Lean Supply Chain Management Practices and Organizational Performance in Pharmaceutical Manufacturing Firms in Kenya

Abstract

Key objectives of the study were to analyze the adoption of Lean supply chain management practices and how this would impact on organization performance of pharmaceutical manufacturing firms in Kenya. The target population was 42 pharmaceutical manufacturing firms in Kenya as per the Kenya pharmaceutical association directory (KPA, 2012). Due to the fact that the population was small, a cross-sectional and censuses survey was used. Purposive sampling was used to select 168 respondents from production, engineering, operations and procurement sections of the firm. In the study, primary data was collected using a structured questionnaire that was administered by the researcher and his research assistants. The research used descriptive statistical analysis in presentation of standard deviations, mean and percentages and inferential statistical analysis in form of regression and correlation analysis. Quantitative data was analyzed by descriptive statistics using SPSS software. The motivation of the study was due to the role pharmaceutical companies in Kenya plays in supporting attainment of World Health Organization (WHO) goal of health for all across the world and also Kenya Vision 2030. In its findings ,the study revealed and concluded that the relationship was significant , positive and relatively high between LSCM practices and organization performance of pharmaceutical manufacturing firms as R square = 0.594 signifying a variation of 59.4 % in organization performance of pharmaceutical firms as result of intervention of LSCM practices. In general, Just In Time, waste elimination, Value stream mapping, Kaizen, lean logistics had the greatest impact on performance. However, it was also observed in the study that too much intervention beyond a certain level by 3 practices namely, lean inventory, lean procurement and lean production would start generating negative effect and impact on organization performance .Following the findings above, the study recommends that positive LSCM practices be reinforced while optimal level of adoption of the 3 LSCM practices need to be established so that this does not start generating negative performance results. The study only focused on adoption of lean management practices by 42 manufacturing pharmaceutical firms in Kenya though there exists other players in the pharmaceutical industry, The study thus recommends benchmarking of pharmaceutical firms that practice LSCM practices over a period of time and carrying comparative analysis for purposes of further improvement and also inclusion of other players in the pharmaceutical industry.