SUPPLIER RELATIONSHIP MANAGEMENT STRATEGY AND PERFORMANCE OF MANUFACTURING FIRMS IN KENYA
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Abstract
The study sought to evaluate how supplier relationship management strategy affects the performance of manufacturing firms in Kenya. The assessment and projections of economic growth of Kenya is pegged on the increase in the contribution of the manufacturing sector to the economy. However, there is still a gap as to how Manufacturing firm’s performance can be heightened despite prominence in the government development blueprints such as Vision 2030. Despite the Government initiatives to promote manufacturing firms through “Buy Kenya build Kenya” and mandatory reservation of 40% in all Government agencies Procurement Budgets for goods to be sourced locally; An overwhelming number of manufactures in Kenya have experienced a fall in turnover, with a least 23% registering losses in the range of 65% to 100%, and with 51%, registering loses between 30% and 65%, due to a fall in demand of the products. This study sought to determine the influence of supplier relationship management strategy on the performance of manufacturing firms in Kenya. The study was guided by The Networks Theory. For this study, the research philosophy was positivism. This study adopted cross-sectional research design. The KAM 2023 directory has listing of members (firms) by sectors which contains a register of 13 sectors of those in manufacturing firms spread all over the country (KAM, 2023). The study targeted all manufacturing companies registered under Kenya Association of Manufacturers. Therefore, the target population was 1032 manufacturing companies in Kenya while the unit of observation was senior managers from production and Supply Chain management. This study adopted Yamane (1967) simplified formula to calculate the sample size. Using this formula, a sample of 288 manufacturing firms were selected. This study utilized a semi-structured questionnaire to collect data. Data analysis was done through use of descriptive and inferential statistics. The study used SPSS version 25 in the analysis of data. The study showed a significant positive relationship between supplier relationship management strategy and the performance of manufacturing firms. Effective supplier integration and collaboration contributed to improved firm performance. Early Supplier Involvement (ESI) leads to cost reduction, improves productivity and reduces lead time and overall improved quality. Supplier Development reduces costs and improves productivity as well overall organization financial and operational performance. Procurement departments should strive to undertake supplier segmentation as informed by Kraljic Model. Following this segmentation, the finance department should allocate resources and attention to these suppliers focusing most attention to strategic suppliers.
Key Words: Supplier Relationship Management Strategy, The Networks Theory, Manufacturing Firms
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References
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