AN ASSESMENT ON THE EFFECTS OF LEAD-TIME MANAGEMENT TECHNIQUES

ON PROCUREMENT PERFORMANCE: A CASE OF KISII TEACHING AND

REFERRAL HOSPITAL

MELDAH KERUBO NYANGAU

A Research Proposal Submitted to the Board of Undergraduate Studies in Partial

Fulfillment of the Requirements for the Award of a Diploma in Stores and Supplies

Management, School of Business and Economics

KISII UNIVERSITY

SEPTEMER 2017

DECLARATION AND RECOMMENDATION

This research proposal is my original work and has never been submitted by any person for

attainment of any award in this university or elsewhere.

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

MELDA KERUBO NYANGAU

CBO5/10192/15

RECOMMENDATION

This research proposal has been submitted for examination with my approval as the candidate

supervisor

Signature………………………………… Date…………………………………………

Mr. Malach Omwenga

Assistant Lecturer, School of Business and Economics

KISII UNIVERSITY

Signature………………………………… Date…………………………………………

Mr. Wycliffe Otera

Assistant Lecturer, School of Business and Economics

KISII UNIVERSITY

ii

iii

DEDICATION

My special dedication goes to my beloved father Simion Nyangau and my mum Mary Mokua for

the financial support they gave me during the writing of this research proposal.

iv

ACKNOWLEDGEMENT

I would like to thank the individuals who made contributions in terms of guidance

encouragement financial support and inspiration towards completion of this proposal. My

gratitude goes towards my supervisor Mr. Wycliffe Otera and Mr. Malach Omwenga and my

parents.

v

ABSTRACT

The general objective of the study will be to assess the effects of lead-time management methods

on procurement performance. The following specific objectives will be used; to determine the

effect of just in time on procurement performance, to determine the effect of first in first out on

procurement performance and to determine the effect of economic order quantity on procurement

performance. The main objective of the study will be to determine the effect of just in time on

procurement performance, to determine the effect of work in progress on procurement

performance and to determine the effect of finished goods on procurement performance. The

literature review and conceptual framework will be use. The study will be carried out at Kisii

Teaching and Referral Hospital. The study will adopt descriptive research design. The target

population of this research will comprise 114 employees of the Kisii teaching and referral

hospital. In this case the researcher will apply 30% of the population that is equivalent to 34

respondents. The study will use research questionnaire to collect data from the respondent who

will comprise of purchasing officer and managers, in charge stores. Primary data will be

collected by use of questionnaires, which will be structured questions. The data collected will

first be edited to ensure that all in the questionnaire are represented to. The researcher will ensure

that all the questionnaires are counter checked to ensure their completeness. Data will be

analyzed by descriptive statistics which will involve frequencies, percentages, weight averages

ad presented using tables and charts where necessary. The study will present findings and draw

conclusions after data analysis.

vi

TABLE OF CONTENTS

ContentsDECLARATION AND RECOMMENDATION.............................................................................ii

DEDICATION................................................................................................................................iii

ACKNOWLEDGEMENT..............................................................................................................iv

ABSTRACT....................................................................................................................................v

TABLE OF CONTENTS................................................................................................................vi

LIST OF FIGURES......................................................................................................................viii

LIST OF TABLES..........................................................................................................................ix

LIST OF ABBREVIATIONS…………………………………………………………………….x

CHAPTER ONE............................................................................................................................1

INTRODUCTION.........................................................................................................................1

1.1 Background of the Study...........................................................................................................1

1.2 Statement of the Problem...........................................................................................................3

1.3 Objective of the Study...............................................................................................................4

1.3.1 Specific Objectives.................................................................................................................4

1.4 Research Questions....................................................................................................................4

1.5 Scope of the Study.....................................................................................................................4

1.6 Significance of the study...........................................................................................................4

1.7 Limitation of the study...............................................................................................................5

1.8 Assumption of the Study............................................................................................................5

1.9 Operational Definitions of Terms……………………………………………………………..5

CHAPTER TWO...........................................................................................................................6

LITERATURE REVIEW..............................................................................................................6

vii

2.1 The Concept of Lead Time........................................................................................................6

2.2 Theoretical Literature review.....................................................................................................8

2.2.1 Logistic theory........................................................................................................................8

2.3 Empirical Review......................................................................................................................9

2.3.1 Effect of just in time on procurement performance................................................................9

2.1.2 Effect of first in first out on procurement performance........................................................12

2.2. 3 Economic Order Quantity and procurement performance...................................................16

2.5 Conceptual framework.............................................................................................................17

CHAPTER THREE.....................................................................................................................19

RESEARCH DESIGN.................................................................................................................19

3.1 Research Design......................................................................................................................19

3.2 Study Area...............................................................................................................................19

3.3 Target Population.....................................................................................................................19

3.4 Sample size determination.......................................................................................................20

3.6 Data Collection Procedures.....................................................................................................20

3.7 Data Collection Instruments....................................................................................................20

3.7.1 Validity of the Instrument.....................................................................................................21

3.7.2 Reliability of the Instrument.................................................................................................21

3.8 Data Analysis and Presentation...............................................................................................21

REFERENCES...........................................................................................................................22

APPENDIX 1.............................................................................................................................25

QUESTIONARE........................................................................................................................25

APPENDIX II: RESEARCH WORK PLAN.............................................................................28

APPENDIX I11: BUDGET......................................................................................................29

viii

LIST OF FIGURES

Figures 2.1 Conceptual framework…………………………………………………………….17

ix

LIST OF TABLES

Table 3.1 Distribution of Respondents in Kisii Teaching and Referral Hospital ……..………19

x

LIST OF ABBREVIATIONS

FIFO- first in out system

EOQ- economic order quantity

MTTR- mean time to repair

JIT - Just in time

xi

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

According to Bowersox, Closs, and Cooper, (2007), he defines lead- time as the period between

ordering and receiving of goods by an organization. The idea of getting the materials ordered to

the required time has become a major problem in almost all organization in the country. Some of

the factors that may make the organization not to receive the ordered materials at the right time

and place include the following: Transportation Distance. This refers to the distance between the

supplier and the purchaser. The more the distance the more the time it will take in receiving of

goods. If the distance is longer goods will be delayed thus affecting the lead time thus long

distance doesn’t favor emergency situations. Breakdown of Vehicles Poorly maintained vehicles

for goods transportation often breaks from time to time thus making unnecessary delays of

transit. Poor vehicle rooting and scheduling the fleet manager may select the longest routes and

prepare the vehicles operating schedules poorly this delivery of goods. This may be due to

inadequate skills and experience.

The value chain concept of Porter (2009) provides further insights on how logistics can

contribute to the cost and service advantage of firms. The value chain depicts the activities that a

firm must perform in order to provide benefits to customers. Primary activities in the value chain

include those involved in the ongoing production, marketing, delivery and servicing of the

product or service. There is support activities including such primary tasks as purchase inputs,

technology, human resources and overall infrastructure needed to support the primary activities.

It is important to note that two of the five primary activities are related to logistics: supplying

raw materials, component parts and related services into the production line (inbound logistics),

and managing the flow of finished goods from the end of the production line to the customer

(outbound logistics). On the other hand, past research has indicated that logistics influences a

manufacturer’s ability to satisfy customers through reduction of lead time and overall

performance Tracey (2008). It is important for firms to develop logistics capabilities to attain

cost and service advantages (Lai 2004).

1

Similarly, another study has found that logistics service performance engenders customer

satisfaction, which has links with customer loyalty and market share (Stank et al. 2003). Piroird

and Dale (2008) identified that planning in a warehouse is one of the most important factors

affecting lead-time variability. The other factors that affect lead-time are listing orders, order

picking, sorting, packing and shipping. The waiting time plays an important role in lead time

variability. In this case it is important to consider the expected waiting time for a single server

queue when using queuing theory where the service time and the inter-arrival time between the

orders have a general distribution. In this case the first in, first out (FIFO) system is used. This

therefore leads to variability in lead time (Kingman, 2011). According to Spitter et al. (2003) the

length of the optimal planned lead time of an item is dependent on the variation of the demand,

the utilization rate of the resource the item is produced on, and the difference in the holding costs

between this item and the end item it is used in. For the variation in the demand and the

difference in holding costs it holds that if the value of one or both parameters increases, the

optimal planned lead time.

Bosire, Kongere, Ombati, and Nyaoga (2011) in store keeping management simplified goes

ahead and gives more factors like; Production Breakdown, If the industry producing this ordered

materials breaks down due to one reason or the other then the purchasing departments may not

get the goods in the required time Political Instability. This will make transport of goods from

one place to another inaccessible. The strategies which are used to manage lead time are just in

time technique. It becomes longer easier for utilization rate this characteristic only holds if the

difference in holding cost between the item produced on the capacitated resource and the end

items is large enough. The holding cost structure plays the leading role in the determination of

the optimal planned lead time. Safety stocks can decrease by longer planned lead times if the

variation in demand and/or the utilization rate is high, but this is only advantageous if the work-

in-process costs do not increase too fast by long planned lead times.

It aims at maintaining materials at the right place for the right operating process (FIFO) first

expire first out. Here goods which comes in and expires quickly .i.e. perishable goods must be

issued first before the expiry period reaches thus facilitates lead time. (EOQ) economic order

quantity identifies the order size that will minimize the sum of the annual costs of holding

inventory and ordering inventory. The unit cost of inventory items is not generally included

2

because the unit cost is unaffected by the order size.(Max 2009), According to Spitter, de Kok,

and Dellaert (2007) the production dynamics and cost of inventory may play an important role in

lead time variability. Waiting times are the times which elapse while jobs are queuing in front of

machines. Zong (2008) also argues that in manufacturing systems there are many factors

contributed to long production lead-times. Machine failure is one of those significant factors.

When a machine breaks down, longer mean time to repair (MTTR) will cause lower machine

availability. Variation of orders is also a factor that leads to lead time variability. Since all orders

do not arrive at the same time, pickers may remain idle for some time. This decreases the

utilization of order picking and affects the efficiency of the warehouse. Hence, while reducing

the lead-time, the efficiency of the warehouse will not be 100%.

1.2 Statement of the Problem

Ordering and receiving of goods by an organization has been a great issue especially in

healthcare system. In Kenya it faces a number of challenges that makes it difficult for its supply

chain to operate efficiently and effectively. Logistics plays a very important role in ensuring that

drugs and medical equipment are sourced and delivered within reasonable time in order to serve

their purpose. The Kenya medical supplies Agency is given the responsibility of procuring and

delivering drugs to various public hospitals in Kenya. There are cases where health facilities run

short of drugs and it takes long durations before replenishment is done. Part of this delay may be

caused by poor logistics that leads to high lead time. Infrastructure may also affect the efficiency

with which a healthcare logistics network operates.

When the logistics network is inefficient, healthcare facilities will experience longer lead times

as well as stock out (Muga et al 2004). Currently lead time causes many challenges to both

procurement and supplying entities and it has led to the following effects. Poor use of buyer-

supplier relationships is a procuring process where they do not acquire the goods in the

prescribed time to create a dad relationship. This will lead to loss of consumers hence reduced

profits. Produced stoppage due to not receiving the goods in time, this will increase idle man

hour and machines in the organization. This will also cause poor productivity leading to poor

quality, Loss of customers this is due to not delivering materials in good time thus lack of trust

to the customers. So they have to look for alternative supplier to supply in time.

3

1.3 Objective of the Study

The general objective of the study will be to assess the effects of lead-time management methods

on procurement performance in KTRH

1.3.1 Specific Objectives

i. To assess the effect of just in time on procurement performance.

ii. To examine the effect of first in first out on procurement performance.

iii. To establish the effect of economic order quantity on procurement performance.

1.4 Research Questions

i. What is the effect of just in time on procurement performance?

ii. What is the effect of first in first out on procurement performance?

iii. What is the effect of economic order quantity on procurement performance?

1.5 Scope of the Study

The main scope will be based on general objective of the study will be to assess the effects of

lead-time management methods on procurement performance. The study will be carried out by

research questions to the purchasing officer and managers in charge of the stores. The researcher

will use questionnaires to collect data.

1.6 Significance of the study

The research will establish how lead time will affect procurement performance; the government

and other research institutions will use the findings. The study will assist the management of the

firm to achieve quality objectives due to the efficiency of supplying goods. It will help also in

maintaining quality supplier relationships.

4

1.7 Limitation of the study

Due to the rules and regulations of the organization and the confidentiality of the information the

study findings of the study may not capture the required information.

1.8 Assumption of the Study

The study will assume that lead time has an impact on procurement performance and the

management will understand the importance of implementing lead time.

1.9 Operational Definitions of Terms

Lead- time -Is the period between ordering and receiving of goods by an organization

Performance- Maintaining materials at the right place for the right efficiency process

Lead time variability- This is to the variations in lead time that can occur for purchased items

5

CHAPTER TWO

LITERATURE REVIEW

2.1 The Concept of Lead Time

Nordas (2006) argued that Lead time is the amount of time between the placement of an order

and the receipts of the goods ordered. It depends on the nature of the product e.g. whether it is

made to order or if it is a from the shelf product. Lead time also depends on planning and supply

chain management, logistics services and of course distance to customers and suppliers. Long

lead time does not need to be a problem if delivery is predictable and demand is stable. However,

if there is uncertainty about future demand, long lead time is costly even when the customer

knows exactly when the merchandise will arrive. If future demand has been underestimated,

running out of stock has costs in terms of foregone sales and the possibility of losing customers.

If future demand has been overestimated, excess supply must be sold at a discount. Furthermore,

the longer the lead time and the more varieties of the product in question are on the market, the

larger stocks are needed. It is also important to notice that competitiveness on lead time is not a

static concept to deliver just-in time and the customer finds it safe to reduce inbound inventories

to a couple of days or in some cases even a couple of hours.

Bosire (2011) conducted a study on the impact of outsourcing on lead time and customer services

in supermarkets in Nairobi. The study indicates that supermarkets outsource several services

such as; marketing and advertising, maintenance, fleet operation etc. The study also reviled the

impact of outsourcing on lead time. It established that there is a positive correlation between

outsourcing and lead time and those supermarkets that implement the variables manifest

customer service management as a strategy to retain customers and remain competitive.

According to Hetzel (1988), forecast errors cause expediting to meet unexpected demand, and

the disruption adds to queuing and missed deliveries. The entire supply chain becomes

asynchronous with high lead time variability and rising safety stock needs. The cycle time grows

even longer, thus forcing a longer forecast horizon and even less forecast accuracy. This type of

feedback cycle can grow throughout the organization without a focused effort toward cycle time

reduction.

6

Gross and Soriano (2009) demonstrate that lead-time variation has a major impact on lot size and

inventory costs. Furthermore, they indicate that an inventory system is more 13 sensitive to lead-

time variation than to demand variation. Variations in lead time can occur for purchased items

and for those that are manufactured in-house. A major factor related to these variations is quality

problems. Typically, either safety stock or safety lead time is utilized to cushion the impact of

this variability. In either case, larger variability requires increased inventories. High lead-time

variability is a major reason for a plant’s inability to achieve inventory goals and to incur longer

average throughput. Customers around the globe are demanding products as they want them at

the best possible price. In today's highly competitive global marketplace they are placing greater

value on quality and delivery time. Manufacturers similarly have begun to place more value on

quality and delivery time and companies are trying to gain a competitive edge and improve

profitability through cutting cost, increasing quality and improving delivery. However it is safe

to say that the more competitive the industry, the more shortened lead times will help. In

competitive industries, short lead time will differentiate a company from its competitors, leading

to increase sales and effective service delivery.

Heard and Plossl (2004) portrayed that high lead-time variability as a major reason for a plant’s

inability to achieve inventory goals and to incur longer average throughput. The pressure to

reduce inventory investments in supply chains has increased as competition expands and product

variety grows. Managers are looking for areas they can improve to reduce inventories without

hurting the level of service provided. Two areas that managers focus on are the reduction of the

replenishment lead time from suppliers and the variability of this lead time. The normal

approximation of lead time demand distribution indicates that both actions reduce inventories for

cycle service levels above 50%. The normal approximation also indicates that reducing lead time

variability tends to have a greater impact than reducing lead times. There is a service-level

threshold greater than 50% below which reorder points increase with a decrease in lead time

variability. Thus, for a firm operating just below this threshold, reducing lead times decreases

reorder points, whereas reducing lead time variability increases reorder points. For firms

operating at these service levels, decreasing lead time is the right lever if they want to cut

inventories, not reducing lead time variability

7

2.2 Theoretical Literature Review 2.2.1 Logistic theory

Jonson, (2008) is the father of theory in that a logistics assumption which argues that most

activities are modern societies. It is constructed on subsystems which in turn contain a collection

of interrelated components. The relationship between the subsystems and components takes the

form of co- ordination and exchange of materials and information. The aim of the system is to

supply customers efficiently with their required products. It was used to indicate how each

subsystem controls the size of the flow of materials through the system via storage,

transportation and various stages of handling and value adding. The logistics systems do not only

consist of flows of materials, components and products which are processed and distributed to

customers, but also include supply chain flows of spare parts and return flows of defective and

used products and packaging .

Elsmar, (2004) highlighted that supply chain management in public sector health systems has

received increasing attention in recent years, as both a priority and a challenge for many

countries since governments find themselves stressed with an increasing number of products,

programs, and patients to manage. Due to major increases in funding and donor support for a

multiplicity of health programs, supply chain managers may be responsible for a larger number

and volume of products, but with limited additional resources to expand their capacity to

manage, store, and distribute these products. Often, staff already working in this area receives

extra pressure to build up internal capacity to meet the service delivery targets. However, many

countries, faced with this type of challenge, recognize that these functions, that were once

auxiliary to their primary function of service delivery to patients, could tie up a significant

portion of their budgets should they scale up appropriately

Azad, (2004) studied that lead time is one of the main competitive factors among companies. The

ability to deliver quickly influences export, sales and thereby revenue. The definition of lead-

time can vary, depending on what part of the company is focused upon. Lead time begins with

the first receipt of a customer order and ends with customer receipt of the product or service.

Everything in between is the lead-time (Lead-time refers to the time lag between placing an

order and receiving it (Li, 2000). Lead time is therefore defined as the time it takes from getting

8

order from a customer and receiving the delivered product (When the duration between the

ordering period and the delivery varies from the expected time, then lead time variability occurs.

Lead time variability therefore refers to the variations in lead time that can occur for purchased

items and for those that are manufactured in-house (Heard and Plossl, 1984). A major factor

related to these variations is quality problems. Typically, either safety stock or lead time is

utilized to cushion the impact of this variability. In either case, larger variability requires

increased inventories.

Kotler, (2001) notes that the term Logistics in ancient times was frequently used in connection

with the art of moving armies and supplies of food and armaments to the war front. Its use can be

traced back to the seventeenth century in the French army. Logistics is defined as planning,

implementing, and controlling the physical flows of materials and finished goods from the point

of origin to the point of use to meet customer’s need at a profit). The logistics management

activities typically include inbound, outbound transportation management, fleet management,

warehousing, materials handling, order fulfilment, logistics network design, inventory

management, supply demand planning and management of third party logistics service providers.

The American Council of Logistics Management also defines logistics as the process of

planning, implementing and controlling the efficient, cost effective flow and storage of raw

materials, in-process inventory, finished goods and related information from point of origin to

point of consumption for the purpose of conforming to customers’ requirements.

2.3 Empirical Review

2.3.1 Effect of just in time on procurement performance

Zong (2008) also argues that in manufacturing systems there are many factors contributed to

long production lead-times. The study indicates that just in time is one of those significant

factors. Supply chain therefore involves movement of materials from suppliers to the final

consumer of the product. Logistics has been viewed as an important part of supply chain

management since it deals with the design and implementation of the movement of products and

information in the supply chain. Drew and Smith (2005) argue that within a firm’s supply chain

management, logistics is the work required to move and geographically position inventory. As

9

such, logistics is a subset of and occurs within the broader framework of a supply chain. The

holding cost structure plays the leading role in the determination of the optimal planned lead

time. Safety stocks can decrease by longer planned lead times if the variation in demand and/or

the utilization rate is high, but this is only advantageous if the work-in-process costs do not

increase too fast by long planned lead times.

According to Spitter, de Kok, and Dellaert (2003) the production dynamics and cost of inventory

play an important role in lead time variability. Spitter further indicates that waiting time is also a

factor that can determine lead time variability. Waiting times are the times which elapse while

jobs are queuing in front of machines. When a machine breaks down, longer mean time to repair

(MTTR) will cause lower machine availability. Thus, it will result in longer production lead-

times. Lead-time variability depends on all the operations that take place in a facility which

intern depend on the equipment used and the decisions made. Variation of orders is also a factor

that leads to lead time variability. Since all orders do not arrive at the same time, pickers may

remain idle for some time. This decreases the utilization of order picking and affects the

efficiency of the warehouse. Hence, while reducing the lead-time, the efficiency of the

warehouse will not be 100%. Piroird and Dale (2008) identified that planning in a warehouse is

one of the most important factors affecting lead-time variability.

On the other hand, Porter (2005) provides further insights on how logistics can contribute to the

cost and service advantage of firms that the Just-in-Time (JIT) management approach, which has

long been proven effective in the manufacturing sector in increasing quality, productivity and

efficiency, improving communication and decreasing costs, reducing lead times and waste, might

enhance the chances of firms to achieve cost, lead time and service advantages through logistics.

However, the potential of JIT has not been widely recognized in logistics as compared to in

manufacturing. Similar to manufacturing, logistics employs processes that add value to the basic

inputs used to create the end product. As the focus of JIT is on business processes, not products,

the management principles of JIT can be replicated and applied in logistics. This sets out to

explore the possibilities of employing JIT to manage logistics activities, and provide an

introduction to the application of JIT in the major areas of business logistics.

10

Stank (2003) argued that concept of lead-time is listed in order picking, sorting, packing and

shipping. The waiting time plays an important role in lead time variability. In this case it is

important to consider the expected waiting time for a single server queue when using queuing

theory where the service time and the inter-arrival time between the orders have a general

distribution. According to Spitter et al. (2003) the length of the optimal planned lead time of an

item is dependent on the variation of the demand, the utilization rate of the resource the item is

produced on, and the difference in the holding costs between this item and the end item it is used

in. For the variation in the demand and the difference in holding costs it holds that if the value of

one or both parameters increases, the optimal planned lead time becomes longer. For the

utilization rate this characteristic only holds if the difference in holding cost between the item

produced on the capacitated resource and the end items is large enough.

Elsmar.com, (2004) revealed that customers around the globe are demanding products as they

want them at the best possible price. In today's highly competitive global marketplace they are

placing greater value on quality and delivery time which have begun to place more value on

quality and delivery time and companies are trying to gain a competitive edge and improve

profitability through cutting cost, increasing quality and improving delivery. However it is safe

to say that the more competitive the industry, the more shortened lead times will help. In

competitive industries, short lead time will differentiate a company from its competitors, leading

to increase sales and effective service delivery. Lead time is one of the main competitive factors

among companies. The ability to deliver quickly influences export, sales and thereby revenue.

The definition of lead-time can vary, depending on what part of the company is focused upon.

Lead time begins with the first receipt of a customer order and ends with customer receipt of the

product or service. Everything in between is the lead-time (Lead-time refers to the time lag

between placing an order and receiving it

Li, (2000) examined that the effect of lead time as the time it takes from getting order from a

customer and receiving the delivered product by that customer (Azad, 2004). When the duration

between the ordering period and the delivery varies from the expected time, then lead time

variability occurs. Lead time variability therefore refers to the variations in lead time that can

occur for purchased items and for those that are manufactured in-house (Heard and Plossl, 2004).

A major factor related to these variations is quality problems. Typically, either safety stock or

11

lead time is utilized to cushion the impact of this variability. In either case, larger variability

requires increased inventories. Heard and Plossl (2004) portray high lead-time variability as a

major reason for a plant’s inability to achieve inventory goals and to incur longer average

throughput. The pressure to reduce inventory investments in supply chains has increased as

competition expands and product variety grows. Managers are looking for areas they can

improve to reduce inventories without hurting the level of service provided. Two areas that

managers focus on are the reduction of the replenishment lead time from suppliers and the

variability of this lead time.

Kingman, (2011) indicates that the normal approximation of lead time demand distribution

indicates that both actions reduce inventories for cycle service levels above 50%. The normal

approximation also indicates that reducing lead time variability tends to have a greater impact

than reducing lead times, especially when lead time variability is large. There is a service-level

threshold greater than 50% below which reorder points increase with a decrease in lead time

variability. Thus, for a firm operating just below this threshold, reducing lead times decreases

reorder points, whereas reducing lead time variability increases reorder points. For firms

operating at these service levels, decreasing lead time is the right lever if they want to cut

inventories, not reducing lead time variability.

2.1.2 Effect of first in first out on procurement performance

Kingman, (2011) demonstrates that when an order arrives and the server is busy, the order waits

in a queue. When all earlier arrived orders are finished, the order is produced. In this case the

first in, first out (FIFO) system is used. This therefore leads to variability in lead time. In face of

the challenges of global competition, organizations are concentrating more on the needs of

customers and seeking ways to reduce costs, lead time, improve quality and meet the ever-rising

expectation of their customers. To these ends, many of them have identified logistics as an area

to build cost and service advantages.

Tracey (2008) studied that value chain depicts the activities that a firm must perform in order to

provide benefits to customers. Primary activities in the value chain include those involved in the

ongoing production, marketing, delivery and servicing of the 15 product or service. There is

support activities including such primary tasks as purchase inputs, technology, human resources

12

and overall infrastructure needed to support the primary activities. It is important to note that two

of the five primary activities are related to logistics: supplying raw materials, component parts

and related services into the production line (inbound logistics), and managing the flow of

finished goods from the end of the production line to the customer (outbound logistics). On the

other hand, past research has indicated that logistics influences a manufacturer’s ability to satisfy

customers through reduction of lead time and overall performance.

Lai (2004) investigated the importance for firms to develop logistics capabilities to attain cost

and service advantages. Similarly, another study has found that logistics service performance

engenders customer satisfaction, which has links with customer loyalty and market share (Stank

et al. 2003).It is important to understand that poor logistics management can result in higher

logistics costs and longer lead times. Examples include inventory, transportation, and order

processing, whereby firms handling the processes will suffer from the higher logistical costs, and

consequently lower profitability and reduced competitiveness. Viewed from this perspective,

logistics management is not only a ‘good-to-have’ business strategy but a ‘must’ to sustain the

growth of a firm or even a supply chain in the long run.

Queyranne, M. (2002) established that order cycles If demand can be predicted for the product or

if demand can be measured on a regular basis, regular ordering quantities can be set up that take

into consideration the most economic relationships among the costs of preparing an order, the

aggregate shipping costs, and the economic order cost. When demand is regular, it is possible to

program regular ordering levels so that stock-outs will be avoided and costs will be minimized. If

it is known that every so many weeks or months a certain quantity of goods will be sold at a

steady pace, then replacements should be scheduled to arrive with equal regularity. Time should

be spent developing a system tailored to the needs of each business. It is useful to focus on items

whose costs justify such control, recognizing that in some cases control efforts may cost more

the items worth. At the same time, it is also necessary to include low return items that are critical

to the overall sales effort.

Silva Roumianstev, S, and Netessine, S. (2009) indicates that business experiences seasonal

cycles, it is important to recognize the demands that will be placed on suppliers as well as other

sellers. A given firm must recognize that if it begins to run out of product in the middle of a busy

season, other sellers are also beginning to run out and are looking for more goods. The problem

13

is compounded in that the producer may have already switched over to next season’s production

and so is not interested in (or probably even capable of) filling any further orders for the current

selling season. Production resources are likely to already be allocated to filling orders for the

next selling season. Changes in this momentum would be extremely costly for both the supplier

and the customer.

On the other hand, Porter (2005) because suppliers have problems with inventory control, just as

sellers do, they may be interested in making deals to induce customers to purchase inventories

off-season, usually at substantial savings. They want to shift the carrying costs of purchase and

storage from the seller to the buyer. Thus, there are seasonal implications to inventory control

Balance Inventory Levels Efficient or inefficient management of merchandise inventory by a

firm is a major factor between healthy profits and operating at a loss. There are both market-

related and budget-related issues that must be dealt with in terms of coming up with an ideal

inventory balance: An inventory that is not compatible with the firm’s market will lose profitable

sales. Customers who cannot find the items they desire in one store or from one supplier are

forced to go to a competitor. Customer will be especially irritated if the item out of stock is one

they would normally expect to find from such a supplier. Repeated experiences of this type will

motivate customers to become regular customers of competitors.

Tracey (2008) reviewed that stocks items sitting on the shelf as obsolete inventory are simply

dead capital. Keeping inventory up to date and devoid of obsolete merchandise is another critical

aspect of good inventory control. This is particularly important with style merchandise, but it is

important with any merchandise that is turning at a lower rate than the average stock turns for

that particular business. One of the important principles newer sellers frequently find difficult is

the need to mark down merchandise that is not moving well. Markups are usually highest when

a new style first comes out. As the style fades, efficient sellers gradually begin to mark it down to

avoid being stuck with large inventories, thus keeping inventory capital working. They will begin

to mark down their inventory, take less gross margin, and return the funds to working capital

rather than have their investment stand on the shelves as obsolete merchandise. Markdowns are

an important part of the working capital cycle. Even though the margins on markdown sales are

lower, turning these items into cash allows you to purchase other, more current goods, where you

can make the margin you desire. Keeping an inventory fresh and up to date requires constant

14

attention by any organization, large or small. Style merchandise should be disposed of before the

style fades. Fad merchandise must have its inventory levels kept in line with the passing fancy.

Obsolete merchandise usually must be sold at less than normal markup or even as loss leaders

where it is priced more competitively. Loss leader pricing strategies can also serve to attract

more' consumer traffic for the business thus creating opportunities to sell other merchandise as

well as well as the obsolete items. Technologically obsolete merchandise should normally be

removed from inventory at any cost. Stock turnover is really the way businesses make money. It

is not so much the profit per unit of sale that makes money for the business, but sales on a

regular basis over time that eventually results in profitability. The stock turnover rate is the rate

at which the average inventory is replaced or turned over, throughout a pre-defined standard

operating period, typically one year. It is generally seen as the multiple that sales represent of the

average inventory for a given period of time. Turnover averages are available for virtually any

industry or business maintaining inventories and having sales. These figures act as an efficient

and effective benchmark with which to compare the business in question, in order to determine

its effectiveness relative to its capital investment. Too frequent inventory turns can be as great a

potential problem as too few. Too frequent inventory turns may indicate the business is trying to

overwork a limited capital base, and may carry with it the attendant costs of stock-outs and

unhappy and lost customers.

Raja et al (2000) argued that Follow-up and Control Periodic reviews of the inventory to detect

slow-moving or obsolete stock and to identify fast sellers are essential for proper inventory

management. Taking regular and periodic inventories must be more than just totaling the costs.

Any clerk can do the work of recording an inventory. However, it is the responsibility of key

management to study the figures and review the items themselves in order to make correct

decisions about the disposal, replacement, or discontinuance of different segments of the

inventory base. Just as an airline cannot make money with its airplanes on the ground, a firm

cannot earn a profit in the absence of sales of goods. Keeping the inventory attractive to

customers is a prime prerequisite for healthy sales. Again, the seller's inventory is usually his

largest investment. It will earn profits in direct proportion to the effort and skill applied in its

management. Inventory quantities must be organized and measured carefully. Minimum stocks

must be assured to prevent stock-outs or the lack of product. At the same time, they must be

15

balanced against excessive inventory because of carrying costs. In larger retail organizations and

in many manufacturing operations, purchasing has evolved as a distinct new and separate phase

of management to achieve the dual objective of higher turnover and lower investment. If this

type of strategy is to be utilized, however, extremely careful attention and constant review must

be built into the management system in order to avoid getting caught short by unexpected

changes in the larger business environment. Caution and periodic review of reorder points and

quantities are a must. Individual market size of some products can change suddenly and

corrections should be made.

2.2. 3 Economic Order Quantity and procurement performanceRaja et al (2000) did a survey of the Uganda Logistics Systems for Public Health Commodities.

The study focused on family planning commodities logistics. The report came up with numerous

findings that were used to give recommendations. It was established that Public health

commodities reach the customer through several separate logistics systems. Some aspects of the

logistics system in the MOH are integrated while others are managed separately. Systematic

integration of the supply chains could result in cost and time-savings and improve product

availability and efficiency at the service delivery level.

Chopra et al (2004) conducted a study on The Effect of Lead Time Uncertainty on Safety Stocks.

The intention of the study was to show the existence of a service-level threshold greater than

50% below which reorder points increase with a decrease in lead time variability. They argued

that the normal approximation of lead time demand distribution indicates that both actions

reduce inventories for cycle service levels above 50%. The normal approximation also indicates

that reducing lead time variability tends to have a greater impact than reducing lead times,

especially when lead time variability is large. The study concluded that for a firm operating just

below this threshold, reducing lead times decreases reorder points, whereas reducing lead time

variability increases reorder points. For firms operating at these service levels, decreasing lead

time is the right lever if they want to cut inventories, not reducing lead time variability.

Hetzel (2008) conducted a study on Cycle Time Reduction and Strategic Inventory Placement

across a Multistage Process. The study focused on cycle time and inventory reduction, which are

central thrusts of Eastman Kodak’s corporate strategy. The findings indicate that these reduction

16

efforts cannot be addressed in isolation. Instead, they represent the outcome that results from

improving the fundamental manufacturing processes across the supply chain. Form the reviewed

of the literature, no study had being done on the impact of logistics management on lead time

variability in public healthcare in Nairobi, Kenya. Therefore there is a need to address this

knowledge slit that have existed for so long.

2.5 Conceptual framework

Fig. 2.1 Conceptual framework

Independent variable dependent variable

Techniques used in lead –time Procurement Performance

Intervening variables

Source; author (2017)

17

Just in Time

-control excessive stock

-carrying costs

First In First Out

- Uncertainty on Safety Stocks.

Economic Order Quantity

-reduced cost and time-savings

-productivity

-output levels

-cost efficiency

-effectiveness

Government policies

Lead-time management includes the swiftness of the goods and items required at a particular

time over a certain period considering all the terms and applications of the procurement

procedures followed correctly by the time of delivery and mode of transportation.

18

CHAPTER THREE

RESEARCH DESIGN

3.1 Research Design

The study will adopt descriptive research design. The study will use research questionnaire to

collect data from the respondent who will comprise. It is appropriate because it involves answer

questions concerning the current status. Engel 2007) argues that descriptive will be widely used

to obtain data useful in evaluating present practices and in providing basis for decision. The

research design will enable the researcher to consider issues such as economy of the design,

rapid data collection and ability to understand the population part of it.

3.2 Study Area

The study was carried out at Kisii teaching and referral hospital and will include the procurement

officers and its subordinates.

3.3 Target Population

The target population of this research will comprise of 73 employees of the Kisii teaching and

referral hospital.

Table 3.1 Distribution of Respondents in Kisii Teaching and Referral Hospital

Department Target Population

Staff management 3

Subordinates staffs 70

Total 73

19

3.4 Sample size determination

A sample will be all 73 of the whole target population for research. In this case the researcher

will apply census of the population that is equivalent to 73 respondents as who recommended by

Mugenda (2003). The researcher will use simple random sampling procedure where the

researcher will sample the population. Simple random sampling will ensure that each member of

the target population has an equal chance of being included in the sample.

Table 3.1 Distribution of Sample size in Kisii Teaching and Referral Hospital procurement

department

Department Target Population

Staff management 3

Subordinates staffs 70

Total 73

Researcher (2017)

3.6 Data Collection Procedures

The researcher will obtain an introductory letter from the college which will enable the

researcher to go to collect data in the field. Before the collection of the data the researcher will

introduce herself to the respondents. This will be done to allow the respondents to develop

confident in the researcher.

3.7 Data Collection Instruments

The researcher will use a questionnaire to gather relevant data. Items on the questionnaire will be

both structured and unstructured test items that the respondents are expected to respond to the

researcher will decide to use the questionnaire because it will easily collect a lot of information

over a short period of time and the information could be easily described in writing.

20

3.7.1 Validity of the Instrument

The study will apply content validity skills as a measure of degree to which data can be obtained.

The research instruments will be meaningful and accurately overflow to represent a theoretical

concept. The validity of the instrument will be determined by expert judgment to determine the

content validity of the instrument.

3.7.2 Reliability of the Instrument

The test retest technique will be used to test the reliability of the research instrument the test

involves administering the same instrument twice to the same group of subjects with same

intervals of one week.

3.8 Data Analysis and Presentation

Data analysis will be done after data collected is edited to ensure that all in the questionnaire are

represented to. The researcher will ensure that all the questionnaires will be counter checked to

ensure their completeness. Data will be analyzed by descriptive statistics which involves

frequencies, percentages, weight averages and presented using tables and charts where essential.

21

CHAPTER FOUR

DATA ANALYSIS, INTERPRENTATION AND PRESENTATION

4.1 Response Rate

Questionnaire return rate is the proportion of the sample that participated in the survey as

intended in all the research procedures. Out of 73 questionnaire forms administered to the 73

employees of the supermarkets in Kisii County 67 were returned and other respondents were too

busy thus making a questionnaire return rate of 91.8%, indicating a high response rate. This is

summarized by the data in the table below;

Table 4.1 response rate

Questionnaire forms Frequency Percentag

e Not properly answered. 2 3Properly and fully answered. 65 89Not returned 6 8Total 73 100Source: Field Survey (2014)

The study aimed at collecting data with regard to the assessment of the effect of working capital

management on profitability of supermarkets. From the study, 65 questionnaire forms were

properly answered and returned making a response rate of 89% while 2 questionnaire forms were

not completely answered but they were returned since a few of the respondents misinterpreted

the questionnaire. Despite that, 6 questionnaire forms were not completely returned. The

Researcher considered that the response rate was significant enough to provide valid and reliable

conclusions from the data collected towards satisfaction of the study objectives.

22

4.2 Background information on respondents

General information comprised data on the ranking of the respondents, Type of the organization,

and the class of the supermarkets as registered in the ministry of trade as per Appendix I of the

questionnaire.

4.2.1 Rank of Respondents

The rank of the respondents was analyzed and tabulated in the table below:

Table 4.2 Ranking of Respondents

Rank Frequency Cumulative

frequency

Percentage

Top Management 44 44 66Middle level

Managers

15 59 22

Supervisors 6 65 9Operational staff 2 67 3Total 67 100Source: field data 2014

From table above, it can be concluded that top management formed a larger percentage of

respondent with a percentage of 66%, 22% of the respondents were middle level managers, 9%

of the respondents were supervisors while 3% of the respondents was formed by the operational

staff. The bio data collected was useful in providing more understanding about the target

population. The highest number of top management respondents would mean that the

information given is more objective to the study since most firms finances are management by

the top management.

4.3 Radio frequency

23

This study sought to establish the extent of radio frequency by firms and the Table 4.1 below

reveals the responses obtained from the field.

Table 4.5: Radio frequency

Radio frequency Strongly

disagree

1

Disagree

2

Not

sure

3

Agre

e

4

Strongly

agree

5

∑ fi ∑ fiwi ∑ fiwi

∑ fi

radio frequency is

used in your firm.

25 30 7 5 0 67 131 1.96

radio frequency is

prepared regularly

used

20 35 9 2 1 67 130 1.94

Each employee is

involved in

budgeting

10 4 8 25 20 67 242 3.61

Budgeting affects

profitability of the

firm

0 2 5 40 20 67 279 4.16

Source: Field Data 2014.

According to Table 4.1 above, most firms use radio frequency with a mean of 1.96, most of the

firms confirmed that Radio frequency is done regularly with mean of 1.94, the study also found

that, most firms involved their employees in the radio frequency process with a mean of 3.61.

Despite that most firms agreed that radio frequency affects profitability of the firm with a mean

of 4.16. The above response confirms the argument that was put across by Weston and Copeland

(1992) that the cash budget enables the financial executive to determine whether and when

24

additional financing will be required and provides lead time for taking the actions necessary to

provide for future financing. The radio frequency also supplies information on whether and when

the firm may have positive cash inflows available for a number of alternatives uses.

4.4 Internet

The research sought to find out which were the effects of Internet in reminding the clients on

their outstanding payments. The table 4.10 shows the results from the respondents.

Table 4.10: effects of Internet on SC optimazation

Idle funds

management

Not at

all

1

Less

extent

2

modera

tely

3

large

4

Very

large

5

∑ fi ∑ fiwi ∑ fiwi

∑ fi

Letter to the

client

0 7 15 25 20 67 260 3.88

Phone call 0 0 5 22 40 67 303 4.52e-mail 0 10 10 20 27 67 265 3.96Fax

Personal

follow-ups

30

0

37

0

0

0

0

32

0

35

67

76

104

303

1.56

4.52Source: Field Data 2014.

The results above showered that the majority of the respondents used phone calls and personal

follow-ups in reminding clients on outstanding dues by a mean of 4.52, some used e-mail with a

mean of 3.96, reminder letters were written with a mean of 3.88 while some firms used fax as

their reminder method that was supported with a mean of 1.56. The results generally indicated

that majority of the firms at least reminded their clients on debts due. This helped in avoiding

bad debts and reduction in working capital of the business.

4.6: Global position systems

The study sought to establish the extent to which Global position systems was managed in the

supermarkets. Table 4.11 shows the results from the respondents.

25

Table 4.11 Extent of use of various aspects in inventory management

Aspect Strongly

disagree

1

disagree

2

Not

sure

3

agree

4

Strongl

y agree

5

∑ fi ∑ fiwi ∑ fiwi

∑ fi

Existence

of stock

level

records

0 0 2 35 30 67 296 4.42

Re-order

levels

determined

by visual

inspection

0 0 5 22 40 67 303 4.52

Stock

taking

done to find

out items

that are

about to

lapse

0 10 10 20 27 67 265 3.96

cumbersome

to keep

written

records of all

items in stock

30 37 0 0 0 67 104 1.56

Source: Field Data 2014.

From the results in table 4.11 indicates that majority of the respondents strongly agreed that

reorder levels were determined by visual inspection with a mean of 4.52, the result also

discovered that written records were maintained concerning the stock levels with a mean of 4.42.

26

From the research, also was discovered that stock taking was done regularly and mainly to find

out those materials that were about to get finished so that appropriate measures could be taken to

avoid stoppage of operations. This was supported with a mean of 3.96. Finally, the research

sought to find out whether there was any difficulty of some firms in keeping records relating to

inventory of materials, and from the results, it was discovered that majority of the respondents

disagreed with a mean of 1.56.

4.6.2 supply chain optimazation.

The study sought to find out whether firms took advantage of the available inventory models in

managing its inventory. The results from the field were summarized as in the table below.

Table 4.12 Extent to which firms adopt various inventory models.

Model Not at

all

1

Less

extent

2

moderat

ely

3

large

4

Very

large

5

∑ fi ∑ fiwi ∑ fiwi

∑ fi

EOQ 0 7 15 25 20 67 260 3.88JIT 10 15 35 5 2 67 175 2.61FIFO 0 10 10 20 27 67 265 3.96LIFO

NIFO

30

40

37

20

0

5

0

2

0

0

67

67

104

103

1.56

1.54Source: field data 2014

Table 4.12, indicates that majority of the firms preferred the use of FIFO as a model for

controlling stock movement with a mean of 3.96, they also adopted EOQ model while ordering

in order to avoid over ordering or under ordering with a mean of 3.88. It was discovered that

fairly relative firms adopted the use of JIT with a mean of 2.61. LIFO and NIFO were adapted to

a less extent as can be seen by the averages of 1.56 and 1.54 respectively.

27

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMENDATIONS

5.1 SUMMARY OF FINDINGS

The study established that supermarkets are of different types depending on the ownership under

which it being operated. From the findings supermarkets were limited company while other

operated as partnership supermarkets businesses. On cash management, the study established

that firms had their idle funds at some time which they either put in the money market, safe in

saving account or re-invest to generate income for the firm. The cash budget of the supermarkets

was projection or forecast of future cash receipts and cash disbursement over some time interval.

It provides the firm with the financial executive with an overview of probable patterns of cash

flows in the future. From the findings, the study established that the firms prepare cash budget

for projects and that managers, accountants with principles consultation and directors were the

ones who were responsible for preparing the cash budgets as an importance tool for management

of the working capital of the firm. The study discovered that budgeting was done by most firms

and this was a clear indication of proper management of cash as budgeting helps in in-depth

understanding of debt troubles. In particular, supermarkets are to benefit more from budgeting

since a budget helps in planning targets for future in terms of lying figures that the organization

plans to achieve.

On short term financing, supermarkets took advantage of credit facilities offered and that 60% of

their purchase were on credit terms also majority 59.70 %and 29.85% of the respondents

indicated that the firm takes the advantage of the discounts. This implied that cash discount was

being offered to clients. The study established that firms practiced the stretching accounts

payable that is paying bills as late as possible without damaging its credit rating as well as

evaluating the credit worthiness. Considerations taken while taking advantage of cash discount

28

was found to be depended on availability of materials and the amount of cash outflow required.

To improve cash flow, major materials were purchased.

The study sought to know how the stretching accounts payable was done in the respective firms.

Stretching accounts payable was done by delay in paying where possible so as to service funds

for those materials and labour where they can get credit, paying before time limit also by having

formal agreement with suppliers such as credit day could be up to 90 days. The study finally

established that financial creditor management in building supermarkets was not like in

manufacturing where annual plans can be done. The supermarkets work was mainly affected by

cash flows and that financial management in building supermarkets was facing many challenges

due to the many players involved during execution.

On debtors management, the study established that firms evaluated the credit worthiness of

would be clients This was to ensure the firm mitigate against credit risks .From the findings,

clients were expected to pay up immediately they receive the invoice .The study established that

those clients who fail to pay the dues by the expected period of time, were reminded through

letter, phone calls or physical visits. In relation to inventory management, the study established

that parties responsible for making decision on amount of inventory to hold were decided by

high qualified personnel and technical mangers once the contract is signed and depended on the

features of the sites.

5.2 ConclusionsFrom the findings, the study concluded that most supermarkets ensured working capital is well

managed as the firms realize that formulating proper working capital is not only a managerial

ritual that led to firm’s success in terms of profitability and competitiveness, needs a thorough

audit of both internal and external aspects of the firm that have both direct and implied

relationships with a firm’s working capital need.

From the findings the study established that supermarkets were limited company while other

operated as partnership supermarkets businesses and they were ensured that cash held by the firm

29

were well managed through cash budgeting, ensuring a written statement of deciding on the

amount of cash to hold (both petty cash and cash at bank) and this would involve both setting

working capital policy and carrying out that policy in day-to-day operations. The cash budget of

the supermarkets was projection or forecast of future cash receipts and cash disbursement over

some time interval. It provides the firm with the financial executive with an overview of

probable patterns of cash flows in the future. This implied that supermarkets were performing

relatively well in management of revenue receivables as well as credit management.

The study further concludes that supermarkets should also purchase some of its requirement on

credit so as to retain and re-invest the working capital in short-term profitable business like in

savings accounts before they could be dispatched to the client. The study concluded that firms

should practice the stretching accounts payable that is paying bills as late as possible without

damaging its credit rating as well as evaluating the credit worthiness.

The study established that firms evaluated the credit worthiness of would be clients this was to

ensure the firm mitigate against credit risks. From the findings, clients were expected to pay up

immediately they receive the invoice or the claim and if there were delays, then legal actions

were taken for the clients after reminder notices had been served to them.

The study concludes that supermarkets s firms adopts the use of professionals in management of

the working capital as it was established that parties responsible for making decision on amount

of inventory to hold were decided by high qualified personnel technical mangers once the

contract is signed and depended on the features of the sites.

5.3 RecommendationsFrom the findings and conclusion, the study recommends that firms should adopt working capital

management practices such as cash budgeting, short term financing, inventory control and

requirement for receivables effective liquidity management as well as on profitability of the firm.

30

This ensure the supermarkets firms maintain a cash management practices firms ensuring

collection and disbursement systems improving efficiently speed up collections and at the end of

the day, sweep excess balances into money market account for earnings of more interest.

The study finally recommend that firms should adopt stretching accounts payable due to delay in

paying bills where possible so as to service funds for those materials and labour where they can

get credit, paying before time limit also by having formal agreement with suppliers such as credit

day could be up to 90 days to enhance working capital management in the firm. The

supermarkets work was mainly affected by cash flows and that financial management in building

supermarkets was facing many challenges due to the many players involved during execution

The study also recommend that for effective working capital management to be managed,

supermarkets firms should minimize challenges that faced the firms during interest due such as

causing further delays especially due to the government project exchequer takes long to be

released, urgency of the work sometimes the clients are blacklisted, bureaucracy was yet another

problem clients faced due to government financial regulations to ensure maximum utilization of

funds in the firm to gain high profit and create a competitive edge over its rival in the market.

31

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34

APPENDIX 1

QUESTIONARE

The purpose of this questionnaire is to strictly collect data for academic research. The study aims

at how lead-time management and its effects on procurement performance. .

Fill in the gaps/tick as appropriate as possible

Section; personal information

1. Gender ……………………………………… male

Female

2. What is your age bracket

18-25

26-36

40-44

45 and above

3. What is your level of education?

35

a) Class 8

b) O Level

c) Diploma level

d) Degree level

e) Masters level

f) Phd level

4. What are your years of services?

a) 1-5 years

b) 6-10 years

c) 10-15 years

d) 16-19 years

SECTION B; JUST IN TIME MANAGEMENT AND ITS EFFECTS ON

PROCUREMENT PERFORMANCE

5. To what extent of level does the following just in time contributes to the procurement

efficiency.

5- very high

4-high

3-moderate

2-low

1-very low

5.a) To what extent does Just in Time affect procurement performance?

36

1 2 3 4 5

ethical norms in the communication skills with the supplier

The economic order quantity control management method

How is just in time effective in the effeciency of an organizationcontrol excessive stock and carrying costs

SECTION C FIRST IN FIRST OUT AND ORGANIZATIONAL PERFORMANCE

5.b) To what extent does First in first out affect procurement performance?

1 2 3 4 5

Uncertainty on safety Stocks improves the flow of stocks

How is ethical norms in the communication skills with the

supplier

How is First in first out affective in procurement performance

It assure need to prevent stock-outs or the lack of product

SECTION D ECONOMIC ORDER QUANTITY AND ORGANIZATIONAL PERFOMANCE

5.a) To what extent does Economic Order Quantity affect procurement performance?

1 2 3 4 5

37

It reduce cost and time-savings

How is ethical norms in the communication skills with the

supplier

The economic order quantity control management method

The supply chains could result in cost and time-savings

38

APPENDIX II: RESEARCH WORK PLAN

TIME ACTIVITY

February 2017 Proposal writing

MAY pril 2017 Proposal defense

June 2017 Data collection and analysis

July 2017 Project report

39

APPENDIX I11: BUDGET

ITEM COST (KSHS)

PRINTING AND PHOTOCOPYING 2000

ACCOMODATION 2000

COMMUNICATION 1000

MISCELLANEOUS 5000

TOTAL 10000

40