CHAPTER ONE

1.0 Introduction

Sustainable procurement has become an important issue for public and private sectors seeking to
appropriate sustainable development. Many studies covers that sustainable procurement practices
can influence markets, save money, achieve financial viability, increase the competitiveness of
the industries, protect natural resources, and foster job creation, which will contribute sustainable
development. The strategic role of purchasing and supplying as a device for sustainable
development has been strengthened recently. In generally, environmental and social issues are
increasingly becoming important in managing any business due to the increasing awareness of
society and political leaders. These movements have contributed to sustainable procurement
practices, which are considered an important aspect of corporate management that can empower
organizations to advance their stated goals.

This chapter covers the background information about sustainable procurement and
organizational performance. It also looks into the problem statement, general and specific
objective of the study, research question, and justification, scope of the study and limitation of
the study.

1.1 Background of the study

Sustainable procurement is the adopting and integrating of corporate social responsibility

principles into your procurement processes and decisions while also ensuring, they meet the
requirements of your company and its stakeholders.

Sustainable Procurement is the process integrates requirements, specifications and criteria that
are compatible with the protection of the environment and the society.

Commitment in sustainable procurement ensures values which are core to the business activities
through the company’s supply chain into the life cycle of the company’s product and services.

. Best practice would be future proof of the company’s sustainable procurement and investments
with sustainable policies in order to increase the viability for the long term.

Policies and strategies for sustainable procurement involves by companies which are based on
the need to future proof themselves primarily around scarcity in supply and ability to cope with

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that demand of developing markets, pressures brought upon by cost and ability to reduce this
through reductions in energy consumption and waste reduction. Also the need to protect brand
reputation, taking sustainability in procurement seriously demands risk management and
addressing of weakness areas that could bring about scandals and bad publicity. Finally,
differentiation of their brand with the view of procuring sustainably for creation of opportunities
that entail developing services and products that are more innovative and sustainable that are also
relevant to their markets and customers.

As consequently, globally has been growing in recent years, as corporate and government
organization’s interest in sustainable procurement, ethical procurement, green procurement, lean
practices, and e-procurement. Universities and institutions has been exploring how the
organizations and their suppliers effect the environment, society and the economy. Although this
act increasing interests, it is an evidence the organizational performance in implementing
sustainable procurement practices is still absent.

Also, the impacts of sustainable procurement practices on organizational performance have not
been widely explored, especially in Somalia. So that, the expand of research in the of sustainable
procurement is better. The remains significant research gaps highlighted above and need to be
addressed. There have been no / little research studies on the impacts of sustainable procurement
practices on organizational performance in Somalia. This study investigates the relationship
between sustainable procurement practices and organizational performance in Somalia. As
taking the above, the problem statement and research objectives for this study are presented
below.

1.2 The problem statement

Sustainable Procurement in Somalia has not been implemented in the sense that there are major
challenges that have bedeviled the procurement practice in Somalia. Amongst of those
companies in Somalia have; no policy document to provide guidelines which spells out criteria to
the implementation of sustainable procurement practice. Public Entities procure without taking
into consideration the effect of sustainability in the procurement process, Suppliers and
Contractors are not abreast with the evolving trends of sustainable procurement and are not
conscientise about the sustainability and Procurement staff not aware of the sustainable
procurement practices. Procurement Entities do not think sustainably during the procurement

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process. The highlight of the problem being studied is to assess the effect of sustainable
procurement practices on organizational performance of Jubba restaurant.

1.3 Objectives of the study

1.3.1 General Objective

The general objective of this study was to investigate the impact of sustainable procurement
practices on organizational performance of the food industry.

1.3.2 Specific Objectives

The specific objectives of this study were;

To explore the extent in which Jubba restaurant has adopted procurement practices.

To find out the relationship between procurement practices and organizational performance in
the Jubba restaurant.

To investigate the challenges faced in the adoption of procurement practices at Jubba restaurant.

1.4 Research question

What will the adopted procurement practices extent in the Jubba restaurant?

How will the challenges faced adopted the procurement practices in the Jubba restaurant?

How is the relation between procurement practices and organizational performance in the Jubba
restaurant?

1.5 The scope of the study

This study focus on sustainable procurement practices on organizational performance of Jubba

restaurant.

1.6 significance of the study

The research project report of this study contributing widely to Jubba restaurant the stakeholders
understanding the important of procurement practices and also helps them to scale down wastage
in the procurement process.

1.7 Limitation of the study

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The researcher was not able to find out the relevant information due to inadequacy of time visit
all department offices asking questions since many of the staffs are in their respective working
departmental offices.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter revises the different literatures written in the areas of the relationship between
sustainable procurement practices and organizational performance and also highlights on the
effect of sustainable procurement practices on organizational performance, as well as importance
and benefits of sustainable procurement and finally summary and conclusion of the chapter.

2.1 concept and meaning of sustainable procurement

As broader concerns to enhance sustainable development, sustainable procurement recently

acquired a high degree of policy circles internationally (Brammer, S. and Walker, H.; 2011).
Sustainable procurement was delivered from the traditional procurement practice which obtains
to extend through the adoption of sustainability principles. Procurement is the process of
acquisition for goods, works and/or services from the supplier (this may be an individual or
organization). The procurement process involves the process for needs identification and
assessment, supplier selection contract, monitoring and evaluation that based on the model
definition by Van weel (2002). Sustainable Procurement is a process of purchasing goods, works
and services from a supplier that provides the minimum combination of whole life costs and
benefits to meet the customer’s needs. It is also the process where organizations hold their needs
for goods, services, works and utilities in a way that obtains value for money on a whole life
basis in terms of seeking benefits not only to the organization, but also to society and the
economy, while optimization damage to the environment.

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Sustainable procurement is about the way of purchasing goods and services takes in place the
social economic and environmental impact on people and communities. It is about concerns what
the products are made of, where they have come from, who has made them, how they are
transported and how they are eventually disposed. (Sustainable Procurement Policy)).
Sustainable procurement means that value takes in place economical, environmental and social
impacts in buying choices. This includes not only fixed price, quality, availability, but also
environmental life-cycle impact and social impacts linked to product/service’s origin (PWC;
2010).

2.2 The importance of sustainable procurement

In both private and public sector there is increasing pressure from customers, clients, and
government to access sustainable procurement into practices.

In 2002, the world suggested the authorities should promote on sustainable development at all on
public procurement policies that improve development and diffusion of environmentally goods
and services. In response to this, Business Operators and Professionals have developed to
institute policies and strategies through sustainable development. For instance the UK Strategy
of Sustainable Consumption and Production. As a step through implementing this strategy, the
Government established the Advisory Committee on Consumer Products and the Environment.
A Europe –widely study published in August 2009 found out that 80 percent of buyers stared
sustainable procurement programs in 2008, while 90 percent see them as “critical” to the survival
of their business (web news, 19 August 2009).

Companies practicing sustainable procurement hold their needs for goods, services, utilities and
works that cause to reduce costs and minimize net benefits for themselves and the wider world.
In the active doing they must operate extrinsic cost considerations into decisions along term the
conventional procurement criteria of price and quality. These considerations are typically divided
by into three main groups: Environmental, Economic and Social (also known as triple bottom
line). The important areas of environmental concerns more efficient use of raw materials in
manufacturing operations, pollution and waste, and energy savings.

2.3 Sustainable procurement: potential benefits

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A review of existing literature can reveal that if implemented effectively, sustainable
procurement has benefits to reduce costs, cut timescales, achieve stakeholder relationships,
maximize sales, minimize risks, enhance reputation and develop margins. Kennard M. (2006)
indicates that potentials to an organization in adopting a Sustainable Procurement Policy will be
to:

 monitoring costs by adopting a wider approach to whole life costing

 develop internal and external standards through performance assessments.
 simply with environmental and social legislation
 control risk and reputation
 manage a sustainable supply chain for the future
 improve the local business community
 A list of potential benefits sustainable procurement practices that possible for an
organization adopted in practices and its operations include;
 A well-defined of procurement strategy and the value outcomes - the improved social,
environmental and economic impacts
 Argument with national and international sustainability standards and regulations
 well understanding of risks in the supply chain
 To contribute to the sustainable organizational strategy
 Well commercial and economic decisions from understanding of issues that impact on the
procurement decision (whole life cycle)
 Potential benefits in a long term relationship, innovation, good materials, alternatives,
technical advice, emerging technologies
 good quality of purchasing staff with more satisfying goals and improved performance
 Education of suppliers
 Much more proactive internal and challenge with demand side
 More effective evaluation of proposals and bids
 More ‘sustainable’ source of supply

2.4.1 Local Buying

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 As listed by Giovannucci, Daniele, Elizabeth Barham and Richard Pirog (2014), locally
shopping is a strategy where the firm operates into its primary processing products or services
which are acquired from the geographical near proximity. Although the actual proximity needs
may differ, Giovannucci et al., (2014). In additional, the firm should engage the supplies who
can easily achievable in the local geographical area. The local manufacture products have a
number of ecological advantages include decreased carbon footprints, a lower need for
conservatives that extend the shelf life and lower packaging. (Local Living Economies Business
Alliance 2016; Shuman 2012). Individual actors, technologies and local practices are involved in
the micro-level (niche level) (Loorbach, 2016).

Walton et al., (2015) the actors in better sustainability plays role include employee, customers
and the community should be in place such as local buying and social aspect. Leaders of
organisations, especially home where they work progressively anticipated to ensure that their
organizations act as' excellent corporate citizens' (Brammer, 2012). Delmas and Pekovic (2013)
have listed some proof significantly indicates that local buying can achieve organizational
performance based on the cutting of lead time, understanding good supplier-buying, less
inventory for efficiency and non-cultural differences. In the local buying strategy creates a sense
of belong by the key community that can improve operational activities of an organization until
organization operates on a definite location (Delmas & Pekovic’s 2013).

The elements of sustainability procurement environmentally tend to effect the use of funds in the
fields, (Hussein and Shale 2014). Only green procurement in entire life cycle of products which
from acquisition to disposal that can reach environmental consideration in the procurement
process. The local purchase of raw materials enables guarantee that goods are recyclable, power
consuming, biodegradable and non-ozone depleting substances to boost corporate efficiency
(Hussein & Shale 2014).

2.4.2 Eco-friendly Packaging

Packaging in the supply chain not only an important role in protecting products and enabling
effective logistics but also it is crucial marketing function (Rundh 2015). Eight framework has
highlighted of sustainable packaging by the sustainable Packaging Coalition in 2015 that has to
be use of recycled resources and produced by using clean protection techniques and best
practices that produce good material throughout the life cycle. During the whole life cycle in

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physically, healthy to people and groups will be important fulfils efficiency and cost market
requirements. On the other hand, Boks and Stevels (2016) have stated that the eco-friendly
packaging occurs into three main categories government, science and consumers, for instant
environmental-friendly packaging can be evaluated in that area. Government ecological
efficiency is mentioned to legal demands such as how materials should be recycled or disposed.
Scientific green usually takes a view on life cycle assessment and determines the impact of
products over the life cycle of the product. Finally, the consumer category deals with consumers’
perceptions of eco-friendliness and consumers’ responses to packaging (Boks & Stevels, 2016).

The determinants of consumer demand to buy ecologically packaged goods have been
discovered by Schwepker and Cornwell (2014). SchwePker and Cornwell (2014) proposed that
customers are increasingly prepared to act modifications in their packaging usage, while
considering the demands of the ecologically packaged products by considering a significant
number of components. Schwepker and Cornwell (2014) have demonstrated that the internal
monitoring environment, the problem of perception of pollution, the litter attitude and the
ecologically aware living environment were important many the discriminatory factors.
Thøgersen's research (2014) showed that ecofriendly communication should be possible to be
effective and therefore meet certain requirements. Generally speaking, the possibility of marks
issued by autonomous regulatory authorities appears to be improved (Parguel, 2014). With
regard to the reflection of ecologic perception, ecological packaging has several impacts on the
attitudes and behavior of customers in favor of a product or brand (Thorndike, 2014). For
instance, Walsink (2016) has taken a 4Rs (reduction, reuse, recycling, re-thinking) campaign
aimed at optimizing the sustainability of packaging and focusing on improvements in packaging
that could reduce materials, increase recycled content and increase the volume of renewable
materials involved in the manufacturing of packaging. Same initiatives have been put in place by
Coca-Cola Company to enable their packaging to be recovered and reuse by developing Plant-
Bottle Packaging to promote recycling and to carry out projects to reduce the quantity of the stuff
used in their packages (Rokka & Uusitalo 2015).

2.4.3 Reverse Logistics

In recent decades, the environmental influence of goods has become a significant concern
(Gurtoo & Antony, 2015). With governments increasing their environmental standards and

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clients becoming increasingly aware of the environment, industry needs to minimize the effect of
their products on the environment. Companies have tried and participated in the supplier chain
(SC) to maximize their own environmental efficiency (Chiarini, 2013). This reality has prompted
companies to reflect on environmental management through the responsible disposal of waste
and the application of Reverse Logistics. RL operations usually incorporated into environmental
policies of a company (Basaran, 2013) and disposing strategies are also included.

Reverse Logistics is primarily concerned with waste management, recycling of materials, and
restoration of components or remediation-through reprocessing (Pokharel & Mutha, 2016).
Reverse logistics is more than container reuse and packaging material recycling. As illustrated by
Adlmaier and Sellitto, (2014), reverse logistics also involves recycling of waste products,
monitoring of logistics returns and proper disposal of waste products Redesign packaging to use
fewer materials or reduce transport energy and pollution is an significant task, however it could
be secondary to the actual significance of reverse logistics as a whole. In reverse logistics the
treatment of returned products is also part of the reverse logistics (Adlmaier & Sellitto 2014)
processing, seasonal stock, replenishment, rescue, hazardous material recall and disposal
schemes, asset recovery and damage. As Stock (2016) put it, the acknowledgement of the
strategic significance of inverse logistics activities in organisations is an exciting and important
trend in supply chain leadership. The reverse logistics transactions are conducive to diverse
actions ranging from what is called "green logistics" to activities that include product yields,
repair and renovation (Srivastava, 2013). This includes "initiatives for reducing the
environmental impact of the supply chain." Reverse logistical procedures can decrease the
danger to the client when purchasing a product and improve the value of the client (Russo &
Cardinali, 2012). Reverse logistics can form a vital aspect of an extended logistics strategy that
drives efficiency, efficiency and differentiation as companies are increasingly capable of
recovering value from their products through their reverse logistics method (Carter &
Narasimhan, 2013; Rogers & Tibben Lembke, 2015). In previous studies on reverse logistics, the
development of reverse logistics competences and operational cost savings had a positive
association (Jack et al., 2010). Companies that can collaborate to develop a reverse logistical
skill can reduce, reuse and recycle products, in ways that competitors cannot, resulting in cost
savings and an increasing concentrate on service problems such as satisfaction, leading to a

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higher objective level of efficiency for sustainable development and excellence for the corporate
organization.

2.4.4 ICT Adoption

Green ICT is a pioneering approach of using ICT related to the environment protection and
sustainability of ICT in future as well as consists of practices to achieve corporate social
responsibility by minimizing carbon footprint, ICT waste and energy conservation (Suryawanshi
& Narkhede, 2015). IISD (2012) found that green ICT positively affect sustainability by
lessening direct effects on the environment of the manufacturing, distribution, operation and
discarding of ICTs equipment through enhanced energy and resources efficiency, increasing the
usage of renewable sources of energy, reducing toxicity in materials and improving recycling
and disposing of ICTs at the end of their lifetime. The environmental concerns has influence the
field of green ICT, which is currently regarded to be the most innovative for conducting
businesses (Onwezen et al., 2013). Through dematerialization and internet distribution, transport
and travel replacement, a range of surveillance and management apps, increased energy
efficiencies in manufacturing and use, as well as product management and recycling (Kiiver &
Kodym, 2014), ITCs can also play a beneficial role. The concept of ICT for sustainability
involves environmental protection. By using software and hardware which have minimal
environmental impacts (radical innovation) or improvement (incremental innovation) and by
using ICT in environmental diagnosis and resolution (Lay, Schroeder & Biege, 2015).

The immediate advantages of reducing CO2 are the basis for attraction, which are primarily
reflected in the savings from the decreased power usage (Mingay 2016). Bachour and Chasteen
(2016) think that Green IC TM implementation in organizations, while adopting the triple
fundamental criteria of financial viability, social responsibility, and the effect on the
environment, implies efficient use of technology. Green ICT's potential to be significant can be
influenced by reducing negative environmental or indirect impacts of ICT by using data systems
in support of other business initiatives to reduce their negative impact on the environment
(Jenkin, Webster and McShane 2014).

Full acceptance of sustainable ICT requires communication and communication with suppliers,
public institutions, customers as well as interaction between employees or organizational
members (Chen, & Watson, 2014). Conditioned on the adoption of Green ICT, the application of

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certain cooperative, green company procedures, based upon a green web service is the corporate
environmental policy basis. The situation is similar when new green processes are being modeled
and implemented, which cannot be achieved without Green ICT acceptance, and without the
application of green data systems at a wider stage (Chen, & Watson 2014). Molla and Abareshi,
(2015) discovered that the use of environmentally-friendly virtual settings such as green cloud-
based computing, green internet and green social networks contributes to maximizing the
advantages of the virtual setting and minimizing its ecosystem impact while managing associated
buying operations. In addition, Greening IT is expected to play a significant role in improving
company sustainable creativity (Tung, 2015).

2.4.5 Organization Performance

Strong governance and constant redesign to achieve outcomes are the organization's capacity to
achieve its goals through sound leadership (Sarkis 2015). Organizations extend their productivity
examination to include a dual corporate / customer view from a standard corporate view. This
extended strategy can assist to reconcile disputes or leverage synergies between enhancing
quality of service and increasing efficiency of services (Sarkis, 2015). Bobis and Staniszewski
(2014) noted that sustained procurement has emerged as a key instrument for an organization to
utilize competitively advantageous Kennard, (2016) stated that sustainable procurement is a
method in which the economic development, social development and preservation of the
environment are balanced against company requirements. He describes the advantages of a
sustainable procurement policy, through the evaluation of results and respect for environmental
and social legislation as part of price control, enhanced inner and external standards. Sustainable
procurement is a continued business for a long-term achievement of an organization.

Procurement was acknowledged as an important strategic topic with a major effect on

organizational performance as it is guided by the values of transparency, responsibility and value
for cash or organizational resources consumption (Aila & Ototo, 2018). Furthermore, Aila and
Ototo (2018) have pointed out that until recently, the fourth aspect of their projects was
concentrated primarily in three aspects on acquisition professionals and professionals; price,
quality and time but with economic dynamics; sustainability.

A study by Kniazeva and Belk, (2016) considered packaging as a significant advertising item
and its success depends on its speech being adapted to consumer expectations and private values

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once done appropriately, acts as a marketing tool for the organization. Similarly, Schwepker and
Cornwell (2014) suggested that consumers are more and more willing have e repeated purchase
from the firms that adopt the eco-packaging system. Jackson et al. (2016) have shown that e-
business technology to reduce dyadic coordination expenses is leading to enhanced economic
results. E-contracting contributed to common procedures and transactions to strategic operations
and expenditure savings (Smart, 2010). Ebusiness technology could be used to promote both
client integration and provider integration and operational efficiency in the provider chain
according to Devaraj et al. (2014). Ordanini and Rubera (2016) found that there was an enhanced
organization performance by the organizations which adopted sustainable ICT in procurement
process as compared to those that did not.

Sustainable procurement can be a lever to deliver broader firm’s objectives, local buying,
ecofriendly packaging, reverse logistics, supplier involvement, ICT adoption, being accountable
among other concepts for a life-long of an organization existence. Sustainable procurement can
stimulate innovation, support social and economic environment as embedded in the triple bottom
line for the organizational recognition leading to better return on investment and competitive
advantage (McCrudden, 2014). This provides the foundation for incorporating sustainable
development in procurement procedures to guarantee the achievement of wider objectives and
tasks of the company. Reviews of the SP Chen, Paulraj and Lado pillars (2015) indicated that
each of the pillars plays a role in ensuring a competitive edge for organizations.

2.5 Theoretical and conceptual framework

In the conceptual framework shows in this figure was theorized that the sustainable procurement
practices effects organizational performance. And there is relation between sustainable
procurement practices and organizational performance.

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Figure 1.1 conceptual framework

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 CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents the methodology of research used by this study. This comprised of the
research design, target population, sampling, and data collection method as well as data analysis.

3.1 Research design

The study employed descriptive research design. Descriptive research is sufficient for gathering
prevailing information on situations for the reason of narration and construal (Salaria, 2012).
This kind of research design was appropriate for this study as it assisted in establishing the effect
of sustainable procurement practices on the organizational performance of food industry in
Moqdishu.

3.2 The study population

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