Supply Chain Management Practices and Performance of Firms in the Electricity Energy Sub-Sector in Kenya

Abstract

Supply chain management practices are the aspects that affect the whole of supply chain, its parts or key procedures with an aim of eventually improving organizational performance. To reduce cost and performance challenges, organizations must put into consideration supply chain practices at various echelons of the supply chain. In Kenya, firms responsible for electricity energy sub-sector power production, transmission and distribution have had challenges in their performance. Therefore, the general purpose of this study was to assess the influence of supply chain management practices on performance of firms in electricity energy sub-sector in Kenya. Specifically, the study focused on demand forecasting, strategic sourcing, supply chain risk management and contract management as the factors influencing the performance of firms in electricity energy sub-sector in Kenya. The study also sought to determine the moderating effect of procurement regulations compliance on the performance of firms in electricity energy sub-sector in Kenya. The study adopted cross-sectional survey design. Purposive sampling technique was used to draw a sample of 375 respondents from a target population of 6052 employees from 15 firms dealing with electricity energy in Kenya. Primary data was collected using a questionnaire. Document analysis was used to collect secondary data. Qualitative data was grouped in to themes. The descriptive analysis was employed. The data collected was analyzed in form of frequencies; means and standard deviation were generated. Means measured central tendency while standard deviation measured dispersion. Inferential statistics was then carried out using Pearson correlation and simple linear and multiple linear regression model were used to test hypothesis. The findings were presented using figures and tables. From the study, it was established that, most firms in electricity energy sub-sector do not share information with their trading partners, the electricity power sub-sector has a weak contract management practice, the actors have a moderate efficient and secured sources of collecting and analyzing the customers complains and providing feedback and most firms are faced with the problem of the quality of materials, inadequate skills and capacity. It was also established that the moderating effect of procurement regulations compliance gained variance in the performance of firms in electricity energy sub-sector in Kenya. The study concluded that, demand forecasting, strategic sourcing, supply chain risk management and contract management positively influences the performance of firms in electricity energy sub-sector. The study also concluded that compliance to purchasing regulations has a significance influence on the performance. The study therefore recommends the firms to collaborate and share information with other stakeholders, incorporate customers’ needs in their strategic sourcing, create secured sources for collecting and collating customers complains, provide feedback and execute supply chain management practices within the legal framework. It also recommends the policy makers in the electricity energy sub-sector to have explicit standards and measures of performance between different stakeholders in their contracts. This would also prevent power outage which is experienced frequently. The study suggested strategies for addressing the identified challenges which could be potential avenues for future research in this field.