Effect of Packaging Material Sourcing on Production Cost of Bottled Water Producing Companies
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Date
2018-05
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Addis Ababa University
Abstract
Sourcing function became an important factor for cost effectiveness. It is adopted to mitigate supply chain disruptions as well as reduce costs by promoting competition between suppliers. This study was conducted with an objective of identifying effect of sourcing on production cost of bottled water producing companies. It conceptualized and developed five dimensions of sourcing :supplier selection, supplier development, contract management and supplier relationship management and tests the relationships between Bottled water producing companies sourcing practices and organizational performance. This study used both descriptive and explanatory research designs. Convenience, stratified and random sampling methods were used. Data were collected from primary sources through questionnaire and analyzed through both descriptive and inferential methods. The descriptive analysis was conducted by using mean and standard deviation. On the other hand, inferential analysis was conducted by using Pearson correlation method and ordinary least square multiple regressions (OLS) method. The result indicated that sourcing has significant effect on production cost efficiency. Supplier selection, supplier development, and supplier relationship management have significant positive effect on the production cost. Based on the findings the researcher recommends that management of the companies has to improve sourcing strategies of the companies.
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Keywords
sourcing strategy, contract managemen, production cost