Article Type : Research Article
Authors : Kannu K, Newton R, Kuruppu C and Karunarathna N
Keywords : Procurement practices; Organizational performance; Hotel industry; Tourism
As a foremost factor of competitive edge,
Procurement practices can be identified as a set of actions undertaken by a
company to guarantee that its supply chain is managed properly, and they are
crucial for maintaining a smooth operation and a healthy bottom line. This
study aims to identify the impact of procurement practices on the hotel
performance enhancement in Sri Lanka. This research examines and develops the
notion of procurement practices such as, Buyer Supplier Relationship, Supplier
selection procedures, Organizational capacity, and Procurement Process
Management. A descriptive survey design was used in the study. The primary data
was collected via a questionnaire from managers in the finance and procurement
departments of 30 hotels around the country. The relationship between
procurement practices and organizational performance was investigated using
analytical tools such as Karl Pearson correlation and multiple regression
analysis in this study with the support of Statistical Package for Social Sciences
(SPSS). Moreover, financial performance was employed to quantify organizational
performance in this study, and financial performance is a crucial component
influenced by procurement procedures in Sri Lanka's hotel business.
Consequently, this research provides a valuable insight for supply chain and
procurement professionals to evaluate the comprehensiveness of their current
procurement techniques in order to gain a competitive advantage.
Tourism is a rapidly
expanding business across the world. Tourism now has a global commercial volume
that equals or even exceeds that of oil exports, food items, and automobiles.
Over the decades, tourism has grown and diversified to be one of the fastest expanding
economic sectors, a significant player in international trade, and one of the
primary sources of revenue for many developing nations [1]. As per the World
Travel and Tourism Council, Travel and tourism precisely supports more
employment than the financial sector, banking, mining, and education sectors,
and contributes significantly much to GDP than both the automobile and
chemicals manufacturing industries in every part of the world. Sri Lanka's
hotel business is a key driver of the country's economic development and a
force that helps the country attract more tourists. There are many necessities
that stand out as priorities to ensure the efficiency and continuity that
visitors expect when they stay at the facility, and the hotel industry has unique
demands that are not common in any other industry. From 2012 to 2017, the hotel
industry in Sri Lanka has been gradually rising, with 2.05 million tourist
arrivals in 2016 and earnings of US$ 3,518 million. The industry grew at a rate
of 14% in 2016, well above the global tourism rate of 3.9% and 10.7% in South
Asia, respectively. This gradual development impacts future investment in the
hotel sector, leading to gradual growth in hotel constructions, new entries,
and facelifts such as rebranding, expansion, and upgrading existing hotels to
higher star grades [2]. After remittances, textiles and garments, tourism is
the economy's third largest export earner, according to the Central Bank of Sri
Lanka. The government of Sri Lanka has prepared a strategy plan for the years
2017-2020, which includes a mission “to be a high-value destination offering
extraordinary experiences that reflect Sri Lankan’s natural and cultural
heritage, are socially inclusive and environmentally responsible, and provide
economic benefits to communities and country.” And The Tourism Strategic Plan
of Sri Lanka is primarily intended to raise revenue for the nation, assist
local people, and expand tourism in a sustainable way [3]. In today's changing
economic climate, a greater emphasis is being placed on providing value to
customers at the lowest feasible cost. Hotels, whether large and small scale,
must focus on how to offer products and services at a reasonable price.
Procurement is an important part of every organization, including hotels.
Procurement has a big impact on hotel performance. Procurement practices are a
series of operations carried out by a company to ensure that the supply chain
is managed effectively, and it also important in assisting the hotel industry
in achieving its goals and preparing for the unpredictable future. Organizing
purchases, assessing the supplier market, and arranging the acquisition of
materials, commodities, and infrastructure are all aspects of procurement.
Moreover, these activities are regulated by the procurement department of a
hotel. This department is responsible for ensuring that a hotel's manufacturing
capacity are consistently supplied to avoid production delays or interruptions.
Procurement, on the other hand, has the potential to add strategic value as it
mainly concerned with efficiency, the elimination of financial and
technological costs, and the preservation of the system's reputation and
competitiveness. However, merely issuing a purchase order for each request does
not signify that price are being cut; in general, it always indicates the
contrary. Continuously surveying what is being used and engaging with people
who purchase those goods allows the business to operate more efficiently and
effectively [4]. Failure to implement procurement procedures successfully may
have a significant negative impact on hotels. In other words, poor procurement
practices almost end in a financial loss. Cost is also an important factor in
consumer services in today's business world. In certain cases, the quality
dimension is changed to save money, and management has strong hopes that the
quality risk will not be identified. And when a company's acquisition
procedures are poor, it makes unnecessary acquisitions. It also means the
company is overpaying for transportation, have no leverage, and have contract
scope issues. For example, Hilton Hotels in United States of America updated
its procurement approach by integrating procurement into national agreements
for its different brands and using local suppliers where it makes financial
sense. Further Hilton Hotels ensures that solid partnerships with suppliers are
established in order to secure good prices, and then negotiates markups with
the distributors who manage warehousing and distribution [5]. In addition, according
to hoteliers Magazine, Suppliers and Hotel operators face numerous problems
within their supply chain and the Magazine itself has conducted a Q&A
session with hotel operators, suppliers, and procurement service providers.
Herman Schumacher, Vice President, Strategic Accounts and Customer Relations at
Avendra LLC was one of their participants and mentioned that the hotels are
frequently time and resource constrained, which can result to price and
convenience has become the most important considerations when making a
transaction or selecting a provider. As a result, they may occasionally find
themselves acquiring products from vendors that are unconcerned about food
safety, quality standards, or ensuring that employees are treated fairly.
Finding genuine vendors who comply with all regulatory laws can be a
time-consuming and difficult task [6]. Studies on procurement practices and how
it affects the performance of Sri Lankan businesses, particularly those in the
service sector and the tourist hotel industry, which is critical to the
country's economy, are not unequivocal. Since the research gap we have found
has not been addressed in the existing literature, this topic of study is novel
for Sri Lanka. Consequently, it is critical to concentrate on procurement
practices in these growing economies to improve organizational performance in
the tourist hotel industry. Therefore, the main purpose of this study is to
identify the impact of procurement practices on organizational performance of
hotel industry in Sri Lanka.
Tourism and hotel industry in Sri Lanka
The tourist industry is difficult to define because there is no single product. It encompasses a wide range of businesses, including hotels, transportation, attractions, travel agencies, and more. Tourism is described in its broadest sense as when individuals travel and stay in areas other than their regular surroundings for less than one year for leisure, business, health, or other purposes. The state of the economy has a significant impact on the hotel sector. In other words, economics and hotel performance are intertwined. Tourism contributes significantly to a country's GDP, and it generates a large portion of the country's foreign exchange profits. In 2019, the direct contribution of travel and tourism to global GDP was estimated to be at 2.9 trillion US dollar [7]. Tourism encourages local governments to upgrade infrastructure such as sanitary sewers, roads, power, telecommunications, and public transportation systems. This improves the locals' quality of life while also facilitating tourism. Furthermore, recent tourism research indicates that some situational and hotel-specific factors have a major impact on hotel success. According to hotel performance studies, increasing revenue and income in the tourist sector, as well as increased foreign currency earnings, helps businesses to create more revenue and income while preserving financial performance [8]. The hotel sector in Sri Lanka is cantered in Colombo, which serves as the country's economic and financial hub as well as a gateway to the rest of the country. Following that is the southern area, where hotel operators take use of Sri Lanka's beach attractions, followed by ancient historic cities of archaeological importance in the country's south. The recently liberated eastern and northern territories can grow and provide more to this industry, as they also hold old archaeological sites and architecture that tourists have yet to witness. Tourist hotels and other institutions licensed by the Sri Lanka Tourism Development Authority, such as boutique villas/hotels, guesthouses, inns, and youth hostels, form the backbone of the industry. In the future, the country might be regarded as a growth hotspot for the tourist sector. With a contribution of 5.1% to GDP. However, in near future, it is expected that this contribution would rise to 6.6%. The scenery and attractions that the nation has to offer are quite diverse. As a result, travellers with a wide range of travel interests will be able to benefit from visiting Sri Lanka. In 2017, the group achieved 2.17 million tourist arrivals, up from 2.05 million the previous year, indicating a 3.1 % increase. However, it's worth noting that the global tourist business grew by about 3.9 % around the same time period, which is likely to have influenced the industry's path [9].
Organizational performance
The measurements for organizational performance are dependent on who is asking the questions and why they need to assess performance, according to, professionals measure and report organizational performance for a variety of reasons, including to justify the proper use of investors' funds, to guide managerial decision-making by highlighting problem areas, to compare the performance of different functions, projects, and people, and to exercise control [10]. As a result, the meaning of organizational performance might shift depending on the context. One of the most straightforward definitions of organizational performance considers the firm's development and survival [11]. According to this definition, a company's performance is effective if it meets its objectives and continues to develop. The flaw with this method is that it neglects to take into consideration the firm's external and internal surroundings [12]. In evaluating the overall performance of an organization, a set of metrics must be used to ensure that all components are monitored and analyzed thoroughly. There is a concerted effort to move toward a broader definition of organizational performance, one that acknowledges and addresses the long-term viability of work processes and results [13]. According to, integrating a formal assessment of strategic planning in its measurement is another essential variable in assessing organizational performance [14]. The efficacy of fulfilling these goals is shown to be enhanced when businesses review their strategic planning utilizing internal and external evaluations with a cascading system of goals, strategies, and plans. The organizational performance is characterized as a measure of how well businesses are run and how much value they provide to customers and other stakeholders [15]. Organizational excellence, on the other hand, is characterized as exceptional leadership and delivery of value to customers and other stakeholders. Organizations can improve their financial, business, and competitive performance by implementing SCM practices, which include increasing production and effectiveness, enhancing product quality, increasing productivity, and lowering costs. As a result, these efficiencies have a direct impact on the firm's economic efficiency, allowing it to seize new business opportunities, raise profit margins, market share, and sales volume [16]. According to, Return on Investment (ROI), profit margin, ROI rise, revenue and market share, profit margin on sales, and overall competitive position have all been used in previous studies to assess organizational efficiency. In this analysis, the same elements are used to evaluate organizational efficiency [17].
Buyer-Supplier relationship
In recent years, there has been a lot of emphasis on the relationship between buyers and suppliers. According to a study conducted by, relationships between buyers and sellers were regarded as adversarial, arm's length transactions [18]. This partnership, on the other hand, is evolving toward a more collaborative approach. This shift assumes that the suppliers are vital sources for obtaining a competitive advantage in global markets. In terms of experience, information, and the ability to share risks. According to the market demands for increased product complexity and variety based on a diverse collection of innovations, as well as response at greater levels of reliability and quality while reducing costs, have shown that some, if any, companies cannot do it all alone. As a result, in order to satisfy their buyers, they must strengthen their core competencies by partnering with other suppliers of complementary competencies. True improvements in efficiency, design, and quality are impossible to achieve unless suppliers collaborate and innovate to the highest feasible degree. As a result, many manufacturers understand that maintaining high levels of confidence and cooperation with their suppliers is essential to their ability to become world-class competitors. Companies must look in to their suppliers to help them achieve a stronger competitive position as higher performance standards are expected in each market setting [19]. The buyer–supplier relationship allows both parties to benefit from each other, but the implicit nature of that relationship can be complicated and difficult to manage. Both the customer and the supplier may establish mutual confidence and make significant progress in pursuing the potential for mutual benefit by knowing and fulfilling the expectations of the other side. Both sides may establish trust while preserving a reputation as ethical and dedicated partners by communicating shared expectations, keeping promises, and working together. According to research conducted in Turkey, knowledge exchange, strategic partnership, connectivity, information flows accuracy, and trust are considered as the five dimensions of the buyer-supplier relationship [20]. Hotels look for opportunities to establish long-term partnerships with suppliers and raise sales by partnering with travel agents and contract firms, and the hotels can develop to comply with their expectations through the firm's service vision and service-standards [21]. Adapting consumer needs, increased standards of pricing and efficiency, and an intensely competitive climate are all possible service factors impacting hoteliers. Hotels compete fiercely, and to win, they must strive to maintain product and service consistency while also being innovative in preserving the strategic Buyer-Supplier Relationship.
Supplier selection procedure
The process of identifying, evaluating, and contracting with suppliers is known as supplier selection. The supplier selection process consumes a significant amount of a company's financial resources and is critical to the organization's performance. The primary goal of the supplier selection process is to lower purchasing risk, increase total value for the buyer, and foster intimacy and long-term relationships between buyers and suppliers [22]. One of the most important decisions that the procurement department of any manufacturing company must make is the selection of a suitable supplier. The supplier selection process has received considerable attention in the business management literature. One of the strategic operating methods is supply strategies. Furthermore, as more companies implement Total Quality Management (TQM) and Just-In-Time (JIT) principles, the issue of supply selection has become increasingly relevant. While managers believe that quality is the most important attribute for a supplier, the findings of suggested that they select suppliers mainly based on cost and delivery efficiency [23]. A company's purchasing activities play a critical role in its day- to-day operations. The performance of suppliers has a significant impact on the quality of manufacturing and services. Furthermore, the purchase cost of the product's materials accounts for a significant portion of the entire cost. As a result, choosing the best suppliers is critical for the company. Unfortunately, most of the time, suppliers are unable to deliver high quality components on time and at the lowest possible price. In other words, quality, delivery, and cost objectives are incompatible. The supplier selection problem is essentially the question of "who to purchase from and how much to buy." A good selection procedure may save a lot of money and provide better control over the resources. According to researchers, the buying department's most essential duty is to choose supply sources, because a poor choice can have a major impact on the company's performance [24]. Supplier selection is a crucial strategic choice in the service supply chain that has a direct impact on customer satisfaction. The goal of the supplier selection is to find the best suppliers for certain products or services. Because some qualitative and quantitative elements are critical in the selection process, the decision maker must first identify the appropriate factors. According to the research conducted by the environmental issues are increasingly becoming a significant concern for company and management. Integrating a company's environmental strategy to the buying function's practices may be a potentially successful way of handling it. Distributing environmental sustainability strategies across the supply chain can be an efficient way to enhance an industry's environmental efficiency. As the supply base decreases, manufacturers must find ways to set themselves apart from their rivals. A supplier's ability to compete in the industry can be enhanced by implementing an environmental protection policy. Furthermore, outlined a set of environmental requirements that a business should follow when choosing a supplier. Environmental standards are divided into two categories: quantitative environmental criteria and qualitative environmental criteria and in the long run, companies can improve their competitive position by incorporating environmental factors into the supplier selection process.
Organizational capacity
Organizational capacity refers to the resources, expertise, and procedures that an organization employs to achieve its objectives and meet stakeholder expectations, and it sets the “boundaries of its effective action” [25-27]. According to, Organizational capabilities are defined as the aggregation, coordination, and deployment of organizational competencies that are focused on the organization's strategic goals [28]. The capability profile of an organization is made up of the characteristics that it possesses. These characteristics are dormant until they are activated. Capacity is thus relevant in terms of whether it is used or not. Knowledge, skill, and ability, all of which are linked to the human dimension of performance, are critical among the basic components of organizational capacity. The capacity of a company to integrate its human resources and associated skills to create a dependable, effective, and valuable product that reacts in a timely manner to consumers' present or projected demands is what ultimately separates it from its competitors. Building organizational capacity decreases the unpredictability of external demands by expanding the organization's repertoire of viable responses by repurposing resources and creating synergies [29]. Organizational capacity is frequently considered as the result of purposeful and innovative procedures that businesses develop to grow and get a competitive advantage over competitors in the marketplace [30,31]. Effective organizations are those that have a diverse set of capacity qualities and employ or deploy that ability to achieve their goals. The different information systems, such as Point of Sale, are now combined to help predict data, track inventory levels, and sales patterns, and as a result, retailers have seen reduced turnaround times, faster order filling, inventory at the right safety stock level, and improved customer experience [32]. Therefore, organizational capacity implies a company's ability to provide services and goods that not only meet current consumer expectations but also foresee future market prospects [33].
Procurement process management
Procurement is a process
or operation for acquiring products and services. Procurement, which is
distinct from buying, includes tasks such as defining fundamental requirements,
sourcing activities such as market analysis, vendor assessment, and contract
negotiation. Risk evaluation, finding and evaluating alternative solutions,
contract awarding, supply of and reimbursement for products and services, and,
where applicable, continuing contract management and concern over processing of
goods are all part of procurement process. The main objective of procurement is
to purchase the right good or service from the appropriate suppliers, at the
appropriate sites, in the appropriate quantity or quality of service, and at
the appropriate time. The procurement process starts the supply chain and lays
the groundwork for the other procedures of production and distribution.
Production is dependent on the timely supply of high-quality materials in order
to manufacture the right quantities of products for distribution to different
locations for consumption. Procurement has long been considered as a weak
function of an organization. It's a well-known statistic that the procurement
process absorbs roughly 60% of the cost of items supplied, so there's a lot of
room for cost savings here. If properly managed, this process can lead to an
organization's success. The procurement methods used by both chain and
non-chain hotels in Thailand. Organizing purchases, surveying the supply
market, arranging the purchase of products, products, and equipment, assessing
the optimal quantities of goods available, placing orders, overseeing order
execution, shipping, and receiving materials, goods, and equipment, and
performing qualitative and quantitative controls are all part of procurement.
The key aim is to provide a hotel with the required goods, products, and food
and beverage supplies in the right amount, on schedule, and at the lowest
possible cost. Understanding the experience of corporate partners and
developing strong relationships with them from the front line to the executive
level are all important aspects of using a proper procurement system. Firms can
minimize adviser expenses and ensure that realistic budgets are adhered to by
improving performance of procurement professionals. The failure to monitor and
enforce quality standards can be linked directly to issues in human resources
capacity to monitor procurement processes, poor dedication of specifications,
weak definition of requirements, and/or insufficient budgets, and failure to
enforce contract conditions is due to poor supervision from within the private
sector as well. Due to the lack of resources, regulatory bodies rarely succeed
in enforcing rules [34]. Providing potential suppliers and contractors with
clear and consistent information increases the transparency of procurement
process [35]. When it comes to procedures, this includes training staff on how
to carry out operations, establishing guidelines, and illustrating how the
procurement process should function in order to achieve strategic objectives.
Standard procurement processes are required by organizations, and they must
include all parts of the procurement cycle, including supplier selection,
contract negotiations, order placement, and payment [36]. Procurement plays a
critical role in most businesses, may help them achieve sustainability and
long-term performance goals by focusing on value addition in the procurement
process [37]. The usage of manual processes has resulted in various
inefficiencies in procurement procedures' operation and regulation [38].
Organizations must adopt information technology solutions to solve today's
operational problems, lowering operating costs via advanced services to
suppliers and other stakeholders. The hotel industry needs to use information
technology to ensure that the procurement system runs smoothly. Hotels could
use information technology to find and learn about the best products,
expediting the process. A study aimed to examine the current procedure,
effectiveness, and quality of procurement processes used in Malaysian hotels
[39]. Through the study the authors have highlighted that analyzing the
sourcing practices and developing appropriate plans will aid hospitality
companies to cut expenses, maximize performance, and, most notably, improve
their bottom line.
Conceptual framework
The independent variables in this analysis are buyer supplier relationships, supplier selection procedures, organizational capacity, and procurement process management, while the dependent variable is the organizational efficiency (Figure 1).
Figure 1: Conceptual framework.
Hypothesis of the study
This study aims to identify the impact of procurement practices on the hotel performance in Sri Lanka. Following hypotheses were developed and tested to accomplish that intention.
Ha1:
There is a significant impact of Procurement Practices on the hotel performance
enhancement.
Ha2:
There is a significant impact of Buyer Supplier relationship on the hotel
performance enhancement.
Ha3:
There is a significant impact of Supplier Selection Procedure on the hotel performance
enhancement.
Ha4:
There is a significant impact of Organizational Capacity on the hotel
performance enhancement.
Ha5: There is a significant impact of Procurement Process Management on the hotel performance enhancement.
Research approach
Deductive research strategy has been used in this study since the research hypotheses were developed based on an existing theory.
Table 1: Descriptive Statistics.
Variables |
Mean |
Median |
Std. |
Buyer supplier relationship |
3.6389 |
4.0000 |
.81894 |
Supplier selection procedure |
3.5944 |
3.8333 |
.83009 |
Organizational capacity |
3.3444 |
3.4167 |
.81876 |
Procurement process
management |
3.5000 |
3.5833 |
.77805 |
Organizational performance |
3.5667 |
3.8333 |
.75886 |
Table 2: Correlation Matrix.
Correlations |
||||||
|
|
BSR |
SSP |
OC |
PPM |
OP |
Buyer supplier relationship |
Pearson Correlation |
1 |
.952** |
.616** |
.819** |
.949** |
|
Sig. (2-tailed) |
|
.000 |
.000 |
.000 |
.000 |
|
N |
30 |
30 |
30 |
30 |
30 |
Supplier selection procedure |
Pearson Correlation |
.952** |
1 |
.735** |
.911** |
.958** |
|
Sig. (2-tailed) |
.000 |
|
.000 |
.000 |
.000 |
|
N |
30 |
30 |
30 |
30 |
30 |
Organizational capacity |
Pearson Correlation |
.616** |
.735** |
1 |
.874** |
.751** |
|
Sig. (2-tailed) |
.000 |
.000 |
|
.000 |
.000 |
|
N |
30 |
30 |
30 |
30 |
30 |
Procurement process management |
Pearson Correlation |
.819** |
.911** |
.874** |
1 |
.915** |
Sig. (2-tailed) |
.000 |
.000 |
.000 |
|
.000 |
|
|
N |
30 |
30 |
30 |
30 |
30 |
Organizational performance |
Pearson Correlation |
.949** |
.958** |
.751** |
.915** |
1 |
|
Sig. (2-tailed) |
.000 |
.000 |
.000 |
.000 |
|
|
N |
30 |
30 |
30 |
30 |
30 |
Table 3: Model summary.
Model Summary |
||||
Model |
R |
R Square |
Adjusted R Square |
Std. Error of the Estimate |
1 |
.979a |
.959 |
.953 |
.16477 |
Dependent variable: Organizational performance |
|
|||
Source: Authors’ compilation based on SPSS outcome |
|
Table 4: ANOVA.
ANOVAa |
||||||
Model |
Sum of
squares |
df |
Mean Square |
F |
sig |
|
1 |
Regression |
16.021 |
4 |
4.005 |
147.539 |
0.000 |
|
Residual |
0.679 |
25 |
.027 |
|
|
|
Total |
16.700 |
29 |
|
|
|
Table 5: Coefficient.
Model |
Unstandardized Coefficients |
|
Standardize d Coefficients |
t |
Sig. |
|
|
B |
Std. Error |
Beta |
|
|
|
BSR |
.880 |
|
.055 |
.949 |
16.0 04 |
.000 |
SSP |
.876 |
|
.049 |
.958 |
17.7 41 |
.000 |
OC |
.696 |
|
.116 |
.751 |
6.02 0 |
.000 |
PPM |
.892 |
|
.074 |
.915 |
11.9 99 |
.000 |
Table 6: Status of Hypotheses.
Hypothesis |
Results |
H1 - There
is a significant impact of Procurement Practices on Organizational Performance of
Hotel Industry in Sri Lanka. |
Accepted |
H2 - There
is a significant impact of Buyer Supplier Relationship to the
Organizational Performance of Hotel Industry in Sri Lanka. |
Accepted |
H3 - There
is a significant impact of Supplier
Selection Procedure to the Organizational Performance of Hotel Industry
in Sri Lanka. |
Accepted |
H4 - There
is a significant impact of Organizational Capacity to the Organizational Performance of Hotel Industry
in Sri Lanka. |
Accepted |
H5 - There
is a significant impact of Procurement Process
Management to the
Organizational Performance of Hotel Industry in Sri Lanka. |
Accepted |
Research population and sample
According, at the end of
the year 2019, the total number of establishments in the registered listed
accommodation at SLTDA amounted to 2619 [40,41]. The total capacity consisted
of 474 tourist hotels. 38 - one-star hotels, 41 - two-star hotels, 26 -
three-star hotels, 24 -four-star hotels, 25 - five-star hotels, 81 - small
luxury hotels, and 239 unclassified hotels are among the 474 tourist hotels in
Sri Lanka. The sample size for this study is limited to 75 three and above star
hotels in Sri Lanka. A sample is a section of the population chosen for
research and cluster sampling method has been selected to choose sample size.
Due to the prevailing COVID-19 situation some hotels are temporarily closed and
it’s impossible to approach each hotel in the sample as previously indicated
for the goal of data gathering. The sample size of our research consists of 30
hotels in Sri Lanka from 25 districts which were registered under SLTDA.
In this quantitative
research, primary and secondary data were used to collect the data. The primary
data collection method of this study is an online web-based survey
questionnaire which includes 5-point Likert scale statements. An online
web-based questionnaire is a set of pre-formulated questions to which
respondents, such as hotel managers, record their responses. Secondary data for
this study collected through the computer-based searches on academic databases
and the relevant books, journals, conference papers and reports were reviewed
thoroughly. Survey questionnaire is made up of 35 closed-ended questions which
have been prepared based on the findings of literature review. Five of the 35
closed-ended questions were designed to capture respondents' organizational and
demographic information, while the other 30 questions were focused on the
research problems and objectives. The pilot study was carried out to test the
questionnaire's reliability, and several hotels from throughout the island were
asked to fill out and submit a questionnaire in order to acquire quantitative
data for the pilot project.
The Statistical Package
for the Social Sciences has been used to analyze the primary data acquired
through online web-based questionnaires (SPSS). To conduct relevant analysis,
statistical approaches such as Pearson Correlation and Regression were applied.
Descriptive Statistics
The descriptive
statistical approach was used to assess the variable of this study (Table 2).
The mean values of the buyer-supplier relationship variable, Supplier selection procedure variable, Organizational capacity, Procurement process management variable and Organizational Performance variable are 3.6, 3.6, 3.3, 3.5 & 3.6 respectively. It implies that the most respondents have agreed to the given statements.
Correlation analysis
A correlation analysis is
used to determine the relationship between the independent variables and the
dependent variable. While the strength of the relationship is weaker when the
correlation coefficient is less than 0.3, the relationship is moderate when the
values are between 0.3 and 0.7. The relationship is deemed strong when the
correlation coefficient is greater than 0.7 (Table 3).
As per Table 3, the r value of 0.949 indicates that there is a strong positive relationship between the buyer-supplier relationships and organizational performance. Also, because the p value is 0.000, which is less than 0.05, this association is statistically significant. Similarly other independent variable such as Supplier selection procedure, Organizational capacity, and Procurement process management have a positive relationship with Organizational performance and their r values are 0.958, 0.751, and 0.915 respectively. Meanwhile the p values are 0.000 (less than 0.05). Therefore, these independent variables are statistically significant with the dependent variable.
Regression analysis
The impact of independent
variables on the dependent variable was investigated using the multiple
regression analysis (Table 4).
R square value is 0.959
which represents that the 95.9% of the variance in the dependent variable
(organizational performance) explained by the independent variables of
buyer-supplier relationship, supplier selection procedures, organizational
capacity, and procurement process management (Table 5).
The above Table 5
determines whether the predictor variables of the study account for significant
variance in the outcome variable (dependent variable). Accordingly, the
significant value is less than 0.05 and it demonstrate that there is a
significant variance between predictors of buyer- supplier relationship,
supplier selection procedures, organizational capacity, and procurement process
management and the dependent variable (Organizational Performance) (Table 6).
According to Table 6, the beta value of the buyer-supplier relationship variable is 0.880 which represents a significant impact on the dependent variable (organizational performance). The significance level (P-value) of buyer-supplier relationship is 0.000 that is within the accepted level of 0.05. According to the regression coefficients model, an increase in one unit change of buyer supplier relationship (BSR) variable will result in a change of 0.880 increase in organizational performance. Similarly other independent variable such as Supplier selection procedure (SSR), Organizational capacity (OC), and Procurement process management (PPM) has a significant impact on the Organizational performance and an increase in one unit will increase 0.876, 0.696, and 0.892 in Organizational performance respectively. Meanwhile the significance is same which 0.000 is (less than 0.05). Therefore, the study rejects all the null hypothesis, which stated that the independent variables do not have a significant impact on organizational performance. As a result of the analysis, it can be identified that the Buyer-Supplier Relationship, Supplier Selection Procedure, Organizational Capacity, and Procurement Process Management all have a significant impact on the hotel performance enhancements.
Hypotheses testing
The researchers in this
study formulated and tested five hypotheses, as shown in Table 7. As per the
results of above tests, all five hypotheses were accepted (Table 7).
The findings of this
study revealed that Buyer supplier relationship, Supplier selection procedure,
Organizational capacity and Procurement process management have a significant
positive impact on the hotel performance in Sri Lanka. As per the study’s
results, the hypotheses have been accepted. In addition, this study's findings
were aligned with the findings of the previous research conducted, which
scrutinized the effects of procurement practices on the performance of
commercial state owned enterprises in Nairobi County [42]. According to the
results, hotels’ organizational performances highly depend on the good
procurement practices. Although buyer supplier relationship between hotels and
their suppliers are more important, but some of them have stated that they do
not have such relationships. It's quick to overlook vendors as nothing more than
a required middleman between the firm and the goods and services which the firm
is purchasing. The perspective of buyer- supplier hotels are looking for
opportunities to establish long-term partnerships and raise sales by partnering
with travel agents and contract firms, and the hotels can develop to comply
with their expectations through the firm's service vision and service- standard
interaction. Adapting consumer needs, increased standards of pricing and
efficiency, and an intensely competitive environment are all possible service
factors impacting hoteliers. However, while cost reduction will always be a
primary concern for procurement, procurement professionals may add value to the
process by focusing on value. The supplier selection process consumes a significant
amount of a company's financial resources, and it is critical to the
organization's performance. The primary goal of the supplier selection process
is to lower purchasing risk, increase total value for the buyer, and foster
intimacy and long- term relationships between buyers and suppliers.
Furthermore, as the hotel industry develops, the numerous operations will
continue to change. Human resource development has become a priority because
employees' expertise and skills are the most valuable assets in service
organizations, especially in the hospitality industry [43]. The firm should
understand their capacity before planning on purchasing and the effective
handling of the procurement process management is critical. It is important for
each company to maintain a professional and operational procurement role in
order to minimize operating costs and remain updated on business trends in
order to purchase products and services at the real price, value, and time
[44].
The hotel industry in Sri
Lanka is a core driver of the island nation's economic development and it is
also a force that helps to attract more tourism to the region. Procurement
plays a crucial part in the hotel industry by assisting to achieve its goals and
preparing for the unpredictable future. According to the findings, most hotels
use a variety of procurement techniques in their operations. Relationships
between buyers and suppliers, supplier selection procedure, organizational
capacities, and procurement process management have all helped those businesses
improve their performance. This was backed up by the findings of a regression
study, which revealed a substantial link between procurement practices and
organizational performance. Based on the findings, the research advises the
hotel industry and tourist authorities to implement essential changes in order
to improve the tourism business in Sri Lanka. Furthermore, the research opens
the possibility of several future investigations. Since this study only focused
on a limited number of hotels in Sri Lanka, future researchers can investigate
the entire tourist industry, which includes hospitality, transportation, travel
facilitation, entertainment, and other businesses.