An empirical investigation of supply chain management best practices in large private manufacturing firms in Kenya

Abstract

Today, large companies are mainly focusing on becoming efficient and flexible in their manufacturing methods in order to handle uncertainty in the business environment. To do this, they need different strategies to manage the flow of goods from the point of production to the consumer. However, most firms have not been able to formulate the right strategies required to achieve this objective in Supply Chain Management (SCM). This calls for a strategic fit of an organization’s core competencies, strategy and core capability, which is an emerging paradigm in the study of strategic management and specifically in SCM. This paper focuses on SCM best practices used by large private manufacturing firms in Kenya. The preliminary tests employed the use of Kaiser Mayer-Olkin (KMO) and Bartlett’s Test. In this case, KMO measures the sampling adequacy which should be greater than 0.5 for a satisfactory analysis to proceed. For this paper, the outcome revealed a measure of 0.583, an indication that the Bartlett’s Test of spericity is significant implying that the correlation matrix is non-singular and therefore, the factor analysis model is satisfactory. A sample of 52 large private manufacturing companies of the supply chain firms representing all large private manufacturing companies, which are members of Kenya Association of Manufacturers (KAM) was used. To establish SCM best practices, 39 variables were used to measure the level of application among these firms. These variables were analyzed using factor analysis procedure and in order to achieve a simple and meaningful structure, that is, have a nonzero loading of the explained variance for each individual factors, varimax rotation was done. As a result, 11 critical factors were established as the best practices which include: operating policies, linkages within supply chain firms, improved performance, information technology systems, strategic alliance, performance measures, goal orientation, customer relationships, guidelines and procedures, supplier selection and supplier evaluation. When benchmarked, these practices were found to be universal and compares well with the best practices globally. The implications of the findings are also discussed.