SUPPLIER RELATIONSHIP MANAGEMENT AND FINANCIAL PERFORMANCE OF SELECTED MANUFACTURING ORGANIZATIONS IN MOGADISHU, SOMALIA

ABSTRACT The purpose of the study was to examine the effect of supplier relationship management on financial performance of organizations. The study objectives were to determine the effect of supplier development on financial performance of manufacturing firms Somalia, effect of supplier segmentation on financial performance in manufacturing firms in Somalia and to examine the effect of information sharing on financial performance in manufacturing firms in Somalia. The study was conducted in the manufacturing organizations of Mogadishu whose financial performance had worsened; data was collected based on the questionnaires that were administered to the staff of the manufacturing organizations who were 172. The study was based on a descriptive research design were the research was presented in frequency, percentages, mean, standard deviation and regression analysis. The study findings indicate that supplier development had a 20.6% effect on financial performance of selected manufacturing organizations in Mogadishu, the effect was also significant (Sig.0.035). Supplier development had only 0.8% effect on financial performance of selected manufacturing organizations in Mogadishu, the effect was insignificant (0.273) while information sharing had a significant 5.4% effect financial performance of manufacturing firms in Mogadishu Somalia (Sig=0.041). The study concludes that though supplier development is practiced to a certain extent, it has some significant association with performance of the manufacturing companies, this imply that improving supplier development can generate performance. On the second objective the study concluded that supplier segmentation was existing and had low effect on financial performance of the organizations given that it was less effective and managed on the third objective information sharing showed statistically significant association with financial performance and thus increasing information sharing were more likely to result in improved performance. The study recommends that firms should strategically manage their supply base on the basis of value of spend or nature of items being purchased. This will enable the firms to categorize their suppliers and thus proper treatment accorded to every supplier based on their importance. The study further recommends the need for the need to develop clear supplier development programs. This will enable firms to engage in activities that improve the performance of suppliers thus resulting in better performance of these firms and Information sharing was found to increase performance of buying firms. It is therefore recommended that manufacturing firms should share important information with its suppliers in order to improve on their performance.

TABLE OF CONTENTS

DECLARATION ....................................................................... i

APPROVAL ............................................................................... ii

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

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

ACRONYMS ............................................................................ v

ABSTRACT ........................................................................ ix

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

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

1.0 Introduction ....................................................... 1

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

1.1.1 Historical Perspective ........................................ 1

1.1.4 Contextual Perspective ........................................... 5

1.2 Statement of the Problem ............................................ 6

1.3 Purpose of the study ....................................... 7

1.4 Objectives .......................................................................... 7

1.5 Research Questions ............................................. 7

1.6 Hypothesis ....................................................................... 7

1.7 Scope of the study ................................................ 8

1.7.1 Geographical Scope.......................................... 8

1.7.2 Subject Scope ........................................ 8

1.7.3 Time Scope ............................................................... 8

1.8 Significance of the study .......................................... 8

1.9 Operational Definition of key terms.................. 9

CHAPTER TWO ........................................................ 11

LITERATURE REVIEW ......................................................... 11

2.1 Introduction ................................................................. 11

2.1 Theoretical Review .............................................. 11

2.2 Conceptual Review ............................................. 12

2.3.1 Effect of supplier development on financial performance of organizations .................... 13

2.3.2 Effect of supplier Segmentation on financial performance organizations ....................... 16

2.3.3 Effect of information sharing on financial performance of organizations ....................... 17

2.4 Effect of Supplier relationship management on financial performance of the organizations ...................................... 19

2.5 Research Gaps ................................................................. 24

CHAPTER THREE ................................................................... 25

METHODOLOGY .................................................................. 25

3.0 Introduction ......................................................... 25

3.1 Research Design ....................................................... 26

3.2 Resear.................................. 26

3.2.1 Sample Size ............................................................... 26

3.2.2 Sampling techniques and Procedure ................... 27

3.3 Data Collection Methods .............................................. 27

3.3.1 Survey.............................................................. 27

3.4 Data collection Instrument ............................... 27

3.4.1 Questionnaire ....................................................... 27

3.5 Pretesting (Validity and Reliability) .................... 28

3.5.1 Validity of Research Instrument ................ 28

3.5.2 Reliability of the instrument ................................ 29

3.6 Data Collection Procedure ....................................... 29

3.7 Data Analysis .............................................................. 29

3.8 Ethical Consideration ................................................... 30

CHAPTER FOUR ........................................................... 31

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA ............ 31

4.0 Introduction .......................................................... 31

4.1 Response Rate ................................................................ 32

4.2 Demographic traits of respondents .................. 32

4.2.1 Gender of respondents ........................... 32

4.2.2 Findings on education of respondents ............. 33

Table 4.3: Show education of the respondents ................. 33

4.2.3 Age of respondents ................................................... 34

4.2.4 Time of work ........................................................... 34

4.3.1 Effect of supplier development on financial performance of manufacturing firms in Mogadishu Somalia ................................................... 35

4.3.1 Supplier development in manufacturing organizations in Mogadishu Somalia .............. 35

4.3.2 Financial performance of selected manufacturing organizations in Mogadishu Somalia. ............................ 37

4.3.3 Regression Test Results (Supplier development on financial performance) ................... 39

Table 4.8: Regression Test Results (Supplier development on financial performance) ........... 39

4.4 Effect of supplier segmentation on financial performance in manufacturing firms in Mogadishu Somalia. .............................................. 41

4.4.1 Supplier segmentation in manufacturing organizations in Mogadishu Somalia .............. 41

4.4.2 Regression Test Results (Supplier segmentation on financial performance) ................... 43

4.5 Effect of information sharing on financial performance in manufacturing firms in Mogadishu Somalia ............................ 44

4.5.1 Information sharing in manufacturing organizations in Mogadishu Somalia .................. 44

4.5.2 Regression Test Results (Information sharing on financial performance) ....................... 46

Table 4.12 Regression Test Results (Information sharing on financial performance).............. 46

4.6 Effect of supplier relationship management on financial performance of selected manufacturing companies in Mogadishu Somalia. ........................ 48

CHAPTER FIVE............................................ 51

DISCUSSION OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS .................... 51

5.0 Introduction .................................................... 51

5.1 Discussion of Findings ................................... 51

5.2 Conclusion ............................................................. 53

5.3 Recommendations ....................................................... 54

5.4 Limitations of study ................................................ 54

5.5 Areas of further research ............................................. 55

REFERENCES ................................................................... 56

Appendix i: Research Questionnaire ..................... 61

Appendix ii: Time Frame ...................................... 65

Appendix iii: Budget ...................................................... 66