Effect of lean procurement on Organization Performance on Oil and Gas industry of Islamabad Pakistan

Abstract

The need of lean procurement is a very important factor in oil and gas industry of Pakistan. The study discusses the relationship between Lean procurement (Independent Variable) and its effects on Organizational Performance (Dependent variable). Furthermore, lean procurement have divided into four dimensions; Procurement, Cost elimination, Lead time and Waste elimination. This research helped to check the relation of all the factors on organizational performance. This research has been conducted on 11 oil and gas companies of Islamabad including Weatherford, Schlumberger, PETRONAS Carigali (Pakistan) Ltd. (PCPL), Pakistan State Oil,Oil & Gas Development Company Ltd., Dewan Petroleum (P.v.t) Ltd, MOL Pakistan Oil & Gas Company, BHP Billiton, Mari Petroleum Company Limited, Attock Oil Refinery and Shell Pakistan. This study is started with the introduction of Supply Chain management and its evolution. The research leads towards lean procurement, its evaluation and its implication on Oil and gas industry of Islamabad. Data for lean procurement has been collected from 11 oil and gas companies and the theoretical framework is based on five hypotheses: H1: Efficient procurement practices in Lean have positive impact on Organizational Performance. H2: Lean procurement has positive effect on Organizational performance.0 H3: Cost Reduction in Lean procurement has positive impact on organizational performance. H4: Waste Elimination in Lean procurement has positive impact on organizational performance. H5: Reduced lead time in Lean procurement has positive impact on organizational performance.The result is concluded with the help of SPSS Software (17.0). H1, H2, H3, H4, H5 have been accepted: This means that all the independent variables have a significant effect on Organizational Performance. This research concludes that the Lean procurement has significant impact on organizational performance of oil and gas sector of Islamabad, Pakistan. The study concludes with lean procurement implementation leads an organization towards gaining competitive advantage by adding value and avoiding wastage.