Capacity Management Practices and Operational Performance of Steel Manufacturing Firms in Kenya

Abstract

Steel manufacturing industry faces problems associated with cost of raw materials, limited diversification of the market, inadequate technology, poor infrastructure and limited value addition to the industry. Manufacturing firms have to strategically implement capacity management practices to ensure scarce resources are properly managed to minimize wastages in terms of raw materials, over production, under production and idle time in order to remain competitive in terms of quality, cost, flexibility, dependably and speed. The objective of this research was to establish the association between capacity management practices and operational performance of Steel Kenyan Manufacturing Firms. The guiding objectives to the study included; to determine the capacity management practices implemented by Steel Manufacturing Firms in Kenya and to determine the effect of capacity management practices on operational performance of Steel Manufacturing Firms in Kenya. The study adopted descriptive research design to collect data from the target firms. Questionnaire was used as primary tool for collecting data; administration was by email and “drop and pick-up later” technique. The data collected was analyzed using descriptive statistics, regression and correlation analysis. The findings of the study indicate that capacity management practices have been implemented to a great degree by Steel Manufacturing Firms in Kenya. The findings further indicate that there exists a positive association between capacity management practices and operational performance. Quality, Cost, and Flexibility as operational performance measures were affected to a large extent by implementation of capacity management practices. The researcher recommends Steel Manufacturing Firms in Kenya to continually train their employees and implement capacity management practices as they were found to be positively correlated to operational. The study also recommends that the government needs to support Steel Manufacturing Firms in their quest of implementing capacity management practices by offering knowledge on the most effective approaches of implementing these practices. The constraint of the study is its focus on Steel Manufacturing Firms in Kenya, therefore, the outcomes might not be conclusive for other sectors of the economy.