Effect Of Supply Chain Finance On Small And Medium Manufacturing Enterprises Performance: A Case Of Nairobi County
Longer supply chains due to globalization have increased the pressure to make financing the supply chain more efficient. Due to increasing volatility of global markets and complexity of supply chains, small and medium enterprises face huge challenges which also include financial aspects and risks in their supply chain. However, there still is a lack of understanding of the various financial supply chain management methods and their effect on the overall organisational performance. This project involved the study of supply chain financing and its effect on Small and Medium Enterprises (SME) in the Manufacturing sector. The study evaluated financial performance indicators such as sales growth, cash flow, cost of goods sold, inventory turnover, gross margin, operating margin, net margin, return on assets and return on investments and how supply chain financing affects these financial performance indicators. This study employed a descriptive research design to obtain data for the study. The target population of the study included 410 registered manufacturing SMEs located in Nairobi County. The study used simple random sampling technique in coming up with the sample size of 41 registered manufacturing SMEs. The analysis of data was done using correlation and regression statistics with the help of SPSS 21. The study findings indicated that there is a significant relationship between sales growth, cash flow, cost of goods sold, inventory turnover, gross margin, operating margin, net margin, return on assets and return on investments and SME performance. It also established that there is a relationship between the performance of SMEs in 2011 and 2012 financial year and that, cost of goods sold and inventory turnover is influenced by planning, sourcing, making and deliverance of goods. The study recommends the need for both management and staff responsible for managing supply chain activities to be aware of the financial performance metrics so that decisions made at the operational level are tied to expected outcomes. The study indicated that supply chain financing leads to positive results in sales growth, cash flow, gross margin, operating margin, net margin, return on assets and return on investments.