Supplier Management and Organizational Performance of Food Processing Industry in Nairobi County Kenya

Abstract

In current environmental changes, hyper-stiffed competition to deliver more innovative products, changing customer and investor demands and globalization have become the standard setting for firms in Food Processing Industry. Multinational firms are constantly under pressure to find the most profitable ways to bring products to market. To effectively compete, organizations must continuously improve their performance by reducing costs, enhancing quality, and differentiating their products and services. Increasingly, this means relying on third parties management and outsourced services have to lead to a highly collaborative working relationship with their suppliers.  The study meant to determine the relationship between Supplier Management and Organizational Performance of Food Processing Industry in Nairobi County Kenya. The study objectives was to determine the role of supplier selection process, supplier involvement practices, supplier development practices, and supplier monitoring programs on the Organizational Performance of Food Processing Industry in Nairobi County Kenya. Theories relevant to this study were Transaction Cost Theory, Resource Dependency Theory and Social Capital Theory which most of them were drawn from different disciplines such as industrial-organizational psychology and economics reflecting the interdisciplinary origin of purchasing and supplies management which were all shown how the variables link up with the mentioned theories. Study variables were discussed under the conceptual framework there after operationalized.  Theories relevant to this study were reviewed that included; resource based view theory, strategic choice theory, network theory, and stakeholder theory. The study variables were explained under conceptual framework under independent variables that is; supplier selection process, supplier involvement practices, supplier development practices, and supplier monitoring programs and Organizational Performance. Critique of relevant literature relevant to the study was done and research gaps identified. The study adopted cross-sectional survey design using both quantitative and qualitative methods. The target population was 102 Food and Beverages Manufacturing Firms in Kenya in Nairobi City County. The study used simple random sample to pick a sample size of 50 Food and Beverages Manufacturing Firms. Data was collected using questionnaires which were self-administered. Qualitative and quantitative data was coded and entered in Statistical Package for Social Sciences version 24 for analysis. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive statistics were generated. Inferential statistics using linear regression and correlation analysis was carried out to test the relationship between independent and dependent variables where all the independent variables were positively correlated with the dependent variable. The results were presented using tables and graphs. The study findings indicated that, supplier selection process, supplier involvement practices, supplier development practices, and supplier monitoring programs have a positive and significant association with performance of food and beverages manufacturing firms in Kenya. This implied that Supplier Management practices and performance of food and beverages manufacturing firms change in the same direction. The study found out that food and beverages manufacturing firms’ in Kenya have embraced Supplier Management practices for effective performance. The study recommends that it would be appropriate for food and beverages manufacturing firms embrace, supplier selection process, supplier involvement practices, supplier development practices, and supplier monitoring programs as Supplier Management practices. Equally, the study recommends that food and beverages manufacturing firms should conduct overall effective and efficient supplier management strategies /practices that focus on long term goals of the organization. This study recommends that a similar research can be conducted from multiple informants groups to come up with a variety of outcomes by creating discussion among supply chain managers with different skills and capability. Moreover, a similar research can be conducted using longitudinal so as the research to identify the evolution of supplier management strategies across number of year.