Capacity Management Strategies and Operational Performance of Sugar Manufacturing Firms in Kenya

Abstract

This study was set out to determine the capacity management strategies adopted by the sugar manufacturing firms in Kenya. The study also sought to establish the relationship between these firms’ capacity management strategies and their operational performance. Census survey study design was employed in this research in which all the entire population of the sugar manufacturing firms were considered. A total of eleven sugar manufacturing firms currently operational were sampled. Data was collected using structured questionnaires and the selection of respondents from each of these firms was non-probabilistic where the sample frame was selected based on their mandate and specialized knowledge in operations management. From the results obtained in this study, all the sugar firms in Kenya operated below their installed capacity and have adopted a mechanistic form of organization structure. Match (Chase) capacity management strategy emerged to be the most common strategy within the sugar firms in Kenya, this was closely followed by lead capacity management strategy. On challenges for the firms to effectively utilize their capacity, inadequate material supply, high cost of farm inputs and poor plant maintenance scheduling emerged to be the most outstanding factors. Investing in innovation and learning for continuous improvement, establishing strategies to sustain financial position of the firms, customer satisfaction and employee satisfaction were the main operational performance measures employed by this firms. Political interference, weak policy backing for the industry and government support among others were the main limiting factors for these firms competitiveness. Inferential findings show that match (chase) capacity management strategy, lead capacity management strategy, lag capacity management strategy and level capacity management strategy were critical capacity management strategies that had a significant influence on operational performance of the sugar manufacturing firms in Kenya. To gain the sector productivity and hence competitiveness, this study recommends for sufficient funding through grants and loan schemes for technology enhancement, alignment of the existing policies that governs the sector supply chain to create an enabling business environment and spur growth. In conclusion, this study established that, there is no single capacity management strategy best for an organization. Organizations ought to be flexible to the market demands to remain competitive. Further research on the implication of various management styles adopted by these firms and their relationship to operational performance is encouraged. Research on sector products diversification is also encouraged