School of Law and Management Studies
University of KwaZulu-Natal
Westville Campus
2015 HONOURS RESEARCH PROPOSAL
Lisa Melanie Coster
212535583
1
University of KwaZulu-Natal
The Impact of Supplier Relationship Management on Firms’ Ability to
Create Quality and Value
By
Lisa Melanie Coster
Honours
2015
2
The Impact of Supplier Relationship Management on Firms’ Ability to
Create Quality and Value
By
Lisa Melanie Coster
A Research Proposal presented to the Discipline of Supply Chain
Management
School of Management, IT and Governance
3
University of KZN
Submitted in partial fulfillment of the requirements for the degree of
Honours Supply Chain Management
Supervisor: Dr KK Archary
2015
ABSTRACT
Suppliers can either add value or destroy value as they control many aspects of a product or
service which are important to a customer such as quality, price and on-time delivery.
Supplier relationship management (SRM) is an important perspective for firms to ensure the
supply of reliable and frequent deliveries in today's dynamic and competitive environment. It
emphasises the need for firms to seek out positive, fulfilling relationships with suppliers.
This proposal investigates the impact of Supplier Relationship Management (SRM) on a
firm’s ability to create quality and value for customers, how mutually beneficial relationships
can be developed and enhanced to maximise value for both buyer and seller, how suppliers’
performance influences a firm’s competitive advantages, the importance of measuring and
evaluating suppliers’ performance and finally, it proposes a framework for supplier
performance management.
ACKNOWLEDGEMENTS
4
First and foremost, I would like to thank God Almighty for all of the wisdom, sense and
patience which He has bestowed upon me during the writing of this research proposal and all
my years of studying. It is through His blessings that many opportunities have been afforded
to me and my achievements were made possible.
My sincere thanks go out to my parents for all of their support over the years for my degree
and through this final honours year. Their love and understanding throughout has been a great
source of strength to get me through the little hiccups along the way.
I would like to extend my heartfelt thanks and gratitude to my supervisor, Dr KK Archary,
for her continuous guidance, constant support and kind encouragement through the writing of
this proposal. All of her help has ensured that this research proposal was written with the
least amount of worry and stress.
Thank you all.
DECLARATION
I, Lisa Coster declare that the contents of this dissertation represent my own work, and that
the dissertation has not previously been submitted for academic examination towards any
qualification. The referencing of authors has been duly acknowledged in this study.
Furthermore, this study represents my own work and statements are not necessarily those of
UKZN
Signed: _______________________________
Date:
_______________________________
5
Table of Contents
The Impact of Supplier Relationship Management on Firm’s Ability to Create Quality and Value........ 9
CHAPTER ONE-INTRODUCTION............................................................................................................... 9
1.1 Introduction ...................................................................................................................................... 9
1.2 Background to the study ................................................................................................................. 10
1.3 The Research Problem .................................................................................................................... 10
1.4 Aim of the Study ............................................................................................................................. 11
1.5 Research Objectives ........................................................................................................................ 11
1.6 Research Questions ........................................................................................................................ 11
1.7 Significance of the Study ................................................................................................................. 12
1.8 Limitations of the Research ............................................................................................................ 12
1.9 Chapter Organisation ...................................................................................................................... 13
1.10 Conclusion ..................................................................................................................................... 13
CHAPTER 2 ............................................................................................................................................ 14
THE IMPORTANCE OF SUPPLIER RELATIONSHIP MANAGEMENT ON IMPLEMENTING QUALITY AND
VALUE FOR THE CUSTOMER ................................................................................................................. 14
2.1 INTRODUCTION ............................................................................................................................... 14
2.2 Concepts.......................................................................................................................................... 15
2.2.1 SUPPLIER RELATIONSHIP MANAGEMENT .................................................................................... 15
2.2.2 PURPOSE OF SUPPLIER RELATIONSHIP MANAGEMENT .............................................................. 15
2.2.3OBJECTIVES OF SUPPLIER RELATIONSHIP MANAGEMENT ........................................................... 15
2.2.4 THE IMPORTANCE OF SUPPLIER RELATIONSHIP MANAGEMENT ................................................ 16
2.2.5 ELEMENTS OF SUPPLIER RELATIONSHIP MANAGEMENT ............................................................ 17
2.2.5.1 Supplier Performance Measurement ....................................................................................... 19
2.2.5.2 Negotiation ............................................................................................................................... 20
2.3 SUPPLIER SELECTION....................................................................................................................... 20
2.4 PURCHASING STRATEGIES............................................................................................................... 21
2.5 KRALJIC’S PORTFOLIO MATRIX ........................................................................................................ 22
Figure 1 ................................................................................................................................................. 22
2.6 STRATEGIC SOURCING .................................................................................................................... 23
2.7 TYPES OF SUPPLIER RELATIONSHIPS ............................................................................................... 24
Table 1.1................................................................................................................................................ 24
2.8 LEVELS OF MANAGEMENT APPLIED WITHIN SUPPLIER RELATIONSHIP MANAGEMENT................ 27
2.8.1. SUPPLIER RELATIONSHIP MANAGEMENT STRATEGY ................................................................ 27
6
2.8.2 CHALLENGES OF SUPPLIER RELATIONSHIP MANAGEMENT ........................................................ 28
2.9 CUSTOMER VALUE ......................................................................................................................... 28
2.9.1 VALUE DEFINED BY THE CUSTOMER ............................................................................................ 29
2.9.2 VALUE IN RELATIONSHIPS ............................................................................................................ 29
2.10 SUPPLY CHAIN COLLABORATION AND VALUE CREATION ............................................................. 30
2.11 QUALITY ........................................................................................................................................ 30
2.11.1 TOTAL QUALITY MANAGEMENT ................................................................................................ 30
2.11.2 ELEMENTS OF TQM .................................................................................................................... 31
2.11.3. CUSTOMER’S PERCEPTIONS OF QUALITY AND VALUE ............................................................. 33
2.11.4 SUPPLIER’S ROLE IN IMPLEMENTING QUALITY AND VALUE ...................................................... 34
2.12 RECOMMENDATIONS.................................................................................................................... 34
2.13 CONCLUSION ................................................................................................................................. 35
CHAPTER 3: RESEARCH METHODOLOGY .............................................................................................. 36
3.1 Introduction .................................................................................................................................... 36
3.2 Research Strategy ........................................................................................................................... 36
3.2.1 Positivistic Research Strategy ...................................................................................................... 36
3.2.2 Phenomenological Research Strategies ....................................................................................... 37
3.2.3 Combined Research Strategies .................................................................................................... 37
3.3 Research Design .............................................................................................................................. 37
3.3 Sampling Design .............................................................................................................................. 39
3.3.1 Probability Sampling .................................................................................................................... 40
Simple Random Sampling ..................................................................................................................... 40
Disadvantages of Simple Random Sampling ......................................................................................... 41
Systematic Sampling ............................................................................................................................. 41
Advantages of Systematic Sampling ..................................................................................................... 41
Disadvantage of Systematic Sampling .................................................................................................. 41
Advantages of Stratified Random Sampling ......................................................................................... 42
3.3.2 Non Probability Sampling............................................................................................................. 42
3.4 Data Collection ................................................................................................................................ 43
3.4.1 Focus Groups................................................................................................................................ 44
3.4.2 Survey Methods ........................................................................................................................... 44
3.5 Interviews........................................................................................................................................ 44
2.5.1. Personal interviewing ................................................................................................................. 45
3.5.2. Telephonic interviews ................................................................................................................. 45
7
3.6. Questionnaires ............................................................................................................................... 45
3.7 Data Analysis ................................................................................................................................... 46
3.6 Reliability and Validity..................................................................................................................... 46
3.6.1. Reliability..................................................................................................................................... 46
3.6.2. Validity ........................................................................................................................................ 47
3.7 Triangulation ................................................................................................................................... 47
3.8 Pilot Studies .................................................................................................................................... 48
3.9 Ethical Considerations..................................................................................................................... 48
3.10 Conclusion ..................................................................................................................................... 48
Bibliography…………………………………………………………………………………………………………………………………….49
List of Tables
1. Table 1.1
23
List of Figures
1. Figure 1
21
8
The Impact of Supplier Relationship Management on Firm’s Ability to
Create Quality and Value
CHAPTER ONE-INTRODUCTION
1.1 Introduction
“Supplier relationship management (SRM) is an important perspective for firms to ensure the
supply of reliable and frequent deliveries in today's dynamic and competitive environment.
For such a relationship to be effective and achieve long-term sustainability it has to be
beneficial for all parties, the buying and the supplier firms (Abdallah and Hamdan, 2014).
Procurement describes the activities involved in establishing fundamental requirements and
includes sourcing activities such as market research, vendor evaluation and negotiation of
contracts.”
Before the 1980s purchasing was mainly operational or tactical. Even during the 1980s
purchasing activities were viewed as a tactical function and were treated as isolated planning
performed by top management (Ferguson et al. 1996). During the last decades purchasing has
gone from tactical and operational to a strategic approach. Strategic Sourcing involves the
development and management of supplier relationships to acquire goods and services in a
manner that aids in achieving the immediate needs of the business. Sourcing plays an
important role in organisations' performance (Kotula, 2015).”
SRM is an important concept that describes how value can be created from relationships with
suppliers. There are three aspects that can be applied within SRM namely: supplier
performance management, continuous improvement and risk management. A supplier’s
performance must be continually measured to ensure the timely and satisfactory performance
of their contracts and to identify opportunities for improving the supplier’s performance by
providing them with what they need to become successful in the supply chain. Supply chain
risk is inevitable and has financial implications for an organisation as a result, buyer-supplier
collaboration is necessary to minimise risk exposure and to reduce the impact of risk on the
supply chain.”
Supplier relationships vary based on the nature of the commodity being purchased. Items are
categorised according to their relative importance to the organisation and their impact on
9
profitability. Some supplier relationships are important because of the volume of business
they represent, others because they affect the future of the company in that they are sources
of technical development and important for product quality and performance (Gadde &
Snehota, 2015). While having good relationships with suppliers is important, it can be a
resource-intensive process that should only be undertaken when measurable value can be
extracted from the relationship greater than the costs involved.”
The purpose of this study is to examine the impact of SRM on a firm’s ability to create
quality and value for customers, to determine how mutually beneficial relationships can be
developed and enhanced to maximise value for both buyer and seller, how suppliers’
performance influences a firm’s competitive advantages, the importance of measuring and
evaluating suppliers’ performance and finally, it proposes a framework for supplier
performance management. This chapter presents the background to the study, the research
problem, and aim of the study, the research objectives and research questions as well as the
significance of the study.
1.2 Background to the study
Supplier relationship management has become a critical business process in the purchasing
and supply environment. This comes as a result of: competitive pressures; the need to
consider sustainability and risk; the need to achieve cost efficiency in order to be cost
competitive; and the need to develop closer relationships with key suppliers who can provide
the expertise necessary to develop innovative new products and successfully bring them to
the market. Significant benefits are possible from better managing relationships with key
suppliers (Lambert & Schwieterman, 2012).”
Due to local and global competitive pressures, the rising expectations of consumers
demanding higher service levels than before and the emergence of new types of consumers
with unique requirements have led to the development and implementation of SRM
strategies. In order to be competitive, companies must stay relevant in the fast paced
environment where products and markets are constantly changing. This reinforces the need
for suppliers who have the incentive to invest in continuous improvement and innovation.
1.3 The Research Problem
Every time purchasing places an order with a supplier, a potential risk arises; this risk could
be as minor as a late delivery or as major as the loss of an entire supplier due to bankruptcy or
10
natural disaster (Monczka et al., 2008). Other supply threats include poor quality, financial
instability, operational problems, transportation delays, and so on. For this reason companies
need to assess the risk profile of their suppliers, avoid high risk suppliers such as those
located in high risk locations or in politically unstable environments as risk can have a
negative impact on a company’s performance.”
Managing a supplier’s performance and ensuring that they comply with the contract cannot
be left entirely in the hands of a supplier. Regular communication is required to monitor and
track the progress of suppliers. Firms willing to receive frequent deliveries have the incentive
to assist and develop their suppliers and to establish close relationships with them.”
1.4 Aim of the Study
The aim of the study is to evaluate the performance of firms with the employment of supplier
relationship management strategies as this impact should be a positive one and enhance a
company’s profit, efficiency and ability to achieve customer satisfaction.
1.5 Research Objectives
The research objectives are as follows:
 To determine the impact of and importance of Supplier Relationship Management on
a firm’s success.

To identify the types of relationships that can be formed with suppliers and
understand which of those relationships are beneficial.

To make recommendations for Supplier Relationship Management to be effective to
companies which are employing it.
1.6 Research Questions
The research questions are as follows:
 What is the impact of and importance of Supplier Relationship Management on a
firm’s success?

What are the possible types of relationships that companies can have with their
suppliers?
11

How do they add value for the customer?

What can be done to make Supplier Relationship Management more effective?
1.7 Significance of the Study
Today the average South African manufacturer spends roughly half its revenue to purchase
goods and services. This makes a company’s success dependent on their interactions with
suppliers (Beil, 2009). The role of procurement managers (buyers) within companies has
become extremely important, often involving staggering rand values (Beil, 2009).”
Suppliers can either add value or destroy value. Defective products, products that are of an
inferior quality or that do not meet customer’s expectations can tarnish a company’s
reputation. Risk has become a huge factor which organisations must plan for to avoid costly
disruptions. Companies need to perform a thorough analysis of suppliers before committing
to them to avoid disappointments later on.
This research will benefit companies that source their requirements from external suppliers
and help them to make better decisions regarding supplier performance management.
Companies will begin to understand the importance of SRM as a competitive tool and a
means of achieving customer satisfaction. Furthermore, the illustration of the different levels
of supplier relationships will assist companies determine the most suitable type(s) of
relationships they can benefit from. This will ultimately result into better quality, fewer
customer complaints and greater customer satisfaction.
1.8 Limitations of the Research
This study is entirely research based. A case based study would give more insight into the
successes or failures resulting from the implementation of SRM practices in South African
companies, however, conducting a case based research would be hindered by time and cost
constraints. Furthermore, SRM is a very broad topic and there are many avenues for research
that can be explored however, due to the nature of the honours research proposal, certain
aspects of SRM have to be excluded or discussed in lesser detail.
12
1.9 Chapter Organisation
The study is formatted as follows:

Chapter 1: Introduction – This chapter presents a background to the study. The
research problem and objectives are determined in this chapter setting the
foundation for this study.

Chapter 2: Literature Review – The theoretical framework of the study is
presented. The chapter comprises of the literature review and provides existing
knowledge and information on the research problem.

Chapter 3: Research Methodology – This chapter presents the research
methodology which entails a full description of the research design, the sample
which is used for the survey and the data collection instrument which is used.
1.10 Conclusion
This chapter serves as an introduction to the main themes of SRM. It includes a brief
introduction to the research problem, the main aim and objectives of the study and provides a
brief road map to the literature review to follow where a discussion of SRM and the issues
that have been identified is carried out in greater detail. Chapter two considers the literature
review.
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CHAPTER 2
THE IMPORTANCE OF SUPPLIER RELATIONSHIP MANAGEMENT
ON IMPLEMENTING QUALITY AND VALUE FOR THE CUSTOMER
2.1 INTRODUCTION
No business can do without suppliers and, as a rule; there is a notable continuity in
relationships to suppliers (Gadde&Snehota, 2015). Suppliers are the organisations or entities
that provide services to a company ranging from the basic supply of raw materials or parts to
more strategic supplies that an organisation cannot function without. Suppliers are very vital
‘organs’ to a business as they are partners in the transformation process that is; they add value
at each stage of the manufacturing and production process and ultimately influence the
quality of the final product. According to (CIPS, 2013) Relationships have two aspects:”
a) Clear commitment between the two parties involved
b) The objective of understanding, agreeing, and whenever possible codifying the interactions
between the two parties.
Companies make different use of supplier relationships, depending on the nature of their
business, the kind of technology used and the context in which they operate
(Gadde&Snehota, 2015). Managing relationships with suppliers is important as it can result
in timely delivery of quality materials, smooth sailing production, customer satisfaction and
reduced costs.”
SRM can lead to effective negotiations with suppliers. A buyer can negotiate the terms of a
contract and get leverage over the supplier, hence both buyer and seller can develop a
contract that is mutually beneficial. Relationships do not have to be standard; they can be
developed into what both parties want and this allows for a mutual understanding between the
buyer and the supplier. Aligning an organisation’s strategy with suppliers’ objectives
supports the development of an effective SRM strategy.
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2.2 Concepts
The following concepts are key to this study:
2.2.1 SUPPLIER RELATIONSHIP MANAGEMENT
The concept of Supplier Relationship Management refers to the identification of when
supplier relationships are appropriate, the dimensions of effective relationships, and how
relationships can be a source of competitive advantage (Momiwand & Shahin, 2012).”
According to (CIPS & NIGP, 2013) supplier relationship management is a set of principles,
processes and tools that can assist the organisation to maximise relationship value with
suppliers and minimise risk and management of overhead through the entire supplier
relationship life cycle.”
Quora (2011) defines supplier relationship management as the discipline of working
collaboratively with suppliers in order to maximise the value derived from those supplier
relationships.”
It is the systematic management of supplier relationships to optimise value through cost
reduction, innovation, mitigation and growth throughout the entire relationship life cycle.
(Accenture, 2011).”
2.2.2 PURPOSE OF SUPPLIER RELATIONSHIP MANAGEMENT
Objectives of SRM ensure that company performance targets are achieved by aligning the
company’s goals with the supplier’s goals. Furthermore, objectives help to maintain on-going
relationships with suppliers in order to ensure that there is a continuous, uninterrupted supply
of essential goods and services.
The goal of the Supplier Management process is to manage suppliers and the services they
supply and ensure value for money is created.
2.2.3OBJECTIVES OF SUPPLIER RELATIONSHIP MANAGEMENT
Accenture (2012) describes SRM objectives as follows:

Obtain value for money from supplier and contracts
15

Ensure that underpinning contracts and agreements with suppliers are aligned to
business needs, and support and align with agreed targets.

Manage relationships with suppliers

Manage supplier performance

Negotiate and agree contracts with suppliers and manage them through their lifecycle

Maintain a supplier policy and a supporting Supplier and Contract Database.
2.2.4
THE
IMPORTANCE
OF
SUPPLIER
RELATIONSHIP
MANAGEMENT
Supplier relationship management has become a critical business process as a result of:
competitive pressures; the need to consider sustainability and risk; the need to achieve cost
efficiency in order to be cost competitive; and the need to develop closer relationships with
key suppliers who can provide the expertise necessary to develop innovative new products
and successfully bring them to market. Significant benefits are possible from better managing
relationships with key suppliers (Lambert and Schwieterman, 2012).”
Furthermore, (Imanipour and Rahimi, 2012) believe that supplier relationship management is
one of the most important parts of supply chain management. In fact, effective supplier
relationship management and improving qualitative and quantitative levels of suppliers could
be a competitive advantage of every company. Thus if a company’s competitive advantage is
based on its supply relationships, then the development and management of these
relationships should be seen as an important source of organisational competitive advantage;
which in turn, provides the foundation for overall organisational competitiveness (Matevz
and Maja, 2013). Firms that strategically manage their purchasing and supply management
have higher levels of cooperation with their suppliers (Carr and Smeltzer, 1999). When the
cooperation and interaction with suppliers increases, the firm’s ability to respond to changing
requirements of end customers will also grow.”
According to (Abdallah and Hamdan, 2014) Supplier relationship management is very
important for manufacturing firms as it can ensure the supply of reliable and frequent
deliveries in today’s dynamic and competitive environment. For such a relationship to be
16
effective and long term, it has to be beneficial for all parties, the buying and the supplier
firm.”
2.2.5 ELEMENTS OF SUPPLIER RELATIONSHIP MANAGEMENT
Relationship Management
In relationship management the buyer focuses on the supplier organisation and uses openness
and information sharing to learn about unknown potential benefits that the supplier may be
able to provide and in reciprocation the supplier learns something of the buyer’s
organisation’s operations and can possibly spot opportunities to enhance the benefits of his
offering (CIPS, 2013).”
According to (CIPS, 2013) the method of achieving the goal, relationship management is
highly dependent on some of the factors that are responsible for achieving successful
interpersonal relationships. They are as follows:
• Regular communications
• Openness and the sharing of information
• Commitment and equality
With contract and supplier management the supplier’s rewards, such as increased business,
come indirectly from responding positively to the buying organisation’s unilateral
determination of benefits that add value for its internal customers. The focus is on the internal
customer and the assessment of benefits is independent of the supplier (CIPS, 2013).”
Communication
Many cases of mistrust or concern result from a failure to communicate effectively – whether
it is on the specifics of the deliverables, the company’s overall business goals, or concerns
about underperformance. At the negotiation stage, each party might be concerned about
unduly exposing its position for fear that the other will exploit information. However, if the
company is looking for a long-term, collaborative relationship, information sharing should be
encouraged from the outset, with a view to developing trust and working together to achieve
mutually beneficial results.”
17
Mutual trust
Trust can be the defining characteristic of a collaborative relationship between a company
and its suppliers. In this context it might mean having confidence in the other party’s:
•
Capability to do the job well
•
Goodwill – having the interests of ‘us’ and the relationship at heart
•
Integrity – acting and speaking honestly
•
Commitment to the relationship beyond the letter of the contract.
Trust can only be won through developing strong relationships, often between the people
managing the contract on a day-to-day basis. It has to be built and earned through actions and
behaviours, rather than assertions, and is often tested when problems arise.”
Joint problem-solving
No matter how good the relationship between a company and its suppliers, and how stable the
delivery of the goods or services, problems can still arise. Good contract management
involves both company and supplier co-operating to ensure that problems are recognised and
resolved quickly and effectively. This can be achieved by:”

Agreeing on problem-handling procedures in advance through a
risk management plan and dispute-resolution protocol

Ensuring clear, timely notification, reporting and escalation
procedures that enable problems to be resolved before they develop
into disputes

Ensuring the supplier has its own risk-management procedures,
including internal escalation procedures, and uses them when
needed. These procedures should seek to prevent problems as well
as resolve them.
A company has an obligation to communicate any concerns about the supplier’s performance
afterall, the supplier can only fix a problem if they know about it. Failing to notify the
supplier of a problem could result in a series of small problems building up to become
material performance issues, which is unfair on the supplier. Whatever the nature of the
problem, it is vital that the company:”
18

Notifies the supplier immediately

Chooses the appropriate notification channel, depending on the problem’s severity
(e.g. phone call, e-mail, letter, face-to-face meeting)

Records the problem as part of tracking overall performance

Both parties act in good faith to negotiate a mutually acceptable resolution

The problem-solving approaches are practical, clear, achievable and effective.

Follow escalation procedures if the initial approaches are unsuccessful.
2.2.5.1 Supplier Performance Measurement
The purpose of investing in a relationship with a supplier is to improve their performance in
fulfilling the needs of the buying organisation. Equally, the buying organisation may have to
implement changes in order for the supplier's performance to improve (CIPS, 2013).
Suppliers are responsible for the timely and satisfactory performance of their contracts
(Burt,Petcavage & Pinkerton, 2010). Unfortunately however, a firm cannot rely on the
supplier to ensure that work is progressing as scheduled and that delivery will be as
specified.”
Purchasing managers must monitor supplier progress to ensure that the desired material is
delivered on time (Burt,Petcavage & Pinkerton, 2010). The method of monitoring depends on
the lead time, complexity, and urgency of the order or contract (Burt,Petcavage & Pinkerton,
2010). Organisations require a structured flexible framework which is easily adoptable,
efficient, reliable, flexible, and compatible to other organisational systems to facilitate in
auditing supplier’s performance (Dey, Bhattacharya & Ho, 2014).”
Supplier Development programs
Supplier development programs are aimed at improving supplier’s performance by providing
them with what they need to become successful in the supply chain. According to (Gordon,
2006) Supplier development is aimed at lowering the total cost of the supply chain, increase
profitability for all supply chain participants, increase product quality, and achieve near
perfect on- time delivery at each point in the supply chain. The following seven steps
comprise a process for developing and deploying supplier assessment:”

Align supplier performance goals with organisational goals and objectives.

Determine an evaluation approach.
19

Develop a method to collect information about suppliers.

Design and develop a robust assessment system.

Deploy a supplier performance assessment system.

Give feedback to suppliers on their performance.

Produce results from measuring supplier performance.
2.2.5.2 Negotiation
Negotiation is described as a pervasive process in which people ultimately attempt to reach a
joint decision on matters of common concern in situations in which there is initial
disagreement (Burt,Petcavage & Pinkerton, 2010).Negotiation in the purchasing process
covers the period from when the first communication is made between the purchasing buyer
and the supplier through to the final signing of the contract. Therefore, having a relationship
with a supplier that is based on trust and mutual understanding is one of the pre-requisites for
effective negotiation as a result; buyers and suppliers are more likely to reach mutually
beneficial agreements with one another. The objectives of negotiation are as follows:”

To obtain the quality specified

To obtain a fair and reasonable price

To get the supplier to perform the contract on time

To exert some control over the manner in which the contract is performed

To persuade the supplier to give maximum co-operation to the buyer’s
company

To develop a sound and continuing relationship with competent suppliers

To create a long term partnership with a highly qualified supplier.
The objectives of negotiation require investigation, with the supplier, of every area of
negotiable concern-considering both short term and normally long term performance
(Burt,Petcavage & Pinkerton, 2010).
2.3 SUPPLIER SELECTION
This is the most important phase which precedes SRM and is the process by which firms
identify, evaluate, and contract with suppliers (Beil, 2009). The approach used when selecting
suppliers is based on the organisations’ priorities and strategy. The supplier selection process
20
deploys a tremendous amount of a firm’s financial resources. In return, firms expect
significant benefits from contracting with suppliers offering high value (Beil, 2009).”
As a means of selecting the source, an invitation for bid (IFB) or a request for proposal (RFP)
is issued out to elicit bids from potential vendors. The IFB or RFP generally includes
background on the issuing organisation and its lines of business, a set of specifications that
describe the sought-after solution, and evaluation criteria that disclose how proposals will be
graded. They may also include a statement of work which describes the tasks to be performed
by the winning bidder and a timeline for providing deliverables (Rouse, 2015).”
2.4 PURCHASING STRATEGIES
Firms frequently procure a large quantity and variety of products, works and services to
execute their operational responsibilities and satisfy various plans and policies of the
organization (Padhi, Wagner and Aggarwal, 2012). The amount that manufacturers spend on
purchased materials and components is typically 50 to 70 per cent of the value of sales (van
Weele, 2005), so their success is heavily influenced by the performance of their purchasing at
the component level (Drake, Lee and Hussain, 2013).”
“While these procurement activities entail significant time and monetary resources of the
firm, they also carry a fair degree of risk for the firm. The purchasing strategies, therefore,
tend to have a large influence on the overall performance of the organisation. There is, thus,
an imperative that the firms employ a professional purchasing approach (Padhi, Wagner and
Aggarwal, 2012).”
There are four categories of purchasing spend namely: routine, bottleneck, leverage and
critical items. These categories and the level of risk associated with each of them influences
decisions about the types of relationships that can be developed with suppliers. For instance,
critical items are of strategic importance to an organisation hence, forming collaborative
partnerships or strategic alliances with suppliers is a priority as these are the types of items a
business cannot function without and requires a continuous supply of. Moreover, there needs
to be a set of criteria for determining which types of relationships to develop with suppliers
and how an organisation can benefit from them as this is the basis for supplier relationship
management.
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2.5 KRALJIC’S PORTFOLIO MATRIX
The Kraljic model is the most commonly used supplier assessment framework (Nudurupati et
al., 2015). Kraljic (1983) proposed a purchasing portfolio modelling approach which
classifies purchasing items by positioning them in the four quadrants formed by the two”
dimensions, importance of the purchase and complexity of the supply market, with the
quadrants representing different purchasing strategies.
According to Kraljic (1983) a firm’s supply strategy depends on two factors: profit impact
and supply risk. Goods or services that have a high supply risk are referred to as strategic.
Those with a low supply risk are referred to as tactical. This Supply Positioning Model
enables a firm to understand the priority of each contract and the amount of time and effort it
should invest in each supplier relationship. It can also support decisions on the stock levels
needed to secure supply. The figure below represents the four quadrants:
Figure 1
22
The grid’s axes represent two factors:
The organisation’s risk, vulnerability and exposure in securing the supply of the goods or
services i.e. how critical these items are to meet the company’s public policy or business
objectives (the ‘supply risk’) and the cost to the organisation of the goods or services (the
‘relative cost’).
The factors that could influence ‘supply risk’ include:

The importance of the goods or services to the company’s business needs or outcomes

The complexity of the goods or services

The current supplier’s ability to deliver

The delivery lead time

The level of competition in the supply market

The product’s life cycle
2.6 STRATEGIC SOURCING
Purchasing management is divided into purchasing on a strategic, tactical and operational
level (Linden, 2012). The strategic level concerns the purchasing decisions that influence the
company in the long term and provide a total overview of the purchasing management
(Linden, 2012). Before the 1980s purchasing was mainly operational or tactical. Even during
the 1980s purchasing activities were viewed as a tactical function and were treated as isolated
planning performed by top management (Ferguson et al. 1996). The last decades purchasing
has gone from tactical and operational to a strategic approach (Ferguson et al.1996;
Brookshaw and Terziovski,1997; Handfield et al. 2009; Van Weele,2010).
Strategic sourcing is defined as a critical challenge of designing and managing supply
networks in line with the organisation’s operational and performance objectives (Chiang et al.
2011). Rendon, (2005) sees the strategic sourcing process as a step in the procurement
process that incorporates the identification and selection of the supplier whose costs,
qualities, technologies, timeliness, dependability, and service best meet the organisation ́s
needs.”
23
Strategic sourcing comprises concepts of strategic purchasing, supplier development,
information sharing with suppliers and inter-functional integration of purchasing (Linden,
2012). Decisions around strategic sourcing cannot only be based on operational level, such as
cost, quality, and delivery. It has to incorporate a strategic level and capabilities evaluation of
suppliers, such as highlighting quality management practices, long-term quality output,
supplier ́s strength, process capabilities, management practices, cost reduction at the same
time as increasing profit, design and development capabilities (Talluri and Narasimhan, 2004;
Rendon, 2005;Giunipero et al. 2006). Strategic sourcing needs to consider the total cost of
ownership including acquisition costs, ownership costs and post ownership costs.”
2.7 TYPES OF SUPPLIER RELATIONSHIPS
The management of external resources requires firms to define which type of relationship
they ought to adopt and under which circumstances, and how to manage different types of
relationships (Cox, 1996).”
The procurement process has many major tasks. One of the most crucial is the selection of
the right supplier. The right supplier provides the right quality of materials, on time, at the
right price, and the right level of service. A company should have a basis for selecting its
suppliers as selecting the wrong suppliers can lead to frustrating delays, upset customers and
shrinking profitability. For instance, if a supplier fails to deliver a critical component on time,
production comes to a standstill leading to downtime costs, back orders, late deliveries and
unhappy customers. The most effective suppliers are those that offer products or services that
match or exceed the needs of a business. Common characteristics of the various types of
relationships that could be developed with suppliers are pointed out below:
Common characteristics of portfolio models Rahimi et al, (2008)
Table 1.1
Transactional
2. Development of supplier’s competition
power by buyer
(Non critical, Market Exchange)
3. High level value of buying
24
1. Short-term relationship
4. High level creativity of supplier
2. Allocating limited resources to supplier
5. Supplier’s technology ownership
3. Simple buy-sell relationship
6.
High-ranked
bargaining
power
of
supplier
4. Change supplier easily
7. Variety of supplier’s product
5. Local suppliers
6. Standard commodities
7. No need for innovation
Familiar
8. Stability of demand
(Strategic, Strategic Partnership)
9. Lack of tendency to investment
1. Long-term relationship
Friendly
2.
Buyer’s
investment
on
supplier’s
innovation
(Leverage, Captive Supplier)
3. Powerful joint venture with supplier
1. Suppliers depend on buyers
4. Development of supplier’s technical
skills by buyer.
2. Multi suppliers for every product
5. High level of purchasing value
3. High competition between suppliers
6. International suppliers
4. Necessity of high-ranked engineering 7. R&D planning for suppliers
experiences
8. Complex commodity’s production
Business Partnership
9. High competition power of suppliers
(Bottleneck, Captive Buyer)
10. Extensive cost of changing supplier
1. Buyers depend on suppliers
11. Product development planning
25
2. Development of supplier’s competition 12. Limited number of suppliers
power by buyer
3. High level value of buying
4. High level creativity of supplier
5. Supplier’s technology ownership
6.
High-ranked
bargaining
power
of
supplier
7. Variety of supplier’s product
The impact of a specific supplier relationship depends on how it fits into the operations and
the strategy of the buying company and how other supplier and customer relationships are
affected. This means that the role and value of a particular relationship cannot be assessed
from its product/service content only (Gadde&Snehota, 2015). Some supplier relationships
are important because of the volume of business they represent, others because they affect the
future of the company in that they are sources of technical development and important for
product quality and performance.”
Trust plays an important role in relationships with suppliers. It can increase the value of
trading relationships such that customers make a greater commitment to the relationship.
Because commitment can be easily damaged, organisations tend to search for trustworthy
partners (Morgan and Hunt, 1994). Mutual trust can improve the quality of the relationship
between buyer and supplier. Relationship quality in the business context represents all types
of relationships between buyers and sellers. The quality of a relationship is delineated by the
overall level of satisfaction with regard to relationship-based expectations (Smith, 1998).”
Commitment has been defined as a stated or implied pledge between allied partners to
maintain a sustainable partnership (Dwyer et al., 1987). Furthermore, (Anderson and Weitz,
1992; Morgan & Hunt, 1994) categorised commitment into three factors: a desire to develop
a stable relationship, a willingness to make short-term sacrifices in order to maintain the
relationship, and confidence in the stability of the relationship.”
26
Communication affects the degree of commitment between buyers and suppliers and,
therefore, influences future relationships. Kwon (2008) states that communication is viewed
as exerting influence on partnership trust. Kwon and Sue (2008) found that partner reputation
and trust were both considered to play important roles in buyer-supplier relationship
decisions, although the interconnectedness of the partner reputation was normally seen as an
antecedent to trust. In addition, they consistently found that reputation had a significant and
positive effect on commitment to a relationship and on the buyer’s willingness to invest in the
future of the relationship.”
2.8 LEVELS OF MANAGEMENT APPLIED WITHIN SUPPLIER
RELATIONSHIP MANAGEMENT
According to CIPS (2013) there are three levels of management that are applied by buyers
when dealing with suppliers. They overlap by some degree but may be generally considered
as follows:
Contract Management –Managing the process of developing a contract and post-contract
administration, including ensuring the performance of the contract.
Supplier Management –This includes the aspects of contract management but additionally
involves a focus on improving the performance of the supplier in fulfilling the needs of the
buying organisation.
Relationship Management -This includes aspects of contract management & supplier
management, but additionally both parties actively seek to become sufficiently familiar with
each other that they can predict how each other will react even in situations that have not so
far been experienced.”
While having good relationships with suppliers is important, it can be a resource-intensive
process that should only be undertaken when measurable value can be extracted from the
relationship greater than the costs involved.”
2.8.1 SUPPLIER RELATIONSHIP MANAGEMENT STRATEGY
A SRM strategy should be aligned to the organisation’s strategic intent and objectives. Before
a strategy can even be thought of the organisation needs to define its priorities. The goal is to
27
ensure clarity around the purpose of the organisation. It is important therefore, to identify
what differentiates the organisation as a whole from all others. As the analysis of business
needs becomes more tangible, operational and strategic priorities can be contextualised and
their sometimes conflicting intentions rationalised against the overarching purpose of the
network.”
The next step is to understand the supply market structure. Once the internal environment is
understood, the next step is to profile the external supply market. This needs to be done from
two perspectives. A classic Porter’s five forces Analysis provides insight at the organisational
level and a product/service portfolio analysis provides further insight at the level of offerings
beings presented by the market”
2.8.2 CHALLENGES OF SUPPLIER RELATIONSHIP MANAGEMENT
With so much of a company’s money on the line, and increasing reliance on outsourcing of
many complex services and products, the job of a buyer is not only important but also
challenging. Buyers must define and measure what “best value” means for the buying
organisation, and execute procurement decisions accordingly. To identify best value, the
buyer must interface with technical, legal, and operations experts within the buyer’s
company, and act as an expert negotiator and coordinator across many internal and external
parties (Beil, 2009).”
Purchasing professionals spend considerable time solving operational problems, such as those
pertaining to quality and delivery performance (Ellegaard, 2011). Making good use of
suppliers is a complex task for at least two reasons. The first is that the economic
consequences are difficult to assess. The critical supplier relationships of a company are often
complex in terms of the range of products and services supplied and people involved. The
second is that companies can exercise only limited control over a vendor (Gadde & Snehota,
2015)”
2.9 CUSTOMER VALUE
Companies are searching for new and better ways to create value and differentiate their
market offerings to attract and keep customers and make a profit (Bendapudi & Leone ,2003).
Understanding what buyers value within a given offering, creating value for them, and then
28
managing it over time have long been recognised as essential elements of every marketoriented firm’s core business strategy (Porter, 1998).”
Customer value is defined as the perceived worth of the set of benefits received by a
customer in exchange for the total cost of the offering, taking into consideration available
competitive offerings and pricings. It is the difference between the values the customer gains
from owning and using a product and the cost of obtaining the product.”
The definition above suggests that there are two aspects to customer value: desired value and
perceived value. Desired value refers to what customers desire in a product or service.
Perceived value is the benefit that the customer believes he or she received from a product
after it was purchased.”
2.9.1 VALUE DEFINED BY THE CUSTOMER
A customer derives value from his or her experience with a particular product or service. A
customer that recently bought a brand new Mercedes Benz judges the brand based on the
vehicle’s features (such as the ease of driving the vehicle, price, practicality, attractiveness of
the interior, the fuel economy, speed and reliability of the vehicle) and the service that they
receive from the dealership pre and post purchase. This then translates to the experience that
is deemed superior to the customer. The average customer is always looking to get more for
their money from the purchases that they make on a daily basis. This is the essence of
competition among firms producing similar products and services. Today, defectiveness,
nonconformity, or, more generally, any variation between product or service performance and
the user’s expectations is termed negative quality (Conti, 1993).
2.9.2 VALUE IN RELATIONSHIPS
The concept of value is commonly used in understanding and analyzing business markets.
According to (Anderson and Narus, 1999) value should be seen as “the cornerstone of
business market management”. The producer’s role is that of the creation and delivery of
goods and services, whereas the role of the customer as the receiver of value is the
consumption of those goods and services. The concept of value requires the participation of
at least two actors and this implies that a relationship exists between the two actors.”
29
2.10 SUPPLY CHAIN COLLABORATION AND VALUE CREATION
The sustainable creation of value in an enterprise depends on the collaboration and cooperation of key members in the supply chain, and the integration of all value adding
activities. A holistic approach to managing important relationships with suppliers,
manufacturers, distributors, and every individual or company that form part of the supply
chain can provide substantial benefits. The value ultimately received by the end customer is
influenced by the ability of the supply chain to add value at each stage of the process.
2.11 QUALITY
According to (Goetsch and Davis, 2010) quality is a dynamic state associated with products,
services, people, processes and environments that meet customer’s needs and expectations
and help provide superior value. They believe that quality must give superior value to the
customer and superior value has 3 elements: superior quality, superior cost and superior
service.”
“Quality has been expressed in many ways by other authors, for instance, Juran an early
doyen of quality management defined quality as “fitness for purpose or use” while Crosby, an
American consultant famous in the 1980’s defined quality as “conformance to requirements”
and lastly, ISO 9000 refers to quality as “the totality of features and characteristics of a
product or service that bear on its ability to satisfy stated or implied needs”.
“increasing the satisfaction of customers and other stakeholders through effective goal
deployment, cost reduction, process improvement, people involvement and supply chain
development has proved essential for organisations to stay in existence in the 21st century,
therefore, quality has developed into the most important competitive weapon, and many
organisations have realised that Total Quality Management and its relatives is the way of
managing into the future (Oakland, 2014).”
2.11.1 TOTAL QUALITY MANAGEMENT
Companies have been concerned with the quality of their products and their qualitymanagement processes for years. However, only since the mid-1980s have organizations paid
serious attention to the implementation of Total Quality Management, (Waldman, 1994).
Total Quality Management (TQM) has been described by one author as a philosophy that
30
involves everyone in the organisation in a continual effort to improve quality and achieve
customer satisfaction. It is also defined as managing the entire organisation so that it excels
on all dimensions of products and services that are important to the customer.”
According to (Talib et al., 2010) TQM is an integrated approach, consisting of principles and
practices, whose goal is to improve the quality of an organisation’s goods and services
through continuously meeting and exceeding customer’s needs in most competitive ways. It
is a total system approach which works horizontally across functions and departments,
involving all employees, top to bottom, and extends backwards and forwards to include the”
supply chain and customer chain. The successful adoption and implementation of TQM
practices requires planning, time and effort and is a long term commitment.
2.11.2 ELEMENTS OF TQM
Goetsch and Davis (2010) describe 10 key elements for the successful implementation of the
TQM approach namely:
1. Strategically based.
TQ organizations have a strategic plan that contains a: vision, mission, objectives and
activities. The strategic plan is designed to give it a sustainable competitive advantage in the
marketplace. A companywide definition of quality along with a strategic plan for change and
a totally holistic approach to handling activities in the organisation are important elements of
TQM.”
2. Customer focus
The customer is the driver internally and externally ,internally the customer is defined by the
quality of the product and externally the customer is defined by the quality of people,
processes and the environment. Quality should be designed into the product with the
customer in mind. Therefore, a company should understand the voice of the customer and
design products according to specifications, with the aim of meeting or exceeding the
customer’s expectations.”
3. Obsession with quality
31
Because the customer is the driver, the organisation becomes obsessed with meeting or
exceeding his expectations thus any product being produced reflects the needs of the
customer. Processes are designed to do the job right the first time.”
4. Scientific approach
Employees are empowered. A Scientific approach is used in structuring work, decision
making and problem solving. By involving employees, management is able to receive inputs
from them as they understand the shortcomings of the system better than anyone else and can
be in a better position to recommend viable solutions.”
5. Long term commitment
Organisations fail if they implement quality after a short time seminar. Quality needs to be
incorporated throughout the entire supply chain, not just the organisation itself; TQ is a
strategic imperative for organisations. Customers are very concerned with the quality of
goods and services they receive.”
6. Teamwork
The best comparative efforts are within departments in the organisation. The Kaizen
philosophy to quality management places emphasis on teamwork and the importance of a
strong morale among the workforce. Quality circles or groups that meet regularly to discuss
quality levels concerning all aspects of a company’s running are being used in organisations
nowadays. Lastly, a strong company is a company that pulls together every step of the way.”
7. Continual process improvement
To improve quality, we must improve the system. The organisation should understand that
quality is a never ending journey and that there is a need for continually looking for new
approaches for improving quality. Suggestions for improvement should be encouraged by
requesting feedback from members of a team.”
8. Education and training
Education and training is needed to improve people continually. Investing in the development
of the company’s employees through skills training is an important way to ensure that they
remain competent in a highly competitive industry.”
32
9. Employee Empowerment
A key element in employee empowerment is that it increases the likelihood of good decision
making and promotes the ownership of decisions. Each worker assumes responsibility for
inspecting his or her own work and takes it upon himself to produce his work at the highest
quality level.”
10. Unity of purpose
To apply TQ there must be a unity of purpose. A systems approach to management which is
inclusive of the extended enterprise that is, all members of the supply chain, is required.
Every activity, process, system and subsystem in the organisation must be integrated
together.
2.11.3 CUSTOMER’S PERCEPTIONS OF QUALITY AND VALUE
This refers to quality according to the perceptions of the customer and reflects the customer’s
expectations about a product or service or the elements that are important to them such as
features, durability, freedom from defects, robustness, or the extent to which the product or
service meets or exceeds the customer’s expectations and performs its intended function(s)
Service elements include competency, courtesy, consistency, credibility, tangibles.
The value package offered to a customer can differentiate a company’s offerings from its
competitors. The benefits of a product or service must exceed the cost of acquiring it.
Therefore it is the total value package that matters most to the customer over and above the
sale of the product. The provision of after sales services such as maintenance plans, warranty
and guarantee, and a returns policy are important from the customer’s perspective. For
instance most vehicles are fitted with standard features such as air cons, airbags and electric
windows however, it is the ability of the organisation to provide these transcendent (extra
elements) that creates value for the customer.
33
2.11.4 SUPPLIER’S ROLE IN IMPLEMENTING QUALITY AND
VALUE
A firm’s competitive advantage can evolve from the relationships between buyers and
suppliers as such the extent to which quality and value can be implemented is determined by
a supplier’s commitment to achieving quality and continuous improvement. For example, in a
transactional relationship, the supplier has little or no concern about the buyer’s wellbeing
and quality will only be as good as required with the supplier having no incentive to improve
quality whereas in a collaborative relationship or alliance both buyer and supplier strive to
achieve greater value together than either could have created individually. Here suppliers are
more likely to invest in research and development and continuous improvement and reduce
costs through value engineering and value analysis when they are involved in long term
relationships.
The supplier’s quality policies, procedures and principles adopted from quality gurus such as
Edward Deming, Juran Crosby and the Japanese Kaizen determine the supplier’s capability to
provide the quality and value package required by the customer.
2.12 RECOMMENDATIONS
In order to successfully work with suppliers, it is important to communicate and set
expectations clearly. Most misunderstandings in business are due to a breakdown in effective
communication therefore it is important to keep the communication lines open. It is
dangerous to assume that a supplier can read your mind or that they understand your
business, a company should explicitly state their requirements in a language the supplier can
understand. Collaboration is key when working with suppliers.
Secondly, a company must learn to share volume forecasts with suppliers. This allows them
to plan ahead of time helping to ensure that they are up to date with the organisations
requirements and do not keep their foot off the pedal.
It is important to document all agreements with suppliers and to put communication in
writing because not every supplier will deliver on their promises. The document must outline
what the supplier expects from the company and what the company expects in return.
34
Moreover, a company should hold suppliers and (itself) accountable. In return for payment,
suppliers are obligated to accept responsibility for their promises and be transparent with the
company when it comes to their business relationship. It is the duty of both parties therefore
to ensure that they perform accordingly and do not violate the contract. The buyer is
responsible for ensuring that the supplier gets paid upon receipt of goods or services and the
duty of the supplier is to provide those goods and services within the time, cost and quality
constraints agreed upon.
Lastly, a company should not put all its eggs in one supplier basket and always have another
supplier on call to pick up where the last one left off if need be. Sometimes things do not
work out as expected and relying on one sole source is risky business. Therefore, if a supplier
is simply not delivering in more ways than one, a company should allocate a percentage of its
purchases to a new supplier and spread the risk.
2.13 CONCLUSION
SRM is increasingly becoming an important concept in today’s supply chain. More and more
companies are realising the importance of managing relationships with key suppliers as it has
become a competitive necessity hence the need to develop suppliers and equip them to
consistently provide superior products and services. Mutual trust and collaboration are
important when dealing with suppliers and regular communication with suppliers is needed to
monitor their progress. Managing relationships with suppliers is important because there are
many ways in which they add value to the organisation. Suppliers are an extended part of the
company and are key to getting the desired supply chain solutions achieved. SRM presents
some challenges of its own such as supplier inefficiencies such as late delivery, poor quality
or defective parts. Companies must be equipped to deal with these challenges and perform a
risk assessment to analyse the supply environment and be able to predict when changes will
occur and their likely impact on the future and present of the company. Successful companies
have been those that quickly anticipate challenges before they happen and put preventative
measures in place to avoid them. The 21st century customer values good quality and value for
their money and SRM is a good way to start measuring a supplier’s performance in order to
achieve customer satisfaction.
35
CHAPTER 3: RESEARCH METHODOLOGY
3.1 Introduction
This chapter introduces and explains the methodology which was used in this research study.
Research is defined as new knowledge which is created or the application of existing
knowledge in a new and creative manner, all in order to create new understandings, concepts
and methodologies (O’Donnell, 2012). The use of research comprises of the analysis and
synthesis of previous information to an extent, such that creative and new outcomes arise
(O’Donnell, 2012).Companies and individuals undertake research for various reasons
including to enrich their knowledge on a particular subject or topic, to investigate problems
and find viable solutions and to make more informed business decisions. In order for good
research to arise, the research topic at hand should be well-read and referenced so that each
source of information supports the other, for reliability of information to be ensured.”
The chapter presents an overview of the research design, research strategies, target
population, research instrument, and questionnaire construction as well as the pilot study. The
sections which will then be reviewed include the administration of questions, data analysis,
validity and reliability, limitations of the research, elimination of bias and ethical
considerations.”
3.2 Research Strategy
Research strategies are the activities that need to be undertaken to ensure there are adequate
resources available to complete the study in the time available and to make sure the approach
to the design of the study is the appropriate one to achieve the study’s objectives. Research
methods can be quantitative, qualitative or mixed (a combination of both) Qualitative
research, which was the approach primarily used in this study is an approach for exploring
and understanding the meaning individuals or groups ascribe to a social or human problem
according to Creswell(2013).”
3.2.1 Positivistic Research Strategy
According to Bradford (2007) surveys are one of the most popular forms of a strategy used
for the positivistic philosophy. Surveys entail the selection of a group of people called the
sample from the entire population of interest. The sample selected must be representative of
the population and chosen with no bias so that the results retrieved from the sample can be
36
inferred onto the population (Bradford, 2007). Surveys are carried out by two methods which
include face-to-face interviews and telephonic interviews or the use of both which all are
facilitated by a questionnaire (Bradford, 2007). Phellas, Bloch and Seale (2011) highlight that
surveys which are of a self-administered nature can be delivered via the post, completed on
the web or completed on e-mail. The two types of surveys that are used are descriptive
surveys, which involve the identification and frequency of particular responses from the
group, and analytical surveys, which are used to analyse the relationship between different
variables in the sample (Bradford, 2007).”
3.2.2 Phenomenological Research Strategies
A case study enables the in-depth study of a particular subject, such as a group of people or
an organisation, involving information of both qualitative and quantitative form, with the
gathering and analysis of information (Bradford, 2007). A case study is used to investigate an
existing event or instance within its real-life context (UIO, 2008). Case studies are sometimes
used to generate theories or can be, explanatory, illustrative, descriptive or experimental
(Bradford, 2007). Autobiography is increasingly being used by researchers to seek patterns
and underlying issues from a small group of the population (Bradford, 2007).”
3.2.3 Combined Research Strategies
As with any divide between two different thought processes and ideas comes the notion that
these two differing ideas can be combined or mixed. Such a case arises with the use of the
combined research strategies of the positivistic and phenomenological philosophies.
According to Nudzor (2009), the use of combined methods works on the premise that in order
to answer complex research questions, a researcher should use all tools and methods at their
disposal instead of allowing any kind of compromise to occur when one specific choice is
made. It therefore becomes apparent that a combined strategy may give the advantage of
answering a research question better than one chosen strategy may.”
3.3 Research Design
The research design is the framework within which the research for a study is collected and
analysed (Monroecollege, 2011). There are three basic types of research designs which can
be used for a study. These research designs include exploratory, descriptive and causal
37
research. In addition to the three basic types of research design, correlational research and
explanatory research can also be identified.
Exploratory research is used in order to gain a better understanding about a given topic or
subject (Monroecollege, 2011). The research aims to form hypotheses which state the relation
between two or more variables to explain a particular situation but does not come up with
final decisions or answers (Monroecollege, 2011). Bradford (2007) states that in exploratory
research, patterns are also identified in the research carried out with these hypotheses and
patterns tested and forming the basis for the study.”
A descriptive study tries to discover answers to the questions who, what, when, where and,
sometimes, how (Cooper and Schindler, 2008). It is utilised to identify and then classify the
characteristics of the subjects in the study (Bradford, 2007).The researcher attempts to
describe, or define, a subject, often by creating a profile of a group of problems, people or
events (Cooper and Schindler, 2008).”
According to Mbaskool (2014) causal research designs are used to test cause-and-effect
relationships. The research aims to determine the changes in the dependent variable with
variations in the independent variable. It also sets out to narrow down the likely relationship
between two variables by eliminating all the causes which are known (Monroecollege,
2011).”
Correlational research is used to determine the relationship among two or more variables
(Education, 2014). Data about all the variables are gathered and then correlational statistical
techniques are applied (Education, 2014). The point of this research is to determine which
variables are connected as well as the positive or negative nature of that connection
(Education-portal, 2014).”
An explanatory study attempts to explain the reasons for the phenomenon that the descriptive
study has only observed (Cooper and Schindler, 2008). Maxwell and Mittapalli (2013) add
that it is used synonymously with experimental research with the inference that only
experiments are able to answer causal questions. The research does not take place until there
is sufficient understanding on the research topic in order to predict what may follow with
some accuracy (Education-portal, 2014). In an explanatory study, the researcher uses
theories, or at least hypotheses, to account for the forces that caused a certain phenomenon to
occur (Cooper and Schindler, 2008).”
38
3.3 Sampling Design
Sampling is defined as the process of selecting a group of people, events, behaviours, or other
elements with which to conduct a study (UMSL, 2000). It involves selecting a group of
individuals that possess some common characteristic defined by the sampling criteria
established by the researcher, from the entire group of people or objects to which the
researcher wishes to generalise the study findings, with the intention of examining them to
gather information and use the findings to make inferences about the population. It is
important that the units in the sample are representative of the entire population (Calder,
2004) furthermore; the sample must have sufficient size to warrant statistical analysis
(Explorable, 2015).”
In statistical terms, the sampling frame is a list of all the elements in the population from
which the sample is drawn (UMSL, 2000) The individual members that make up the
population are known as elements and all the elements combined make up the subject. The
frame is needed so that everyone in the population is identified so they will have an equal
opportunity for selection as a subject (element) UMSL(2000) . Since it may be impossible to
collect information about every member of the population, a sample is done to save time,
money and effort while conducting the research, and is often adequate and easier to obtain.”
According to (Cooper & Schindler, 2008) the following are the steps to be considered in
sampling design:
1. What is the relevant population?
2. What are the parameters of interest?
3. What is the sampling frame?
4. What is the type of sample?
5. What size sample is needed?
6. How much will it cost?
Every researcher must keep in mind that the ideal scenario is to test all the individuals to
obtain reliable, valid and accurate results (Explorable, 2015) If testing all the individuals is
impossible, that is the only time we rely on sampling techniques (Explorable, 2015). A
researcher makes several decisions when designing a sample (Cooper and Schindler, 2008).
39
The one the researcher should select depends on the requirements of the project, its”
objectives, and the funds available (Cooper and Schindler, 2008). The sampling design is the
method chosen to select the sample from the overall population (Calder, 2004). The members
of a sample are selected on a probability basis or by another means. There are two major
types of sampling design: probability and non-probability sampling. Population sampling
must be conducted correctly since errors can lead to inaccurate and misleading data
(Explorable, 2015).
3.3.1 Probability Sampling
In probability sampling, also known as random sampling, each population element has a
known and equal chance of selection (Cooper and Schindler, 2008). This method guarantees
that the selection process is completely randomised and without bias (Explorable, 2015). For
instance, to avoid favouritism (by a sampler) and self-selection (by respondents), statisticians
use chance to select samples (Calder, 2004). The advantage of using probability sampling is
the accuracy of the statistical methods after the experiment. It can also be used to estimate the
population parameters since it is representative of the entire population. It is also a reliable
method to eliminate sampling bias (Explorable, 2015).”
Simple Random Sampling
Simple random sampling, elements are selected at random. A sample of size n consists of n
individuals from the population chosen in such a way that every set of n individuals has a
known and equal chance of being selected as a subject (Calder, 2004).”
One of the best things about simple random sampling is the ease of assembling the sample. It
is also considered as a fair way of selecting a sample from a given population since every
member is given equal opportunities of being selected (Explorable, 2015) thus it offers a high
degree of generalizability of the findings to the whole populations.”
Another key feature of simple random sampling is its representativeness of the population.
Theoretically, the only thing that can compromise its representativeness is luck. If the sample
is not representative of the population, the random variation is called sampling error
(Explorable, 2015).”
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Disadvantages of Simple Random Sampling
One of the most obvious limitations of simple random sampling method is its need of a
complete list of all the members of the population. The list of the population must be
complete and up-to-date. This list is usually not available for large populations. In cases as
such, it is wiser to use other sampling techniques (Explorable, 2015).”
Systematic Sampling
Systematic sampling is a random sampling technique which is frequently chosen by
researchers for its simplicity and its periodic quality (Explorable, 2015) .In systematic
sampling, every kth element in the population is sampled, beginning with a random start of an
element in the range of 1 to k (Cooper and Schindler, 2008) The kth element is determined by
dividing the sample size into the population size to obtain the skip pattern applied to the
sampling frame (Cooper and Schindler, 2008).”
Advantages of Systematic Sampling
The major advantage of using systematic sampling over simple random sampling is its
simplicity and flexibility (Cooper and Schindler, 2008). It allows the researcher to add a
degree of system or process into the random selection of subjects (Explorable, 2015) . With
systematic sampling there is no need to number the entries in a large personnel file before
drawing a sample (Cooper and Schindler, 2008).”
Disadvantage of Systematic Sampling
The process of selection can interact with a hidden periodic trait within the population. If the
sampling technique coincides with the periodicity of the trait, the sampling technique will no
longer be random and representativeness of the sample is compromised (Explorable, 2015).
Another difficulty may arise when there is a monotonic trend in the population elements
(Cooper and Schindler, 2008).
Stratified random sampling is a probability sampling technique wherein the population is
divided into subgroups, called strata, according to some variable or variables in importance to
the study (UMSL, 2000). Variables often used include: age, gender, socio economic status,
religion, nationality, ethnic origin and so on.
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To select a stratified random sample, first divide the population into groups of similar
individuals, called strata. Then choose a separate simple random sample in each stratum and
combine these simple random samples to form the full sample (Calder, 2004). There are two
approaches to stratification: Proportional and disproportional. In Proportional stratification
subgroup sample sizes equal the proportions of the subgroup in the population whereas in
disproportional stratification subgroup sample sizes are not equal to the proportion of the
subgroup in the population.
Cluster sampling is used when it is impossible or impractical to compile a complete list of all
members of the target population (Crossman, 2014). The target population is divided into
clusters and clusters are randomly chosen with each individual in the selected clusters
becoming a part of the sample (Statcan, 2013).”
Advantages of Stratified Random Sampling
Stratified random sampling is used when the researcher wants to highlight a specific
subgroup within the population. This technique is useful in such researches because it ensures
the presence of the key subgroup within the sample (Explorable, 2015).”
Researchers also employ stratified random sampling when they want to observe existing
relationships between two or more subgroups. With a simple random sampling technique, the
researcher is not sure whether the subgroups that he wants to observe are represented equally
or proportionately within the sample (Explorable, 2015).”
3.3.2 Non Probability Sampling
According to Statcan (2013) non-probability sampling is such that elements are chosen
arbitrarily with no way to calculate the probability of any one element being chosen for the
sample or any element having assurance of being included. Crossman (2014) states that nonprobability sampling includes convenience sampling, judgement sampling, snowball
sampling and quota sampling.”
Convenience sampling is a non-probability sampling technique where subjects are selected
because of their convenient accessibility and proximity to the researcher (Explorable, 2015).
For example, interviewing at the mall or on a street corner. Convenience sampling is not
representative of the target population as the sample is only selected as a matter of easy
access and convenience (Statcan, 2013).”
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A non-probability sample that conforms to certain criteria is called purposive sampling
(Cooper and Schindler, 2008). The researcher uses personal judgement to select subjects that
are considered to be representative of the population (UMSL, 2000). An advantage of
judgement sampling is the reduced cost and time used in selecting the sample with a critical
issue being objectivity as this sampling can be subject to the biases of researchers (Statcan,
2013).”
Judgement sampling is used where gathering ‘specialised informed inputs’ on the topic area
researched is vital and using any of the probability sampling design would not offer
opportunities to gain specialised information. This method calls for special efforts to locate
and gain access to individuals who do have the requisite information. An advantage of
judgement sampling is the reduced cost and time used in selecting the sample with a critical
issue being objectivity as this sampling can be subject to the biases of researchers (Statcan,
2013).”
Snowball sampling also known as network sampling, is a non-probability sampling technique
where existing subjects recruit future subjects from among their acquaintances. Thus the
sample group appears to grow like a rolling snowball. This sampling technique is used by
researchers to identify potential subjects in studies where subjects are hard to locate
(Explorable, 2015).”
Ensures certain groups are adequately represented in the study through the assignment of a
quota. Generally, the quota fixed for each sub group is based on the total numbers of each
group in the population. However, since this is a nonprobability sampling design, the results
are not generalisable to the population. In a workplace and society that is increasingly
heterogeneous because of changing demographics, quota sampling can be expected to be
used more frequently in the future.” 3.4 Data Collection
This research was conducted using qualitative techniques. Data collection approaches for
qualitative research usually involve direct interaction with individuals on a one to one basis
or direct interactions with individuals in a group setting. Qualitative research data collection
methods are time consuming, therefore data is usually collected from a smaller sample than
would be the case for quantitative approaches - therefore this makes qualitative research more
expensive. The benefits of the qualitative approach is that the information is richer and has a
deeper insight into the phenomenon under study The main methods for collecting qualitative
data are individual interviews, focus groups, observations, action research.
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3.4.1 Focus Groups
Focus groups can be defined as a group of interacting individuals having some common
interest or characteristics brought together by a moderator who uses the group and its
interaction as a way to get information about a specific or focused issue. The purpose of the
group is to produce qualitative data to provide insights into the attitudes, perceptions and
opinions of participants. Focus groups consist typically of 8-10 members with a moderator
leading the discussion for about 2 hours on a particular topic, concept or product. Members
are generally chosen on the basis of their expertise in the topic on which information is
sought.”
For instance, students studying the research methodology course at UKZN would be in the
best position to give recommendations on how to improve the course by actively
brainstorming ideas in a centralised venue (at the library for instance), in a comfortable
environment with circle seating. Focus groups are aimed at getting impressions,
interpretations, and opinions as the members talk about key issues. The moderator plays a
vital role in steering the discussions in a manner that draws out the information sought and
keeps the members on track. The moderator introduces the topic, observes and takes notes
ensuring that all members participate in the discussion and that no member dominates the
group.”
3.4.2 Survey Methods
Survey methods provide a means of measuring a population’s characteristics, self-reported
and observed behaviour, awareness of programs, attitudes or opinions, and needs.
3.5 Interviews
Interviews are methods used to gather information from individual candidates for the purpose
of conducting a study.
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2.5.1. Personal interviewing
A personal interview survey also called as a face-to face survey is a two-way conversation
initiated by an interviewer to obtain information from a participant (Cooper and Schindler,
2008). They are typically strangers and the interviewer generally controls the topics and
patterns of discussion. Personal interview surveys are used to probe the answers of the
respondents and at the same time, to observe the behaviour of the respondents, either
individually or as a group (Explorable, 2015).”
3.5.2. Telephonic interviews
People selected to be part of the sample are interviewed on the telephone by a trained
interviewer (Cooper and Schindler, 2008). Telephone numbers are utilised by the interviewer
to contact and gather information from respondents. The telephone survey approach is
usually utilized when there is a need to collection information via public opinion polling
(Explorable, 2015).”
3.6. Questionnaires
The primary research instrument which was selected for this study was the questionnaires.
Questionnaires will be appropriate to this study as questions can be formed according to the
research objectives of the study. Questionnaires are generally the most common instrument
for collecting primary data. Phellas et al. (2011) state that there are different delivery methods
for self-administered questionnaires when obtaining data. These include postal, web-based
and electronic mail or e-mail.”
There are many advantages of questionnaires which make them more suitable for the
research. The first advantage comes in the form of cheap costs as costs associated with the
use of questionnaires only come in the form of printing, designing and distribution costs
(Phellas et al., 2011). Any savings in costs that accompany a research project is useful as it
helps to attain the research objectives without too much of expense incurred. A second
advantage of questionnaires is the greater geographical coverage that occurs (Phellas et al,
2011). If wide areas are to be covered for research purposes, this can be done without the
costs of travelling or incurring any further costs (Phellas et al., 2011).”
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3.7 Data Analysis
Data analysis is the process of finding the right data to answer your question, understanding
the processes underlying the data, discovering the important patterns in the data, and then
communicating your results to have the biggest possible impact (Hopkins, 2015). The choice
of statistical analysis programme which will be used to analyse the data for this study will be
Microsoft Excel. Microsoft Excel will be used to format and organise the data in an effective
way and in a consistent format (Uniteforsight, 2013).”
Once the data from the questionnaires are entered, all data will be checked for accuracy.
Descriptive statistics will then be used to describe the data such as the frequency of
responses, the distribution of responses and the range over which all responses occur
(Uniteforsight, 2013). Inferential statistics will also be used to make inferences about the
hypotheses based on the data collected. This allows for inferences to be made about the
population as a whole with patterns found in the target population as well. Tables and graphs
will be prepared from the coded data in order to see the patterns which occur as well as the
relationships between all variables.”
3.6 Reliability and Validity
Reliability measures the extent to which the results of a study can be applied to similar
studies and validity refers to the precision or accuracy of a study.
3.6.1. Reliability
Reliability is thought to be identical to reproducibility, consistency and dependability over
time, over respondents and over instruments (Ayodele, 2012). Explorable (2015) states that in
order for the results of a study to be deemed reliable, other researchers must be able to
perform exactly the same experiment, under the same conditions and generate the same
results. This will reinforce the findings and ensure that the wider scientific community will
accept the hypothesis. The pilot study will be used to ensure the reliability of the
questionnaire with the 5 point Likert scale ensuring further reliability. The use of the Likert
scale made certain that if the questionnaire were to be re-tested on a similar sample under a
similar context, the range of answers would be similar with similar answers being produced,
hence displaying reliability.”
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3.6.2. Validity
Validity determines whether the research truly measures that which it was intended to
measure or how truthful the research results are (Golafshani, 2003). Researchers generally
determine validity by asking a series of questions, and will often look for answers in the
research of others. Validity is defined as the degree to which a test or research instrument
measures that which it was meant to measure or how well the test or research instrument
fulfils its purpose (Ayodele, 2012).”
There are four types of validity that are important in research which include face validity,
content validity, construct validity and criterion-related validity. Face validity pertains to the
subjective assessments of the researchers’ concerning the research instrument’s relevance and
presentation in accordance with the relevance, ambiguousness and clarity of the items on the
instrument (Ayodele, 2012). Content validity refers to the extent to which the instrument
covers all the areas of the research which it was meant to cover (Ayodele, 2012). Construct
validity has to do with how well the constructs of cause and effect represent the real-world
situations which are intended to be modelled on (ChangingMinds, 2014). Criterion-related
validity is the ability of the measure used to predict the criterion which is designated from a
variable (ChangingMinds, 2014). Content validity will be used to ensure the degree to which
the questionnaire measured the variables which it was meant to. To ensure content validity,
the questions in the questionnaire will be extracted from the information that was gathered
during the literature review.”
3.7 Triangulation
Triangulation refers to the use of more than one approach to the investigation of a research
question in order to enhance confidence in the ensuing findings. It involves using multiple
data sources in an investigation to produce understanding. According to Denzin (1970) There
are four forms of triangulation namely: data triangulation, investigation triangulation,
theoretical triangulation and methodical triangulation. Data triangulation- entails gathering
data through several sampling strategies, so that slices of data at different times and social
situations, as well as on a variety of people, are gathered. Investigator triangulation- involves
the use of more than one researcher in the field to gather and interpret data. Theoretical
triangulation-refers to the use of more than one theoretical position in interpreting data.
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Methodical triangulation-refers to the use of more than one method for collecting data. In this
study, Investigator triangulation was the method primarily used.”
3.8 Pilot Studies
A pilot test is conducted to detect weakness in design and instrumentation, and to provide
proxy data for selection of a probability sample ( Cooper and Schindler, 2008). A pilot test is
similar to a ‘trial run’ in that it enables you to assess the validity and reliability of the data
that will be collected. There is no way of knowing whether the questionnaire that has been
prepared by the researcher will succeed therefore, a pilot test refines the questionnaire so the
respondents will have no problem in answering the question and there will be no problem
recording the data. It is important for the researcher to ask an expert to comment on the
representativeness and suitability of the questions and allow suggestions to be made on the
structure of the questionnaire. Furthermore, pilot test with a group as similar as possible to
the group that the researcher is testing. For smaller scale testing questionnaires the researcher
is unlikely to have financial or time resources however, it is still important to pilot test the
questionnaire.”
3.9 Ethical Considerations
Fouka and Mantzorou (2011) state that research ethics entail requirements on daily work, the
protection of the dignity of participants and of the information’s publication in the research.
All ethical considerations must be taken into consideration to avoid any distortion or setbacks
with the research carried out. The ethical considerations that must be taken into account
emphasises the need to both, do good and do no harm (Dissertation, 2012). In order to abide
by these ethical principles means that researchers need to ensure that participants have given
informed consent, ensure that no harm comes to participants, ensure confidentiality and
anonymity as well as ensure that permission is obtained.”
3.10 Conclusion
The research methodology for this study was described in this chapter with the qualitative
method used to ensure reliability and objectivity. The use of questionnaires allow for costeffectiveness and coverage of a wider geographic area in accordance with its distribution. The
administration of the questionnaire as well as its collection and the data analysis was
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discussed with reference given to the reliability and validity of the study, limitations of the
research, elimination of bias and ethical considerations.
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