Effect of Supply Chain Integral Relationships on Performance of Cosmetics Manufacturing Firms in Nairobi County, Kenya

Abstract

Global competition within firms has forced most manufacturing industries to become more innovative and strategic in their supply chain practices. One of the ways to survive this intense competition is to have an integrated supply chain. The level of uncertainty in the business environment continues to increase and one of the greatest challenges to a firm is responding to uncertainty caused by high volatile demand and short product life cycles. Implementation of supply chain integral has been advocated as the means of increasing competitiveness of firms. The study focussed to assess the effect of supply chain integral relationships on the performance of cosmetic manufacturing firms in Nairobi County, Kenya. The study specifically addressed key variables that included: Collaborative Awareness, Cross Functional Information Sharing, Decision Synchronization, Idiosyncratic Partner Investment, Technological Engagement and Performance. Resource Based View Theory, Relational View theory, Supply Chain Network Theory and Contingency theories were adopted in the study. The study adopted Positivism Research Philosophy. Cross-sectional survey research design was used in the study. The unit of analysis was 714 employees working in the procurement departments in cosmetic manufacturing firms in Nairobi County, Kenya. A sample of 256 was selected from the target population using a Multi Stage Sampling Technique. Primary data was collected using self-administered semi-structured questionnaires which were dropped and picked later. Both descriptive and inferential statistics were used to analyse the collected data. Moderated Multiple Regression (MMR) was used to analyse the relationship between the predictor variables and performance. Pilot study reliability results showed that all our Cronbach’s alpha coefficients were above 0.7, implying that the research instruments were reliable. The findings of the study showed that technological engagement moderates the relationship between the predictor variables and performance of cosmetic manufacturing Firms (r = .588, p < 0.01). Results indicated there is a positive and statistically significant correlation between cross functional information sharing and performance (r=.582, p<0.01), a positive and statistically significant correlation between decision synchronization and performance (r=.516, p < 0.01), a positive and statistically significant correlation between idiosyncratic partner investment and performance (r=.529, p<0.01), while the correlation between collaborative awareness and performance was also positive and statistically significant (r=0.505, p<0.01). The study concludes that collaborative awareness, cross functional information sharing, decision synchronization and Idiosyncratic Partner investment positively affect the performance of cosmetics firms. The study recommends that collaborative awareness should be improved and executed in such a way that is well synchronized with other activities and connected with long-term goals of the partners. The study recommends that cosmetic firms should implement cross-functional information sharing and keep each other informed about changes and unforeseen challenges. Cosmetics firms should also focus more on decision synchronization, because it is key in building and maintaining mutual partnerships of the supply chain firms. The study recommends that cosmetics firms should engage idiosyncratic partner investments, and make major investments, in time and effort to learn about the business practices of their suppliers, specifically for relational exchange. The results of the study will contribute to greater understanding of the supply chain integral factors that leads to outstanding performance of firms.