Effects of Supply Chain Management Practices on Competitive Advantage and Organizational Performance of the Dairy Processing Firms in Kenya
Wainaina, Charles Maina
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Under capacity, utilization has profound effects on the efficiency, flexibility and responsiveness of the dairy processing firms in Kenya. Further, under capacity utilization has negatively impacted the competitiveness (cost/price, quality and delivery dependability) of processed dairy products from the Kenyan processing firms in local and regional markets. There is a need to promote globally competitive and high performing dairy processing firms in Kenya. Thus, this study aimed to analyse the effects of SCM practices (supplier development, logistics management practices, CRM, ICT, and strategic sourcing) on the competitive advantage (CA) (quality, cost, delivery dependability) and OP (efficiency, flexibility and responsiveness) in the dairy processing firms in Kenya. Specifically, the study analysed the effects of SCM practices on the organisational performance in the dairy processing firms: Examine the effects of SCM practices on the CA in the dairy processing firms in Kenya: Determine the effects of CA on the organisational performance in Kenya: Evaluate the mediation role of CA in the relationship between organisational performance. The study's conceptual framework was hinged on the resource-based view (RBV) theory of a firm that links SCM practices with a high competitive advantage and enhanced organisational performance. Consequently, this study conceptualized supply chain management (SCM) practices (Supplier development, strategic sourcing, logistics management, ICT and CRM) as valuable resources that can drive competitive advantage and organisational performance of the dairy processing firms in Kenya. Structural equation modeling (SEM) techniques were applied to examine the relationships among the study variables. Additionally, multiple linear regression techniques were used to establish individual independent variables' contribution to dependent variables. A census survey was undertaken targeting 150 milk processing firms licensed by the Kenya Bureau of Standards (KEBS). The survey instruments' validity and reliability were examined through a pilot study and confirmatory factor analysis (CFA). Data reduction and the constructs' underlying structure were examined with exploratory factor analysis (EFA). Statistical Package for Social Sciences (SPSS9) version 20 and analysis of moment structure (AMOS) version 25 software were used for data analysis. The results revealed that SCM practices (supplier development practices, logistics management practices, CRM practices, ICT practices and strategic sourcing practices) significantly predicted both organisational performance B = 0.96, 95% CI [0.95, 0.98], and competitive advantage B = 0.95, 95% CI [0.93, 0.97]. Additionally, competitive advantage significantly predicted organizational performance, B = 0.98, 95% CI [0.97, 0.99]. Moreover, the results confirmed that competitive advantage has a mediating role in the relationship between SCM practices and organisational performance. In conclusion, SCM practices first generate a competitive advantage and, in turn, the competitive advantage enhance organizational performance. Based on these results, managers should consider adopting effective SCM practices to secure competitive advantage and enhance their companies' organisational performance. Moreover, policies should promote the adoption of SCM practices by the processing firms. Academically, this study enriches the literature in SCM practices and provides a conceptual framework for understanding the relationship between SCM practices, CA and organisational performance in Kenya's dairy processing firms.