Running head: SUPPLY CHAIN RISK MANAGEMENT STRATEGIES 1

Effect of Supply Chain Risk Management policies on financial Performance of Food and

Beverage Manufacturing Firms in Kenya

Name

Institution
Running head: SUPPLY CHAIN RISK MANAGEMENT STRATEGIES 2

Effect of Supply Chain Risk Management policies on financial Performance of Food and

Beverage Manufacturing Firms in Kenya

Abstract

Food and beverage industry, being common to human existence and fitness, plays a major part in

increasing financial prospect. The industry greatly affects the whole value chains starting with

the producers to the consumers. Given this enormous effect, the complication of the firm

dealings, scientific progress, globalization, the swiftness of the merchandise sequences and the

general speed of transformation have created food and beverage additional multifaceted vibrant

and progressively indefinite, delicate and susceptible to disturbances. The study focused on

assessing the effect of supply chain risks administration approaches on the supply chain

performance of food and beverage manufacturing in Kenya. The research uses descriptive survey

research design. The target population entails all foods and beverage manufacturing industries in

Kenya. The study sampled all the187 respondents who were drawn from the Kenya Association

of Manufacturers' website. Therefore, the study carried out a census study. The study employed

the descriptive and inferential analysis while analyzing data using statistical package for social

sciences. It was however ascertained that supply chain risk management strategies have an effect

on the performance of the food and beverage manufacturing companies.

Introduction

Traditionally, the development of the manufacturing sector has remained a crucial component in

the prosperous revolution of the greatest frugality that has perceived continued increases in their

per capita revenues (Stadtler, 2015). Numerous parts of Africa, manufacturing industries have

faced a lot of challenges in the previous periods thereby making them remain weak. The

industrial subdivision in Kenya is a probable basis of progression. The government has that the
Running head: SUPPLY CHAIN RISK MANAGEMENT STRATEGIES 3

manufacturing sector to reach 20% and more of the gross domestic product which almost

doubles the general level (Gilmour, 2013). Similarly to the numerous upcoming markets in

Africa, high supply chain hazards are an encounter.

Supply Chain Risk Management policies

The difficulty of corporate communications, scientific developments, globalization, promptness

of merchandise progressions, and the general leap of transformation have augmented

improbability, brittleness, susceptibility and disturbances different organizations (Heckmann,

Comes & Nickel, 2015). The role of the supply chain is to bring together parties who are

involved in the either directly or indirectly with a sole objective of fulfilling the request of the

customer. In an organization, supply chain comprises of the manufacturer, carriers, retailers, as

well as customers.

Heckmann, Comes & Nickel (2015) defined supply chain as incorporating all undertakings

connected with the current of properties from the existing resources phase over to the end

consumers including the related information movements both active and depressed supply chain.

Currently, a supply chain is turning into more susceptible to unforeseeable events which could

result to supply disruptions and thus hampering the performance of the supply chain.

Internationally, there exist no other food and beverage industry which is more reliant on the

public assurance while it attracts several risks to its operations than the constructive risks.

Gilmour (2013) posits that lack of appropriate strategies policies in an organization to deal with

these hazards may lead to companies losing much of the finances which could otherwise not

have been. However, other studies have depicted that supply chain risks have an influence on the

supply chain performance.

According to Stadtler (2015, the procedure measurement of the upstream SCRM have described

that a strong link between a competent SCRM to having a positive performance. Schmitt (2011)

logically simulated supply disturbances in a multi-level supply chain as well as statistically

establishes the usefulness of supply chain hazard administration strategies. Grekova, et. al.,

(2016) in their report demonstrated that supply series disturbances could result in a long-term

poor performance particularly for the investors' wealth and equity proceeds from the general

performance of the industry performance.

Food and Beverage Manufacturing industry

Food processing division in Kenya is still the largest element in a manufacturing industry. The

division, however, encompasses more than 187 businesses, including all the sole proprietors to

international companies (Ashton, et. al., 2014). A report of the Kenya National Bureau of

Statistics indicated that in 2016, the division produces more than 33.4% of the entire

manufacturing production as well as securing employment opportunities to about 33.5% of the

manufacturing subdivision (Meyers, et. al., 2016).

Notably, the supply chain of food and beverage is complicated hence is promptly focus to

hazards which include superiority, price, lead time and also stock as a result of both interior and

outside forces. Gilmour (2013) recommended three concerns which generate difficulty in the

food supply series. Meyers, et. al., (2016) in their study concerning the food supply chain

provided two forms of risk situations remained recognized which wanted different approachable

administration schemes. Primarily, some of the risks particularly are prompt to food safety and

therefore upholding a safe supply of food. These risks, therefore, can be control by an

organization as well as their direct supply chain partners.

Supply Chain Performance Measurements

Supply chain performance measurement refers to the determining the competent and efficacy of

the supply chain. They comprise of various estimations that encompass both the financial and

non-financial values that seek to ascertain expenditures, volume, first periods as well as facility

level. The top level investigates the executive decisions and regularly ascertains the wider based

rules as well as the extent that they are strictly followed to achieve organizational objectives

(Gilmour, 2013). The middle-level management is concerns with assigning resources while also

evaluating a performance of the employees so as to correct any variance which might have

occurred as a result of differences in planned and actual performance.

Theories of the guiding the study

a. Contingency Theory

This theory advocate that an array of maximum decisions in the company is unforeseeable hence

they are subdivided into internal and external elements and that the appropriate among

managerial configuration and procedure will result in an improved performance (Renton,

Daellenbach & Davenport, 2016). The theory is made up of the two sustaining conventions: that

there exist no better means to coordinate necessary form lie on the category of the surrounding

that an individual is operating on and also the administrators should strive to ensure that they

attained the directions and healthier fits.

This plan permitted food and beverage industry to meet the unforeseen actions as prompt supply

delays, unclear needs and natural catastrophe (Renton, Daellenbach & Davenport, 2016). They

become inventive, vibrant and receptive to vicissitudes and encounters. Flexibility has been

established to have a positive effective that improved their relative performance about the parent

competitors (Renton, Daellenbach & Davenport, 2016). Research indicated that flexibility is vital

in every business dealing that includes supply chain which in turn faces the demand as well as
Running head: SUPPLY CHAIN RISK MANAGEMENT STRATEGIES 6

supply hazards because it helps an organization to assign the resources rapidly and also

responding to any changes.

b. Relational Theory

The relational concept elucidates the economic benefit as well as the greater

performance. This is accomplished by concentrating on the dyads and the systems of the

companies as analysis units. This study inclines to help one understand the significance of

superior relational competencies in improving the supply chain risk management. According to

Swink, (2006) the supply chain relations are characterized by the integration, coordination and

also the collaboration of the supply chain from the consumers to the suppliers.

Research gaps

The empirical review shows that most of the studies carried on the supply chain risk

management tend to major in the developed countries rather than the undeveloped (Dani &

Deep, 2010). Therefore, it is clear that limited studies have been carried out in countries such as

Kenya, especially in the food and beverage manufacturing field. Nevertheless, the empirical

studies done in these developed countries tend to favor business organizations that are not in

such a field, that is, food and beverage manufacturing. Essential aspects to focus on are the

identification and classification if sources of the supply chain risks and the framework applied in

the supply chain risk management.

The incorporation if the supply chain risk constructs and also the supply chain risk

management strategies, into the supply chain management of the food and beverages industries

can be said to be timely and reflectional in both the theoretical inoperative and practitioner

requirements. Therefore, the essence of the research is to address the gap of the small research in
Running head: SUPPLY CHAIN RISK MANAGEMENT STRATEGIES 7

supply chain risk management strategies in the food and beverage manufacturing firms in Kenya.

The study tries to fill all the knowledge gaps as well as answer all the questions involving the

research. This is done through the application of different specific strategies on the food and

beverages manufacturing companies in Kenya to build residence as well as sustain growth.

The research methodology

This includes all the aspects that were used to make the study complete such as the

survey technique, data collection procedure, research design, data design, population,

presentation, and sampling frame

Research Design

The study applied the explanatory survey design which, according to Saunders, Lewis,

and Thornhill, (2009) implies that the respective research should explain rather than describe the

case studied. The key objective of the research was to find out how the supply chain risk

management strategies influence the performance of such firms and therefore the application of

survey was the best option for the investigation. However, the approach should be explanatory

and descriptive due to its huge collection of data from a substantial population. This enables one

to establish and explain the connection existing between variables.

Research Philosophy

Research philosophy is described as the effective framework which allows the researcher

to make choices regarding the respective theories and methodologies (Saunders et al., 2009).

Three research philosophies dominate the business and management industries, which are,

positivism, realism paradigms, and interpretitism paradigms.

However, this study will use the positivism mode as it is dependent on the values of

reason, validity, and truth. The model focuses on the facts that should be gathered through a

direct observation and experience (Easterby-Smith, Thorpe & Jackson, 2008).

Research Population

According to Kombo and Dello (2006), the population is a defined as the group of

individuals or items whose samples are taken for measurements. This study used a questionnaire

in an effort of obtaining the primary data regarding the analysis of the food and beverages

manufacturing firms in the country. The study targeted the senior level managers who are

knowledgeable in the supply chain and logistics functionality and had direct involvement in the

operational and also strategic decision-making processes. The Set of skills, expertise and

business roles were the major aspects considered for the respondents.

Sampling Frame

A sampling frame is the complete listing of all the population units used to draw the

random samples. KAM registered 187 F&B manufacturing firms in Kenya were used by this

study as the sampling frame.

Census survey

The census survey can be defined as the appropriate data collection designed for such a

sizeable population (Kothari, 2008). The method was used to collect data from the 187 firms.

Census survey involves obtaining information from each member of the selected population.

Larger sample size for small population tends to provide accurate results, especially when using

the census methodology (Kothari, 2008).

Data Collection Mechanism

All forms of questionnaires were used in the collection of information. This is because of

the explanatory objective and complexity of the matters involved in the research, that is, to find

out how the supply chain risk management influence the supply chain performance of the food

and beverage manufacturing companies. The study dealt mainly with the variables, time

constraints and sample sizes thus using the questionnaires (Mugenda & Mugenda, 2012). The

application of questionnaire allows the researcher to obtain in-depth information am collect more

data in a flexible environment.

Questionnaire

The questionnaire was carried out to the samples F&B manufacturing firms. The

literature research was performed to identify the strategies used in the supply chain risk

management. Three sections were used in the questionnaire. This included the section A, B, and

C. Section A involved collecting the general information from companies that deal with the food

and beverages.

Section B included soliciting information regarding the business nature, strategies used in

the supply chain risk management by the supply chains of organizations. Section C involved the

collection of data regarding the performance. Five points Likert gauge was used to determine the

extent of resources and activities utilization in achieving the supply chain risk management.

Data collection procedures

Trained research assistants were used to carry out the questionnaire inclusive of the

general research expectations. To improve their skills, a pilot testing was initiated, and schedule
Running head: SUPPLY CHAIN RISK MANAGEMENT STRATEGIES 10

appointments developed after that to administer the questionnaire. The objective if this study was

to determine the role of the Supply Chain Risk Management strategies in the performance of

F&B manufacturers in Kenya.

Pilot Test

According to Johnson& Christensen, (2010) pilot test is simply a test collection of data

that allows one to detect the weaknesses in the design and instrumentation as well as provide the

small scale data for the probability sample selection. It can also be said to be a pre-test done

before the primary study to determine whether the research instruments used in the main study

are accurate and will provide the expected data results. It played a significant role in improving

the questionnaire employed in the research.

Data Analysis and Presentation

The data analysis was dependent on the explanatory factor analysis as well as the

descriptive measures. This was to identify and validate each and every item playing a role to

each component in the model. According to the study, the supply chain risk management

strategies tend to have an important influence on the supply chain performance.

Conclusion

The article has delivered a broad literature review about the supply chain risk

management strategy and their influence on the performance of firms dealing with food and

beverages in Kenya. However, some of the Supply chain risk management strategies have been

proposed to improve their supply chain management. This includes; agility, supply chain re-
Running head: SUPPLY CHAIN RISK MANAGEMENT STRATEGIES 11

engineering, supply chain visibility and velocity, supply chain collaboration, economic supply

incentives, dynamic pricing and promotion

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