Influence of Supply Chain Optimization on the Performance of Manufacturing Firms in Kenya

Abstract

The purpose of the study was to assess the influence of supply chain optimization on the performance of manufacturing firms in Kenya. The specific objectives of the study were to establish the influence of inventory control, supplier management, procurement cost optimization, supply chain automation on performance of manufacturing firms in Kenya. The study further explored the moderating effect of staff competence on the relationship between supply chain optimization and performance of manufacturing firms in Kenya. The study focused on the purchasing portfolio theory, transaction cost analysis theory, theory of constraints, competency theory and supply chain operations reference model. The study used cross sectional survey research design. Cross sectional design was justified on grounds that data of different manufacturing firms will be collected at a defined period. The study’s target population included supply chain managers in charge of procurement department in manufacturing firms in Nairobi County. The 499 supply chain managers in manufacturing firms were the population for this study. The sample of this study consisted of 222 supply chain managers in manufacturing firms in the Nairobi that were stratified and randomly selected from a list of 499 supply chain managers in manufacturing firms operating in Nairobi in Kenya. This study relied on both primary and secondary data sources. Secondary data was collected for performance of the selected manufacturing firms for the period of between 2012 and 2016. This study utilized a questionnaire on the other hand to collect primary data. Quantitative techniques were used in analyzing the data. A pilot study was conducted on 22 supply chain managers which constituted 10 per cent of the sampled 222 supply chain managers in manufacturing firms. The supply chain managers used in pilot testing were not used in data collection for the study. The aim of the pilot test was to test the reliability and validity of the questionnaire. The study used both descriptive and inferential statistics. Descriptive analyses used included: mean, standard deviation as an additional measure of variance and hence risk, frequencies and percentages, while the inferential statistics used were correlation analysis and regression analysis. The findings revealed that supply chain optimization used in this study were significant predictors of performance of manufacturing firms in Kenya. This revealed that there is a significant positive relationship between inventory controls, supplier management, procurement cost optimization, supply chain automation and performance of manufacturing firms in Kenya. The study also established that staff competence significantly moderated the relationship between supply chain optimization and performance of manufacturing firms in Kenya. The study concludes that supply chain optimization plays a significant role in the overall performance of the manufacturing firms. The study recommends that manufacturing firms should invest in supply chain optimization to enhance their performance.