Effect of Strategic Sourcing on Organizational Performance: The case of MOHA Soft Drinks Industry S.C.
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Date
2019-06
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Addis Ababa University
Abstract
The purpose of this study is to examine effect of strategic sourcing on organizational
performance, identify the gap, and to recommend improvement areas in the case of MOHA Soft
Drinks Industry SC. In this study strategic sourcing is evaluated by supplier development, long
term supplier relationship, effective procurement plan, and communication. Both descriptive
and explanatory research design is employed. Primary data was collected from employees of
MOHA Soft Drinks Industry SC. through structured questionnaires. Out of a total of 102
questionnaires distributed, only 87 (85.2%) complete responses were returned. Data were
analyzed through descriptive statistical and inferential analysis methods. Employees of MOHA
Soft Drinks Industry SC have agreed with supplier development, long term supplier
relationship, effective procurement plan, and communication aspects of Strategic Sourcing
practices of the company. From moderate to strong positive and significant
correlation/relationship is observed between strategic sourcing and organizational
performance. The multiple regression analysis results indicated that, unlike long term supplier
relationship, the three strategic sourcing dimensions (supplier development, effective
procurement plan, and communication) have positive and significant effect on organizational
performance. Furthermore, 67.8% change in organizational performance is explained by those
significant strategic sourcing dimensions. Finally, the study recommended MOHA Soft Drinks
Industry SC has to reassess its long term supplier relationship and is suggested to improve its
relationship with suppliers from simply buy-sale relationship to a modern supply chain
relationship through establishing strategic or long term supplier relationship and continuous
information sharing in order to minimize supply uncertainty which resulted in demand and
supply mismatch
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Keywords
Supplier development, Long term supplier relationship, Effective procurement plan, Organizational performance