FACTORS AFFECTING PAYMENT OF SUPPLIERS IN THE

PUBLIC SECTOR
(A CASE STUDY OF COUTY ASSEMBLY OF MALINDI.)

CAROLINE KAHONZI KITSAO

INDEX NO: 107109002

CENTER CODE: 107109

A Research Project Submitted in Fulfillment of the Requirement for the

Award of the Diploma in Supply Chain Management in Weru Technical
and Vocational Collage

July,2024

2024

DECLARATION PAGE

The project is my original work and has not been presented for a diploma in
Any other collage

Signature………….. Date…………………….
Name: Caroline Kahonzi Kitsao
Registration number:……………………………………..

The project has been submitted for examination with my approval as collage
supervisor

Signature……………………. Date…………………….
Name: MDM EASTHER

DEDICATION
I dedicate this project to my loving family for their, support, tolerance and patience during
this course, they are my motivation.

ii
 ACKNOWLEDGEMENT
There are many people who have invested their lives and time, thus making it possible for
me development of this project. Without them I would not have anything to bring out of
this research.
My gratitude goes out to my supervisor, Mr. Kelvin who patiently and tirelessly guided me
in the production of this work.
I also express my gratitude and indebtness to my family for their unconditional support

throughout my study.

iii
ABSTRACT

The research study attempted to fill the gap between available procurement
procedures, by identifying how they are applied by the procuring entity and how
such procedures affect the vendor payment after the delivery of goods, works and
services, as perceived by interested parties in Kenya. A sample of questionnaire was
given to respondents to collect data from the procurement staffs who are often
involved in procurement procedures on vendor payment. A semi-structured
questionnaire was given to procurement officers in the public sector. Qualitative data
was analyzed by coding and organizing it into themes and concepts and
quantitative data was also analyzed using statistical packages, which yield
descriptive and inferential statistics. Data was presented using mean and standard
deviation where necessary. Pilot test was also conducted for the purpose of ensuring
the research instrument is reliable and valid. The analysis was done using statistical
package for social sciences (spss) version 17.The findings of this study show that for
effective supplier payment there must be accuracy in the department and suppliers must
make sure they give their full details and the type of relationship that exists between the
department and the suppliers and also the practices of the government. Supplier payment
has been facing the following challenges: procurement regulations, urgency of
transactions and ethics. These factors directly influence the relationship between suppliers
and buyers so the Government has a big role to play in the procurement process so as to
satisfy customers. This research was to benefit the public service and donor community to
make prudent decision in future. The researcher therefore recommends that more research
to be carried out on management style, capacity of personnel and procurement regulations
to make the supply chain process effective.

iv
 Table of Contents

DECLARATION.......................................................................................................................... i
DEDICATION............................................................................................................................. ii
ACKNOWLEDGEMENT.......................................................................................................... iii
ABSTRACT.................................................................................................................................. iv
CHAPTER ONE: INTRODUCTION.......................................................................................... 1
1.1 Background................................................................................................................................ 1
1.2 Statement of the problem............................................................................................................ 7
1.3 Research objective...................................................................................................................... 9
1.4 Value of the study…………………………………………………………………….................. 9
CHAPTER TWO: LITERATURE REVIEW….......................................................................11
2.1 Introduction...............................................................................................................................11
2.2 procurement procedure and regulations…...............................................................................11
2.3 supplier payment procedure......................................................................................................12
2.3.1 Purchase order/supplier payment delays…...........................................................................13
2.4 factors affecting supplier payment in the public sector............................................................14
2.5 conceptual framework..............................................................................................................17
2.6 conceptual model………………………………………………………………….....................17
CHAPTER THREE: RESEARCH METHODOLOGY.............................................................18
3.1 Introduction..............................................................................................................................18
3.2 research design.........................................................................................................................18
3.3 population.................................................................................................................................18
3.4 Data collection..........................................................................................................................18
3.5 data analysis and presentation..................................................................................................19
CHAPTER FOUR: DATA ANALYSIS, RESULTS AND FINDINGS...................................20
4.1 Introduction..............................................................................................................................20
4.2. General information.................................................................................................................20

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4.3 Respondents feeling in relation to payment process.................................................................25
4.4 Factors Affecting payment......................................................................................................27

4.5 Factor Analysis….....................................................................................................................28

CHAPTER FIVE: SUMMARY AND RECOMMENDATIONS.............................................30

5.1 Introduction..............................................................................................................................30
5.2 Summary...................................................................................................................................30
5.3 conclusions…...........................................................................................................................31
5.4 recommendations….................................................................................................................32
5.5 limitations of the study.............................................................................................................33
5.6 Area for further study...............................................................................................................33
References.................................................................................................................................34
Appendixe 1: Questionnaite.......................................................................................................36
Appendix 11: Ministries in Kenya.................................................................................... 37

Appendix 111: Letter of Introduction...............................................................................38

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 LIST OF ABBREVIATIONS
ERP- Enterprise resource planning
EU-European union
IDE-Interchange data electronically
IBRD-International bank for reconstruction and development
IDA-International development agency
Ksh-Kenya shillings
NRM-Natural resource management
NCB-National competitive bidding
PPOA-Public procurement oversight authority
PPDA-Public procurement and disposal act
PR-Purchase requisition
RFQ-Request for quote
SPSS-Statistical Package for Social Sciences

vii
 LIST OF TABLES

Table 4.1 Respondents feeling of the procurement process............................................21

Table 4.2 Factors affecting supplier payment in the public sector…...........................22
Table 4.3 Total Variance Explained….............................................................................24

viii
 CHAPTER ONE: INTRODUCTION
1.1 Background
Public procurement has primarily been the domain of procurers and contracting authorities
in the public sector who are responsible for buying needed goods and service for public use
against the best price. This topic (public procurement) has become interesting for policy
makers in the procurement profession (Savas, 2000).The start point may lie in the fact that
most countries have come up with relevant regulations to give guidance on procurement
procedures, the most recent ones in 2004 by European Union (EU) members’ states,
affecting the public and the utilities sectors.

This regulation needs to be translated into national law by procurement policy makers in
the European Union member states. However, this does not explain the interest from a
wider variety of policy makers from different domains like markets; innovation,
environment and information and communication technologies have come to hold an
interest in public procurement. These policy makers have picked up the idea that public
procurement procedures can also be used for purposes beyond strictly buying goods and
services for public use. Although the main objective of public procurement will remain
buying goods and services for public use, simultaneously it can be a means to realize
environmental objectives, improve the quality of health care services, or increase the
innovative capacity of an organization, a region or a sector. with these additional features,
public procurement obtains a new quality and becomes a policy instrument that can be
interesting for environmental,industrial,research and innovation policy makers and other
actors involved in the policy making processes (Perlman,2001).

the Authority was appointed in September 2007.The legal framework defines clearly the
responsibilities of the PPOA,which include: to ensure that procurement procedures are
compiled with to monitor the public

1
procurement system and recommend improvements, to assist in the implementation and
operation of the procurement system and to initiate public procurement policy and
amendments to the PPDA.At present the Procurement procedures involve the purchase of
goods, works and services by a business, association, organization, or an individual. This
means buying goods from suppliers at the lowest possible price (Perlman, 2001).The best
way of doing this is to let the suppliers contend with each other so that the investment costs
of the buyer are kept at a minimum. Procurement procedures more often than not also
involve a bidding process in which the bidders or suppliers quote their prices and the
purchasers agree to the lowest possible bid.

This is the most proficientand gainful manner of obtaining supplies or services if the
quality of the goods meets the buyers specifications .The procedure of procurement
usually commences when the purchaser starts to source for bidders in the market. After
discovering the suppliers, a request is made for bids, proposals, quotes and information.
However, direct contact with bidders can also be made as an alternative for advertising all
the above requests (Armstrong &Jackson, 1992).

1.2 Statement of the Problem

According to Kimaiyo (2012), the public procurement system in Kenya has evolved from a
system with no regulations since 1978 to an orderly legally regulated procurement system
currently in use. However many times the procurement process is complicated with
disputable settlement mechanisms relating to tender award procedures, unfairness and lack
of transparency. In addition there is evidence of malpractice that affects public sector
procurement for example vehicle repair documents are often not used, sometimes invoices,
receipts and other documents are fake. Other challenges include inadequate trained staff in
procurement department, poor sensitization or training to tender committee, resistance to
change by the implementers of PPDA-Public procurement disposal Act, resistance to
change by existing suppliers, influence for external stakeholders and the size of the
institution. Market dynamics have created challenges from man public organizations and
some of the key challenges affecting public organizations include the emergence of the
global economic advancement in the technology, increase societal emands,organisational

2
scrutiny by pressure groups and more so the heightened media attention that is critical of
government inefficiencies in service delivery.
Studies carried out by various scholars have not addressed the best method to use on
procurement procedure on payment transactions. Even though we have some
procurement procedures in place, little is known of procurement procedures to be applied
by the personnel concerned in order to enhance efficiency and effectiveness. Public
procurement is an area that is prone to mismanagement, corruption and supplier ploys. One
of the major causes of public procurement problems is a lack of competent Procurement
workforce (Thai,2011).The most effective procurement practitioners have a blend of
competency, good relationship, management and communication skills and an ability to
think laterally (Guinipero,2000).This certified public procurement specialists are also
required to perform in a more constructive manner. Despite Government concentrated
efforts in reforming procurement systems, there is still problems attributable to huge losses
in improper procurement to the tune of kshs 30 billion and public procurement therefore
requires a tight or water proof system to be followed and adapted (Kamau ,2012).

1.3 General objective

1. To determine factors that influence payment of suppliers in public sector in Kenya.

1.4 Specific Objectives

1. To determine the relationship between the determined factors and vendor satisfaction.
2. To determine different activities of the buyers such as timely payments of goods or
services.
3. To determine whether the quality of the goods meets the buyer’s specifications.

1.5 Research Questions

1. What are the factors that influence payment of suppliers in the Government Ministries?
2. What is the relationship between the determined factors and vendor satisfaction?

3
3. How are the procurement procedures applied by the procuring entities?
4. How are the procurement procedures affect the vendor payment after the delivery
of goods, work and services?

1.6 Significance of the study

1. To helps the company manage its finances effectively.
2. To helps the company to identify areas for improvements and strengthen
their relationships.
3. To enables the company to optimize their procurement processes.

1.7 Limitations of the study

1. Access to reliable and comprehensive data on payment processes may be limited.
2. Interpretation of payment factors may be subjective and influenced by
individual perspectives.

1.8 Scope of study

This study finds that county Assembly is located in Malindi subcounty at Malindi town.
From Baolala to County Assembly covers 40.9 km. According to the research County
Assembly have approximately 30 workers in which out of these only 10 workers
conducted the questionnaire.
:

4
 CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
This chapter analyzes the literature review of procurement procedures on supplier payment
after they have supplied goods, works and services to the buyers place. It covers the: public
procurement practices, factors affecting supplier payment and challenges faced in supplier
implementation policies.
2.2 Procurement Procedure and Regulations
According to (Cohen and Roussel, 2005) Public procurement law regulates the purchasing
by public sector bodies and certain utility sector bodies of contracts for goods, works or
services. The law is designed to open up the regulation to public procurement personnel to
do a fair market competition, to prevent “buy national" policies and to promote the free
movement of goods and services then achieve supplier payment. Procurement
procedure/process is the term used by businesses to describe the buying process, and can
refer to the purchase of supplies or services. Many businesses use automated tools such as
an Enterprise Resource Planning (ERP) system and electronic data interchange (EDI) to
assist procurement specialists or buyer with the buying activities. Regardless of whether an
automated system is used, the goal of the procurement process is to buy the exact product
or service when needed for the most favorable price. This is used to mean the process of
acquiring and obtaining of supplies as per the users specifications, in the most economic
price, by the time scheduled, delivered to the correct destination and packaged for better
handling and storage (Perlman, 2001).

5
2.3 Supplier Payment Procedure
When payment is made directly to the supplier a multi-copy purchase order is not
proccesed.therefore,the procurement manager's copy indicating that the transaction was
processed is not correct so procurement managers are therefore advised to make a copy of
the payment voucher and any additional supporting documentation prior to forwarding it to
the Accounting manager's department for processing. An account expenditure summary
( AES),which lists each payment processed on a given grant, is sent to the procurement
manager therefore procurement managers are encouraged to review this report and notify
the accounting department of any discrepancies (Savas,1997).

In most circumstances, requisition can be obtained within two working days. This allows
the ministries one day to check and make sure that the purchase requisition complies with
procurement act and sponsor guidelines and one day for processing. However if the
requisitions are not completed properly, processing of the purchase order is delayed
because the requisition has to be returned to the procurement manager for corrections
(Savas, 1977).Goods, works and services will be inspected upon delivery by inspection and
acceptance committee to confirm conformance with specifications/contract stipulations.
The supplier’s presence at such inspection and/or assistance may be requested is usually
made in the month following acceptance.

2.4 Overview of Supplier Payment

One of the most important things to negotiate before choosing a supplier is how payment
will be made. Many circumstances and priorities will influence your choice of payment
method. A lot will depend on how much you know about financing a sale and how willing
your supplier is to accept your terms and conditions.

2.4.1 Relationship between the determined factors and the vendors

satisfaction Maintaining a long term relationship between transacting parties

relies on;

6
Trust and information exchange , competence-based trust and client dependence directly
predict vendors satisfaction.

2.4.2 Different activities of the buyers such as timely payment

When buyers pay on time ,it ensures that vendor receive the funds they need to operate
smoothly. Consistent and timely payments build trust between buyers and vendor. It also
prevent penalities.

2.4.3 Quality of the goods that meets buyers specification.

Buyers should clearly define their requirements including quality standards, features and
performance expectactions. Vendors must adhere to these specifications during production.
They can conduct audits samples to verify quality.

2.5 Conceptual Framework

The study sought to establish the relationship between the buyer and the seller in the public
sector in Kenya, at the same time taking into consideration the procurement procedures in
place. Therefore, the independent variables were the factors to be determined and the
dependent variable will be supplier satisfaction.

Independent variables
Relationship between the Dependent variables
determined factors and the vendors
satisfaction. Factors that influence

Different activities of the buyers payment of suppliers in the

public sector in kenya.
Quality of the goods that meets the
buyers specifications.

2.6 Research Gap

There should be adherence to procurement rules and regulations.
Streamlining processes and prioritizing timely payments.
Ensuring fairness in payment terms to build suppliers trust.
Ethical considerations impact payment practices.

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 CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction
This chapter presents the methodology used in the study. It is organized as follows: first it
presents the research design, then the population, sampling frame, sampling techniques,
data collection instrument, data collection procedures, pilot test and finally data processing
analysis.
3.2 Research Design
The study adopted a descriptive research design. (Bogdam and Biken, 1992) stated that
descriptive studies are more formalized and typically structured with clearly stated
investigative questions. It serves a variety of research objectives such as descriptive of the
phenomenon or characteristics associated with a subject population, estimates of
proportions of a population that have these characteristics and discovery of associations
among different variables. Therefore the study adopted a census survey. Census data offer
a unique insight into smaller areas and small demographic groups which sample data
would be unable to capture.
3.3 Population
The target population of the study was 18 Government ministries in Kenya. This is because
all the ministries follow the same guidelines and procedures put in place by the public
procurement disposal Act Regulations. The target respondents were procurement and
finance staff in the ministries and they were requested to fill in the questionnaire that was
used to provide data. This group of respondents was believed to be involved in the
procurement policy formulation and implementation.
3.4 Data Collection
The research made use of both primary and secondary data. Primary data consisted of
structured questionnaire both open-ended and closed-ended questions. Open-ended
questions gave respondents the freedom to express and explain themselves, closed-ended
questions will give the researcher an opportunity to get answers expected or anticipated to
form the basis of building an opinion and conclusion. Secondary data was obtained from

8
journals and research papers done by other scholars. The structured questionnaire was
divided into two parts to respond to the objectives of the study. The first part was general
information about the respondent, the second part was to enquire the challenges that
vendors face in the public sector. The questionnaires were administered and the mass of
raw data collected was systematically organized in a manner that would facilitate analysis.
Each ministry had three questionnaires, two for the procurement department and one in the
finance department since they were the ones involved in paying the suppliers.
3.5 Data Analysis and Presentation
Both descriptive and inferential statistical analyses were used to analyze the survey data.
Descriptive statistics included tables and frequency distribution whereas for inferential
statistics, factor analyses were used. Wino (2006) noted that factor analysis method is
necessary to reduce a large set of variables to small number of factors which could be
easily interpreted and for satisfactory analysis to proceed. Factor analysis involves
grouping variables into categories that appear to relate to a particular activity of the
purchase decision.Kagiri (2005) noted that factors should be grouped into at least seven
categories for meaningful analysis to be done.
For factor analysis, the preliminary tests employed were Kaiser Mayer-Olkim (KMO) and
Berlet’s tests run off the statistical package for Social Sciences (SPSS) software the KMO
measures the sampling adequacy which should be greater than 0.5 for a satisfactory factor
analysis to proceed with factor analysis. In order to determine the number of factors to
retain for further analysis, the factors with Eigen values greater or equal to one are
selected. These selected variables contribute a large percentage of the variance among the
extracted factors.

CHAPTER FOUR: DATA ANALYSIS FINDINGS AND DISCUSSIONS

4.1 Introduction
This chapter covered the experience encountered while on the field collecting data, the
general findings and the analysis of the data collected. The information from the field was

9
divided into two parts, part one was meant to examine the general background of the
procurement staff and part two was to look at the factors affecting supplier payment in the
public sector using a likert scale.
4.2 General Information
The demographic data sought in the study included: general profile of the study’s
respondents with regards to working experience, education and their involvement in the
supply chain process and Position the respondents hold with regard to vendor payment.
Out of 54 questionnaires distributed, a total of 50 questionnaires were fully filled and
returned,majority of the respondents 20(40%) had worked for a period of 1015yrs,followed
by 18(36%) of those whose work experience was 5-10yrs,while 12(24%) had worked for
more than 15 yrs. .majority 40% of the respondents had a degree, followed by 32%who
had masters and both PhD and diploma were 14% each .48(96%) are involved in the
payment process and only 2% are not involved in the payment process. Majority of the
respondents are accountants (32%), followed by procurement officers (28%), staff (20%),
and auditors (20%).This means that the respondents selected were the right people since
they are the ones involved in the payment process.

According to Mugenda and Mugenda (1999) a 50% response rate is adequate, 60% good
and above 70% rated very well. This implies that basing on this assertion; the response rate
in this case of of 92% is very good ,we can also say that most of the respondents were
experienced in their areas of work therefore very conversant with this field, staff in the
public sector are professionals hence customer satisfaction on service delivery to supplier
payment. Perlman (2001) stated that when there are people of high integrity with
professionalism in any organization there would be better management of procurement
resources, as things are delivered at the right time, at the right price, from the right source,
the right quality and the right quantity to influence supplier payment. This means that the
study involved the right respondents since they are the ones who deal with paying the
suppliers so they have first-hand information of the process.

10
 4.3 Respondents feeling in relation to payment process
In this section, respondents were selected randomly, and then asked to respond on how they
rate the payment process with regards to transparency, fraudulent, effective, and
ineffective.
Table 4.1Respondents feeling of the procurement process
Mean Standard
deviation

transparency 1.58 12.38

Not fraudulent 4.02 9.87

effective 1.82 12.86

ineffective 3.86 9.35

The results indicate that majority of the respondents felt that the process is effective
followed by transparent they also agreed that it’s not fraudulent and ineffective. This
shows that the Government is doing its best to make sure that the payment process in the
public sectors is not faced with irregularities.

4.4 Factors Affecting supplier payment in the Public Sector.

In the section, respondents were asked. To what extent do you agree with the following
statements regarding supplier payment in the public sector?1=to a very large extent,2-to a
large extent,3=to some extent,4=to a little extent,5=not at all. The results are shown in table
4.2 below.
Table 4.2 Factors affecting supplier payment in the public sector.
Factors mean Standard
deviation

1)Procurement regulations in the country 2.7 3.67

2)Type of Goods delivered 3.56 4.89

11
3)Vendor experience 3.62 5.33

4)Language barrier 3.64 5.95

5)Costs incurred in supplying goods 3.56 6.51

6)Geographical location 3.26 4.69

7)Supplier bargaining power 2.94 2.0

8)Technology ie.ICT adoption 2.58 5.43

9)Origin of suppliers raw materials 3.0 1.92

10)Your relationship with supplier 3.46 5.0

11)Suppliers demands 3.08 2.91

12)Terms competitors are offering 3.1 4.0

13)The urgency of the transaction 2.26 6.04

14)Time constraints 2.8 7.07

15)The cash flow availability and needs 3.0 5.91

16)Incomplete or illegible vendor address 1.58 7.81

17)Missing project director signature 2.1 9.0

18)Accountability 2.42 7.17

19)Internal processes 1.84 9.48

20)Ethics 2.0 8.71

21)Unfairness and lack of transparency 2.78 4.18

22)Fake invoices and receipts 2.56 7.93

23)Inadequate trained staff in procurement department 2.42 8.39

24)Resistance to change by the implementers of PPDA-public procurement 2.96 3.93

disposal authority

25)Influence from stakeholders 3.66 5.95

26)Size of the institution 3.86 8.77

27)Company image 3.44 5.52

28)Complexity of supply chains 2.6 5.38

29)Insurance costs 2.7 4.18

30)Shipping procedures 2.32 5.70

31)Import or export restrictions 2.58 4.94

32)Business and social practices of the country 3.7 5.78

12
 33)Availability of product substitutes 3.5 4.63

34)Government policies 2.2 8.12

35)How much the product costs 3.38 4.47

36) Personal capacity i.e. Each department having its own procurement unit. 3.08 2.34

37)Procurement procedures of the organization 2.38 6.04

38)Competitive supply, which requires the procurement be carried out by competition 2.42 6.44

39) Consistency, which emphasizes the equal treatment of all bidders irrespective of 2.14 7.81
race, nationality or political affiliation.

40)Integrity ensures that there are no malpractices 2.38 8.15

41)Informed decision making 2.62 6.36

42)Transparency enhances openness and clarity on procurement policy and its 2.6 9.43
delivery

43)Responsive to aspirations responsive to aspirations, expectations and needs of the 3.06 3.53
target society

44)Operating procedures in the organization 2.46 7.03

45)Financial soundness of the organization 2.46 9.64

46)The company image 2.78 8.03

47)Poor communication between buyer and seller 2.18 10.56

48)Fair dealings 2.08 11.44

49)Credit worthiness of the buyer 2.14 9.24

Source: author 2014
I classified the results into two categories, one is challenges and the other was factors and
From the results above we can say that fair dealings, poor communications between buyer
and seller, Transparency of the organization, internal processes and missing project
signature are some of the challenges the Government faces when it comes to payment of
suppliers. Others are ethics, inadequate trained staff, integrity, Government policies,
Company image, size of the institution can be classified as factors facing the same process
of supplier payment.

4.5 Factor Analysis

Factor analysis conducted on all statements measuring usefulness In order to determine the
number of factors to retain for further analysis, the factors with Eigen values greater or

13
equal to one isselected. The extracted factors explain 23.749% of the total variance. The
extracted factors used the basis of Kaiser maximum criteria which indicates that an Eigen
value of more than one constitutes a factor.
TABLE 4.3 TOTAL VARIANCE EXPLAINED

Initial Extraction Sums of Squared Loadings

Compon Eigenvalues
ent
Total % of Variance Cumulative % Total % of Variance Cumulative %

1 11.637 23.749 23.749 11.637 23.749 23.749

2 6.567 13.401 37.150 6.567 13.401 37.150

3 4.248 8.670 45.820 4.248 8.670 45.820

4 2.745 5.602 51.422 2.745 5.602 51.422

5 2.508 5.119 56.541 2.508 5.119 56.541

6 2.253 4.599 61.140 2.253 4.599 61.140

7 2.056 4.197 65.337 2.056 4.197 65.337

8 1.749 3.569 68.906 1.749 3.569 68.906

9 1.349 2.754 71.660 1.349 2.754 71.660

10 1.301 2.654 74.314 1.301 2.654 74.314

11 1.237 2.525 76.839 1.237 2.525 76.839

12 1.124 2.293 79.132 1.124 2.293 79.132

13 1.105 2.255 81.387 1.105 2.255 81.387

14 .936 1.911 83.297

15 .828 1.691 84.988

16 .720 1.470 86.458

17 .684 1.396 87.854

18 .610 1.246 89.100

19 .579 1.182 90.282

14
20 .541 1.103 91.385

21 .515 1.050 92.435

22 .427 .871 93.306

23 .387 .790 94.097

24 .352 .719 94.815

25 .345 .704 95.519

26 .277 .566 96.085

27 .255 .520 96.605

28 .228 .465 97.070

29 .211 .430 97.500

30 .192 .392 97.893

31 .170 .347 98.240

32 .155 .316 98.556

33 .125 .255 98.810

34 .110 .224 99.034

35 .097 .198 99.233

36 .081 .166 99.398

37 .075 .153 99.551

38 .065 .133 99.684

39 .049 .100 99.784

40 .037 .075 99.859

41 .022 .046 99.905

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42 .020 .041 99.946
43 .010 .020 99.966

44 .007 .015 99.981

45 .005 .011 99.992

46 .002 .004 99.996

47 .001 .002 99.998

48 .001 .001 100.000

49 .000 .000 100.000

Extraction Method: Principal Component Analysis. source: author
2014

In order to determine the number of factors to retain for further analysis, the factors with
Eigen values greater or equal to one are selected. From the above table the factors with a
value greater than 1 areprocurement regulations in the country, type of goods delivered,
vendor experience, language barrier, costs incurred in supplying goods, geographical
location, supplier bargaining power, technology, origin of supplier’s raw
materials,buyer’s relationship with the supplier, suppliersdemands, terms competitors are
offering and the urgency of the transaction. This means that these are the factors that have
a major effect on the supplier payment in the public sector Those with a value of close to 1
that is above 0.5 are: time constraints, cash flow availability and needs, incomplete or
illegibleaddress, missingprojectsignature, accountability, internalprocesses, ethics,
unfairness and lack of transparency.This means that these are the factors that have a major
effect on the supplier payment in the public sector and can therefore be used for further
analysis.

16
 CHAPTER FIVE: SUMMARY, CONCLUSIONS
AND RECOMMENDATIONS
5.1 Introduction
This chapter covered the research in summary, conclusion and recommendations while
analyzing the factors influencing supplier payment at the Government ministries in Kenya.
5.2 Summary
Supplier payment system is actually simple: it defines the procedures, rules, standards and
instruments used to exchange financial value and items between two parties discharging an
obligation. Although the purpose is simple, supplier payment systems have evolved over a
period of years (Savas, 1977).The different conditions in each country or organizations
depending on the (size, legal systems, business practices, communications, infrastructure,
stages of development of instruments and institutions make each supplier payment system
unique (Adams &schvaneveldt 1985).the study was guided by objective: to determine the
factors affecting supplier payment in the public sector.
The study adopted a descriptive survey design as a research design in which the data was
gathered by use of structured questionnaires to capture the needed information. The type of
design fits the research since the data was collected one. On average, the procurement
officers in the public sector were fifty four. On average, the procurement managers and
officers were generally satisfied with the general performance of the procurement
department apart from a few factors they thought were pulling them back.
5.3 Conclusions
This study aimed to identify the factors that affect the payment of suppliers in the public
sector after the delivery of goods to their customers at the public sector in Kenya. The
investigation further evaluated to what extent the factors affect the payment that way it’s
easier to identify the key factors. From the study findings it can be concluded that
procurement regulations in the country, the urgency of the transaction, incomplete or
illegible vendor address, internal processes in the company, ethics largely affect the
supplier payment in the public sector among other factors. A look at procurement
regulations show that the purpose of the department of procurement is to establish

17
purchasing sections and carry out centralized purchasing procedures designed to acquire
high quality ,appropriate goods and services at a reasonable cost and in a timely manner for
the government ministries and departments which it serves. All procurement procedures
shall be conducted in a fair and impartial manner to avoid even the appearance of
impropriety. Specifications shall be developed to reflect the procurement needs of the
public sector rather than to favour one supplier over the other.

For effective supplier payment there must be accuracy in the department, and suppliers
must make sure they give their full details, and the type of relationship that exists between
the department and the suppliers and also the practices of the government ie integrity,
ethics, and proper organization of the procurement department including having adequately
trained staff for the job.it was also observed that personnel capacity also contribute largely
to the problems between the supplier and the buyer relationship. The effects of personnel
organizational policies on the capacity utilization of the personnel and on the throughput
time of procurement work orders were studied. The results of the simulation show that the
best utilization of the personnel and the best throughput time of procurement work orders
were obtained if the procurement personnel are allowed to function across the borders of
their department (here termed as exchangeability of personnel. These factors directly
influence the relationship between suppliers and buyers so the Government has a big role
to play in procurement process so as to satisfy customers because once the customers are
satisfied it will lead to lasting relationships between the public sector and the suppliers.
5.4 Recommendations
Further research should also be carried in depth to determine the causes of delayed supplier
payment in order to improve on the causes of the late payment so as to meet the (ISO and
KBS) international standards organization and Kenya bureau of standards, which governs
the procedures to follow in relation to the purchase of goods and services and more so the
Public Procurement Disposal Act 2005, which instill the ethical values in the cause of the
late payment and its penalties. A professional purchasing officer must be able to get the
right materials at the right time, from the right source of the right quality, and at the right
price. This would be achieved if all the paying personnel from the ministry were to attend

18
seminars/courses where they would get training before the processing of invoice for
payment.

The study recommends that the public sector should update their machines or the kind of
software currently in use. By this communication interruptions will be minimized. Hence
most of them will face less inventory excess risks. Some of the procurement departments
prefer single sourcing which should not be the case, in an aim to reduce risks associated by
purchasing from one source they should adopt multiple sourcing strategy. Therefore many
cases of supplier failures would reduce. Procurement regulation should be used as a guide,
as its stipulated in the PPDA Act 2005 and regulations 2006.More emphasis should be on
how the available regulations can assist the ministry of water to have mutual and cordial
relationship with the vendors, so as achieve customer satisfaction after the delivery of
goods, hence timely vendor payment.
5.5 Recommendation for Further Study
My study focused on analyzing the factors affecting supplier payment in the public sector
and what areas he Government should improve on. However more study should be done on
how the government selects the suppliers and also on the factors affecting supplier
payment in the private sector. More study should also be done in areas of cooperation
between government, private sector and general citizens in maintaining the good standards
in procurement procedures. My study focused on the suppliers but it didn’t look at the
buyers perspective though I highlighted a few factors but there should be a study to look at
the buyers point of view or in this case the challenges the government faces when dealing
with suppliers. The relationship between the government and the suppliers is still at its new
stages but the Government is trying on its side and based on the study, if the Government
handles the process ethically and wit integrity then the relationship with the suppliers will
be a lasting one.

19
 5.6 References.
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New York.
Armstrong. & Jackson D. (1992).Purchasing and Supply Manager Chartered Institute Of
Purchasing. London: Pitman.
Blake, R.R. & Mounton, J.S. (1978).The New Managerial Grid. (Houston: Gulf
Publishing company, 1978), vol.35, no.4 p.9.
Bogdam, R. & Bilken, S. (1992). Qualitative Research for Educationally & Bacon,
Boston, USA.
Burke. (1989).Competence and standards in Education and Training.Falmer Press 1989,
vol.11, ch.3, p28.
Cannon, J.P, and Perrault, W.D. (Nov .1999).Buyer-seller Relationship in Business.
Journal of Marketing Research, 36pp 439-460.
Cohen, S, and Roussel, J. (2005).Strategic Supply Chain Management. New
York: McGraw-Hill.
Cooper, D.R. &Schindler, P.S. (2003).Business Research Methods (8th Ed).New York
McGraw-Hill.
Clifton, J.W. & Sisk, H.L. (1981).Management and Organization. New York McGraw-
Hill.
Calij. (1992).TQM for purchasing management. New York: McGraw-Hill.
Factors Influencing Vendor New Zealand. (2007).New Zealand in profile 2007.Retrieved
Fromhttp://www.facts.govt.nz,15th October 2010, 11am.
Farmer, D. (1996).Storage and supply of Management Journal Purchasing Principles
London: Pitman.
Greiner, L.E. (1973).What Managers Think of Participative Leadership. Harvard Business
Review, vol.51, no.2 p.111.

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G.Jay Anyon (1973).Entrepreneurial Dimensions of Management. University of
Pennsylvania.
Government of Kenya (2005, 2006 &2008).Public Procurement and Disposal Act,
Nairobi: Government printers.

Griffiths, (1963).Alliance Partnership Sourcing, Major Tool for, strategic purchasing

Selected reading in purchasing and supply. London: pitman.
Imai, M. (1986).The key to Japan’s competitive success. New York: Mc Graw-Hill.
Jessop, D. &Morrison, A. (1963).Storage and Supply Materials. (6th Ed).London: pitman.
Laffont, J.J. & Tirole, J. (1993).Procurement & Incentive Theory. New York: McGraw
Hill.
Martin. & Nicholls, J. (1987).Creating a committed work force. Institute of
personnelmanagement.Vol.23, no.66 p3.
Meyer, D.K. (2010).Research methodology: presentation of data collection Analysis
Auckland, New Zealand: Viking.
Mugenda, O. & Mugenda, A. (2003).Research methods: quantitative and qualitative
Approach. Nairobi: Acts press.
Perlman, E. (2001).slowdown ahead for financing e-procurement. Governing, 14(10), 70.
Plumbley, p. (1985).Recruitment and selection, institute of personnel management. (4th
Ed.), ch.1, pp 22-24.
Reed, B.J. &Swain, J. (1997).Public Finance Administration. (2nd Ed.)Thousand Oaks,
CA: Sage publications.
Redden, W.J. (1977) Managerial Effectiveness. New York: Mc Graw- Hill.
Roes, R.A, & Greuter, M.JM. (1989).Developments in personnel selection methodology In
R KHambleton and J Zoal (Eds) Advances in testing. Kluwer.
Ruth, D (2007).Management Development in New Zealand. Journal of European Industrial
Training.
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Performance. Boulder CO: West view press.
Savas, E.S. (2000).Privatization and Public-Private Partnerships. Chatham NJ:
Chatham.

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Trochim, M.K.W. (2006).Research Methods: knowledge Base. New York: McGraw-
Hill.Revised:10/20/2006
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Supply Chain Management.Aucklan; Viking.

Appendix 1: Introduction Letter

Dear Participants,

I am a postgraduate student in Weru Technical and Vocational

College, pursuing a

Diploma in Supply Chain Management. One of the requirements

to the award of the diploma would be to write a dissertation in

my area of specialization. I am carrying out a research study on

Factors affecting payment of suppliers in the public sector.

( A case study of County Assembly of Malindi.)

I kindly request you to take your time and fill this questionnaire

to aid in achieving the purpose of the study. Confidentiality and

privacy is guaranteed. The information given will be used for the

purpose of this study alone and will not be shared without

consent of the respondents.

Thank you.

Caroline Kitsao.

22
 Appendix 11 Questionnaire
Instructions:
Tick (√) or write where appropriate. The following questionnaire should be completed by
the procurement department staff working in the government ministries in Kenya.

Section A: General Information.

1. Working experience: 5-10yrs ( ) 10- 15yrs ( ) above 15yrs ( )
2. Education, highest qualification: diploma ( ) degree ( ) msc ( ) PhD ( )
3. Are you involved in any of the process on vendor payment in Government
ministry? Yes ( ) No ( )
Likert scale: This is a five point plan which describes the feeling of respondents.
What is your feeling in relation to payment process?

Strongly agree Agree Neutral disagree Strongly

disagree

transparency

fraudulent

effective

ineffective

4. What position do you hold in your organization with regard to vendor payment:
an auditor ( ) accountant ( ) procurement officer ( ) staff ( )
SECTION B: Factors Affecting Vendor Payment in the Public Sector.
2. Factors affecting vendor payment in the public sector. To what extent do you agree with
the following statements regarding vendor payment in the public sector? 1=to a very large
extent, 2=to a large extent, 3=to some extent, 4=to a little extent, 5=not at all.

23
 SCALE
Factors 1` 2 3 4 5

1)Procurement regulations in the country

2)Type of Goods delivered

3)Vendor experience

4)Language barrier

5)Costs incurred in supplying goods

6)Geographical location

7)Supplier bargaining power

8)Technology ie.ICT adoption

9)Origin of suppliers raw materials

10)Your relationship with supplier

11)Suppliers demands

12)Terms competitors are offering

13)The urgency of the transaction

14)Time constraints

15)The cash flow availability and needs

16)Incomplete or illegible vendor address

17)Missing project director signature

18)Accountability

19)Internal processes

20)Ethics

21)Unfairness and lack of transparency

22)Fake invoices and receipts

23)Inadequate trained staff in procurement department

24)Resistance to change by the implementers

of PPDA-public procurement disposal authority

25)Influence from stakeholders

26)Size of the institution

27)Company image

24
28)Complexity of supply chains

29)Insurance costs

30)Shipping procedures

31)Import or export restrictions

32)Business and social practices of the country

33)Availability of product substitutes

34)Government policies

35)How much the product costs

36) Personal capacity i.e. Each department having its

own procurement unit.

37)Procurement procedures of the organization

38)Competitive supply, which requires the

procurement be carried out by competition

39) Consistency, which emphasizes the equal

treatment of all bidders irrespective of race, nationality
or political affiliation.

40)Integrity ensures that there are no malpractices

41)Informed decision making

42)Transparency enhances openness and clarity on

procurement policy and its delivery

43)Responsive to aspirations responsive to aspirations,

expectations and needs of the target society

44)Operating procedures in the organization

45)Financial soundness of the organization

46)The company image

47)Poor communication between buyer and seller

48)Fair dealings

49)Credit worthiness of the buyer

Appendix III: Time Frame

25
Activitie Ja FE MARC APRI MA JUN
s n B H L Y E
Start End Descriptio
n
Jan Jan202 Chapter
2024 4 one
Feb Feb proposal
2024 2024
March March Defence
2o24 2024 and
approval
April April Data
2024 2024 collection
May May Data
2024 2024 analysis
June June Input of
2024 2024 correction
and
printing
of the
research
project

Appendix IV: Budget

NO ITEM BUDGET

26
 1. Data collection, collation and analysis

• Printing of questionnaires For field study KSH. 500

• Traveling cost (to conduct the survey)

KSH. 2000
• Data entry clerks

KSH. 1000

2. • Publishing of final report KSH. 2000

• Final draft Printing,
• Miscellaneous
KSH. 1000

KSH. 700

3. Total Budget KSH. 7,200

APPENDIX V

Public sector ministries in Kenya

1. Ministry of Interior and Coordination of National Government

2. Ministry of Devolution and Planning

3. The National Treasury

4. Ministry of Defense

5. Ministry of Foreign Affairs

27
6. Ministry of Education

7. Ministry of Health

8. Ministry of Transport and Infrastructure

9. Ministry of Information, Communication and Technology

10. Ministry of Environment, Water and Natural Resource

11. Ministry of Land, Housing and Urban Development

12. Ministry of Sports, Culture and the Arts

13. Ministry of Labor, Social Security and Services

14. Ministry of Energy and Petroleum

15. Ministry of Agriculture, Livestock and Fisheries

16. Ministry of Industrialization and Enterprise Development,

17. Ministry of Commerce, Tourism and East Africa Region

18. Ministry of Mining.

28