SUPPLIER RELATIONSHIP MANAGEMENT AND VALUE FOR MONEY IN

PROCUREMENT IN COMMERCIAL BANKS OF UGANDA: A CASE OF

STANBIC BANK UGANDA LIMITED

BY

BAYIGA DORCUS

18/MPP/KLA/WKD/0001

A RESEARCH DISSERTATION SUBMITTED TO THE SCHOOL OF MANAGEMENT

SCIENCE IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD

OF A MASTER’S DEGREE IN PUBLIC PROCUREMENT MANAGEMENT

UGANDA MANAGEMENT INSTITUTE

JUNE, 2023
 DECLARATION

I, Bayiga Dorcus, declare that this dissertation entitled “Supplier relationship management and

value for money in procurement in commercial banks of Uganda: a case of Stanbic Bank Uganda

Limited” is my own original work and it has not been presented and will not be presented to any

other institution for any academic award. Where other people’s work has been used, this has

been duly acknowledged.

SIGN……………………………………..DATE ……………………………………………..

BAYIGA DORCUS

18/MPP/KLA/WKD/0001

i
 APPROVAL

This is to certify that this dissertation by Bayiga Dorcus entitled, “Supplier relationship

management and value for money in procurement in commercial banks of Uganda: a case of

Stanbic Bank Uganda Limited” has been submitted for examination with our approval as

Institute supervisors.

Sign ……………………………………. Date………………………………..

DR. BRUCE KISITU

SUPERVISOR

Uganda Management Institute

Sign ……………………………………. Date………………………………..

DR. JULIET ATWEBEMBEIRE

SUPERVISOR

Uganda Management Institute

ii
 DEDICATION

This dissertation is dedicated to my family members most especially my dear husband, my

children and my parents for their financial support and moral encouragement.

iii
 ACKNOWLEDGEMENT

I am deeply indebted to my research supervisor Dr. Bruce Kisitu and Dr. Juliet Atwebembeire

for their patience with my inadequacies as they guided me through the research process. Without

your parental and professional input, this research would have been difficult to elevate to its

current level.

I acknowledge with gratitude the contributions and co-operation made by the respondents from

Stanbic Bank Uganda Limited for their willingness to provide the necessary information when I

visited their company during the research process. Without their cooperation, this study would

have been impossible to accomplish.

I also thank my colleagues at Uganda Management Institute, persons who dealt with secretarial

work and those who read through the questionnaires and perfected the draft report.

I deeply treasure the contributions of all the above persons and ask God Almighty to richly bless

them.

TABLE OF CONTENTS

iv
DECLARATION............................................................................................................................i

APPROVAL...................................................................................................................................ii

DEDICATION..............................................................................................................................iii

ACKNOWLEDGEMENT...........................................................................................................iv

TABLE OF CONTENTS..............................................................................................................v

LIST OF TABLES........................................................................................................................ix

LIST OF FIGURES.......................................................................................................................x

ABSTRACT.................................................................................................................................xii

CHAPTER ONE............................................................................................................................1

INTRODUCTION.........................................................................................................................1

1.0 Introduction................................................................................................................................1

1.1 Background to the Study...........................................................................................................1

1.1.1 Historical Background............................................................................................................1

1.1.2 Theoretical Background..........................................................................................................2

1.1.3 Conceptual Background..........................................................................................................4

1.1.4 Contextual Background..........................................................................................................5

1.2 Problem statement.....................................................................................................................6

1.3 Purpose of the study...................................................................................................................7

1.4 Specific Objectives....................................................................................................................7

1.5 Research Questions....................................................................................................................7

1.5 Hypothesis of the Study.............................................................................................................8

1.7 Significance of the Study...........................................................................................................9

v
1.8 Justification of the study..........................................................................................................10

1.9 Scope of the study....................................................................................................................10

1.10.1 Subject scope......................................................................................................................10

1.10.2 Geographical scope.............................................................................................................10

1.10.2 Time scope..........................................................................................................................11

1.11 Operating definitions.............................................................................................................11

CHAPTER TWO.........................................................................................................................12

LITERATURE REVIEW...........................................................................................................12

2.1 Introduction..............................................................................................................................12

2.2 Theoretical review...................................................................................................................12

2.3 Related literature review..........................................................................................................15

2.3.1 Supplier performance management and Value for money...................................................15

2.3.2. Supplier development and Value for Money.......................................................................18

2.4 Value for Money......................................................................................................................21

2.5 Summary of literature review..................................................................................................23

CHAPTER THREE.....................................................................................................................24

METHODOLOGY......................................................................................................................24

3.1 Introduction..............................................................................................................................24

3.2 Research design.......................................................................................................................24

3.3 Study Population......................................................................................................................24

3.4 Sample Size.............................................................................................................................25

3.5 Sampling Techniques and procedures.....................................................................................25

3.5.1 Simple Random Sampling....................................................................................................25

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3.6 Data Collection Methods.........................................................................................................26

3.6.1. Questionnaire Survey...........................................................................................................26

3.6.2 Interviews.............................................................................................................................27

3.7.2 Interview guide.....................................................................................................................28

3.8 Quality control of data.............................................................................................................28

3.8.1 Validity of instruments.........................................................................................................29

3.8.2 Reliability of instruments.....................................................................................................30

3.9 Data collection procedure........................................................................................................31

3.10. Data Analysis Technique......................................................................................................32

3.10.1 Quantitative data analysis...................................................................................................32

3.10.2 Qualitative data analysis.....................................................................................................32

3.11 Measurement of variables......................................................................................................33

3.12 Ethical Considerations...........................................................................................................33

CHAPTER FOUR.......................................................................................................................29

PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS.........................29

4.1 Introduction..............................................................................................................................29

4.2 Response Rate..........................................................................................................................29

4.3.1 Sex of the respondents..........................................................................................................30

4.3.2 Age of the respondents.........................................................................................................30

4.3.3 Education level of respondents.............................................................................................31

4.3.4 Years of service in the organization.....................................................................................32

4.4 Empirical findings...................................................................................................................33

4.4.1 Value for money at Stanbic Bank Uganda Limited..............................................................33

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4.4.2 Supplier performance management and value for money....................................................37

4.4.3 Supplier development and value for money.........................................................................43

CHAPTER FIVE.........................................................................................................................50

SUMMARY, DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS...................50

5.1 Introduction..............................................................................................................................50

5.2. Summary of major findings....................................................................................................50

5.2.1: Supplier performance management and value for money...................................................50

5.2.2 Supplier development and value for money.........................................................................50

5.3. Discussion of findings............................................................................................................51

5.3.1 Supplier performance management and value for money....................................................51

5.3.2 Supplier development and value for money.........................................................................52

5.4 Conclusions..............................................................................................................................54

5.4.1 Supplier performance management and value for money....................................................54

5.4.2 Supplier development and value for money.........................................................................54

5.5 Recommendations....................................................................................................................54

5.5.1 Supplier performance management and value for money....................................................55

5.5.2 Supplier development and value for money.........................................................................55

REFERENCES............................................................................................................................57

APPENDICES.................................................................................................................................i

APPENDIX I: QUESTIONNAIRE FOR THE FINANCE AND ADMINISTRATION AND

OPERATIONS’ DEPARTMENT.................................................................................................i

SECTION B: QUESTIONS ON THE STUDY VARIABLES..................................................ii

APPENDIX TWO: INTERVIEW GUIDE FOR THE MANAGERS......................................v

viii
APPENDIX III: SAMPLING GUIDE.......................................................................................vii

ix
 LIST OF TABLES

Table 3.1: sample size determination............................................................................................27

Table 3.2: Results of content validity for research tools...............................................................32

Table 3.3: Reliability test results of research instruments.............................................................33

Table 4.4: Response rate................................................................................................................29

Table 4.5: Sex of the respondents..................................................................................................30

Table 4.6: Value for money at Stanbic Bank Uganda Limited......................................................34

Table 4.7: Descriptive statistics on supplier performance management.......................................39

Table 4.8: Model summary............................................................................................................43

Table 4.9: Regression of supplier performance management.......................................................44

Table 4.10: Descriptive Statistics on supplier development and value for money........................45

Table 4.11: Model Summary.........................................................................................................51

Table 4.12: Regression analysis for supplier development...........................................................51

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 LIST OF FIGURES

Figure 1.1: Relationship between supplier relationship management and Value for Money..........8

Figure 4.2: Age of the respondents................................................................................................31

Figure 4.3: Highest Level of Education.........................................................................................32

Figure 4.4: Years of service in the organization............................................................................33

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 LIST OF ACROYMNS AND ABBREVIATIONS

CRM: Customer Relationship Management

SRM: Supplier Relationship Management

TCO: Total Cost of Ownership

VFM: Value for Money

CIPS: Chartered Institute of Procurement and Supply

SFI: Supervised Financial Institutions

UNCTAD: The United Nations Conference on Trade and Development

xii
 ABSTRACT

The study focused on the effect of supplier relationship management on Value for Money in

procurement in commercial banks in Uganda with a case study of Stanbic Bank Uganda Limited.

The study was guided by the following research objectives namely; to examine the effect of

supplier performance management on value for money at Stanbic Bank Uganda Limited and to

examine the effect of supplier development on value for money in Stanbic Bank Uganda

Limited. The study adopted a cross-sectional survey design where both quantitative and

qualitative approaches were used. The findings established that supplier performance

management had a moderate positive effect on the value for money at Stanbic Bank Uganda

Limited. The adjusted R square which explains the effect of supplier performance management

on value for money was 0.35 which account for 35% variation in value for money. The study

results further indicated a significant effect of supplier performance management on value for

money given that P-value (P=0.00<0.05). The findings established that supplier development had

a strong positive effect on the value for money at Stanbic Bank Uganda Limited. The adjusted R

square which explains the effect of supplier development on value for money was 0.52 which

account for 52% variation in value for money. The study results further indicated a significant

effect of supplier development on value for money given that P-value (P=0.00<0.05). The study

recommended that management should set supplier performance indicators, quantity

expectations and quarterly performance expectations for strategic supplies. Management of the

banking sector in particular should introduce a policy of “supplier development”. It should focus

on supplier training and enrolment in seminars and workshops provide them with capital benefits

to undertake their work.

xiii
 CHAPTER ONE

INTRODUCTION

1.0 Introduction

Supplier relationship management is a pertinent element in achieving Value for Money in the

procurement process. It is a continuous process that needs to be employed by both the public and

private sector in their respective procurement process. This study examines the relationship

between supplier relationship management and value for money in Stanbic Bank Uganda

Limited. Supplier relationship management is the independent variable and Value for Money is

the dependent variable. This chapter presents the background of the study, the problem

statement, purpose of the study, general objectives and specific objectives of the study, research

questions, hypotheses, conceptual framework, significance of the study, rationale/justification of

the study, scope of the study and operational definitions.

1.1 Background to the Study

This section presents the background of the study under four dimensions that is, the historical,

theoretical, conceptual and contextual perspectives.

1.1.1 Historical Background

Since the 18th Century, Supplier Relationship Management in public organizations emerged as

part of the public procurement reforms recommended by International Monetary Fund (Adjei,

2005). Throughout the 2000s, SRM has continued attracting and gaining popularity in both the

developed and developing nations (Cowell, 2009). The act of purchasing since history has been

highly referred to as a clerical function-meaning that the interplay between the buying agents and

the suppliers in the chain is usually done adversary (Burton, 2004). This kind of understanding

has been changing through history and many people started shifting their understanding from

1
what is called adversarial to seeing it as a collaborative function (Burt, Dobbler & Starling,

2003).

In the context of Africa today, South Africa, Kenya, Rwanda and Tanzania for example, better

Value for Money from procurement is achieved by getting an increased level or quality of

service at the same cost, avoiding unnecessary purchases, ensuring that user needs are met but

not exceeded, and specifying the purchasing requirement in output terms so that suppliers can

recommend cost-effective and innovative solutions to meet that need (Apiyo & Mburu, 2014).

In Uganda, Value for Money is achieved through optimizing the cost of delivering a service or

goods over the full life of the contract rather than minimizing the initial price, introducing

incentives into the contract to ensure continuous cost and quality improvements throughout its

duration, aggregating transactions to obtain volume discounts, and collaborating with other

departments to obtain the best prices and secure better discounts from bulk buying (Basheka,

2009). Achieving Value for Money and demonstrating results is a key issue in the international

development sector (Flynn, 2018; Changalima, 2016). The situation is no different in Uganda

where, due to lack of competence of most procurement officers in terms of utilising the Supplier

Relationship Management practices, there have been a number of problems in the procurement

units hence affecting timely delivery of both government and private sector projects. This study

therefore seeks to investigate the relationship between Supplier Relationship Management and

Value for Money in procurement; taking a case study of Stanbic Bank Uganda Limited

1.1.2 Theoretical Background

Principal Agent theory

This study was guided by the Principal Agent theory by Jensen and Meckling (1976) and

quantity theory of the Value for Money developed by David Ricardo (1811). The Principal

2
Agent theory states that a Principal and an Agent get into a mutual contractual agreement during

a procurement process, to ensure Value for Money.

According to Jensen and Meckling (1976), agency theory is the study of the agency relationship

and the issues that arise from this, particularly the dilemma that the Principal and Agent, while

nominally working towards the same goal, may not always share the same interests. The

Principal Agent problem arises when one party (Agent) agrees to work in favor of another party

(Principal) in return for some incentives. Such an agreement may incur huge costs for the Agent,

thereby leading to the problems of moral hazard and conflict of interest. Owing to the costs

incurred, the Agent might begin to pursue his own agenda and ignore the best interest of the

Principal, thereby causing the Principal Agent problem to occur (Kivistö, 2007). The focus for

agency theory is on the use of contractual mechanisms. With an assumption of full rationality,

agency theory argues that it is possible ex ante to design complete contracts covering every

conceivable contingency that might impact on a buyer–supplier transaction. The agency costs

incurred in mitigating supplier opportunism are thus primarily associated with contract drafting,

to design incentive structures and monitoring regimes, and with contract enforcement or supplier

bonding (Jensen & Meckling, 1976). For purposes of the current study, the principal is the bank

and the agents are the suppliers with whom the bank manages relationships. The theory is linked

to the study in such a way that by having in place the supplier-agent relationship, the bank is

generally confident that the suppliers will not deviate from their aspirations and will serve the

interests of the bank (principal) rather than their own (agents).

Quantity Theory

This study was also guided by the quantity theory of the value of money developed by David

Ricardo (1811). The theory proposes that the amount of commodities to be exchanged is at any

3
time a fixed quantity, and that there is likewise a definite amount of the medium of exchange to

perform this work. Thus prices are the ratio between the bulk of commodities on the one hand,

and the quantity of money on the other. The price of a commodity is its value expressed in terms

of money. Since demand and supply regulate the values of commodities in conformity with their

costs of production, the law may be expressed in these terms: the price of any commodity was

altered by a change either in the supply of the article used as the denominator of value; or in the

demand for that article; or by a rise in the cost of producing the given commodity; or by a fall in

this cost (Mitchell, 1896). The quantity theory of the value of money proposes that prices are the

ratio between the bulk of commodities on one hand, and the value of quantity of money on the

other. This theory was, therefore, the basis for establishing the Supplier Relationship

Management on Value for Money in Procurement in Commercial Banks in Uganda with a case

study of Stanbic Bank Uganda Limited.

1.1.3 Conceptual Background

Supplier Relationship Management is the process that defines how a company interacts with its

suppliers. This is a mirror image of Customer Relationship Management (CRM). Just as a

company needs to develop relationships with its customers, it also needs to foster relationships

with its suppliers (Oyugi & Getuno, 2019). The desired outcome is a win-win relationship where

both parties benefit (Supply Chain Management Institute, 2008).

Supplier Relationship Management (SRM) is a comprehensive approach to procurement

managing and capturing the post contract value from key business relationships. SRM enables

procurement to operate at a strategic level and by adopting a more collaborative approach and

developing a closer relationship this generates more value from the relationship in terms of

innovation and efficiency (Chartered Institute of Procurement and Supply (CIPS, 2020). Value

4
for Money is the achievement of the lowest whole of life cost and clearly defined benefits,

purpose of goods, works and services procured at the right time, within budget and scope, and of

the required quality (Nsiah et al. 2016).

Value for Money (VfM) is defined as the optimum combination of whole of life costs and quality

of the good or service to meet the user’s requirement (Moralles et al. 2015). Value for Money

(VFM) is not about achieving the lowest price. It is about achieving the optimum combination of

whole life costs and quality. Traditionally VfM was thought of as getting the right quality, in the

right quantity, at the right time, from the right supplier at the right price. This concept has been

updated to obtaining better quality of goods or services in more suitable quantities, just in time

when needed, from better suppliers at prices that continue to improve (Lorenzoni, Let al., 2018).

Value for Money in public procurement is achieved through pursuing the lowest whole of life

cost, clearly defining relevant benefits and delivering on time. Preventing waste and fostering

competition, transparency and accountability during the tendering process are key conditions to

achieving Value for Money

1.1.4 Contextual Background

Stanbic Bank Uganda Limited (Stanbic Bank) is a private limited liability company incorporated

in accordance with the laws of Uganda and licensed to carry out banking/financial business by

Bank of Uganda. It one of the biggest banks in Uganda that offers its clients a wide range of

personal, business and corporate and investment banking products through its branches spread

across Uganda and its online banking platforms. Stanbic Bank in accordance with its

Procurement Procedure Manual has a procurement unit whose purpose in carrying out all

purchases is to maximize Value For Money, including getting the most competitive prices for

goods and services on the market by putting into consideration whole -of-life costing, the

5
prevailing market forces, the prevailing market factors and best in class procurement industry

practices because it would like to be in a position where it is getting a fair deal on all its

purchases.

Stanbic Bank has promulgated the supplier relationship management framework whose purpose

is to govern its Supplier Relationship Management activities including inter alia; periodic

supplier performance reviews, external supplier risk/controls assurance, financial stability

checks, invoice validation/processing and contracts review for Strategic (High risk), Operational

(Medium risk) and Commodity (Low risk) supplier relationships as per the segmentation process

(Stanbic Bank Uganda Limited Supplier Relationship Management Framework version 1.0). As

a result of the adoption of the Supplier Relationship Management practices by Stanbic Bank, the

Procurement unit saved Uganda Shillings Four Billion One Hundred Million Only (UGX

4,100,000,000) (Procurement Unit Report, 2019) from the purchase of goods and services hence

achieving Value for Money.

1.2 Problem statement

In order to ensure Value for Money (VfM), Stanbic Bank has put in place a number of measures

such as ensuring an effective supplier appraisal process, putting in place a quality control unit as

well as a fully functional procurement unit. Preventing waste and fostering competition among

their suppliers, promoting transparency and accountability during the tendering process are key

conditions they have put in place in this endeavour. In addition to these, the staff knowledge and

skills are kept at par through regular trainings on the job and off the job. Despite these efforts,

Stanbic Bank is not realizing Value for Money for most items purchased, and in addition to that,

there is concern over escalating costs and budget excesses across various high value technology

procurement requirements, lack of establishment of effective Supplier Relationship Management

6
which contributes to 61% of losses made in procurement bids,  loss of 4.7 billion in procurement

of bicycles that Stanbic bank had forged the bill of lading, (Stanbic Bank, 2020, Odongo, 2021).

This problem is partly attributed to poor supplier performance management and lack of supplier

development at Stanbic Bank, which, if not addressed will lead to continued losses for the bank

as well as poor management of its procurement processes, leading to negative consequences

(Cheptora et al., 2018). This has prompted the study to identify Supplier Relationship

Management as a factor that influences the achievement of Value for Money in commercial

banks with the case study of Stanbic Bank Uganda Limited.

1.3 Purpose of the study

The purpose of the study was to examine the effect of supplier relationship management on

Value for Money in procurement in commercial banks in Uganda with a case study of Stanbic

Bank Uganda Limited.

1.4 Specific Objectives

i. To examine the effect of supplier performance management on value for money at

Stanbic Bank Uganda Limited.

ii. To examine the effect of supplier development on value for money in Stanbic Bank

Uganda Limited.

1.5 Research Questions

i What is the effect of supplier performance management on value for money at Stanbic

Bank Uganda Limited?

ii What is the effect of supplier development on value for money at Stanbic Bank Uganda

Limited?

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1.5 Hypothesis of the Study

H1: Supplier performance management as significant relationship with value for money in

Stanbic Bank Uganda Limited

H2: Supplier development as significant relationship with value for money in Stanbic Bank

Uganda Limited.

1.6 Conceptual Framework

According to Swaen and George (2022), conceptual framework illustrates the expected

relationship between study variables. It defines the relevant objectives for your research

process and maps out how they come together to draw coherent conclusions. In this case the

independent variable is supplier relationship management and the dependent variable is Value

for Money in commercial banks in Uganda.

Supplier Relationship Mgt (SRM) (IV)

Supplier performance management
 Setting of performance targets
Value for Money (VFM) (DV)
 Appraisal management
 Quality of a service offered
 Monitoring of performance
 Getting the right quality
Supplier Development  Delivery of services
 Supplier training  Satisfaction of the cost of a
 Supplier financial support service

Source: Modified from Togar, Simatupang & Ramaswami (2005), “An integrative framework

for supply chain collaboration”

Figure 1.1: Relationship between supplier relationship management and Value for Money

In the figure above, the independent variable is supplier relationship management and value for

money is the dependent variable. The independent variable is measured in terms of supplier

8
performance management with sub themes like (setting of performance targets, appraisal

management and monitoring of performance) and supplier development with sub themes like

(supplier training and supplier financial support). The dependent variable is measured in terms of

quality of a service offered, getting the right quality, delivery of services and satisfaction of the

cost of a service. Any change in the independent variable will bring about a change in the

dependent variable.

1.7 Significance of the Study

The study is expected to contribute to different sectors in the following ways:

Policy makers: The policy makers may gain more insight on value for money and are expected to

use the findings and recommendations to enhance the achievement of value for money in

Procurement through the adoption of supplier relationship management practices.

Commercial Banks: The commercial banks may be able to understand the importance of

Supplier Relationship Management practices in Procurement and how it will achieve Value for

Money. They will therefore embrace the concept and put it at the center of their supplier

relationships.

Researchers and academicians: The study is expected to add to existing stock of literature in the

field of procurement and supply chain management. Other scholars may validate the findings and

use the study as a reference text.

Other researchers and institutions may follow the areas recommended for further research as a

means of increasing body knowledge on supplier relationship management and value for money

in procurement.

9
1.8 Justification of the study

Private sector entities continue to suffer losses due to lack of Value for Money (Lubale & Kioko,

2016). This study intends to enlighten them about this concept and help, or possibly save a

significant number of them from such monumental losses. This study is designed to help those

organisations especially in the private sector (commercial banks) to unlock the barriers to the

achievement of Value for Money. If this study is not conducted, many commercial banks in

Uganda will continue to grapple with this problem.

1.9 Scope of the study

This section defines the research boundaries/scope of this study in terms of subject, geographical

coverage and time under review.

1.10.1 Subject scope

This study shall look at the various SRM practices in procurement at Stanbic Bank Uganda

Limited, the benefits of SRM and the extent to which SRM contributes to the achievement of

Value for Money (quality of a service offered, getting the right quality, delivery of services and

satisfaction of the cost of a service)

1.10.2 Geographical scope

The researcher shall conduct this study at Stanbic Bank Uganda Limited head office located at

Plot 17 Hannington Road Crested Towers, Short Tower, Kampala Uganda. The case study was

also selected owing to the fact that the SRM environment is an area of regulatory interest by the

Central Bank of Uganda through its Outsourcing guidelines issued to all Supervised Financial

Institutions (SFIs) in Uganda, Stanbic Bank Uganda Limited being the largest SFI.

10
1.10.2 Time scope

This study shall focus on the Supplier Relationship Management environment in the period

2015-2023.

1.11 Operating definitions

Supplier Relationship Management (SRM)

Supplier Relationship Management or Supply Management is a comprehensive approach to

managing an organization’s interactions with the firms that supply the products and services it

uses. SRM is also a systematic approach for developing and managing partnerships. It is focused

on joint growth and value creation with a limited number of key suppliers based on trust, open

communication, empathy and a win-win orientation.

Procurement means acquisition by purchase, rental, lease, hire purchase, licence, tenancy,

franchise, or any other contractual means, of any type of works, services or supplies or any

combination.

Value for Money: This is the relationship between the money that enters the chain (the costs)

and the resulting outcomes and impact (White et al., 2013). In this study, it was considered to

refer to ensuring economy, efficiency and effectiveness in the buying of commodities.

Supplier Performance Management is a business practice that is used to measure, analyse, and

manage the performance of a supplier.

Financial Support refers to the buying firm's effort to develop its suppliers by engaging in

human and capital resources which include technical support, direct investment in equipment

and tools.

11
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

The literature in this chapter is reviewed under the following sub headings; Theoretical review,

actual literature review and summary. The literature reviewed in this section describes and

examines the supporting theories that related to the research objectives outlined in chapter one.

2.2 Theoretical review

This study was guided by the Principal-Agent Theory by Jensen and Meckling (1976).

According Jensen and Meckling (1976), agency theory is the study of the agency relationship

and the issues that arise from this, particularly the dilemma that the principal and agent, while

nominally working toward the same goal, may not always share the same interests.

In principal-agent models, some actor (or group of actors) called an agent undertakes an action

on behalf of another actor (or group of actors) called a principal. The principal, for its part, can

make decisions that affect the incentives of the agent to take any of its various possible actions.

This process of structuring incentives for the agent is the central focus of principal agent theory.

The decisions made by the principal that structure the agent’s incentives to take various actions

constitute a contract, in the language of principal-agent theory, and principal-agent theory is

often taken as a specific area of contract theory more generally (Bolton & Dewatripont, 2004).

The principle agent problem arises when one party (agent) agrees to work in favor of another

party (principle) in return for some incentives. Such an agreement may incur huge costs for the

agent, thereby leading to the problems of moral hazard and conflict of interest. Owing to the

costs incurred, the agent might begin to pursue his own agenda and ignore the best interest of the

principle, thereby causing the principal agent problem to occur (Kivistö, 2007).

12
According to Lane and Kivisto (2008), the costs to agent and subsequent conflict of interest arise

due to the skewed information symmetry and the risk of failure faced by the principal. For

example, shareholders of a company appoint managers to look after the proceedings of the

company and earn profits on their behalf. The shareholders expect the managers to distribute all

the profits to the shareholders. But the managers sensing their own growth and salary expectation

try to retain the profits for future as a safe side. This can lead to principle agent problem. It is one

of the most noticed problems in the current situation when most companies are not being

managed by the owners themselves (Ahmad et al. 2012).

The agency relationship appears whenever one of the parties must rely on the acts of the other.

The agency relationship is a contract, under which the principal engages another person (the

agent) to perform specific projects on its behalf, delegating decision-making rights. Three further

assumptions that are made in the agency theory are the efficiency of the principal’s operations

depends on the agent’s acts and decisions, decisions are made by the parties to the relationship

under conditions of uncertainty plus risk and the principal and the agent have conflicting

objectives to some extent (Mofokeng, 2012).

Experience has shown that application of the agency model poses a number of challenges that

make the opponents to increasingly question on its credibility. Opponents argue that there is

always a difference between the directions given by the principals and the actual decisions made

by agents. This divergence between the principal’s decision and the agent’s decisions is the main

problem highlighted by the agency model. The divergence arises due to the fact that the agents

also have their self-interests that they would like to maximize in the course of discharging the

given responsibilities. And if the agent works for the sole benefit of the principal, he/she is

demotivated and thus likely to engage in lower level of effort (Mandl at el, 2014).

13
The principal agent theory is related to this study in that the bank (principal) and the private

contractor (agent) can come into a mutual contractual agreement during a procurement process,

with care taken on the value for money. In other words, when the Bank uses the most appropriate

procurement method, with right procurement packaging, they select the best contractors who will

provide the most economical, and yet effective and efficient service.

Quantity theory of the Value for Money David Ricardo (1811)

The study was also underpinned by the quantity theory of the value of money David Ricardo

(1811). The theory proposes that the amount of commodities to be exchanged at any time is a

fixed quantity, and that there is likewise a definite amount of the medium of exchange to perform

this work. Therefore, prices would be the ratio between the bulk of commodities on the one

hand, and the quantity of money on the other. A change in the amount of the circulating medium

would cause a rise or fall of prices. According to theory, the value of every commodity is fixed

by the relation between the demand for it and the supply of it. Price is the value of any

commodity expressed in terms of some recognized denominator of value, whatever that may be.

Since demand and supply regulate the values of commodities in conformity with their costs of

production, the law may be expressed in these terms: the price of any commodity was altered by

a change either in the supply of the article used as the denominator of value; or in the demand for

that article; or by a rise in the cost of producing the given commodity; or by a fall in this cost

(Mitchell, 1896).

Further, Mitchell (1896) explains that what is true of the price of a single commodity is equally

true of the average price of a large number of commodities. Consequently, the price level is

subject to change from four causes. Therefore, if the demand for the article used as the

denominator of value increases, and the other factors remain constant, less of the denominator

14
than before will exchange for the same amount of commodities; that is, prices will fall. If the

supply of the article used as denominator increases, nothing else changing, more of that article

was offered for like amounts of goods; that is, prices will rise. If the average cost of producing

goods increases, while the other factors are constant, more of the article used as denominator will

exchange for an equal amount of commodities; that is, prices will rise. Finally, if the average

cost of producing goods decreases, and no other change occurs, less of the denominator will buy

the same amount of goods; that is, prices will fall. The general price level is subject to

fluctuations arising from changes in the cost of producing goods, quite as much as to alterations

caused by changes in the demand or supply of the article used as the denominator of value.

The value of money-meaning the article commonly used as the denominator of value is

determined by the same law as the value of any other commodity. Price is a ratio between two

terms money and commodities and that it will change when either of these changes. This theory

proposes that prices are the ratio between the bulk of commodities on the one hand, and the

quantity of money on the other. This theory helped in relating planning, contract management

and supplier relations in local governments ensuring that there is value for money by ensuring

that prices of the commodities procured are the ratio of the quantity of money paid.

2.3 Related literature review

This section covered literature review according to the research objectives as indicated.

2.3.1 Supplier performance management and Value for money

This study revealed that performance monitoring is a relatively strong factor in Value for money.

The study clearly pointed out that performance monitoring had a positive statistically significant

relationship with Value for money. This implies that the more efforts are put into monitoring the

performance of the suppliers, the higher the likelihood of suppliers performing higher in terms of

15
meeting their targets and expectations. Al Kurdi, Alshurideh and Al Afaishat (2020) asserted that

monitoring of suppliers is important to motivate them. In monitoring the suppliers, the

supervisors play a critical role of checking progress, supporting to bridge gaps and providing

feedback to the suppliers. Hence Armstrong emphasizes that a good supervisor should be able to

scan the work environment in which the junior staff work to ensure that it is supportive enough

to enable the employee achieve the set goals and objectives. He further notes that the supervisor

must support the juniors to update their objectives and support them to learn continuously on the

job and task accomplishment through coaching (Al Kurdi, Alshurideh, & Al Afaishat, 2020).

It was also revealed in this study that performance evaluations are highly correlated with Value

for money. Novita and Sudaryan (2021) confirm that performance evaluations are crucial parts of

performance management. Similarly, Jedaia and Mehrez, (2020) reaffirm performance

evaluation as a basic tool that makes suppliers very effective and active in performing their tasks

and duties in the organization. This study clearly noted that evaluation feedback is often

provided to the suppliers’ which helps them to perform their tasks. This feedback is helpful in

highlighting any performance gaps that need to be addressed. In fact, Okoth and Florah (2019)

were right to assert that by providing feedback, it helps the suppliers to identify those

weaknesses in their current performance hence enabling them to make adjustments for purposes

of achieving the stated goals and targets.

In addition, performance appraisal is often carried out in Stanbic Bank Uganda Limited as

revealed by the results though this was not statistically significant with Value for money.

Important to note is that performance appraisal is very critical to employee performance (Antara

et al., 2020). By appraising the suppliers, various performance aspects are generated for

management to address. An individual’s performance is rated and scored which highlights how

16
they are performing against the set targets and goals. Critical in this process is that the employee

is able to understand his/her weaknesses which have to be worked on. Similarly, the supervisors

are able to understand each one’s high performing points and weakest points hence devise means

of addressing them. In essence, appraisal is healthy as it checks the employee’s level of input

against the outputs hence resulting into improved performance when weaknesses are addressed.

Therefore, it is highly vital for organizations like Stanbic Bank Uganda Limited to regularly

conduct performance appraisals which has a direct impact on their performance as revealed in

this study

Suppliers must know what they need to do perform their jobs successfully. Expectations for

employee’s performance are established in employee performance plans. Employee’s

performance plans are all of the written or otherwise recorded, elements that set forth expected

performance. A plan must include all critical and non-critical elements and their performance

elements tell suppliers what they have to do and standards tell them how they have to do it. The

critical elements include planning monitoring, developing, rating and rewarding CQU, (Roberts,

Neumann, & Cauvin, 2020). Management by objectives as one of the key appraisal methods is

defined as a result-based evaluative program (Loberg et al., 2021). In greater detail, the goals of

the performance appraisal system from an MBO perspective are mutually defined by a number of

key stakeholders who include the subordinates, supervisors and suppliers as well. A typical

MBO appraisal system consists of several steps. The process begins by the establishment of clear

objectives for the employee. An action plan detailing the way in which the objectives are to be

achieved is develop. The employee is then allowed to implement the developed action plan. This

allows for appraisal of performance in an objective maimer. Corrective actions are taken in

situations deemed necessary as well as new objectives for the future established.

17
2.3.2. Supplier development and Value for Money

Supply company managers make sure to train suppliers who have positive work experience to

decision making hence motivating the min results increasing firm performance. The managers

make sure they provide the staff with motivation programs, promotion programs and good

supplier programs (Bai & Satir, 2020). Further, the buyer may send his suppliers or group of

team to train supplier or he may invite group of suppliers facing same problem for training in his

own firm. Therefore, training suppliers is a very important tool in increasing supplier base since

it increases supplier competency and the opportunities to enhance value for money. Masinde and

Osoro (2019) found that supplier development programs support the development of a supplier’s

capabilities usually with the assistance of a buyer. Supplier development also depends on

supplier’s interest and how they explore them self to increase their capabilities to provide value

for money. Thus, it is important that suppliers looking to develop their capabilities have access to

the type of training that they require which may or may not be provided by their buyers. For

suppliers that have access to buyer-supported training their training needs might often change as

they develop their own capabilities (Matto, 2022).

Supplier development is concerned with assisting the actual and potential suppliers produce and

supply high quality inputs to their prospective clients. Suppliers help organizations to meeting

their present and future requirements, since no organization is capable of satisfying all its

supplies requirements from its internal sources (Changalima,  Ismail,  & Mchopa,  2021). In

most cases it involves large organizations extending a helping hand in form of resources to small

vendors/small suppliers who have demonstrated willingness to meet their purchaser’s

requirements. It therefore involves looking at the various strengths and weakness of a supplier

who is willing to supply you with the materials/services and helping them overcome these

18
weaknesses so that they can serve you in a more efficient way. Analyzing value for money in

performance management of suppliers, price, quality, and time to market immediacy, product

credibility, service reliability, support capability, research and development power, purchase

specialty, value analysis, value engineering and e-commerce (Mwagike & Changalima, 2022).

Traditionally, the role of supplier in contributing to the value for money of the buyer has never

been accorded strategic importance. This has been due to the simple reason that the inter-

organizational linkages between the buyers and sellers has been of arm’s length and often

adversarial with individual firms in the supply chain seeking to achieve cost reduction,

profitability and growth at the expense of each other (Araz, & Ozkarahan, 2017). However,

researchers, such as Sikombe and Phiri (2021) stated that successful buyers recognize the role

working closer with their suppliers plays with regards to inventory management and handling,

demand management, purchasing processing management, and achievement of success in the

face of industry competition and increasing material scarcity in the global arena for ensuring

high levels of economy, efficiency and effectiveness.

Ismail et al (2022) the notion of achieving effective value for money due to investments in

supplier development is not of complete novelty. Effective supply chain performance of any firm

can only be achieved if there is a cordial buyer-supplier relationship focusing on the antecedents

trust and commitment, communication quality, information sharing and involvement as well as

feedback. To address the challenges of relational assets assignment that buyers face, they apply a

number of strategies to identify, evaluate and select suppliers with the aim of supplier base

reduction, selection of key suppliers for consideration for process and product development

improvements and investments and to advance buyer-supplier collaborative relationships

(Sikombe and Phiri (2021).

19
Suppliers’ need competent technical ability to provide high quality product or service, ensure

future a rise in performance and promote successful development efforts. This is very important

when the firm’s strategy included the development of a new product or technology or access to

proprietary technology (Ismail et al., 2022). These technical criteria insist company to shift into

the global market place. This factor has been measured on the basis of the importance of the

following technical areas: compliance with quantity, compliance with due date, compliance with

packaging standard, and production planning systems of suppliers, maintenance activities of

suppliers and plant layout and material. The potential production capability of each supplier

should be analysed to meet a specified Production plan and also to develop a new product

according to the market demand. Therefore the production facilities and ability of the supplier to

improve its capacity should also be taken into account in order to Judge the best one (Das &

Buddress, 2017). Financial support refers to the buying firm's effort to develop its suppliers by

engaging in human and capital resources which include technical support, direct investment in

equipment and tools (Mukucha & Chari, 2021). Buyer organizations are supposed to

communicate with the suppliers they want to develop for information on their willingness. When

the supplier gets evaluation feedback from the buying firm for improvements, the firm needs to

provide suggestions or personnel to the supplier site. Such actions of the buying firm motivate

direct involvement of potential suppliers including financial resources (van der Westhuizen

& Ntshingila, 2020).

2.4 Value for Money

VFM does not mean a tender must be awarded to the lowest tenderer thus not about achieving

the lowest initial price but the optimum combination of whole life costing and quality (Nsiah-

Asare and Prempeh, 2016). Value for money is based not only on the acquisition price/cost

20
(economy) but also on the maximum efficiency and effectiveness of a procurement transaction.

Uyarra and Flanagan (2015) stress that an efficient operation produces the maximum output for

any given set of resource inputs; or, it has a minimum input for any given quantity and quality of

services provided.

Value for money (VfM) is defined as the optimum combination of whole of life costs and quality

of the good or service to meet the user’s requirement (Moralles et al. 2015). Value for money

(VFM) is not about achieving the lowest price. It is about achieving the optimum combination of

whole life costs and quality. Traditionally VfM was thought of as getting the right quality, in the

right quantity, at the right time, from the right supplier at the right price. This concept has been

updated to obtaining better quality of goods or services in more suitable quantities, just in time

when needed, from better suppliers at prices that continue to improve (World Bank Report,

2013).

Value for money is derived from the optimal balance of benefits and costs on the basis of total

cost of ownership. As such, value for money does not necessarily mean that a tender must be

awarded to the lowest tenderer (Civil Service College, 2010). Value for money is a term

generally used to describe an explicit commitment to ensuring the best results possible are

obtained from the money spent. In the UK Government, use of this term reflects a concern for

more transparency and accountability in spending public funds, and for obtaining the maximum

benefit from the resources available (Barnett et al. 2010).

Value for money in public procurement is achieved through pursuing the lowest whole of life

cost, clearly defining relevant benefits and delivering on time. Preventing waste and fostering

competition, transparency and accountability during the tendering process are key conditions to

achieving value for money. Value for Money refers to a judicious, economic and efficient use of

21
state resources at a reasonable cost. Value for money is not about achieving the lowest initial

price: it is defined as the optimum combination of whole life costs and quality (Lorenzoni, Let

al., 2018).

According to Leigh-Hunt, et al., (2018), value for money is often used to express the satisfaction

of the cost of a service of a given quality. As value for money is often equated with reducing

costs, organisations can believe that they are achieving value for money if they are paying less

for a given service compared to last year. However, even though cost is easier to measure, Leigh-

Hunt, et al., (2018) stress that value for money is about quality of a service and the effectiveness

of how it is delivered. Therefore, they claim that organisations, in order to achieve value for

money, should set both cost and quality objectives and only prioritise cost where financial

constraints are severe.

According to Ariste and Di Matteo, (2017), value for Money in the public sector involves

consideration of the contribution to be made to advancing government policies and priorities

while achieving the best return and performance for the money being spent. This means that

public procurement entities can choose to award a contract based on other criteria other than the

lowest price. One of the factors considered is the whole life cycle cost (Raymond, 2008). All

public procurement of goods, works and services, must be based on Value for Money

assessment, having due regard to propriety and regularity.

2.5 Summary of literature review

Studies have been done on Supplier Relationship Management and Value for Money. For

example, Nshimyumuremyi (2018) conducted a study on the Procurement Planning and Value

For Money, Changalima (2016) conducted a study on the determinants of Value For Money in

the procurement of works in the Public Sector, Mchopa et al (2014) conducted a study on

22
contracts management and Value For Money and Nsiah-Asare and Prempeh (2016) conducted a

study on the measures of ensuring Value for Money. However, none of the above-mentioned

studies have looked at the contribution of Supplier Relationship Management in the achievement

of Value for Money. In addition, no study has been conducted in the private sector of Uganda,

specifically the banks on how Supplier Relationship Management promotes Value for Money

hence presenting a consent or knowledge gap that this study has covered.

23
 CHAPTER THREE

METHODOLOGY

3.1 Introduction

This chapter presents and describes the approaches and techniques the researcher used to collect

data and investigate the research problem. This includes research design, study population,

sample size and selection, sampling techniques and procedure, data collection method, data

collection instruments, data quality control (validity and reliability), procedure of data collection,

data analysis and measurement of variables and ethical considerations.

3.2 Research design

The study used a cross sectional survey design. A cross-sectional survey is suitable for such a

study to collect information at a one point in time, rather than from a given period of time.

While using the cross-sectional design, the researcher will apply both qualitative and quantitative

approaches to collect detailed facts Žukauskas et al (2018). By using the quantitative approach,

the researcher will describe numerical data, statistics and statistical inferences which are to focus

on relationships between variables, which will assume a sample to be representative of the

population and used statistics to generalise findings (Sileyew, 2020) while qualitative approach

helped in collating narrative and descriptive facts, to make a deeper exploration on how supplier

relationship management contributes to value for money in procurement in commercial banks in

Uganda with a case study of Stanbic Bank Uganda Limited.

3.3 Study Population

According to Stratton (2021), a population is a complete set of the entire group or individuals

with a common observable characteristic. The study population was of 110 respondents made up

of officers and managers of different departments that play a role in the day to day running of the

24
business at the head office and among whose roles is to ensure Value for Money. These include

officers in the finance and administration department, operations unit of the bank. The

administration department primarily deals with procurement and disposal, as well as asset

management issues of the bank.

3.4 Sample Size

This refers to the number of items being selected from the universe to constitute a sample

(Kothari, 2019). The sample size of the population in this study is obtained using the Morgan and

Krejcie as illustrated in the 3.1 below:

Table 3.1: sample size determination

Category Population (N) Sample size (n) Sampling technique

Heads of departments 15 14 Purposive sampling

Managers 5 5 Purposive sampling

Finance and 50 44 Simple random sampling

Administration staff

Operations’ department 40 36 Simple random sampling

staff

Total 110 99

Source: (Stanbic Bank HR Department, 2021)

3.5 Sampling Techniques and procedures

3.5.1 Simple Random Sampling

Simple random sampling is a type of probability sampling in which the researcher randomly

selects a subset of participants from a population. Each member of the population has an equal

chance of being selected. Data is then collected from as large a percentage as possible of this

25
random subset. This sampling technique was used because it ensures that every member has an

equal chance of being recruited into the sample and also eliminates bias in data collection

(Thomas, 2020). The study used simple random sampling to select finance and administration

staff and operations’ department staff. Through use of this technique, finance and administration

staff and operations’ department staff were used as study population from which a small sample

shall be drawn. To ensure the validity of the findings, every individual selected will participate in

the study through filling the questionnaires that shall be given to them.

3.5.2 Purposive Sampling

Purposive sampling is a non-probability method for obtaining a sample where researchers use

their expertise to choose specific participants that helped the study meet its goals (Nikolopoulou,

2022). This helped the researcher to select significant respondents to provide in depth

information which was used to analyze and triangulate data collected from the respondents. This

technique is considered since it is less costly and saves time; it enabled the researcher to acquire

an in-depth understanding of the problem and to gain richer, useful and focused information

(Thomas, 2020). Purposive sampling was used to select managers and heads of departments.

3.6 Data Collection Methods

The study was categorized into secondary and primary data collection method. Quantitative and

qualitative methods were utilized to collect primary data. The study used both primary and

secondary sources of data collection. Quantitative and qualitative methods were utilized to

collect primary data (Taylor, 2021). Self-administered questionnaires will support the collection

of primary data.

26
3.6.1. Questionnaire Survey

According to Muhammad and Kabir (2018), a questionnaire is a method of survey data

collection in which information is gathered through oral or written questionnaires.

Questionnaires enabled the researcher to collect a large sample of information in a short time and

at a reasonably low cost and give similar or standardized questions to the subjects making it

easier for comparison and generalization. In this case questionnaires (with close ended questions)

were administered with aid of research assistants. The questionnaires were adopted because the

response option for a close ended question is exhaustive and mutually exclusive. The

questionnaires were self-administered to finance and administration staff and operations’

department staff. Questionnaires have advantages over some other types of surveys in that they

are cheap, do not require as much effort from the questioner as verbal or telephone surveys, and

often have standardized answers that make it simple to compile data.

3.6.2 Interviews

Interview is a conversation between two or more people where questions are asked by

interviewer to elicit facts or statements from the interviewee. It’s a person-to-person verbal

communication in which one person or a group of persons is interviewed at a time (Sileyew,

2019). Interviews were conducted because they have the advantage of ensuring probing for more

information, clarification and capturing non-verbal expressions of the interviewees. It gives the

researcher time to revisit some of the issues that have been an oversight in other instruments and

yet is deemed vital for the study. Personal interviews were conducted with heads of department.

The interviews capture questions on the independent and dependent variable and in the course of

interviewing, probing was applied so as to elicit a good response rate.

3.7. Data collection instruments

27
Questionnaires and interview guide was used as the major tools for this study

3.7.1 Self-Administered Questionnaire

According to Muhammad and Kabir (2018), a questionnaire is a method of survey data collection

in which information is gathered through oral or written questionnaires. The questionnaires were

self-administered to finance and administration staff and operations’ department staff to obtain

required information for the study. The questionnaires were adopted since they are easier to

administer, less costly, timely and they allow the aspect of confidentiality (Budianto, 2020). The

researcher will design the questionnaires in accordance to the study objectives and variables

employed in the conceptual framework. In this case close ended questions was administered to

the respondents with aid of research assistants. This was used to obtain their views in relation to

the study phenomena (Mutepf, 2019).

3.7.2 Interview guide

Interviews guide is an alternative tool of data collection whereby researchers collect data through

direct verbal interaction while recording respondent’s answers using interview guide to

supplement other data collection methods (Budianto, 2020). Interviews were conducted with the

key informants such as Managers and heads of departments who are well informed about the

study problem. This method was considered since it enabled the researcher to obtain in depth

qualitative information on the study phenomenon. This further enriched this study by providing

more relevant information which might not have been obtained through the questionnaires

method as well as allowing further probing (Wang, 2018). The interview guide was used by the

researcher to have a face to face professional interaction with the respondents to obtain

comprehensive explanations of their perception this study.

3.8 Quality control of data

28
Data quality techniques ensured that data collected was valid and reliable; the instruments were

tested to ensure validity and reliability.

3.8.1 Validity of instruments

Validity basically means “measure what is intended to be measured” (Bannigan & Watson,

2018). In this study, validity was measured empirically. Conceptual empirical confirmation of

validity, also called pragmatic validity shall be done to compare information obtained on study

themes using evidenced facts and outcomes found in reality from the primary data that is

gathered. Primary data sources were triangulated as indicated by combining respondent’s

categories finance and administration staff and operations’ department staff to improve content

validity. However, since social variables have no obvious facts or outcomes, the primary data

gathered was subjected to further conceptual or constructs confirmation of validity. Conceptual

confirmation of validity is conferred from the conceptual evidence the extent to which the

variables relationship is consistent with the deductions in the theoretical review of literature

(document review) (Bannigan & Watson, 2018). Quantitatively, to establish validity the

researcher conducted the content validity index (CVI) test to check the validity of the

questionnaire contents. The CVI is computed using the following formula below;

CVI = No. of items rated relevant

Total no. of items

The CVI is computed using the following formula.

29
Table 3.2: Results of content validity for research tools

Dimensions No of Items Relevant CVI

Supplier performance management 08 06 0.75

Supplier development 07 07 1

Value for Money in procurement 08 07 0.875

Source: Primary Data (2023)

Table 3.2 presents averages of 0.875 and (0.75, 1 & 0.875 respectively) on all three variables had

a CVIs that were above 0.7, imply that the tool was validity since it was appropriately

answering / measuring the objectives and conceptualization of the study. According to Mugenda

& Mugenda (2003), the tool can be considered valid where the CVI value is 0.7 and above as is

the case for all the four variables provided above.

3.8.2 Reliability of instruments

Reliability refers to the likelihood of getting the same results over and over again if a measure

was repeated in the same circumstances. Reliability ensures that measures are free from error so

that they gave same results when repeated measurements were made under constant conditions.

In line with this, the researcher used a heterogeneous population and participants drawn from

across-section of stakeholders who was involved in the management of Stanbic Bank Uganda

Limited. The instruments were pre-tested by selection of a few staff members who will review

and improve it, to ensure reliability before it was really applied in the study (Yusoff, 2019). The

researcher will personally administer the questionnaires to the participants and was available for

consultations and explanations while the participants fill in the data. The researcher checked the

questionnaires to ensure that all the questions are answered appropriately. The pre-test

contributed to the credibility, dependability and trustworthiness of the questionnaires. The

30
findings from the test were coded in the SPSS, a computer package to test for reliability at the

Cronbach’s alpha coefficient so as to assess the internal consistency above 0.70.

Table 3.3: Reliability test results of research instruments.

Study variables Cronbach’s Alpha

Supplier performance management 0.745

Supplier development 0.986

Value for Money in procurement 0.876

Average Cronbach Alpha coefficient for variables 0.843

Source: Primary Data (2023)

The reliability of instruments was established using Cronbach Alpha Coefficient which tests

internal reliability and the average reliability test result for research was 0.84 which is

recommended as given table 3.3 above.

3.9 Data collection procedure

A letter of recommendation from the Uganda Management Institute (UMI) to Stanbic Bank

Uganda Limited was obtained. After successful defences, the researcher guaranteed respondents

the confidentiality of their data. Respondents were given time to complete the study

questionnaire. The data collection process involved two main activities: collecting data and

displaying data. Data was collected by the researcher using questionnaires and interviews.

Questionnaires are preferred by researchers because they are inexpensive to manage, can be

filled out as the respondents like, and can quickly collect information from multiple respondents.

Face-to-face interviews are a more personal form of study, as interviewers worked directly with

respondents and interviewers asked follow-up questions, especially because it was generally

easier for respondents.

31
3.10. Data Analysis Technique

Data was analysed both quantitatively and qualitatively.

3.10.1 Quantitative data analysis

According to Borgstede and Scholz (2021) quantitative data analysis is a form of research that

relies on the methods of natural sciences, which produces numerical data and hard facts. This

technique helped in establishing cause and effect relationship between two variables by using

mathematical, computational and statistical methods. Quantitative data analysis involved use of

both descriptive and inferential statistics by using Statistical Package for Social Scientists (SPSS)

for analysis.

Descriptive statistics entailed determination of measures of central tendency such as mean,

standard deviation; frequency distributions; and percentages. Data was processed by editing,

coding, entering, and then presented in comprehensive tables showing the responses of each

category of variables. In Inferential statistics focused on making predictions about a large group

of data based on a representative sample of the population. Inferential Statistics helped to draw

conclusions and make predictions based on a data set. This was done using regression analysis

showing the effect independent variables and a dependent variable (Marsh et al, 2020).

3.10.2 Qualitative data analysis

Borgstede and Scholz (2021) defined qualitative data analysis as one which provides insights and

understanding of the problem setting. Qualitative data analysis involved both thematic and

content analysis and was based on how the findings will relate to the research questions.

Content analysis is a research method used to identify patterns in recorded communication

(Luo, 2022). To conduct content analysis, the researcher systematically collected data from a set

of texts, which can be written, oral, or visual (Books, newspapers and magazines, Speeches and

32
interviews). The researcher used content analysis to find out about the purposes, messages, and

effects of communication content. Content analysis was used to quantify the occurrence of

certain words, phrases, subjects or concepts in a set of historical or contemporary texts (Marsh et

al, 2020).

Thematic analysis is a method of was used to identify common themes, topics, ideas and

patterns of meaning that come up repeatedly (Caulfield, 2022). It involved various approaches of

conducting thematic analysis, but the most common form follows a six-step process:

familiarization, coding, generating themes, reviewing themes, defining and naming themes, and

writing up. This process helped the researcher to avoid confirmation bias when formulating your

analysis.

3.11 Measurement of variables

The background ground characteristics variables identifying the respondents were measured

using the nominal scale with appropriate options given. The nominal scale helps label or tag to

identify objects, properties, or events. Independent and dependent variables namely Supplier

Performance Management and supplier development was measured on the ordinal scale which is

a ranking scale and possess the characteristic of order. The scale helped to distinguish between

objects according to a single attribute and direction (Smith & Albaum, 2013). The ranking was

based on the five-point Likert scale (Where 1 = strongly disagree 2 = disagree 3 = undecided 4 =

agree 5 = strongly agree).

3.12 Ethical Considerations

According to Fleming (2018), ethical issues refer to the integrity in the production of knowledge,

as well as the dignity welfare of the researched.

33
Confidentiality and privacy: It refers to the obligation of an individual or organization to

safeguard entrusted information. The research participant’s privacy was assured by the

researcher, who kept all the information safely locked up during the research process.

To ensure privacy, the respondents were informed upfront that indeed their names will not be

required, that they have the right to leave questions unanswered for which they do not wish to

offer the requisite information, and that the study did not put the respondent under pressure.

Informed consent: The research sought informed consent before conducting the data collection

process. The requirements of informed consent for research are that the respondents or subject

must be competent to understand and decide, receives a full disclosure, comprehends the

disclosure, acts voluntarily, and consents to the proposed action which this study will adhere to.

Plagiarism is presenting someone else's work or ideas as your own, with or without their consent

by incorporating it into your work without full acknowledgement. All published and unpublished

material, whether in manuscript, printed or electronic form, is covered under this definition. This

was minimized by paraphrasing, citing, quoting, citing quotes, citing own material, and

referencing.

Voluntary participation: The research participants were informed that their participation in the

study was not to be rewarded in anyway; it was entirely on voluntary basis. All the research

participants were informed of their rights to refuse to be interviewed, or to withdraw at any point

for any reason, without any prejudice or explanation.

34
 CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS

4.1 Introduction

This chapter presents analyses and interprets results. The findings are presented according to

the objectives of the study. The study examined the effect of supplier relationship

management on Value for Money in procurement in commercial banks in Uganda with a case

study of Stanbic Bank Uganda Limited. The objectives of the study were to examine the

effect of supplier performance management on value for money at Stanbic Bank Uganda

Limited and to examine the effect of supplier development on value for money in Stanbic

Bank Uganda Limited.

4.2 Response Rate

The response rate of the study is presented in Table 4.4 below

Table 4.4: Response rate

Instrument Target Actual Response Response rate

Questionnaire 80 68 85

Interview 19 15 79

Targeted 99 83 83

Source Primary data (2023)

From Table 4.4 above, out of the 80 distributed 68 were returned correctly filled representing

79%. Out of the 19 respondents that were targeted for interviews, 15 were interviewed

implying a response rate of 79%. The overall response rate, therefore Was 83%. This

response rate was deemed well enough since it was over and above the 50% recommended by

Amin (2005).

29
4.3 Findings on background information of the respondent

The demographic characteristics (education level, sex, among others) for the 68 respondents

were examined and findings are presented in the next subsection.

4.3.1 Sex of the respondents

The sex characteristics of respondents were investigated for this study, and findings are

presented the Table 4.5 below.

Table 4.5: Sex of the respondents

Category Frequency Percent

Male 50 74

Female 16 26

Total 68 100

Source: Primary Data (2023)

From Table 4.5 above, the majority of the respondents were male 74% and females were

26%. The study was representative of both sexes. The implication of this finding was that no

matter the disparity in percentage of males and females who attended the study, at least views

of both males and females were captured which is too vital in making a critical analysis on

the effect of supplier relationship management on value for money in procurement in

commercial banks.

4.3.2 Age of the respondents

The study looked at the distribution of the respondents by age using frequency distribution.

The results obtained on the item are presented in Figure 4.3 below.

30
 50
45
40
35
30
25
20 Percentage
15
10
5
0
18-25 years 26-30yrs 31-35yrs 36-40 years 41 years and
above

Source: Primary Data (2022)

Figure 4.2: Age of the respondents

From the Figure 4.2 above, it was revealed that the majority of respondents were between 31-

35 years implying 44%, 15% were between 26-30 years, those between 41 years and above

were 22% respectively. This indicated that all categories of respondents in reference to

different age groups were represented in this study. This implies that all categories of

respondents in reference to different age groups were represented in this study and mature

enough to respond to questions asked.

4.3.3 Education level of respondents

By examining the highest educational qualifications of the study respondents, the researcher

wished to ascertain whether there were substantial differences in the responses as indicated in

the Figure 4.3 below.

31
 PHD Diploma
7% 7%
Masters
23%

Degree
63%

Source: Primary Data (2023)

Figure 4.3: Highest Level of Education

The findings from Figure 4.3 above indicate that majority of the respondents were degree

holders making a total percentage of 63%, the respondents with masters were 23%, those

with diplomas were 12%, and PhD respectively. This implies that the respondents had good

academic qualifications with the right skills and knowledge to deliver. Besides, the

respondents were able to understand, read, interpret the questionnaire and gave relevant

responses to the questions asked.

4.3.4 Years of service in the organization

By examining the years of service in the organization by respondents, the researcher wished

to ascertain whether there were substantial differences in the responses as indicated in the

Figure 4.4 below.

32
10 years and
above

7-9 years

Percentage
4-6 years

1-3years

0 10 20 30 40 50 60 70

Source: Primary Data (2023)

Figure 4.4: Years of service in the organization

From the Figure 4.4 above, it indicate that majority of the respondents 68% had worked for 4-

6 years, 13% had worked for 1-3years, 16% of the respondents had worked for 7-9 years and

06% of the respondents had worked for more than 10 years. This meant that majority of the

respondents had a working experience of 3 years and above, thereby having enough

knowledge to provide relevant information about supplier relationship management and value

for money in procurement in commercial banks.

4.4 Empirical findings

This section presents the empirical findings of the study according to the objectives. The

empirical findings are analyzed using descriptive statistics, qualitative analysis and testing

hypotheses for the respective findings.

4.4.1 Value for money at Stanbic Bank Uganda Limited

The items on value for money at Stanbic Bank Uganda Limited were structured basing on the

objective of the study. Items were measured on a five-point Likert scale where code 1 =

strongly Disagree, 2 = Disagree, 3 = Not sure, 4 = Agree and 5 = strongly Agree. Seven (7)

33
Items which are statistically tabulated and presented in the table below with the frequencies

and percentages according to the responses collected.

Table 4.6: Value for money at Stanbic Bank Uganda Limited

Item Responses Frequency Percent Mean Std D

The prices of commodities Strongly Disagree 14 21% 3.63 0.864
are low Disagree 05 7%
Not sure 00 00%
Agree 37 54%
Strongly Agree 12 18%
The procurement process is Strongly Disagree 08 12% 4.00 1.03
cost effective Disagree 00 00%
Not sure 00 00%
Agree 51 75%
Strongly Agree 09 13%
Right products are procured Strongly Disagree 06 09% 4.00 1.08
Disagree 02 03%
Not sure 00 00%
Agree 48 71%
Strongly Agree 12 18%
There timely delivery Strongly Disagree 45 66% 2.54 1.00
Disagree 18 26%
Not sure 00 10%
Agree 05 07%
Strongly Agree 00 00%
Satisfaction is obtained Strongly Disagree 03 4% 2.30 0.02
from the supplies Disagree 25 37%
Not sure 12 18%
Agree 16 24%
Strongly Agree 00 00%
Expectations of the Strongly Disagree 06 09% 4.00 0.02
beneficiaries from the Disagree 02 03%
supplies are met Not sure 00 29%
Agree 48 71%
Strongly Agree 12 18%
Suppliers fulfil their Strongly Disagree 06 09% 3.04 0.984
contractual obligations Disagree 27 40%
Not sure 8 12%
Agree 22 32%
Strongly Agree 03 04%
Source: Primary Data (2023)

34
As to whether the prices of commodities are low, majority of the respondents, 54% agreed

18% strongly agreed, 00% were not sure, 07% disagreed and 21% strongly disagreed. The

mean = 3.73 corresponding to agree indicated the majority of the respondents agreed that

with the statement and the standard deviation of 1.08 showed the deviating responses from

respondents. The above responses imply that the procurement officers understand the power

of the value for money. This is because they try their best to pay for best quality goods and

services at the lowest costs. They also ensure that they allocate their money wisely in a

profitable venture that would give them a competitive advantage in the market. However, in

order to achieve this, they ensure that they have quality human and material resources at

lowest cost and make sure they balance the use of resources at reasonable cost as well.

Responses to the question as to whether under the procurement process is cost effective,

majority of the respondents, 75% agreed 13% strongly agreed, 00% were not sure, 00%

disagreed and 12%strongly disagreed. The mean = 3.99 indicated that the majority of the

respondents agreed with the statement and the standard deviation of 1.12 indicating the

deviation from the response. The findings above are supported the key informant who

indicated that:

The cost of the product is directly related to the amount of value you deliver.

Another respondent said that; Stanbic Bank Uganda Limited give discounts

the right way. Stanbic Bank Uganda Limited gives discount if clients pay

everything upfront. It is encouraging early payment and removing the risk of

not getting paid later on. In relation to above, another respondent said that;

Stanbic Bank Uganda Limited reduces costs, increases turnover, increases

productivity, and increases efficiency to enhance profitability

((KII/001/12/05/2023)

35
As to whether right products are procured, the majority of the respondents, 71% agreed with

the statement, 18% strongly agreed, 00% were not sure, 03% disagreed and 09% strongly

disagreed. The mean of 4.00 indicated that right products are procured. The standard

deviation of 1.08 indicated those with deviating responses. The findings above are supported

by the key informants who assert that:

Stanbic Bank Uganda Limited management Calls the clients regularly. It

Schedules periodical calls with the customers to share updates about how

things are going and to ask how happy they are with the services In relation to

this, a respondent stated that; Stanbic Bank Uganda Limited is genuinely

committed to providing more customer service excellence than. It keeps an eye

on the communication outlets and it is ready and willing to answer any

questions, over any solutions, or address any issues that may arise in a timely

manner (KII/001/15/05/2023)

Another respondent stated that:

Stanbic Bank Uganda Limited shares new market insights, its opinion on the

matter, and opportunities that the clients might not be aware of yet. It should

be noted that; Generating valuable content shows that the organization is on

top of the game and improves brand awareness (KII/001/15/05/2023)

As to whether there is timely delivery of services, the majority of the respondents, 66%

strongly disagreed with the statement, 26% disagreed, 00% (00) were not sure, 00% (00)

agreed and 07% disagreed with the statement respectively. The mean = 2.50 indicated the

majority of the respondents disagreed with the statement and the deviation of 1.0 indicated

those with deviating response. This implies that Stanbic Bank Uganda Limited operations

produce maximum output for a given set of inputs and make use of the right resources to

accomplish tasks at hand. However, they find it difficult to reduce wastes because of the poor

36
methods and practices they employ in their procurement planning. In other words because of

resource wastage accruing from wrong procurement planning practices, value for money in

terms of efficiency is affected.

Responses to the question as to whether satisfaction is obtained from the supplies, majority of

the respondents, 37% disagreed with the statement, 18% of the respondents were not sure of

the statement, 24%, agreed to the statement respectively. The mean = 2.30 indicated that the

majority of the respondents disagreed with the statement and the standard deviation of 0.02

indicating the deviation from the response.

As to whether expectations of the beneficiaries from the supplies are met, the majority of the

respondents, 71% agreed with the statement, 18% strongly agreed, 00% were not sure, 03%

disagreed and 09% strongly disagreed. The mean of 4.00 indicated that the respondents

agreed with the statement and standard deviation 0.02 indicated those with deviation

response.

As to whether suppliers fulfil their contractual obligations, 32% agreed with the statement,

22% strongly agreed, 12% were not sure, 40% disagreed and 09% strongly disagreed with the

statement. The mean of 3.04 indicated that the respondents were satisfied with the statement.

The standard deviation of 0.984 indicated those with deviating responses.

4.4.2 Supplier performance management and value for money

The first objective in the study was to examine the effect of supplier performance

management and value for money. To observe the influence, 6 question items were

administered to respondents to establish the extent to which they agreed with them.

37
Table 4.7: Descriptive statistics on supplier performance management

Item Response Freq % Mean Std D

Stanbic Bank Uganda Limited has Strongly Disagree 09 13% 3.60 0.877
established key performance
indicators for all its strategic supplies Disagree 2 03%
Not sure 2 03%
Agree 17 25%
Strongly Agree 38 56%
Stanbic Bank Uganda Limited has Strongly Disagree 01 01% 3.50 0.986
established quality expectations that
suppliers are expected to meet Disagree 06 09%
Not sure 03 04%
Agree 37 54%
Strongly Agree 21 31%
Stanbic Bank Uganda Limited has Strongly Disagree 02 03% 3.74 1.00
established quantity expectations that
suppliers are expected to meet Disagree 03 04%
Not sure 8 12%
Agree 42 62%
Strongly Agree 13 19%
Stanbic Bank Uganda Limited has Strongly Disagree 06 09% 3.00 0.984
established quarterly performance
expectations that strategic suppliers Disagree 27 40%
have to meet Not sure 00 00%
Agree 23 34%
Strongly Agree 08 12%
Stanbic Bank Uganda Limited has Strongly Disagree 09 13% 3.54 1.00
established annual performance
expectations that strategic suppliers Disagree 6 9%
have to meet Not sure 0 00%
Agree 17 25%
Strongly Agree 36 52%
The contract manager regularly Strongly Disagree 16 24% 2.50 1.00
collects contract performance
information Disagree 18 26%
Not sure 06 09%
Agree 20 29%

38
 Strongly Agree 08 12%
Source Primary Data (2023)

As to whether Stanbic Bank Uganda Limited has established key performance indicators for

all its strategic supplies, 56% of the respondent strongly agreed with the statement, 25%

agreed, 03% were not sure of the statement, 03% disagreed and 13% strongly disagreed with

the statement. The mean = 3.60 indicated that the respondents agreed with the statement and

the standard deviation of 0.877 indicated those with deviating responses. The findings above

are supported by the key informants who indicated that:

Suppliers of Stanbic Bank Uganda Limited provide a detailed test, sample,

and inspection methods to ensure compliance with the key performance

indicators. Suppliers of Stanbic Bank Uganda Limited help in defining the

requirements and then approach industry to see what is available to meet the

department’s/agency’s needs (KII/001/17/05/2023)

Responses to the question as to whether Stanbic Bank Uganda Limited has established

quality expectations that suppliers are expected to meet, 54% of the respondents agreed with

the statement 31% strongly disagreed, 09% disagreed, 04% were not sure, 01% disagreed.

The mean = 3.50 indicated those who were satisfied with the statement. The standard

deviation 0.986 indicated those with deviating responses. This implies that involving

suppliers in quality expectations the buying organizations to share knowledge and increase

learning so that better solutions can be found to complex inter-company problems that impact

performance. The findings are supported by the key informant who asserts that:

Supplier can have a significant impact on an organizations performance,

through their contributions towards cost reduction, eliminate inconsistency in

the designer’s manufacturing processes, minimize high-cost material items,

share technical expertise and processes within each other, enabling the

39
 constant improvement of quality, share technology capabilities, and increase

responsiveness of buying companies (KII/001/17/05/2023)

With respect to whether Stanbic Bank Uganda Limited has established quantity expectations

that suppliers are expected to meet, the majority of the respondents 62% agreed with the

statement, 19% strongly agreed, 04% disagreed, 12% not sure, 03% strongly disagreed. The

mean = 3.700 which indicated the majority of the respondents agreed with the statement. This

implies that involving suppliers in quantity expectations the buying organizations to share

knowledge and increase learning so that better solutions can be found to complex inter-

company problems that impact performance.

Responses to the question as to whether Stanbic Bank Uganda Limited has established

quarterly performance expectations that strategic suppliers have to meet, the majority of the

respondents 40% disagreed, 34% agreed with the statement, 00% were not sure, 09% strongly

disagreed and 12% strongly agreed. The mean = 3.00 indicated the majority of the

respondents who disagreed with the statement. The standard deviation of 0.984 indicated

those with deviating responses.

As to whether Stanbic Bank Uganda Limited has established annual performance

expectations that strategic suppliers have to meet, the respondent’s responses indicated that

the majority of the respondents 52% strongly agreed, 25% agree, 00% not sure, 03%

disagreed and 13% strongly disagreed with the statement. The mean = 3.50 indicated that the

respondents agreed with the statement. The standard deviation of 0.984 indicated those with

deviating responses. The findings above are supported by the key informants who indicated

that:

Stanbic Bank Uganda Limited uses data to evaluate and compare performance

of new suppliers, and for continuous improvement, and appraisal on a two-

way basis can highlight the buyer's deficiencies, which is the source of

40
 common problems within many supplier relationships. The key informant

indicated that desk appraisal is one of the widely used methods in appraising

suppliers. This involves use of published and unpublished information already

in existence and is particularly applicable to product and financial appraisal.

Secondary data applicable include catalogues, product data sheet furnished

by the supplier. This leads to investigation on specific factor. It helps to

appraise the accuracy and veracity of the answers provided by potential

suppliers (KII/002/20/05/2023)

As to whether the contract manager regularly collects contract performance information, 29%

of the respondents agreed with the statement, 12% strongly agreed, 09% not sure, 26%

disagreed and 24% strongly disagreed with the statement. The mean = 2.50 indicated that the

respondents were not satisfied with the statement. These findings revealed material

weaknesses in reviewing supplier performance for lack of data collection instrument on

supplier performance, failure by contract managers to promptly collect supplier performance

information, inadequate use of meeting, supplier appraisal and use of performance reports to

review supplier performance a practice which constrains procurement performance.

4.4.2.1 Regression of supplier performance management and value for money

The simple linear regression analysis was applied to ascertain the magnitude of the effect of

supplier performance management on value for money and the results are shown in the table

4.8 below:

Table 4.8: Model summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .159a .025 .035 .92903

a. Predictors: (Constant), Supplier performance management

Source: Primary Data (2023)

41
The R Square explains the effect of the independent variable of supplier performance

management on value for money, is 0.35. This suggests that supplier performance

management account for 35% variation in the dependent variable value for money.

Table 4.9: Regression of supplier performance management

Coefficientsa

Standardized

Unstandardized Coefficients Coefficients

Model B Std. Error Beta T Sig.

1 (Constant) 2.603 .675 3.855 .000

Supplier

performance .392 .241 .350 1.624 .000

management

a. Dependent Variable: Value for money

Source: Primary Data (2023)

The study further revealed that supplier performance management as a dimension of the

independent variable has a Standardized Coefficient Beta of 0.35. The moderate positive

results indicate that the supplier performance management accounts for 35% variation in

value for money at Stanbic Bank Uganda Limited. The study results further indicated a

significant statistical of supplier performance management on value for money given that P-

value (P=0.01<0.05). The hypothesis that supplier performance management significantly

affects value for money is therefore upheld. This implies that the more the supplier

performance management, the better the value for money. This means that any change in

supplier performance management leads to the same change in value for money.

42
4.4.3 Supplier development and value for money

The second objective in the study was to examine the effect of supplier development and

value for money. To observe the influence, 7 question items were administered to

respondents to establish the extent to which they agreed with them.

Table 4.10: Descriptive Statistics on supplier development and value for money

Item Responses Frequency Percent Mean Std D

Stanbic Bank Uganda Strongly Disagree 02 03% 3.50 1.08
Limited pricing policy is Disagree 04 06%
jointly agreed on with its Not sure 02 03%
suppliers
Agree 22 32%
Strongly Agree 36 53%
Stanbic Bank Uganda Strongly Disagree 01 1% 3.89 1.12
Limited undertakes supplier Disagree 04 6%
evaluation periodically to Not sure 05 7%
ensure good quality of the
Agree 44 65%
goods and services
Strongly Agree 14 21%
In most aspects of the Strongly Disagree 01 01% 3.48 0.95
relationship, the Disagree 06 08% 8
responsibility for getting Not sure 9 13%
things done is shared
Agree 34 50%
Strongly Agree 18 26%
We openly advise our Strongly Disagree 13 19% 2.14 1.02
suppliers on the best Disagree 27 40%
technology to use in Not sure 07 10%
handling our products
Agree 16 24%
Strongly Agree 05 07%
The technical abilities of the Strongly Disagree 01 1% 4.80 1.12
public staffs in handling Disagree 04 6%
products are evaluated Not sure 00 00%
supplying to them
Agree 58 85%
Strongly Agree 07 10%
Stanbic Bank Uganda Strongly Disagree 18 26% 2.50 1.02
Limited makes its supply Disagree 28 41%
plans for the next seasons Not sure 9 13%
together with its suppliers in
Agree 12 18%
Uganda
Strongly Agree 01 01%
Stanbic Bank Uganda Strongly Disagree 01 01% 3.60 0.98
Limited organizes training Disagree 06 09% 4
of its suppliers
Not sure 03 04%

43
 Agree 37 54%
Strongly Agree 21 31%

Source: Primary Data (2022)

With respect to whether Stanbic Bank Uganda Limited pricing policy is jointly agreed on

with its suppliers, majority of the respondents, 32% agreed 53% strongly agreed, 06% were

not sure, 03% disagreed and 06% strongly disagreed. The mean = 3.50 indicated the majority

of the respondents agreed with the statement. The standard deviation of 1.08 showed the

deviating responses from respondents. This implies that Stanbic Bank Uganda Limited

extends financial support to specific suppliers who may experience financial difficulties so as

to empower them to meet their financial obligations. This indicates that a supplier who is

properly and adequately financially supported, increases the buying organizations ability to

deliver high-quality and innovative products to its customers and thus reduces buyers

operational risks. Supplier’s financial support is critical in determining the supplier’s ability

to remain financially solvent.

Responses to the question as to whether Stanbic Bank Uganda Limited undertakes supplier

evaluation periodically to ensure good quality of the goods and services, majority of the

respondents 65% agreed with the statement, 21% strongly agreed, 7% were not sure, 6%

disagreed and 01% strongly disagreed. The mean = 3.89 indicated that the majority of the

respondents agreed with the statement the standard deviation of 1.12 indicating those

respondents with deviating responses.

As to whether in most aspects of the relationship, the responsibility for getting things done is

shared, 50% agreed with the statement, 26% strongly agreed, 13% were not sure, 08%

disagreed and 01% strongly disagreed. The mean of 3.48 indicated that the respondents

agreed with the statements. Those with deviating response were given a standard deviation of

0.958.

44
With respect to whether the bank openly advises suppliers on the best technology to use in

handling products, 40% agreed, 19% strongly agreed, 10% were not sure, 20% disagreed and

6% strongly disagreed. The mean = 3.54 corresponding to disagree indicated the majority of

the respondents disagreed with the statement. This implies that Stanbic Bank Uganda Limited

conducts so called innovation workshops with its suppliers. The findings are supported by the

key informants who argued that:

Once target suppliers are selected, Stanbic Bank Uganda Limited conducts so-

called innovation workshops with its select suppliers. Stanbic Bank Uganda

Limited invites suppliers to workshops and gives them chances to share pain

points they experience and/or provide opportunities they see and brainstorm

ideas together to solve the situations they mention or capture opportunities

they describe. The areas of problem solving and innovation do not limit to new

product development they actually cover all possible interactions that Stanbic

Bank Uganda Limited and suppliers can have through business operations.

The ideas generated from workshops mostly handle short-term situations and

opportunities (KII/005/13/05/2023)

Another respondent stated that:

The innovation ideas are mostly centred on product innovation and marketing

and/or service improvement, and few fresh ideas have been generated from

users as time passes by. Given that suppliers are usually involved in supply

chains of multiple companies in the same industry, it’s significantly to have

closer relationships with suppliers and have them play critical roles in open

innovation in our company. In this regard, it’s the high time to rethink the role

of suppliers in open innovation (KII/008/17/05/2023)

45
With respect to whether technical abilities of the public staffs in handling products are

evaluated supplying to them, the majority of the respondents, 85% agreed with the statement,

10% strongly agreed, 00% were not sure, 01% disagreed and 02% strongly disagreed. The

mean = 4.80 indicated the majority of the respondents agreed with the statement. The

standard deviation of 1.12 indicated those with deviating responses. The findings are

supported by the key informant who noted that:

Public staffs have helped to reduce costs and development time, increase

quality and provide innovation to increase market share at Stanbic Bank

Uganda Limited. By keeping the supplier-partner’s future needs in mind,

decisions of suppliers regarding investments, new product, new process or

system could be facilitated. Thus, the possibility of misjudgement or wrong

strategy made would be reduced (KII/009/19/05/2023)

As to whether the Stanbic Bank Uganda Limited makes its supply plans for the next seasons

together with its suppliers in Uganda, the majority of the respondents, 41% disagreed with the

statement, 26% strongly disagreed, 13% were not sure, 18% agreed and 01% strongly agreed.

The mean = 2.50 corresponding to agree indicated the majority of the respondents were not

satisfied with the statement. The standard deviation of 1.12 indicated those with deviating

responses. This implies that Stanbic Bank Uganda Limited always makes its procurement

plans for the next seasons together with its suppliers and alternatively suppliers always

provide them with sale forecasts for the products buyer companies buy from them. The

findings are supported by the key informants who stated that:

Stanbic Bank Uganda Limited is able to develop mutually beneficial

knowledge sharing relationships with suppliers by talking to them about their

future requirements. Stanbic Bank Uganda Limited seeks the opinions of its

suppliers because they have their own impressions of how the company is

46
 performing. Stanbic Bank Uganda Limited uses formal surveys to gather this

knowledge or ask for their views on a more informal basis

(KII/011/22/05/2023)

As to whether Stanbic Bank Uganda Limited organizes training of its suppliers, the majority

of the respondents, 54% agreed with the statement, 26% strongly agreed, 13% were not sure,

08% disagreed and 01% strongly disagreed. The mean of 3.48 indicated that the respondents

agreed with the statement. The standard deviation of 1.12 indicated those with deviating

responses. This implies that Stanbic Bank Uganda Limited selects the type of training

suitable for specific groups of suppliers. However much 08% of the respondents disagreed

and were not sure respectively. It should be noted that, the right type of training could then

lead to an increase in performance for the supplier which would in turn encourage an

increase in buyer supported training. The findings are supported by the key informant who

asserts that:

Supplier training programs are designed by the buyer focused on enhancing

and improving supplier technical capability in terms of key competencies like

quality, production processes and management best practices to enhance

firm’s productivity (KII/001/17/05/2023)

Relatedly, another rr key informant said:

“It has now became a routine that our suppliers have to be trained on what

you expect from them after being selected…we don’t mean they don’t know

what to do…they of course know but Stanbic Bank Uganda Limited has

different targets away from what other organizations they might have been

working with wanted…so training and continually advising them becomes

very key in stimulating their performance and our performance at Stanbic

Bank Uganda Limited …”(KII/012/16/05/2023)

47
4.4.3.1 Regression of supplier development and value for money

The linear regression analysis was applied to ascertain the magnitude of the effect supplier

development on value for money and the results are shown in the table 4.1 below:

Table 4.11: Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .159a .045 .052 .72903

a. Predictors: (Constant), Supplier development

Source: Primary Data (2023)

The adjusted R Square explains the effect of the independent variable supplier development

on value for money, is 0.52. This suggests that supplier development account for 52%

variation in value for money.

Table 4.12: Regression analysis for supplier development

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2.603 .675 3.855 .001
Supplier
.392 .241 .520 1.624 .000
development
a. Dependent Variable: Value for money
Source: Primary Data (2023)

The study further revealed that supplier development as a dimension of the independent

variable has a Standardized Coefficient Beta of 0.520. The strong positive results indicate

that the supplier development accounts for 52% value for money at Stanbic Bank Uganda

Limited. The study results further indicated a significant statistical relationship between the

study variables given that P-value (P=0.01<0.05). The hypothesis that supplier development

significantly affects value for money is therefore upheld. This implies that the more supplier

development, the better the value for money. This means that any change in supplier

development leads to the same change in value for money.

48
 CHAPTER FIVE

SUMMARY, DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter presents analyses and interprets results. The findings are presented according to

the objectives of the study. The study examined the effect of supplier relationship

management on Value for Money in procurement in commercial banks in Uganda with a case

study of Stanbic Bank Uganda Limited. The objectives of the study were to examine the

effect of supplier performance management on value for money at Stanbic Bank Uganda

Limited and to examine the effect of supplier development on value for money in Stanbic

Bank Uganda Limited. This chapter provides summaries of the findings from the study,

discusses the empirical results in view of the research objectives, and draws conclusions and

finally recommendations.

5.2. Summary of major findings

The summary of the major findings is presented based on the study objectives as laid out

chapter one of this report.

5.2.1: Supplier performance management and value for money

The findings established that supplier performance management had a moderate positive

effect on the value for money at Stanbic Bank Uganda Limited. The adjusted R square which

explains the effect of supplier performance management on value for money was 0.35 which

account for 35% variation in value for money. The study results further indicated a

significant effect of supplier performance management on value for money given that P-value

(P=0.00<0.05).

5.2.2 Supplier development and value for money

The findings established that supplier development had a strong positive effect on the value

for money at Stanbic Bank Uganda Limited. The adjusted R square which explains the effect

49
of supplier development on value for money was 0.52 which account for 52% variation in

value for money. The study results further indicated a significant effect of supplier

development on value for money given that P-value (P=0.00<0.05).

5.3. Discussion of findings

5.3.1 Supplier performance management and value for money

It was also revealed in this study that performance evaluations are highly correlated with

Value for money. Novita and Sudaryan (2021) confirm that performance evaluations are

crucial parts of performance management. Similarly, Jedaia and Mehrez, (2020) reaffirm

performance evaluation as a basic tool that makes suppliers very effective and active in

performing their tasks and duties in the organization. This study clearly noted that evaluation

feedback is often provided to the suppliers’ which helps them to perform their tasks. This

feedback is helpful in highlighting any performance gaps that need to be addressed. In fact,

Okoth and Florah (2019) were right to assert that by providing feedback, it helps the suppliers

to identify those weaknesses in their current performance hence enabling them to make

adjustments for purposes of achieving the stated goals and targets.

The study findings are consistent with Antara et al (2020) who indicated that performance

appraisal is often carried out in Stanbic Bank Uganda Limited as revealed by the results

though this was not statistically significant with Value for money. Important to note is that

performance appraisal is very critical to employee performance. By appraising the suppliers,

various performance aspects are generated for management to address. An individual’s

performance is rated and scored which highlights how they are performing against the set

targets and goals. Critical in this process is that the employee is able to understand his/her

weaknesses which have to be worked on. Similarly, the supervisors are able to understand

each one’s high performing points and weakest points hence devise means of addressing

50
them. In essence, appraisal is healthy as it checks the employee’s level of input against the

outputs hence resulting into improved performance when weaknesses are addressed.

The study findings are in agreement with Roberts, Neumann, and Cauvin, (2020) suppliers

must know what they need to do perform their jobs successfully. Expectations for employee’s

performance are established in employee performance plans. Employee’s performance plans

are all of the written or otherwise recorded, elements that set forth expected performance. In

greater detail, the goals of the performance appraisal system from an MBO perspective are

mutually defined by a number of key stakeholders who include the subordinates, supervisors

and suppliers as well. A typical MBO appraisal system consists of several steps. The process

begins by the establishment of clear objectives for the employee. An action plan detailing the

way in which the objectives are to be achieved is develop. The employee is then allowed to

implement the developed action plan. This allows for appraisal of performance in an

objective maimer. Corrective actions are taken in situations deemed necessary as well as new

objectives for the future established.

5.3.2 Supplier development and value for money

The study findings are consistent with Bai and Satir (2020) who posit that supply company

managers make sure to train suppliers who have positive work experience to decision making

hence motivating the min results increasing firm performance. The managers make sure they

provide the staff with motivation programs, promotion programs and good supplier programs.

Further, the buyer may send his suppliers or group of team to train supplier or he may invite

group of suppliers facing same problem for training in his own firm. Therefore, training

suppliers is a very important tool in increasing supplier base since it increases supplier

competency and the opportunities to enhance value for money. Masinde and Osoro (2019)

found that supplier development programs support the development of a supplier’s

capabilities usually with the assistance of a buyer. Supplier development also depends on

51
supplier’s interest and how they explore them self to increase their capabilities to provide

value for money. Thus, it is important that suppliers looking to develop their capabilities have

access to the type of training that they require which may or may not be provided by their

buyers. For suppliers that have access to buyer-supported training their training needs might

often change as they develop their own capabilities.

The study findings are cognizant with Changalima, Ismail and Mchopa (2021) who indicated

that supplier development is concerned with assisting the actual and potential suppliers

produce and supply high quality inputs to their prospective clients. Suppliers help

organizations to meeting their present and future requirements, since no organization is

capable of satisfying all its supplies requirements from its internal sources. In most cases it

involves large organizations extending a helping hand in form of resources to small

vendors/small suppliers who have demonstrated willingness to meet their purchaser’s

requirements. Mwagike and Changalima (2022) noted that analyzing value for money in

performance management of suppliers, price, quality, and time to market immediacy, product

credibility, service reliability, support capability, research and development power, purchase

specialty, value analysis, value engineering and e-commerce.

Ismail et al (2022) conveys that Suppliers’ need competent technical ability to provide high

quality product or service, ensure future a rise in performance and promote successful

development efforts. This is very important when the firm’s strategy included the

development of a new product or technology or access to proprietary technology. These

technical criteria insist company to shift into the global market place. This factor has been

measured on the basis of the importance of the following technical areas: compliance with

quantity, compliance with due date, compliance with packaging standard, and production

planning systems of suppliers, maintenance activities of suppliers and plant layout and

material. Das and Buddress (2017) also revealed that potential production capability of each

52
supplier should be analysed to meet a specified Production plan and also to develop a new

product according to the market demand. Therefore the production facilities and ability of the

supplier to improve its capacity should also be taken into account in order to judge the best

one.

5.4 Conclusions

Study conclusions were drawn based on the study findings.

5.4.1 Supplier performance management and value for money

The study concluded that supplier performance management significantly affect procurement

value for money and the failure to set supplier performance targets and reviewing supplier

performance constrain the attainment of procurement agility, value for money and internal

customer satisfaction indicators of procurement.

5.4.2 Supplier development and value for money

From the study, it was found that supplier development played an important role in the value

for money at Stanbic bank especially through supplier training, early supplier involvement,

and financial support. The study revealed that the strategies of supplier development

included; training suppliers about the required products, allowing suppliers have

representatives at the buyers premises, sending buyer representative personnel to illustrate to

the suppliers on some production stages, involving suppliers in the product design stages,

involving suppliers in the product decision, using similar suppliers for repeated times,

Giving suppliers incentives to boost their finance, direct investment in equipment and

production tools and outsourcing parts and services from external suppliers.

5.5 Recommendations

In light of the study conclusions, the following recommendations were made in line with the

objectives of this study.

5.5.1 Supplier performance management and value for money

53
The management of banking institutions needs to invest much in evaluating the performance

of suppliers consistently as they assess their suitability and capability before they are given

contracts. The selection process should entail assessing of their past performance and

evaluation should go after work is done so that they can be replaced or advised where they

are not doing well.

To enhance value for money in banking sector, the study recommends that management

should set supplier performance indicators, quantity expectations and quarterly performance

expectations for strategic supplies. The contract managers should also collect supplier

performance data based on established tool and indicators and regularly generate report for

management actions.

In relation to supplier relationships management programs, government agencies involved in

procurement should establish effective relationships with suppliers. This should be through

maintaining constant touch with the suppliers, long cordial relationships, train suppliers and

communicate effectively with suppliers. The organizations should also check suppliers’

performance effectiveness; establish trust and good relationships with them.

5.5.2 Supplier development and value for money

Management of the banking sector in particular should introduce a policy of “supplier

development”. It should focus on supplier training and enrolment in seminars and workshops

provide them with capital benefits to undertake their work.

The study also recommends that the organization adopts supplier optimization policies where

the company was able to pick suppliers based on their capabilities and not just based on the

price and the quality of service or product. These procurement policies will ensure that delays

resulting from the procurement process are corrected and the organization is able to

positively influence its performance through the procurement department and not lose money

through the same department.

54
There should be a plan to ensure awareness of supplier development amongst the concerned

parties so that its practice is obvious as any other organizational routine. For example,

suppliers can be trained about supplier development so that there is no chance of taking it for

granted because of the important roles it plays on the organization's performance.

5.6. Areas for future Research

The study was limited on supplier relationship management and value for money in

procurement. There is therefore a need for further study to ensure that many more variables

are used more than SRM like financial management, public private partnership and many

more.

Supplier relationship management and value for money in procurement were restricted on

three dimensions each. Theoretically, these variables can have many more dimensions and

indicators. It is thus important for another study to be undertaken to study these variables

using more other dimensions and indicators for a comprehensive understanding of the study.

Further research should be carried out procurement management practices and value in other

local governments and government agencies such as ministries, schools and non-government

organizations to confirm the consistency of the findings of this study. Also studies can be

carried out politics and revenue challenges in relation to value for money in local

governments.

Further research should also be conducted to find out how supplier education, supplier

collaboration and supplier segmentation affect procurement performance of manufacturing

organizations.

55
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 APPENDICES

APPENDIX I: QUESTIONNAIRE FOR THE FINANCE AND ADMINISTRATION

AND OPERATIONS’ DEPARTMENT

Dear Respondent,

I am BAYIGA DORCUS a student at Uganda Management Institute pursuing a Master’s

Degree in Public Procurement Management. As one of the requirements for being awarded

with this qualification, I am conducting a study on, “The effect of Supplier Relationship

Management on Value for Money in Procurement in Commercial Banks in Uganda with a

case study of Stanbic Bank Uganda Limited”. You have been identified as one of the

resourceful people to participate in this study. You are requested to answer the questions as

honestly as possible to enable reliable conclusions and recommendations. All your responses

was used strictly for research purpose and treated with anonymity and utmost confidentiality.

SECTION A: DEMOGRAPHIC CHARACTERISTICS

Individual Characteristics

Please tick the option that best describes you.

Indicate your Sex

Male Female

1 2

In which age bracket do you fall?

18-25 years 26-30yrs 31-35yrs 36-40 years 41 years and above

1 2 3 4 5

Highest Education Level

Certificate Diploma Degree Masters PHD

i
 1 2 3 4

Years of Service

1-3years 4-6 years 7-9 years 10 years and above

1 2 3 4

SECTION B: QUESTIONS ON THE STUDY VARIABLES

You are required to answer the following statements using the key presented to you. Key:

5Strongly Agree (SA), 4- Agree (A), 3- Not sure (NS), 2- Disagree (D) and 1 represents

Strongly Disagree (SD).

SA A NS D SD

SUPPLIER PERFORMANCE MANAGEMENT

SPM1 Stanbic Bank Uganda Limited has established key

performance indicators for all its strategic supplies

SPM2 Stanbic Bank Uganda Limited has established quality

expectations that suppliers are expected to meet

SPM3 Stanbic Bank Uganda Limited has established quantity

expectations that suppliers are expected to meet

SPM4 Stanbic Bank Uganda Limited has established quarterly

performance expectations that strategic suppliers have to meet

SPM5 Stanbic Bank Uganda Limited has established annual

performance expectations that strategic suppliers have to meet

SPM6 Stanbic Bank Uganda Limited has an established data

ii
 collection tools/forms for collecting information on strategic

suppliers

SPM7 The contract manager regularly collects contract performance

information

SPM8 Meetings are used to share information on supplier

performance

SUPPLIER DEVELOPMENT

SD1 Stanbic Bank Uganda Limited pricing policy is jointly agreed

on with its suppliers

SD2 Stanbic Bank Uganda Limited undertakes supplier evaluation

periodically to ensure good quality of the goods and services

SD3 In most aspects of the relationship, the responsibility for getting

things done is shared

SD4 We openly advise our suppliers on the best technology to use in

handling our products

SD5 The technical abilities of the public staffs in handling products

are evaluated supplying to them

SD6 Stanbic Bank Uganda Limited makes its supply plans for the

next seasons together with its suppliers in Uganda

SD7 Stanbic Bank Uganda Limited organizes training of its suppliers

iii
 VALUE FOR MONEY

VfM1 The prices of commodities are low

VfM2 The procurement process is cost effective

VfM3 Right products are procured

VfM4 There timely delivery

VfM5 Satisfaction is obtained from the supplies

VfM6 Expectations of the beneficiaries from the supplies are met

VfM7 Suppliers fulfil their contractual obligations

VfM8 Suppliers fulfil their obligations fast

Thanks for your time & cooperation

iv
 APPENDIX TWO: INTERVIEW GUIDE FOR THE MANAGERS

Dear Sir/ Madam,

I am BAYIGA DORCUS REG 18/MPP/KLA/WKD/0001 a student at Uganda

Management Institute pursuing a Master’s Degree in Public Procurement Management. As

one of the requirements for being awarded with this qualification, I am conducting a study

on, “The extent to which Supplier Relationship Management contributes to Value for Money

in Procurement in Commercial Banks in Uganda with a case study of Stanbic Bank Uganda

Limited”. You have been identified as one of the resourceful people to participate in this

study. You are requested to answer the questions as honestly as possible to enable reliable

conclusions and recommendations. All your responses was used strictly for research purpose

and treated with anonymity and utmost confidentiality.

i. Are reference checks done on suppliers previous contracts?

ii. Is verification of documentation submitted by the suppliers done with relevant

authorities?

iii. Is assessment of supplier’s equipment undertaken before award of contract?

iv. Are supplier staff qualifications vetted?

v. What are some of the challenges in selecting of suppliers in Stanbic Bank Uganda

Limited?

vi. What can be done to improve on the selection of suppliers in Stanbic Bank Uganda

Limited?

vii. Can you suggest some other criteria that can be considered in order to select effective

suppliers?

viii. Describe the Efforts to Use Supplier Development with Strategic Suppliers In Stanbic

Bank Uganda Limited

v
ix. To what extent has Stanbic Bank Uganda Limited considered the use of supplier

performance targets with its strategic suppliers

x. What Are the Challenges Supplier Performance Management in Stanbic Bank Uganda

Limited

Thanks for your time & cooperation

vi
APPENDIX III: SAMPLING GUIDE

vii