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Chapter One; Influence of Supply Chain Management Practices on the Performance of Fast Moving Manufacturing Firms in Nairobi County, Kenya
1.4 Research Question
1. What is the influence of supplier selection on the performance of fast moving manufacturing firms in Nairobi County, Kenya?
2. What is the impact of the supply chain on the performance of fast moving manufacturing firms in Nairobi County, Kenya?
3. What is the influence of supplier collaboration on the performance of fast moving manufacturing firms in Nairobi County, Kenya?
4. What is the effect of supply risk management on the performance of fast moving manufacturing firms in Nairobi County, Kenya?
CHAPTER ONE; Influence of Supply
Chain Management Practices on the Performance of Fast Moving Manufacturing
Firms in Nairobi County, Kenya
INTRODUCTION
1.0 Introduction
1.1 Background of the Study
Supply
chain management (SCM) is defined the supervision of supply chain
activities while focusing on maximizing customer value and achieving a
maintainable level of competitive edge (Prachad & Tata, 2010). The business
dynamism environment is characterized by intense competition, diminishing
resources and internationalization among other factors; many manufacturing
firms are forced to produce products at lower costs. Majority of the
manufacturing companies are adopting supply management control techniques which
minimize operational costs hence maximizing profits (Sharma & Arya, 2016).
Supply management practices improve efficiency on the supply chain, and thus it
plays an essential role among manufacturing firms.
In
manufacturing firms, too much stock could lead to tied capital, increase in
holding cost, deterioration of materials, obsolescence and, theft. Materials shortage
in manufacturing firms can lead to production process interruption, underutilization of machines and poor customers’
relations. Among fast moving manufacturing firms, supply chain management is in
the production process, and therefore its management helps a firm to grow and
increase its profitability and customer base (Gibson, 2013). To ensure there is
no stock out, which may dissatisfy customer needs, proper supply chain management
control must be provided.
The
fast moving consumer goods (FMCG) manufacturing firms in Nairobi are considered
to be active and fast in the production of a range of items (Mutai &
Barack, 2016). These organizations are mostly concerned with fast moving
products like home care products,
refreshments, personal care, and foods. Most of these products are supposed to
be consumed within a short duration of time, and some of them have a short
shelf life. Therefore, an efficient supply chain management is of necessity and
of paramount importance in these organizations.
The fast moving consumer goods sectors have lost
immensely due to small supply chain management initiatives (Muhia & Afande,
2015). The supply chain management requires an enterprise-wide analysis of what
activities to engage in at each level of the firm and its appropriate
activities. According to Hughes and Jonathan (2010), poor management of supply
within the organization affects the business operations from enhancing the
differing capabilities and strengths of its manufacturing capabilities. As a
result, most companies have concentrated on short terms goals where pricing has
been their area of interest while foregoing the long-term objective in managing
the internal and external suppliers.
Today, the business environment has taken a
paradigm shift; this situation has paved way for the implementation of new
supply chain management techniques. This change in business operations has
significantly improved the supply chain performance where companies focus on
the overall supply chain performance of firms as opposed to individuals
enterprises. According to Shapiro (2009), the increased level of competition
has significantly increased the efficiency levels response times, demand
forecasting, customer satisfaction, and service delivery. The performance
levels of manufacturing companies is measured based on the outputs of companies
and more so on the achievement of set goals and objectives which involves
production of products for consumer use.
Measurements
of supply chain performance are used to find out the effectiveness and
efficiency of current systems being used or benchmark competing options (Beamon,
1998). They offer essential response data regarding development, improved
communication and, identification of complications (Chan et al., 2003). These
measurements create a better understanding of the supply chain thus advancing general
performance (Shepherd & Gunter, 2006). Performance measures of supply chain
performance for each firm are done contrarily, and it is subjected to a
specific firm. The Supply Chain Operations Reference (SCOR model), benchmarking
and the Balanced scorecard are the three approaches that are used for supply chain
performance measurements (Kleijnen & Smits, 2003). The SCOR model lets managers
address, advance and lead into supply chain management operations within and
amongst all shareholders (Chan et al., 2003).
1.1.1
The
global perspective of Supply Chain Management Practices
In
China, Huawei Technologies utilizes supplier selection to enhance the
performance of the organization considering its success hinges on the
appropriate selection of suppliers. According to Mutai and Barack (2016), proper
supplier selection improves the quality of output of any organization something
that directly influences the performance levels, for example, through an
increase in profitability. To improve the performance levels, the organization
select its suppliers through an evaluation process. Supplier prequalification
ensures that there is a reasonable prospect that entities participating in the
tendering process demonstrate the ability to deliver the final contract
satisfactorily. Supplier prequalification enables an organization to document
instances of poor performance on suppliers, therefore, uses this information to
determine the eligibility for participation in future tender bids (Gibson,
2013). Through supplier certification, Huawei Technologies gains access to a
portfolio of the best class of suppliers thus improving the practices of supply
chain management.
In Denmark, Hay House Furniture enhances the company’s level of performance through the implementation of specific supply chain policies. Organizational systems policies support supply chain management through the formulation of principles that enables the organization to reach its long-term goals and objectives. System policies are designed to influence the performance levels of an organization through the realization of cost reduction, customer satisfaction, and so on (Kemunto, 2014). Multinationals use inventory management policies to run the process of supply chain management where the companies get to make and receive an order of products sold to consumers. These policies make it easy for the company to manage the different products under production effectively. The implementation of disposal policies ensures that...