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Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 138
This work is licensed under a Creative Commons Attribution 4.0 International License
Effect of Supplier Evaluation on
Procurement Performance in Government
Ministries in Rwanda:
Case of Ministry of Health
1Betty MUKARUMONGI (Masters Student,Jomo Kenyatta University of Agriculture and Technology)
2Dr. Patrick MULYUNGI (Lecturer, Jomo Kenyatta University of Agriculture and Technology)
3Dr. Noor SALEH (Lecturer, Jomo Kenyatta University of Agriculture and Technology)
Abstract: The purpose of this study was to determine the effect of supplier evaluation on procurement
performances of government ministries in Rwanda. Specific objectives focused on the effects of supplier quality
commitment, financial stability of supplier and supplier competence on performance of procurement of
government ministries in Rwanda. The research employed a descriptive research design. The target population
for the study included 650 employees of the ministry of health in Rwanda. Stratified random sampling was
used to determine the sample size. The study used both primary and secondary data, where questionnaires,
interview and annual reports of ministry of health were used. Primary data for the study was collected using
structured questionnaires that were administered to the respondents. Quantitative data was analyzed using
descriptive statistics narrative data were analyzed using qualitative approaches. Data collected was analyzed
using SPSS version 21which involved statistical computations for averages, percentages, and correlation and
regression analysis. The findings of the study revealed that suppliers’ quality commitment, suppliers’ financial
capacity and suppliers’ competence have significant effect on performance of procurement function in Rwanda
individually with t=3.144; p=0.003, t=1.101; p=.046 and t=4.335; p=0.000 respectively and collectively with
R-square value of 0.661. From the findings, the study recommends that experts who are knowledgeable and
have expertise should be consulted in conducting supplier evaluation. Supplier evaluation criteria should focus
on suppliers’ quality commitment, financial capacity and competence should be considered when awarding
supply contracts to suppliers.
Keywords: Supplier evaluation, supplier performance management, procurement performance.
I. INTRODUCTION 1.1 Background of the study
Organization’s ability to offer consistent quality and compete largely depends on its access to quality
products and services (CIPS, 2013). As market factors change, organizations also need to change. This is
particularly true in competitive and globalized markets. Organizations are constantly under pressure to find
ways to cut material and production costs through engaging in strategic supplier selection process and
evaluation (Weber, 2008). According to SundtoftHald et.al (2012) supplier evaluation is perceived as a tool
which provides the buying firm with a better understanding of ‘‘which suppliers are performing well and which
suppliers are not performing well’’ but studies reveal that even after having carried out an in-depth supplier
evaluation plus appraisal coupled with the enactment of Public Procurement and Disposals Act (PPDA) of 2009
and other policies on supplier evaluation, inefficiencies still exist ranging from supplies being made halfway or
even termination of contracts before conclusion.
Supplier evaluation is a significant process for any organization because on average, products that are
purchased account for between forty and sixty percent of sales of end products (Chartered Institute of
Procurement and Supply). This directly influence the quality and cost of purchased products; a small gain in
cost due to supplier selection has significant benefits for organizations. Supplier evaluation is one of the
activities executed
by procurement staff and one whose effective execution determines the success or failure in the procurement
performance. Purchases from suppliers account for more than half of total costs for most companies and in some
industries, such as electronics, telecommunications, construction, and automotive, this portion is normally
substantially higher (Gadde & Håkansson, 2001).
Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 139
This work is licensed under a Creative Commons Attribution 4.0 International License
Supplier evaluation is the quantitative and qualitative assessment of suppliers to ensure a portfolio of
best in class suppliers is available for use (Kemunto, 2014). To sustain effective and reliable sources of supplies,
buyers should select their suppliers carefully and evaluate them regularly (Humphreys, 2003). The concept of
supplier evaluation has gained popularity among practitioners and even scholars (Humphreys, 2004).
According to Handfield (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 was sought for and those that do not meet the criteria set by firms are supposed to be
weeded out.
Public procurement is the purchasing and logistics operations in the public sector or in public
institutions (Osuga et al., 2015). In many countries, the public sector is the major source of market for suppliers
sometimes demanding up to 40 percent of national demand. For instance, in the UK, the public-sector demand
per year stands at £150 billion. For this reason, the government of UK has formulated public contracts
regulations 2015 aimed at enhancing transparency and efficiency in public procurement operations in the
country (UK Legislation, 2015). In Africa, owing to the importance of public procurement, conference on public
procurement has been constituted to look at issues of integrity and transparency in public procurement
(International Trade Centre, 1999). Similarly, scholars have developed interest about public procurement in the
recent past conducting a number of studies on the subject. For instance, Quinot & Arrowsmith (2013) wrote a
book that focused on the law governing public procurement in a number of African systems and looks at key
themes relevant to all African states to provide a focused view of the African systems and bring a comparative
perspective in understanding Public Procurement in Africa and other parts of the world.
In Malaysia, for instance, Gordon (2008) conducted a study to assess the impact of supplier evaluation
on business performance among private hospitals. In Nigeria, the study conducted by Amin et al. (2012) on
supply chain practices identified supplier evaluation and a critical supply chain activity that every organization
must engage in. In
Rwanda, the RPPA Act 2009 and procedure 2010 serves as a guide that provides guidelines and
procurement procedure and supplier evaluation for public procurement entities to ensure judicious, economic
and efficient use of state resources ensuring that public procurement is carried out in affair, transparent and non-
discriminatory manner. Among other criteria, the Act 2005 states that tenderers and other suppliers should
possess the necessary professional and technical qualifications and competence, financial resources, equipment
and other physical facilities, managerial capability, reliability, experience in the procurement object and
reputation; and the personnel to perform the procurement contract. In spite of all these, public institutions such
as government ministries have never realized the objective of supplier evaluation (PPOA, 2009).
Kangogo, J. and Kiptoo, (2013) associated procurement performance with effectiveness and efficiency
procurement operations. On the other hand, Muma et al. (2014) pointed out that procurement operational
performance is associated with reduced procurement costs and improved achievement of procurement
organizational goals respectively. The concept of procurement performance has emerged strongly in the recent
past in Rwandan Public sector (Chemoiywo, 2014). This is due to the malpractices and inefficiencies
experienced in the sector in the past. Similarly, the public procurement functions in Kenya have been
characterized with inadequate funding from the government (Ikumu, 2014). Expert Group Meeting discussed by
Rotich et al. (2015) pointed out that procurement performance is concerned with effectiveness and efficiency in
procurement operations. They came up with eight indicators for measurement of procurement operational
performance. The indicators include; the level of price variance, level of contract utilization, expiration
management, supplier performance, procurement cycle time and variability, payment processing time,
procurement cost and staff training. Procurement performance is associated with cost reduction, enhanced
profitability, assured supplies, quality improvements and competitive advantage (Kamotho, 2014). This study
intended to study how procurement operational performance can be enhanced through supplier evaluation. Any
organizational success often hinges on the most appropriate selection of its partners and suppliers. Procurement
is an increasingly important activity within most government ministries, and severe financial and operational
consequences can result from the failure to optimize the procurement function. Specifically, appropriate
supplier’s selection is one of the fundamental strategies for enhancing the quality of output of any organization,
which has a direct influence on the company’s competitiveness and reputation (Dobos, 2003). One of the
techniques used by organization to select best suppliers is supplier evaluation.
In Rwanda, the Public Procurement and Disposal Act 2009 outlined the process through which the
government operates and spends public money (MINFRA, 2015). It is estimated that in Rwanda public
procurement accounts for over 10% of the Gross Domestic Product (GDP), making it a large market for
suppliers and contractors (Cousins, 2008). With this amount of resource, public procurement tops the list of
sectors with high opportunities for corruption (International Transparency, 2010). This therefore means that
every effort should be made to erect safeguards to check against corrupt malpractices in public procurement
(PPOA, 2009). It is for this reason that there is a need to assess both the potential and current suppliers on one
Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 140
This work is licensed under a Creative Commons Attribution 4.0 International License
on one basis to improve their performance and capabilities for the benefit of buying organization (CIPS
Knowledge, 2014).
After the prequalification of suppliers through supplier evaluation, improvement in procurement
performance is expected, however it puzzling to note that buyer supplier relationship does not last any longer,
suppliers are in most cases conventionally selected based on low price and less importance is given to the
suppliers who give assurance of on time delivery and long term relationships (OECD, 2007). The question arises
in this case as to what criteria to government ministries use in selecting and evaluating its suppliers for better
procurement performance.
There have been reported concerns that procurement performance of the public institutions including
government ministries have a lot of gray areas in the procurement
operations ranging from supplier’s failure to meet delivery dates, delivery of inferior materials and even at times
failing to furnish the orders completely (OECD, 2007). At the same time there is an increasing trend of a
number of suppliers even those within the approved list of suppliers demanding payment before the deliveries
are made (The New Times, 2014). The aim of this research project therefore is to find out the effect of supplier
evaluation on the performance of procurement function in government ministries in Rwanda.
1.2 Statement of the problem
Suppliers are important stakeholders whose operations can impact the overall performance of a given
procurement function. The choice of an organization’s supplier should be guided by an elaborate evaluation of
the potential suppliers since the suppliers can impact the performance of any procurement function or process.
Delayed deliveries, poor quality products or services, non-completion of orders and even threats of litigation due
to delayed payments is a common scenario experienced by public institutions.
Public procurement is key to government service delivery, yet constraints affect its performance.
Procurement is perceived as prone to corruption; occasioning waste and affecting quality of service and life
improving opportunities. There is need to reverse this worrying trend and win public confidence. Despite
Government efforts to improve the procurement system, it is still marred by shoddy works, poor quality goods
and services. Improper implementation of recommended performance standards results in unnecessarily high
operation costs, uncoordinated business activities, inability to achieve domestic policy goals, and failure to
attract and retain professionals. Suppliers complain about the capability of public sector buyers.
Report by RPPA indicates that up to 30% of procurement inefficiencies in the public sector in Rwanda are
attributed to supplier’s performance issues. There is therefore concern as to what can be done to reduce supplier
related procurement issues. One of the ways through which organizations strive to reduce supplier related
inefficiencies is through evaluation of suppliers. In ideal situations, supplier evaluation is expected to positively
influence procurement performance. However, it puzzling to note that the relation has not been the case as
studies reveal mixed findings with some indicating significant positive relationship while other indicate
insignificant relationship.
As reported by RPPA, in the public sector in Rwanda, suppliers are in most cases conventionally
selected based on low price and less importance is given to the suppliers who give assurance of on timely
delivery and long-term relationships. The question arises in this case as to what criteria the government
ministries should use in selecting their suppliers for better procurement performance. Supplier evaluation is
arguably one of the popularly used approaches of ensuring the right suppliers are awarded contracts. It is for this
reason that this study focused on the effect of evaluation on procurement performance in government ministries.
1.3 Objectives of the study
1.3.1 General objective
The general objective of the study was to determine the effect of supplier evaluation on procurement
performances of government ministries in Rwanda
1.3.2 Specific objectives
The specific objectives of the study were:
To evaluate the effect of supplier’s quality commitment on procurement performance in government ministries
in Rwanda
To determine the effect of Supplier’s financial stability on procurement performance in government ministries
in Rwanda
To assess the influence of supplier’s competence on procurement performance of government ministries in
Rwanda.
To establish the effect of ICT integration on procurement performance of government ministries in Rwanda.
1.4 Research questions
The following research questions guided the study:
What is the effect of supplier’s quality commitment on procurement performance in government ministries in
Rwanda?
Does Supplier’s financial stability affect procurement performance in government ministries in Rwanda?
Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 141
This work is licensed under a Creative Commons Attribution 4.0 International License
How does supplier’ competence influence procurement performance of government ministries in Rwanda?
What is the effect of ICT integration on procurement performance of government ministries in Rwanda?
II. EMPIRICAL LITERATURE REVIEW 2.1 Suppliers’ Quality Commitment
A study by Tracey (2008) on analysis of supplier and procurement issues in UK established that quality
commitment is determining factor for qualified supplier and is a key element and a good resource to cut
production and material costs in order to survive or sustain competitive position in respective markets, hence
development of an effective and rational supplier evaluation and selection is desirable. In the study, she
observed that in South Korea for example, the supplier quality evaluation function’s role has dramatically
increased as companies sought to gain competitive advantage in the global market place. The effects of supplier
quality evaluation were seen as a strategic resource for reaching high quality levels, fast delivery and cost
savings. Companies such as General Motors, Mark & Spencer have been able to gain an improved competitive
position through a better management of their purchasing activities (Dodos, 2003).
A study conducted by Kitheka et al (2013) on supplier evaluation practices established that supplier
performance measurement, supplier audits, supplier development and supplier integration are the most used
supplier quality management practices. The study also established that from supplier quality management, an
organization may enjoy among other benefits reduced lead times, increased responsiveness to customers’, orders
and enquiries, customer loyalty, increased profitability, reduced opportunity cost from lost sales and effective
communication between the organization suppliers as well as customers. The study further recommended that
suppliers should maintain reliable records so as to avoid the problem of poor visibility and traceability and that
the organizations must build into their systems quality measures and continuous inspections so that
disappointments of customers through discontinuous supply or supply of poor quality products.
2.2 Supplier Financial Capacity
According to report produced by Krause (2002) in their survey on supplier evaluation in Germany, a
competitive supplier sourcing process should be carried out in an open, objective and transparent manner can
achieve best value for money in public procurement. Essential principles that should be observed in conducting
the procurement function include supplier financial capacity, capability, and readiness to embrace new
technology among other factors. In addition to the above indicators, the findings of study conducted by Mwikali
& Kavale (2012) revealed that cost factors, technical capability, quality assessment, organizational profile,
service levels and risk factors, in that order of relative importance, are key factors affecting supplier selection in
procurement management. The findings further indicated that supplier selection should be done by experts who
are knowledgeable and have expertise to conduct the exercise professionally since supplier selection is a process
vulnerable to personal and political interference especially in the public sector.
According Pamela (2013) in her study on the determinants of supplier selection and evaluation in
Pakistan Telelecom industry, supplier financial capacity expertise is one of the key factors which determine the
eventual performance of both the supplier and procurement performance, the study depicted high correlation
between the financial capacity of supplier and ability of supplier to deliver which in turn enhances procurement
performance indicating a need for a strategic alliances for improved performance of the parties.
Similarly, a study on the evaluation of procurement process in public institutions of Uganda, conducted
in Makerere University established that reduction in purchasing cost through effective supplier evaluations is
one of the most significant purposes of procurement. On average, public Universities in Uganda spent 80% of
their budgets on activities related to the purchase of materials, hence cost reductions as a result of effective
supplier evaluation allow the firm to pursue price competition strategies in downstream markets and sustain
growth throughout the entire supply chain stream (Pontious, 2008).
2.3 Supplier Competence
A study by Kirande & Rotich (2014) on the determinants of public procurement performance in
Kenyan Universities established that the main concern of procurement function is to make sure that one buys
from the best suppliers and also improve the current suppliers. The organizations therefore choose suppliers
with who have the capacity to deliver. The study further observed that supplier evaluation can work as a tool to
influence future behavior of both buyer and supplier organization. By connecting procurement targets to certain
supplier competence, organizations achieve higher supplier performance thereby leading to improved
procurement performance. On the other hand, Nzau (2014) in his study on factors affecting procurement
performance of public Universities in Nairobi County found out that selection of suppliers is done based on
certain set criteria and the needs of the procuring entity. He points out that among the factors which affects the
procurement performance incudes timely preparation of procurement plan, strategic supplier selection plus
buyer supplier relationships among other factors.
Further study indicates that, after the prequalification of suppliers based on supplier competence, public
institutions expect a lot from their suppliers because they are confident that they have filtered their suppliers on
Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 142
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very efficient basis but still they are uncertain about the quality of the items to be delivered, on time delivery,
commitment to quality, technology leverage, and overall performance of suppliers (Masceko,2013). These
findings concur with findings of CIPS (2013) in their report on monitoring the performance of suppliers pointed
that strategic monitoring of competence of suppliers is critical in management of performance operations and
most importantly, management of supplier-buyer relationship. It is important that any procurement and supplies
professional have the required skills in supplier relationship competence determination so as to be in a position
to develop appropriate performance criteria both for suppliers and the entire procurement function. The report
further indicates that performance management criteria should be well communicated to all stakeholders who
are directly involved in procurement operations so as to enhance their contribution towards achievement of the
desired standards.
III. RESEARCH METHODOLOGY 3.1 Research design
Research design facilitates study efficiency, yielding maximal information. The study used a
descriptive research design. Descriptive research is a research design that is used in accurately describing the
characteristics of the population under study and is concerned with the “what” concept and uses descriptive
categories (Kothari, 2014).
3.2 Target population
The study targeted the employees from ministry of Health comprising the 4 departments with 650
members of staff at the headquarters of the Ministry of Health.
Table 1: Population frame
Department Population
Procurement department, 270
Finance department, 130
ICT department 150
Operations department 100
Total 650
Source: Ministry of health, Rwanda
3.3 Sample size and sampling procedure
The sampling frame describes the list of all population units from which the sample was selected
(Cooper & Schindler, 2003). This study targets a sample size of 65 respondents that represents 10% of target
population. Mugenda and Mugenda (2003). Stratified proportionate sampling technique was used.
Table 2: Population, Sample, and Sample Proportions
Department Population Sample Proportion
Procurement department, 270 27 10
Finance department, 130 13 10
ICT department 150 15 10
Operations department 100 10 10
Total 650 65 10
Source: researcher, 2018
3.4 Pilot testing of the instrument
A preliminary test was done on the data collection tools and procedures to identify likely problems.
This test was conducted at ministry of infrastructure whereby twenty questionnaires were administered to the
employees in the respective departments. The filled questionnaires were later checked for consistency.
3.5 Validity and reliability of the research instrument
Validity determines whether the research items truly measure what they are intended to measure or
how factual the research results are (Golafshani,2003). To test content validity (extent to which the sample is a
representative of the population), experts ‘opinion was sought. Reliability is the extent to which results of a
study are consistent overtime and there is an accurate representation of the total population understudy
(Golafshani, 2003). Cronbach alpha coefficient was computed using SPSS. The Cronbach alpha coefficient
value above 0.6 shows that the measurement procedure is reliable (Toke et al., 2012).
3.6 Data Analysis and presentation
Data collected using the questionnaire was analyzed through SPSS (Statistical Packages of Social
Sciences) version 21. Data was coded for analysis. Descriptive statistics such as mean and standard deviation
was used to describe indicators of supplier evaluation and procurement performance. Correlation analysis with
one tailed significant test was used to test the correlation between individual indicators of supplier evaluation
and procurement performance while a multiple regression was used to test the overall effect of supplier
Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 143
This work is licensed under a Creative Commons Attribution 4.0 International License
evaluation on procurement performance. ANOVA test was conducted to test the statistical significance of the
overall effect of supplier evaluation on procurement performance. The study was based on the following
multiple regression model;
Y = α+ β1X1 + β2X2 + β3X3 + β4X4 + …………+ µ
Y= Dependent variable – Procurement performance
α = Constant
µ= Error
β = Coefficients
X1 = Supplier Quality Commitment
X2 = Supplier’s Financial Stability
X3 = Supplier Competence
X4 = ICT integration
IV. FINDINGS AND DISCUSSION 4.1. Reliability Test
Reliability test was carried on the respective variables. The results of the reliability test were as
presented in table 3.
Table 1: Reliability Test.
Years Cronbach's Alpha No. of Items
Valid
Quality commitment 0.801 7
Financial capacity 0.789 9
Supplier competence 0.845 8
ICT integration 0.747 10
Procurement performance 0.712 15
Source: researcher, 2018
From table 3, the Cronbach’s alpha of; 0.801, 0.789, 0.845, 0.747 and 0.712 for Quality Commitment,
Financial Capacity, Supplier Competence ICT integration and Procurement Performance were above the
threshold value of 0.7. It was therefore concluded that the research instruments were reliable and hence could be
used in the study.
4.2 Effect of supplier’s quality commitment on procurement performance in government ministries in
Rwanda.
Supplier’s quality commitment on procurement performance in government ministries in Rwanda.
Respondents’ opinions against the statements were recorded using the scale shown below: 1-Strongly disagree;
2 – Disagree; 3 – Indifferent; 4 – Agree; 5 –Strongly agree.
Table 4: Statements relating to effects of Supplier’s quality commitment on procurement performance in
government ministries in Rwanda
Statements 1 2 3 4 5
Supplier Selection is affected by politicians and other external
players.
21% 40% 3% 19% 17%
Open tendering is done transparently 39% 15% 10% 36% 0%
Restricted tendering is never done in the Ministry of Health 39% 43% 10% 8% 0%
Bids evaluation is handled by competent members 25% 35% 25% 12% 3%
Annual procurement plan is not prepared in good time 15% 35% 13% 19% 18%
Composure of tender committee is all inclusive (all departments
represented)
39% 15% 10% 36% 0%
Deliveries’ inspection process is not handled well by inspection
committee.
33% 34% 9% 19% 5%
All suppliers are promptly paid on delivery. 15% 23% 25% 19% 18%
Source: researcher, 2018
Analysis of the responses to the statement that Supplier Selection is affected by politicians and other
external players it was found that 21% of the respondents strongly agreed, 40% agreed, 3% were neutral, 19%
disagreed while 17% strongly disagreed. Analysis of the statement that open tendering is done transparently was
also done and it was found that, 39% of the respondents strongly agreed, 15% agreed, 10% were neutral, 39%
Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 144
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disagreed while none of them strongly disagreed. When the responses to the statement that restricted tendering
is never done in the Ministry of Health were analyzed, it was found that 39% of the respondents strongly agreed,
43% agreed, 10% were neutral, 8% disagreed while none strongly disagreed. Analysis of the statement that bids
evaluation is handled by competent members was also done. From the analysis, it was found that 35% of the
respondents strongly agreed with the statement, 25% agreed, 25% were neutral, 12% disagreed while 3%
strongly disagreed. Analysis of the statement that the annual procurement plan is not prepared in good time was
also done. From the analysis, it was found that 15% of the respondents strongly agreed with the statement, 35%
agreed, 13% were neutral, 19% disagreed while 18% strongly disagreed. When the responses to the statement
that Composure of tender committee is all inclusive (all departments represented) were analyzed, it was found
that 39% of the respondents strongly agreed, 15% agreed, 10% were neutral, 39% disagreed while none of them
strongly disagreed. Analysis of the statement that deliveries’ inspection process is not handled well by
inspection committee was also done and it was found that, 39% of the respondents strongly agreed, 15% agreed,
10% were neutral, 39% disagreed while none of them strongly disagreed.
Table 5: Correlation between supplier’s quality commitment and procurement performance
Quality commitment Procurement performance
Quality commitment
Pearson Correlation 1
Sig. (2-tailed)
N 62
Procurement
performance
Pearson Correlation .347** 1
Sig. (2-tailed) .000
N 62 62
**. Correlation is significant at the 0.01 level (2-tailed).
Source: researcher, 2018
Table 5 indicate that supplier’s quality commitment and procurement performance (r=0.347, p<0.01).
This implies that supplier’s quality commitment would result to procurement performance.
4.3 Effect of supplier’s financial ability on procurement performance in government ministries in
Rwanda.
Financial ability on procurement performance in government ministries in Rwanda. According to the likert-scale
from the questionnaire that sought to determine the extent which supplier finances indicators play a role in
procurement performance, 1 represented strongly disagree, 2 represented Disagree, 3 represented Neutral, 4
represented Agree, 5 represented strongly agree.
Table 6: Statements relating to effects of Supplier’s financial ability on procurement performance in
government ministries in Rwanda
Statements 1 2 3 4 5
Supplier finances are considered during supplier evaluation in the
organization as a measure to improve the procurement
performance
72.3% 34% 3% 27.7% 13%
Supplier’s financial condition need to be evaluated at the earliest
stages of supplier appraisal
39% 15% 10% 36% 0%
Company suppliers had sufficient capacity to fulfill the orders 39% 43% 10% 8% 0%
The scale of borrowing and the ratio of debts to assets of the
supplier are assessed
25% 35% 25% 12% 3%
Supplier possibility of takeover or merger that will affect the
ability to supply was low
15% 35% 13% 19% 18%
The return on assets, employed by a supplier are considered 39% 15% 10% 36% 0%
The profitability and the relationship between supplier’s gross and
net profits over the last three years was stable
33% 34% 9% 19% 5%
The turnover of the supplier was calculated over the last three
years
15% 23% 25% 19% 18%
Source: researcher, 2018
Betty MUKARUMONGI et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08 Issue 05, May 2018, Page 138-151
http://indusedu.org Page 145
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The study sought to determine whether supplier finances are considered during supplier evaluation in
the organization as a measure to improve the procurement performance. The study found out that a large
percentage of 72.3 with a frequency of 34 were of the opinion that supplier finances was considered during
supplier evaluation in the organization while only 27.7% of the respondents with a frequency of 13 were of the
contrary opinion. From this data the study deduced that supplier finances were considered during supplier
evaluation in the organization as a measure to improve the procurement performance as confirmed by the
response from the majority of the respondents resulting to collection of reliable data. Supplier’s financial
condition need to be evaluated at the earliest stages of supplier appraisal.
Based on the study findings, most respondents strongly agreed to the statement that company suppliers
had sufficient capacity to fulfill the orders. Respondents also agreed to the statements that the scale of
borrowing and the ratio of debts to assets of the supplier are assessed; Supplier possibility of takeover or merger
that will affect the ability to supply was low; The return on assets, employed by a supplier are considered.
However, respondents were neutral to the statement that the profitability and the relationship between supplier’s
gross and net profits over the last three years was stable. Finally, based on the study findings respondents
disagreed to the statement that the turnover of the supplier was calculated over the last three years. In additions
to financial stability of the supplier, a buyer should equally look at a supplier’s price and cost factors. Evaluating
a supplier’s cost structure needs a deep understanding of a supplier’s total costs, including: direct labor costs,
indirect labor costs, material costs, manufacturing costs and the general overhead costs. Understanding cost
structure of the supplier will help a buyer determine how efficiently a supplier can produce an item and at the
same time provide means for identification of areas of costs improvement (Handfield, 2008).
Table 7: Correlation between supplier’s financial ability and procurement performance
Financial ability Procurement performance
Financial ability
Pearson Correlation 1
Sig. (2-tailed)
N 62
Procurement
performance
Pearson Correlation .447** 1
Sig. (2-tailed) .000
N 62 62
**. Correlation is significant at the 0.01 level (2-tailed).
Source: researcher, 2018
Table 7 indicate that supplier’s financial ability and procurement performance (r=0.447, p<0.01). This
implies that supplier’s financial ability would result to procurement performance.
4.4 Effect of supplier’s competence on procurement performance in government ministries in Rwanda.
Supplier’s competence on procurement performance in government ministries in Rwanda.
Respondents’ opinions against the statements were recorded using the scale shown below: 1-Strongly disagree;
2 – Disagree; 3 – Indifferent; 4 – Agree; 5 –Strongly agree.
Table 8: Supplier financial ability
S/N Statement N Mean Std.
Deviation
Financial appraisal of the supplier is always done 62 3.87 .797
Supplier ability to offer after sale services (maintenance) is
always appraised
62 3.82 .857
The contractors’ competency of key personnel was appraised 62 3.74 .968
Contractors technical ability to meet to meet the project
requirements was appraised
62 3.66 1.063
Contractors legal capacity was appraised 62 3.79 .911
Suppliers' quality control systems were appraised 62 3.75 .975
Visit to the contractors/suppliers' premises was made 62 3.82 .976
Contractors experience to undertake the project was appraised 62 3.82 .914
Suppliers commitment to supply for the project was appraised 62 3.95 .819
Contractors ability to consistently meet project requirements
was appraised
62 3.64 1.059
Source: researcher, 2018
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From the results above, it is eminent that supplier appraisal was practiced for most of the procurement
in the Ministry of Health. Supplier commitment to supply for the project was the highly rated appraisal with a
(x̅=3.95). Financial appraisal was the second appraisal that was highly practiced with a (x̅=3.87). These findings
concur with (Kiruri, 2013; Mungai, 2014) who found out that financial, quality, technical assessments were the
main criteria used to appraise suppliers. Further the need for the procuring entity to make visits to
suppliers/premises as a way to assess the suppliers’ capability was practiced as agreed by (x̅=3.82) of the
respondents. This in line with Mungai (2014) who in his study established that site visit was one of the common
ways of appraising suppliers and their performance.
Table 9: Correlation between supplier’s competence and procurement performance
Supplier competence Procurement performance
Supplier competence
Pearson Correlation 1
Sig. (2-tailed)
N 62
Procurement
performance
Pearson Correlation .444** 1
Sig. (2-tailed) .000
N 62 62
**. Correlation is significant at the 0.01 level (2-tailed).
Source: researcher, 2018
Table 9 indicate that supplier’s competence and procurement performance (r=0.444, p<0.01). This
implies that supplier’s competence would result to procurement performance.
4.5 Effect of ICT integration on procurement performance in government ministries in Rwanda.
ICT integration on procurement performance in government ministries in Rwanda. Respondents’
opinions against the statements were recorded using the scale shown below: 1-Strongly disagree; 2 – Disagree;
3 – Indifferent; 4 – Agree; 5 –Strongly agree.
Table 10: Extent of ICT integration on procurement performance in government ministries in Rwanda
Statements Mean Std. Dev
Announcement of the notice – publication 3.5845 0.7725
Contract Administration 3.5643 1.4527
Preparation of Tender Dossier 3.5542 1.1833
Procurement Planning 3.5428 1.5152
Calculating the value and classification of the contract 3.3714 08370
Opening and evaluation of tenders 3.3322 1.4923
Determination of the procurement procedure 3.0000 0.8401
Giving and signing of contract 3.0000 0.8401
Source: researcher, 2018
From the study, majority of the respondents indicated the star rated hotel have adopted ICT in
announcement of the notice – publication to a great extent as shown by a mean score of 3.5845, as well as
contract administration shown by a mean score of 3.5643, preparation of tender dossier shown by a mean score
of 3.5542 and procurement planning shown by a mean score of 3.5428. In addition, the hotels adopted ICT in
calculating the value and classification of the contract, opening and evaluation of tenders, determination of the
procurement procedure and giving and signing of contract to moderate extents as shown by a mean score of
3.3714, 3.3322, 3.0000 and 3.0000 respectively. ICT in procurement enables organizations to extend the speed,
quality and quantity of information processing. The operational benefits are related to improving the efficiency
of the procurement process and thereby reducing the total costs of procurement
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Table 11: Correlation between ICT integration and procurement performance
ICT integration Procurement performance
ICT integration
Pearson Correlation 1
Sig. (2-tailed)
N 62
Procurement
performance
Pearson Correlation .544** 1
Sig. (2-tailed) .000
N 62 62
**. Correlation is significant at the 0.01 level (2-tailed).
Source: researcher, 2018
Table 11 indicate that ICT adoption and procurement performance (r=0.444, p<0.01). This implies that
ICT adoption would result to procurement performance.
4.6 Procurement Performance
The results on the procurement performance as well as the influence of the supplier evaluation criteria
on procurement performance are presented under this section. These are in frequencies as well as their mean
values based on the extent of influence of supplier evaluation on procurement performance.
Table 12: Procurement Performance
Statements No
extent
Little
extent
Moderate Large
extent
Very
large
extent
Mean Std.
Dev
Reduction in product and material
costs
2% 8% 4% 48% 38% 4.473 .8721
Enhanced quality of output 2% 6% 10% 64% 30% 4.871 .5632
Rate of returned goods/materials 2% 10% 8% 50% 30% 4.692 .9170
Reduction in supplier quality
problems
2% 4% 14% 48% 32% 4.163 .7783
Eliminating wasteful steps in
production process
2% 2% 8% 54% 34% 4.801 .9321
Supplier flexibility 4% 4% 6% 66% 20% 4.692 .4789
Efficiency in supply chain
management
2% 6% 4% 30% 58% 4.568 .9008
Transparency in procurement about
winning bids and prices
2% 2% 8% 54% 34% 4.801 .8203
Procurement function work in
compliance with procurement
procedures
4% 4% 6% 66% 20% 4.692 .5690
Is the choice to use specific contract
strategy inspired by the need to
deliver value for money by
Procurement
2% 6% 22% 40% 30% 4.151 .3926
Source: researcher, 2018
On the procurement performance, as shown in Table 12, effectiveness of the evaluation process leads
to improved performance in the procurement procedures. The results on means and standard deviations show
that, all the aspects of performance obtained a mean score of values between 4.0 and 4.9 which the range for a
large extent of agreement. Based on the mean results, the highest rank was obtained as 4.871 which indicated
that with effective supplier evaluation criteria, an organization will benefit with enhanced quality of output in its
operations. The lowest mean obtained on the other hand was 4.151 for the aspect that supplier evaluation is the
choice to use specific contract strategy inspired by the need to deliver value for money by Procurement.
With respect to the frequency analysis, results indicate that best practices in supplier evaluation results
to reduction in product and material costs. This is as reported by 48% and 38% who agreed to a large and to a
very large extent respectively. 94% of the respondents also agreed that supplier evaluation leads to enhanced
quality of output. With efficiency supplier evaluation, an organization encounters a decreased rate of rate of
return inwards as reported by 80% of the respondents.
There are also reduced supplier quality problems with appropriate supplier evaluation criteria
according to the response given by 80% of the respondents. Appropriate supplier evaluation criteria also result
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to an elimination of wasteful steps in production process, supplier flexibility, efficiency in supply chain
management, transparency in procurement about winning bids and prices, as well leads to procurement function
working in compliance with procurement procedures. These had majority of the respondents who agreed to a
great extent supporting the influence of supplier selection to the procurement performance of the organizations.
Supplier evaluation gives the choice to use specific contract strategy inspired by the need to deliver value for
money by Procurement as reported by 88% of the respondents.
4.7 Regression Analysis
Multiple regression analysis was conducted to establish the effect of supplier evaluation on procurement
performance of government ministries in Rwanda using a case of Ministry of Health.
Table 13: Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .779a .661 .642 .32481
Predictors: (Constant), Quality Commitment, Financial Capacity, Supplier Competence, ICT integration
Source: Researcher, 2018
From Table 13, the R-square = 0.661 implies that supplier competence, supplier’s quality commitment,
supplier’s financial capability and ICT integration collectively explain up to 66.1% of procurement
performance in the Ministry of Health.
ANOVA test was conducted to test the significance of the influence of supplier evaluation on procurement
performance. The results were as presented in Table 13.
Table 14: ANOVAa
The ANOVA results for regression coefficient indicate that the significance of the F is 0.00 which is
less than 0.05. P=0.000(<0.05) implies that the collective effect of supplier’s quality commitment, supplier’s
financial capability and supplier competence is statistically significant.
This implies that there is a positive significant relationship between supplier evaluation versus
procurement performance of Ministry of Health in Rwanda and that the model is a good fit for the data.
Table 15: Coefficient results
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std.
Error
Beta
1 (Constant) .455 .231 1.973 .106
Supplier Quality Commitment .016 .009 .444 1.815 .009
Supplier’s Financial ability .182 .050 1.231 3.616 .036
Supplier Competence .153 .017 1.075 3.159 .025
ICT integration .204 .240 .230 .850 .028
Source: Researcher, 2018
From the data in the above table the established regression equation was
Y = 0.455 + 0.016 X1 + 0.182 X2 + 0.153 X3 + 0.204 X4
From the above regression equation, it was revealed that holding supplier quality commitment,
Supplier’s Financial ability, supplier competence and ICT integration to a constant zero, procurement
performance would be at 0.455. A unit increase on supplier quality commitment would lead to increase in
procurement performance by a factor of 0.016, a unit increase in Supplier’s Financial ability would lead to
increase in procurement performance by a factor of 0.182, a unit increase in supplier competence would lead to
increase in procurement performance by a factor of 0.153 and unit increase in ICT integration would lead to
increase in procurement performance by a factor of 0.204.
Model Sum of Squares df Mean Square F Sig.
1
Regression 11.098 3 3.699 11.388 .000b
Residual 5.697 54 .105
Total 16.795 57
a. Dependent Variable: Procurement performance
b. Predictors: (Constant), Quality Commitment, Financial Capacity, Supplier Competence, ICT integration
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V. SUMMARY, CONCLUSION AND RECOMMENDATIONS 5.1 Summary of the study
The study was undertaken with the aim of investigating the supplier evaluation criteria and the
influence on the procurement performance in Rwanda. The study findings revealed majority of the organizations
considered evaluation based on the quality of the supplier services, financial position of the supplier as well as
the flexibility of the supplier during supplier evaluation. Other considerations made were supplier efficiency in
service delivery, price/cost charged by the supplier, constitution and the PPOA guidelines, information sharing
between the organization and supplier, supplier technical capability, supplier profile, ability of the supplier to
share confidential information, experience of the supplier in offering certain services/products as well as
compliance with procurement procedures.
The study findings established major challenges that affected the effectiveness of the procurement
evaluation process. These included; incompetence by procurement officers, corruption, and ignorance of
guidelines provided by the PPOA, as well as inefficiencies in procurement processes. Lack of incentives,
pressure of implementing PPOA and PPDA guidelines, cost of implementing procurement systems as well as
maintaining procurement system greatly affects supplier selection process. Other challenges included lack of
management support, lack of expertise in evaluation among supply chain staffs, inadequate transparency from
suppliers as well as lack of clear goals towards procurement.
The study findings on the influence of supplier selection criteria on procurement performance revealed
that evaluation based on the quality of the Supplier services greatly influences procurement performance. As
well, selection based on the financial position of the Supplier was also reported to have a great and very great
extent of influence to the procurement performance. Findings also revealed that selection based on the flexibility
of the supplier greatly affect performance. Further, supplier efficiency evaluation criteria were found to have a
great effect on procurement performance. Evaluation based on price/cost charged by the supplier criteria as well
was reported to have a great effect on procurement performance. Other evaluation criteria used were
constitution and the PPOA guidelines criteria, ability of the supplier to share information with the organization,
Supplier technical capability as well as supplier profile which were found to have a great effect on procurement
performance. Findings further revealed that the ability/willingness of the supplier to share confidential
information, selection based on the experience of the supplier in offering certain services/products and
compliance with procurement procedures greatly affects procurement performance.
Conducting a regression test, the study findings revealed that the selection criteria used (quality of the
Supplier services, Financial position of the Supplier, flexibility of the supplier, Supplier efficiency in delivery
and service, price/cost charged by the supplier, Constitution and the PPOA guidelines, Information sharing,
Supplier technical capability, Supplier profile, Ability/willingness to share confidential information, Supplier
experience, and Compliance with procurement procedures) explains 661% of the procurement performance. All
these criteria were found to have a positive relationship with procurement performance of the organizations. The
relationship was also tested to be significant at the 5% level of significant indicating significant influence of the
evaluation criteria on procurement performance.
5.2 Conclusions
Supplier quality commitment, supplier’s financial stability and supplier competence have significant
effect on procurement performance of Ministry of Health. The study therefore concludes that supplier’s
evaluation is very critical and significant in affecting the procurement performance in the Ministry of health.
5.3 Recommendations
The study recommends the following; Supplier selection should be done by experts who are
knowledgeable and have expertise to conduct the exercise professionally. This is because supplier selection is a
process vulnerable to personal and political interference especially in the public sector. Quality commitment
must be considered a critical factor in supplier evaluation and supplier selection.
The performance management criteria should focus on suppliers’ financial capacity as one of the
criteria for supplier selection. This is because suppliers’ financial capability directly influences the ability of the
suppliers to meet organizational needs. There is need to be communicated to all stakeholders who are directly
involved in procurement operations on the need to consider financial capacity of suppliers.
The researcher recommends that supplier competence should be considered when awarding supply contracts. It
should form the basis of awarding contracts. This is because the level of suppliers’ competence determines the
suppliers’ ability to understand user needs and enhances their ability to satisfy supply needs of the procuring
organizations.
5.4 Areas for further research
The study suggests the following areas for further studies;
A comparative study should be conducted to establish if there is difference in the effects of supplier
evaluation on procurement performance between physical product organizations and service organizations.
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Further studies may also be conducted to relate supplier evaluation and procurement performance in
government parastatals in Rwanda to establish whether there is any difference.
Lastly, further study may also be conducted on the application of seven progressive steps of supplier
evaluation
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