CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Procurement greatly impacts how an organization achieves its objectives. According to Leenders et al., (2008), purchasing adds value to the organization. Procurement practice is an area that can be improved to further contribute to organizational performance. Organizations tend to choose procurement procedures that are familiar to them; they should instead choose the ones most suited and most beneficial to their organizations success. Narasimhan and Kim (2002) states that there has been increased pressure for purchasing integration. Purchasing integration links purchasing practices to organizational performance (Gattorna, 2006). The direct link of operational efficiency and supply chain to organizational performance therefore means that the adoption of procurement practices is crucial to organizational success. Consolidation of the entire procurement process leading to the implementation of procurement practices such as, green purchasing, just in time delivery (JIT), total quality management (TQM) and e-procurement is necessary so as to boost the overall organizational performance. Streamlined procurement systems lead to efficiency and increases the confidence of employees, customers and stakeholders of the organization.

Shifting away from traditional purchasing and moving into modern and more efficient procurement practices leads to continuous improvement and benchmarking. This is where an organization measures itself against the leading organizations in its class. Procurement is no longer a process but a strategic function in the organization, it reduces cost and achieves maximum savings for the organization. Organizations should always benchmark against the ‘best in classes and implement continuous improvement in its processes (Guth, 2010). Some of the procurement practices that organizations can engage in include commitment to green purchasing, commitment to just in time delivery, commitment to total quality management and e-procurement. Organizations must broaden their view of productivity from the predictable company oriented view to a dual company – customer perspective.

Procurement should be deeply involved in the design and implementation of Sustainable Procurement Policies focusing on how Environmental issues and issues relating to other aspects of Society and Economy can be integrated in the procurement process activities (Hsu & Hu, 2008). Considering a wide variety of performance measures is important when defining organizational performance. Organizational performance should be measured under various perspectives these include quality, efficiency, productivity, profitability and sustainability. Procurement practices should be looked at as part of organizational strategy. Procurement should be involved in the budgeting process, supplier choice and consolidation, concern for the environment and issues touching on quality and technological advances. Stakeholders are increasingly demanding that organizations should address and manage the environmental and social issues that impact their organization (Carter, 2011). Procurement managers are best positioned as they can positively or negatively impact social performance and the environment through performance evaluation and supplier selection.

Carr and Smeltzer (1997) stated that procurement practices comprises of the actions taken by the purchasing organization to navigate and integrate its performance in order to increase productivity by reducing cost and time. Procurement is the practice of selecting vendors, strategic vetting, setting up payment terms, selection, and negotiation of contracts and actual purchasing of goods (Weele, 2010). Lim (2014) described procurement as a process which entails acquiring (procuring) goods, services and work that is vital to an organization. Worldwide, public procurement has become an issue of concern and debate, and has been subjected to reforms, restructuring, rules and regulations (Kabega et al., 2016).

The linkage of procurement to organizational performance in particular, makes the embracing of best practices important to present organizational success. Procurement is found to be practiced in many industries around the world (Hussein & Shale, 2014).

Organizational performance is the actual output or outcomes of an institution and its intended outputs or goals and objectives (Upadhaya et al., 2014). Organizational performance can be measured through reduction in cost, quality of goods/services delivered, productivity, lead time (Mchopa, et al., 2014: and Richard, et al., 2009). Hamon (2003) stated that the most critical factor for effective management is Performance Measurement (PM) and that identifying and measuring the influence of Supply Chain Management (SCM) on it enhances the organizational performance. However, the subject of performance does not receive sufficient motivation in supply chain management research. The indicators of performance of an organization can be financial targets attained and satisfaction of labour force. On the same note, Ho (2008) observed that organization performance could also be estimated based on institutions effectiveness and efficiency. According Venkatraman and Ramanujam (1986) the indicators of performance should be measured based on financial elements such as growth of sales, profit, return on investment, business performance and organization effectiveness. Delaney and Huselid (2006) emphasized that performance of an organization could be measured by observing quality of products and service, performance in the market, customers satisfaction, innovations of services, and labour force.

In the developed world, research has shown that effective procurement practices can have a significant positive impact on organizational performance. A study by Johnson and Leenders (2004) found that organizations that adopt strategic procurement practices such as supplier integration, leveraging purchasing power, and total cost of ownership analysis tend to outperform their peers in terms of financial metrics, operational efficiency, and customer satisfaction.

In the developing world, the effect of procurement practices on organizational performance is more nuanced. While some studies have found a positive relationship, others have highlighted the challenges posed by factors such as limited resources, weak institutional frameworks, and lack of procurement expertise. A review by Basheka and Muchineripi (2016) suggests that developing countries need to invest in building procurement capacity, improving transparency, and aligning procurement with broader organizational goals to unlock the full benefits.

Turning to the African context, a study by Ambe and Badenhorst-Weiss (2012) found that poor procurement practices, such as lack of planning, ineffective supplier management, and corruption, have had a detrimental effect on organizational performance in several African countries. The authors emphasize the need for African organizations to adopt more strategic and professional procurement approaches.

In Cameroon, a study by Ndifor and Fomba (2018) revealed that the performance of public sector organizations is often hindered by procurement-related challenges, including inadequate budgeting, lack of procurement expertise, and political interference. The authors call for strengthening the legal and institutional framework for public procurement in Cameroon. Finally, in the Brassiere du Bamenda region, a case study by Nkemkiafu and Njubuosi (2021) highlighted the positive impact of implementing e-procurement systems on the performance of small and medium-sized enterprises (SMEs). The authors found that the use of electronic platforms for sourcing, bidding, and contract management helped SMEs in the region to improve efficiency, reduce costs, and enhance transparency in their procurement processes.

1.2 Statement of the Research Problem

Procurement practices and their effects on organizational performance in Brasseries du Cameroun Douala have become a concern. Despite being a major brewery in the country, Brasseries du Cameroun is facing challenges in its procurement processes. These challenges are reflected in various areas such as supplier selection, contract management and costs control. One of the key problems is the lack of strategic approach to supplier selection. A significant numbers of suppliers are not thoroughly evaluated leading to a higher risk of sub per quality and delays in the production process. Additionally, the absence of long- term partnership with reliable suppliers often result in unstable supply chain, which can hinder production schedules and have a negative impact on customer satisfaction. Contract management is another issue that affects procurement practices in Brasseries du Cameroun Douala. There is a lack of proper contract monitoring and enforcement, leading to deviation from moderate extent-upon terms and conditions. This can result in financial losses and legal disputes, ultimately affecting the company’s performance. Cost control is a critical aspect of procurement practices, and Brasseries du Cameroun struggles in this area as well. Inefficient cost tracking and analysis makes it challenging to identify opportunities for cost reduction and optimize procurement expenditure. As a result, the organization may incur unnecessary expenses and fail to achieve desired cost savings. These problems in procurement practices have several adverse effects on the overall organizational performance of Brasseries du Cameroun Douala. The can lead to production delays, increase operational cost, lower product quality, and dissatisfaction among customers. Consequently, the company’s competitiveness in the market may be compromised and its financial performance could suffer. This study is aimed to examine the effects of procurement practices on organizational performance of Brasseries du Cameroun Douala.

1.3 Research Question

Here the research is divided into two parts that is main research question and specific research questions as seen below.

1.3.1 Main Question

What are the effects of Procurement practices on Organisational performance in Brasseries du Cameroun Bamenda?

1.3.2 Specific Questions

1) What are the effects of supplier selection procedures on organizational performance in Brasseries du Cameroun Bamenda?

2) What are the effects of buyer-supplier relationship on organizational performance in Brasseries du Cameroun Bamenda?

3) What are the effects of e-procurement on organizational performance in Brasseries du Cameroun Bamenda?

1.4. Research Objective

Also, the research objectives are divided in to two parts as seen below.

1.4.1 Main objective

The main objective of this study is to examine the effects of Procurement practices on the Organizational performance of Brasseries du Cameroun Bamenda.

1.4.2 Specific Objectives

1) To investigate the effects of supplier selection procedures on organizational performance in Brasseries du Cameroun Bamenda.

2) To examine the effects of buyer-supplier relationship on organizational performance in Brasseries du Cameroun Bamenda.

3) To evaluate the effects of e-procurement on organizational performance in Brasseries du Cameroun Bamenda.