Digital Transformation and Supply Chain Performance of Fast-moving Consumer Goods Manufacturing Firms in Kenya

Abstract

In the era of technological advancements, there is an increased desire to modernize supply chain processes with new solutions with objectives to enhance operational efficiencies. Digital transformation continues to penetrate different spheres of business operations, with increasing advances in digital applications for diverse business processes. This has seen increased integration of digital solutions in processes including supply chain operations. The purpose of this study was to determine how digital transformation has impacted supply chain performance of Fast-Moving Consumer Goods (FMCGs) manufacturing firms in Kenya. Supply chain processes have attracted increased interest and scrutiny considering increased breakthroughs and technological advances. There has been little investigation on the effect of digital transformation on supply chain performance, which warranted the need for this study. The study examined digital tools, innovation and automation as digital transformation variables and their effect on supply chain performance for FMCGs manufacturing firms. The study employed descriptive research design with the target population being all FMCGs manufacturing firms in Kenya. Simple random sampling technique was used with a sample size of 95 FMCGs manufacturing firms within Nairobi which are licensed and registered by KAM since 80% of firms registered by the KAM are located within Nairobi. Supply chain managers in these firms were the unit of analysis and a structured questionnaire with closed-ended questions was used as tool for data collection. Both descriptive and multiple regression techniques were used in data analysis. The study found that digital tools which include social media platforms, analytical tools, artificial intelligence and websites have been utilized by FMCGs manufacturers. Innovation and automation also influenced supply chain operations and performance of FMCGs manufacturers. The study concluded that digital transformation has contributed towards enhancing supply chain performance of FMCGs manufacturers resulting in; reduced operational costs, enhanced levels of operational efficiency, increased operational speeds and enhanced product quality. The study recommends FMCGs manufacturing firms to increase funding towards upscale of present digital platforms for them to continue accruing increased performance on supply chain processes. The study also recommends increased training and capacity development in digital applications to build a sufficient workforce with up-to-date skills on digital processes for FMCGs manufacturing operations