CHAPTER ONE

1.1. Introduction

This study is made up of five chapters. The content of each chapter is organized as follows; Chapter one is the introductory chapter. It introduces the study stating the background of the study in relation to earlier researches, the problem to be addressed, the research questions and objectives, the hypothesis, the importance, and scope of the study. Chapter two deals with literature review and focuses on review of past research work on same topic.  Chapter three describes the research methodology stating the study area, the research design, the target population, method of data collection and the method for data analysis.

1.2. Background to the study.

Supplier selection process evaluation is a field that continues to attract significant focus in procurement management literature with effective evaluation and selection of suppliers considered to be one of the critical roles of procurement officers (Narasimhan et al, 2001). A number of parameters exits for the evaluation and selection of suppliers of which include, quality, on time delivery (Ning pi et al, 2005). According to Lyson et al, (2008) suppliers can be appraised on eight parameters namely, finance, production capacity, human resource, quality, performance, environmental, ethical considerations and organizational structure.  The performance of the suppliers substantially impacts on the effectiveness and efficiency of the buying firm and it’s of great importance (Fredriksson et al, 2011).

 According to Handfield et al, (2009), one reason for supplier selection is that of product development process, meaning that as the product development cycle reduces, suppliers are also required to reduce the delivery cycle or else competent ones will be sought for and those that do not meet the criteria set by firms are supposed to be weeded out (Trevelen 1987). Dwyer (1993) is in agreement that the goal of supplier evaluation is to secure valued resources and technologies of the selected supplier in situations that preclude the option of vertical integration due to resource limitations and managerial constraints. Apart from being able to harness the strengths and skills of suppliers to their advantage, firms that conduct supplier evaluation also benefit from improved quality and process performance and continuous cost reduction (Newman 1988).

Supplier selection evaluation is a significant process for any organization because on average, products that are purchased account for between forty and sixty percent of sales of end products (CIPS, 2012). This directly influence the quality and cost of purchased products; a small gain in cost due to supplier selection has significant benefits for organizations. Supplier evaluation is one of the activities executed by procurement staff and one whose effective execution determines the success or failure in the procurement performance.

 There is a need to identify the strategic supplier related factors and include them in the supplier selection criteria. Some of the factor’s firms consider include trust and commitment, adequate finance, quality, reliable delivery times, adequate logistic and technological capabilities (Krause, Handfield, & Tyler, 2007). Materials delivery, quality, cost, financial position, communication and technology are recognized as the commonly used criteria a fact confirmed from empirical results as well as in previous literature. However other criteria such as ISO certification, reliability, credibility, good references and product development were are also necessary. This shows that focus is shifting from solely relying on quantitative factors to include qualitative criteria (Araz & Ozkarahan, 2007). Supplier evaluation strategy is important because it can assist an organization in assuring the right competences among procurement staff and the right tools to support an efficient administration, for example procurement Support the achievement of organizational objectives by linking them with the procurement goals (Chen, 2011).

Organization’s ability to offer consistent quality and compete largely depends on its access to quality products and services (CIPS, 20 13). As market factors change, organizations also need to change their approach. This is particularly true in competitive and globalized markets. Organizations are constantly under pressure to find ways to cut material and production costs through engaging in strategic supplier selection process and evaluation (Weber, 2008).

According to Nadir (2012) supplier evaluation is perceived as a tool which provides the buying firm with a better undemanding of ‘which suppliers are performing well and which suppliers are not performing well” but studies reveal that even after having carried out an in-depth supplier evaluation plus appraisal coupled with the enactment of Public Procurement and Disposals Act (PPDA) of 2005 and other policies on supplier evaluation, inefficiencies still exist.

Supplier selection evaluation assumes utmost importance in the current scenario of global purchasing.  Every organization needs to have an evaluation matrix or model in place. Companies who evaluate their suppliers find that they have better visibility into supplier performance, uncover and remove hidden cost drivers, reduce risk, increase competitive advantage by reducing order cycle times and inventory, gain insight on how to best leverage their supply base, and align practices between themselves and their suppliers.

1.3.  Statement of the problem

Selecting the most appropriate source of supplies has long been regarded as one of procurement’s most important functions (Ogden et al., 2008). Organizations are therefore moving from the traditional kind of transactions to the use of a few qualified suppliers with close relationships, a trend attributed to the customers’ demand for higher quality; wider range of products; shorter time to market; and faster deliveries (Karlsson, eta! 2011).

However, selecting appropriate suppliers is not a straightforward process. It relies not only on the selection itself but also on the precedent key stages such as assessing the financial viability of suppliers, Capacity assessment as well as technical evaluation of potential suppliers, (de’Boer et al., 2001).

Supplier selection processes in the private health sector is characterize by several challenges such as limited supplier options, quality and safety concerns, cost consideration as well as compliance -ethical issues. Over all, this study plans to evaluate the effective implementation of the ISO 9000 standards on supplier selection processes which recommends that a company or Organizational body most consider a series of steps before selecting an appropriate supplier for its products or services. Steps which include requirement definition, conducting market research, request and evaluate proposals from potential suppliers, conduct supplier audit, negotiate terms of supplies and eventually establish a contract after a successful supplier selection. The study seeks to Evaluate the effective implementation of these supplier selection processes in their selection process.

1.4.1 Main Research questions:               

 How effective are the supplier selection processes in selected private health units in the Buea health district

1.4.2 Specific Research question

1. What criteria do private health units in Buea health district use to select suppliers in their selection process
2. How is the supplier selection process structured and managed within private health units in Buea health district
3. What are the key performance indicators used to evaluate supplier performance in private health units in Buea health district
4. What challenges do private health units face in the supplier selection process

1.5.1 Main Objective

The main objective of the study is to examine the effectiveness of supplier selection processes in selected private health units in the Buea health district

1.5.2 Specific Objective

1. To evaluate the supplier selection criteria for private health units in Buea Health district
2. To investigate how the supplier selection process is structured and managed within selected private health units in the Buea health district
3. To examine the key performance indicators used in evaluating supplier performance in selected private health units in the Buea health district.
4. To identify challenges and barriers of supplier selection process in private health units in Buea health district

1.6 Hypotheses

This research work will adopt the Null hypothesis

• H0₁: Supplier selection criteria is not effective in selected private health units in Buea health district
• H0₂: The structure and management of suppliers is not important in the selection process of selected private health units in the Buea health district
• H0₃: performance indicators are not an important criterion in the supplier selection process of private health units in Buea health district
• H0₄: There are no Challenges and barriers in the supplier selection process of private health units in Buea health district