Industry 4.0 and Operational Performance of Manufacturing Firms in Kenya - a Comparative Analysis of Multinationals and Locally Owned Manufacturing Firms in Nairobi County

Abstract

Industry 4.0 technologies have been employed in manufacturing for performance improvement and providing data for faster and fruitful decision making. Different manufacturing firms have adopted Industry 4.0 at varying extent both at global and local level depending on the enablers they are exposed to and the challenges they face. This study intended to establish the degree of industry 4.0 adoption by multinational manufacturing firms and locally owned manufacturing firms in Nairobi County. The study also purposed to realize the enablers which have prompted embracing of industry 4.0 and the challenges which some firms face during implementation. The effect of industry 4.0 on operational performance factors such as cost, quality, flexibility, and delivery of manufacturing firms in Nairobi county was also covered. Descriptive research design was used on a population consisting of 432 firms. Stratified proportionate sampling method was used to select 122 firms across 13 manufacturing sectors in Kenya. Data was collected using questionnaires sent through emails, google forms and “drop-and-later later” method. The data was analyzed using t-test method for comparative analysis of level of adoption, barriers to adoption and enablers of adoption between multinationals and locally owned firms. Regression analysis was used to establish how operational performance was affected by industry 4.0 technologies. The findings exhibited that Internet of Things and Artificial Intelligence were highly adopted by multinationals than locally owned firms; big data analytics was adopted almost equally by both category of firms while robotics and 3D Printing were found to be rarely used. Multinationals were found to be exposed to strong enablers of industry 4.0 which were Top Management Support, reliable IT infrastructure and availability of financial resources for investment. Locally owned firms were found to be face stronger industry 4.0 inhibitors which were absence of policies and strategies to address implementation of industry 4.0, inadequate finances for investment and employee incompetence. IoT, AI, big data analytics, robotics and 3D printing were found to significantly affect cost, quality, flexibility and dependability. Use of primary data collected from manufacturing firms in Nairobi county only were identified to be the limitations during the study. The study results provide an overview of the manufacturing environment in Kenya and is of benefit to investors who will know which industry 4.0 technologies to invest in to be competitive, the challenges they might face and the benefits they stand to gain. Players in the IT field and consultants stand to benefit from this study as it provides a forecast on the technical skills gap experienced by manufacturers. Further research can be conducted outside Nairobi county and/or in the service-oriented firms to establish similarity or variation in findings