FACALTY OF COMMERCE

DEPARTMENT OF

RETAIL AND LOGISTICS MANAGEMENT

BY

LEEROY T KUBVORUNO

R182345G

RESEARCH PROPOSAL

THE EFFECTS OF SUPPLIER SELECTION ON ORGANISATIONAL PERFOMANCE

OF SPAR ZIMBABWE

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Table of contents
1.0 INTRODUCTION........................................................................................................................1
1.2 BACKGROUND OF STUDY...............................................................................................................1
1.3 STATEMENT OF THE PROBLEM......................................................................................................3
1.4 RESEARCH OBJECTIVES..................................................................................................................4
1.5 RESEARCH QUESTIONS..................................................................................................................4
1.6 ASSUMPTIONS OF THE STUDY.......................................................................................................5
1.7 LIMITATIONS OF THE STUDY..........................................................................................................5
1.8 JUSTIFICATION OF THE STUDY.......................................................................................................5
1.9 SCOPE OF THE STUDY....................................................................................................................6
1.10 DEFINITION OF KEY TERMS..........................................................................................................6
1.10.1 Supplier Selection.....................................................................................................................7
1.10.2 Organizational Perfomance......................................................................................................7
1.11 THEORETICAL FRAMEWORK........................................................................................................8
1.11.2 Partner Selection Theory..........................................................................................................9
1.12 BRIEF LITERATURE REVIEW........................................................................................................10
1.12.1 The relationship between supplier selection and organizational performance......................10
1.12.2 Benefits of supplier selection..................................................................................................10
1.13 RESEARCH METHODOLOGY.......................................................................................................11
1.14 PROJECT FINANCIAL BUDGET.....................................................................................................15
REFERENCES......................................................................................................................................16

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1.0 INTRODUCTION

This research is based on the researcher's attempts to investigate the implications of supplier
selection on SPAR Zimbabwe's organizational performance. Supplier acquisitions require a
greater commitment of a company's financial capital and are critical to its success. Supplier
selection is one of the supply chain operations that have an impact on the entire supply chain
process; it allows businesses to run a more effective and versatile supply chain, which improves
customer satisfaction and operational efficiency. As a result, it is in the researcher's best interests
to learn about the implications of provider selection on organizational performance. Therefore, in
this research the researcher will highlight on the background of the study which will show the
developments made in service innovations, the statement of the problem to be researched on, the
research objectives, the research questions, and justification of this study, scope of this study as
well as limitations and assumptions of the study.

1.2 BACKGROUND OF STUDY

Supplier selection is one of the classic areas of research in supply chain management. It’s
indicated in past reviews, of literature on supplier selection that there is a strong diversity in the
supplier selection and the systematic approaches to supplier selection methodology (Ho et. al.,
2010).

From a global perspective, supplier selection encompasses the myriad activities used to evaluate
capability of potential suppliers and then to select to configure a buyer a buyer’s supply chain for
long-term competitive advantage (Choi and Hartley, 1996; Vonderemse and Tracey 1999).

In selecting the right suppliers, an organization establishes a set of evaluation criteria to be used
for comparison of potential suppliers. Supplier selection is key to procurement process and
represents a major opportunity for an organization to reduce costs, increase effectiveness and
enhance customer satisfaction. Weber (2008), noted that organizations are constantly under
pressure to find ways to cut material and production costs through engaging in strategic supplier
selection process and evaluation.

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According to Nadir (2012) supplier evaluation is perceived as a tool which provides the buying
firm with a better understanding of “which suppliers are performing well” but studies reveal that
after having carried out an in depth supplier evaluation plus appraisal coupled with the enactment
of the Public Procurement and Disposal Act of 2005 and other policies on supplier evaluation,
inefficient still exist ranging from supplies being made halfway or even termination of contracts
before conclusion.

In Malaysia, for instance Junli, (2008) conducted a study to assess the impact of supplier
evaluation on business performance among private hospitals. In Nigeria, the study by Akenroye
et.al. (2012) on supply chain practices identified supplier evaluation as a critical supply chain
activity that every organization must engage in. In Kenya, the Public Procurement and Asset
Disposal Act, 2015 and Regulations 2006 serves as a guide that provides guideline and
procurement procedure and supplier evaluation for Public procuring entities (Rotich, 2015).

Lebans & Euske (2006), provide a set of definitions to illustrate the concept of organizational
performance: performance is a set of financial and non-financial indicators which offer
information on the degree of achievement of objectives and results. According to (Myla, 2010)
organizational performance can be indicated by the cost effective control alternatives applied to
rectify cost inefficiencies or, in short, minimize cost while maximizing profits.

For a long time, the traditional approach to supplier selection has been to select solely on the
basis of price. The criteria have however evolved in the recent years to include factors such as
financial ability, and production capability and human resource base have been added to the
traditional factors of quality, delivery and cost. Mwikali & Kavale (2012), in their study revealed
that cost factors, technical capability, quality assessment, organizational profile, service levels
and risk factors in order of relative importance are key factors affecting supplier selection in
procurement management.

Ntayi (2009) observes that millions of dollars get wasted due to inefficient and ineffective
procurement structures, policies and procedures as well as failure to impose sanctions of
procurement rules thus resulting in poor service delivery.

Supplier selection has become an integral function of any organization, seeking to identify,
evaluate and contract suppliers. Organizations are often outsourcing non-core activities, leading

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to reliance and dependence on suppliers. However, question arises as to the criteria used by
public sectors in selecting and evaluating suppliers. It is in public domain that public sector’s
runaway

The performance of the suppliers substantially impacts on the effectiveness and efficiency of the
buying firm and it's of great importance (Fredrikisson et al, 2011). According to Handfield et al,
(2009), one reason for supplier selection is that of product development process, meaning that as
the product development cycle reduces, suppliers are also required to reduce the delivery cycle
or else competent ones will be sought for and those that do not meet the criteria set by firms are
supposed to be weeded out (Trevelen 1987). Dwyer (1993) is in agreement that the goal of
supplier evaluation is to secure valued resources and technologies of the selected supplier in
situations that preclude the option of vettical integration due to resource limitations and
managerial constraints. Apart from being able to harness the strengths and skills of suppliers to
their advantage, firms that conduct supplier evaluation also benefit from improved quality and
process performance and continuous cost reduction (Newman 1988). Remarkably, there has not
been much research on the relationship between supplier selection and organizational
perfomance in Africa and none for Zimbabwe.Henceforth, this study will try to bridge a
knowledge gap regarding the effect of supplier selection and organizational performance of
SPAR Zimbabwe.

1.3 STATEMENT OF THE PROBLEM

Bello (2003) asserts that experts agree that no best way exists to evaluate and select suppliers,
and thus organizations use a variety of approaches. The overall objective of the supplier
evaluation process is to reduce risk and maximize overall value to the purchaser. There is poor
performance in relation to the successful value for money creation. The procurement has failed
to enhance financial savings, reduction in costs while maximizing value of resource usage. An
organization must select suppliers it can do business with over an extended period of time. The
industrial purchasing function remains amongst the most critical activities for ensuring the long-
term viability of a firm. Companies have been pursuing improvements in purchasing function in
order to improve their overall performance (Kinney, 2000). Moreover there is no research
linking the procurement function performance with value for money, timely delivery, cost
management and quality dimensions of supplier selection, in particular in Spar Zimbabwe. A
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research study is therefore needed to investigate and establish the effects of supplier selection
and factors that needs to be considered in selection of suppliers. Furthermore, in spite of having
various studies undertaken on supplier selection by various researchers, none of the studies have
particularly addressed the effect of supplier selection on organizational performance in SPAR
Zimbabwe. This study filled this gap by exploring the effects of these four dimensions of
suppliers on organizational performance in Spar.

1.4 RESEARCH OBJECTIVES

The objectives of the study will be divided into two parts namely primary and secondary
objectives.

1.4.1 Primary Objectives

The main objective of this study is to investigate the effects of supplier selection on
orgainazational performance of Spar Zimbabwe

1.4.2 Secondary Objectives

This study will be undertaken;

i. To identify factors that affect supplier selection of SPAR Zimbabwe

ii. To identify different criteria used for supplier evaluation in SPAR Zimbabwe
iii. To explore the benefits of supplier selection on the organizational performance
iv. To establish the relationship between supplier evaluation and organizational performance

1.5 RESEARCH QUESTIONS

To achieve the aforementioned objectives, the following questions are going to be asked;

i. What are the factors that affect supplier selection of SPAR Zimbabwe?
ii. What are the different methods of supplier evaluation used?
iii. What are the benefits of supplier selection on the organizational performance?
iv. What is the relationship between supplier selection and business performance?

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1.6 ASSUMPTIONS OF THE STUDY

The research will be centered on the following assumptions:

 Assume that the selected group will be a true representative of the population.
 Selected respondents will respond in time.
 There will be support from respondents in information gathering
 There will be enough capital and resources to finance the research.

1.7 LIMITATIONS OF THE STUDY

 Given the limited time frame of the research and the resource constraints characterized
with the current economic hardships in Zimbabwe the researcher will face time
management problems due to limited time to carry out the study
 The researcher is mostly likely to face challenges when accessing the data since some
information is highly confidential and some people are not willing to help with the
completion of questioners so the research will be limited. To overcome this constraint the
researcher will need to clearly outline the purpose of the research and the benefits that
can be derived if the research is carried out to completion. The researcher needs also to
reassure the respondents of confidentiality
 The research will focus on the effects of suppler selection on organizational performance
of Spar Zimbabwe only and does not cover other manufacturing firms.

1.8 JUSTIFICATION OF THE STUDY

The researcher will focus on investigating the effects of supplier selection on the organizational
performance of Spar Zimbabwe. The researcher will try to give an assessment of barriers,
creterias and benefits of supplier selection on organizational perfomance. The research will
benefit various companies and individuals in the following ways:

a) Suppliers

The study will be significant to suppliers especially in the small and medium size categories
as it will shed light on what Spar consider in a supplier before selecting potential suppliers.

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 b) The Organization

The study will also benefit the organization in enhancing effectiveness and efficiency in
public entities and make a contribution to the field of knowledge on supplier selection and
organizational performance.

c) Other researchers

The research will be useful to researchers who will study this field of research or any related
field to this research. That is, the study should add value to existing literature and may also
be useful as reference to other fellow scholars and researchers in this area of research. In this
regard, future academics will also use this study to benchmark further studies on supplier
evaluation in manufacturing firms. Thus, the research will add literature on effects of
supplier selection on the organizational perfomance. This will result in the expansion of the
board of knowledge such that future researchers and scholars will borrow ideas for further
research projects.

1.9 SCOPE OF THE STUDY

The study mainly focused on the relationship between supplier selection and organization
performance, the instruments utilized for assessing suppliers, and the benefits to contracting
authorities due to the range of factors affecting organization success.

The information for this study will obtained from SPAR Zimabwe departmental offices and staff,
with the procurement and finance unit serving as the primary source of information, with all
managers from senior procurement, procurement officer, and assistant procurement officer
serving as sources of information. The study will run from 2012 to 2020, a period of eight years,
and will use literature on the subject under investigation obtained from publications. This
timeframe was chosen because it was around this time that SPAR began to evaluate suppliers in
order to improve procurement and overall organizational performance.

1.10 DEFINITION OF TERMS

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1.10.1 Supply chain
Ayers (2001) suggest that a supply chain is a life cycle processes comprising physical,
information, financial, and knowledge flows whose purpose is to satisfy end-user requirements
with products and services from multiple linked suppliers. According to this definition, the
supply chain encompasses processes that cover a broad range of activities including sourcing,
manufacturing, transporting, and selling physical products and services. Life cycle refers to both
the market life cycle and the usage life cycle and these are not the same for durable goods and
services. Therefore, product support after the sale becomes an important supply chain component
(Ayers, 2001).

1.10.2 Supplier selection

Supplier selection is the process by which suppliers are inspected, evaluated and selected to
eventually become part of the supply chain of an organization (de Boer, 2012).

1.10.3 Supply chain management

Supply Chain Management is a set of approaches utilized to efficiently integrate suppliers,

manufacturers, warehouses, and stores; so that merchandise is produced and distributed at the
right quantity, to the right locations, and at the right time, in order to minimize system wide costs
while satisfying service level requirements (Bozarth and Handfield, 2008)

1.10.4 Organizational performance

This refers to corporate performance measured in accordance with standard or prescribed

measures, including cycle times, productivity and regulatory compliance, of the efficiency,
performance and environmental responsibility (Carton, 2004).

1.10.5 Organizational culture

Alvesson (2012) defines organizational culture as a complex set of values, beliefs, assumptions,
and symbols that define the way in which a firm conducts its business

1.11 THEORETICAL FRAMEWORK

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This section highlights the principles and concepts that have been explored and brought out by
various authors in existing literature on suppler selection and organizational performance.

1.11.1 Grey System Theory

Grey system theory was first introduced in early 1980s by Deng (1982). According to Grey
System Theory, in a practical business environment, in most instances, supplier evaluation takes
place in an environment with less than perfect information. As such, there is some level of
uncertainty in the decisions related to supplier evaluation. In such an environment, it is important
to develop certain indicators or criteria; qualitative or quantitative that the supplier can be
subjected to before selection. From this theory, the grey correlation analysis model with seven
progressive steps was developed (Zou, 2008). These steps include; grey generation aimed at
gathering information on grey aspects, grey modeling done to establish a set of grey variation
equations and grey differential equations, grey prediction aimed at achieving a qualitative
prediction, grey decision, grey relational analysis and grey control (Tsai, 2003).

The theory of Grey System considers the following factors in deciding on the best supplier;
Existence of key factors important to the buyer, the numbers of factors are limited and countable
and can be directly attributed to potential suppliers, in dependability of factors and factor
expandability. The theory applies the principle of series comparability to generate a grey
relation. An evaluation matrix may be developed to facilitate this process. The best supplier is
selected by choosing a goal and weighting the values of all evaluation factors based on the
characteristics of materials to be sourced based on demand patterns (Zou, 2008). In a supplier
selection environment, this theory can be applied during evaluation of critical performance areas
by the procuring entities.

This theory has relevance to the study as it surrounds the whole process of supplier selection as it
mainly provides a criteria and procedure for selecting a supplier. The theory has a practical and
positive benefit of improving effectiveness in the selection process because it provides criteria
for selecting the factors to look for in a supplier and when a good supplier is selected; this
positively affects supply chain performance which affects final performance of the organization.

1.11.2 Partner Selection Theory

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The theory of partner selection basically routes for a step to step from the start point to the finish
point selection process. It provides for clear guidelines on selecting suppliers in this scenario.
Saffu and Mamman (2000) postulated that partner selection theory is restricted and concentrates
on the criteria for selecting partners rather than on the procedure of partner selection.
Furthermore, the authors assume a rational decision-making process based on very specific
selection criteria. Depending on the objective of the agreement as a whole, specific partner
characteristics are more or less valuable. A coherent selection criterion is developed to guide the
selection process, often prioritizing the partner characteristics of significance. This criterion
determines the partners or the suppliers who are selected.

Angeles and Nath (2000) collected information on organizations selection criteria of their trading
partners. They found out that strategic commitment and trading partner flexibility were among
the factors that determine selection of trading partners. Rising economies industries from
Mexico, Poland and Romania considered economic assets, technical capabilities, intangible
assets and readiness to share knowledge were the main elements in selection of partners.
Developed economies organizations from Canada, France and the United States of America
picked their partners based on exceptional competencies, local market knowledge and
accessibility of the partners (Saffu&Mamman, 2000). According to this theory, suppliers should
be selected following clearly established procedure. Also suppliers should have certain
characteristics that match the needs of the procuring entity such as Value for Money, Quality of
products and Services, economic price and Process Cost Management.

1.12 BRIEF LITERATURE REVIEW

This presents a critical review of available literature on supplier selection and its effect on
organizational performance. However, the literature is restricted to Spar business

1.12.1 The relationship between supplier selection and organizational performance

Since the organization's suppliers can affect the price, quality, and delivery reliability of its
products, supplier selection is widely regarded as the most important responsibility of the
procurement function (Li, 2008). Organizations believe that effective supplier selection would
help them save money on product and material prices while maintaining good quality and after-

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sales service (Soonmez, 2006). The implication is that for successful supply chain management,
an effective appraisal should be in place (Li, 2008).

Supplier assessment has a number of advantages, including the capacity to use suppliers'
strengths and talents to the buyer's advantage (Dwyer, Schurr, and Oh, 1987), enhanced quality
and process performance, and continual cost reduction, among others (Newman 1988, Wilson,
Dant, and Han). Supplier evaluation is also important in strategic sourcing, supplier
management, and achieving competitive advantage, according to CIPS (2007). ompanies that
appraise their suppliers gain better visibility into supplier performance, uncover and address
hidden cost drivers, reduce risk, gain a competitive advantage by reducing order cycle times and
stock, gain insight into how to best leverage the supply base, and align practices between
themselves and their suppliers (Gordon, 2006).

1.12.2 Benefits of supplier selection

An effective supplier evaluation procedure has a number of advantages, including the prevention
of poor supplier performance. The advantages often include buying from suppliers who meet
high product and service quality standards while also providing sufficient capacity and business
stability. Understanding supplier performance and business practices can assist decrease business
risks, especially when firms' reliance on key suppliers grows. Risks can be both financial and
operational, and they get worse as you get farther away.

Furthermore, supplier evaluation can assist consumers and suppliers in identifying and
eliminating hidden supply chain cost drivers. In terms of corporate social responsibility, the
supply chain is full with potential dangers that can come from suppliers. Better communication
between suppliers and customers can help to mitigate some of these risks. Customers may help
suppliers take waste and inefficiency out of the business by better understanding supplier
performance and business practices and processes, resulting in higher quality suppliers and lower
costs. Environmental issues, faults or a lack of materials, a lack of cash flow, and other factors
can threaten the flow of supply. It's hard to eliminate all hazards, but by monitoring the supplier's
performance on a regular basis, you can take steps to keep them at bay. The review process
allows you to communicate with suppliers so that you can identify and manage any
hazards (Lyson and Farrington 2006)

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1.13 RESEARCH METHODOLOGY

The research will be as follows:

1.13.1 Research Design

Cooper & Schinder (2003) defines a research design is a plan and structure of investigation of
information so as to obtain answers to research questions. The research will adopt a descriptive
research design. According to (Cooper and Schindler 2003), a descriptive study is concerned
with finding out the what, where and how of a phenomenon. The design is suitable to establish
the effects of supplier selection on organizational performance. It emphasizes on quality in the
collection and analysis of data.

1.13.2 Population of the Study

Target population refers to the total membership of a defined class of people, objects, or events
(O'Leary, 2004). The target population of the study will be the personnel under Procurement, and
Finance from SPAR .The target population of this study comprised of 40 procurement and
finance staffs within SPAR Zimbabwe. The study targeted this group because they are involved
in executing or managing day to day functions of procurement in Spar Zimbabwe.

1.13.2 Research Sample

The sampling frame described the list of all population units from which the sample was selected
(Fei Shir, 2015). The research employed Stratified random sampling technique in coming up
with a sample size of 36 respondents from a total of 40 in specific departments. In arriving at
adequate sample size, Yamane (1967) formula was used as follows to arrive on the number of
respondents to be sampled:

n = N
1+ N (e)2
Where;
N= Population;
e = margin of error or significance level at 0.05,

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n = sample size
Therefore,
= n = 40
1+ 40 (0.05)2

= 36 respondents

1.13.3 Sampling Techniques

The researcher in carrying out an investigation in the effects of supplier selection on

organizational performance of SPAR Zimbabwe will use stratified random sampling method as
provides better coverage of the population since the researcher have control over the subgroups
to ensure all of them are represented in the sampling.Primary and secondary methods will be
used in data collection.

1.12.4 Primary data

The main reason behind the use of primary data by the researcher is to come up with original
reliable and unbiased data. The researcher will also find it easier to collect data at any given time
using the most sufficient methods. However, this type of data collection requires many resources
such as time, capital and need a lot of corporation from the respondents

Questionnaires

The questionnaire will be consisting structured questions which are simple and relatively easy to
administer. The questionnaire seeks to assess the views of the respondents without guiding them.
Carefully chosen questions will be enlisted to aid respondents to answer only questions which
are related to the topic under study. The researcher will distribute 36 questionnaires to selected
personnel in the SPAR Zimbabwe. The researcher will prepare questions which answers the
research questions on the impact of service innovation and customer service. The questions seek
to dig deeply into the service innovation products and the questions will be very flexible.

1.13.5 Secondary Data

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The researcher will make use of the published documents, journals, newspapers and articles in
carrying out the research; basically it helps in the review of the related literature and comparing
the information of different authors and/or researchers. Secondary data is also less costly.

1.13.6 Data validity and reliability

In designing the research instruments, validity, reliability and objectivity of the information
obtained was the most considered element. To ensure data reliability the researcher will use the
Cronbanch’s alpha test to verify data reliability of which it is reliable when it is above 0.7. To
ensure validity of research instruments the researcher articulated questionnaire and interview
questions that are in line with the objectives of the research. Questionnaires were pre-tested to
reveal uncertainties, conflicting questions and to weed out questions not relevant to the study.
Questions that lacked clarity were rectified and clarifications were made on how to complete
questionnaires. Respondents were given the chance to answer the questions while the researcher
is not present (except when they willingly wanted to do so during his presence). Furthermore, no
appeals concerning the names of respondents, this gave them secrecy and liberty which
generated more dependable and effective information.

1.13.7 Ethical considerations

In carrying out this research study, the researcher acknowledges that ethical concerns may arise
at different stages of the entire research project. Saunders et al (2009) implores that ethics in
research have grown rapidly in the past years, and it is a matter of concern to the researcher.
Research ethics refers to generally accepted norms, values and beliefs in research projects.

Prior to data collection, relevant parties will be sensitized of the research issues so as to be
granted permission to access information. The research study will adhere to the courses of
organizational codes of conduct, privacy and confidentiality and widely accepted research ethics.
Where information is not officially granted due to the issues of privacy and confidentiality in the
industry, it may be noted as grey material and sources will never be divulged. Consent will be
sought from respondents of selected banks before giving questionnaires and/or interviewing.
There will be need to keep privy the interviewee responses, hence no divulge of responses and

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no special mention on names to identify respondents, their specific earnings and age will be done
prior to and after the research study.

1.13.8 Data Analysis and Presentation

Data presentation and analysis will involve coding of questionnaires, editing, classification, and
tabulation of collected data so that comparisons and an analysis could be made. The collected
data will be presented in form of pie charts, bar graphs and tables. The researcher will also make
use of Microsoft Excel in form of graphs and pie charts. Analysis of data can also be done using
the SPSS application. This technique is considered most appropriate because the respondents
either gave suggestions or expressed their opinions.

1.14 PROJECT FINANCIAL BUDGET

EXPENSES ESTIMATED COSTS IN USD

INTERNET $80
TRANSPORT $45
PRINTING AND STATIONARY $30
AIRTIME $25
TOTAL $180

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