Procurement Management Practices and Operational Performance of Commercial Banks in Kenya.

Procurement management practices play a vital role in boosting operational efficiency, cutting costs, and enhancing service reliability and responsiveness within commercial banks. Effective procurement ensures that the goods, services and technologies on which banking operations depend are available on time, at the right quality and at an acceptable cost. However, commercial banks operating in Kenya continue to encounter operational difficulties stemming from ineffective procurement processes, weak information exchange with suppliers, inadequate inventory management, weak contract monitoring and incomplete adoption of electronic procurement systems, which result in service delays, increased costs and operational risk. Therefore, the purpose of this study was to determine the effect of procurement management practices on the operational performance of commercial banks in Kenya. Specifically, it examined the effect of information sharing with suppliers, inventory level control, contract monitoring and e-tendering systems on operational performance, measured through reliability, cost reduction and responsiveness. The study was anchored on the Kraljic Portfolio Purchasing Model, Game Theory, the Dynamic Supply Chain Capabilities Theory and the Technology Acceptance Model. The study adopted a descriptive research design. The unit of analysis was the 39 licensed commercial banks in Kenya, while the unit of observation comprised managers, senior managers, heads of departments and procurement staff, giving a target population of 194. A sample of 131 respondents was determined using Yamane’s formula and selected through stratified purposive sampling. Structured questionnaires were used to collect data, and 118 were returned, giving a response rate of 90.1%. Both descriptive and inferential statistical methods, including Pearson correlation, diagnostic tests and multiple linear regression, were used to analyse the data, which were presented in tables and discussed. The findings revealed that information sharing with suppliers, inventory level control, contract monitoring and e-tendering systems all had positive and significant effects on the operational performance of commercial banks in Kenya, jointly explaining 53.0% of the variation in operational performance. E-tendering systems recorded the strongest effect, followed by contract monitoring, information sharing with suppliers and inventory level control. The study, therefore, recommends that commercial banks should strengthen structured information-sharing frameworks with suppliers, including the sharing of demand forecasts. Commercial banks should strengthen inventory planning, monitoring and automated replenishment systems. Commercial banks should establish clear supplier performance metrics and enforce corrective measures consistently. Commercial banks should continue to invest in secure, integrated and user-friendly e-tendering systems supported by continuous user training.