Effects of supply chain management strategies on competitive advantage on food and beverage processing companies

Thesis Submitted to School of Management and Commerce in partial Fulfillment of the Requirements for the Degree of Masters of Commerce at Strathmore UniversityThe purpose of this study was to analyze effects of Supply Chain Management strategies (SCM) on competitive advantage in the food and beverage processing companies in Nairobi County. The food and beverage industry plays a unique role in expanding economic opportunities because it is universal to life and health however, the industry’s performance is below bar in Nairobi and is facing intense competition from the imported food stuffs from overseas. There is also increasing evidence that most companies in the food and beverage industry have a long way to go before they can realize their full potential for a truly linked SCM system. For instance, most logistics executives do not know exactly how SCM creates value for customers because this phenomenon has not been examined exhaust-fully. Moreover studies done in different geographical areas have diverse approaches of methodologies, scopes and variables therefore resulting in varied findings that may not apply in Nairobi in analyzing effects of SCM strategies on competitive advantage hence the need for this study. The study adopted quantitative approach with food and beverage processing companies as the target population as listed in the Kenya Association of Manufacturers (KAM) directory. Detailed information about perceptions, opinions and attitudes was obtained using a questionnaire administered by the researcher among these companies. Linear regression and correlation statistics were applied to investigate relationship between SCM Strategies and competitive advantage. The study found that to a large extent companies are striving to attain competitive advantage over their competitors. Supply chain integration (1.664) had the greatest effect on competitive advantage followed by supply chain collaboration (0.703) as revealed by the magnitude of their coefficients. Supply chain agility (0.375) had the least effect on competitive advantage. The study concluded that companies’ competitive advantage is achieved through implementing supply chain collaboration, supply chain agility and supply chain integration strategies in their networks. Competitive advantage is achieved when companies manage an integrated chain where customer is the focus, information requirements, physical logistics and chain participants are managed. Company’s brand equity, competitive positioning and forging good customer relationships are companies’ major sources of competitive advantage. The study recommends that the companies should develop a clearly laid out policies and procedures for handling customers’ concerns and/or complaints. Companies should develop interactive websites to achieve effective information sharing and concerns can be addressed in real time. It is imperative for companies develop policies and procedures guidelines in order to ensure continuous product research and development with the aim of satisfying customer ever changing demands and achieve competitive advantage over their competitors. There is need for management to improvement on the existing systems to enhance integration with trust as a key component. Companies have their strengths in supply chain collaboration and supply chain integration however it is the synergy of all three SCM strategies that facilitates a company achieving competitive advantage. This way, it becomes difficult to imitate the same strategies and facilities within a supply chain hence it is difficult to duplicate an exact supply chain keeping the company ahead and differentiated from its competitor