Supply Chain Relationship Management Practices and Performance of Pharmaceutical Firms in Kenya

Abstract

The purpose of this study was to determine the influence of supply chain relationship management practices on the performance of pharmaceutical firms in Kenya. Previous studies have concentrated on examining supply chains in other sectors but few studies have been conducted on supply chain relationships management and performance in the pharmaceutical industry. The study was of significance to policy makers, researchers, pharmaceutical firms and supply chain practitioners. A conceptual framework was used to depict how the conceptualized independent variables; Transparency, resilience building, Collaborative planning and process alignment relate to dependent variable; organizational performance. The study sought to establish the moderating effect of inter-organization systems (IOS) on the relationship between supply chain relationship management practices and organizational performance. The study was underpinned by; stakeholder theory, dynamic capabilities theory, systems theory, network theory, social technical systems theory and strategic choice theory. Descriptive research design was used to explain what, where, when and how of the problem. Census sampling technique was utilized, where all the 171 pharmaceutical firms that formed the study population were enumerated. Some of the limitations faced during the study included; reluctance of the respondents to answer the questionnaires for fear of information leaking to competitors, tight schedules of respondents and caution when dealing with members of the public. A drop and pick method of data collection was adopted where a questionnaire was administered per firm to supply chain managers or their representative. The number of responsive questionnaires were 134 representing 78% response rate while 37 were non responsive representing 22%. A pilot study was conducted to test the reliability and validity of the data collection instrument through Cronbach alpha and Kaiser-Meyer-Olkin test respectively. To test for data characteristics, normality test, hypothesis test, heteroscedasticity test and multicollinearity tests were carried out, while to test the strength and direction of relationship between independent and dependent variables, Correlation analysis and linear regression analysis were done. The results of the study showed positive and significant relationship between transparency, resilience building, collaborative planning, process alignment and firm performance. The results further showed that inter-organization systems significantly moderated the relationship between supply chain relationship management practices and organizational performance. The study made an important conclusion that when relationship management is properly done in regard to collaboration, transparency, resilience building and process alignment, then it will support performance of pharmaceutical firms through increased market share, higher returns on investment, improved customer service levels, reduced lead times, responsiveness and stable supply chains. The study made important recommendations that firms should adopt supply chain relationship management strategies through transparent collaborative efforts, building resilient and responsive supply chains as well as aligned supply chains and business processes for improved performance. The research pointed the need for further studies to explore other factors of supply chain relationship management practices that influence performance both in pharmaceutical industry and other sectors of the economy.