Category Management Practices and Supply Chain Performance of Supermarkets in Nairobi

Abstract

Category management practices was recently introduced in Kenya and it has been deployed by a few multinational retail firms to ensure that goods and services that are commonly used and cannot be purchased separately by the different functional teams but acquired through a single process in order to leverage on its total spend in the market for the relevant category. The resultant benefits are, better value for money through aggregation of demand, standardizing of specification, enhanced supplier relationship, proper and cost effective procurement skill utilization in market watching and analysis (Green, 2011). Many supermarkets are at crossroads, either to continue doing the transactional sourcing, offer strategic sourcing solution to the business or broaden their approach to include category management. The objectives of the study were to establish the category management practices used by Supermarkets in Nairobi, Kenya and to establish the relationship between category management practices and supply chain performance of supermarkets in Nairobi. The independent variable was category management practices as measured by Planogramming, product assortment, in store/shopper marketing, promotion and pricing. Supply chain performance was the dependent variable which the study sought to explain and it was measured by cost reduction, responsiveness, flexibility, service delivery and efficiency of asset utilization. Primary data was collected from supermarkets in Nairobi with the aid of questionnaires. 80 questionnaires were administered to the respondents where 77 filled and returned. This yielded a response rate of 96.25%. The study employed a descriptive research design and a multiple linear regression model was used to analyze the relationship between the variables. Statistical package for social sciences version 21 was used for data analysis purposes. The results of the study indicated that supermarkets are practicing category management practices to a great extent. Programming, product assortment, in store/shopper marketing, promotion and pricing were considered as adequate variables in explaining the performance of the supply chain. This is supported by coefficient of determination also known as the R square of 58.6%. This means that the category management practices selected for the study explain 58.6% of the variations in the dependent variable which is Supply chain performance. The findings affirm that independent variables can be adequately used to predict supply chain reported and is shown by p value (0.000) which was less than the conventional 0.05 level of significance. This study recommended that organizational employees especially from the supply chain management should be trained further on the various aspects of category management practices and the need for the same towards boosting overall supermarket SC performance.