Project – Supplier Relationship Management and Procurement Performance in Public Institutions: A Study of Lagos State University Teaching Hospital, Ikeja

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Procurement is a strategic function through which organisations obtain the goods, services and works required to achieve their operational objectives. In public institutions, procurement is particularly important because public resources must be converted into goods and services in a manner that promotes efficiency, transparency, accountability and value for money. Unlike private organisations, public institutions operate within regulatory, financial and administrative frameworks that place considerable emphasis on fairness, competition and compliance. Consequently, procurement performance is not determined only by the ability to purchase at the lowest possible price but also by the extent to which purchased goods and services meet specified quality, quantity, delivery and service requirements. The Public Procurement Act 2007 established the institutional framework for regulating and professionalising public procurement in Nigeria and emphasises principles associated with transparency, competition, accountability and value for money (Federal Republic of Nigeria, 2007).

The increasing complexity of public procurement has also made the management of supplier relationships an important area of organisational performance. Traditionally, purchasing relationships were often viewed largely as transactional interactions in which the buyer selected a supplier, negotiated a price and completed a purchase. Contemporary supply management, however, increasingly recognises that organisations depend on suppliers not only for the provision of physical goods but also for quality assurance, technical support, innovation, continuity of supply and responsiveness to changing requirements. Cousins, Lamming, Lawson and Squire (2008) explain that strategic supply management extends beyond individual purchasing transactions to include supplier selection, supplier development, performance measurement, relationship management and alignment between supply strategy and organisational objectives. This perspective makes the quality of buyer-supplier relationships an important determinant of procurement outcomes.

Supplier Relationship Management (SRM) refers broadly to the systematic process through which an organisation develops, manages, evaluates and improves its relationships with suppliers. Lambert and Schwieterman (2012) describe SRM as a strategic, process-oriented and cross-functional business process through which organisations structure relationships with suppliers in order to create value for both parties. Their framework emphasises the identification of strategically important suppliers, development of appropriate relationships, performance measurement, communication and collaboration. SRM therefore goes beyond maintaining cordial relationships with suppliers; it involves deliberate organisational practices designed to ensure that suppliers consistently contribute to the buyer’s operational and strategic objectives.

Effective SRM may involve several interrelated practices, including supplier selection and evaluation, communication and information sharing, supplier performance monitoring, contract management, supplier development, collaboration, trust, commitment and problem resolution. Supplier evaluation enables an organisation to determine whether suppliers are capable of meeting agreed specifications and standards. Supplier performance monitoring provides information about delivery reliability, product quality, responsiveness and compliance with contractual obligations. Communication and information sharing allow buyers and suppliers to coordinate activities and respond more effectively to changes in demand, shortages, technical requirements and operational difficulties. Supplier development, on the other hand, may involve training, feedback, technical assistance or joint problem-solving aimed at improving supplier capabilities.

The relevance of these practices becomes particularly clear in healthcare institutions. Hospitals depend on continuous access to medicines, medical equipment, laboratory supplies, surgical materials, consumables, information technology equipment, maintenance services, cleaning services, food supplies and other essential inputs. Any significant disruption in the supply of critical items may affect the ability of healthcare professionals to provide timely and effective services. Healthcare procurement is also characterised by technical specifications, quality requirements, regulatory considerations and the need for dependable delivery. Thus, procurement performance in a teaching hospital cannot be evaluated solely on the basis of expenditure reduction. Reliability, quality, timeliness, compliance and continuity of supply are equally important.

Recent Nigerian research supports the importance of supply-chain practices in healthcare performance. Oyenuga, Oyatoye and Oyedeji (2024), using Lagos University Teaching Hospital (LUTH) and Lagos State University Teaching Hospital (LASUTH) as units of analysis, found that healthcare supply-chain performance is influenced by supply-chain practices, with total supply-chain visibility and sourcing flexibility emerging as particularly important. Their findings demonstrate that healthcare organisations in Lagos operate within supply environments where effective coordination and visibility are essential to supply-chain performance.

The importance of supplier management is also evident in broader public procurement research. Changalima et al. (2022) found a positive and significant relationship between supplier development and public procurement performance. Their study of 179 public procuring entities showed that supplier development contributed positively to procurement performance, although difficulties in contract management weakened this relationship. This finding suggests that public organisations can improve procurement outcomes by developing productive relationships and capabilities among suppliers, while also ensuring that contractual arrangements are effectively administered.

In Nigeria, supplier selection and management are further complicated by institutional, regulatory and behavioural factors. Essien, Lodorfos and Kostopoulos (2019), in a study of 40 Nigerian public-sector organisations involving 341 senior staff and top management personnel, found that government policy requirements, social ties, political factors, decision-makers’ experience and ethical climate were among important determinants of supplier selection decisions. The study demonstrates that public-sector supplier management is influenced by more than conventional economic criteria and that organisational and institutional factors may shape procurement decisions.

Public procurement in Nigeria is expected to operate within a framework that promotes transparency, competition, accountability and value for money. The Bureau of Public Procurement identifies the professionalisation of procurement and the promotion of transparency, efficiency, competition, integrity and value for money as central objectives of the Nigerian procurement system. In this environment, supplier relationships must be managed in a manner that supports procurement objectives without compromising fairness, ethical conduct or regulatory compliance. This is especially relevant to public healthcare institutions where procurement decisions involve public funds and may directly influence service delivery.

Lagos State has a substantial public healthcare system in which procurement plays an important role in supporting health-service delivery. LASUTH is a major tertiary healthcare institution located in Ikeja. According to the hospital’s official history, the institution developed from the former Ikeja General Hospital and was formally upgraded by the Lagos State Government in July 2001 to become Lagos State University Teaching Hospital. The hospital describes its mission in terms of providing high-quality managed healthcare services and its vision as becoming a centre of excellence in healthcare delivery.

As a large teaching hospital, LASUTH requires a broad range of supplies, services, equipment and works to sustain its clinical, administrative, academic and research activities. Publicly available Lagos State procurement records demonstrate that LASUTH has been involved in procurement activities covering areas such as specialised medical equipment, digitalisation and infrastructure-related projects. For example, Lagos State procurement records have documented contracts associated with LASUTH, illustrating the range and complexity of supplier interactions surrounding the institution. Such activities make supplier management an important component of the hospital’s overall procurement system.

Procurement performance at LASUTH can therefore be considered from several dimensions. Cost efficiency concerns the extent to which procurement obtains required goods and services at reasonable total cost. Quality concerns whether purchased goods and services conform to specifications and expected standards. Delivery performance concerns whether suppliers deliver the right goods or services at the agreed time and location. Compliance concerns adherence to procurement procedures, contract terms and relevant regulations. Responsiveness concerns the ability of suppliers to address problems, urgent requirements, complaints and changing needs. These dimensions are interconnected because poor performance in one area may affect other aspects of hospital operations.

For instance, a supplier that offers a low price but repeatedly delivers medical consumables late may create costs that are not immediately visible in the procurement contract. Similarly, a supplier that delivers equipment at the agreed time but provides poor after-sales support may increase maintenance costs and reduce equipment availability. In healthcare, the consequences of procurement delays or poor-quality supplies may extend beyond financial losses to affect the efficiency of clinical operations. Consequently, effective supplier relationship management should focus on the total value and performance of supplier relationships rather than price alone.

Communication is another important element of supplier relationship management. Procurement officers and suppliers require accurate and timely information regarding specifications, quantities, delivery schedules, contract requirements and changes in institutional needs. Weak communication can produce misunderstandings, delivery errors, disputes and delays. In contrast, structured communication and feedback can help suppliers understand institutional expectations and enable the organisation to identify and resolve performance problems. Lambert and Schwieterman (2012) emphasise the cross-functional nature of SRM, suggesting that supplier relationships should involve relevant organisational functions rather than being treated as the responsibility of purchasing personnel alone.

Supplier performance evaluation is similarly important. An institution that does not systematically assess supplier performance may have difficulty distinguishing consistently reliable suppliers from those whose performance creates operational risks. Performance indicators can include delivery timeliness, quality compliance, responsiveness, documentation, pricing consistency, contract compliance and after-sales service. Regular evaluation can provide a basis for corrective action, supplier development, contract renewal or future sourcing decisions.

Supplier development can also strengthen procurement performance by helping suppliers improve their capacity to meet institutional requirements. Changalima et al. (2022) provide empirical evidence that supplier development has a positive relationship with public procurement performance. Their finding is relevant to public healthcare institutions because some procurement problems may arise from supplier capability limitations rather than from the procurement process itself. Constructive engagement, feedback and joint problem-solving may therefore contribute to better supplier performance when appropriately applied.

Trust and commitment are also relevant, although they must be understood within the boundaries of public procurement regulations. Long-term or repeated interactions can allow buyers and suppliers to develop familiarity with specifications, procedures and expectations. However, public institutions cannot allow supplier relationships to undermine competitive procurement, transparency or accountability. The objective should therefore be a professional relationship based on clearly defined contracts, performance standards, communication and mutual accountability rather than informal preferential relationships.

The relationship between SRM and procurement performance has received increasing scholarly attention. Research by Al-Abdallah and colleagues has examined supplier relationship management in relation to organisational and competitive outcomes, while recent work in Ghana found that SRM positively and significantly affected procurement performance and supply-chain responsiveness (Al-Abdallah et al., 2023). Public-sector studies similarly suggest that supplier development, supplier evaluation and effective contract management can contribute to improved procurement outcomes.

Despite these developments, there remains a need for context-specific research on supplier relationship management in Nigerian public healthcare institutions. A relationship-management practice that works effectively in a manufacturing organisation may not automatically produce the same results in a teaching hospital because hospitals have different supply requirements, regulatory expectations, levels of urgency and consequences associated with supply interruptions. The procurement of medicines, medical equipment, laboratory materials and other healthcare inputs requires reliability and quality in addition to conventional measures of cost and efficiency.

The LASUTH context is therefore particularly relevant. The hospital operates within the public-sector environment of Lagos State and simultaneously functions as a major healthcare, teaching and research institution. Its procurement activities involve interactions with different categories of suppliers and contractors. Understanding how supplier selection, supplier evaluation, communication, collaboration, supplier development and performance monitoring influence procurement outcomes at LASUTH can provide useful evidence for improving procurement management.

This study is consequently designed to examine Supplier Relationship Management and Procurement Performance in Public Institutions, using Lagos State University Teaching Hospital, Ikeja, as the case study. The study focuses on the extent to which supplier relationship practices are implemented and how these practices relate to procurement performance in the institution. The findings are expected to contribute to the understanding of strategic supplier management in public healthcare procurement and provide practical information for strengthening procurement effectiveness, supplier accountability and value for money.

1.2 Statement of the Problem

Public procurement is expected to ensure that institutions obtain the right quality and quantity of goods and services at the appropriate time and cost while complying with established rules and maintaining transparency and accountability. However, achieving these objectives can be challenging in practice. The existence of procurement laws and procedures does not automatically guarantee effective procurement outcomes. Procurement performance may be affected by supplier reliability, inadequate communication, weak supplier monitoring, contract-management difficulties, quality problems, delivery delays and other challenges that arise after suppliers have been selected.

The problem becomes more significant in public healthcare institutions because procurement failure may have consequences beyond administrative inefficiency. Hospitals require uninterrupted supplies to support diagnosis, treatment, surgery, laboratory investigations, patient administration, facility maintenance and other services. Delayed delivery of critical supplies, delivery of substandard items or inadequate supplier support may create operational difficulties. Therefore, procurement performance in a teaching hospital requires an effective system for selecting, managing and evaluating suppliers throughout the supplier relationship.

One important concern is the possibility of treating supplier relationships as purely transactional activities. When procurement departments focus mainly on completing individual purchasing transactions, insufficient attention may be given to continuous supplier performance monitoring, communication, feedback and development. Such an approach may make it difficult to identify recurring supplier problems and develop long-term corrective measures. Lambert and Schwieterman (2012) argue that SRM should be approached as a structured cross-functional process rather than merely a series of individual purchasing transactions.

Another problem concerns supplier performance. Suppliers may differ considerably in their ability to meet agreed delivery schedules, quality standards, technical specifications and contractual obligations. Where supplier performance is not regularly evaluated, an institution may continue to engage suppliers whose performance creates recurring procurement difficulties. Conversely, suppliers that perform well may not receive adequate feedback or opportunities for deeper collaboration and development. The absence of systematic supplier evaluation can therefore weaken the institution’s ability to make evidence-based supplier-management decisions.

Communication and information sharing also present potential challenges. Procurement activities frequently require communication among procurement officers, user departments, finance personnel, technical personnel and suppliers. Poor communication can lead to unclear specifications, incorrect deliveries, delays in resolving complaints and disputes over contractual requirements. In a healthcare environment, where user departments may have specialised and urgent requirements, effective communication becomes particularly important.

Contract management represents another area of concern. Even where procurement procedures are properly followed during supplier selection and contract award, difficulties may emerge during contract execution. Changalima et al. (2022) found that contract-management difficulty can weaken the positive relationship between supplier development and public procurement performance. This suggests that supplier relationships cannot be separated from the organisation’s capacity to administer contracts effectively.

The Nigerian public-sector environment also presents additional complexities. Research by Essien, Lodorfos and Kostopoulos (2019) indicates that supplier selection in Nigerian public organisations can be influenced by policy requirements, social relationships, political considerations, decision-makers’ experience and ethical climate. While supplier selection is only one component of SRM, these findings demonstrate that supplier management in public institutions operates within a complex institutional environment.

There is also the challenge of balancing close supplier relationships with public procurement principles. Effective SRM requires communication, trust, collaboration and, in some circumstances, long-term engagement. However, public institutions must simultaneously protect transparency, competition, fairness and accountability. Excessively informal relationships may create risks of favouritism or conflict of interest, while excessively rigid transactional relationships may limit communication and collaborative problem-solving. The challenge is therefore to establish professional supplier relationships that improve performance without compromising procurement integrity.

At LASUTH, the significance of this problem is heightened by the scale and diversity of its operations. As a tertiary teaching hospital, LASUTH requires medical supplies, specialised equipment, technical services, maintenance services, construction and other forms of procurement support. The hospital’s procurement activities are also connected to broader public expenditure and development programmes in Lagos State. Official records show substantial public investment in LASUTH and procurement-related activities associated with the hospital.

Although existing Nigerian research has examined public procurement, supplier selection, supply-chain practices and supplier development, there is comparatively limited institution-specific empirical evidence on how supplier relationship management practices affect procurement performance at LASUTH. Oyenuga, Oyatoye and Oyedeji (2024) examined healthcare supply-chain practices using LASUTH and LUTH, but their focus was broader healthcare supply-chain performance rather than the specific relationship between SRM dimensions and procurement performance at LASUTH. Similarly, Essien et al. (2019) examined supplier selection in Nigerian public organisations but did not specifically investigate supplier relationship management and procurement performance within a Lagos public teaching hospital.

This creates a contextual and empirical gap. It is not sufficient to assume that evidence from general public-sector organisations, manufacturing firms or other countries applies directly to LASUTH. The procurement environment of a tertiary teaching hospital has distinctive operational and clinical requirements. There is therefore a need to investigate the actual supplier relationship practices within the institution and determine whether such practices are associated with procurement outcomes such as cost efficiency, quality, timely delivery, supplier responsiveness and compliance.

The central problem of this study is therefore the insufficient empirical understanding of the extent to which supplier relationship management contributes to procurement performance in LASUTH. Specifically, it is necessary to determine whether supplier evaluation, supplier performance monitoring, communication, collaboration, supplier development and contract management are adequately practised and whether these practices are related to effective procurement outcomes. Addressing this problem may help identify weaknesses in supplier management and provide evidence-based recommendations for improving procurement performance in the institution.

1.3 Purpose of the Study

The main purpose of this study is to examine the relationship between Supplier Relationship Management and Procurement Performance in Public Institutions, using Lagos State University Teaching Hospital, Ikeja, as a case study.

The specific objectives are to:

1. examine the extent to which supplier selection and evaluation practices are implemented at Lagos State University Teaching Hospital, Ikeja;
2. determine the effect of supplier performance monitoring on procurement performance at LASUTH;
3. examine the influence of communication and information sharing between LASUTH and its suppliers on procurement performance;
4. assess the effect of supplier collaboration and development on procurement performance at LASUTH.

1.4 Research Questions

The following research questions will guide the study:

1. To what extent are supplier selection and evaluation practices implemented at Lagos State University Teaching Hospital, Ikeja?
2. What effect does supplier performance monitoring have on procurement performance at LASUTH?
3. How does communication and information sharing between LASUTH and its suppliers influence procurement performance?
4. What effect does supplier collaboration and development have on procurement performance at LASUTH?

1.5 Research Hypothesis

The following null hypothesis will be tested at the 0.05 level of significance:

H₀: There is no significant relationship between supplier relationship management and procurement performance at Lagos State University Teaching Hospital, Ikeja.

1.6 Significance of the Study

The study will be significant to the management of Lagos State University Teaching Hospital because its findings may provide empirical evidence concerning the effectiveness of existing supplier relationship practices. The findings may assist management in identifying areas where supplier monitoring, communication, contract administration and supplier development can be strengthened.

The study will also be useful to procurement officers and supply-chain personnel. It may provide a basis for improving supplier evaluation, performance measurement, communication and contract-management practices. By identifying practices associated with better procurement outcomes, procurement personnel may be better positioned to develop systematic supplier-management approaches.

Suppliers and contractors doing business with public healthcare institutions may also benefit from the study. The findings may clarify the importance of timely delivery, quality compliance, responsiveness, communication and adherence to contractual requirements. This may encourage suppliers to improve their performance and develop more professional relationships with public institutions.

The study may further be useful to Lagos State policymakers and public procurement authorities. Evidence from LASUTH may contribute to discussions on public procurement reform, supplier performance management, contract administration and value-for-money improvement within the state’s public institutions.

Academically, the study will contribute to the literature on supplier relationship management and procurement performance, particularly within the Nigerian public-sector healthcare environment. It may also provide a basis for future studies involving other public hospitals, government agencies and healthcare institutions.

Finally, the study may be useful to researchers and students in procurement, supply-chain management, business administration, public administration and related disciplines. It will provide empirical information on the application of supplier relationship management principles within a Nigerian public teaching hospital.

1.7 Scope of the Study

The study focuses on Supplier Relationship Management and Procurement Performance in Public Institutions, with Lagos State University Teaching Hospital (LASUTH), Ikeja, Lagos State, as the case study.

Conceptually, the study is concerned with supplier relationship management practices such as supplier selection and evaluation, supplier performance monitoring, communication and information sharing, supplier collaboration and development, and contract management. Procurement performance will be considered in relation to dimensions such as cost efficiency, quality, timely delivery, supplier responsiveness and compliance with procurement requirements.

The study will be geographically limited to LASUTH, Ikeja. The respondents will be drawn from relevant personnel whose responsibilities or activities expose them to procurement, purchasing, stores, supply-chain, finance, user departments, contract administration and related supplier-management activities within the institution.

1.8 Limitations of the Study

The study may encounter some limitations. First, some respondents may be reluctant to provide information about procurement practices because procurement involves financial, contractual and administrative matters. To reduce this concern, respondents will be informed that the study is for academic purposes and that responses will be treated confidentially.

Second, access to detailed procurement records and supplier-performance reports may be limited because some institutional information may be regarded as confidential. The study will therefore rely primarily on information that can appropriately be obtained from respondents and authorised institutional sources.

Third, the study is limited to LASUTH, Ikeja. Consequently, findings may not automatically be generalised to every public institution in Nigeria. Nevertheless, the case-study approach is expected to provide detailed insight into supplier relationship management within a major public teaching hospital.

1.9 Operational Definition of Terms

Supplier Relationship Management (SRM): A systematic approach to developing, managing, monitoring and improving an organisation’s relationships with its suppliers to achieve mutual value and organisational objectives.

Supplier: An individual, company, contractor or organisation that provides goods, works or services to LASUTH under an agreed procurement arrangement.

Supplier Evaluation: The systematic assessment of suppliers based on criteria such as quality, cost, delivery performance, capacity, responsiveness and compliance with requirements.

Supplier Performance Monitoring: The continuous process of assessing supplier performance against agreed specifications, contractual obligations and performance standards.

Supplier Development: Activities undertaken by an organisation to improve a supplier’s capability, quality, reliability, responsiveness or capacity to meet organisational requirements.

Supplier Collaboration: The process through which a buying organisation and its suppliers communicate, share information and jointly address problems or improve processes.

Procurement: The process through which an organisation plans, sources, purchases, receives and manages goods, works and services required to achieve its objectives.

Procurement Performance: The extent to which procurement activities achieve desired outcomes in terms of cost, quality, timely delivery, compliance, efficiency and value for money.

Public Institution: An organisation established, funded or controlled by government to provide public services and carry out governmental or public-interest functions.

Contract Management: The systematic administration, monitoring and control of a procurement contract from award through execution and completion.

Value for Money: The achievement of an appropriate balance among cost, quality, performance, timeliness and other relevant benefits obtained from procurement expenditure.

1.10 Organisation of the Study

The study will be organised into five chapters. Chapter One presents the introduction, including the background of the study, statement of the problem, purpose, research questions, hypothesis, significance, scope, limitations and operational definitions.

Chapter Two will review relevant literature on supplier relationship management and procurement performance. It will cover the conceptual review, theoretical framework and empirical review and identify the gap that the study intends to address.

Chapter Three will present the research methodology. It will discuss the research design, study area, population, sample and sampling technique, instrument for data collection, validity and reliability of the instrument, method of data collection and methods of data analysis.

Chapter Four will present and analyse the data collected from respondents. The research questions will be answered and the hypothesis will be tested using an appropriate statistical method.

Chapter Five will provide the summary of findings, conclusion and recommendations based on the results of the study. It will also identify areas for further research.

Project – Supplier Relationship Management and Procurement Performance in Public Institutions: A Study of Lagos State University Teaching Hospital, Ikeja