Centralized Purchasing Strategies And Organizational Performance In The Manufacturing Industry: A Case Of Mabati Rolling Mills

ABSTRACT

In the current global business environment formulating and implementing the best strategies is essential for organization success. One of the key units in the manufacturing industry is the purchasing department. The major share of the organization costs are utilized within the purchasing department hence finding and employing the best purchasing strategies is key to fostering organization performance. Despite the central role of the purchasing department there is minimal scholarly literature examining the strategies employed in purchasing. Hence this study examined the influence of centralized purchasing strategies on the organization performance within manufacturing firms. The study was be guided by the following objectives; to determine the influence of economies of scale; e-procurement; standardization and inventory xiii management on the organization performance of Mabati Rolling Mills. The research is grounded on the resource dependency and the agency theory. The research adopted descriptive research design. The target population for the study was personnel at Mabati Rolling Mills. The study employed probability sampling in selecting a sample size of 50 respondents drawn from production department, finance, human resources, marketing and sales and the procurement department within Mabati Rolling Mills in Athi River. The study collected both primary and secondary data to examine the relationship between the two variables. The study utilized the Cronbach alpha in assessing the reliability of the study while validity was tested using content validity. The collected data was edited and coded into SPSS Version 23 for subsequent descriptive and inferential statistics. The data was presented using means, charts, figures, frequencies, standard deviations. The inferential statistics were presented using regression models and ANOVA models. The results of the study indicated that there was a positive and significant influence of centralized purchasing as indicated by R 2= .844. The study concluded that the performance of MRM was higher as a results of centralized purchasing as indicated by the growth in sales and the profit margins of the firm. The research recommended that the firm should enhance the purchasing standards and policies. The firm should also foster the adoption of information technology systems in the procurement departments. The firm should also ensure compliance to inventory management practices among all personnel for better firm effectiveness. The findings of the study will be of importance in enhancing organization performance at MRM as well as fostering the purchasing practice. The results will also be of importance to other manufacturing organization as well as scholars and future researchers on purchasing and organization performance.