Supplier Relationship Management and Operational Performance of Sugar Firms in Kenya

Abstract

In an increasing competitive marketplace, firms are seeking new methods of enhancing competitive advantage and therefore, purchasing is becoming a strategic function and a key factor in competitive positioning. Supplier Relationship Management (SRM) plays an important role in enhancing organisational performance through reduction of costs and the optimization of performance in industrial enterprises. This study therefore sought to assess the effect of supplier relationship management on operational performance of sugar firms in Kenya. The study worked towards attaining the following objectives; To determine the effect of supplier collaboration in product development on operational performance of sugar firms in Kenya, To establish the effect of information sharing on operational performance of sugar firms in Kenya, and To determine the effect of trust-based relationship on operational performance of sugar firms in Kenya. Three theories, namely the social capital theory, the theory of constraints, and the commitment trust theory, anchored this study. The research absorbed a descriptive research design. The study’s target population consisted of all the employees of the 13, currently operational, sugar companies in Kenya serving in the companies’ supply chain departments (Chemelil Sugar Factory; Kibos Sugar and Allied Factories; Muhoroni Sugar Factory; Mumias Sugar Factory; Nzoia Sugar Factory; Sony Sugar Factory; South Nyanza Sugar Factory; Sukari Industries Limited; Transmara Sugar Factory; West Kenya Sugar Factory; Butali Sugar Factory; Kwale International Sugar Company and Kisii sugar factory).Primary data was collected for analysis using questionnaires as instruments of collecting the data. Analysis of the data was conducted through SPSS and the findings presented using frequency tables, charts and graphs. The research established that trust-based relationships, information sharing and supplier collaboartion in NPD positively impact operational efficiency in the sugar sector in Kenya. It was also found that most of the operations within the sugar firms are based on trust. In addition, the study concluded that the sector is not highly efficient in managing all its operational undertakings. The researcher recommends that the sugar firms should ensure that an effective supplier-buyer information relationship structure is established, encourage supplier involvement in product development and operational systems within the organisations should be made reliable for the firms to attain operational excellence.