CHAPTER ONE

1.1 Introduction
This study covers exploration to the challenges facing purchasing of raw materials in heavy
commercial vehicle assembling companies, case study Toyota East Africa in Kenya. The
chapter consists of eight sections which include, introduction, background of the study,
statement of the problem, objectives of the study and lastly the scope of the study.
1.2 Background of the study
Heavy commercial vehicle as an important tool in the lives of people. Toyota East Africa
Limited (TEAL) is the sole distributor of Toyota and Yamaha products in the East Africa
region. The company, which began its operations in 1999, is a wholly owned subsidiary of
Toyota Tsusho Corporation of Japan. The Toyota brand is ranked among highest in the
world and was featured in super brand East Africa as top ten brands in the region. TEAL
is committed to introducing vehicle models that respond to the diverse needs of the region.
This is done in order to ensure that devolved vehicles are suitably designed to meet the
needs of their particular region. The company is renewed for its customer satisfaction and
has built an excellent reputation for reliability and customer service.
The company: Toyota Kenya Limited is the sole distributor and service provider of
Toyota, Yamaha, Hino and Case IH brands in Kenya. Toyota itself is an automotive brand
represented already since the late 1970s in Kenya with most brand vehicles from the import
of other works. Manufactures of these units since 1977 in Mombasa. During the year 2012,
the cooperation is, however, ended with the contract manufactures, because it wanted to
take up its own production. The plant is already under construction currently. In addition
to sales and repair of automobiles, the Toyota East Africa Limited currently employs in
particular with the production of super structures and the performing conversations on
vehicles of type land cruiser 70 for custom specifications. So there is a wide range of
different vehicles parts, which have been developed by an in-house research and
development team in Nairobi conversion center whereby the current production while
foreign producer on Toyota land cruiser and the Hiace is aligned, so should the pickup in
the new plant in Nairobi Hilux, buses and trucks of the brand hino roll off the line. If
1

feasible, in parallel, also the brand Yamaha motorcycles to be fitted, the chairman Dennis
Awori. In January 2012 the company has been through the Toyota Kenya Limited replaced.
Purchasing involves the purchase and supplies, storage and monitoring of goods sold in a
retail store, machinery, supplies or other raw goods. For most businesses, specifically
retailers, purchasing and supplies management is one of the most important job
descriptions in monitoring buyers behaviors and making sure top selling items are well
stocked. In many cases, purchasing and supply management involves negotiating with
manufactures or wholesalers in the process of buying or materials as well as working
closely with cost analysts and marketing professionals in deciding which product to buy
and which one are not selling well enough for the costs. This process ensures that the
company keeps better selling items in stock while passing on products that sit on store
shelves collecting dust.
The people in charge of purchasing and supply management must constantly research and
learn consumer behaviors as well as stay up to update on new and emerging products on
the market. In order for a business to survive, it must offer the things consumer wants to
buy. Purchasing and supplies are made up of several key players. The term can include
pricing analysts, market researchers and marketing personnel managers over each of these
departments, as well as store owners and supervisors. It is vitally important for each team
member to compare notes and discuss buying and marketing strategies. In the case of
retailers they must compare with the manufactures or wholesalers purchasing team to get
an idea of which item are being made and sold, and to whom. The purchasing and supply
management team must also come to buying agreement with suppliers of their product.
Technology is the set to fundamentally change the way purchasing and supplies operates
over the next few years. This will be led mainly by the raise of networks built around social
media technology which will enable purchase and supplies professionals to speed on
industry development and interact with suppliers all around the world. Development of
technology means purchasing and supplies will increasingly be able and expected to make
decisions based on research and use of predictive data. This will change the skillset
required for those working in purchase and supplies. Managing a budget is often a
challenging task. Procurement professionals need to have strong teams to ensure costs are
2

contained. Without a dedicate team to run a quality sourcing event, requirements are not
often accurately captured or scrutinized and money is wasted or unnecessary high
specification product and services. Without a dedicate team at the other end of the source
to manage the process, to manage supplier adherence to contract, scope creep becomes an
issue. Without the people, process or technology to measure and truck current speed, there
is an overspend lag. Responsibility of the sourcing and purchasing function is to ensure
compliance to contracts. CPOs know the importance but ensuring that the message is
delivered to the rest of the business. A most frustrating discovery for sourcing professional
is the contract they sourced at implementing is being ignored in favor of another supplier
that is delivering less value than the chosen supplier. As well as the direct forfeiture of
savings. CPOs know they are also losing potential volume based incentives from the
preferred supplier and diluting their buying power in the market.
CPO also wants their sourcing and purchase and supplies function to be used more and
recognized as a value generating shared resource by the enterprise. There is nothing more
frustrating than having a well-oiled process, team with deep sourcing enterprise.
1.2.2 Toyota East Africa profile
Toyota East Africa Limited (TEAL) was established in 1999 as a sole distributor of Toyota
vehicles in Kenya and Uganda, with 100% share owned by Toyota Tsusho Corporation
(TTC) which is subsidiary of Toyota Motor Corporation (TMC) Japan. Toyotas business
philosophy is to realize a stable, long term growth by working hard to strike a balance
between the requirements of people and society.
With the financial and management support of Toyota Group (TMC/TTC), TEAL has
transformed the old Uhuru highway facility workshop, showroom and the office block into
world class standards. Toyota have been striving to bring their standards as close as to
Toyota global standards through the improvement of facilities and improvement of
quality of their employees. TEAL has been number 1 shareholder in the market and most
preferred motor company that provides the best value and service to the customer and to
the community with over 2000 unit sales annually. Fleet management system-this is
customer tailored.
3

Conversion and body works-to meet customers various specification requirements be it

for business, the UN/NGOs or the tourist sector. TEAL manages one of only three TMC
Toyota training Centers in Africa. The facility provides training to our fleet, government
and UN/NGO customer. TEAL has been the most modern Workshop facility managed by
highly trained and motivated workforce. TEAL has three direct owned outlets in Nairobi,
Mombasa and Lokichoggio. Their service center network covers all the major towns. Their
Lokichoggio serves mostly the UN/NGOs operating in the Northern region of Kenya and
Southern Sudan. Their staff regularly visits the various centers in Southern Sudan for
servicing and repair of Toyota vehicles. TEAL maintains a comprehensive genuine parts
stock of over 16,000 line items worth US$200,000 for the Toyota and Yamaha models
which we sell in this market.
TEAL has developed a specialized UN/NGO sales department to meet the unique
requirements for UN/NGO groups. The department is headed by a highly trained and
experienced Mr. Bob Moore who stated that they have special price structure and provision
of value added services, i.e. service contracts, driver training and the supply of specialized
accessories like Codan, radio mine blankets etc. He also stated that they are currently have
service contracts with UNCEF, WFP, and UNHCR just to mention a few.
He said their intension is to replicate their services in Rumbek and throughout Southern
Sudan, at a very early stage.

1.2.2 Organizational Structure

TOYOTA EAST AFRICA

CEO

HOD
OPERATI
ONS

HOD

HOD

FINANC
E

HUMAN
RESOUCE

HOD
MARKETIN
G

HOD

HOD

PROCURE
MENT

ICT AND
R&D

AND SALES

Source: Toyota East Africa (2016)

1.3 Statement of the problem

Understanding the behavioral responses of customers to the actions of a company is an ongoing need of companies and organizations providing goods and services within a
competitive environment. Choosing one thing over another, choosing to do or not to do
something is an active (overt) response on the part of a customer. Now, as TMM ramps up
for the production of Hino, it must address the issue of raw material before impacting
production performance.
An effective manufacturing strategy must take into account the distinctive competencies
of a firm that will give it a competitive advantage over its competitors. However, there has
been a heated debate concerning the parameters of performance that are critical to an
organization between those who argue that a manufacturing organizations can excel in all
the dimensions of competitive priorities and those who oppose saying that organizations
ought to compete only on those dimensions they feel strong in. previous studies have been
conducted in Kenya as a way of remaining afloat in the turbulent global environment. This
5

study found out that regardless of a companys characteristics, in order for companies to
gain and maintain competitiveness they should pursue the right strategies, which include,
high quality, low cost, time/speed, innovativeness and flexibility. Although the study
talked about manufacturing strategies it did not look at the operations strategies among
motor vehicle assemblers.
Ndungu et al, (2008) conducted a study which indicated that the slow growth in the motor
vehicle assembly industry in Kenya has been attributed to various factors including;
competition from second hand dealers, environmental challenges and a reduction in
spending by key client, especially the corporate sector, which due to market place dynamics
now keenly monitor spending. This study also state that these challenges are expected to
affect the market share of the automotive industry if adequate measures are not taken. The
study did not focus on the operations strategies and performance of the industry.
Another study conducted by Makembo (2011), indicated that the Kenyan motor vehicle
market has developed some peculiarity because of its skewed characteristics which allow
for the importation of cheap used vehicle from different countries. Cheap used vehicle
imports are getting even more popular to Kenyan motorists because they offer low income
households the possibility of vehicle ownership and high level of personal mobility,
increasing social welfare benefits. Although this study focused on motor vehicle market
development, the researcher did not look at the operational strategies in market
development. However, little has been done, specifically addressing the operation
strategies in the motor vehicle assembly industry, in Kenya. Previous studies have mainly
focused on the manufacturing and marketing in the industries. This research study sought
to survey the challenges facing purchasing of raw materials in heavy commercial vehicle
assembling companies in Kenya.
The worldwide automotive market is highly competitive. Toyota faces intense competition
from automotive manufactures in the markets in which it operates. Although the global
economy is gradually recovering, competition in the automotive industry has further
intensified amidst difficult overall market conditions. In addition, competition is likely
further intensify in light of further continuing globalization in the worldwide automotive
industry, possibly resulting in further industry reorganization. Factors affecting
6

competition include product quality and features, safety, reliability, fuel economy, the
amount of time required for innovation and development, pricing, customer service and
financing terms. Increased competition may lead to lower vehicle unit sales which may
result in a further downward price pressure and adversely affect Toyotas financial
condition and results of operations. Toyotas stability to adequately respond to the recent
paid changes in the automotive market and to maintain its competitiveness will be
fundamental to its future success in existing and new markets and to maintain its market
share. There can be no assurance that Toyota will be able to compete successfully in the
future.
At Toyota Kenya, the sales from vehicles of different models have been fluctuating from
time to time. The assembling of Toyota Hino in Kenya is experiencing challenges in high
investment in the input of raw materials. These problems are increasingly occurring with
an increase in custom demand for the Hino model. Toyota currently addresses these
problems offline for Toyota Hino by putting place policies, however, this is a deviation
from the policies, Toyota assembly plant address the high investment in raw materials to
enable them meet customer demand.
1.4 Objectives of the study
The purpose of this study was to evaluate the procurement challenges in raw materials of
heavy commercial vehicle assembling in Toyota East Africa Ltd. The specific objectives
of the study were:
i.

To assess quality challenges facing purchasing processes of raw materials in heavy

commercial vehicles in Kenya

ii.

To what extend does procurement policies affect procurement of raw materials in

heavy commercial vehicles?

iii.

To determine how technology affect procurement of raw materials in heavy

commercial vehicles

iv.

To determine the effect of government policies in procurement of raw materials in

heavy commercial vehicles

1.5 Research questions

i.

How does quality policy affect procurement of raw materials in heavy commercial
vehicles in Kenya?

ii.

How does procurement policies affect purchasing of raw materials in heavy

commercial vehicle assembling in Kenya?

iii.

What are the effects of technology in purchasing of raw materials in heavy

commercial vehicles?

iv.

How does government policies affect procurement of raw materials in heavy

commercial assembling in Kenya?

1.6 Significance of study

The study will aid various stakeholders in the country; automotive companies in the
country may obtain details on how they can effectively implement their procurement
strategies in the face of numerous challenges facing them from both within and outside the
companies. New changes in the procurement legislation in the country and their effect on
the automotive operations would help to develop appropriate procurement policies in the
face of changing needs. In additional, the study may be an invaluable source of material
and information to educational organizations operating in the country. The government and
regulators of the higher education in the country may also find invaluable information on
how good procurement strategies can be developed and how any resultant challenges can
be mitigated and also develop appropriate policies that may guide and encourage other
organizations within and outside the public sector in implementing their strategies. For
academicians, this study may form the foundation upon which other related and replicated
studies can be based on. Investors can also gain an insight on the business and strategic
position within the environment, which can assist them in determining viability of their
investments.
1.7 Limitation of the study
Data collection was a challenge since most of the respondents could not be reached online.
Given the dispersed status of heavy commercial vehicle in Toyota East Africa, the
researcher travelled and was fatigue of mind, hence slowing down the research process.
8

Some respondents did not understand or value the research activities. It took the researcher
a lot of time convincing them on why they should answer the questionnaires accurately to
lay foundation for proper research analysis and interpretation.
1.8 Scope of the study
The study will be carried in Toyota East Africa Limited branch situated along Uhuru
highway in Nairobi. The research will be carried out from January 2016 to May 2016 hence
taking 5 months. A sample of 76 employees were selected. The target population included
top level of management, middle level of management and operational staff in Toyota East
Africa. The idea of the study will be, to establish challenges affecting procurement of raw
materials in heavy commercial vehicle assembling companies in Kenya in reference to
Toyota East Africa.

CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter is a review of literature on evaluation of procurement challenges on heavy
commercial vehicles in Toyota East Africa. In addition, past research has been reviewed
with an aim of identifying the gap within those studies.
2.2 Review of theoretical literature
2.2.1 Quality policies
Victor A. Elias (2015) defined quality as the ability of performance in each theme of
performance to enact a strategy. Quality affects a company in a variety of ways, from
productivity and profitability to customer satisfaction and public perception. In addition,
quality affects the overall operating costs of a company. Focusing on quality helps keep a
company strong in all areas. Poor quality company money in terms of productivity
problems. If a company uses low-quality parts, system breakdown, regardless of any highquality parts also used. Low-quality parts can cause mechanical breakdowns, as well as
work slowdowns or even stoppages.
Quality increases profitability. When employees are engaged in a work environment in
which team work is emphasized and where quality products are the goal, the work in the
environment flows more smoothly than one in which quality is in afterthought. Quality has
a direct bearing on customer satisfaction. If a company produces a quality product, satisfied
customers will rank that company higher in surveys than companies that fail to provide
quality products or services. In addition, dissatisfied customers are more vocal in their
criticisms of a company with quality problems. Various websites will rank different
companies according to customer satisfaction and quality products. Poor companies may
get an initial sale of a product or services but it will not create repeat customers. Quality
directly affects costs in a business. While using less expensive parts and equipment might

10

cut cost in the short term, the long-term effects might be far more expensive. For example,
using certain software that costs less might save company money in the short term, but that
software might be more complicated than more expensive software or luck of customer
service. In that case, employees will take longer to understand how to use the software. On
top of that, if a problem arises with the software, the lack of customer support means it
takes longer to accomplish the job, thereby costing the company more than if it had used a
more expensive, higher quality software product.
Focusing on quality can help a business maintain a sissified customer base. In turn, this
means the business might continue turning a profit. If a business is not profitable,
examining the quality of the product or service is an important step to finding a solution.
When focusing on quality, it

must be a team effort, within the company committed to

implementing any quality changes managers mandate. Although the initial cost might
seem expensive, the overall costs of ensuring delivery of quality products and services
might prove to be less than expected.

11

Figure 2.1 Quality and Profitability

Improved quality

Improved quality

Of design

Higher perceived

Lower

And services

price

Increased

Increased

Market share

revenues

Manufacturing

Source: Adapted from: The Letter on Business Strategy, no.4 (Cambridge, MA; Strategic
Planning Institute, 1986)

2.2.2 Procurement policies

A procurement policy is developed in order to establish the rules of how procurement
should be conducted specific to the organization. Procurement policy is put to ensure to
ensure the procurement of all goals and services is conducted in an honest, competitive,
fair and transparent manner that delivers the best value for money outcome whilst at the
same time protecting the reputation of the organization, taking into account the required
12

specification, quality service, delivery, reliability, environmental and social issues and the
total cost of ownership.
According to Danielle M. Conway (2012) sustainable procurement generally focusses on
identifying and prioritizing the purchase of goods and services that pose a minimal negative
effect on human health and the environment when compared with the purchase of other
goods and services that serve the same purpose. Procurement policies helps the local
government promote sustainably through procurement practices; discusses the
implementation of sustainably throughout the procurement process; and address the future
of sustainably by emphasizing the importance of leadership and training at every level of
the acquisition workforce. The concept of this chapter is to promote sustainable
procurement at the highest levels of the acquisition workforce in order to ensure success in
archiving widespread acceptance and strategic implementation of sustainable procurement
policies and practices at the state and local government level.
Lewis and Roerich (2009) insist that procurement is a key activity in the supply chain.
Procurement can significantly influence the overall success of an emergency response
depending on how it is managed. In most organizations, procurement represents a very
large portion of the total spend and should be managed effectively to achieve the desired
objectives. Procurement works like a pivot in the internal supply chain process turning
around requests into actual product or services to fulfill the needs (Caldwell, Roerich, &
Davies, 2009). Caldwell et al, (2009) further argue that procurement serves three levels of
user namely the internal customer, programs in response to emergencies and ongoing
programs and repositioning of stock, for both internal customers and program needs.
Benslinmane and Plaisent (2005) argue that the overall aim and objective of procurement
is to carry out activities related to procurement in such a way that the goods and services
so procured are of the right quality, from the right place and at the right time. There are
six rights in procurement and they can be archived through following specific objectives
of procurement (Benslimane & Plaisent, 2005). These specific objectives are to: buy
quality materials, items and services economically from reliable sources; ensure timely
delivery through the selection of capable and efficient suppliers continuously locate,
evaluate and develop economical and reliable supply sources identify the most reliable
13

sources of supply through either open tender, direct procurement, pre-qualifying suppliers
and retaining only those that are capable of meeting the organizations requirements
strategic sourcing and limited tendering investigate the availability of new materials and
monitor trends in market prices and buy in accordance with organizations policies.
2.2.3 Technology
Emerging technologies, such as the newly commercialized internet and its hypertext-based
multimedia-supporting spinoff, the World Wide Web, are raising high hopes of finally
changing the picture of costly, time-consuming and inefficiency procurement processes by
enabling major improvements in terms of lower administrative overhead, better service
quality, timely location receipt of products and increased flexibility. With the most
organization spending at least one third of their overall budget to purchase goods and
services, procurement holds significant business value (Zenz and Thompson, 1994; Killen
and Kamauff, 1995). Growing pressures from increasingly open and competitive markets
and increasingly tight budget in public sector reinforce the need to recognize and streamline
inefficiency procurement procedures.
Although there is some tradition of information technology (IT) in procurement and
increasing use of electronic data interchange (EDI) systems by the government and state
agencies, especially, most information processing and communication around purchasing
are still based on paper and telephone. Available IT systems usually do not cover the full
process or are very expensive to set up. Internet and world wide web-based applications
promise alternatives that are cheaper and easier to set up. In fact, they have the potential to
trigger even more radical changes. Consequently, even traditional user of EDI for
procurement are facing significant reengineering and change management challenges. This
article addresses how internet and Web-based technology will affect the procurement
function. The evolving nature of the field still leaves many questions open and procurement
managers frequently wonder whether or not to jump, and onto which bandwagon. After
providing an overview of procurement process and some of the activities that organization
undertaken to improve performance prior to the advent of the internet, we take a look at
currently available internet and web based technologies, and the opportunities they open.

14

We also present some short scenarios of what the field of procurement may like in another
decade.
In the section (impact of the internet on procurement,) we consider the user (buyer) side
and present the results of a field study of both companies and government institutions that
we conducted in 1997 procurement in the state and federal organization, a large part of it
military, is somewhat distinct from procurement in private enterprise, because public
institution often have different objectives and constraints. Since they are not profit oriented,
but, rather entrusted with task of public interest, they face far more regulations than private
corporations concerning binding and purchasing procedures and are usually under closer
public scrutiny. However, the government and corporate activities are intertwined in many
ways; indeed, the government procures large quantities of items from private enterprises.
Corporate America, on the other hand, has learned much from research and advances in
public procurement and logistics, especially in the military sector. In the area of nonproduction procurement, such as office supplies, the practices of government entities and
private companies are fairly similar and the results reported in this paper are applicable to
both.
2.2.4 Government policies
Datta (2000), defined government policy as actions of government and intensions that
determine those actions process vary significantly from strength to the very format large
cooperations and government entities are most likely to have manufacturing companies.
These rules help the manager to set up clear rules to govern the organization leading to
quality production and practice which stratifies and extend customer expectations.
According to Matthew (2002), the most government significant roles in the society are to
establish and enforce rules and regulations that influence how firm and individuals
consumers conduct their interaction. A social welfare maximizing government would
presumably establish industry rules that ensure that the product and services being bout to
the market industry place where endowed with a social optimal level of quality if endowed
with perfect information and total control.

15

Government establish many rules and regulations that guide business. Business will
normally change the way they operate when government changes these rules and
regulations. Government economic policy and market regulations have an influence on the
competitiveness and profitability of business. Business owners must comply with
regulations established by federal, state and local governments. The government can
implement a policy that changes the social behavior in the business environment. For
example, the government can levy taxes on the use of carbon-based fuels and grant
subsidies for the business that use renewable energy. The government can underwrite the
development of new technology that will bring the necessary change. Imposing on a
particular sector. Similarly, tax and duty exceptions on a particular sector trigger
investment in it and may generate growth. For example, a high tax rate on imported goods
may encourage local production of the same goods. On the other hand, a high tax rate for
raw materials hampers domestic production. In March 1952, the government decides to
replace its hitherto gut-reaction policy for the automotive industry with a more studied
and comprehensive approach to the industry (Kathuria 1996). It referred to Tariff
Commission the question of providing protection/ assistance for the encouragement of
automotive industry. The Tariff Commission submitted its report in 1953 recommending
that only units with a plan for progressive manufacture of components and complete
vehicles may be allowed to operate. It also recommended against any price controls and
advised the government to maintain a watch on the prices. Subsequently, the
recommendations of the commission were adopted by the government. Foreign assemblers
like General Motors and Ford who considered the domestic demand too low to warrant a
local manufacturing program were obliged to close down their operations within three
years. Thus, the exit of foreign assemblers by 1956 and the ban on import of fully-built
vehicles since 1949 effectively protected the Indian automotive industry from foreign
competition.

16

2.3 Review of critical

According to Victor A. Elias (2015) quality is the ability of performance in each theme of
performance to enact a strategy. Quality is a perceptual, conditional and somewhat
subjective attribute and may be understood by differently people. Consumer may focus on
the specification quality of product or how it compares to competitors in the market place.
Procedures might measure the conformance quality or degree to which the product was
produced. Whereas this is true from the author, the author has not shown how quality
affects procurement of raw materials in heavy commercial vehicles in Kenya and therefore
this study will be conducted to fill the gaps left by the previous researcher.
Daniele M. Conway (2012) Procurement policies help to identify and prioritize the
purchase of goods and services that pose a minimal negative on human health and
environmental when compared to the purchase of other goods and services that serve the
same purpose. The concept of this is to promote sustainable procurement at the highest
level of the acquisition workforce.
Lewis and Roehrich (2009) defined procurement policies as a key activity in the supply
chain. Procurement policies can significantly influence the overall success of an emergency
response depending on how they are managed. (Caldwell, Roehrich, & Davies, 2009)
added that procurement represents a very large proportion of the total spend and should be
managed effectively to achieve the desired objectives. Procurement works like a pivot in
the internal supply chain process turning around requests into actual products or services
to fulfill the need. Caldwell et al, (2009) further argue that procurement serves three levels
of user namely the internal customer, programs in response to emergencies and ongoing
programs and repositioning of stock, for both internal customers and program needs.
Benslinmane and Plaisent (2005) argue that the overall aim and objective of procurement
is to carry out activities related to procurement in such a way that the goods and services
so procured are of the right quality, from the right source, are at the right cost and can be
delivered in the right quantities, to the right place and at the right time. Whereas this
information provided by the author is considered as true, little explanation has been
provided to show how procurement policies affect procurement of raw materials in heavy
commercial vehicles assemblies in Kenya.
17

Technology is the application of information in the design, production and utilization of

goods and services, and in the organization of human activities. According to (Zenz and
Thompson, 1994; Killen and Kamauff, 1995) most organizations spend at least one third
of their overall budget to purchase goods and services, procurement holds significant
business value growing pressures from increasingly open and competitive markets and
increasingly tight budget in public sector reinforce the need to recognize and streamline
inefficiency procurement procedures. Whereas the information from the authors was true,
the authors did not show how technology affect procurement of raw materials in heavy
commercial vehicle in Kenya.
According to Datta (2000) government policy is actions of government and the intensions
that determine those actions process vary significantly from the strength to the very format
large cooperations and government entities are most likely to have strength and format
process. Government policy has played a major role in providing directions and protecting
some activities and some people from being exploited and they need to be enforced by
every organization. Whereas the author was true, the author did not show how government
policies affect procurement of raw materials in heavy commercial vehicle assembling
companies in Kenya therefore this study will be conducted to fill the gaps left by the author.
2.4 Summary and gaps to be filled
Quality is the standard of something as measured against other thing of similar kind; the
degree of excellence of something. An organization can archive sustainable success by
implementing a quality management system design to continuously improve performance,
taking into account the most important expectations, those of the customers, shareholders,
supplier and those of the community. Part of the organizations processes, adding value,
lowering costs and increasing adaptability to the needs of the customer
Procurement is a key activity in supply chain which can significantly influence the overall
success of an emergency response depending on how it is managed. In most organizations,
procurement represents a very large proportion of the total spend and should be managed
effectively. Procurement policy is developed in order to establish the rules of how

18

procurement should be conducted specific to the organization in order to ensure

procurement of goods and services is conducted well.
Technology is the application of scientific knowledge for practical purposes, especially in
industry. From the products and services offered, to the way buyers collaborate with
suppliers, technology has a massive impact on procurement. The technological landscape
is constantly changing and customer have come to expect businesses to operate faster, be
more connected and offer them the latest advances because of it. Organizations need to on
top of changes in technological environment and how this affects their business.
Government policy is the actions of the government and intensions that determine those
actions process vary significantly to from the strength to the very format large
cooperations and government entities are most likely to have strength and format process.
Managers use this rules by government to set up clear rules to govern their organizations
leading to quality production and practice which satisfies and extend customer
expectations.

19

2.5 Conceptual frame work

The researcher used a conceptual to show the relationship between the dependent and the
independent variable for this study as shown in the following diagram. These variables
include quality, cost, counterfeits and material handling.
Independent variables

Dependent variables

Quality policy

Procurement policies
Purchasing of raw materials in
heavy commercial vehicle
assembling company

Technology

Government policies

Source: Author (2016)

20

2.5.1 Quality policy

Quality leads to better performance in the market place. Quality is an important source of
competitive advantages; the net effect of improved quality of design and conformances
increased profits. Quality grates value for stakeholders and creates customers confidence
and provide competitive advantage.

2.5.2 Procurement policies

Procurement, policy is put to ensure transparency, openness and fairness leading to the best
value for money outcome whilst at the same time protecting the reputation of the
organization, taking into account the required specification, quality, service, delivery,
reliability, environmental and social issues and the total cost of ownership.
2.2.3 Technology
Technology has improved and created efficiency and effectiveness in procurement and
supply chain. Integration has been made possible in cost and the use of electronic data
interchange, electronic point of sale and enterprise resource planning to enable the
organization to integrate both internal and external environment.

2.2.4 Government policies

Governments establish many rules and regulations that guide businesses. Businesses will
normally change the way they operate when government changes these rules and
regulations. Government economic policy and market regulations have an influence on the
competitiveness and profitability of businesses. The new procurement law requiring the
Government organization to purchase from youth companies 30% of the expenditure.

21

CHAPTER THREE
RESEACH DESIGN AND METHODOLOGY
3.1 Introduction
This chapter explains the research methodology that used. The first section of this chapter
highlights the design strategy that the study adopted. Then, the study population and
sampling techniques as well as means of collecting data analysis methodologies are
explained towards the end of the chapter.
3.2 Study design
According to Green and Tull (2009), a research design is the specification of methods and
procedures for acquiring the information needed .A descriptive research approach was
adopted in this research. This approach was appropriate forin-depth gathering of both
qualitative and quantitative data on procurement challenges facing heavy commercial
assembling in Kenya. The procedures and methods used in this research described variables
that were quality, procurement policies, technology and government policies. The strategy
is popular both in business and management research since it answers the questions of who,
what, where and how much in the study (Saunders, Lewis, & Thornhill, 2009)
3.3 Target Population
The target population for this study was in heavy commercial assembling company in
Toyota East Africa Kenya. Target population is defined as a universal set of the study of
all members of real or hypothetical set of people, events or objectives to which an
investigation generates the results, Mugenda and Mugenda (2003). The study will target
150 employees in Toyota East Africa.
3.1 Target population Table
Category

Target population

Percentage

Top level management

Middle level management

37

25

Operational staff

105

70

Total

150

100

Source: Author (2016)

22

3.4 Sampling Design

A sampling design is a work plan of design that specifies the sampling frame, the sample
size and sample selection, Kothari (2004). Purposive sampling techniques was used to
enlist information from three respondents in Toyota East Africa. The three respondents
were top management members, middle management members and operational staff
members. 76 questionnaires were distributed among the respondents. 55 questionnaires
were filled and returned to the researcher while 21 of the remaining questionnaires were
not answered. A purposive sampling technique was essential to staff respondents since the
researcher was soliciting for specific information concerning challenges facing
procurement of raw materials in heavy commercial vehicle assembling in Kenya. The
sample size of this study was 76 respondents.
3.2 Sampling Design table
Category

Target

Sample size

Percentage

population
Top level management

Middle level

37

19

25

Operational staff

105

53

70

Total

150

76

100

management

Source: Author (2016)

3.5 Data Collection

3.5.1 Primary Data
Primary data was collected using questionnaires that were developed based on the
objectives of the study.
3.5.2 Secondary Data
Secondary data was also collected from text books, research projects, internet, journals and
magazines. The questionnaire items were both open ended as well as closed ended. The
closed ended questions allowed for specific type of responses while in the open ended type
the respondents may state responses as they wish. The questionnaires were administered to
the respondents through drop and pick method and also by email. They were given time to
23

fill, after which the filled up questionnaires were collected after a period of three days. The
questionnaire will be divided into four sections, i.e. Section A, B, C, D and E. section A
collected data on respondents general information e.g. their position, department and their
experience. Section B addressed objective one, which is to identify quality challenges
facing purchasing and supplies processes of raw materials in heavy commercial vehicle in
Toyota East Africa Ltd. Section C addressed objective two, which is to what extent does
procurement policies affect procurement of raw materials in heavy commercial vehicle
while Section D addressed objective three, which is to determine effects of Government
policies procurement of raw materials in heavy commercial vehicle.

3.6 Validity and Reliability

With accordance to Mugenda and Mugenda (2003) validity refers to accuracy and
meaningfulness or reference which are based on the research results. It is the degree to
which an assessment tool produces stable and consistence results. A plot of study will be
carried out to determine any weakness in design and instrumentation and it will be carried
out in form of questionnaires since the study will involve self-administered type of data
collection

3.7 Data Analysis

Data collected was checked for completeness and consistency before analysis was made.
Statistical Package for Social Science (SPSS) and Microsoft Excel were used to analyze
the data. The SPSS was used to carry out an exploratory factor analysis to identify
unobserved variables that explained certain patterns of challenges experienced in
procurement. Various descriptive analyses such as means, range and coefficient were then
derived from the analyzed data.

24

CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND INTERPRETATION OF FINDINS
4.1 Introduction
This chapter presents the data findings and presentations collected through the
questionnaires. In this chapter, the researcher carries out an analysis of data using both
quantitative and qualitative methods. The analysis process is done on basis of the variable
of the research objectives. The analysis and interpretation of data is done by the help of
graphs, pie charts and judgment due to the observations made.
4.2 Presentation of finding
The study analyzed the following variables, quality, procurement policies, technology and
government policies.
4.2.1 Response Rate
Table 4.1 and the figure 4.1 show the response rate. Out of 70 respondents of Toyota East
Africa that were given questionnaires, only 55 (72%) responded. 21 (28%) did not respond.
Table 4.1 Response Rate
Category

Frequency

Percentage

Response

55

72

Non Response

21

28

Total

76

100

Source: Author (2016)

25

Figure 4.1 Response Rate

28%

72%

Source: Author (2016)

Table 4.1 and figure 4.1 show that 72% 0f the respondents filled the questionnaires and
returned them to the researcher, while 28% did not respond to the questionnaires. The
response rate allowed data presentation since it was high.

26

4.2.2 Gender analysis

Table 4.2 and figure 4.2 shows analysis of gender of the respondents.
Table 4.2 gender analysis of respondents
Gender

Frequency

Percentage

Male

44

55

Female

36

45

Total

80

100

Source: Author (2016)

Figure 4.2 Gender analysis of the respondents

45% Female
55% Male

Source: author (2016)

Table 4.2 and figure 4.2 shows that 60% of the respondents were male and 40% were
female. The gender analysis shows that male respondents were many compared to female
respondents in Toyota East Africa.

27

4.2.3 Age analysis

Table 4.3 and figure 4.3 shows age analysis of the respondents.
Table 4.3 Age analysis
Category

Frequency

Percentage

25 and below

15

19

25-35

10

35-45

26

32

Above 45

31

39

Total

80

100

Source: Author (2016)

Figure 4.3 Age analysis

Source: Author (2016)

The table 4.3 and figure 4.3 shows that 19% of the respondents aged 25 years and below,
10% of the respondents aged between 25 and 35 years, 32% of the respondents aged
between 35-45 years, 39% of the respondents aged 45 years and above. The age analysis
28

from table 4.3 and figure 4.3 shows that the respondents who aged above 45 years in Toyota
East Africa were many.
4.2.4 Education Level attained
Table 4.4 and figure 4.4 show the education level of the respondents.
Table 4.4 Education level
Category

Frequency

Percentage

Primary level

Secondary level

18

22

College level

26

33

University level

30

38

Others

Total

80

100

Source: Author (2016)

Figure 4.3 Education level

40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
primary level secondary level college level university level

Source: Author (2016)

29

others

Table 4.3 and figure 4.3 indicate the data analysis on education level of the respondents.
2% of the total of the respondents had primary level of education, 22% had secondary
education level, 33% had college education, 38% had university education and others were
represented by 5%. From the study, it can be concluded that the majority of the respondents
in Toyota East Africa have acquired university education.
4.2.5 Length of service
Table 4.5 Length of service
Category

Frequency

Percentage

1 year and below

11

14

2-6 years

15

19

7-11 years

29

36

11 years and above

25

31

Total

80

100

Source: Author (2016)

Figure 4.5 Length of service

40%
35%
30%
25%
20%
15%
10%

5%
0%
1 year and below

2-6 years

7-11 years

Source: Author (2016)

30

11 years and
above

The analysis on the table 4.5 and figure 4.5 indicates the respondents length of service in
Toyota East Africa. According to the analysis, 14% of the respondents had worked in the
organization for 1 year and below, 2-6 years were 19%, 7-11 years were 36% and 11 years
and above had 31%. From the analysis it can be concluded that majority of the respondents
had worked for organization for 7 to 11 years.
4.2.6 Management level for respondents
Table 4.6 Management level
Category

Frequency

Percentage

Top Management

10

12

Middle Management

16

20

Operational staff

54

68

Total

80

100

Source: Author (2016)

Figure 4.6 Management level of the respondents

70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
top management

middle management

Source: Author (2016)

31

operational staff

Table 4.6 and figure 4.6 above shows the response on management level. According to the
analysis, 12% of the respondents were from the top management level, 20% from middle
management level and 68% from operational staff. From the study it can be concluded that
majority of the respondents were from the operational staff.
4.2.7 Quality policy
Table 4.7 Effect of quality on procurement of raw materials in heavy commercial
vehicle
Category

Frequency

Percentage

Yes

70

87

No

10

13

Total

80

100

Source: Author (2016)

Figure 4.7 Effect of quality on procurement of raw materials in heavy commercial
vehicle

13% No

87% Yes

Source: Author (2016)

32

Table 4.7 and figure 4.7 above show effect of procurement of raw materials in heavy
commercial vehicle. According to the analysis, 87% of the total of the respondents said
quality affect the procurement of raw materials in heavy commercial vehicle while 13% of
the respondents said quality does not affect procurement of raw materials in heavy
commercial vehicle. From the study, it can be concluded that quality affect the procurement
of raw materials in heavy commercial vehicle.
4.2.8 Quality policy
Table 4.8 Extend of quality on procurement of raw material in heavy commercial
vehicle
Category

Frequency

Percentage

Very high

37

46

High

20

25

Fair

13

16

No effect

10

13

Total

80

100

Source: Author (2016)

33

Figure 4.8 Extend of quality on procurement of raw materials in heavy commercial

vehicle

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
very high

high

fair

no effect

Source: Author (2016)

Table 4.8 and figure 4.8 was intended to determine the extent to which quality affect
procurement of raw materials in heavy commercial vehicle in Kenya. According to the
analysis, 46% said quality affect at very high extent, 25% said quality affect at high extent,
16% said quality affect fair extent and 13% said quality does not affect procurement of raw
material in heavy commercial vehicle. From the study, it can be concluded that quality
affect procurement of raw material in heavy commercial vehicle in Kenya at a very high
extent represented by 46%.

34

4.2.9 Procurement policies

Table 4.9 Effect of procurement policies on procurement of raw materials in heavy
commercial vehicle
Category

Frequency

Percentage

Yes

69

86

No

11

14

Total

80

100

Source: Author (2016)

Figure 4.9 Effect of procurement policies on procurement of raw materials in heavy
commercial vehicle

14% No

86% Yes

Source: Author (2016)

Table 4.9 and figure 4.9 above was to determine the effect of procurement policies on
procurement of raw materials in heavy commercial vehicle in Kenya. According to the
study, 86% of the respondents said procurement policies affect procurement of raw
materials in heavy commercial vehicle while 14% said it does not affect. Based on the

35

analysis, it can be concluded that procurement policies affect procurement of raw materials
in heavy commercial vehicles in Kenya.

4.2.10 Procurement policies

Table 4.10 Rate on the effect of procurement policies on procurement of raw
materials in heavy commercial vehicle
Category

Frequency

Percentage

Very high

38

48

High

17

21

Fair

14

17

No effect

11

14

Total

80

100

Source: Author (2016)

36

Figure 4.10 Rate on the effect of procurement policies on procurement of raw

materials in heavy commercial vehicle

50%
45%
40%
35%
30%
25%
20%

15%
10%
5%
0%
very high

high

fair

no effect

Source: Author (2016)

The presentation indicated on the table 4.10 and figure 4.10 was based on the need to
determine the rate to which procurement policies affect procurement of raw materials in
heavy commercial vehicle in Kenya. According to the analysis, 48% of the respondents
stated that procurement policies affect at very high rate, 21% stated that procurement
policies affect at high rate, 17% said procurement policies affect at fair rate, 14% stated
that procurement policies does not affect procurement of raw materials in heavy
commercial vehicles in Kenya. From the study, it can be concluded that procurement
policies affect procurement of raw materials in heavy commercial vehicles at very high
rate represented by 48%.

37

4.2.11 Technology
Table 4.11 Effect of technology on procurement of raw materials in heavy commercial
vehicle
Category

Frequency

Percentage

Yes

67

84

No

13

16

Total

80

100

Source: Author (2016)

Figure 4.11 Effect of technology on procurement of raw materials in heavy
commercial vehicle

16% No

84% Yes

Source: Author (2016)

Table 4.11 and figure 4.11 shows effect of technology on procurement of raw materials in
heavy commercial vehicle. According to the study, 84% of the respondents said technology
affect procurement of raw materials in heavy commercial vehicle while 16% said
technology does not affect procurement of raw materials in heavy commercial vehicle.
38

From the analysis, it can be concluded that technology affect the procurement of raw
materials in heavy commercial vehicles in Kenya.
4.2.12 Technology
Table 4.12 Extend of technology procurement of raw materials in heavy commercial
vehicle
Category

Frequency

Percentage

Very high

37

46

High

16

20

Fair

14

18

No effect

13

16

Total

80

100

Source: Author (2016)

39

Figure 4.12 Extend of technology procurement of raw materials in heavy commercial

vehicle

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
very high

high

fair

no effect

Source: Author (2016)

Table 4.12 and figure 4.12 was to determine extend to which technology affect
procurement of raw materials in heavy commercial vehicles in Kenya. According to the
presentation above, 46% said technology affect at a very high extend, 20% said technology
affect at high extend, 18% of the respondents said technology affect at fair extend, 16%
said technology does not affect the procurement of raw materials in heavy commercial
vehicles in Kenya. From the analysis, it can be concluded that technology affect
procurement of raw materials in heavy commercial vehicles in Kenya at a very high rate.

40

4.2.13 Government policies

Table 4.13 Effect of government policies on procurement of raw materials in heavy
commercial vehicles
Category

Frequency

Percentage

Yes

68

85

No

12

15

Total

80

100

Source: Author (2016)

Figure 4.13 Effect of government policies on procurement of raw materials in heavy
commercial vehicles

15% No

85% Yes

Source: Author (2016)

Table 4.13 and figure 4.13 shows effect of government policies on procurement of raw
materials in heavy commercial vehicles. According to the study, 85% of the respondents
said government policies affect procurement of raw materials in heavy commercial
vehicles while 15% said it does not affect. From the analysis, it can be concluded that

41

government policies affect procurement of raw materials in heavy commercial vehicles in

Kenya.
4.2.14 Government policies
Table 4.14 Rate on the effect of government policies on procurement of raw materials
in heavy commercial vehicle
Category

Frequency

Percentage

Very high

40

50

High

15

19

Fair

13

16

No effect

12

15

Total

80

100

Source: Author (2016)

42

Figure 4.14 Rate on the effect of government policies on procurement of raw materials
in heavy commercial vehicle

Source: Author (2016)

Table 4.14 and figure 4.14 was based on the need to determine the rate on which
government policies affect procurement of raw materials in heavy commercial vehicles.
From the presentation above, 50% of the respondents stated that government policies affect
at a very high rate, 19% of the respondents stated that government policies affect at high
rate, 16% said it affect at fair rate while 15% of the respondents stated that government
policies does not affect procurement of raw materials in heavy commercial vehicles in
Kenya.
4.3 Summary of data analysis
4.3.1 General information
Out of 76 questionnaires distributed 55 were returned represented by 72% of the total
population and only 21 questionnaires represented by 28% were not returned. The analysis
shows that 55% of the respondents were male while 45% were female. 19% of the
43

respondents had less than 25 years. 10% of the respondents had 25-35 years. 32% had 3545 years. 39% of the respondents had more than 45 years. 2% of the respondents had
primary level of education, 22% had secondary level, 33% had college level, and majority
of the respondents had university level and others were represented by 5%. 14% of the
respondents had worked in the organization for less than 1 year, 19% had worked for 2-6
years, 36% had worked in the organization for 7-11 years and 31% had worked in the
organization more than 11 years. 12% represented top management respondents, 20%
represented middle management respondents while the operational staff was the highest
which was represented by 68%.
4.3.2 Quality policies
Analysis show that Quality affect procurement of raw materials in heavy commercial
vehicles in Kenya; this was represented by the response of 87% for those who agreed
whereas 13% of the respondents disagreed.
4.3.3 Procurement policies
Analysis show that procurement affect procurement of raw material in heavy commercial
vehicles in Kenya; this was represented by the response of 86% for those who agreed while
14% of them indicated that they disagree.
4.3.4 Technology
Analysis show that technology affect procurement of raw materials in heavy commercial
in Kenya; this was represented by 84% of the respondents who agreed whereas 16% of the
respondents disagreed.
4.3.5 Government policies
Based on the analysis of the respondents, with 85% of the total respondents indicated that
government policies affect procurement of raw materials in heavy commercial vehicle in
Kenya. 15% of the total respondents indicated that government policies does not affect
procurement of raw materials in heavy commercial vehicles in Kenya.

44

CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter presents a summary of findings of the study, conclusion and
recommendations. There is also suggestion for further research which is provided to shed
more light on the key areas which need more research to be conducted.
5.2 Summary of Findings
5.2.1 How quality policy affect procurement of raw materials in heavy commercial
vehicles assembling companies in Kenya?
The study established that the majority of the respondents which were represented by 87%
agreed that quality affect procurement of raw materials in heavy commercial vehicles in
Kenya and only 13% disagreed. Majority 46% of the respondents reported that they agreed
to a very large extend,25% said they agreed to a high extend, 16% agreed to fair extend
and only 13% of the total respondents said quality does not affect procurement of raw
materials in heavy commercial vehicles in Kenya.
5.2.2 To what extend does procurement policies affect procurement of raw materials
in heavy commercial vehicles assembling companies in Kenya?
It was found out that a good number represented by 86% of the respondents agreed that
procurement policies affect procurement of raw materials in heavy commercial vehicles in
Kenya and only 14% of the respondents disagreed. The majority 48% said procurement
policies affect at a very high rate, 21% said it affect at high rate,17% of the respondents
said it affect at fair rate while 14% refuted that procurement policies does not affect
procurement of raw materials in heavy commercial vehicles in Kenya.

45

5.2.3 How technology affect procurement of raw materials in heavy commercial

vehicles assembling in Kenya?
Most respondents represented by 84% said that technology affect procurement of raw
materials in heavy commercial vehicles in Kenya while 16% of the respondents disagreed.
46% of the respondents said they agreed at a very high rate, 20% agreed at a high rate, 18%
agreed at a fair rate and only 16% said technology does not affect procurement of raw
materials in heavy commercial vehicles in Kenya.
5.2.4To what extend does government policies affect procurement of raw materials in
heavy commercial vehicles assembling companies in Kenya?
The majority 85% confirmed that government policies affect procurement of raw
materials in heavy commercial vehicles in Kenya while only 15% disagreed. Most of the
respondents 50% agreed at a very high extend , 19% said it affect at high extend, 16% said
it affect at fair extend while 15% said government policies does not affect procurement of
raw materials in heavy commercial vehicles in Kenya.
5.3 Conclusions
According to the study conducted, majority of the respondents agreed that quality affect
procurement of raw materials in heavy commercial vehicles assembling in Kenya. Quality
is the significant consideration in procurement of raw materials in heavy commercial
vehicles assemblies. This can be attributed to the fact that customers prefer goods of high
quality to be satisfied and retaining their loyalty to continue buying goods.
The conclusion in regard to procurement policies was that, procurement policies affect
procurement of raw materials in heavy commercial vehicles assembling companies in
Kenya. It appears that procurement policies cannot be overlooked when purchasing and
supplying raw materials in heavy commercial vehicles assembling companies in Kenya.
The study established that technology is seen to have effect on procurement of raw
materials in heavy commercial vehicles assembling in Kenya. The conclusion was that staff
need to be introduced to purchasing and supplying of modern raw materials which will

46

minimize the effect of technology in procurement of raw materials in heavy commercial

vehicles in Kenya.
In regard to government policies, majority of the respondents confirmed that government
policies affect procurement of heavy commercial vehicles assembling companies in Kenya.
The conclusion was that when purchasing and supplying raw materials in heavy
commercial vehicles, it is important to consider government policies as a significant factor.
5.4 Recommendations
5.4.1 Quality
The study established that the majority of the respondents reported that they agreed to a
very high extent that quality affect procurement of raw materials in heavy commercial
vehicles assembling in Kenya. It is recommended that the management of Toyota East
Africa should consider quality when purchasing and supplying of raw materials in heavy
commercial vehicles to avoid the low profits in their company.
5.4.2 Procurement policies
Procurement of all goods and services is conducted in an honest, competitive, fair and
transparent manner that delivers the best value for money outcome whilst at the same time
protecting the reputation of the organization, taking into account the required specification,
quality, service, delivery, reliability, environmental and social issues and the total cost of
ownership. It was recommended that the management of Toyota East Africa should ensure
the raw materials are of the best value in order to achieve high profits.
5.4.3 Technology
Technology is the modern way of running a business enterprise efficiently. Most
organizations look for the largest technologies available to make work easier and also gain
more and have more returns. It was recommended that Toyota East Africa management
should ensure that raw materials are of high technology and also there was a
recommendation that staff should be trained about the products.

47

5.4.4 Government policies

According to the study, majority of the respondents confirmed that government policies
affect procurement of raw materials in heavy commercial vehicles assembling companies
in Kenya. Thus the study recommended that the management of Toyota East Africa should
set up clear rules to govern the organization leading to quality production and practice
which satisfies and extend customer expectations.
5.5 Suggestions for further studies
This study was conducted mainly to focus on four factors that affect procurement of raw
materials in heavy commercial vehicles assembling companies in Kenya. The study is
based on Toyota East Africa which began its operation in 1999. This shows that studies
need to be carried out to focus on other factors that affect procurement of raw materials in
heavy commercial vehicle assembling in Kenya.

48

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