Challenges facing supply chain management in the Oil marketing companies in Kenya

Abstract

The complexities in oil marketing companies supply chains impose enormous challenges to the SCM. SCM in the oil marketing companies in Kenya was studied in a qualitative and quantitative survey that covered 23 oil marketing companies in Kenya, with the purposes of identifying the challenges facing the SCM in oil marketing companies and determining the extent to which the oil marketing companies in Kenya are adopting best practices to manage challenges in their supply chain. The findings show that challenges facing supply chain management in the oil marketing companies in Kenya occur in one or more of the supply chain components; transportation, equipment, communication, suppliers, customers, labor and finance. In an effort to manage their supply chain and reduce costs, oil marketing companies are outsourcing their logistics functions to third-party logistics companies to managing their supply chains. Oil companies also engage in strategic planning. E-procurement, close partnership with suppliers, use of external consultants, outsourcing non core activities, dealing with few suppliers, engaging in vertical integration and Supply Chain Benchmarking. The researcher recommends that there is need to expand the Kenya pipe line to increase its oil transportation capacity and as a result reduce the cost of oil transportation. The oil marketing companies need to train their personnel so as to appreciate the concept of SCM and the best practices and systems that are significant in mitigating the challenges of SCM. They also need to develop customer relationship management, supplier relationship management and engage in closer cooperation with other companies, government and regional players. Further, oil marketing companies in Kenya need to invest in IT systems.