Supply Chain Integration, Public Procurement and Operational Performance of Kenya’s Public Health Sector

Abstract

The main objective of this study was to determine the effects of supply chain integration dimensions on the operational performance of Kenya‘s public health sector. The independent variables in the study were the four dimensions of supply chain integration, namely, internal integration, supplier integration, customer integration, and information integration. The operational performance of Kenya‘s public health sector was the dependent variable, and public procurement of the moderating variable. Although there are many studies on supply chain integration and operational performance, there is no universally accepted model that explains the effects of supply chain integration on operational performance in the Kenyan public sector context. Based on this gap, this research seeks to link studies carried out in developed countries (particularly in the manufacturing sector), to the Kenyan health sector, given the importance of the sector in achieving universal health care. The study adopted a post-positivism paradigm informed by the use of both deductive and inductive approaches. The target population consisted of staff working directly in the supply chain in public Level Five health facilities and the Kenya Medical Supplies Authority. The study administered structured questionnaires and interviews with one hundred and ninetyfour participants selected through simple random sampling. The study utilized the Statistical Package for Social Sciences to analyze data from the one hundred and sixty-four participants who responded. Structural equation modeling was evaluated through Analysis of Moment Structures software. To assure validity and reliability, the study conducted a pilot study in one of the facilities, with the Cronbach Alpha falling within the allowable limits. The study used descriptive statistics to summarize the demographics and general questions, while inferential statistics were used to test the hypotheses. Findings from the study indicated that customer integration, supplier integration, internal integration, information technology integration significantly influenced operational performance. Based on structural equation modeling and the introduction of public procurement as a moderating variable, the path from supply chain integration to operational performance was positive and significant, implying that public procurement as a moderating variable had a positive effect on the relationship. The study established internal integration as a critical element of supply chain integration with indicators of internal integration such as responsiveness, integrated system, real-time inventory/logistics management, and cross-functional teams significantly contributing to the operational performance. Supplier integration was found to facilitate a healthier relationship between all parties and helped to increase efficiency. The study underscored the need for health facilities to appreciate the role of customer integration in encouraging visibility on the processes. Information technology integration proved vital in facilitating collaboration and information sharing among all the partners, leading to the improved operational performance of the health facilities. The study posits that public procurement mediates the relationship between supply chain integration and operational performance of the health sector as it is an enabler of collaboration and long-term relationships with the suppliers On the aspect of internal integration, the study recommends that public hospitals in Kenya consider embracing approaches geared towards strengthening functional integration, as it is vital in the overall long-term operational effectiveness and efficiency. On supplier integration, the study recommends that public hospitals need to continuously engage in joint decision-making with their critical suppliers so that both the institutions, and their suppliers can agree on central operational plans, and develop tactical strategies that are mutually beneficial in achieving public health strategies. To impact on customer integration, hospital supply chain managers can improve service delivery through increased focus on strengthening their supply chains. In addition, they should consider increased involvement of staff in the design, implementation and improvement of the internal practices geared towards achieving government the strategic objective on universal health care, In addition, the study concluded that health facilities had acknowledged the power of information technology integration as the glue that holds all the supply chain players. The study further determined that there exists a robust public procurement system that promotes fair and equitable supply chain integration, by providing an adequate and timely degree of transparency in each phase of the public procurement cycle.