A survey of contract manufacturing as a collaborative supply chain process:Case study of selected firms in Kenya

Abstract

The study was carried out to determine if there was any competitive advantage when organizations undertake contract manufacturing in Kenya. The firms selected represent different sectors in Kenya’s manufacturing industry. The organizations are large by Kenyan standards employing over 100 people, they also subscribe to continuous improvement and good manufacturing practices. Primary data was collected from oral interviews carried out from respondents while secondary data was collected from secondary sources such as company journals, websites and reports. Methods of data collection involved in depth personal interviews guided by a questionnaire which was structured to cover the objective of the study by having sections specific to the four key critical areas of production costs, transport logistics, manufacturing contracts and performance measuring systems. The respondents were senior personnel in the organizations. The research used content analysis to analyze the responses; this is a systematic qualitative technique for compressing data into fewer content categories based on the set research objectives to understand what lies behind a given result On the key identified aspects that are critical to manufacturing, the study concludes that Kenya rates highly as an off-shore destination to consider when seeking a contract manufacturing relationship. This is a profitable venture as revealed with benefits, among them being speed to market for the finished goods for the contracting organization, business profitability and use of available capacity by the local organization offering the service with the overall contribution towards Kenya’s development through creation of jobs and the generation of revenue and foreign exchange earnings. The areas identified as requiring improvement include bureaucracy experienced from the Kenya Revenue Authority (KRA) interface, the high cost and unreliability of power supply and the congestion at the import handling facilities of the Kenya Ports Authority (KPA), these areas need to be addressed immediately for Kenya to attract more contract manufacturing ventures and to retain its competitive advantage over other regional countries.