Supply Chain Management Practices and Performance of Milk Processors in Kenya

Abstract

Supply Chain Management practices are activities carried out by an organization to enhance the effectiveness of its supply chain. The practices improve organizational performance and enhance competitiveness. Milk processors act as a link between dairy farmers and the dairy market. Milk processors in Kenya have been performing poorly. There has been a 6.7% decline in performance in the dairy industry. The poor performance is a result of poor quality and low quantities of milk supplies to the processing plants. Only 12% of marketed milk reaches the processing facilities. The capacities are therefore underutilized by over 54% annually. Consequently, this study looks into practices of supply chain management which are strategic sourcing, inventory management, and green procurement and how they influence the performance of milk processors in Kenya. The resource orchestration, lean and the stakeholder theories guided the study. The study was conducted across the country comprising respondents from milk processors in Kenya. The study adopted a quantitative census design and used structured questionnaires in data collection. Validity and reliability was checked. All diagnostic tests were carried out. Correlation analysis followed by multiple regression analysis was conducted to show the relationship between the study variables. A strong and statistically significant relationship was established between strategic sourcing, lean inventory management, green procurement practices and firm performance. The study concluded that practices of supply chain management-strategic sourcing, green procurement and lean inventory management are good measures of firm performance. However, more research needs to be done in the area. The study will provide insights into the management of milk processing firms. When adopted, the supply chain management practices will help milk processors improve performance.