Value Chain Management Practices and Performance of Food and Beverage Manufacturing Firms in Kenya

Abstract

The food manufacturing sector recorded a significant drop in performance from 4.7% to 1.6% and 2.7% to 0.2% ,2018/2019 respectively, according to the World Bank Economic Update in 2022. Furthermore, agricultural real value-added declined from 5.2% in 2019 to 1.6% in 2021. Further, the food manufacturing industry in Kenya has been experiencing much turbulence recently, including a drop in the GDP, an increasing trade imbalance, and the exiting of large multinationals such as Cadbury, Nestle, Procter & Gamble, and African Oils. The main focus of this study was to establish the relationship between value chain management practices and the performance of food and beverage manufacturing firms in Kenya. The specific objectives are determining the relationship between material management and performance of food and beverage manufacturing firms in Kenya, establish the relationship between outbound logistics and performance of food and beverage manufacturing firms in Kenya, assessing the relationship between operations management and performance of food and beverage manufacturing firms in Kenya, to establish the relationship between inbound logistic and performance of food and beverage manufacturing firms in Kenya and to assess the moderating effect of technological integration and the relationship between value chain management practices and performance of food and beverage manufacturing firms in Kenya. The study adopted descriptive research and explanatory research designs. The unit of analysis was 246 food and beverage manufacturing firms registered under the Kenya Association of Manufacturers (KAM) while the unit of observation consisted of 152 respondents drawn from these firms. A stratified random sampling technique was used, followed by simple random sampling within the different strata. Key informants in each firm formed the unit of observation. The questionnaire was used to collect primary data, while both quantitative and qualitative data were generated from closed-ended and open-ended questions. Secondary data were used to measure performance. Descriptive statistics, including frequency distribution, mean, and standard deviation, were used for data analysis. Inferential data analysis techniques, correlation, and regression analysis were used to establish the relationship between value chain management practices and the performance of food and beverage manufacturing firms. The study results were presented using tables, graphs, and figures. The study found that all the independent variables, material management, operations management, inbound logistics, and outbound logistics, had a strong, positive, significant effect on the performance of food and beverage manufacturing firms in Kenya. Further, for moderating effect, the study found that Technological integration has a positive moderating effect on the relationship between value chain practices and the performance of food and beverage manufacturing firms in Kenya. The study's recommendations include embracing technology and automation, strengthening collaboration with suppliers and development, improving order processing and transportation management, prioritizing customer satisfaction, establishing smooth inbound logistics mechanisms, leveraging technology for visibility and coordination, regularly updating and improving technology and systems.