EFFECT OF PROCUREMENT PRACTICES ON PERFORMANCE OF SELECTED PRIVATE UNIVERSITIES IN OSUN STATE

• Background of the Study

Procurement has seen a lot of growth leading to the formation of procurement related bodies such as the Institute of Supplies Management and the Chartered Institute of Purchasing and Supply. There has been increased pressure for the merging of procurement procedures and objectives with the organization’s goals. The supply chain has been directly linked to the overall company performance and this has therefore made procurement practices vital to company success. Procurement practices positively impact an organization’s financial performance, the success of a new product depends on procurement and supplier involvement. Most organizations use a substantial amount of their income in procurement and therefore recognize the importance of strategic procurement practices Carr and Pearson (2002). Directors and heads of procurement department greatly influence supplier evaluations and the drafting of specifications to ensure the organization gets the best value for its money.

Massive changes are occurring in the operating models and marketing strategies of public sector organizations. Procurement greatly impacts how an organization achieves its objectives. According to Leenders et al (2008), purchasing adds value to the organization. Procurement practice is an area that can be improved to further contribute to organizational performance. Organizations tend to choose procurement procedures that are familiar to them; they should instead choose the ones most suited and most beneficial to their organizations success. Narasimhan and Kim (2002), states that there has been increased pressure for purchasing integration. Purchasing integration links purchasing practices to organizational performance Gattorna, 2006). The direct link of operational efficiency and supply chain to organizational performance therefore means that the adoption of procurement practices is crucial to organizational success. Consolidation of the entire procurement process leading to the implementation of procurement practices such as, green purchasing, just in time delivery (JIT), total quality management (TQM) and e-procurement is necessary so as to boost the overall organizational performance. Streamlined procurement systems lead to efficiency and increase the confidence of employees, customers and stakeholders of the organization. Shifting away from traditional purchasing and moving into modern and more efficient procurement practices leads to continuous improvement and benchmarking. This is where an organization measures itself against the leading organizations in its class. Procurement is no longer a process but a strategic function in the organization, it reduces cost and achieves maximum savings for the organization. Organizations should always benchmark against the ‘best in class’ and implement continuous improvement in its processes (Guth, 2010). Some of the procurement practices that organizations can engage in include: commitment to green purchasing, commitment to just in time delivery, commitment to total quality management and e-procurement. Organizations must broaden their view of productivity from the predictable company oriented view to a dual company – customer perspective. Procurement should be deeply involved in the design and implementation of Sustainable Procurement Policies focusing on how Environmental issues and issues relating to other aspects of Society and Economy can be integrated in the procurement process activities (Hsu & Hu, 2008). Considering a wide variety of performance measures is important when defining organizational performance. Organizational performance should be measured under various perspectives; these include quality, efficiency, productivity, profitability and sustainability. Procurement practices should be looked at as part of organizational strategy. Procurement should be involved in the budgeting process, supplier choice and consolidation, concern for the environment and issues touching on quality and technological advances. Stakeholders are increasingly demanding that organizations should address and manage the environmental and social issues that impact their organization (Carter, 2011). Procurement managers are best positioned as they can positively or negatively impact social performance and the environment through performance evaluation and supplier selection. The government should therefore provide incentives for them to have better and profitable working environments. These may include advancement of long term working capital at subsidized interest rates and provision of cheap raw materials for their manufacturing sector.