Supplier Relationship Management and Operational Performance of Sugar Manufacturing Firms in Kakamega County, Kenya

Abstract

Sugar firms are a major employer and a revenue earner in Kenya. Sugar manufacturing firms in Kakamega County, Kenya have continuously experienced acute shortage of suppliers for key products and services. This has currently resulted in the sugar manufacturing firms to face a major crisis posed by high cost of production, capacity limit underutilization, absence of factory maintenance and poor transport framework. Sugar manufacturing firms in Kakamega County have not been able to reap the benefits of their engagement despite having a contractual relationship with their suppliers. This has made them suffer from losses brought about by high litigation costs as a result of delays in supplier payment and failure to meet the buyer‟s conditions at stipulated time. Critical review of studies revealed to the best of the researcher‟s knowledge that there is no single study which had examined the link between Supplier Relationship Management in terms of supplier appraisal, supplier development, supplier involvement and information sharing on operational performance. This study thus aimed to fill the evident research gap by exploring how Supplier Relationship Management affects the operational performance of sugar manufacturing firms in Kakamega County. The study specific objectives were: to find out the effect of supplier appraisal; supplier development; supplier involvement; and information sharing on the operational performance of sugar manufacturing firms in Kakamega County. The researcher employed descriptive cross sectional survey research design. The population of the study consisted of three sugar manufacturing firms in Kakamega County which included Mumias, West Kenya and Butali Sugar Companies. Primary data was gathered through use of quantitative approach. Both questionnaires and interview schedules were utilized to gather primary information from various managers in the sugar manufacturing firms. The Pearson Product Moment Correlation Coefficient was used to estimate the influence of Supplier Relationship Management constructs, that is; supplier appraisal, supplier development, supplier involvement and information sharing on operational performance of sugar manufacturing firms in Kakamega County. The study determined that Supplier Relationship Management practices are embraced in the sugar manufacturing firms in Kakamega County. The study also found out that there is a higher positive and significant relationship between operational performance and; information sharing (r=0.696) followed by supplier development (r=0.623) and supplier involvement (r=0.507) all at 0.01 level of significance. The study however, established that there is a weak positive and significant relationship between supplier appraisal and operational performance (r=0.400) at 0.05 level of significance. The study thus concluded that information sharing leads to a higher operational performance as compared to supplier development, supplier involvement and supplier appraisal. Based on the study findings and conclusion, the study recommends that sugar manufacturing firms in Kakamega County should invest much of their resources, that is, human, physical and financial in facilitating information sharing between the firm and suppliers in order to realize a very high improvement in the operational performance of the firms. Some of the mechanisms that can be strengthened include and not limited to: continuous information sharing between the company and suppliers; timely dissemination of data between the company and suppliers using networking; availing of personal communication between the company and suppliers; availing of suppliers‟ database; and allowing suppliers access to company‟s critical information.