Business process improvement approaches used by manufacturing SMEs in Nairobi, Kenya

Abstract

Across the globe, the contribution of SMEs to economic development is now well recognized. However, the advent of globalization and the rapidly changing technologies has raised the level of competition for SMEs who now have to compete with multinationals offering similar, and often, better quality products. Thus the need to adopt practices that enhance product quality is no longer an option for businesses of all levels. This study examines the awareness, implementation levels and challenges facing SMEs in the adoption and use of three key business process improvement approaches. The approaches include: six sigma, benchmarking and business process re-engineering. The study adopted a descriptive research methodology with target population being SMEs registered with Kebs and operating in the Kariobangi light industries area. Sixty firms were randomly selected proportionately according to products manufactured. Data analysis was done using SPSS. It was found that there exists a huge knowledge gap on the three BPI approaches with Benchmarking being the only approach that showed some moderate level of understanding. It was also found that SMEs tended to shun away from the costly and time demanding approaches such as BPR and Six Sigma and tended to apply, to a limited extent, benchmarking. Chi square test revealed that the level of implementation of BPI was not dependent on sub-sectors. The key challenge identified was the scarcity of funds to finance continuous business process improvement. It was recommended that government of Kenya, in conjunction with key stakeholders, should come up with affordable short term courses on business process improvement. It was also suggested that future studies should consider examining the influence of level of implementation of business process improvement on firm performance.