FACULTY OF COMMERCE
DEPARTMENT OF BUSINESS MANAGEMENT
THE IMPACT OF STRATEGIC PURCHASING ON INTERNAL CUSTOMER SATISFACTION IN MINING COMPANIES. A CASE OF VUBACHIKWE MINE
A RESEARCH PROJECT TO BE SUBMITTED TO LUPANE STATE UNIVERSITY IN PARTIAL FULFILMENT OF THE REQUIREMENTS OF THE BACHELOR OF COMMERCE HONOURS DEGREE IN PURCHASING AND SUPPLY
This is my original work and has not been submitted for any degree in any university.
This project has been submitted with approval as university supervisor
Signed ………………….. Date………/……./2018
MRS R Mashukushe
NAME OF AUTHOR NOMATHAMSANQA NYONI
DEGREE PROGRAMME BACHELOR OF COMMERCE HONOURS DEGREE IN PURCHASING AND SUPPLY MANAGEMENT
PROJECT TITLE THE IMPACT OF STRATEGIC PURCHASING ON INTERNAL CUSTOMER SATISFACTION IN MINING COMPANIES. A CASE OF VUBACHIKWE MINE ZIMBABWE
SUPERVISOR MRS MASHUKUSHE
YEAR OF AWARD 2018
The author hereby grants the Lupane State University Library permissions to produce copies of this project and to lend or sell such copies for private, scholarly, or scientific research only. The author reserves other publication rights. Neither the project nor extensive extracts from it may be printed or otherwise reproduced without the author’s permission
The undersigned certify that they have supervised the student Nomathamsanqa Nyoni on the project entitled.
The impact of strategic purchasing on internal customer satisfaction in mining companies: a case of Vubachikwe mine Zimbabwe; submitted in partial fulfilment of the requirements of the Bachelor of Commerce Honours degree in Purchasing and Supply Management
External reviewer……………….. Date…../……./2018
This study is dedicated to my loving mom Leah Ncube and my adorable son Nathan Thamsanqa Mnkandla.
First and for the most part I would like to thank the Lupane State University Business Management Department for the priceless education which I received. I would also like to extend my appreciation to my project supervisor, Mrs R Mashukushe, a woman with good heart, for her unwavering dedication, logical and sound advice which she contributed to the progress which was recorded in this project. Further compliments goes to my family and my school friends for their staunch and crème de le crème support and also my workmates for their much needed help and also support. Last but not least I would like to thank the almighty God for his grace and giving me the strength to pursue this project. All things work together in Jesus name.
This study was initiated by the researcher to evaluate the impact of strategic purchasing on internal customer satisfaction in mining companies; a case study of Vubachikwe mine. The sub objectives of the study included identifying the purchasing policies that hinder the implementation of strategic purchasing, identifying ways of how strategic purchasing can be used to enhance internal customer satisfaction, identifying the benefits of implementing strategic purchasing as a tool of improve internal customer satisfaction and lastly, establishing the relationship which exists between strategic purchasing and internal customer satisfaction. Related literature was consulted including the two theories namely the disconfirmation and expectant theory. Strategic purchasing was indicated as the independent variable while internal customer satisfaction as the dependent variable. The study was a descriptive study with a sample size of 35 people who are part of the management. A non-probability sampling technique, the purposive sampling method was used to select the respondents for the research. Interviews and questionnaires were used to gather data. . The questionnaire contained closed questions with a five point scale (Likket scale).Some questions required the respondent to give a brief explanation and some demanded a yes or no answer. The researcher used Microsoft Excel to present findings collected from the study. The researcher give out recommendations that can help improve the overall performance of the purchasing department. Also the researcher highlighted areas of further research.
TABLE OF CONTENTS
Table of Contents
DECLARATION FORM ii
RELEASE FORM iii
APPROVAL FORM iv
CHAPTER ONE 1
1.1 BACKGROUND OF THE STUDY 1
1.2 STATEMENT OF THE PROBLEM 4
1.3 OBJECTIVES OF THE STUDY 5
1.3.1 Sub objectives 5
1.4 RESEARCH QUESTIONS 5
1.5 STATEMENT OF HYPOTHESIS 6
1.6 SIGNIFICANCE OF THE STUDY 6
1.6.1 Body of knowledge 6
1.6.2 Vubachikwe mine 6
1.6.3 Policy makers 6
1.7 RESEARCH ASSUMPTIONS 7
1.8 DELIMITATIONS 7
1.8.1 Geographical location 7
1.8.2 Scope 7
1.9 LIMITATIONS 7
1.9.1 Time 7
1.9.2 Finance 7
1.9.3 Information 7
1.10 DEFINITION OF TERMS 8
1.10.1 Supply chain Management 8
1.10.2 Strategic purchasing 8
1.10.3 Customer satisfaction 8
1.10.4 GDP 8
1.10.5 Gold Mining Industry 8
1.11CHAPTER SUMMARY 9
CHAPTER TWO 10
2.0 INTRODUCTION 10
2.1 Concepts and definitions 10
2.1.1 Strategic purchasing 10
2.1.2 Internal customer satisfaction 11
2.2 OBJECTIVES OF THE STUDY 12
2.3 THEORETICAL FRAMEWORK 16
2.3.1 Disconfirmation theory 16
2.3.2 Expectation theory 17
2.4 EMPIRICAL FRAMEWORK 18
2.5 CONCEPTUAL FRAMEWORK 18
2.5.1 Changing roles of purchasing 18
2.5.2 Strategy levels 19
2.53Strategic purchasing 20
2.5.4 Tactical purchasing vs strategic purchasing 20
2.6 CHAPTER SUMMARY 21
CHAPTER THREE 22
3.0 INTRODUCTION 22
3.1 RESEARCH 22
3.2 RESEARCH APPROACH 22
3.2.1 Qualitative research 22
22.214.171.124 Advantages of qualitative research 23
126.96.36.199 Disadvantages of qualitative research 23
3.2.2 Quantitative research 24
188.8.131.52 Advantages of quantitative research 24
184.108.40.206 Disadvantages of quantitative research 24
3.3 RESEARCH DESIGN 24
3.3.1 Descriptive research 25
3.4 ETHICAL CONSIDERATION 25
3.5 DATA COLLECTION 25
3.6 DATA SOURCES 26
3.6.1 Secondary data 26
220.127.116.11 Advantages of secondary data 26
18.104.22.168 Disadvantages of secondary data 26
3.6.2 Primary data 27
22.214.171.124 Advantages of primary data 27
126.96.36.199 Disadvantages of primary data 27
3.7 DATA COLLECTION 27
3.7.1 Questionnaires 27
188.8.131.52Questionnaire administration 28
184.108.40.206 Questionnaire design 28
220.127.116.11 Advantages of questionnaires 28
18.104.22.168 Disadvantages of questionnaires 29
22.214.171.124 Validity 29
126.96.36.199 Reliability 30
188.8.131.52 Pilot study 31
3.7.2 Interviews 31
184.108.40.206 Advantages of interviews 31
220.127.116.11 Disadvantages of interviews 32
3.8 POPULATION 32
3.8.1 Target population 32
3.8.2 Sampling 32
3.8.3 Sample size 33
3.8.4 Probability 33
3.8.5 Non-probability 34
18.104.22.168 Judgemental sampling 34
3.9 DATA ANALYSIS 34
3.10 CHAPTER SUMMARY 35
DATA ANALYSIS AND INTERPRETATION
4.0 Introduction 36
4.1 Response rate 36
4.2 Years of service 37
4.3 Professional qualification 38
4.4 Purchasing processes 39
4.5 Purchasing staff 40
4.6 Benefits 41
4.7 Integration and strategies 42
4.7.1 Purchasing department status 43
4.7.2 Tactical Purchasing vs. strategic purchasing 44
4.8 CHAPTER SUMMARY 45
5.0 INTRODUCTION 46
5.1 SUMMARY OF FINDINGS 46
5.2 CONCLUSION 47
5.3 RECOMMENDATIONS 47
5.3.1 Supplier relationship management 48
5.3.2 Supplier development 48
5.3.3 Spend analysis 48
5.3.4 High status 48
5.4 AREAS OF FURTHER RESEARCH 49
5.5 CHAPTER SUMMARY 49
LIST OF TABLES AND FIGURES
LIST OF FIGURES
Fig 4.1 Response rate 38
Fig 4.2 Years of services 38
Fig 4.3 Professional qualification 39
Fig 4.4 Purchasing process 40
Fig4.5 Purchasing staff 41
Fig 4.6 Internal customers’ expectations 43
Fig 4.7 Purchasing department status 44
Fig.4.8 Tactical purchasing vs strategic purchasing 46
LIST OF TABLES
Table 3.8.3 Sample size
Table 4.1 Response rate 37
Table 4.2 Years of service 38
Table 4.3 Professional qualification 39
Table 4.4 Purchasing processes 40
Table 4.5 Purchasing staff 41
Table 4.6 customers’ expectations 42
Table 4.7 Purchasing department status 43
Table 4.8 Tactical purchasing vs. Strategic purchasing 45
GDP Gross domestic product
HOD Head of Department
ICS Internal customer satisfaction
Over the past few decades there has been a growing reliance on supply chain management (SCM) by organizations which has led to an increase in recognition and acceptance of strategic purchasing. Strategic purchasing has since evolved from a mere buying function into a strategic function and thus has been recognized as a main driving force in strategic management of supply chain. This has been accelerated by the rapid increase in globalization which has increased the need for organizational competitiveness. Also the wide and dynamic scope of the external environmental conditions as well as the desire to keep a competitive edge and increase the organizational survival chances, has brought about the importance of customer satisfaction, both external and internal customers (Paulraj, Chenn ; Flynn, 2006).
The study will therefore, shade more light on the importance of strategic purchasing and its impact on internal customer satisfaction and also explain the benefits of internal customer satisfaction in an organization especially in a mining environment. The main thrust of the study is to show how organizations have overly underperformed due to haphazard supply and further provide compressive ways in which the purchasing and supply department can be effectively utilized to create organizational competitiveness especially in a gold mining organization. Further the study will utilize Vubachikwe mine as a case study.
1.1 BACKGROUND OF THE STUDY
Since the 1980s, the economic situation of Zimbabwe has been going down the spiral. It was further shattered by the 2008 global recession wave which saw many organizations shut down. In that period of crisis, one of the economic sustainers in Zimbabwe has been the mining industry. Most gold mining companies managed to help redeem the economic situation given the poor economy, through employment sustenance regardless of some retrenchments that occurred during the same period and the preceding years. Further, the gold mining industry poorly performed such that the gross domestic product (GDP) declined by 50% in the year 2008. Also in the same year, gold production recorded its lowest of 3.5tonnes. (Metallon Corporation, 2014).
Also Nyarota, Kavila, Mapunga and Ngundu, (2015) argued that that there was a significant decline in productivity and capital stock during the period from 200 to 2008 and capital contribution to economic growth was negative between 1990 and 2008. More so, average economic growth rate averaged 2.2% from 1980 to 2014, weighed down by the decline in economic activity. These subdued growth rates in Zimbabwe are attributed to a decline in capital stock and productivity as well as mismanagement and poor organizational governance. As such to revamp the economy capital and productivity constraints need serious attention and addressing.
Consequently, apart from the underperformance of the sector, during and after the recession period, Zimbabwe has been relying most on the primary commodities such as gold, diamond and platinum. The country’s economy is heavily reliant and supported by the exportation of these products which carry great value in the global market and without these products the economy will be significantly worse and thus the country is highly reliant on these primary commodities. Subsequently, the mining sector has now become the chief contributor of economic betterment.
As discussed, the mining industry has become the backbone of the country and any factor that can hinder or accelerate its production is important to explore. One of the main failures and underperformance of the sector is the use of the traditional procurement style which undermines internal customer satisfaction. Howbeit, internal customers are important to set up the production process and achieve desired results.
Vubachikwe mine has not been exempted from these inefficiencies faced by the mining such as fall in gold prices. According to the Herald (January 16 2014), gold price fell by 28 percent in 2013 and this was recorded as the largest single year drop in over 30 years. Thus, gold price instability affects the cash-flow of the company and cash is the lifeblood of any organisation. In January 2014 the company needed an amount of $10m so as to increase production in order to achieve economies of scale and lowering costs. (Herald, January 16 2014). The company has been facing cash-flow problems since then till to date. The company’s Human Resource Manager (2014) told the Herald that “Duration is committed to its employees, shareholders and other stakeholders and is doing its utmost to weather this storm. At our company we are improving efficiencies and cutting costs wherever possible: Duration is committed to its employees, shareholders and other stakeholders and is doing its utmost to weather this storm. At our company we are improving efficiencies and cutting costs wherever possible”. As a cost cut strategy the company focused mainly in the purchasing department. It is so because study has shown that purchasing department uses most of the company’s revenue. Thus, they introduced the critical list, (Vubachikwe mine, monthly journal, 2016) which enables the organisation to purchase products on weekly basis and most of the transactions are cash based. Hence, method does cut costs, however it brings another setback of shortage of material. The critical list cannot cover all the needed materials at the mine; it consists mainly of products which the HODs deem are critical for the operations of the company. Also, any extra material that will be needed is paid on cash and cash payments limit the quantity of products purchased. Therefore, it can be noted that the company cannot afford to have any buffer stocks; it survives on what is known in layman language as food to mouth basis.
Furthermore, the 2008 global recession wave which saw many organisations shut down is yet another setback that has hit the company hard. The manufacturing industry was affected many companies shut down and the few that remained scaled down their operations, thus has led to unavailability of material in the local market. This has forced Vubachikwe mine to source some of its most critical products in line of production from afar and this has resulted in having longer lead times, for instance, leach aid a leaching chemical used in the plant is bought from Britain. (Vubachikwe mine Newsletter, 2017)
It can also be noted that the company uses the Pastel evolution package in its business operation. The package is a good accounting package but does not fully cater for the purchasing needs such as inventory control. For inventory controlling the company uses bin cards which fall under the manually system. This system relies on the stores clerk to pull out the bin cards when a minimum level has been reached. Its sole reliance on clerks is its weakness because if the clerk somehow forgets to pull the card for placing orders the whole system will be compromised. It can lead to serious consequences such production stoppages.
1.2 STATEMENT OF THE PROBLEM
The purchasing department is solely responsible for the acquisition of products and services in an organisation. The acquisition of products and services is an ongoing cycle. Thus, according to, Bailey et al (2005) the purchasing cycle is structured as; recognition of need, specification, purchase decision, source identification, source selection, contracting, contract management, receipt, inspection and need fulfillment. Thus the purchasing cycle basically formulates the duties of the purchasing department.
Furthermore, by carrying out its duties the purchasing department ensures that the five basic rights of purchasing are met, which according to, Lyons et al (2010), are right quality, quantity, place, time and price. Entirely this guarantees customer satisfaction. According to Paulraj, Chen and Flynn, (2006) customer satisfaction refers to a measure of how products and services supplied by a company meet or surpass customer expectations and is the most crucial aspect in company’s overall performance and growth. Material availability is imperative to an organisation because the overall performance of the end users relies heavily on it. (Giese et al 2002). Sound performance departments are an asset to the company because the basic objective of any business organization is to operate efficiently and effectively to obtain the highest possible return using the lowest possible inputs, which is, obtaining the highest return on capital investments. (Callen, 2008).
Therefore, the purchasing department plays a major role in ensuring that its customers achieve their targeted goals in return improving the company’s bottom line.
However, Vubachikwe mine purchasing department is challenged with issues such as, longer lead times, shortages of material, overloading the end user with unnecessary information which according to, Lu, D. (2011) leads to poor service delivery in return neither the mining department, who are stores biggest customer, can mine gold without explosives and drill steels nor can the Engineering department fabricate and put up structures without welding rods, oxy-acetylene gases, steel material and many other needed materials. As a result, once there is lack in the purchasing and supply of an organization, the internal customers are dissatisfied.
Therefore this study seeks to evaluate the impact strategic purchasing can have in satisfying the internal customers of a manufacturing company like mining. It is so because in this day and age, economic upliftment is the song of policy setters and everyone at large. Thus a profitable satisfaction of internal customer’s needs is of paramount importance thereof. Strategic purchasing is a methodology used in many businesses to realize the greatest amount of benefit to the company while still effectively managing the costs associated with the acquisition of raw materials and operational components.
1.3 OBJECTIVES OF THE STUDY
The main purpose of the study is to evaluate the impact of strategic purchasing on internal customer satisfaction in a mine in Zimbabwe.
The specific objectives include:
To identify the purchasing policies that hinders the implementation of strategic purchasing?
To identify ways of how strategic purchasing can be used to enhance internal customer satisfaction?
To identify the benefits of implementing strategic purchasing as a tool of improve internal customer satisfaction?
To establish the relationship which exists between strategic purchasing and internal customer satisfaction?
1.4 RESEARCH QUESTIONS
The study seeks to answer the following questions:
What are the purchasing policies that hinder the implementation of strategic purchasing?
How can strategic purchasing be used to enhance internal customer satisfaction?
What are the benefits of implementing strategic purchasing as a tool to improve internal customer satisfaction?
Is strategic purchasing an important component to boost internal customer satisfaction?
1.5 STATEMENT OF HYPOTHESIS
The hypotheses which the study seeks to test are:
H_0: Strategic purchasing negatively impacts internal customer satisfaction in a mine.
H_1: Strategic purchasing positively impacts internal customer satisfaction in a mine.
SIGNIFICANCE OF THE STUDY
1.6.1 Body of knowledge
This study is the missing piece in literature of the purchasing professionalism. Most studies focused on external customers forgetting the customers that are closer home, that is, internal customers. Therefore, the study added information and showed the level of relationship between strategic purchasing and internal customers.
In order to ensure the survival of the organisation there is need for the organisation to be able to run its operations as smoothly as an oiled machine. Hence, this study showed how best it can do that through the purchasing department. It highlighted how the running of the purchasing department can affect the overall performance of the organisation.
This study highlighted the interrelationship between strategic purchasing and internal customer satisfaction. However, all business management researched seeks to help improve the bottom line of the organisation. With, the mining industry being the backbone of the country, thus a smooth running mine surely be an added gain to the country.
1.7 RESEARCH ASSUMPTIONS
This study is based on the following assumptions:
Vubachikwe mine represents the mining industry in Zimbabwe
Vubachikwe mine is fully operational and is able to provide usable results
1.8.1 Geographical location
The study focused on Vubachikwe mine, which is situated in Gwanda, to represent the mining industry because the researcher is well acquainted with the purchasing and supply mechanism of the company.
The researcher focused on information of the company which happened in the last 15 years, that is, from 2003 to 2018.
The researcher faced problems with the timeline to carry out the research because it was be carried be out between working hours. However, to eliminate this limitation the researcher engaged one person to help in carrying out of the research.
The researcher was hindered by financial constraints such as costs of typing, fees of engaging another person. However, the researcher eliminated this limitation by personal typing and seeking assistance from the company to print out the material that were used in the study.
The researcher faced challenges in getting all the data needed to carry out a research because the study was using the company’s confidential information. Nonetheless, to eliminate the challenge the researcher will assured Vubachikwe mine that the information will not be publicized; that it was strictly for academic purposes. Also the management got the chance to go through the document.
DEFINITION OF TERMS
Supply chain Management
Is defined as the flow of goods and services, involving the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption (Lu, 2011).
Is defined as an institutional procurement process that continuously advances and re-evaluates the purchasing activities of a company (Pazirandeh, 2014).
It is a measure of how products and services supplied by a company meet or surpass customer expectation (Giese & Cote, 2002)
Is defined as the total value of goods produced and services provided in a country during a single year (Callen, 2008).
Gold Mining Industry
Is defined as an establishment that is primarily engaged in the extraction of gold.
Strategic purchasing is now the golden print towards customer satisfaction which leads to organizational competitiveness and quality product production in this globalized economy. The study, therefore, will be organized as follows; chapter one will focus on the introduction of the study, chapter two will give a comprehensive overview of the strategic purchasing concept and customer satisfaction, chapter three will give an assessment of empirical literature review in relation to the impact of strategic purchasing on internal customer satisfaction, chapter four will outline the methodology of the study and chapter five will provide the conclusion and policy recommendations for all relevant stakeholders.
This chapter outlines review of literature. It will cover the foundation for the research. The aim is to gather as much as possible information related to the topic through determining what experts say about the meaning of customer satisfaction. The implementation of strategic purchasing requires an effective management structure and also involves re-looking at articles or research reports similar to one’s study. It is a review of literature which is related to the study, to make the connection between what has been learnt in the past and what this study is all about.
2.1 Concepts and definitions
2.1.1 Strategic purchasing
Carr, (1997) defined strategic purchasing as the process of planning, implementing, evaluating and controlling planned and operating decision for directing all activities of the purchasing function towards opportunities consistent with the firm’s capabilities to achieve long term goals. In simple terms, strategic purchasing can be said to be prudent buying, (Deber and Lewis, 2004), rather than solely responsible for buying orders for other divisions with its main aim to achieve maximum price reductions (Gadde & Håkansson, 1994). Strategic purchasing goes far beyond the formerly short- term orientation of cutting costs (Knoppen& Sáenz, 2015), somewhat covers issues to do with early supplier involvement, and the involvement of logistical activities throughout the value chain (Knoppen& Sáenz, 2015). Certainly, literature has proven that purchasing department has evolved from tactical to strategic.
Source: adapted from A Strategic Purchasing –Global Perspective by Apostolova et al 2015
Internal customer satisfaction
According to, MBA skool.com, internal customers are employees within an organisation who receive and utilize the goods and services produced elsewhere in the same organisation as inputs to their work. Thus, the purchasing department is the service provider of departments within the organisation. Internal customer satisfaction is about making them happy with the service a department is providing. Conseil (2016) reveals that by virtue for its professionalism and its rigor a purchasing department should gain its credibility vis-à-vis its internal customers. This credibility is certainly the basis for a good relationship with its internal customers. He went on further to describe a method, known as Management of Procurement internal customer satisfaction, which can be used to assess internal customer satisfaction in an organisation. The process is illustrated in the diagram below:
Source: adapted from Atlais Conseil, 2016, customer satisfaction
Conseil views are concurred by, Moretti (2016) who states that any Purchasing function wishing to be considered a strategic partner within the company should be concerned about how its internal clients are satisfied with the services provided. These opinions are further supported by, Van Poucke et al (2000) who insist further that purchasing department as a service provider in an organisation must care fanatically about its internal customers as putting a focus on ICS creates a more productive and service oriented environment.
According to, According to Cook (2002:13), customer satisfaction is about customer perceptions, which is often a subjective and intangible experience. The perception of service which customers receive is dependent upon the expectations. When a customer receives services that are better than his or her expectations, this is regarded as meeting the customer’s demand. . If the treatment which the customer receives is less than his/her expectations, the customer is dissatisfied. Hoffman and Bateson (1997:271) concur with Kotler by saying that customer satisfaction is a comparison of customer expectations to perceptions regarding the actual service encountered. The two definitions given above by authors make it clear that satisfaction is a function of perceived performance and expectations. Kabodian (1996) further postulate that most organizations should not only aim to satisfy their customers and stop there.
Source: Service quality/satisfaction ladder (adapted from Kabodian (1996)
More will be explained later on in the chapter as each concept will be further elucidated and evaluated in order to bring an understanding on the key concepts.
OBJECTIVES OF THE STUDY
The specific objectives include:
1. To identify the purchasing policies that hinders the implementation of strategic purchasing?
2. To identify ways of how strategic purchasing can be used to enhance internal customer satisfaction?
3. To identify the benefits of implementing strategic purchasing as a tool of improve internal customer satisfaction?
4. To establish the relationship which exists between strategic purchasing and internal customer satisfaction?
To identify the company policies that hinders the implementation of strategic purchasing?
They are few researches conducted which focused primarily on barriers of strategic purchasing, however many researches focused generally on barriers of strategy implementation. Strategy implementation is a difficult stage because it seeks to connect formulation and control. (Rajasekar, 2014). This thought is concurred by Herbiniak, 2016 when stating that strategy formulation is the easier part implementing and making work are the hardest part. According to, Rajasekar (2014) issues that hinder strategy implementation include leadership style, information availability and accuracy, uncertainty, organizational structure, organizational culture, human resources, and technology.
To identify ways of how strategic purchasing can be used to enhance internal customer satisfaction?
Brookshaw and Terziovski, (1997); Mbiege and Okoye, (2007) and Nyambi, (2013), concur that internal customer satisfaction is an important component in improving the company’s efficiency and effectiveness. Also strategic purchasing is shown to play a positive role in customer satisfaction and how strategic purchasing affects internal customers positively and the effect further translates to an organization’s improved performance. Moreover, research work done by Suchanek, Pitcher and Kralova, (2014) on customer satisfaction, product quality and performance of companies proved a positive correlation between customer satisfaction, company performance and competitiveness. Customer satisfaction led to the production of quality products which further led to the competitiveness of the organization and an increment in performance.
2.2.3 To establish the relationship which exists between strategic purchasing and internal customer satisfaction
Consequently in their study (Chen, Paulray and Lado, 2004), examined the link among strategic purchasing, supply management and firm performance. They argue that strategic purchasing can produce competitive advantage by enabling firms to work closer with a few number of suppliers, promote open communication among supply chain partners and develop long term relationship `orientation to achieve mutual gains. Further, obtained results provide robust support for the l`inks between strategic purchasing, supply management, customer responsiveness and financial p`erformance of an organization. The results are concurred by Ubeda, Alsua and Carrasco, (2`015) who support the notion that as an organizational purchasing maturity increase, company performance increases
Strategic purchasing is an approach used in businesses to realize the greatest amount of benefit to the company while still effectively managing the costs associated with the acquisition of raw materials and operational components. Strategic purchasing has increasingly assumed a pivotal role in supply chain management, whilst customer satisfaction is argued to be the key towards sustainable growth. Paulraj, Chen and Flynn, (2006) conducted a study on the level of strategic purchasing (its impact on supply integration and importance) and their study provide strong empirical support for the importance of strategic purchasing by showing that by moving towards the more advanced stages, firms at the nascent stage of strategic purchasing can achieve better supply. It further revealed that strategic purchasing can have a profound impact on supply chain performance for both buyer and supplier. These results are supported by Stefanov and Blanco, (2006), who conducted a study on supply chain strategy as part of customer satisfaction. Obtained results prove that strategic supply leads to customer satisfaction and that it is both beneficial to the organization and the customers.
As discussed, most studies focused on the importance of strategic purchasing to organizational performance, and quite a number focused on the external customer satisfaction towards organization’s performance. However, very few of the studies have intertwined strategic purchasing and internal customer satisfaction. This makes it an interesting line of thought to explore given the fact that both components are essential to growth, and how these component impact each other is of importance.
This section will serve to review the theories on the ground and will link the theories to the objectives of the study.
Source: adapted from www. Marketingstudyguide.com
The disconfirmation theory was first proposed by an American social psychologist Leon Festinger in 1956. This theory was based more on social life, as it was illustrated in the 1956 book titled “when prophecy fails’. (Wikipedia). Festinger et al theorized that some conditions must be present for this to occur. In 1963 Carlsmith and Aronson extrapolated, it follows that this discomfort puts the individual in a negative hedonic state. (Wikipedia). In 1977 Anderson suggested an assimilation contrast model that combines the two mo.
In 1977, Richard Oliver developed the Expectation Confirmation Theory. It is a theory of consumer behavior that seeks to explain consumer satisfaction based on the gap between some performance standard and the actual performance of a product or service as perceived by tis consumer.
Source: adapted from wikipedia
EXPECTATION CONFIRMATION THEORY
Expectation Confirmation Theory has four main constructs in the model which include: expectation, performance, disconfirmation, and satisfaction. Expectations serve as the comparison anchor in the theory– what consumers use to evaluate performance and form a disconfirmation judgment (Halstead, 1999). Expectations reflect anticipation (Churchill ; Suprenant, 1982). They are predictive over product attributes at some point in the future (Spreng, MacKenzie ; Olshavsky, 1996). Performance is an evaluation by the individual after the event, such as a perception of product quality. If a product meets or outperforms expectations (confirmation) post-purchase satisfaction will result. If a product falls short of expectations (disconfirmation) the consumer is likely to be dissatisfied (Spreng, et al., 1996). Typically, disconfirmation is often measured directly, or as a difference score between expectation and performance components.
Many studies which have been conducted focused mainly on strategic purchasing and internal customer satisfaction but the actual impact of strategic purchasing on internal customer satisfaction has been neither empirically verified nor rigorously examined.
In 1997, Terry Brookshaw and Mile Terziovski assessed the relationship between strategic purchasing and customer satisfaction within a total quality management environment. Their focus was more on the impact of strategic purchasing on external customers. Eline Van Pouckea, Arjan J. van Weeleb, Paul Matthyssensa, assessed the interrelationship between purchasing maturity, internal customer satisfaction and purchasing performance. Their mission was to establish the level of interdependence amongst the three variables. In 1996, Carter and Narasimhan, studied whether purchasing is strategic in nature. In 2000, Ronald Gilbert carried out s study focused mainly on measuring internal customer satisfaction.
INDEPENDENT VARIABLE DEPENDENT VARIABLE
Strategic purchasing Spend analysis
Technology implementation Internal customer satisfaction
CHANGING ROLES OF PURCHASING
Purchasing is defined as to buy materials of the right quality, in the right quantity form the right source delivered to the right place at the right time at the right price. (Lysons et al, 2006). Purchasing department has evolved over the years, it has moved from being a mere administrative work to strategic. In this day of age purchasing now demands a sit on the table and contributes strategically to an organisation. According to, Carter and Narasimhan, purchasing does have a role in corporate strategy. For purchasing to have a role in corporate strategy it must have a high status, (Lysons et al, 2002). However the image and status of purchasing is driven by the contribution of the purchasing function to overall corporate performance and to the performance of other functions. (Carter and Narasimhan, 1996).
Source: adapted from A Strategic Purchasing –Global Perspective by Apostolova et al 2015
According to, Henry Mintzberg, a strategy is a noticeable pattern overtime in a stream of corporate decisions. There are three strategy levels that purchasing can use to enhance the chances for firm success (Carter and Narasimhan, 1996), that is, the corporate, business and functional.
Corporate strategy Tactical level Functional
Purchasing research Buying methods Expediting
Long range planning Negotiations Records and systems maintenance
Predicting availability Contracts Invoice clearance
Policy determination etc. Cost reduction techniques Requisitions handling
Purchasing Roles (adapted from Bailey et al., 2008)
Carr, (1997) defined strategic purchasing as the process of planning, implementing, evaluating and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function toward opportunities consistent with the firm’s capabilities to achieve long term goals. Strategic purchasing aims at adding more value to the purchasing function. It seeks to integrate the purchasing function with its all stakeholders so as to gain competitive advantage.
Source: adapted from scm.ncsu.edu
TACTICAL VS STRATEGIC PURCHASING
Strategic purchasing is a methodology used in many businesses to realize the greatest amount of benefit to the company while still effectively managing the costs associated with the acquisition of raw materials and operational components. As opposed to tactical purchasing, which tends to see the purchasing process as somewhat distanced from other functions within the corporate structure, strategic purchasing attempts to promote the most efficient use of all materials throughout the company. The goal of this type of purchasing is to increase the bottom line of the company through the most judicious use of purchasing approaches and strategies. (wisegeek)
As mentioned above purchasing has evolved from being tactical to strategic. Indicators of this development include roles such as supplier relationship management: Strategic purchasing teams measure supplier performance and regularly spend time meeting with their most important suppliers to implement improvements. Also, technology implementation is frequently done by the strategic purchasing teams as they seek to reduce costs, decrease cycle time, and make the purchasing process more efficient. Another role that strategic purchasing teams do is spend analysis. It seeks to examine the amount of money they spend in each category of goods and services and use this analysis to identify opportunities for improvement
Furthermore developing project plans is yet another role which strategic purchasing teams uses so as to project management practices to map out both recurring activities and one-time projects. Also, strategic purchasing teams consolidate spend across all parts of their organizations and enter into contracts with a limited supply base to serve the needs of the entire organization.
Strategic purchasing does forecasting. The team regularly documents changes that they foresee in price levels, availability, and markets to ensure a competitive advantage for their organizations. Strategic purchasing teams are involved at the early stages of specification development, lending specialized knowledge in material availability, cost drivers, standard parts, and reliability of supply.
Furthermore, strategic purchasing teams develop tools (e.g., RFP templates) so repetitive tasks can be done more quickly and error-free. They also do supplier development: it is so because they cannot blindly accept the suppliers and products that are currently available. They work with suppliers to develop new capabilities or products that will improve cost or quality. Lastly, strategic purchasing teams do work responsibility refinement: Strategic purchasing teams constantly identify ways to automate, delegate, or eliminate tactical, non-value-added work.
2.6 CHAPTER SUMMARY
In this chapter, the researcher discussed customer satisfaction theories namely the disconfirmation theory and expectation theory, strategic purchasing, the changing roles of purchasing, duties done at the different strategy levels. Chapter 3 will discuss the methodology of the study which deals with methods in collecting data from the field.
Chapter three will bring insight into the approach used in data collection, analysis and interpretation of the data collected for the study. It will attempt to provide a comprehensive analysis of the research plan and tools utilized in this study. It will elucidate the methods used in conducting the research, the logic behind the methods employed, and justifications for each of the techniques. Research methodology will discuss the research design, research instruments and data collection instruments, population, sampling methods, measuring instruments and statistical techniques used to analyse data. It further encompassed discussing research validity and reliability. More also this research project will employ qualitative methods for data collection, with some supporting quantitative data also being collected. This approach is used so that there is room for the researcher to explore the richness and depth of explorations and description. Self-administered questionnaire was used to source the primary data with regards of the impact of strategic purchasing on internal customer satisfaction.
According to Leedy and Ormrod (2001:4) a research is a systematic process of collecting and analysing information, in order to increase understanding of the field of study in which the researcher is interested.
3.2 RESEARCH APPROACH
3.2.1 Qualitative Research
Qualitative research is a methodological approach that examine the why and the how of a decision making not just the where, when, or who and have a strong basis in the field of sociology. A qualitative research attempts to increase understanding of why things are the way they are in social world and why people act the way they do.(Marshall & Rossman, 1999). A qualitative approach is used as a vehicle for studying the empirical world from the perspective of the subject, not the researcher (Duffy, 1987).
Qualitative approach has many methods and one of the popular methods is the case study which examines the purposive samples. The researcher used a case study approach. Another form of qualitative research is called cognitive testing or pilot testing which is used in the development of quantitative survey items. Survey items are piloted on study participants to test the reliability and validity of the items (Denzin et al; 2005). According to Jones (2017) qualitative research is concerned about complete and detailed descriptions of events.
The researcher used this approach in carrying out this study because the aim of qualitative research is to describe certain aspects of a phenomenon, with a view to explaining the subject of study (Cormack, 1991). The methodology itself is also described as phenomenology (Duffy, 1985), or as a humanistic and idealistic approach (Leach, 1990), with itself its origins lying in the disciplines of history, philosophy, anthropology, sociology and psychology (Cormack, 1991).This historical foundation, which is not that of the physical science domain, has been cited as one of the great weaknesses of qualitative research.
22.214.171.124 Advantages of qualitative research
It does not need strict design plan before it begins. This gives the researcher the freedom to let the study unfold naturally.
The researcher is able to get more detailed rich data in the form of written descriptions or visual evidence such as photographs.
Qualitative research looks at the context and social effects and how it affects individuals.
More also qualitative research is useful during the early stages of the study when the researcher is no sure of what exactly will be studied or what to focus o
126.96.36.199 Disadvantages of qualitative research
The researcher will be heavily involved in the process hence it gives a subjective view of the study and its participants.
The interpretations may be biased as the researcher may interpret the research according to his or her own view.
This research method is time consuming.
3.2.2 Quantitative research
Jones (2017) states that quantitative research emphasizes on the objectivity and the use of statistics. Zappia (2017) stresses that ‘with quantitative research methods, numerical data are gathered and then generalized across groups of people to explain trends or phenomena’. These methods begin from questions such as “how many?” “how often?” “when?” and “where? The following are the advantages and disadvantages of quantitative research according to Zappia (2017). In data analysis and presentation the researcher used quantitative methods.
Advantages of quantitative research
Personal bias can be avoided
It is easier to generalize the result and to study broadly.
Quantitative approaches are best when the need is to compare data systematically, such as a comparison between groups or countries.
Disadvantages of quantitative research
Quantitative research methods produce primarily numerical descriptions, they don’t yield rich details about behavior, attitudes or emotions.
Because the research is carried out in sterile or artificial environments such as labs, the results don’t accurately reflect real-world situations.
The data for a quantitative study are usually gathered in a fairly rigid way and therefore don’t inspire discovery
It is not suitable in situations where people need to be observed in their daily routines.
According to Cooper and Schindler (2006:138) a research design is an outline for the collection, measurement, and analysis of data. It is the plan and structure of investigation so conceived as to obtain answers to research questions. Research design is an overall strategy that you choose to integrate the different components of the study in a coherent and logical way, thereby, ensuring effectiveness in addressing the research problem; it constitutes the blueprint for the collection, measurement and analysis of data. Leedy and Ormrod (2001:91) argues that it is the complete strategy of tackling on the central research problem and it provides the overall structure for the procedures, the data and the data analysis methods that the researcher employs.
According to Sekaran (2000) there are three main types of research designs namely causal research design, descriptive research design and exploratory research design. However the researcher used the descriptive research design.
Saunders et al (2007) stresses that descriptive research is carried out when there is need to get information on the current status of a person or object. It is a type of research that is undertaken to be able to describe the characteristics of the variables in a situation. This research was carried out using the descriptive approach. The method is more precise and accurate. Furthermore, descriptive survey design allows observation of subjects in a completely natural setting and produces rich data that leads to significant recommendations.
During the study, confidential information was collected and due to the nature and sensitivity of the information the researcher adhered to a strict confidentiality code in order to protect the privacy of organisations.
According to Cooper and Schindler (2003:16) “A research design should not cause mental or physical harm to participants and should make data integrity a first priority”. Goche (2012) stresses that ethical concerns in research reflect vital moral issues about the practice of responsible behaviors in society. Some unethical activities include violating non-disclosure agreements, breaking respondent confidentiality, misrepresenting results, deceiving people, and invoicing irregularities (Saunders et al; 2007).
According to Greenfield (1996) the mode of data collection is the means by which information is produced and recorded. This includes, inter-alia, face-to-face interviews, telephone interviews, observation of behavior, postal or other self-completion questionnaire etc. Various modes of data collection differ in terms of costs and resources required for gathering data and in terms of the level of detail and complexity of data.
According to Babbie (1990) secondary data, as the term implies, is essentially ‘second-hand’ in as much as it is not new data collected specifically and primarily for the purpose of the consultancy being conducted. Secondary data should be examined before any data is collected for the first time by the researcher. Secondary data tends to be readily available and inexpensive to obtain. In addition, secondary data can be examined over a longer period of time. For instance, the researcher made use of Delta Beverages financial reports which were derived from the company official website. Cohen and Manion (1980) stress that Secondary data may include a variety of publications, newspapers, journals, text books, economic updates from financial institutions and insurance journals and reports. In literature review the researcher made use of the text books, journals and other publications to asses what other scholars and researchers were saying about the research topic there by enabling the researcher to build the conceptual and theoretical framework. The following are the benefits of using secondary data sources.
Advantages of secondary data
It is inexpensive to collect and readily available.
It is not time consuming. Some secondary data can be attained from the internet; by just a few clicks on the computer the researcher can get all the information needed.
Secondary data helps the researcher to understand and get appreciation on the subject matter.
The researcher can compare the data he or she attained and what other researchers have found on the subject matter.
Disadvantages of secondary data
Data may be out dated.
Variation in environment must be considered as well.
According to Hairston and Ruszkiewicz (1996), primary sources are the materials on a topic upon which consequent interpretations or studies are based. Pasuraman (1991) argues that primary data are data collected specifically for the project at hand. The researcher used primary data sources to get relevant information on the study. This was because primary data have greater relevance to the study than secondary data given that the parameters for collecting it will be set by the researcher. In addition this data also have relevance to the study as it is current. Primary sources are records of actions as they are first described, without any interpretation or commentary. They include anything from first hand documents such as poems, diaries and interviews to research results generated by experiments. Iyade (2006) stress that they may also be sets of data, such as census statistics, which have been tabulated, but not interpreted. Primary data is advantageous in that it gives the researcher the chance to conduct an unbiased and extensive study on the research problem set out to solve.However the major challenge associated with primary data is that it has costs associated with collecting it. The researcher made use of the structured questionnaire and interviews to collect primary data from employees.
Advantages of primary data
The data is up to date and relevant and the degree of accuracy is high.
It is more reliable than the secondary data.
Disadvantages of primary data
Sometimes researchers may give fake and socially acceptable or incomplete data responses which may be wrong and biased.
High costs- with more people, time and efforts involved the costs become high.
The questionnaires were manually distributed to all the respondents by the researcher. According to Kombo (2006), a questionnaire enables regulation of responses, enhancing objectivity and reduces bias. Questionnaires are less costly, easy to analyse and people are used to them.
DATA COLLECTION TOOLS
De Vos, et al (2004) state that a questionnaire can be open where by it requests one to reveal his or her opinion on the subject matter or closed, where it requires the responded to respond with a yes or a no. There are two types of questionnaire, namely self-administered, which is completed by respondents themselves, without the assistance of an interviewer. This is done either by distributing the questionnaires and collecting them once they have been completed. Secondly there is the mail questionnaire, which is sent by mail, with the hope that the respondents will complete and return it. As the researcher conducted the research which was qualitative in nature, the researcher preferred the self-administered questionnaire as the best data collection instrument and is the type that the researcher used to get information.
The researcher administered the questionnaires to the respondents personally so as to encourage them to quickly respond as most of the times the response rate is very low. A period of seven days was given to the respondents and follow up was made via telephone and emails to check whether the questionnaires were ready for collection.
According to Greenfield (1996:21) a questionnaire should be short and understandable so that it can be easily answered by the respondent and this ensures that the right answers are elicited for the questions posed. However Leedy and Omrod (2001) stress that the simplicity of the questionnaire is determined by the nature of the research problem. De Vos et al (2004) stresses that a clear questionnaire that has more pages but have clear and user friendly design is better than one with crowded and unfriendly layout.
In this study the researcher used simple questionnaires with short questions and statements. They were understandable and in plain, simple English. The questionnaire design also contained closed questions with a five point scale (Likert scale). The following is the example of the format in accordance with the Likert scale. Some questions required the respondent to give a brief explanation and some demanded a yes or no answer.
Strongly agree Agree Uncertain Strongly disagree Disagree
Advantages of questionnaires
According to DeVos et al (2005) the following are the advantages of questionnaires:
High degree of freedom for the respondents in completing the questionnaire and the ability to reach a large number of respondents; the researcher can just distribute the questionnaires to a large number of respondent and collect them after some period of time.
The respondents can answer the questionnaires in the time convenient to them and this ensures and guarantees quality of the responses.
Questionnaires are one of the best research instruments because of their versatility, and simplicity. More also they are easily understandable.
Uniformity of questions – It allows the researcher to get different views on the subject matters that is what people think on a particular matter and therefore enables the researcher to compare the information attained.
Disadvantages of questionnaires
High non response rate
Answers may be left out- if the respondent is not sure of the answer or does not fully understand the questions.
Questions wrongly interpreted – this may affect the validity of the response. More also respondents may answer superficially if the questionnaires takes a long time to complete.
Open ended questions can generate large amounts of data that may be cumbersome to interpret. According to De Vos et al (2004) this can be solved by elucidating the scope of the question so that the responses are precise.
According to Leedy and Ormrod (2001:31), validity of a measurement instrument as the extent to which the instrument measures what it is supposed to measure. More also, Kerlinger (1992:171) indicates that a valid measuring instrument does what it is intended to do, which is to measure. The research instrument must be selected or developed carefully to fit the design and the plan for data analysis so that data collected will be useful for answering the research questions. Good research instruments produce valid and reliable results and questionnaires are the right instruments.
According to Miller and Wilson (1983) there are 4 types of validity:
Content validity –Leedy and Omrod (2001) stress that content validity ‘is the extent to which a measuring instrument is a representative sample of the content area (domain) being measured’.
Criterion validity- according to DeVos et al (2004) criterion validity involves multiple measurement and is established by comparing scores on an instrument with an external criterion known, or believed to measure the concept, trait or behaviour being studied.
Construct validity-According to Leedy and Ormrod (2001:78) construct validity is the extent to which an instrument measures a characteristic that cannot be directly observed, but must instead be inferred from patterns in peoples? behaviour. Motivation, creativity, racial bias and stress (the focus of this study) all can be directly observed and measured.
It is the accuracy or precision of the research instrument. It is the extent to which the test would give consistent results if applied more than once to the same people under standard conditions (DeVos; 2004). Godwin (2002) defines reliability as the extent to which events of the same phenomenon are consistent and repeated. He further argues that measures high in reliability contain minimum measurement mistakes.
Managers, support staff and other employees at the company under study were consulted and requested to read and provide ideas for the questionnaire to ensure validity.
The researcher also conducted a pilot study to ensure validity and reliability.
Coolican (1999) stresses that piloting involves trying out a questionnaire on a small number of people and thereafter identifying any ambiguities and if necessary adjusting the questionnaire so that it can be clearer before the actual gathering of data. This was done to improve the questionnaire and to make it more clear and understandable so as to ensure that accurate data is collected. It also ensured that the actual respondents have no problem in answering the questions. Saunders et al (2000:305) states that pilot study helps one to “refine the questionnaire so that respondents will have no problems in answering the questions and there will be no problem in recording the data Saunders et al. (2000:308) argues that the number of people on whom one pilots his or her questionnaire depends on the research questions, objectives, the time and financial resources that are available as well as how well one has initially designed the questionnaire.
Another instrument that the researcher used to get primary data is the interviews. According to Cooper and Schidler (2006) a personal interview is a one on one and two way conversation between the interviewee and the interviewer. This research instrument enabled the researcher to get in depth information from the experts and relied on open ended questions. Structured interviews were used.
The use of open ended questions generates detailed information as the respondent is given a chance to elucidate on the subject matter and to reveal his or her opinions.
Unclear questions can also be clarified during the interview- interviews make it easier for the interviewer to clarify or rephrase the questions if the respondent does not understand.
The researcher can get more complete information as the interviewer can probe further when the answers are not clear.
It is inexpensive.
With this instrument it is difficult to reach widely geographically dispersed population.
People may be less likely to provide sensitive information on face to face conversation.
This method is time consuming as the interviewer can only interview one person at a time.
Interviews can be subject to biasness as during the interview the interviewer can approve or disapprove the responses and this can be shown by body language which may encourage or discourage the respondent to make certain responses.
Therefore the researcher used two types of research instruments that are: i. Questionnaires
Singleton et al (1998) defines population as the total collection of elements about which the researcher wishes to make some inferences. It consists of the entire set of objects or people which is the focus of the researcher and about which the researcher wants to determine the characteristics.McClendon (2004:131) stresses that the population of the study is the total number of possible units that are included in the study. It is the total of all units that have a chance of being included in the sample to be studied. The population of Vubachikwe mine is 1000 employees including those who are on contract.
Borg and Gall (1989) describe target population as all members of a real or hypothetical set of people to which research results are generalised. It is important to distinguish the desired target population and the defined target population. The desired target population is the population of interest to the research. The researcher targeted the mining, reduction, technical and engineering departments.
McClendon (2004:5) defines sampling as the process of selecting a subset of units to be studied from a large total called the population. Frey et al (1999) defines a sample as a “subgroup of a targeted population”. It has also been described as a representative “taste” of a group by Berinstein(2001). Kumar (2005:169) argues that the main aim in selecting a sample is to attain maximum accuracy in your estimations within a given sample size and to avoid prejudice in the selection of your sample size. According to Cohen and Manion (1980) there are two methodologies of sampling that are probability sampling and non probability sampling.
Zamboni (2010) defines sample size is a direct count of the number of samples measured or observations being made.
The researcher did a study based on the four departments that are mining (production), reduction, engineering and technical service and the sample size of the researcher was 35 respondents taken from these departments at Vubachikwe mine. The following table shows the breakdown of the number of respondents selected from each department.
Department Number of employees
Production (mining) 10
Technical service 7
Table 3.8.3 Breakdown of respondents from each department
In this method there is a possibility of selecting each member in the population. This means that the members of the population have a chance to be selected and the researcher knows it. However, probability samples can results can be generalized from the sample to the population. Birley and Moreland (1998: 45) identify three types of probability sampling that a researcher may choose from, namely, random, stratified and cluster. Sampling involves taking a representative range of the population and using the data collected as research evidence. The sample should be representative, meaning that each sampled unit will represent the characteristics of a known number of units in the population (Lohr, 2000).
Non probability sampling
In non-probability sampling, chances of being included in the sample are unknown. It does not allow the study’s findings to be generalised. When discussing the results of a nonprobability sample, the researcher must limit his/her findings to the persons or elements sampled. This procedure also does not allow the researcher to calculate sampling statistics that provide information about the precision of the results. The advantage of nonprobability sampling is the ease in which it can be administered. Black (1999; 118) stresses the types of non-probability sampling are stage, purposive, quota, snowball and volunteer or accidental or convenience sampling. Convenience sampling, quota sampling, and judgmental sampling are the three types of non-probability sampling.
This sampling technique was used by the researcher in this study. It allowed the researcher to choose who to include in the sample. Cohen and Manion (1980) stress that in this technique the researcher ’employs her own expert judgment about who to include in the sample. This technique was used from the onset that is in selecting the company to research on; vubanchikwe mine was selected as the organization convenient for the study as it is facing challenges in its purchasing department to meet their customers’ demands, thus satisfying their internal customers. It was also used in the distribution of questionnaires and the carrying out of interviews.
The researcher used judgmental sampling and convenience/ accidental sampling
According to Kerlinger (1992) data analysis is whereby the analyst or the researcher breaks down data into constituent parts to obtain answers to research questions. Data analysis involves breaking up data into manageable themes, patterns, trends and relationships. The aim of analysis is to understand the different constitutive elements of the data through the assessment of the variables that is how does the use of supply chain management information systems in managing supply chains help the company to attain competitive advantage.
This research project therefore explored how supply chain information systems can be enhanced in supply chain management and how consequently can be enhanced to ensure that the supply chain is efficient and effective; this used as a competitive strategy. The researcher used pie charts, tables and graphs to present the collected information. Information was then interpreted and descriptive analysis was used to analyse data and findings were stated on the basis of quantitative analysis; this helped the researcher to detect the errors, bias and mistakes.
This chapter served to elucidate the data collection techniques that were utilized citing the validity and the reliability of each and how data was to be analyzed. The methodology was based on primary data based on interviews and questionnaires. The sampling unit included 35 employees of Vubachikwe mine from 4 departments that are mining, reduction, technical services and engineering. The researcher also eluded the different sampling techniques and chose two under non probability sampling that is judgmental and convenience or accidental sampling. The next chapter will dwell on the analysis and interpretation of the research findings.
DATA ANALYSIS AND INTERPRETATION
The previous chapter provided an explanation of the methodology that was applied in the study that discussed the population for the study as well as the best sampling procedure to be used. The data collection instrument, its advantages and reliability were also outlined. The current chapter presents the data analysis as well as the interpretation of the results in a very clear, concise and comprehensive manner. The findings are to be presented in relation to research questions and objectives. Moreover, the research findings are expressed in relation to the content of the questionnaire, which was the key instrument used to obtain the primary data from the respondents. The questionnaire utilised made use of various types of questions, which included dichotomous questions and the five point Likket scale. TheMicrosoft Excel was used to present and analyse data.
4.1 RESPONSE RATE
35 questionnaires were distributed to Vubachikwe mine using the purposive nonprobability sampling technique. Of those 35 only 29 questionnaires were returned to the researcher. Therefore the response rate was 83%. Six of the questionnaires 17% that were issued were not returned and some were spoiled. Thus the graph below shows the response rate.
Mining reduction engineering technical sevrices Total
issued 10 8 10 7 35
returned 8 6 9 6 29
not returned 2 2 1 1 6
Table 4.1 response rate
Figure 4.1 response rate
4.2 YEARS OF SERVICE
Years of service
less than 5 6–10 11–15 Total
years of service 7 14 8 29
Table 4.2 years of service
Figure4. 2 years of service
Respondents were requested to indicate years of service. As the pie chart above shows of the 24% respondents had been with Vubachikwe mine for less than 5 years, 48%of the respondents fall between 6-10 years, 28% for a period between 11-15 year. This made it easier for the researcher to collect information as the respondents were able to elucidate on the performance of the purchasing over the years.
4.3 PROFESSIONAL QUALIFICATION
The chart below shows the academic qualifications of the respondents
mining Reduction engineering technical services Total
High 2 1 1 2 6
certificate 4 2 2 2 10
diploma 2 3 2 2 9
Degree 1 1 1 1 4
Table 4.3 professional qualification
Figure 4.3 professional qualification
The respondents were asked to indicate their level of education this is so because the researcher selected respondents who are supervisors and foremen. These are the people who are solely responsible with placing orders with the buying office. 14% of the respondents have a degree in their respective fields they are the ones who draw up the weekly critical list; the head of departments. 31% have diplomas these are mainly in the tactical level artisans responsible for giving workers daily duties. 34% have certificates and 21% have high school qualifications these are the semi-skilled workers within certain level of responsible such as monitoring others as they carry out their duties.
4.4 PURCHASING PROCESSES
The respondents asked to rate both the importance their attribute to and their satisfaction with each of the following aspects of the product and service purchasing process.
very satisfied satisfied neutral dissatisfied very dissatisfied total
purchase order completion time 11 9 3 4 2 29
accuracy of purchase order processing 10 8 4 3 4 29
cost savings 5 4 1 8 11 29
item delivery time 4 6 2 9 8 29
ability to source 4 5 2 8 10 29
Table 4.4 purchasing processes
Figure 4.4 purchasing process
The respondents were asked to say how satisfied they were with some of the major processes in the purchasing department. 34% of the respondents were very satisfied with the accuracy of purchase order processing. 38% were also very satisfied with purchase order completion time. This indicates that the first stages in purchasing cycle were being done efficiently. However, the ability to source had 34% of respondents who were very dissatisfied while cost savings had 38% of very dissatisfied respondents when asked reasons of such a shift from the first changes they highlighted issues to do with receiving poor quality products which meant the sourcing part was not being done well. Also, with cost savings they highlighted most of the products bring brought in especially to engineering had to be worked as it could not fit its intended purpose due to poor specifications.
4.5 PURCHASING STAFF
very satisfied satisfied neutral dissatisfied very dissatisfied Total
professionalism 10 9 4 4 2 29
responsiveness 6 4 3 9 7 29
knowledge 9 8 5 4 3 29
Table 4.5 purchasing staff
Figure 4.5 assessment of purchasing staff
The graph above assessed how respondents viewed the purchasing staff in areas of professionalism. On professionalism 52% of the respondents were very satisfied and knowledge 31% of the respondents was very satisfied with the purchasing staff. However, on responsiveness 31% of the respondents were dissatisfied while 24% were very dissatisfied. Respondents stated that the purchasing department was not that much responsive to their demands partly because it fell under the accounting department. Therefore, accounting cares much about the amounts more than issues such as material availability.
Yes slighly no total
Mining 2 5 1 8
engineering 3 4 2 9
Reduction 1 3 2 6
technical services 1 4 1 6
Table 4.6 expectations
The graph below indicates how the respondents felt about the way the purchasing department responded to their demands. The respondents were asked to if whether their felt as if the purchasing department met their demands using yes, slightly and no. The yes option had 24% respondents; slightly option had 55% of the respondents whilst no option had 33% of the respondents. When asked the reasons for choosing slightly the respondents mentioned that at times their orders were being done well whilst at times wrong items were being supplied. The respondents were not so convinced that they expectations were being met.
Figure 4.6 internal customers expectations
4.7 INTEGRATION AND STRATEGIES
The graph below shows the status of the purchasing department in Vubachikwe mine. The respondents were asked to ascertain the status of the purchasing department. 38% of the respondents felt that the department had a low status, 45% o the respondents felt that the purchasing department had an average status and only 17% felt it has a high status. The highest option being the average status when the reason they thought felt it had a average status they felt it had no autonomous since its under finance and also it is not executing its duties as efficiently as possible.
high status average status low status Total
Mining 1 2 5 8
reduction 1 3 2 6
engineering 2 5 2 9
technical services 1 3 2 6
total 5 13 11 29
Table 4.7.1 purchasing department status
Figure 4.7.1 purchasing department status
4.7.2 TACTICAL PURCHASING VS STRATEGIC PURCHASING
The graph shows how the respondents views the purchasing department
strongly agree agree uncertain strongly disagree Disagree
the current organisation purchasing policies have a negative to the organisation 14 7 3 1 4
there is need for the organisation to change its purchasing policies. 17 8 1 0 3
the organisation can greatly benefit from the implementation of strategic purchasing 18 6 3 0 2
Table 4.7.2 tactical purchasing vs strategic purchasing
The graph below indicates how respondents react to the two ways of purchasing, that is, tactical purchasing and strategic purchasing. 48% of the respondents feel the current policies are an disadvantage to the organisation. 56% of the respondents felt that there is need for the organisation to change its policies and move towards embracing strategic purchasing. 62% of the respondents agreed that strategic purchasing can help improve the organization’s overall performance.
Figure 4.7.2 tactical purchasing vs strategic purchasing
4.8 CHAPTER SUMMARY
The chapter aims to present, analyze and summarize the data collected over the period of the research. Areas covered include response rate of the respondents, years of services of respondents, purchasing processes used in the purchasing department, purchasing status and tactical purchasing vs. strategic purchasing. The next chapter 5: Summary, Conclusion and Recommendations, which focuses on drawing conclusions and recommendations based on the main findings of the study.
FINDINGS AND RECOMMENDATION
In Chapter 4, the results of the research were interpreted with the intention of presenting the findings of the study. The research results were also contrasted with what the contemporary literature reveals as discussed in Chapter 3. This was done with a view to determine whether the research results concurred or differed with the literature findings.
The intention of this study was to assess the impact of strategic purchasing on internal customer satisfaction and it was based on Vubachikwe mine; how strategic purchasing can help the purchasing department meet its internal customers’ expectations and demands and overall influence the organization’s performance. The following are the research objectives that the study addresses
5.1SUMMARY OF FINDINGS
The findings on the impact of strategic purchasing on internal purchasing in Vubachikwe mine Gwanda served to address the objectives of the study and were divided into the following sections:
5.1.1 RESEARCH OBJECTIVES
To identify the purchasing policies that hinders the implementation of strategic purchasing?
To identify ways of how strategic purchasing can be used to enhance internal customer satisfaction?
To identify the benefits of implementing strategic purchasing as a tool of improve internal customer satisfaction?
To establish the relationship which exists between strategic purchasing and internal customer satisfaction?
Purchasing policies that hinder strategic purchasing
The researcher noted that most studies focused mainly on strategy implementation as a whole rather than strategic purchasing. However, the researcher accepted that these overall barriers of strategy implementation also apply to strategic purchasing implementation. Thus, to establish challenges faced by the tactical purchasing, the researcher focused on the processes of the purchasing department. The researcher discovered the first stages of the purchasing cycle, such as, need recognition, sourcing and supplier selection, were done well, however the last stages, such as, expediting, delivery and payment, were not being done effectively.
Benefits of implementing strategic purchasing as a tool of improve internal customer satisfaction.
The researcher gathered that strategic purchasing can help improve the productivity of the organisation as well as increase safety precautions. Since the study was conducted in a mine safety is of paramount importance in the mining industry.
To establish the relationship which exists between strategic purchasing and internal customer satisfaction.
The study revealed that there is interdependence between strategic purchasing and internal customer satisfaction. Tactical purchasing is all about getting the job done and cares less about getting it done so as to meet the expectations and demands of the customers.
The study has revealed that when the purchasing department fails to do well the departments which it serves get frustrated. It is of importance that it satisfies its internal customer so that it improves the company’s bottom line. This study has revealed that strategic purchasing can help satisfy its internal customers. Hence, strategic purchasing has an positive impact on internal customer satisfaction
In chapter 1 the main objectives of this research project were identified and the pivotal point now will be making recommendations based on the research findings. To ensure that internal customers are satisfied by the purchasing department so as to increase organizational productivity and attain competitive advantage, Vubachikwe mine should do the following:
SUPPLIER RELATIONSHIP MANAGEMENT
Respondents highlighted that there were very dissatisfied by item delivery: this is heavy reliant on the supplier. Poor relationship between the purchasing and suppliers is one of the reasons why the organisation in experiencing longer lead times. Hence, Vubachikwe mine should invest in maintaining good relations with by paying credits on time. Also, the organisation can improve its relationship with suppliers through supplier development.
Ability to source was noted by the researcher as another process which dissatisfied internal customers. This is caused by the number of poor quality products that being received into stores. Engineering being the most affected because it deals with strict specifications. Hence, some of the products it receive are usually of wrong specifications, therefore at the end there are forced to modify brand new items so as to make fit their intended purposes.
It is important for the organisation to implement strategic purchasing, that way it can always find ways to come up with its best spend analysis without compromising its customers’ needs. Spend analysis enables the department to look at its expenditure and find ways to lessen expenses such as the make or buy decisions, outsourcing, sub-contracting.
It is important for the organisation to accord the purchasing department with a high status. This will help the customers to have trust and faith in the department. When customers lose faith in a department the researcher realized they end up doing some of the duties of the purchasing department, such as, sourcing, because they think the department cannot find the best suppliers who can supply what they need. A high status will build up the trust, confidence and faith in internal customers.
5.4 AREAS OF FURTHER RESEARCH.
The purchasing function is still evolving from being a tactical department to being a strategic department. Thus, many studies focus on satisfying the external customer ignoring the internal ones; hence, there is need for a rigor study on how the purchasing department can satisfy its internal customers. The performance of internal customers especially in the mining industry relies heavily on availability of material which is solely responsibility of the purchasing department. Thus, their overall output affects the productivity of an organisation.
As technology is fast growing; many companies are moving towards eradicating traditional purchasing methods to electronic purchasing. Hence, another possible area of study is to focus on how electronic procurement can help satisfy the internal customers in a mining industry.
5.5 CHAPTER SUMMARY
This research identified policies that hinder strategic purchasing, benefits, ways and the interdependence of internal customer satisfaction. It can be noted that Vubachikwe mine faces challenges in its purchasing processes resulting in them failing to meet their customers’ expectations which can be used as a weapon to increase productivity. It can be noted that there is need for Vubachikwe mine to adopt strategic purchasing so as to fully yield the benefits and to coordinate its supply chain using the actions brought by strategic purchasing to ensure flexibility and efficiency. Recommendations were therefore outlined which included supplier development, spend analysis, supplier relationship management these can help change the face of the purchasing department and also aid the organisation the ability to meet its targets. Because satisfying internal customers all results in increase productivity and at the end of the day an increase in the bottom line.
FACULTY OF COMMERCE
DEPARTMENT OF BUSINESS MANAGEMENT
Bachelor of Commerce Honours Degree in Purchasing and Supply
Please kindly answer each statement carefully and honestly and decide as to what extent you “agree” or “disagree” with each statement. You are also welcome to add any comments you may have in the allocated spaces.
Most importantly be informed that all information collected will be highly confidential and will only be used for the purposes of this study.
Please indicate your response by putting a tick in the appropriate box
2. Age (years) 18 -25 26-35 36-45 +46
Other (Specify)……………………………. ………..
4. Years of service in the organisation ……………………
Please rate both the importance you attribute to and your satisfaction with each of the following aspects of the product and service purchasing process
Very important Important Neutral Unimportant Very unimportant Very satisfied Satisfied Neutral Dissatisfied Very dissatisfied
PO completion time
Accuracy of PO processing
Item delivery time
Ability to source
Please rate your satisfaction with the following aspects of the purchasing services staff
Very satisfied Satisfied Neutral Dissatisfied Very dissatisfied
What suggestions do you have to improve the procurement process? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
Which department do you belong to: Engineering
Are your demands and expectations as a department being met by the purchasing department?
Yes slightly no
What benefits will the organisation enjoy if the purchasing department was meeting your expectations?…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
To what extent do you agree with the following statements Strongly agree Agree Uncertain Strongly disagree disagree
The current purchasing policies have a negative impact to the whole organisation.
There is need for the organisation to change its purchasing policies.
The organisation can greatly benefit from the implementation of strategic purchasing.
Integration and strategies
What can you say is the nature of the Purchasing department in Vubachikwe mine?
High status low status
Do you think there is a link between strategic purchasing and internal customer satisfaction?
If so, how would the organisation gain from interrelationship of strategic purchasing and internal customer satisfaction?
To what extent do you agree with the following statements? Strongly agree Agree Uncertain Strongly disagree disagree
The current purchasing method enables the organization to cut costs.
Internal customer satisfaction can help improve the organization’s overall performance
Strategic purchasing can help improve the overall performance of the purchasing department
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