FACTORS AFFECTING SUPPLIER SELECTION IN PROCUREMENT PROCESS

AMONG INTERNATIONAL NGOs: CASE OF

ACTION AID UGANDA

BY

NAME: ................................................................

RE. NO: .................................

A RESEARCH PROPOSAL SUBMITTED TO THE DEPARTMENT OF BUSINESS

AND ADMINISTRATION IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF A DEGREE OF
PROCUREMENT AND LOGISTICS MANAGEMENT
OF INTERNATIONAL UNIVERSITY
OF EAST AFRICA.

APRIL 2019

1
 CHAPTER ONE
INTRODUCTION OF THE STUDY
1.1 Introduction
This chapter entails the background of the study, statement of the problem, objective of the
study, research questions, and significance of the study, limitation of the study and the scope of
the study. This will guide the researcher in conducting the study accordance with the laid
procedures.

1.2 Background of the Study

Supply chain management and supplier selection have become the fastest growing areas of
management especially in the last few years. Although study in the area started in 1960s, it is in
the 90s that scholars gained much interest in the area of supplier selection. The reason is that
with heightened global competition that has reduced the profit margins of most companies, hence
cost cutting has become the option and is being focused in logistics which has become the single
largest and most important activity of most firms, both in the for profit and not-for-profit sectors.
As such, quite a significant portion of organizations’ budgets is spent in these activities. Supplier
selection in particular is crucial in management of a supply chain. The decision is one of the
most fundamental and important decisions made by buyers and organizations. This is because
supplier selection and management can be applied to a variety of suppliers throughout a
products’ life cycle from initial raw materials acquisition to end-of-life service providers (Bai
and Sarkis, 2009).
Internationally, purchasing is a major exercise. In USA, the total dollar magnitude of all
purchases by businesses exceeded the gross national product in 1995. Purchasing transactions
take 55% of the organization’s revenue. Supplier selection becomes important thus because it
involves large cash flows (Cheraghi, Dadashzadeh& Subramanian, n.d).
Globally, supplier selection decisions are intricate due to the fact that multiple criteria must be
considered in the decision making process. Multi-criteria approach is used in selecting suppliers,
however (Weber & Current,1991).although there are numerous criteria used in selecting
suppliers depending on organizations, literature suggests that the most important are price,
delivery, and quality. Locally, the procurement procedures pretty much follow the international

2
standards to a large extent. This means that even supplier selection determinants are more or less
similar to those considered by purchasers everywhere else.

1.3 Statement of the Problem

Determinants of supplier or vendor selection by At Action Aid Uganda have been quite a
mystery among local suppliers. Few know the attributes the Action Aid look out for in suppliers
and consequently fail to bid for contracts from Action Aid, yet only speculate that the At Action
Aid Uganda consider foreign suppliers once the latter hog all supply contracts. All through, the
procurement process, supplier selection is perceived to be riddled with secrecy and favoritism.
Certainly; this not only complicates the realization of the Action Aid’s stated objective of seeing
increased participation of local suppliers and vendors in doing business with the Action Aid
hence spurring growth in employment opportunities across the country, but also raises concern
over the social justice in the spending of commonwealth funds given the massive amounts of
money involved.

Doing business with the International agencies is one way of ensuring market for small and
medium sized business enterprises hence job creation and fulfilling one of the Action Aid’s
broad objective of poverty alleviation. Despite these obvious benefits of doing business with the
Action Aid, most Ugandan small and medium sized enterprises do not fully benefit from the
contracts because they do not know the requirements for supplier selection. A July 2008 study
report commissioned by KISM titled, ‘Procurement and Supply in Uganda: The market for Small
and Medium Enterprises’ notes that “donor and NGO procurement systems work well though
they tend to be over- bureaucratized which is itself a constraint to most SMEs with potential to
supply their procurement needs.” Therefore, determination of determinants in supplier selection
by the At Action Aid Uganda is crucial. This study therefore focuses on the determinants of
supplier selection in procurement process in the international nongovernmental organizations,
with special focus on the Action Aid Uganda. Although there are studies on supplier selection
determinants in procurement, most of this focuses on government agencies. There are hardly any
studies focusing only on supplier selection determinants in International non-Governmental
Organizations and particularly, the Action Aid Uganda, hence the need for this study.

3
1.4 Objective of the Study
1.4.1 General Objective
The general objective of this study is to investigate the factors affecting supplier selection in the
procurement process among international nongovernmental organizations with special reference
to Action Aid Uganda.
1.4.2 Specific Objectives
The specific objectives are:
i. To determine the effect of cost on supplier selection decisions at Action Aid Uganda.
ii. To investigate the effects of quality on supplier selection decisions at Action Aid
Uganda.
iii. To establish the effect of competition on supplier selection decisions at Action Aid
Uganda.
iv. To investigate the effect of technology on supplier selection decisions at Action Aid
Uganda.
1.5 Research Questions
The research questions for the study shall be:
i. How does cost affect supplier selection decisions in international organizations at
Action Aid Uganda?
ii. To what extent does quality of supplies affect supplier selection decisions at
Action Aid Uganda?
iii. What is the effect of quality on supplier selection decisions at Action Aid
Uganda?
iv. What is the effect of technology in the supplier selection decisions at Action Aid
Uganda?

1.6 Scope of the Study

The study will confine itself only to the Action Aid Uganda. The focus of the study will be on
establishing the effects of supplier selection in the procurement process among the International
Organizations in Uganda. The researcher shall take Action Aid Uganda located in opposite KIU
on gabba Road, Kampala.

4
1.6.1 Geographical scope
To carry out a study on factors affecting supplier selection in procurement process among the
International Organizations in Uganda, a case study of Action Aid Uganda. The target population
will be 40 employees of Action Aid Uganda and it will take the researcher exactly three months
to complete the researcher.

1.7 Significance of the Study

This study is significant in the sense that it will put into perspective the exact effects for supplier
selection by the international organizations in Uganda. The study will be of significant the
following.

1.7.1 To The suppliers

Especially in the small and medium size categories as it will shed light on what the International
organizations in Uganda consider in a supplier before awarding a contract.

1.7.2 To the Business consultants and entrepreneurship trainers

The study will also be valuable to business consultants and entrepreneurship trainers as they will
help businesses develop capacities in the key aspects that the International organizations consider
before selecting suppliers. The study will enable more firms to do business with International
organizations.
1.7.3 To the researcher
The main purpose is to add the already existing knowledge in Uganda Institute of Management.
The study will also provide direction to researchers in developing a theory of buyer behavior.

1.7.4 To the employees of the organization.

Who will be guaranteed of work continuity and even good remuneration after their business
volume increases due to good supplier selection.
1.7.5 To the competitors
Who can use the information obtained to take advantage on the weak areas of the competitors.
They can also use the same to learn new skills and concepts at no cost and implement them in
their organizations.

5
1.8 Conceptual frameworks
Figure 2.1Conceptual Framework
Independent Variables Dependent Variable

Cost

Technology
Factors affecting supplier selection in
procurement process among international
Competition NGOs.

Quality

Source: Author (2013)

8.1.1 Cost
The most obvious benefit to a company planning to contract a function is cost reduction. This
achieved on several fronts, instead of having to hire your own workers complete with benefit you
only pay services rendered by third party contractor, without workers to directly employ, you
will not have to spend on infrastructure costs

8.1.2 Technology
Due to the fast changing technology, the existing product may be rendered absolute. Companies
should therefore always be informed on such changes of dong work and ordering of raw
materials.

8.1.3 Competition
Competition is the effort of two or more parties acting independently to secure the business of
third party by offering the most favorable terms to gain competitive advantage. He further said

6
that competition is the pillar of capitalism and that it may stimulate innovations, encourage
efficiency or drive down process.

8.1.4 Quality
Quality can be thought as the extent to which a product or services achieves customer
satisfaction. Companies have to offer quality services in order to win their customers. The need
for the good quality of end product that satisfy customer has greatly led to a lot of considerations
when procuring raw materials equipment service.

7
 REFERENCES

James, U.V.(2014). Public Policy and the African Environment: An Examination of the Theory
and practice of the planning process of the continent. In Kalu, A.K.(Ed.). Agenda Setting and
Public Policy in Africa; Ashagte. England

Kabaj, O.(2013). The Challenge of African Development. Oxford University Press

Langseth, P.; Kato,D. ; Kisubi, D. ; & Pope, J.(2017).Good Governance in Africa. A Case study
from Uganda. EDI Working Papers, Economic Development Institute of the World Bank

Livingstone, I. & Charlton, R.(2011). Financing Decentralized Development in a Low-Income

Country: Raising Revenue for Local Governments in Uganda. In Development and Change
Vol.32 (2011), 77-100.

Management, eight edition. Prentice Hall. Financial Times: Great Britain

Odhiambo, W.; & Kamau,P.(2013). Public Procurement: Lessons from Uganda, Tanzania and
Uganda. OECD Working Paper NO.208. OECD Development Centre
Reform in East and Southern Africa; Democracy, Governance and Human rights programme
paper Number 3, February 2011

Report of the taskforce on Public Procurement (2019). Improving Public Procurement in

Uganda. Kampala, Uganda: Government of Uganda Revolution. Kluwer international