppliers. Supplier selection involves rigorous evaluation based on criteria such as quality, price, reliability, and reputation, ensuring alignment with the company’s needs (Caniato et al., 2012). Contract negotiation establishes clear terms and conditions regarding pricing, delivery schedules, and quality standards to mitigate potential misunderstandings and disputes (Cousins et al., 2008). Collaboration with suppliers focuses on enhancing their capabilities, processes, and performance through training, knowledge sharing, and innovation initiatives (Caniato et al., 2012).

While these SRM practices are crucial, they are considered independent variables (IVs) in this study, proposed to mitigate the challenges affecting procurement performance. The primary focus of this study is to delve deeper into the relationship between SRM practices and procurement performance, aiming to identify strategies that can enhance procurement effectiveness and efficiency. This chapter provides a comprehensive overview of the study’s background, problem statement, objectives, research questions, scope, justification, significance, hypotheses, conceptual framework, and operational definitions to lay the foundation for further investigation.

1.2 Background of the study

The section presents historical background, theoretical, contextual background, and conceptual background.

1.2.1 Historical background

The history of supplier relationships is intertwined with the evolution of commerce, trade, and industry (Yang, Li, Cui, & Qiao, 2023). Over time, these relationships have evolved from simple barter arrangements to complex, strategic partnerships, in ancient times, before the advent of money, people engaged in barter trade, exchanging goods and services directly with each other. This early form of trade relied heavily on interpersonal relationships and trust between suppliers and buyers (Yang, 2022).

During the era of mercantilism, European powers focused on accumulating wealth through trade. Supplier relationships were often characterized by monopolies granted by the state to specific companies, leading to unequal power dynamics and exploitation, The Industrial Revolution brought about significant changes in supplier relationships. With the rise of factories and mass production, businesses started sourcing raw materials and components from specialized suppliers. This marked the beginning of modern supply chains (Shiralkar, Bongale, & Kumar, 2022).

The 20th century saw the refinement of supply chain management practices, driven by advancements in transportation, communication, and technology (Dubey et al., 2019), Companies began to optimize supplier relationships for efficiency, cost-effectiveness, and reliability. Globalization further transformed supplier relationships. Companies expanded their supplier networks globally to access cheaper labor, raw materials, and new markets. This led to increased complexity in managing supplier relationships across different regions and cultures (Acquah et al., 2023).

In recent decades, there has been a shift towards strategic partnerships and closer integration within supply chains. Rather than viewing suppliers as mere transactional entities, companies now collaborate closely with key suppliers to drive innovation, sustainability, and mutual growth (Amoako-Gyampah, et al., 2019), The digital revolution has revolutionized supplier relationships through technologies like big data analytics, IoT (Internet of Things), AI (Artificial Intelligence), and blockchain. These technologies enable real-time visibility, predictive analytics, and greater transparency across supply chains, fostering stronger, more resilient supplier relationships (Sanchez et al., 2023).

Procurement is continuing to evolve both conceptually and organizationally. That evolution accelerated since the 1990s as governments at all levels came under increasing pressures to do more with less. Indeed, all governmental entities of rich and poor countries are struggling in the face of unrelenting budget constraints; government downsizing; public demand for increased transparency in public procurement; and greater concerns about efficiency, fairness and equity. Additionally, public procurement professionals have faced a constantly changing environment typified by rapidly emerging technologies, increasing product choice, environmental concerns, and the complexities of international and regional trading agreements. Further, policymakers have increasingly used public procurement as a tool to achieve socioeconomic goals (Thai, 2007, Albano, Snider & Thai, 2013).

The procurement function has not been given the recognition it deserves in developing countries, in most public entities, regardless of the effort by partners like the World Bank, the International Trade Organization, the United Nations Conference on Trade and Development, the World Trade Organization and, others. This could be deliberate or sheer ignorance on the value the procurement function could contribute to any organization (Telgen, Zomer, & de Boer, 1997). Procurement is one of the important sectors undertaken by government and non-state actors to streamline issues of accountability and compliance. This embraces not only purchasing, that is, buying of goods, but it also includes the hiring of contracts or consultants to carry out services. Standards required in procurement are high-quality service, economy and efficiency, and fairness in competition. Thus a procedure must be followed and applies to all contracts for goods and works.

In most developing countries, the procurement function is transitioning from a clerical non-strategic unit to an effective socio-economic unit that is able to influence decisions and add value (Knight, Harland, Telgen, Thai, Callender, & Mcken, 2007; and Facolta di Economia, 2006). Developing countries in one way or another have reformed their public procurement regulations. The reforms have not been limited to regulations only, included public procurement process, methods, procurement organizational structure, and the workforce. The reforms have been as a result of joint efforts with various development partners like the World Bank, International Trade Centre, WTO, and UNCTAD varying from country to country.

Nonetheless, most developing countries are facing a problem of rapid changes in public procurement requirements. The changes are impacting pressure on how the procurement function performs its internal and external processes and procedures to achieve its objectives. The ability to realize procurement goals is influenced by internal force and external forces. Interactions between various elements, professionalism, staffing levels and budget resources, procurement organizational structure whether centralized or decentralized, procurement regulations, rules, and guidance, and internal control policies, all need attention and influence the performance of the procurement function. In addition, public procurement faces challenges imposed by a variety of 3 environmental factors (external factors) such as market, legal environment, and political environment, organizational and socio-economic environmental factors.

1.2.2 Theoretical context

The study will utilize the Resource Dependence Theory (RDT), which has emerged as a crucial theoretical framework for understanding the dynamics of supplier relationships and their impact on procurement performance. This literature review synthesizes key insights from seminal works by authors such as Pfeffer and Salancik (1978), Emerson (1962), and Dyer and Singh (1998), among others, while also examining contemporary applications, underlying assumptions, and existing gaps in the literature.

Pfeffer and Salancik (1978) laid the groundwork for RDT by proposing that organizations are inherently dependent on external resources and must manage these dependencies strategically to maintain autonomy and achieve organizational goals. Emerson (1962) further expanded on this concept, highlighting the role of power dynamics in shaping inter-organizational relationships and resource exchanges. Dyer and Singh (1998) contributed to RDT literature by emphasizing the importance of relational governance mechanisms, such as trust and commitment, in mitigating dependence risks and enhancing collaborative outcomes in buyer-supplier relationships.

In the context of procurement performance, RDT offers valuable insights into the strategies and practices that organizations employ to manage their reliance on external suppliers effectively. Scholars such as Cousins et al. (2008) and Handfield et al. (2005) have applied RDT principles to explore the impact of supplier relationships on procurement performance metrics such as cost reduction, quality improvement, and supply chain resilience. These studies highlight the importance of adopting proactive Supplier Relationship Management (SRM) practices, such as long-term contracting, supplier development, and collaborative innovation, to optimize procurement outcomes and mitigate supply chain risks.

RDT operates on several key assumptions, including the notion that organizations depend on external resources for survival and growth, and that resource dependencies create asymmetrical power relations between organizations and their suppliers. Additionally, RDT assumes that organizations seek to minimize dependence risks by diversifying their supplier base, investing in relational governance mechanisms, and aligning their interests with those of their suppliers. However, critics such as Zaheer and Venkatraman (1995) have questioned the universal applicability of RDT, arguing that it may oversimplify the complexities of inter-organizational relationships and fail to account for contextual factors that influence supplier dynamics.

Despite its utility, the RDT and procurement performance exhibit several notable gaps. First, there is a need for more empirical research that examines the effectiveness of specific SRM strategies in different industry contexts and organizational settings. Second, there is limited attention given to the role of digital technologies, such as blockchain and artificial intelligence, in reshaping supplier relationships and procurement practices. Finally, there is a dearth of studies that explore the implications of environmental sustainability and social responsibility considerations on supplier dependencies and procurement performance.

1.2.3 Conceptual background

Supplier Relationship Management (SRM) and procurement performance are intertwined concepts crucial for optimizing organizational efficiency and competitiveness in the contemporary business landscape. SRM involves the systematic management of interactions and relationships with suppliers, focusing on practices such as supplier segmentation, collaboration, and contract management (Klemettinen, 2018). The objective of SRM is to foster strong, collaborative, and mutually beneficial partnerships with suppliers to enhance organizational performance (Cousins et al., 2008). By effectively managing supplier relationships, organizations can optimize supplier performance, mitigate risks, foster innovation, and achieve cost savings (Giannakis & Croom, 2004).

Procurement performance, on the other hand, is a key measure of an organization’s effectiveness in sourcing goods and services. It encompasses various metrics including cost reduction, quality improvement, delivery reliability, and supply chain resilience (Cousins et al., 2008). Effective procurement performance ensures timely and cost-effective acquisition of goods and services, contributing to overall organizational success by enhancing operational efficiency and mitigating supply chain risks (Lamming et al., 1996).

The relationship between SRM practices and procurement performance is symbiotic. Practices such as supplier segmentation, collaboration, and contract management play a critical role in driving procurement performance outcomes (Handfield et al., 2005). By segmenting suppliers based on relevant criteria, organizations can tailor their approach to each supplier category, thereby optimizing supplier performance and enhancing overall procurement effectiveness. Collaboration with suppliers enables organizations to leverage supplier expertise, drive innovation, and achieve cost savings through joint process improvements. Furthermore, effective contract management ensures clear terms and conditions, minimizing disputes and ensuring compliance with agreements (Humphreys et al., 2004).

However, the effectiveness of SRM practices in enhancing procurement performance may vary depending on contextual factors such as industry dynamics, organizational culture, and regulatory environments (Humphreys et al., 2004). Therefore, organizations must tailor their SRM strategies to align with specific business objectives and market conditions to realize maximum benefits in terms of procurement performance improvement.

1.2.4 Contextual background

Roofings Rolling Mills, established in Uganda in 2009, has become a cornerstone of the steel manufacturing sector in East and Central Africa (Nash, 2017). Their commitment to quality is exemplified by their ISO 9001 certification, ensuring products meet international standards (International Organization for Standardization, 2024). This dedication has solidified their position as a regional leader, catering to diverse customer needs across the East and Central African markets.

Roofings Rolling Mills boasts a strategically located 40-acre factory within the Namanve Industrial Park, Mukono District (Roofings Rolling Mills, n.d.). This prime location allows for efficient production and distribution across the region. Their expansive product portfolio caters extensively to construction requirements, offering a wide variety of steel products including galvanized pre-painted coils, binding wires, TMT rebars, and chain links. Beyond their core business, Roofings Rolling Mills demonstrates a strong commitment to corporate social responsibility. A unique facet of their operations is the production of oxygen, hydrogen, and nitrogen, with surplus oxygen being donated to hospitals like Rubaga and Nsambya. This initiative highlights their dedication to the well-being of the communities they serve (Roofings Rolling Mills, n.d.).

Roofings Rolling Mills’ ambitious growth strategy is supported by significant financial investments. In 2011, the International Finance Corporation allocated $25 million to enhance its infrastructure (International Finance Corporation, 2011). Furthermore, six Ugandan commercial banks collectively injected $64 million in December 2010, further bolstering their operational capabilities (Nash, 2017). These investments are expected to significantly increase export volumes, with projections indicating a doubling to over US$130 million annually. Roofings Rolling Mills has not only solidified its presence within the East African community but has also extended its reach beyond borders, becoming a supplier to the Democratic Republic of Congo (DRC) (Nash, 2017). This expansion underscores their ability to compete in the international market.

The connection between effective Supplier Relationship Management (SRM) and procurement performance is crucial for Roofings Rolling Mills’ continued success. Strategic supplier partnerships, efficient contract management, and open communication are instrumental in ensuring a seamless procurement process, ultimately enhancing overall organizational performance (Jin et al., 2020). By nurturing strong relationships with suppliers and optimizing procurement processes, Roofings Rolling Mills can further solidify its position as a leader in the steel manufacturing industry.

1.2. Problem statement

In today’s interconnected business landscape, effective procurement practices are vital for organizational success (PwC, 2023). Yet, many companies, particularly in East Africa, face significant challenges in ensuring reliable deliveries, maintaining high-quality goods and services, and managing contracts efficiently (PwC, 2023).

Roofings Uganda, a prominent player in the Ugandan construction sector, illustrates these challenges. Despite a robust portfolio of awarded contracts, their 2021 annual report notably omits critical insights into documented service delivery issues (Mubangizi, 2013). These issues manifest in alarming metrics: a 30% cancellation rate, 5% of deliveries being incomplete, 10% delayed deliveries, and 60% late payments. Furthermore, concerns regarding overpriced goods and missing documentation highlight systemic weaknesses in Roofings Uganda’s procurement processes (Mubangizi, 2013).

Existing literature often provides broad, global strategies that may overlook the unique cultural, legal, and logistical contexts of the Ugandan market (World Bank, 2022). This study aims to address this gap by exploring ways to enhance procurement performance at Roofings Uganda, focusing specifically on supplier relationship management as a dependent variable. By investigating factors such as supplier segmentation, collaboration strategies, and contract management practices, this research seeks to identify targeted interventions that resonate with the distinct characteristics of the Ugandan market.

1.3. Purpose of the study

The study seeks to examine supplier relationship management and procurement performance. A case study of Roofings Industries Uganda.

1.4 Specific Objectives of the Study

The study will be guided by the objectives below, which collectively aim to understand how various aspects of supplier relationship management influence procurement performance within the company.

• To examine the relationship between supplier segmentation and procurement performance at Roofings Industries Ltd.
• To investigate the relationship between contract management practices and procurement performance at Roofings Industries Ltd.
• To analyze the relationship between supplier collaboration and procurement performance at Roofings Industries Ltd.

1.5. Research Questions

1. What is the relationship between supplier segmentation and procurement performance at roofings Industries Ltd?
2. What is the relationship between contract management and procurement performance at roofings Industries Ltd?

• What is the relationship between supplier collaboration and procurement performance at roofings Industries Ltd?

1.6 Hypotheses

H₁:   There is a positive and significant relationship between supplier segmentation and procurement performance.

H_2:   There is a positive and significant relationship between contract management and procurement performance.

H₃:  There is a positive and significant between supplier collaboration and procurement performance.

1.7. Scope of the study

1.7.1. Content scope

Generally, the study will investigate the influence of supplier relationship management and procurement performance; the relationship between supplier segmentation and procurement performance, the influence of contract management and procurement performance, and the relationship between supplier collaboration and procurement performance.

1.7.2 Geographical scope

The study will be carried out in the Roofing Industry located in Namanve industrial area.

1.7.3 Time scope

The study will be conducted for 10 months from February to November 2024.

1.8. Significance of the study

The study will be useful in the following ways;  The study will help procurement policymakers within the private and public sectors identify critical areas that need urgent emphasis and make appropriate decisions to ensure the proper procurement process is critically adhered to.  The study will be used as a source of reference material for future researchers who intend to undertake the same related topic in their studies.

The study will help identify further areas of research built on the findings of the study.

The study will also be useful to the researcher since it will lead to the award of a master’s degree at Kyambogo University.

1.9 Conceptual framework

The explanation of the relationships between the variables for the study in the statement of the problem, objectives, and research questions are illustrated.

Independent variables                                                          Dependent variable 

Supplier Relationship                                                           Procurement Performance

Source: Adapted From literature (Arrow Smith, & Hartley (2002); Agaba & Shipman, (2007); Witting, (1999) with Modification by the Researcher

SECTION TWO

LITERATURE REVIEW

2.0 Introduction

This section presents a review of the literature on the procurement process, stages of the procurement process, procurement performance, the key performance indicators of procurement performance, difficulties in measuring procurement performance, the relationship between the procurement process and procurement performance, and conclusion.

2.1 Theoretical review

Resource Dependence Theory (RDT) offers a nuanced understanding of the intricate interplay between organizations and their external environment, particularly concerning their reliance on external resources such as suppliers. Pfeffer and Salancik (1978) laid the foundational groundwork for RDT by proposing that organizations are inherently dependent on external resources and must manage these dependencies strategically to maintain autonomy and achieve organizational goals. Emerson (1962) expanded on this concept by highlighting the role of power dynamics in shaping inter-organizational relationships and resource exchanges, emphasizing the asymmetries inherent in these interactions.

In the realm of procurement performance, RDT provides valuable insights into how organizations manage their supplier relationships to optimize outcomes. Scholars like Cousins et al. (2008) and Handfield et al. (2005) have applied RDT principles to explore the impact of supplier relationships on procurement performance metrics such as cost reduction, quality improvement, and supply chain resilience. Their research underscores the importance of adopting proactive Supplier Relationship Management (SRM) practices, such as long-term contracting, supplier development, and collaborative innovation, to mitigate supply chain risks and enhance performance.

However, RDT is not without its critics. Zaheer and Venkatraman (1995) have raised concerns about the universal applicability of RDT, arguing that it may oversimplify the complexities of inter-organizational relationships and fail to account for contextual factors that influence supplier dynamics. They contend that RDT’s emphasis on reducing dependence risks through diversification and relational governance mechanisms may overlook the nuances of power dynamics and the contextual contingencies that shape supplier relationships.

Moreover, gaps in the literature on RDT and procurement performance are evident. First, there is a need for more empirical research that examines the effectiveness of specific SRM strategies across different industry contexts and organizational settings. Second, the role of digital technologies, such as blockchain and artificial intelligence, in reshaping supplier relationships and procurement practices warrants further exploration. Finally, the implications of environmental sustainability and social responsibility considerations on supplier dependencies and procurement performance remain underexplored.

In conclusion, Resource Dependence Theory offers valuable insights into the dynamics of supplier relationships and their implications for procurement performance. By addressing existing gaps and advancing research in this area, scholars and practitioners can deepen their understanding of how organizations can effectively manage their supplier dependencies to achieve sustainable competitive advantage in dynamic business environments.

2.2 Empirical literature review

2.2.1 Procurement performance

Procurement performance is a measure of identifying the extent to which the procurement function can reach the objectives and goals with minimum costs for an ongoing or completed project (Van Weele, 2019). Van Weele (2012) noted that there are two main aspects of procurement performance: effectiveness and efficiency. Procurement effectiveness as defined by Van Weele (2019) is the extent to which the previously stated goals and objectives are being met. It refers to the relationship between actual and planned performance of any human activity. Additionally, he explains that procurement efficiency is the relationship between planned and actual resources required to realize the established goals and objectives and their related activities, referring to the planned and actual costs. As a result, supplier performance is the most important procurement performance driver.

For any project to fulfill its objectives, change its focus, and become more competitive, Amaratunga and Baldry (2021) suggest that procurement performance is a key driver to improving the quality of services while its absence or use of inappropriate means can act as a barrier to change and may lead to deterioration of the purchasing function. Nonetheless, most developing countries are facing a problem of rapid changes in procurement requirements. The changes are impacting pressure on how the project procurement function performs its internal and external processes and procedures to achieve its objectives. Procurement performance provides a basis for effective control and stewardship of resources and demonstrates the value of the procurement function. Most organizations have no performance measures in place for assessing procurement efficiency and effectiveness. Of the few that did have measures, many were qualitative statements rather than specific targets to achieve (Anvuur & Kumaraswamy, 2016).

2.2.2. Performance monitoring

The term procurement process is an area of interest to organizations responsible for project delivery for better performance in product quality, cost, cycle time, and responsiveness (Sanderson & Cox, 2018). The procurement process is composed of different stages (pre-acquisition phase, tender process, contract award, contract and supplier management), each one requiring a specific and careful design capable of guaranteeing the best possible results (Baldi et al., 2016).

The procurement process is the series of actions required to obtain goods or services from an outside source. The events may include researching vendors, order requests, budget negotiation, purchases, and audits. The procurement cycle can require significant time and capital to complete (Zyncus, 2018). For example, if a retailer needs to restock a product, they must first complete internal procedures like purchasing order requests and invoicing approvals. Once all of the requests are approved, management handles inventory costs and warehousing fees with external vendors and storage facilities. Only when all of these processes are complete can the business finally purchase their inventory. Understanding the importance of procurement management and properly implementing its steps can help businesses optimize their profits (Zyncus, 2018).

In government entities like the Ministry of Local Government, public procurement operates in an environment of increasingly intense scrutiny driven by technology, program reviews, and public and political expectations for service improvements (Bolton, 2017). Currently, in Africa, procurement is of particular significance in the public sector and has been used as a policy tool due to the discriminatory and high level of corruption in the country (Bolton, 2016).

Procurement is central to the local government service delivery system and promotes aims that are, arguably, secondary to the primary aim of procurement such as using procurement to promote social, industrial, or environmental policies (Cane, 2017). Before 2022, public procurement in Kenya was geared towards large and established contractors. It was difficult for new contractors to participate in government procurement procedures. However, public procurement in countries such as South Africa has been granted constitutional status and is recognized as a means of addressing past discriminatory policies and practices (Bolton, 2016).

2.2.3. Supplier Segmentation

Supplier segmentation entails categorizing suppliers to get a comprehensive knowledge of a buyer’s supply base and its critical features, as well as making resource allocation modifications in response to the results (Dawson et al. 2017). It entails obtaining a more complete and comprehensible image of all suppliers by a buyer through categorizing them into groups, in which the buyer may spend their limited engagement resources on the most relevant group (Dolo, 2016).

Supplier segmentation allows a company to divide suppliers into different categories based on their needs, traits, or behavior (Tolmay & Badenhorst, 2015). Stratifying an organization’s supplier base allows one to create a collaborative relationship by segmenting the suppliers into manageable groups (Tolmay & Badenhorst, 2015). It also allows the buyer to decide on the type of relationship to develop with various suppliers based on their specializations in the supplier base (Hamad, 2020).

Wagner and Krause (2009) have demonstrated that there is a positive relationship between a supplier’s capabilities improvement and the knowledge transfer from the buyer to the supplier. In addition, knowledge transfer is considered a human resource transaction-specific investment, serving as another type of transaction-specific investment made by the buying company. This kind of investment will also result in an increase in the resource-based attractiveness and economic attractiveness of the buying firm. Both parties may rely more on each other since the relation-based investments have little value outside the relationship. Moreover, offering supplier incentives is also an important approach to drive supplier capability improvement. The incentives can be used by the customer firms that succeed in increasing suppliers’ performance and capabilities to recognize suppliers’ achievements with ‘certified’ or ‘preferred’ status. Therefore, this action could motivate suppliers to improve their capabilities.

supply chain management can be considered as a strategic tool that is used by firms to improve quality, customer service and competitive advantage. One of the main business processes of supply chain management is supplier relationship management which is focused on the development and maintenance the relationships with suppliers (Lambert & Schwieterman, 2012). Supplier relationship management usually contains three steps: supplier selection, supplier segmentation and supplier development. Generally speaking, a number of qualitative and quantitative criteria are identified by the company to choose the most suitable suppliers (to see the methods and the criteria of supplier selection we refer to the review papers (Chai et al., 2021).

Supplier selection has been primarily used by many organizations as a way of selecting competent suppliers that can guarantee that the value for money in the budget process is realized (Gonzalez and Quesada, 2004). Arrowsmith (2008) further argues that the quality of suppliers is a cornerstone to improved performance. It provides leverage to ensure that services are delivered as planned. The budget is implemented on time and with the required procedure. In line with Lyson (2000), the quality of suppliers in the organization is a primary factor for the possession of a competitive advantage over other suppliers.

Youssef et al (2006) explain that the essence of supplier selection is to reach to right suppliers. Right suppliers mean that they have the quality required, they have the money to deliver in time and they have the experience in procurement service and management. Therefore, suppliers must be scanned and understand their price lists while comparing with a number of factors including market conditions. If the above criteria are met, it is easy to achieve the value for money, service quality and service reliability.

Lyson (2021) further adds that in a bid to generate “value for money” procuring entities like the Ministry Of Health, Ministry Of Works, Uganda Railway Corporation are switching to publishing notices as an appropriate method of selecting suppliers, especially for the complex suppliers or works. Oluka and Basheka (2012) also reiterate that the major elements of effective contract management towards performance are having clear plans for managing a contract and developing appropriate methods of identifying non-adherence. Beijer (2012) in his study on 19 designs of performance measurement, found out that without adhering to the contract management process, it affects the utilization of budget funds and can lead to increased unspent balances. Beijer (2012) further asserts that quality and delivery as performance criteria of the budget to check the operational performance of contractors or suppliers, because these performance criteria can be used to both check and analyze contractors or suppliers. In selecting suppliers, the buying organization must shortlist all sufficient bidders who are effective and possess the competence to afford the competition which other organizations possess as guided by the PPDA regulation (no.70 of 2003) points out that selecting bidders from shortlisted bidders to be included on a shortlist can be identified from the roofings which as knowledge on the market, supplier experience which can be done through supplier pre-qualification for group of contracts that were done previously.

To match budget utilization measures and avoid losses, Branch (2001) ascertains that the organization must Endeavour to clearly assess the supplier’s geographical location. This is an important characteristic that should be used by user departments when making supplier evaluations. International procurement raises issues that in dealing with overseas suppliers, shipments are subject to dangers of interruption by accidents, strikes, and acts of nature like earthquakes (Amos, 2009). Supplier selection further specifies how suppliers must be managed and this takes the whole process of vendor identification, and vendor negotiation especially on prices they charge to supply and in the end select the best supplier or vendor. In this case, the vendor familiarizes themselves with the institution’s operating activities (Arthur,2009). Supplier management and the process of certifying them calls for having evaluating and assessing suppliers, especially in areas of service quality, delivery time, cost of service delivery, technical expertise and management capabilities (Krause et al, 2007).

Monczka et al (2008) further argue that for purposes of meeting budget estimates, supplier selection should be a continual process. This should be undertaken within purchasing departments and it makes a primary stage during prequalification of suppliers. The organization needs to compare its budget and the price of suppliers. Therefore, Monczka et al. (2008) indicate that budget estimates should be done for each user department and interviews or surveys be done on the site of suppliers. This can be done by developing supplier appraisal forms that demonstrate the supplier capacity, financial capacity, quality elements, supplier organizational structure, the organization processes and previous performance.

Archstone, (2007:12) affirms that “due to increasing supply consolidation, an organization’s overall performance and efficiency is more and more dependent on the capabilities of its suppliers”. Theor, (2009), confirms that one source to minimize costs and ensure budget success can be found in the sophisticated management of the relationships with suppliers, and this has been evidenced in highly competitive sectors like automotive where a wide spectrum of managerial tools and technological aids have been developed. As a result, one of purchasing key activities is securing the best suppliers, in terms of value for money to operate within the supply chain (Ford, 2006). In a nutshell, supplier selection has to be managed properly if an organization is not only to reap value for money but also credibility from the public, especially suppliers.

2.3 Empirical Review

2.3.1 Supplier Segmentation and Procurement Performance

Supplier segmentation involves categorizing suppliers based on criteria such as their strategic importance, risk profile, and performance (Kraljic, 1983). This process enables organizations to tailor their approach to managing different suppliers, optimizing resource allocation, and enhancing procurement effectiveness (Handfield et al., 2005). Effective supplier segmentation helps organizations prioritize strategic suppliers for collaborative initiatives while managing transactional suppliers through standardized processes (Cousins et al., 2008).

Research indicates that supplier segmentation significantly impacts procurement performance. For instance, Kraljic’s (1983) seminal work on purchasing portfolio management demonstrates how segmentation can lead to strategic sourcing decisions that enhance cost efficiency and supply chain resilience. By segmenting suppliers, organizations can focus their efforts on building strong relationships with key suppliers, which leads to improved delivery reliability, quality, and innovation (Monczka et al., 2005).

While the benefits of supplier segmentation are well-documented, there are arguments regarding its implementation challenges. One challenge is the dynamic nature of supplier markets, which requires continuous reassessment and adjustment of segmentation strategies (O’Brien, 2012). Additionally, there is a gap in the literature concerning the specific criteria and methodologies for effective segmentation in various industries and geographical contexts. Most existing studies focus on developed markets, leaving a gap in understanding how segmentation impacts procurement performance in emerging markets like Uganda (Linton, 2016).

A study by Hesping and Schiele (2015) on the automotive industry highlights how effective supplier segmentation leads to improved procurement performance by aligning supplier strategies with business objectives. In contrast, an examination of the pharmaceutical industry by Araz and Ozkarahan (2007) underscores the challenges of segmenting suppliers in a highly regulated environment, suggesting a need for industry-specific segmentation models.

H1: There is a positive and significant relationship between supplier segmentation and procurement performance.

2.3.2 Contract Management and Procurement Performance

Contract management involves the systematic administration of contractual agreements with suppliers to ensure compliance with terms and conditions (Monczka et al., 2005). Effective contract management practices include clear definition of roles and responsibilities, regular performance monitoring, and proactive dispute resolution (Humphreys et al., 2004).

Effective contract management is crucial for enhancing procurement performance. It ensures that contractual obligations are met, which minimizes risks and disputes, leading to smoother supply chain operations (Avery, 2018). Studies show that organizations with robust contract management practices achieve better cost control, higher quality of goods and services, and improved supplier performance (Patterson & Anderson, 2003).

Despite its importance, contract management often faces challenges such as complexity, lack of transparency, and inadequate technology support. One argument is that traditional contract management approaches are inadequate in today’s dynamic business environment, necessitating more flexible and technology-driven solutions (Garrett & Rendon, 2005). There is also a significant research gap in understanding the impact of digital contract management tools on procurement performance, particularly in the context of small and medium-sized enterprises (SMEs) in developing countries (Caniato et al., 2019).

An example from the construction industry by Eriksson and Westerberg (2011) illustrates how proactive contract management practices can lead to project success by ensuring timely delivery and cost control. In the technology sector, studies by IACCM (2018) reveal how the adoption of contract lifecycle management software has streamlined contract processes, resulting in enhanced procurement performance.

H2: There is a positive and significant relationship between contract management and procurement performance.

2.3.3 Supplier Collaboration and Procurement Performance

Supplier collaboration involves working closely with suppliers to achieve shared objectives such as cost reduction, quality improvement, and innovation (Dyer & Singh, 1998). Collaborative practices may include joint process improvement initiatives, shared technology development, and collaborative planning and forecasting (Humphreys et al., 2004).

Supplier collaboration has a profound impact on procurement performance. Collaborative relationships enable organizations to leverage supplier expertise and resources, driving mutual value creation and innovation (Giannakis & Croom, 2004). Research shows that companies engaging in high levels of collaboration with suppliers achieve significant improvements in cost efficiency, product quality, and time-to-market (Paulraj et al., 2008).

Despite its benefits, supplier collaboration is not without challenges. One major issue is the risk of over-reliance on key suppliers, which can lead to vulnerabilities in the supply chain (Holweg et al., 2005). Another argument is the potential for conflicts of interest, where the goals of the supplier and the buyer may not always align (Cousins et al., 2006). Additionally, there is a research gap in exploring the impact of cultural differences on the effectiveness of supplier collaboration, particularly in a globalized supply chain context (Zhao et al., 2008).

An example from the electronics industry by Krause et al. (2007) demonstrates how supplier collaboration on technological innovations can lead to significant competitive advantages. Conversely, a case study in the apparel industry by Bhardwaj and Fairhurst (2010) highlights the complexities and challenges of maintaining collaborative relationships with suppliers in a fast-changing market environment.

According to the Thai (2004), the overall process of procurement starts with realizing the need and identifying the procurement requirements. This directly informs the invoice, inventory procedures, work plans, schedule of activities, project planning, and capital required to operationalize the budget. Establishing the procurement requirements becomes the basis for ascertaining the survey done in the market for suppliers, their pricing, the new products on the market, technological inputs or advancements, substitute goods, new supply sources, competitive nature and all environmental conditions that are likely to have an effect on supply market. (Karin et al. 2007) in their report which was done in government departments in Kenya, they found out that one of the single reasons for poor performance of Kenya is non adherence to the procurement plans of different departments. Organizations failed to explain the stages of procurements and lacked proper need assessment of roles (Schlosser, 2003). This study will endeavor to assess whether this happens in Uganda.

H3: There is a positive and significant between supplier collaboration and procurement performance.

SECTION THREE

METHODOLOGY

3.1 Introduction

This chapter presents the methodology that will be adopted during the study. It describes and discusses; the research design, sample size and selection, the data collection methods used and their corresponding data collection instruments, data management and analysis procedure as well as steps that will be taken to ensure validity and reliability during the study and measurement of variables.

3.2 Research Design

The study will adopt a cross-sectional design. Explanatory research helps a researcher to analyze patterns, and formulate hypotheses that can guide future endeavors. According to Amin, (2005) If a researcher is seeking a more complete understanding of a relationship between variables, explanatory research is a great place to start. Since the study seeks to examine the relationship between variables, a simple bivariate correlation design will be adopted to determine the relationship between them.

Unit of analysis

The unit of analysis will include aspects of; supplier segmentation, contract management practices, supplier collaboration and procurement performance at Roofings Industries Ltd.

The study will use both qualitative and quantitative approaches. The quantitative approach will be adopted because the study intends to examine the supplier relationship and procurement performance. Such an endeavor can best be achieved when a quantitative approach is used because it allows for collecting numeric data on the observable individual behavior of samples and then subjecting these data to statistical analysis (Amin, 2005:5).

A qualitative approach will also be adopted to enable the researcher to capture data that will be left out by the quantitative approach. This will be aimed at capturing more in-depth information on the topic under investigation.

3.3 Study Population

Sekaran (2018) defines a population as the entire group of people, events or things that a researcher wishes to investigate. This is the total population that will be used in the study, this specific population has been arrived at due to their experience and knowledge on the subject matter on assessment of the functionality of supplier relationships and procurement performance.

Population of respondents

Source: Roofings Human Resource (2023)

3.4 Study Sample

Mugenda and Mugenda (2003), argue that it is impossible to study the whole targeted population and therefore the researcher shall take a sample of the population. A sample is a subset of the population that comprises members selected from the population. Using Krejcie and Morgan’s (1970) table for the sample size determination approach, a sample size of 52 respondents will be selected from the total population of 60 employees from the selected departments and seniority level at Roofings Uganda.

Table 1: Sample Size Determination

3.5 Sampling Techniques and Procedure

A number of sampling techniques will be used to select respondents to the study namely; simple random and purposive sampling techniques. The lower-level Staff will be selected using a simple random sampling technique. Simple random sampling will be used because it ensures the generalizability of findings and minimizes bias (Sekaran, 2003).  A purposive sampling technique will be used to select the procurement and accounts officials. These key informants will be purposively sampled because they are believed to have technical and specialized knowledge about the topic under investigation by the offices that they hold.

3.6 Data Collection Methods

The section presents data collection methods which include survey method, interview and documentary review. The following data collection methods have been chosen because of their numerous advantages.

3.6.1 Survey Method

The study will use the questionnaire method to collect data. The questionnaire will be used because it allows for the collection of data from a large group of respondents in a short period as suggested by Mugenda and Mugenda (1999: 107). The questionnaire will also be used because it allows busy respondents to fill it at their convenient time. It also allows respondents to express their views and opinions without fear of being victimized (Oso & Onen, 2008:18).

3.6.2 Interview Method

The study will employ the interview method. Interviews in this study will help the researcher obtain more information on the topic under investigation. Interviews will be used because they fetch a variety of ideas needed for the study and give a deeper understanding of the topic. This method will also be used because it will offer the researcher an opportunity to adapt questions, clarify the questions by using the appropriate language, clear doubts and establish rapport and probe for more information (Sekaran, 2003:253).

3.6.3 Document Review Method

The researcher will review documents to obtain recorded information that is related to the issue under investigation. This method will be used because it enables the researcher to access data at his convenience time, obtain data that are thoughtful in that the informants have given attention in obtaining them, and enable the researcher to obtain data in the language of the respondent (Oso & Onen, 2008: 45).

3.7 Data Collection Instruments

The instruments used in this study will be questionnaires, interview guides, and a document review checklist.

3.7.1 Self-Administered Questionnaire

The study will employ a questionnaire as a tool for data collection. The questionnaire for staff will have 5 sections. Section, section B, Section D, and Section E.  The questionnaires will be closed-ended. Closed-ended questions will be developed to help respondents make quick decisions; in addition, closed-ended questions will help the researcher to code the information easily for subsequent analysis and narrow down the error gap while analyzing data as observed by Sekaran (2003:231).

3.7.2 Interview Guide

An unstructured interview will be used as a tool for collecting in-depth information from the key informants. The guide will have a list of topical issues and questions that will be explored in the course of conducting the interviews. The guide will be drawn with the questions soliciting the perception of the key informants regarding the supplier relationship and procurement performance. The interview guide will be used because it obtains in-depth data which may not be possible to obtain when using self-administered questionnaires (Mugenda & Mugenda, 1999:17; Kakoza, 1999:27).

3.7.3 Documentary Review Checklist

A document review checklist will be used to collect more in-depth data on the topic under investigation. This will also enable the researcher to supplement the data that is acquired from the interviews and questionnaires. The researcher will analyze the documents and publications related to the study topic. Documents that are expected to be reviewed include company reports, Journals, and Newspapers.

3.8 Validity and Reliability of the Research Instruments

3.8.1 Validity

Validity is defined as the extent to which results can be accurately interpreted and generalized to other populations (Oso & Onen, 2008). While Borg & Gall, 1989 as cited in Onyinkwa, (2013) validity is defined as the degree to which results obtained by the research instrument correctly represented the phenomenon understudy and Mugenda & Mugenda, (1999) as the accuracy and meaningfulness of inferences which are based on the research results.

Amin, (2005) recommended a minimum CVI of 0.7 to be used. Validity will be tested using the content validity index which involves judges scoring the relevancy of the questions in the instruments about the study variables.

The formula for the Content Validity Index is;

CVI =

Where CVI = content validity

n= number of items indicated relevant.

N = total no. of items in the instrument

In this study, validity will be achieved by establishing content validity. The researcher will achieve content validity by using the experts to assess the validity of the research instrument. The experts especially research supervisors and consultants from Kyambogo University will be given data collection tools to assess whether the items in the instruments are valid in relation to the research topic, objectives, and questions. From the instruments, they will declare some items valid and others invalid. Those declared invalid will be dropped, others adjusted, while the valid ones will be maintained.  The content validity index (CVI) will be computed by dividing the number of items declared valid by the total number of items/questions in the data collection instrument.

3.8.2 Reliability

According to Mugenda and Mugenda, (2003), reliability is the measure of the extent to which research instruments are able to provide the same results upon being tested repeatedly. Crobach’s coefficient alpha (a) as recommended by Amin, (2005, P.302) will be used to test the reliability of the research instrument. The instrument is deemed reliable if a reliability of 0.7 and above is obtained and therefore, it will be adopted for use in the data collection.

Formula for reliability is

=       ( )

Where  = alpha reliability co efficiency.

K= Number of items included in the questionnaire

= sum of variance of individual items

= variance of all items in the instrument.

To ensure the credibility and trustworthiness of qualitative data the researcher will ensure that only the officials who are employees of Roofings Company will be interviewed.

The coefficient ranges between a=0.00 for no reliability, a =1.00 for perfect reliability. The closer alpha gets to 1.0 the better. If the study findings result in Cronbanch’s Alpha of 0.7 and above, this will signify that research instrument is good enough for the study. According to Amin (2005), all the measurements in the instrument that show adequate levels of internal consistency of cronbach’s alpha of 0.77 and above are accepted as reliable.

3.9 Data Collection Procedure

The researcher will obtain a letter of introduction from Kyambogo university which will be presented to the authorities at in the Roofings Group of companies and after that she will obtain a list of all the staff in the organization.

The researcher will randomly select respondents to participate in the study; a self-administered questionnaire will be used to collect information from the above-mentioned respondents.

The researcher will also purposively select senior and middle-level managers who will be interviewed.

3.10 Data Analysis

3.10.1 Analysis of Quantitative Data

Descriptive statistics namely frequency counts and percentages will be used to analyze the respondents’ demographic characteristics and the mean and standard deviation will be used to analyze the respondents’ opinions on the factors affecting the supplier relationship and procurement performance.

Data will be analyzed and correlated using Pearson Product-Moment correlation coefficient to establish the relationship between the variables under the study topic as suggested by Sekaran (2003), Amin (2005) and Oso and Onen (2008). Regression analysis will be used in determining the strength of the relationship between the variables, this will be possible by determining the value of R-squared value the higher the R-squared value the stronger the relationship. The statistical package that will be used for the analysis of data in this study is the SPSS version 16.0. Different statistical techniques will be used namely: correlation and regression analysis. The upper level of statistical significance for hypothesis testing will be at 5%. All statistical test results will be computed at 2-tailed level of significance.

3.10.2 Analysis of qualitative data

Qualitative data will be analyzed using content analysis. Responses from key informants will be grouped into recurrent issues. The recurrent issues which will emerge in relation to each guiding question will be presented in the results, with selected direct quotations from participants offered as illustrations.

3.11 Measurement of variables

Data on the respondents’ views and opinions about the factors of supplier relationship and procurement performance will be collected using a structured questionnaire. The responses will be obtained using a five-point Likert scale ranging from 1 to 5, where 1 = Strongly Disagree, 2 = Disagree, 3 = Not Sure, 4 = Agree, and 5 = Strongly Agree. This measurement method is supported by numerous scholars who have conducted similar studies, such as Bowling (1997).

The structured questions will be designed to measure the following variables:

Supplier Segmentation: This variable will be measured through indicators such as; Value Contribution, Strategic Importance, Risk Assessment and Product or Service Complexity, (Calder et al., 2021). Respondents will be asked to rate their level of agreement with statements related to these dimensions using the Likert scale. Statistical mean values will be obtained to rank the significance of these indicators.

Contract Management: This variable will be measured through indicators such as;  On-Time Deliveries, Quality Compliance, Cost Variance, Cycle Time, Compliance Violations, (Nielsen et al., 2021). Respondents will rate their level of agreement with statements pertaining to these dimensions using the Likert scale. Statistical mean values will be used to rank the significance of these indicators.

Supplier Collaboration: This variable will be measured through indicators such as; Joint Development Initiatives, Shared Goals, Response Time, and Frequency of Meetings (Raval, Sarkar, & Devani, 2022). Respondents will rate their level of agreement with statements related to these dimensions using the Likert scale. Statistical mean values will be calculated to rank the importance of these indicators.

The collected data will be analyzed to determine the relationship between each variable and procurement performance, the measurements of performance in this study are; Quality of goods and services, Timely delivery, Efficiency and productivity. This approach ensures that the study captures the respondents’ perspectives accurately and provides a reliable basis for assessing the impact of supplier relationships on procurement performance.

Correlation and Regression Analysis

To examine the association between Contract Management and procurement performance, the data collected from the study area will be organized, edited, categorized, and cross-tabulated. Correlation will be used to analyze the data and determine the relationship between the variables. This method measures the strength of the association between variables on a scale of -1 to 1. The interpretation of the correlation coefficient will be based on established guidelines in Table 3.5 below.

Table 3.5: Pearson correlation interpretation

Regression analysis will be conducted as a statistical method to study the relationship between the independent variables (supplier segmentation, contract management and supplier collaboration) and Procurement perfomance as the dependent variable. The goal of regression analysis will be to model the relationship between these variables and to make predictions about the dependent variable based on the impact of independent variables.

3.9 Ethical considerations

This study will primarily safeguard the privacy of respondents and their information will be kept confidential. For purposes of privacy, respondents’ names will be kept or silenced for purposes of not denying the respondents to express their views confidently. The study will also safeguard voluntary participation where respondents will not be required to answer a question if they do not feel like it, and the researcher will not put the respondent under duress (Mugenda Mugenda, 2003). On the side of confidentiality, all respondents will be promised that the information they are sharing will be for study purposes (Amin, 2005).To ensure that there is no plagiarism in this study, all work used in this book will be cited and referenced. The researcher will also go ahead to ensure that originality is ensured while using other people’s work (Kothari, 2004)

WORK PLAN

The schedule of activities and the period in which the research will be conducted with due regard to budgetary limitations is in the table below.

PROPOSED BUDGET.

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Questionnaire

Dear Respondent,

You have been selected to participant in this study. Please kindly spare your time and fill this questionnaire. The aim of the study seeks to examine the supplier relationship management and procurement performance, A CASE STUDY OF ROOFINGS INDUSTRIES

The information provided shall be used for academic purposes only thus total confidentiality is guaranteed for all information provided.

Please indicate by ticking in the provided boxes provided what best represents the category in which you lie.

Section A:       Respondent Details:

Names (Optional) …………………………………………  Gender:    Male    Female (Circle)

Level of Education:

Postgraduate     Bachelor Degree      Diploma                     Certificate None of These

How many years have you been working here

Less than 1 year    1-2 years  2-3 years   3-4 years               4 & above

Please state your Role in supplier relationship management and procurement performance.

…………………………………….…………………………………………………

…………………………………….…………………………………………………

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Section B: Supplier segmentation and procurement performance Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree,   A-Agree,       NS- Not Sure,   D- Disagree,     SD-Strongly Disagree

Section C:  Contract management practices and procurement performance.  Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree, NS- Not Sure, D- Disagree, SD-Strongly Disagree

Section D: supplier collaboration and procurement performance.  Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree, NS- Not Sure, D- Disagree, SD-Strongly Disagree

Section E: Procurement performance.  Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree, NS- Not Sure, D- Disagree, SD-Strongly Disagree

Please suggest any other recommendations for supplier relationship management and procurement performance at ROOFINGS INDUSTRIES.

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Thank you for responding

APPENDICES.

APPENDIX 1: Krejcie and Morgan Table

Table for determining sample size from a given population