EFFETCT OF SUPPLIER PARTNERING ON AN ORGANIZATIONS PERFOMANCE

CASE STUDY: NILE BREWERIES LIMITED IN JINJA, UGANDA

BY

OLUOCH ROSE A TIENO

BSP/20036/82/DF

A RESEACH DESERTATION SUBBMITED TO THE SCHOOL OF BUSINESS AND

MANAGEMENT, IN PARTIAL FULFILMENT OF THE REQUIREMENTS

FOR THE AW ARD OF BACHELORS DEGREE IN SUPPLIES AND

PROCUREMENT MANAGEMENT IN KAMPALA

INTERNATIONAL UNIVERSITY

NOVEMBER 2011

DECLEARATION

I OLUOCH ROSE ATIENO declare that this research disseriation presented to

Kampala International University is my original work and has never been

presented to any institution or organization for any award.

Signature ......... -~ -~ ......... . ....... .. ....... .... .

OLUOCH ROSE A TIENO

Date ...... 0.\. ! '.~\.9.-?.\ \ ............................... ..

APPROVAL

This work has been done under my supervision as an institution supervisor and

submitted with my approval

Signature ... ~ ........... . .. .

MR HENRY BA~SA

Date .. .... 61/~.~Jf .• .... .... .

I I

DEDICATION

I would like to dedicate this research dissertation to my dearest mother Judith

Oluoch without whose constant love and support I wouldn't have came this far, to

my dad Philip Oluoch, my siblings Steve, Pam, Callo, Washington, my boyfriend

Nicholas and my best friends Rita, Suzan, Evans (gaucho) and Fred Who have

been so supportive through out my report writing.

Ill

ACKNOWLEGEMENT

First and fore most I would like to thank God for the gift of life and for the

suppotiive family he has given me. I am humbled that he has brought me this far.

I also thank my mother for always being there for me when I needed financial help

with this research dissertation.

Most of all I would like to thank my supervisor Mr. Henry Barasa for his

guidance, support and constructive criticism during the preparation of this

research. His knowledge, experience, immense wisdom and understanding greatly

contributed to the success of this study.

I am also indebted to the staff in Nile Breweries ltd in Jinja who played a great

role in the success of the study.

IV

TABLE OF CONTENTS

Declaration ............................................................................................. i

Approval. ............................................................................................. .ii

Dedication ............................................................................................ iii

Acknowledgement. ................................................................................... .iv

Table ofcontents .................................................................................................. v

List oftables ......................................................................................... vii

CHAPTER ONE

l .Ointroduction ............................................................................... 1

1.1 Background of the study ................................................................ I

1.2 Problem statement. ..................................................................... .4

1.3 Purpose of the study .................................................................... .4

1.4 Research objectives ...................................................................... 5

1.5 Research questions .............................................................................. 5

1.6 Significance of the study ....................................................................... 5

1. ?Limitations ................................................................................. 6

1.8 Scope of the study ....................................................................... 6

1.9 Conceptual frame work ................................................................. 7

CHAPTER T\-VO

2.0 Introduction .............................................................................. 9

2.1 Types of business partnering ........................................................... 9

2.2 The rational for stakeholder partnering .................................................... 11

V

2.3 Challenges faced by the business people

In establishing partnerships ............................................................... 14

2.4 Factors to consider when selecting Suppliers to partner with .................... 15

CHAPTER THREE

3.0 Introduction .................................................................................. 19

3.1 Research design ......................................................................... 19

3.2 Population of the study and sampling size .......................................... 20

3.3 Sampling and design procedure ....................................................... 20

3.4 Method of data collection ............................................................. 21

3.5 Instrumentation ......................................................................... 21

3.6 Data analysis ............................................................................ 22

CHAPTER FOUR

4.1 introduction ............................................................................ 23

4.2 Quantitative analysis .................................................................. 23

4.2.1 Response rate ........................................................................ 24

4.2.2 Gender analysis ...................................................................... 25

4.2.3 Level of education ................................................................... 27

4.2.4 Working experience ................................................................. 28

4.2.5 Category of respondents ............................................................ 30

4.3 Qualitative analysis .................................................................... 34

VI

CHAPTER FIVE

5.1 Introduction .......................................................................... 36

5.2 Summary offindings ................................................................ 36

5.3 Research Question One .............................................................. 37

5.4 Research Question Two ............................................................. 39

5.5 Research Question Three ........................................................... .42

5.6 Conclusion ............................................................................ 45

5.7 Recommendations .................................................................. .46

REFERENCES ................................................................................. .48

QUESTIONNAIRE ........................................................................... . 52

Vil

LIST OF TABLES

Table 3.lshows the target population ..................................................... 20

Table 3.2 shows the sample design ........................................................ 21

Table 4.1 shows the response rate ........................................................ 24

Table 4.2 shows the gender analysis ..................................................... 25

Table 4.3 shows the age of the respondents ............................................ 26

Table 4.4 shows the level of education of the respondents .......................... 27

Table 4.5 shows the period the respondents have been working for NBL ......... 28

Table 4.6 shows the category of the respondents ...................................... 30

Table 4.7 shows how many respondents understand suppler partnering .......... 31

Table4.8 shows how the supplier's ability to raise and lower prices affects the

organization ................................................................................. 32

Table4.S9 shows the success ifNBL in establishing supplier partnership ........ 33

VIII

CHAPTER ONE

1.0 Introduction

This study covers the effect of supplier partnering on overall organization

performance. This chapter consists of ten sections that is background of the study,

problem statement, purpose of the study, research questions, significance of the

study, limitations of the study, scope of the study, and conceptual frame work.

1.1 Background of the study

Partnering for mutual benefit is fundamental to total quality. In an intensely

competitive market place where quality is defined by the customers, such practices

as low-bid contracts, antagonistic internal relationships and attempting to operate

as an island are being replaced by partnering. Working together for mutual benefit

sounds like something nice to do and it is. However being nice has nothing to do

with this contemporary approach.

The main objective of purchasing is to ensure that required materials are available

when they are needed, in proper amounts and at minimum costs. To attain this

objective business mangers must select suppliers carefully. Generally the company

with purchasing needs must develop a working relationship with their suppliers

and customers built on trust. Purchasing personnel should be on the look out for

new or back up suppliers even when their needs are being meet by the current

suppliers, because problems such as strikes and equipment breakdown can cut

down the flow of purchased materials at any time.

The procurement function buys all the materials and parts the firm needs to

conduct business. Hence procurement is a more important function than many

managers realizes. Some experts estimate that sixty percent of manufacturer's

sales are paid to suppliers for purchased materials. Without good supplier

relationships, suppliers can raise prices and provide poor quality goods and

services which will end up affecting the business negatively. For example if a

supplier charges highly for delivery and the business person can not transfer or

pass the price increases to the customers then the business returns will be low.

Background on Nile breweries

Nile breweries limited is a top beer company in Uganda that has lead beer market

in Uganda and beyond through its numerous products currently on the market.

These brands have made it a world class winner in the gold category over the

years. It has dominated the value for money beer category through their brands

Eagle Lager and Eagle Extra and the main stream category beer with Nile Special.

Their competitors have dominated the mainstream beer category through Bell

Leger but their own Club Pilsner is a strong challenger. They also have

strengthened their position in the premium beer category with the launch of Castle

Larger and Redds Premium gold.

2

One of its brands that keep on winning global awards is Nile Special. Because it is

a truly rewarding beer with a full body and rich flavor brewed at the source of

river Nile. Being part of a global giant called SAB Miller has truly helped to give

them insight on what "world class" really means. This is because they have access

to world class standards. Nile Special is as good as any beer you can get- in any

country in the world.

Nile Breweries has started other brands to make beer accessible to majority of

Ugandans. In 2002 Eagle Larger was launched. This was brewed from indigenous

sorghum and as a result attracts lowers taxes. This saving has been passed directly

to the consumer, who can enjoy quality beer at low prices. Also in 2004 Eagle

Extra was launched, and has been Uganda's most popular beer for two successive

years. Many consumers are enjoying a standard, hygienic "clean beer" for the first

time ever.

The company has had significant impact on the rural economy because direct

income for farmers has risen from Ush 440 million in 2003 to Ush 2 billion in

2006. A further Ush 1.6 million was disbursed for industry related services such as

transpott and storage in the 2009. Over 8,000 farmers were involved in growing

sorghum on more than 10,000 acres of land in the last season.

3

Nile Breweries is also a very proud global player. It is a subsidiary of SABMiller

which is a company listed on both the London and Johannesburg stock exchanges.

SABMiller is currently the number two brewer globally by volume and has a

presence in 60 countries, spread in five continents, and has over 200 brands.

Their mission is to continue to reward their consumers with consistent world class

beer and on this journey endeavor to increase the quality of life many farmers,

their families and the communities.

1.2 Problem statement

Many business managers pay little or no attention to the relationship they create

with their business suppliers. What these managers do not know is that these

suppliers play a very impotiant role to the long term survival and competitiveness

of their organization.

1.3 Purpose of the study

The purpose of this research is to establish the type of supplier relationship created

by the management of Nile Breweries Ltd and how these relationships affect the

organizations performance both positively and negatively.

4

1.4 Research objectives

• To determine the factors that the Nile Breweries management considers

while choosing which suppliers to partner with.

• To find out the challenges that Nile Breweries 1s facing 111 creating

partnership with their business suppliers.

• To find out how the partnership with the suppliers has affected Nile

Breweries general performance

1.5 Research questions

• What are the factors that Nile Breweries management considers while

choosing which suppliers to partner with?

• What are the challenges that Nile Breweries 1s facing 111 creating

partnership with their business suppliers?

• How has the partnership with the suppliers affected Nile Breweries general

performance?

1.6 Significance of the study

This research will provide procurement functions in organizations with ideas on

how to develop long term lasting relationships with their business suppliers. It will

not only show the importance of building maintaining good relationships with

people who matter to the business survival but also the effect that these

5

relationships have on the organizations performance. This research will also act as

a literature review for other students who are pursuing the business course with the

aim of venturing in to the field in future.

1. 7 Limitations of the study

The following are the limitations of the study

Unreturned questionnaires- some may not be returned to the researcher by the

respondents.

Hesitancy- some employees may be hesitant 111 g1v111g information to the

researcher

Confidentiality- lack of accessibility to adequate data considered sensitive to the

company will also affect the study.

1.8 Scope of the study

The study will be confined to the premises of Nile Breweries Limited in Jinja,

Uganda. The focus of the study will be analyzing how establishing of partnering

with suppliers affects the general organizations performance. The study targeted

the management, the subordinate staff. The study will be carried out during the

month of August to November 201 I. The study will explore the problem statement

and research questions outlined. It will also specify the beneficiaries and

constrains of the study as well as the conception frame work.

6

Futiher more the study will use the work of different authors and scholars to

review the literature. Descriptive research and target population will be divided

into status to generate the sample size and gather information from the

respondents. Interviews and questionnaires will be used as ideal instruments of

data collection and latter analyzed qualitatively and quantitatively.

Finally the study will outline the summary of major findings answers to research

questions, conclusion and recommendations explained within the study also on the

prospect for further study.

1.9 Conceptual framework

The conceptual framework considers the role of the company. Supplier partnership

is the dependent variable in this study whereas the organization's performance is

the independent variable. The organization's performance, whether positive or

negative will depend on the type of relationship that the organization management

establishes with its suppliers.

The objective behind supplier partnership in any organization is to improve the

organizations productivity by maxnrnzmg the organizations product

competitiveness and further their position in the market.

Increase the capacity for innovation, have all materials when they need them at

low possible costs.

7

With that in place the organization will be able to deliver more quality products

and ensure reliable and uninterrupted supply to their customers. Supplier

partnership strengthens the relationship between the buying organization and the

supplier because both paiiies are mutually depended on each other. The supplier

receives benefits inform of reduced paper work, faster payment, long term

agreements that lead to more accurate business forecasts, access to new designs

and inputs to future materials and products.

8

2.0 Introduction

CHAPTER T\:YO

LITERATURE REVIEW

This chapter outlines the opinions of other authors and scholars with regards to

creation of lasting business partnering relationships. For ease of flow of

understanding this chapter is divided into types of business partnering, rationale

for partnering and challenges faced by business organizations in establishing

partnerships.

2.1 Types of business partnering

Business partnering can be characterized as a process of improvement that brings

an organization and its constituent parts to the point where benefits not found in

competing networks can be created. There are several types of business pattnering

that include

Internal partnering- this is where an organization creates an environment and

establishes mechanisms within it that bring managers and employees, teams and

individual employees together in mutual supportive alliances that maximize the

human resource of the organization.

With internal competition someone within the organization loses. When this

happens the organization also loses. But with mutually supportive internal

partnering, all internal partners can win and the organizations competitive force is

9

directed outwards against other competing organizations. This 1s when the

organization truly wins.

Partnering with suppliers- the goal is to create and maintain a loyal, trusting,

reliable relationship that will allow both partners to win, while promoting the

continuous improvement of quality, productivity and competitiveness.

(Profier & Houser), pminering requires an understanding of each party's need and

capabilities to establish a clear vision for focusing the efforts of people working

for the buyer and the supplier. Necessary improvements can be then dedicated to

those areas identified as requiring attention and improvement. If that focus is

placed, as it has been in most cases, solely on the buyers perceived needs, nothing

happens to establish overall improvement to the buyer-seller network. Long term

commitment then became nebulous and difficult to achieve. Continuous

improvement 1s often reduced to a short-term project instead of an ongomg

process.

Partnering with customers- the term customer means the end user of a product in

question and any buyer of a supplier's products. There are other users of this term,

the internal customers who exit in every organization, and organizations that buy

from suppliers are customers to those suppliers. However in this section the term

will be used to mean the end users and customers of suppliers.

10

The rational of forming paiinership with consumers is simple. It is the best way to

ensure customer satisfaction, which is, in turn, the best way to be competitive.

No organization can possibly know better than its customers what the customers

want. No organization can afford to squander its resources and, in turn, its

competitive edge trying to guess what the customers want.

Partnering with potential competitors-this type of partnering sounds like an odd

strategy on the surface. Why would organizations that compete for business in the

same markets want to form paiinerships? The rational to this is the same as that of

partnering with suppliers and customers; competitiveness. This is a strategy that

applies more frequently to small and medium sized firms. But it can also be used

by even the largest organizations and sometimes is. Small and medium seized

enterprises don't typically develop major technological break through. However,

there are many ways that SME's can work together to enhance their

competitiveness in spite of being competitors in the same market. The most

practiced type ofpaiinership among SME's is the manufacturing network.

l l

2.2 The rational of partnering

John Kay, director Oxford University, insists that you can not run a successful

company if you don't care about customers and employees or if you are

unpleasant to suppliers. James Morgan for the Economic magazine observed that

in purchasing, surprisingly large number of procurement organizations, suppliers

have became an imp01tant factor in planning, in fact for many procurement

organizations suppliers have became their secret weapon, their hidden resource

and their competitive edge. He further indicated that a major study in the l 990's

on buyer survey, suppliers can be an important source of information in ways in

which both small and large business can improve on their performance and

productivity.

Paul Innglis noted in purchasing that leading companies develop tailored supplier

strategies that are directly linked to their corporate strategies. He added that smmt

business leaders use suppliers to maximize their own product competitiveness,

going beyond the narrow focus of cost production. Leaders exceed traditional

sourcing practices, adopt new models to fully leverage supplier capabilities and

further their own position in the market.

According to management theorist Jordan Lewis, buyer- seller alliances unleash a

capacity for innovation that far out weighs the short term cost saving offered by

arms length competitive bidding.

12

Galbraith ( 1998) states that a company's center of gravity is usually the point

where the company has all the materials and supplies it needs when it needs them

at the low cost possible. To achieve this goal a company has to have enough

suppliers on hand to cover the product lead time- the time that elapses between

placing an order and receiving the material.

Bovee eta! (2003) indicate that a company's ability to deliver quality products and

services is often tied to the dynamics of its suppliers. Many companies now

integrate the facilities, functions and activities involved in production of goods and

services from suppliers to customers. Straut &Attner further indicate that some

suppliers have specialized equipment, engineering materials and assembly

personnel to turn out superior parts. Hence it's more practical to buy from them

than to do it yourself.

When fewer in numbers the supplier relationship is strengthened. As rule both

parties work competitively because they are mutually depended. Good supplier

partnership ensures reliable and uninterrupted transactions that benefit both

parties. Ricky eta! (1999). In addition analysts indicate that supplies receive

benefits in emerging purchasing dynamics as well. For example reduced paper

work, faster payment, long term agreements that lead to more accurate business

forecast, access to new design, and inputs to future materials and products.

13

2.3 challenges faced by business organizations in establishing partnerships

According to a 1997 A.T Kearney survey of business executives, common

impediments to establishing true business partnership with suppliers include;

attachment of greater importance to other initiatives, comfortable relationship with

existing suppliers, death of cross unit Business Corporation, poor monitoring and

control systems, inexperience at managing improvement programs and distrust of

suppliers. Earnest L.A purchasing notes that the procurement function needs to

know a great deal more about suppliers capabilities than it did when everything

depended on a bid and buy relationship. The Economist says that poor supplier

performance is not only when a purchaser runs into situations where it has links

with bad suppliers but it must also work on the possibility of the supplier passing

trade secrets to the competitors.

Wheelen &Hunger (1998) say that few firms successfully monitor all important

external factors. Even though managers agree that strategic importance determines

what variables are consistently tackled, they sometimes miss or choose to ignore

new developments. Suppliers can affect an industry through their ability to raise

prices or reduce prices of purchased goods and services .A supplier is a powerful

one if the supplier's industry is dominated by few companies but is sells to many,

if its products and services are unique, if substitutes are not readily available, if the

supplier is able to forward and compete directly with their present customers and

14

if a purchasing company buys only a small portion of the suppliers products thus

unimpo1tant to the supplier.

Maintain lasting relationship with multiple suppliers is expensive for purchasing

organizations, it takes time to survey, inquire, communicate with, evaluate

potential suppliers and build good purchaser supplier relationship. Ricky eta!

(1999). According to buster (1996), a common lament of suppliers is that buyer

organizations all too often have unrealistic expectation of the supplier's ability to

anticipate the buyer's needs. He says in new technology areas we have great

difficulty in getting users in our own company to define what they want. Most

have an attitude of I'll know what I want when I see it, and many of these users

keep changing their minds.

Daniel (20 I 0) adds that customers are not patient and sometimes will not

understand why it takes time to finish their work; however strength of a business

team spells its success.

2.4 Factors to consider while selecting suppliers to partner with

One way to identify and analyze developments in the external environment is to

use the issues of priority matrix. Identify the number of likely trends emerging

societal and task environment, access the possibility of those trends emerging in

the societal and task environment, access the possibility of those trends actually

15

occurring from high to low, and try to ascertain the impact of these trends in the

organization being examined. Wheelen & David ( 1998).

Bovee! eta! (2005) say that quality assurance includes quality control as well as

doing the job right first by designing tools and machinery properly demanding

quality parts from suppliers and encouraging customer feedback.

Straut &Attner (1998) argue that suitable suppliers must be able to offer adequate

production capacity to fill the requirements of the purchasing unit, meet delivery

schedules, offer sound guarantees and provide reliable services. Further more

Ricky eta! (I 999) add that finding and determining which suppliers to buy from

require supplier selection which is a four stage process. First survey the possible

suppliers, secondly visit, evaluate and narrow down the list of the company's

needs. Negotiate the terms of the purchase followed by the final choice of the

supplier. The forth stage is an on going process of a continuing positive buyer

relationship.

Finery (2007) advice that when looking out for new suppliers or benchmarking the

current suppliers, business are to consider the following when evaluating their

option

Commitment to quality-consider the suppliers approach to problem solving and

preventive maintenance, and its method of equipment calibration.

16

Cost competitiveness-competitive pricing is impo1iant especially for businesses

that are small or experiencing financial difficulties.

Communication-suppliers that do not maintain the policy of open communication

or even practice deception should be avoided at all costs.

Timely service- business strategies are predicted on schedules which in turn are

based on receiving shipments at an agreed upon time.

Flexible and special services- many purchasers express appreciation for suppliers

that take extra measures to satisfy their customers

Market knowledge- suppliers with extensive knowledge of the market condition

and mastery of contemporary issues affecting your business can be immensely

valuable in helping small companies chart a course of financial success.

Production capabilities- the supplier's capability for program management and

production functions should be considered including its ability to integrate design

and manufacturing functions.

17

Financial stability- businesses that locate large sums for purchasing often prefer to

make long tenn deals with suppliers that are financially stable.

Location- supplier capabilities in this area include transportation capacity,

sourcing capacity, and just-in-time performance.

Ability to provide technical assistance- suppliers with top research and

development capacities can be quite valuable to buyers providing them with

significant savings in both price and quality.

18

3.0 Introduction

CHAPTER THREE

RESEARCH METHODOLOGY

In order to achieve specific objectives, this chapter is created to determine and

give details on regarding the procedures used in conducting this study. Pertinent

issues discussed in this chapter are research design, population and sample size,

sample design, methods of data collection, and measurement of variable and data

analysis.

3.1 Research design

This research is a descriptive survey that aims at investigating how partnership

with the suppliers has affected the organizations performance of Nile Breweries

Limited.

Mugenda &Mugenda (2003) descriptive research is a process of collecting data in

order to test hypothesis or ensure question answering of subjects are according to

the study.

Gay (1999) defines descriptive research as the process of collecting data in order

to answer questions concerning the current status of the subject in the study. A

descriptive research determines and reports the way things are.

19

3.2 Population of the study and sampling size

The target of the study is Nile Breweries limited in Jinja town in Uganda. Nile

breweries limited is a top beer company in Uganda that has lead beer market in

Uganda and beyond through its numerous products currently on the market. NBL

has several beers deport in the country.

The study was concentrating on the top and middle management staff and general

staff from all departments.

Table 3.1 Target population

category population percentage

Top level management 20 25

Middle 28 35

Lower level 32 40

Total 80 100

Source: Author (2011)

3.3 Sampling and design procedure

A sample design is a smaller group obtained from the accessible population. The

sampling design to be used in this research is systematic random sampling. Where

selected respondents from a list of members in the sample will be randomized in a

bid to give indiscriminative chance in the final sample to be drawn.

20

Table 3.2 sample design

category population Population ration Sample size

Top level 20 50 IO

Middle level 28 50 14

Lower level 32 50 16

Total 80 40

Source: Author (2011)

3.4 Method of data collection

This study will consist of both primary and secondary data collection methods.

The primary method of data collection will be semi structured questionnaire and

interview. The secondary data will be obtained from documents owned by the

organization in question

3.5 Instrumentation

The main instrument used to collect data will be a questionnaire comprising of

both structured and unstructured questions .A questionnaire is a list of questions

relating to the field of enquiry and provides spaces for answers to be filled by the

respondents. The method involves preparing a questionnaire that is then sent to the

respondents with request for response. It contains both structured and unstructured

21

questions. It will be administered personally by the researcher and will be

complimented by interview.

A draft questionnaire will be pre tested on a sample of five respondents and the

final draft will be made during the pre test stage. The questionnaire will be

distributed to the respondents the collected later.

Interview involves going to the field in person for making inquiries and soliciting

for information from the respondents. This method will only be used for intensive

inquiry rather than extensive (wide) inquiry. It involves interaction between

interviewer and the interviewee.

3.6 Data analysis

The data will be analyzed both qualitatively and quantitatively. Quantitative

analysis provides in depth information of the study while qualitative analysis

enabled the use of statistics to give better understanding of the collected data

justification of qualitative was to help the researcher in analyzing the information

in a systematic way in order to come to useful conclusions and recommendations.

22

CHAPTER FOUR

DATA ANALYSIS, PRESENTATION AND INTERPRETATION OF

FINDINDS

4.1 Introduction

This chapter analyses the data. After collecting data from respondents, the data

was edited, coded and tabulated. The data was analyzed using tables and charts.

The data provided information that formed the basis for discussion and

interpretation of results. The chapter is divided into introduction, response rate,

quantitative analysis, qualitative analysis and concluding statement in the context

of effects of supplier partnering on an organizations performance.

4.2 Quantitative analysis

The study below shows the total number of respondents who responded and those

who did not respond. The total number of questionnaires that were distributed to

the field was 40 and out of 40 questionnaires 32questionnaires were fully

answered which represent 80% of the total questionnaires that were administered

to the field, while 8 questionnaires which represent 20% of the total questionnaires

were not returned

23

Table 4.1 Response rate

Population category frequency Percentage

Responded 32 80

Did not respond 8 20

Total 40 100

Figure 4.1 response rate

20%

responded

did not respond

80%

24

Table4.2 Gender analysis

Population category frequency Percentage

male 20 63

Female 12 37

total 32 100

According to the above study the total number of males who responded was

63%while the female were 37%. From the study it can be concluded that the

number of the male who responded was slightly higher than that the number of

female who responded thus male staff dominated the organization.

Fig 4.2 Gender of respondents

37%

63%

25

male

female

4.2.2 Age Analysis

Table4.3 age analysis

Population category

18-25

26-35

36-40

41-44

45-50

50 and above

total

frequency

8

12

5

3

2

2

32

Fig 4.3 Age of the respondents

40

35

30

25

20

15

10

5

0

18-25 26-35 36-40 41-44 45-49 50and above

26

Percentage

25

38

16

9

6

6

100

Series!

According to the study above 25% were between the ages of 18-25, 38% were

between 26-35years, 16% were between 36-40years, 9% were between 41-

44years, While 6% were between 45-50years and above 50years were 6%

4.2.3 Level of education analysis

Table 4.4 level of education

Population category frequency

0 level 4

A level 8

Diploma 10

University 5

Other 5

Total 32

Percentage

12

25

31

16

16

100

The above study shows the level of education of various respondents. According

to the study 31 % of the total respondents were diploma students, 25% were A

level graduates, 12% were O level graduates, 16% were university graduates,

while the rest ended in levels below that. From the study it can be cone! uded that

the majority of the respondents were diploma graduates.

27

Figure 4.4 level of education

35

30

25

20

15

10

5

0

O level A level Diploma University

4.2.4 \Vorking experience

Population category frequency

0-2 years 7

3-5 years 8

6-8 years 12

9-11 years 3

12 years and above 2

Total 32

28

Seriesl

Other

Percentage

22

25

38

9

6

100

Fig 4.5 \Vorking experience

40

35

30

25

20

15

10

5

0

0-2years 3-5years 6-Syears 9-llyears 12and above

Serlesl

The study above shows the number of years that various respondents worked at

Nile breweries. From the study 22% of the total respondents indicated that they

have been working at Nile breweries for period of 0-2 years, 35% said they have

working for a period of 3-5 years, while 38% have worked for a period of 6-8

years and 9% and 2%indicated that they have been working for a period of 9-

11 years and 12 and above years respectively. Based on the study it can be

concluded that most of the respondents have been working at Nile breweries for a

period of 6-8 years

29

4.2.5 Category of the respondents

Table 4.6 category of the respondents

Population category frequency

Managers 12

Non managerial 20

Total 32

Fig 4.6 category of respondents

38%

62%

Percentage

38

62

100

manegerial

non managerial

The above study shows the response of the respondents on the category of various

respondents. According to the figure 4.6 38% of the respondents indicated that

they were management staff while 62% indicated that they were non management

staff.

30

4.2.7 Do you understand what the term supplier partnering is?

Table 4.7

Population category

Yes

No

Total

Figure 4.7

19%

frequency

26

6

32

81%

Percentage

81

19

100

yes

No

The table shows how many people in the organization understand what the term

supplier partnering is. Based on the analysis 81 % of the total respondents

indicated that they understand stakeholder partnering while 19% of the total

respondents stated that they did not understand what stakeholder partnering is.

31

4.2.8 Has Nile breweries succeeded in establishing any partnership programs

with their company's suppliers?

Table 4.8

Population category

Yes

No

Total

Figure 4.8

32%

frequency

22

10

32

68%

Percentage

68

32

100

yes

No

The study above shows that Nile breweries show that indeed Nile breweries have

succeeded in establishing partnership relationships with their suppliers in the

organization. 68% of the total respondents indicated that Nile breweries ltd has

succeeded in establishing partnership relationships with the company's

32

stakeholders while 32% of the total respondents felt that they have not yet

succeeded.

4.2.9 Can suppliers ability to raise and reduce prices have a strong economic

effect on the organizations output?

Table 4.9

Population category

Yes

No

Total

Figure 4.9

19%

frequency

26

6

32

81%

33

Percentage

81

19

100

yes

No

The study shows that indeed supplier's ability to rise and lower prices can have a

big economic effect on the organizations output. This is because 81 % of the

respondent in the study indicated that supplier's control of price does affect the

organizations performance while 19% said that suppliers have not that much effect

on the organization.

4.3 Qualitative data analysis

This type of analysis is used to analyze the response given from the open ended

questions it also helps establish pattern and relationship between the information

gathered in the study. It also helps to get in-depth information on the feeling of the

respondents.

The majority of the respondents had a good idea as to what supplier partnership is.

Although a few of them have no idea of what it is or how it affects the

organization. The organization should do more in training the few who have no

idea of what benefits the partnering relationship can help achieve in the

organization. This way with joint effort things will work out for the best.

Many business organizations pay little or no attention to the relationship they

create with their company suppliers. But the case is different in Nile breweries ltd.

This is seen in the study where most of the respondents think and feel that indeed

34

the organization has made great effort in trying to integrate the supplier partnering

concept in to the daily organizations operations.

Most of the respondents also think that suppliers of raw materials to the

organization have great effect on the organization hence there is great need to

create long lasting relationship with them.

35

CHAPTER FIVE

SU!VIMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This research was conducted with the aim of determining the effect of supplier

partnership in an organization. This chapter gives summary of the findings,

conclusions and recommendations of the research study. The summary of findings

gives more information and explanations on the major issues raised by the

respondents on the effects of the supplier partnering on an organization's

performance. This was based on the analyzed facts in quantitative analysis where

numerical values were used to explain the effect of independent variables on

dependent variables. This finding contributed in answering the research questions

and making conclusions of the research study

5.2 Summary of findings

This section serves to establish specific answers to each research question in a bid

to address the research problem. The three research questions in chapter one are

restated and relative answers provided.

36

I I

I I

5.3 Research Question one

What are the factors that the Nile breweries limited management considers

while establishing a partnership relationship with their stakeholders?

Nile breweries limited consider the suppliers commitment to quality. The put in to

consideration the suppliers approach to problem solving and preventive

maintenance, and its method of equipment calibration.

Another factor that they consider is cost competitiveness. They partner with small

scale barley farmers and thus competitive pricing is important especially for

businesses that are small or experiencing financial difficulties.

The organization also considers the communication channels and the

communication frequency. Suppliers that do not maintain the policy of open

communication or even practice deception should be avoided at all costs.

The organization also looks at the type of services offered by the suppliers. Can

the supplier offer timely services? This is because the organization's strategies are

predicted on schedules which in turn are based on receiving shipments at an

agreed upon time. They also look at the flexible and special services offered by the

supplier. The organization express appreciation for suppliers that take extra

measures to satisfy their customers

37

While selecting and evaluating suppliers, the organization's management

considers the suppliers market knowledge. Suppliers with extensive knowledge of

the market condition and mastery of contemporary issues affecting the

organization are immensely valuable in helping the organization chart a course of

financial success.

Production capabilities are another aspect that is very important in supplier

selection for Nile Breweries Limited. The supplier's capability for program

management and production functions are be considered including its ability to

integrate design and manufacturing functions.

Financial stability of the supplier is also considered. NBL locates large sums for

purchasing hence it often prefers to make long term deals with suppliers that are

financially stable.

The Location of the supplier is another factor that is put into consideration while

selecting which suppliers to partner with. Supplier capabilities in this area include

transportation capacity, sourcing capacity, and just-in-time performance.

Nile Breweries Limited also considers the supplier's ability to provide technical

assistance. Suppliers with top research and development capacities can be quite

38

valuable to the organization providing them with significant savings in both price

and quality.

5.4 Research Question Two

What challenges are Nile breweries limited facing in creating a partnership

with their suppliers?

Passing of trade secrets-Poor supplier relationship is not only when a purchaser

runs into situations where it has links with bad suppliers but it must also work on

the possibility of the supplier passing trade secrets to the competitors. This is also

true for Nile breweries limited, who get their raw materials from barely farmers

who also sell their barely to other brewing organizations who are competitors of

NBL.

Some of these buying breweries may entice the farmers into telling them what

they know about Nile breweries limited.

Unplanned events-.In order to obtain quality products great effort has been

exerted by the management team to get buy-in from all people in the brewery.

This has lead to an improved relationship between functions like engineering and

production and others. This works in the enhancement of their quality process

because it creates a better working environment, better results, less unplanned

events and generally better and stronger morale.

39

Lack of departmental participation-Team work training has been performed to

ensure that there is goal alignment between different teams and different

departments. Visual boards have been installed in the work places where teams

meet on a daily basis (every shift) to set targets for the shifts and review the

performance afterwards.

Team work obviously plays an impotiant role in the measurement of team results,

hence the focus on team work. To assist with the discipline required within a team

particularly with the execution of certain specialized practices, for example quality

and asset care, a formal programme has been introduced to increase the cleaning

and organization of each of them. The goal off course is to create a clean,

sustainable and organized work place and operating environment.

Bargaining power of suppliers-Even though managers agree that strategic

importance determines what variables are consistently tackled, they sometimes

miss or choose to ignore new developments. Suppliers of barely can affect the

organization through their ability to raise prices or reduce prices of raw materials.

A supplier is a powerful one if the supplier's industry is dominated by few

companies but is sells to many, if its products and services are unique, if

substitutes are not readily available, if the supplier is able to forward and compete

directly with their present customers and if a purchasing company buys only a

small potiion of the suppliers products thus unimpo1iant

40

Costs incurred-Maintaining lasting relationship with multiple suppliers is

expensive for Nile breweries limited; it takes time to survey, inquire, communicate

with, evaluate potential suppliers and build good purchaser supplier relationship.

Establishing close relationships means that organization has to conduct the

necessary research to make sure that they select the right companies. The

purchasing unit needs to know a great deal more about capabilities than they did

when things depended on bid/buy relationship.

Unrealistic expectations-A common complaint of suppliers is that buyer

organizations all too often have unrealistic expectation of the supplier's ability to

anticipate the organization's needs.

Changing specifications-In new technology areas Nile breweries management

has a great difficulty in getting users in their own company to define what they

want. Most have an attitude of I'll lmow what I want when I see it, and many of

these users keep changing their minds. Customers are not patient and sometimes

will not understand why it takes time to finish their work; however strength of a

business team spells its success.

41

5.5 Research Question Three

How has partnership with the suppliers affected Nile Breweries' general

performance?

The employees and management of Nile breweries ltd were presented with

questionnaires and most of them felt that the organization has really gained a lot of

benefits. By partnering with their suppliers they have been able to gain access to

information that has improved their performance and their productivity.

Partnerships with suppliers have helped them improve their products through

contribution of product design, technology, and ideas for producing new products.

In most instances the suppliers are helping the organization by pointing out ways

in which designs can be improved or more desirable materials can be used.

There have been improvements in product quality. It has dominated the value for

money beer category through their brands Eagle Lager and Eagle Extra and the

main stream category beer with Nile Special. In addition to providing design

recommendations that result into improved products, suppliers have often been the

source of suggestions that has allowed the organization to hold tolerances in

production.

There has been reduction in total product cost, either through streamlining of work

process and replacement of costly components with less expensive-but still

effective ones thus improving customer satisfaction. Nile Breweries has started

42

other brands to make beer accessible to majority of Ugandans. In 2002 Eagle

Larger was launched. This was brewed from indigenous sorghum and as result

attracts lowers taxes. This saving has been passed directly to the consumer, who

can enjoy quality beer at low prices. Also in 2004 Eagle Extra was launched, and

has been Uganda's most popular beer for two successive years. Many consumers

are enjoying a standard, hygienic "clean beer" of the first time ever.

Apart from championing the don't drink and drive (3D) campaign, paying tuition

for bright children of poor farmers in areas who grow its brewing raw materials,

sponsoring (HIV/AIDS's VCT) in areas near its factory in Njeru in Jinja

municipality, construction of bore holes in areas that grow Epuri puri sorghum,

NBL has now headed for other areas where it has contract farmers who grow its

barely product. Nile breweries limited have extended its tree planting drive dubbed

'Green towns project' to kabala town. The breweries have planted over 465 trees

of various species on the streets of the town and in Rugama forest reserve which is

under the jurisdiction of Kabale town council.

Smart business leaders use suppliers to maxurnze their own product

competitiveness, going beyond the narrow focus of cost production. Leaders

exceed traditional sourcing practices, adopt new models to fully leverage supplier

capabilities and further their own position in the market.

43

In 2008, Nile breweries limited came on board with intensive barley growing

intensive with the main objective of developing capacity in barely cultivation and

setting up a malting plant. 'The project has so far been successful and barely is

becoming one major cash crop of in the growing areas' Mr. George Mbago,

NBL's local sourcing manager, said. Barely is used in the brewing industry mainly

as malt, which is the main beer ingredient. In its raw form unmalted barely is used

as an adjunct in the food/flour sector, it is used to make several products like

confectionaries. Barely grows in a period of three months. At the moment it is

grown for local consumption but in future, if production surpasses requirements

then exports to other markets will be considered. Under the NBL initiate, barely is

being grown in the districts of Kapchorwa, Bukwo, Kanungu, Kisoro, Kabale,

Kabarole, Bundibogyo, Bushenyi, Zombo and Kitgum.

To date they have a network of over 3,000 farmers but this number will go up in as

more farmers take up the barely enterprise. Currently NBL gets close to 6,000

tones per year and they expect this to more than triple in the next two years to

about 20,000 tones to meet the requirement of the malting plant. So many farmers

have come on board and currently have managed to mobilize 350 farmers

organized in 12 groups

Construction of malting plant has created 30 direct jobs and many more indirect

jobs in the supply chain. Currently farmers are making a kill from selling barely to

44

Nile Breweries. The 20,000 tones of barely required by Nile Breweries Limited

gives a market oppo1iunity wo1ih about Ush 18 billion annually to Ugandan

farmers. This shows that in partnering their organizational suppliers, it's not only

the organization that benefits but the economy as well.

Since 2002, Nile Breweries Ltd has worked with Afro- kai, a seed and commodity

broker, to create long term relationships with sorghum farmers. NBL provides one

of the most inspiring projects in this area because it led to a new innovative

product, Eagle larger, which is now the second largest African beer brand. It's

estimated that the number of farmers involved with supplying Nile Breweries with

sorghum will be around 5,800 each year.

5.6 CONCLUSION

From the above study research question one indicate that Nile Breweries limited

take several aspects in to consideration while they are choosing suppliers with

whom to create patinership relationship with. These factors include location of the

supplier, market knowledge, timely services and many more.

From the study the results from research question two reveal that indeed Nile

breweries limited does encounter challenges in their efforts to create partnerships

with the organization's suppliers. From the high costs the organization incurs and

much more.

45

From the study the results from research question three indicated several

achievement that Nile breweries limited has achieved in paiinering with their

suppliers.

5.7 RECOMMENDATION

As much Nile breweries limited 1s committed paiinering with suppliers for

production of quality products there are several aspects that have not been put in to

focus on their production process.

All business operations take place within the limits of the environment. Without

the environment all businesses cease. Although the company is realizing which

parts of the value chain create most emissions' helping them to target reduction

programme, their energy use is still high. They use energy in production and

transportation of their products. The company must become more efficient in

managing carbon dioxide footprint and explore cleaner production to save money

and resources and reduce green house gas emissions and ensure that their suppliers

do the same.

The company also needs to make the reduction of waste or zero waste a reality.

The company should try and put in place technology or design new ones that are

46

m hannony with nature- that is technology that makes efficient use of raw

materials and produces little or no waste.

Water is a very important aspect of production in Nile breweries. The company

has to put more emphasis in the efficient use of water by understanding the water

sheds and engaging the suppliers. This way the company will cut costs, reduce

risks and in the end the local communities will also benefit.

The company should also send their staff to the field to research about the

customer requirements. They should look out for what the customers like in the

product and also their dislikes. This way they will be able to produce quality

products because their products will conform to the customer's requirements. Any

complaints received from the customers should be dealt with in a timely manner

and these feedbacks from the consumers can also be useful to the organizational

suppliers.

47

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Thomas W Wheelen & David Hunger (1998) 'strategy management and business

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Ricky W.Griffin & Ronald J Ebert (2002) 'Business' 6th edition prentice hall Inc

H.Mintzberg & JB Quinin ( 1999) 'the strategy process: concept and cases' 2nd

edition prentice hall

Glance C &A Peshkin (2002) 'Becoming quantitative researcher: an introduction'

Longman

Hilt c (1996) 'researching and writing in the social sciences' Allny & boron

Marshall c & g Rossman (1989) 'Designing quantitative research' sage publication

Kovas A (1985) 'The researcher process: the essential skill of development' Davis

company

Miles 111 & H Michael (1994) 'Quantitative and data analysis' sage publications

48

Lannon JM (1985) 'Technical writing' little brown and company

Leedy P (1993) 'Practical research' Planning and lesign Mc Milan company

Batman Snee! (2003) 'Management 111 the new era' 5th edition, Marton west

publication

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York

Allens Arthur Robinson (2007) 'Intellectual prope1ty'

David Hassey 'Strategic management from theory to implementation' 4th

edition

Butterworth publishers

Kenneth Lysons (1999) 'Purchasing' 4th edition, Bell glow glass publishers

49

Gary j Zenz (1994) 'Purchasing and management of materials' 3rd edition, john

Weily & sons Inc, Texas America

P Fawcet, R McLeish, I Ogden (1999) 'Logistic management' 5th edition, Pearson

education ltd Asia

Malcolm Saunders (2000) 'Purchasing and supply chain management' 2nd edition

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education

50

INTERVIEW GUIDE

1. How long have you worked for Nile Breweries limit

2. Do you understand the concept of supplier partnering in an organization?

3. Where did you learn about it?

4. Has Nile breweries created strategic relationships with any of their suppliers?

5. What measures has the organization taken to integrate the supplier partnering

concept into the organizational structure?

6. How has the concept been taken in by the internal employees?

7. Do the current organizational suppliers have the capacity to fulfill the

requirements of the purchasing unit?

8. Has partnering with suppliers ensured uninterrupted supply transactions for Nile

breweries ltd?

9. In your opinion do you think that partnering with suppliers creates loyal trusting

relationships that allow both partners to win?

10. What are some of the challenges that the organization is facing in creation of

strategic relationships with their suppliers?

51

QUESTIONNAIRE ON THE EFFECTS OF SUPPLIER PARTNERING ON

AN ORGANIZATIONS PERFORMANCE

CASE STUDY OF NILE BREWERIES LTD KAMPALA

Dear respondents as part of the requirements of the award of a bachelors degree in

supplies and procurement management in Kampala International University am

administering a questionnaire to collect information on the effect of supplier

partnering on an organization perforn1ance.

I kindly request for your assistance by participating in this exercise by providing

information that may be required.

INSTRUCTIONS

Do not sign your name anywhere on this questionnaire

I Gender: Male .__ _ __,

2 Ages: 18-25

25-36

36-40

41-44

45-49

50 and above

Female.__ _ __,

52

3 Marital status: man-ied '-------'

Widowed'-------'

4 Educational backgrounds

0 level A level

University other

single

divorced

Diploma

5 How long have you worked for Nile Breweries limited?

0-2years

3-Syears

6-8years

9-1 lyears

12 and above

6 Do you understand the concept of supplier partnering in an organization?

Yes No

(b) If yes where did you learn about it?

.... ······················································· .......... , ......................... .

················································································ ···········

···················· ········································································

7 Has Nile breweries created strategic relationships with any of their suppliers?

53

Yes No

8 Do the current organizational suppliers have the capacity to fulfill the requirements of the purchasing unit?

Yes No

9 Ifno, what do you think the management should do?

··································································· .......... ··········

····················································································· ...

······································································. ········· ........ .

10 Has partnering with suppliers ensured uninterrupted supply transactions for Nile breweries ltd?

Yes No

11 In your op11110n do you think that partnering with suppliers creates loyal trusting relationships that allow both partners to win?

Yes No

12 What are some of the challenges that the organization is facing in creation of strategic relationships with their suppliers?

································································· ... ········· .............. .

············· .................................. , ...................... ········· ........... .

················································· .................................... ' .... .

········································· ····························· ................... .

54