An Assessment of Supply Chain Management Strategies and Competitiveness of Kenyan SMEs

A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirements for the Masters of Business Administration (MBA)The purpose of this study was to discern the Supply Chain Management (SCM) strategies employed by Small and Medium Enterprises in Kenya and the outcomes of these strategies in relation to critical success factors for firm competitiveness. The study was guided by the following research questions: to assess the effect of process strategies on competitiveness of Kenyan SMEs, to evaluate the effect of market strategies on competitiveness of Kenyan SMEs and to determine the effect of channel strategies on Kenyan SMEs. The study examined the characteristics of supply chain practices of SMEs in Kenya, therefore, a descriptive research design was adopted. Using simple random sampling technique, companies in the Kenya top 100 midsized companies’ survey of 2015 conducted by Nation Media and KPMG were studied. An email questionnaire was sent to managers within these organisations. Data was then collected using a questionnaire. The data collected was analysed using the Statistical Package for the Social Sciences (SPSS) data analysis tool to generate descriptive data in order to describe the characteristics of these organisations. The data was then presented in tables. The study established that there was a positive relationship between supply chain management strategies and firm competitiveness. The study revealed that all the elements of process strategies are positively related to firm competitiveness. Under this strategy, information technology (IT) use was determined to be the most important enabler of firm competitiveness. Overall, market strategies were found to be the most important supply chain management strategy. Customer relationship management under this set of strategies was also found to be positively related to firm competitiveness while marketing information systems had a negative relationship with competitiveness. Finally, the study revealed that all the elements of channel strategies are positively related to firm competitiveness. The study concluded that supply chain management strategies are well-implemented by Kenyan SMEs. Process strategies, through IT use was found to lead to improved transaction speeds and reduced transaction costs. Inventory management through an accounting system that is linked to physical inventory was also discovered to be an important strategy. The study further established that market strategies through the accommodation of customers’ special requests is the most important overall strategy for ensuring firm competitiveness followed by integrated order processing applications. The study concluded that external integration through use of a reliable delivery system by supply chain members is the most critical factor under channel strategies for firm competitiveness followed by clear internal guidelines for creating and monitoring alliances under supplier collaboration. Based on the findings, this study has four major recommendations. Firstly, it is recommended that SMEs implement the use of bar code technologies as they were not viewed as essential to increased efficiency by these organisations. Secondly, the study recommends that SMEs ensure that the cost of capital used for inventory decision making is the same as the cost of capital used for other investment decisions. This will reduce the high possible impact on capital should there be a change in inventories. Thirdly, this study further recommends that SMEs enhance the facilitation of reverse logistics for their customers in order to improve responsiveness. Finally, this study recommends that Kenya SMEs invest in employee co-location as a strategy as it improves competitiveness by strengthening supply chain relationships