supply chain agility and operations(1)
TRANSCRIPT
EFFECTS OF SUPPLY CHAIN AGILITY ON MANAGEMENT OF SUPPLY CHAIN
OPERATIONS IN GOVERNMENT MEDICAL SUPPLY AGENCY: A CASE STUDY OF
KENYA MEDICAL SUPPLIES AUTHORITY
AMBROSE KAMANDA
RESEARCH PROJECT SUBMITTED TO NAIROBI CENTRAL BUSINESS DISTRICT
CENTRE CAMPUS IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
THE DEGREE OF MASTERS OF SCIENCE IN PROCUMENT AND LOGISTICS IN
JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY
2016
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DECLARATION
I declare that this is my original work and has not been submitted to any other institution of
higher learning other than Jomo Kenyatta University of Agriculture and Technology for
academic credit.
Signed: _____________________________ Date______________________
Ambrose Kamanda
HD311-C004-1980/2014
Declaration by the University Supervisor:
This research project has been presented for examination with my approval as the Jomo Kenyatta
University of Agriculture and Technology supervisor
Signed: ___________________________ Date________________________
Dr. David Kiarie
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DEDICATION
I dedicate this project to my supervisor Dr. David Kiarie for the professional guidance offered
and my KEMSA supervisor for the corporation and their patience has been my source of
encouragement and inspiration.
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ACKNOWLEDGEMENT
I would like to express my sincere gratitude and appreciation to my mother and brothers for the
help and understanding they showed me during the whole period of this study. DR. David Kiarie
for his knowledge impartment towards the successful preparation of this research project, it’s
through his guidance and advice that I was able to prepare this project. All members of the Jomo
Kenyatta University of Agriculture and Technology (CBD Campus), both: students, teaching and
none teaching staff for the much-needed support they gave me.
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ABSTRACT
Supply chain agility is the ability of the supply chain partner organizations to adapt quickly with the rapid and speedily changes in business environments, It requires an appropriate blending of coordination, communication and speed in procurement, inventory, assembly and delivery of products and services is the fundamental tool for the management of supply chain operations needed for survival in turbulent markets, where environmental forces create additional uncertainty and technological advancement in manufacturing creates competitiveness and rivalry in the market resulting in higher requirement for management of supply chain operations.The Kenya Medical Supplies Authority(KEMSA) is a state corporation established (under the cap 466 of the laws of Kenya through legal notices No.17 of 11th February 2000) with the mandate to procure, warehouse and distribute medical commodities to all public health facilities in Kenya. KEMSA has not been successful in its key functions of purchasing, storage and distribution of drugs and related supplies owing to poor practices currently employed in its procurement and supply department. KEMSA have long recognized that a sound management of supply chain operations is critical if they are to achieve the continuous availability of public health commodities at health facilities. Profound weaknesses, generally found across all systems, include the inadequate availability of recording and LMIS tools, poor quality of records and reports, inadequate logistics training, and stock levels outside the established minimum and maximum levels for several commodities. Poor management of supply chain operations lead to poor inventory control at the service delivery point level, poor reporting for reproductive health commodities, and high wastage rates for vaccines. This study soughed to determine the effect of supply chain agility on the management of supply chain operations in Government Medical Supply Agency. The target population of this study constituted 110 of senior and middle supply chain and operation staff of KEMSA. The selection comprised the six operation departments in KEMSA staff working in the Procurement and Supply, Distribution Functions, Technical Advisory, Quality Assurance, Warehousing Function and Finance Department. on the regression analysis, technological advancement, competitiveness, consumer preference and environmental uncertainty can only explain 71.4% of the variations supply chain operations management at KEMSA. This implies that 28.6% of variations in the operations management is linked to other factors. A study is therefore required to establish the additional factors and their level of effect on agility in supply chain management operations at KEMSA These findings further clearly show that when all the independent variables are at zero, a unit increase in environmental uncertainty affects the operations management by 0.544; a unit increase in technological advancement affects the operations management by 0.138; a unit increase in consumer preferences affects the operations management of KEMSA by 0.334 and finally, a unit increase in competitiveness affects the KEMSA operations management by 0.132.Essentially, environmental uncertainty bear the highest effect on operations management,
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TABLE OF CONTENTS
DECLARATION........................................................................................................................... ii
DEDICATION.............................................................................................................................. iii
ACKNOWLEDGEMENT........................................................................................................... iv
ABSTRACT................................................................................................................................... v
TABLE OF FIGURES................................................................................................................. ix
LIST OF TABLES ....................................................................................................................... xi
ABBREVIATIONS AND ACRONYMS.................................................................................. xiii
OPERATIONAL DEFINATION OF TERM.......................................................................... xiii
CHAPTER ONE ........................................................................................................................... 1
INTRODUCTION......................................................................................................................... 1
1.1 Background of the Study....................................................................................................... 1
1.1.1 Global Perspective of Supply Chain Agility .................................................................. 3
1.1.2 Regional Perspective of Supply Chain Agility............................................................... 4
1.1.3 Local Perspective of Supply Chain Agility .................................................................... 5
1.1.4 Supply chain agility ........................................................................................................ 6
1.1.5 management of supply chain operations ........................................................................ 6
1.1.6 Kenya Medical Supply Agency...................................................................................... 7
1.2 Statement of the Problem ...................................................................................................... 8
1.3 Research Objectives and Questions ...................................................................................... 9
1.3.1 The General Objective of the Study ............................................................................... 9
1.3.2 Specific Objectives ......................................................................................................... 9
1.3.3 Research Questions....................................................................................................... 10
1.5 Justification of the Study..................................................................................................... 10
1.5.1 Government .................................................................................................................. 10
1.5.2 The Procurement Departments of Public Institutions................................................... 10
1.5.3 Other Stakeholders ....................................................................................................... 10
1.5.4 Researchers and Students ............................................................................................. 11
1.6 Scope of the Study............................................................................................................... 11
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1.7 Limitation of the Study ....................................................................................................... 11
CHAPTER TWO ........................................................................................................................ 12
LITERATURE REVIEW .......................................................................................................... 12
2.1 Introduction ......................................................................................................................... 12
2.2 Theoretical Review ............................................................................................................. 12
2.2.1 The Value Chain Model ............................................................................................... 12
2.2.2 Network Perspective Theory (NT) ............................................................................... 13
2.2.3 Systems Theory ............................................................................................................ 15
2.2.4 Quality Management Theory........................................................................................ 16
2.2.5 Goal Setting Theory...................................................................................................... 18
2.3 Conceptual Framework ....................................................................................................... 20
2.3.1 Environmental Uncertainty........................................................................................... 21
2.3.2 Technological Advancement ........................................................................................ 22
2.3.3 Consumer Preference.................................................................................................... 23
2.3.4 Competitiveness............................................................................................................ 25
2.4 Empirical Review................................................................................................................ 26
2.4.1 Environmental Uncertainty........................................................................................... 27
2.4.2 Technology ................................................................................................................... 29
2.4.3 Consumer Preferences .................................................................................................. 31
2.4.4 Competitiveness............................................................................................................ 32
2.5 Critique of Literature Review ............................................................................................. 35
2.6 Summary of Literature ........................................................................................................ 36
2.7 Research Gaps ..................................................................................................................... 36
CHAPTER THREE.................................................................................................................... 38
RESEARCH METHODOLOGY .............................................................................................. 38
3.1 Introduction........................................................................................................................... 38
3.2 Research Design.................................................................................................................. 38
3.3 Target Population ................................................................................................................ 38
3.4 Sample and Sampling Technique........................................................................................ 39
3.5 Instruments for Data Collection .......................................................................................... 40
3.6 Data Collection Procedures................................................................................................. 41
3.7 Pilot Test ............................................................................................................................. 41
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3.7.1 Reliability of Research ................................................................................................. 42
3.7.2 Validity of Research ..................................................................................................... 42
3.8 Data Processing and Presentation ....................................................................................... 43
CHAPTER 4................................................................................................................................ 45
DATA ANALYSIS AND PRESENTATION............................................................................ 45
4.1 Introduction ......................................................................................................................... 45
4.2 Response Rate ..................................................................................................................... 45
4.3 Results of pilot ................................................................................................................... 45
4.4 Demographic findings ........................................................................................................ 46
4.4.1 Gender of the respondents ............................................................................................ 46
4.4.2 Age of the respondents ................................................................................................. 47
4.4.3 Education Level of the respondents.............................................................................. 47
4.4.4 Job designation of the respondents............................................................................... 48
4.5 Descriptive Analysis ........................................................................................................... 49
4.5.1 Environmental Uncertainty........................................................................................... 49
4.4.3 Market unpredictability ................................................................................................ 53
4.5.2.1 Supply chain management software system.............................................................. 54
4.5.5.2 Information Technology Practices............................................................................. 55
4.6 Consumer Preferences......................................................................................................... 58
4.6.1 Differentiated customer products and services............................................................. 58
4.6.3 Factors to Consider when pricing a product ................................................................. 59
4.7 Competitiveness. ................................................................................................................. 61
4.7.1 Competitive Strategies.................................................................................................. 61
4.7.2 Cost Leadership Strategies ........................................................................................... 62
4.5.5 Management of Supply Chain Operations ....................................................................... 63
4.5.5.1 Process Management ................................................................................................. 63
4.8.2 Strategy......................................................................................................................... 65
4.8. 3 Customer integration ................................................................................................... 66
4.8.4 Supplier integration ...................................................................................................... 67
4.8.5 Internal integration ....................................................................................................... 68
4.9 Multiple Regression Analysis ............................................................................................. 69
4.9.1 Model Summary ........................................................................................................... 69
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4.9.2 F-Test (On Way Anova) ............................................................................................... 70
4.9.3 Coefficients................................................................................................................... 71
SUMMARY OF RESULTS, CONCLUSION AND RECOMMENDATION....................... 74
5.1 Introduction ......................................................................................................................... 74
5.2 Summary of the Study......................................................................................................... 74
5.3 Conclusion of the study....................................................................................................... 76
5.4 Recommendation of the study............................................................................................. 77
5.5 Areas for Further Study....................................................................................................... 78
REFERENCES............................................................................................................................ 79
APPENDIX 1: QUESTIONNAIRE........................................................................................... 89
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TABLE OF FIGURESFigure 2.1: Conceptual Framework .............................................................................................. 20
Figure 4.1: Gender of the Respondents…………………………………………………………..47
Figure 4.2: Life-Cycle in Inventory .............................................................................................. 47
Figure 4.3: Market Unpredictability ........................................................................................... 522
Figure 4.4: : Supply chain management software system........................................................... 523
Figure 4.5: nformation and technological practices.................................................................... 535
Figure 4.6: Differentiated customer products and services .......................................................... 59
Figure 4.7: Factors to consider when pricing a product................................................................ 60
Figure 4.8: Competitive strategies ................................................................................................ 61
Figure 4.9: Respondents ratings on adoption of competitive strategies ....................................... 62
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LIST OF TABLES
Table 2.1: The study population was divided into six categories as shown in table ...............40
Table 4.1: Response Rate…………………………………………………………………….45
Table 4.2: Reliability Results...................................................................................................46
Table 4.3: Age of the respondents ...........................................................................................47
Table 4.4:Education Level of the respondents.........................................................................48
Table 4.5: Education Level of the respondents........................................................................48
Table 4.6: Respondents Period of Working.............................................................................49
Table 4.7: Social Factors..........................................................................................................50
Table 4.8: Benefits of using IT ................................................................................................56
Table 4.9: Factors to consider in pricing of products ..............................................................59
Table 4.10: Cost leadership strategies .....................................................................................63
Table 4.11: Business process management..............................................................................64
Table 4.12: Rate of strategy Monitoring, development and implementation ..........................65
Table 4.13: The extent of information sharing between your organization and major
customers .................................................................................................................................66
Table 4.14: The extent of information sharing between your organization and major suppliers
..................................................................................................................................................67
Table 4.15: The extent of information sharing between your supply chain and internal
functions...................................................................................................................................68
Table 4.16: Descriptive statistics of the variables ...................................................................69
Table 4.17: Regression analysis model summary....................................................................70
Table 4.18: Anova....................................................................................................................71
Table 4.19: Coefficients Results ..............................................................................................72
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ABBREVIATIONS AND ACRONYMS
3PL Third-Party Logistics
EDI Electronic Data Exchange
EFQM European Foundation for Quality Management
ERP Enterprise Resource Planning,
FMS Flexible Manufacturing Systems
GE General Electric
KEMSA Kenya Medical Supply Agency
MOH Ministry of Health
N.H.C National Health Accounts
NHSSP National Health Sector Strategic Plan
NT Network Perspective Theory
P&G Procter and Gamble
SPC Statistical Process Control
SPSS Statistical Package for Social Sciences
TQM Total Quality Management
UNICEF United Nations International Children's Emergency Fund
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OPERATIONAL DEFINATION OF TERM
EAI-Enterprise Application Integration: software that works with specific software
platforms to tie together multi-applications to support enterprise integration (Sherer,
2010).
IS-Information Systems: An interrelated component working together to collect, process,
store and disseminate information to support decision making, coordination, control,
analysis and visualization in an organization (Tynjala, 2012).
IT-Information Technology: all the hardware and software technologies a firm need to
achieve its business objectives (Szymczak, 2013).
Environmental Uncertainty -The monitoring, evaluating, and disseminating of information
from the external and internal environments to key people within the corporation to
avoid strategic surprise and ensure the long-term health of the firm (Pehrsson &
Svensson, 2013).
S.C.A -Supply Chain Agility: the ability of the supply chain partner organizations to adapt
quickly with the rapid and speedily changes in business environments It requires an
appropriate blending of coordination, communication, and speed in procurement,
inventory, assembly and delivery of products and services (Potter, Towill, &
Christopher, 2015).
SCM. - Supply Chain Management: Supply Chain Management be the process of
strategically managing the procurement, movement and storage of materials, parts and
finished inventory and related information flows through the organization and its
marketing channels in such a way that current and future profitability are maximized
through the cost-effective fulfilment of orders (McCormack,2009).
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CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Supply chain agility is the ability of the supply chain partner organizations to adapt quickly with
the rapid and speedily changes in business environments (Potter, Towill, & Christopher, 2015). It
requires an appropriate blending of coordination, communication and speed in procurement,
inventory, assembly and delivery of products and services, as well as the return and re-use of
materials and services (Wang &Yen ,2012). Agility is a business-wide capability that embraces
organizational structures, information systems, logistics processes and, in particular, mindsets
(Davies et al, 2011). suggests that the key characteristic of an agile organization is flexibility.
Indeed, the origins of agility as a business concept lie in flexible manufacturing systems (FMS)
(Liao, Hong, & Rao, 2010) Initially it was thought that the route to manufacturing flexibility was
through automation to enable rapid change (i.e. reduced set-up times) and thus a greater
responsiveness to changes in product volume. Later this idea of manufacturing flexibility was
extended into the wider business context and the concept of agility as an organizational
orientation was born (Meziani, 2014).
The current business environment is characterized by constant change, shorter product lifecycles,
and increased demand uncertainty (Sadeh,2013). As economies accelerate, companies and
organizations receive and endure market realities such as customers that are more demanding,
dwindling product lifecycles, and severe price erosion (Bayus, Kang, & Agarwal, 2007). These
conditions have become common thus companies and researchers alike have turned to the
concept of agility in their quest for a sustainable source of competitive advantage. Supply chain
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agility has become the most dominant competitive tool for organizations and companies
operating in such an uncertain and ever-changing business environment.
Many organizations and companies have adopted lean supply chain practices to cut on cost but
this has not helped in doing so. Lean supply chain focuses mainly on using less to produce more
which though is of good intention has not fully helped solve all the issues. Some components of
agility are not covered by agility supply base e.g. flexibility, swiftness and alertness (Fayezi,
Zutshi, & O'Loughlin, 2016). A survey of recent research suggests that there are five dimensions
of agility that are common to the supply chain world: alertness, accessibility, decisiveness,
swiftness, and flexibility.
Each dimension represents a capability that companies must develop to achieve the desired level
of agility. Alertness is the ability to quickly detect changes, opportunities, and threats. In the
business setting before a business can respond to changes in its environment, it must first identify
those changes (Bottani, 2010) Truly agile companies have developed a high level of alertness.
The alertness dimension requires sensing emerging market trends listening to customers,
interchanging information with suppliers, monitoring demand, and sensing impending
disruptions, be they natural or man-made disasters.
Decisiveness is the ability to make decisions resolutely using the available information.
Businesses need to foster the ability to make resolute decisions on how to respond to changes.
Flexibility is a company's ability to modify its range of tactics and operations to the extent
needed to implement its strategy (Giunchetti, 2015) The generalization of supply base agility was
obtained from the literature on flexibility in economics (Fayezi, Zutshi, & O'Loughlin, 2016) and
was further developed in the context of agile manufacturing
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1.1.1 Global Perspective of Supply Chain Agility
Globally, companies have invested significant resources in the agile supply chain. Many have
invested largely in improving data accessibility within their supply chains which comes handy
during decision making and a swift response in case of any emergency. For example, Procter and
Gamble (P&G) and Wal-Mart have found a way to use information technology to share data.
P&G uses the GT Nexus platform to achieve real-time visibility into inventory flows across its
global supply chain (Connelly, Ketchen, & Hult, 2013) To achieve a "single version of the
truth," all supply chain partners are connected to the same cloud-based platform, getting access
to a common, real-time data set, which includes status of orders, inventory, shipments,
documents, and payments. Both companies can use this information to quickly make decisions to
reduce inventories or move products so they are located close to the end consumer when that
customer wants them.
Another example is General Electric (GE). With more than 500,000 suppliers in over 100
countries and a yearly budget of US $55 billion, GE understands the importance of agility
through accessibility. To increase its ability to collaborate quickly with suppliers, GE phased out
its homegrown Global Supplier Library and replaced it with the easier-to-use Supplier
Information Management software-as-a-service (SaaS) solution. GE's objective was to achieve
one common view of its huge supplier base and related data by uniting its sourcing empire within
a central information repository with multilingual capabilities (Chiang, Guo, & Pai, 2010). The
solution also has self-service functionality that allows each supplier to manage its own data. This
solution provides all supply chain members with real-time access to relevant data. As such, it has
allowed GE to experience superior levels of supply chain agility because every entity in its
supply chain can quickly coordinate its actions with those of other members.
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As companies get larger and their supply chain networks expand, more functions and
management layers become involved in decisions, leading to a slowdown in decision making.
Apple Inc. is instructive. Today Apple is a much-heralded example of supply chain agility, but
that was not always the case. From 1985 to 1993, Apple became increasingly bureaucratic. The
company had multiple committees to drive various corporate initiatives hence it became difficult
for Apple to make resolute decisions to capitalize on its ability to detect opportunities in the
market.
A supply chain operates within a specific range, and the company's supply chain agility is
limited to this range. Apple Inc.’s supply chain agility allowed it to redesign the iPhone just
weeks before the device was scheduled to be released. (Agarwal, Shankar, Tiwari,2007) The
challenge was to redesign an element of the phone and manufacture it quickly and cost
effectively while maintaining the highest quality. (Chandra, 2008) To accomplish this feat,
Apple capitalized on its suppliers' flexible operations that of the contract electronics
manufacturer Foxconn.
1.1.2 Regional Perspective of Supply Chain Agility
East African Breweries Ltd (EABL) has achieved it supply chain agility through the
management of its operation because of the upstream and downstream integration of supply
chain operations; According to Diageo (2011) regional firms which have achieved excellence in
the management of supply chain operations through implementation of effective supply chain
agility. East African Breweries Limited (EABL) has successfully implemented effective supply
chain agility process in its operations through focus; constantly changing business environment,
increasing market rivalry and competition, changing customer need and advanced in
manufacturing technology organizations cannot battle entirely as individual entities.
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Increasingly, they must rely on effective supply chain operations management (SCM) to
successfully compete in the global market and networked economies (Ziegler, 2014). to maintain
competitive advantage and stay ahead of the consumers and reactive approach which are driven
by events happening in the marketplace that requires responses ranging from competitor
activities and changes in regulatory environment. EABL continuously reviews/scans its
environment and responds to the changes in the external environment based on the potential
impact of each change. (McCormack,2009).
1.1.3 Local Perspective of Supply Chain Agility
In Kenya, few studies have been done on an aspect of the agile supply chain with many focusing
on dynamic procurement practices did a study on factors affecting supply chain agility in the
medical health sector (a case study of Kenya medical supply authority) (Langat ,2015). The
study recommended that the agency should fully embrace supply chain agility to improve service
delivery, reduce stock out by being market sensitive, enabling process integration in the
organization, embracing swift response and finally being flexible.(Jovanovic, 2007) did a study
on supply chain management practices and performance of a public health institution specifically
medical supplies agency in Kenya, and he found out that effective supply chain management
impact positively on operational performance and competitive priorities of the firm.
Mutuerandu & Iravo, (2014) did a study on procurement practices in Kenya public corporations;
however, his study focused much on procurement practices in relation to risk management in
State Corporation leaving a gap on dynamic aspect of the procurement practices. He suggested a
further research on procurement best practices and in another setting which this study sought to
fill by focusing on the dynamic aspect of the procurement practices and in both private and
public setting.
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1.1.4 Supply chain agility
Supply chain agility helps ensure that deliveries arrive on time and in full, an increase in on-time
deliveries over companies with less agile supply chains. improved deliveries on time while
reducing days for holding. (Pehrsson & Svensson, 2013).
The concept of Agility in Market sensitive and Supply chain is capable of reading and
responding to real demand with Information-based supply chain, rather than inventory-based.
Network-based and the internet enables partners in the supply chain to act upon the real demand
Process integration, Collaborative working between buyers and suppliers, joint product
development, common systems and shared information Agile supply (McCormack,2009).
Retailers can only compete when they have the ability to look at current demand and make
allocation decisions on the fly as trends change. Impact of Low Supply Chain Agility When
retailers don’t have the systems in place to bring all of their supply chain data to a single
platform, they miss crucial information on inventory location and availability across regions and
channels Supply chain agility enables Demand characteristics, supply Demand characteristics
and supply capabilities end-customers become more knowledgeable about product Lean supply
chain Agile supply chain Efficiency, cost Responsiveness and customer Focus (Wong, 2011).
1.1.5 management of supply chain operations
Supply chain Operations management is an area of management concerned with overseeing,
designing, and controlling the process of production and redesigning business operations in the
production of goods or services (Ontañón & Meseguer, 2015). It involves the responsibility of
ensuring that business operations are efficient in terms of using as few resources as needed and
effective in terms of meeting customer requirements. It is concerned with managing the process
that converts inputs (in the forms of raw materials, labor, and energy) into outputs (in the form of
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goods and/or services (Lai, Edwin, 2008). Design Planning and control Operations Strategy
Improvement Supply chain planning and control the operation supplies… the coordinated
delivery of products and services the market requires specified time, quantity and quality of
products and services Supply chain planning and control for successful SCM (Supply Chain
Management), integrating the activities of manufacturers, inventory, warehouse, suppliers,
transporter, customers and retailers need to be in synchronization. (McCormack,2009).
This synchronization plays a great role in products and service delivery at the accurate time to
the end user. It mainly aims to the customer satisfaction with the reduced cost and increased
productivity. With the advancement in e- business world, it becomes effective to manage the
supply chain as they need to handle a large number of suppliers and end users at the same time
(Agarwal, Shankar& Tiwari,2007).
1.1.6 Kenya Medical Supply Agency
The Kenya Medical Supplies Authority(KEMSA) is a state corporation established (under the
cap 466 of the laws of Kenya through legal notices No.17 of 11th February 2000) with the
mandate to procure, warehouse and distribute medical commodities to all public health facilities
in Kenya.
KEMSA acts as the representative of Kenya in the purchase, storage and distribution of drugs to
the various health facilities and institutions. Despite being a large, well-funded and established
organization that enjoys the protection of the Kenya government and state agencies, KEMSA has
not been successful in its key functions of purchasing, storage, distribution of drugs and related
supplies owing to poor practices currently employed in its procurement and supply department.
(Deadman,2012). This has caused the organization to assume a negative, dysfunctional and
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unfavorable image among the stakeholders, competitors’ government organs and the Kenya
public (Ministry of Health Journal November 2012).
Implementation of supply base agility practices strengthen transparency and accountability thus
reduced opportunities for corruption by strengthening KEMSA’s procurement capacity and
accountability, improve supply chain management of public health, establish capacity within the
Ministry of Health to monitor KEMSA’s procurement function and assess compliance,
strengthen the supervision of medical supplies delivered to rural health facilities.
1.2 Statement of the Problem
Supply chain agility has become a competitive advantage factor to both private and public sector
in Kenya; this is due to change in the business environment which is characterized by constant
change, shorter product lifecycles, and increased demand uncertainty (Sadeh, 2013). Dynamic
supply base agility practices have not been effectively embraced in Kenya’ public sector (Langat,
2015). The Kenyan Ministry of Health (MOH) have long recognized that Poor management of
supply chain operations leads to poor inventory control at the service delivery point level, poor
reporting for reproductive health commodities, and high wastage rates for vaccines. In addition,
HIV test kits were in short supply and a number found in the central cold store had expired
before use (Langat, 2015Conversely, essential drugs, including anti-malaria drugs, were
consistently undersupplied for those in high demand, and oversupplied for those in low demand.
(NACC ,2008). A kit system is used for essential drugs; however, the kit’s contents have not
been updated since the mid-1980s. In general, lack of transportation and communication among
the levels of the system make supervision and monitoring of stock levels and consumption
difficult (N.H.A, 2010). According to World Bank as the major donor for Reproductive Health
and HIV/AIDS financing, supply chain agility has declined at an alarming rate resulting in a
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decrease in global GDP to up to 4.7% (WB, 2014). According to (UNICEF ,2012) the primary
provider of vaccines and some of the essential drugs in Kenya, Kenya’s infant mortality rate
stands at 48%, with the country’s life expectancy at birth being 58%. This is significantly lower
than the global average of 68%.
Due to these factors, there has been an acute decline in operations performance to stamp out the
various challenges that KEMSA faces and initiate supply chain agility to manage operations and
map is supply chain activities. since health care is a service industry, which means that the
customer is part of production process. (Richard, 2009).
1.3 Research Objectives and Questions
1.3.1 The General Objective of the Study
The general objective of this study was to determine the effect of supply chain agility on the
management of supply chain operations at Government Medical Supply Agency. (case study of
Kenya Medical Supply Agency).
1.3.2 Specific Objectives
i. To determine how consumer preference affects supply chain agility on the management
of supply chain operations at Government Medical Supply Agency.
ii. To assess how competitiveness affects supply chain agility on the management of supply
chain operations at Government Medical Supply Agency.
iii. To assess how environmental uncertainty affects supply chain agility on the management
of supply chain operations at Government Medical Supply Agency.
iv. To find out how technological advancement affects supply chain agility on management
of supply chain operations at Government Medical Supply Agency
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1.3.3 Research Questions
i. Does competitiveness affect supply chain agility on the management of supply chain
operations at Government Medical Supplies Agency?
ii. Does environmental uncertainty affect supply chain agility on the management of supply
chain operations at Government Medical Supplies Agency?
iii. Does consumer preference affect supply chain agility on the management of supply chain
operations at Government Medical Supplies Agency?
iv. Do technological advancements affect supply chain agility on the management of supply
chain operations at Government Medical Supplies Agency?
1.5 Justification of the Study
1.5.1 Government
Findings and recommendations on supply base agility from this study was fundamental to the
government such that if implemented in its agencies, corporations and ministries positively
affected its operations. This greatly impacted on its service delivery to the people which is its
core function and cut costs significantly.
1.5.2 The Procurement Departments of Public Institutions
Management and staff from procurement departments greatly learned and benefited from this
study as it highlighted best supply base agility practices Also the study pinpoints various
companies that have managed to incorporate these practices thus helping interested and
upcoming enterprises to use this information as case studies for their own planning and practice.
1.5.3 Other Stakeholders
These include procurement professionals, institutions, contractors and suppliers in the supply
chain industry. This study provides useful, relevant and up to date information on supply base
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agility, its limitations and challenges and how it impacts on operations of Organizations It also
provides recommendations which comes in handy during implementation by the stakeholder.
1.5.4 Researchers and Students
Other researchers and students greatly benefited from the study findings and its recommendation
thus assisting them in their ongoing research or future research work.
1.6 Scope of the Study
The research tested the significance of supply chain agility on the management of the operations
at KEMSA. The study focused on the importance of agile supply chain and determine the factors
affecting supply chain agility in KEMSA and how these factors affect service delivery. An
analysis of these practices with respect to KEMSA helped to determine their influence on the
performance of operations in government medical supply agencies. The study was carried out at
KEMSA headquarters which is located along Commercial Street in Industrial Area, Nairobi.
1.7 Limitation of the Study
Due to confidentiality policy by most government agencies and corporations, there was
limitation sharing of information to protect agencies’ confidential matters. However, the
researcher did present a signed introduction letter from the University to the KEMSA
management to avoid suspicion and enable discloser of more information.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter involves literature review where a deeper look in the subject matter is done. A
thorough research on agile supply base practices and its effect on performance from academic
books, journals, and other research materials is done. It comprises the: theoretical review,
conceptual framework, empirical review critique of literature summary and research gaps.
2.2 Theoretical Review
According to Kothari (2009), a theory is a coherent group of tested propositions commonly
regarded as correct that can be used as principles of explanation and prediction for a class of
phenomena. The theoretical review is the structure that can hold or support a theory of a research
study. The theoretical review introduces and describes the theory that explains why the research
problem under study exists. This study used five theories that help explain the arguments
advanced in this study on agility.
2.2.1 The Value Chain Model
The idea of the value chain is based on the process view of organizations, the idea of seeing a
manufacturing (or service) organization as a system, made up of subsystems each with inputs,
transformation processes, and outputs. Inputs, transformation processes, and outputs involve the
acquisition and consumption of resources - money, labor, materials, equipment, buildings, land,
administration and management (Bayus, Kang, & Agarwal, 2007). How value chain activities are
carried out determines costs and affects profits. Most organizations engage in hundreds, even
thousands, of activities in the process of converting inputs to outputs. These activities can be
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classified generally as either primary or support activities that all businesses must undertake in
some form.
According to Singh, (2008), the primary activities are: Inbound Logistics which involves
relationships with suppliers and include all the activities required to receive, store, and
disseminate inputs; Operations which involves all the activities required to transform inputs into
outputs (products and services); Outbound Logistics which includes all the activities required to
collect, store, and distribute the output; Marketing and Sales which includes all activities that
inform buyers about products and services, induce buyers to purchase them, and facilitate their
purchase and Service which includes all the activities required to keep the product or service
working effectively for the buyer after it is sold and delivered.
Secondary activities are Procurement which is the acquisition of inputs, or resources, for the
firm; Human Resource management that consists of all activities involved in recruiting, hiring,
training, developing, compensating and (if necessary) dismissing or laying off personnel; (Bayus,
Kang, & Agarwal, 2007). Technological Development which pertains to the equipment,
hardware, software, procedures and technical knowledge brought to bear in the firm's
transformation of inputs into outputs and Infrastructure that serves the company's needs and ties
its various parts together, it consists of functions or departments such as accounting, legal,
finance, planning, public affairs, government relations, quality assurance and general
management.
2.2.2 Network Perspective Theory (NT)
The network perspective was developed in marketing as an alternative to the dominant marketing
management perspective (Möller & Svahn, 2009) The theory argues that firms rely not only on
their relationship with direct partners but with the extended network of relationships with supply
14
chain firms. It argues that competitive advantage can only be achieved through efficiently and
effectively orchestrated supply chains. Therefore, the focus of the NT is to develop long-term,
trust-based relationship between supply chain firms. The network approach has a more inductive
research approach focusing on the phenomena of exchange between companies and tries to
describe and explain why this exchange occurs
According to Korfiatis, (2006), NT is based on an assumption of the importance of relationships
among interacting units. The social network perspective encompasses theories, models, and
applications that are expressed in terms of relational concepts or processes. Along with growing
interest and increased use of network analysis has come to a consensus about the central
principles underlying the network perspective. In addition to the use of relational concepts, the
following were noted as being important: Actors and their actions are viewed as interdependent
rather than independent, autonomous units; Relational ties (linkages) between actors are channels
for transfer or "flow" of resources (either material or nonmaterial); Network models focusing on
individuals view the network structural environment as providing opportunities for or constraints
on individual action; Network models conceptualize structure (social, economic, political, and so
forth) as lasting patterns of relations among actors.
The network can be divided into three concepts: actors, resources, and activities. All form their
own networks but are dependent on each other (Bjørn & Hauschild, 2012). The relationship
between the different actors is important in order to understand the network. The relationships
are characterized by continuity, multiplicity and specificity. Over time mutual knowledge and
trust create a framework for future business among the actors in the network. The actors can be
linked to each other through technical, social, cognitive, legal, economic and other ties
(Hammarkvist, Håkansson and Mattsson). When the firm has access to the network it should
15
expand its knowledge about it by learning of its current activities carried out in the network
(Huggins, 2009). The main message in the network view is that cooperation is more efficient
than competition for the firm’s development. If companies trust each other and develop bonds
and communication channels between the different actors in the network, the resources and
activities in the network can be organized in an efficient way. This creates competitive firms.
2.2.3 Systems Theory
Systems Theory is the transdisciplinary study of the abstract organization of phenomena,
independent of their substance, type, or spatial or temporal scale of existence. It investigates both
the principles common to all complex entities and the (usually mathematical) models which can
be used to describe them. Systems theory was proposed in the 1940's by the biologist Ludwig
von Bertalanffy (Callender, 2007) and furthered by Ross Ashby von Bertalanffy was both
reacting against reductionism and attempting to revive the unity of science. He emphasized that
real systems are open to, and interact with, their environments and that they can acquire
qualitatively new properties through emergence, resulting in continual evolution.
A system can be said to consist of four things. The first is objects – the parts, elements, or
variables within the system. These may be physical or abstract or both, depending on the nature
of the system. Second, a system consists of attributes – the qualities or properties of the system
and its objects. Third, a system had internal relationships among its objects. Fourth, systems exist
in an environment. A system, then, is a set of things that affect one another within an
environment and form a larger pattern that is different from any of the parts. (Prenkert, 2010)
The fundamental systems-interactive paradigm of organizational analysis features the continual
stages of input, throughput (processing), and output, which demonstrate the concept of
openness/closedness. A closed system does not interact with its environment. It does not take in
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information and therefore is likely to atrophy, that is to vanish. An open system receives
information, which it uses to interact dynamically with its environment. (Jovanovic, 2007).
Openness increases its likelihood to survive and prosper. Several system characteristics are:
wholeness and interdependence (the whole is more than the sum of all parts), correlations,
perceiving causes, chain of influence, hierarchy, super systems and subsystems, self-regulation
and control, goal-oriented, interchange with the environment, inputs/outputs, the need for
balance/homeostasis, change and adaptability (morphogenesis) and equifinal: there are various
ways to achieve goals. Different types of networks are a line, commune, hierarchy and dictator
networks. Communication in this perspective can be seen as an integrated process – not as an
isolated event.
In supply chain management context system theory brings together various components of a
complex supply chain (that is the human, capital, information, materials and financial resources
etc.) to form a subsystem which is then part of a larger system of supply chains or network.
(Paulraj & Chen 2007). The theory argues that for a holistic perspective ST must be employed to
understand the internal and external factors that shape an organization’s supply chain
performance. There are two issues that organizations should consider in terms of their supply
chains. First, the issue of supply chain topology is pertinent. This principle would indicate that
the longer the supply chain in terms of its links, the less adaptable the supply chain will be to
possible changes needed for it to survive.
2.2.4 Quality Management Theory
Total Quality Management (TQM) is a quality improvement body of methodologies that are
customer-based and service oriented. TQM was first developed in Japan having been started by
Joseph Juran, W Edwards Deming, and Armand Feigen bum; and then spread in popularity.
17
TQM refers to a set of customer based practices that intend to improve quality and promote
process improvement, there are also several different theories at work guiding TQM practices.
(Kaluarachchi, 2010) TQM is the way of managing for the future, and is far wider in its
application than just assuring product or service quality – it is a way of managing people and
business processes to ensure complete customer satisfaction at every stage, internally and
externally. (Lai, Edwin, 2008.) The core of TQM is the customer-supplier interfaces, both
externally and internally, and at each interface lie a number of processes. This core must be
surrounded by a commitment to quality, communication of the quality message, and recognition
of the need to change the culture of the organization to create total quality. These are the
foundations of TQM, and they are supported by the key management functions of people,
processes, and systems in the organization. According to Heizer & Render, quality is the ability
of a product or service to meet customer/user needs. These may include performance,
appearance, availability, delivery, reliability, maintainability, cost effectiveness and price
(Wong, 2011). It is, therefore, imperative that the organization knows what these needs and
expectations are. A wide range of tools and techniques is used for identifying, measuring,
prioritizing and improving processes which are critical to quality. These process improvement
tools and techniques include DRIVE (Define, Review, Identify, Verify, and Execute), process
mapping, flowcharting, force field analysis, cause, and effect, brainstorming, Pareto analysis,
Statistical Process Control (SPC) etc.
(EFQM ,2007) proposes a model of excellence leading to improved business results. The model
is based on the concept that an organization will achieve better results by involving all people in
the continuous improvement of their processes. Investors in people have drawn attention to the
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importance of employees’ engagement for building an effective relationship between an
organization and its people.
2.2.5 Goal Setting Theory
This theory began with the early work on levels of aspiration developed by Kurt Lewin but has
since been primarily developed by Dr. Edwin Locke, who began goal setting research in the
1960s. The research revealed an inductive relationship between goal setting and improved
production performance. A goal is the aim of an action or task that a person consciously desires
to achieve or obtain (Heimerdinger & Hinsz, 2008) Goal setting involves the conscious process
of establishing levels of performance in order to obtain desirable outcomes. The theory states
that the source of motivation is the desire and intention to reach a goal. If individuals or teams
find that their current performance is not achieving desired goals, they typically become
motivated to increase effort or change their strategy (Latham & Locke, 2007)
Locke and Latham stated that "the goal setting theory was based on the premise that much
human action is purposeful, in that it is directed by conscious goals" (Miles & Clenney, 2012)
The decision to set a goal results from dissatisfaction with current performance levels. Setting a
goal should include setting a structure that directs actions and behaviors which improve the
unsatisfactory performance. Setting a goal will change a person's behavior in order to work
towards achieving the set goal. Goal-setting theory predicts that people will channel effort
toward accomplishing their goals, which will in turn affect performance (Locke & Latham,
2006) found a direct linear relationship between goal difficulty, the level of performance, and
effort involved. The theory states that several conditions are particularly important for successful
goal achievement. These include goal acceptance and commitment, goal specificity, goal
difficulty, and feedback (O'Neil & Drillings, 1994 Goal mechanisms affect performance by
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increasing motivation to reach set goals. These mechanisms are inputs that affect behavior in
groups or individuals, which serve to increase attention to a goal, energy in pursuing a goal,
persistence in achieving a goal, and ability to strategize to reach a goal.
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2.3 Conceptual Framework
A conceptual framework is a set of broad ideas and principles taken from relevant fields of
inquiry and used to structure a subsequent presentation (Kombo, 2006). Conceptual frameworks
are used to explain how the independent variables affect the dependent variable. The Study uses
supply chain performance as dependent variable and supplier management elements as
independent variables
Independent Variables Dependent Variable
Environmental Uncertainty1.Social factors2: shorter goods’ life cycles,3: market unpredictability
Technological Advancement
1: Product Innovations2: information system3: Quality
Consumer Preference1: Product Differentiation2: Price Sensitivity3: Bargaining power
Competitiveness
1: Delivery2: switching cost3: Cost Leadership
Management of supply chain operations
1: strategy 2: Processes management3: Information integration
Figure 2.1: Conceptual Framework
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2.3.1 Environmental Uncertainty
Uncertainty is a source of both risk and opportunity (Park & Talbot, 2012).It refers to the
situation when the company does not have sufficient knowledge to predict all potential scenarios
resulting from decisions or operations (Pehrsson & Svensson, 2013) Thus Environmental
uncertainty refers to uncertain changes occurring externally and the degree of instability in the
business environment that may occur at any point within a global supply chain network (Wang,
Yeung, & Zhang, 2011; Yi, 2011). The market turbulence of the past years may have
foreshadowed a new phase of globalization, one in which volatility is likely to remain constant.
Even after the current recession lifts, underlying fluctuations in energy, commodity and currency
rates, the emergence of new and non-traditional competitors, and rising customer demands will
continue to roil traditional business and operating models for some time to come.
The turbulent market conditions have heightened the need for more competitive strategies to be
developed for growth (Ambe, 2010). Business, economics, and the political environments are
increasingly subjected to unexpected shocks and discontinuities. These might result in an
inability of an organization to understand, estimate, make sense of how an environment might
change, the potential impact of the changes, and whether an organization’s response to such
changes might be successful or not (McCormack,2009). Major sources of environmental
uncertainties are customers (demand), suppliers (supply), technology (structural) and competitors
(Fynes, de Búrca, & Marshall, 2004; Wong & Boon-it, 2008; Huang et al., 2014; Hua 2013; Xu,
Zhao, Li, & Sun, 2010), while other earlier studies have identified several sources of uncertainty
such as demand, manufacturing process, supply and control uncertainty.
Many strategic issues that confront business today stem from the new rules of competition,
globalization down pressure on price and the customer taking control. Also, because of the recent
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economic meltdown, companies around the world are confronted by a perfect storm: frozen
credit market and long global recession. Events are moving so rapidly that it is almost impossible
to access the implication of the meltdown for the days ahead, let alone the years to come
(Njoroge, 2009). Environmental uncertainty is multidimensional in nature and as a result, firms
frequently face multiple environmental uncertainties concurrently (Wong, 2011). Uncertainty in
the supply chain can take many forms, e.g. uncertainty regarding the reliability of suppliers, the
actions of competitors, or the quality of products
2.3.2 Technological Advancement
Technology underpins nearly every business process today; it can help those in the workplace
improve their use of critical data. Despite continuous concerns over cost, security, reliability, and
responsiveness, technology has delivered a great deal over the past decade. Significant
investments are required to allow information sharing across entities so that activities and
decisions throughout the supply chain can be coordinated. (Szymczak, 2013). To stay
competitive globally and remain on the cutting edge of a complex business world, more
companies are incorporating technology into their supply chain management systems today.
In recent years, consumers have become increasingly demanding, setting their expectations high
when it comes to quality and service. At the same time, supply chain managers have come to
realize that the latest technology can help them ensure better accountability and visibility,
allowing them to maintain tight control and stay ahead of the pack. Traditional logistics and
supply chain operations are slowly but surely giving way to more streamlined, mobile processes
that rely heavily on wireless devices and applications to operate at peak efficiency levels around
the clock and around the world. (Lai, Edwin, 2008.)
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Recent advances in cost-effective IT have made the cost-benefit trade-off favorable toward well-
coordinated supply chain management. Examples such as Client-Server architecture, enterprise
resource planning ERP, electronic data exchange EDI are some of the advances made.
(Michalarias, Omelchenko, & Lenz, 2009).
According to Clint Reiser, research analyst with ARC Advisory Group, several technology-
agnostic mobile application platforms have been developed to help suppliers extend their
enterprise, supply chain, and commercial applications to mobile devices. These applications run
on handheld cellular devices and offer features such as information capture and retrieval,
dispatching, driver and route progress tracking, and location and event reporting. The mobility,
flexibility, and convenience of wireless devices mean supply chain managers can coordinate
processes at every link in the chain, regardless of their physical location (Lai, Edwin, 2008.)
In addition, employees, vendors, and other supply chain partners can play active roles in
ensuring efficiency—for example, truck drivers can use GPS-equipped devices to immediately
report transportation snags that may disrupt processes further along the supply chain. (Paulraj &
Chen 2007). Software programs and cloud computing have greatly enhanced the tracking of
materials and products, with real-time status updates available at the touch of a button. They also
allow companies to adjust production schedules and inventory levels on the fly.
2.3.3 Consumer Preference
Consumer preference is defined as a set of assumptions that focus on consumer choices that
result in different alternatives such as happiness, satisfaction, or utility. Also, we can define
Consumer preferences as the subjective (individual) tastes, as measured by utility, of various
bundles of goods. (Lai, Edwin, 2008).
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They permit the consumer to rank these bundles of goods according to the levels of utility they
give the consumer. Note that preferences are independent of income and prices. Ability to
purchase goods does not determine a consumer’s likes or dislikes.
How consumers make choices is an important question. A recent analysis of a sample of
consumers finds that the difficulty of selecting one alternative was one of the most important
causes for delaying a number of purchase decisions (Liao & Chu, 2013) The uncertainty of
determining the most preferred alternative plays no role in the rational theory of choice, which
assumes that prior to choice the vector of attributes is reduced to a scalar value utility (Li, Hayes,
& Ziegler, 2014).The entire consumer preference process results in an optimal choice. Consumer
preferences allow a consumer to rank different bundles of goods according to levels of utility, or
the total satisfaction of consuming a good or service.
The consumer makes decisions by allocating their scarce income across all possible goods in
order to obtain the greatest satisfaction. Formally, we say that consumers maximize their utility
subject to budget constraint. The utility is defined as the satisfaction that a consumer derives
from the consumption of a good. As noted above, utility’s determinants are decided by a host of
noneconomic factors. Consumer value is measured in terms of the relative utilities between
goods.
In order to develop a model, there are some assumptions about the consumer’s preferences to be
made. (Agarwal, Shankar, Tiwari,2007).
There assumptions are: decisiveness, where given any two commodity bundles in commodity
space, the consumer must be able to rank them, consistency, where the consumer must be
consistent in preference and rankings, Transitivity which refers if a consumer prefers A to B and
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prefers B to C, then she should prefer A to C and lastly non-satiation where a consumer always
prefers more to less of a commodity (Liao & Chu, 2013).
2.3.4 Competitiveness
Competitiveness is the ability and performance of an organization, sub-sector or country to sell
and supply goods and services in a given market, in relation to the ability and performance of
other firms, sub-sectors or countries in the same market (Lai, Edwin, 2008.). Due to the
influences of globalization and fierce competition in the market, organizational agility and the
competitiveness have been increasingly considered. Many companies have risen to the top of
their industry by creating and sustaining a single competitive advantage. In their 1982 book "In
Search of Excellence," Tom Peters and Robert H. Waterman Jr. described companies that rode a
specific core competency to industry leadership. While instructive, their work became more
revealing when, 10 years later, several of those companies had lost their competitive edge and
were rapidly losing their market leadership (Lai, Edwin, 2008.).
The "Five Forces" analysis of a company's competitive environment, developed by Michael
Porter, still provides a useful tool to identify external competitive challenges and, in turn,
potential strategies for competitive advantage. In Porter's framework, competitive advantage
comes through being the lowest cost supplier, providing differentiated capabilities or focusing on
a particular area of strength. But in today's environment, supply chain advantages can more
readily and rapidly be matched by competitors through such means as common access to third-
party logistics providers (3PLs), advanced communication technology, advanced inventory and
distribution center technology and concepts, and fewer entry barriers. (Agarwal, Shankar,
Tiwari,2007).
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To achieve this transformation and truly gain a significant competitive advantage requires a
different way of thinking about supply chain performance and structuring. The key is a total
commitment to seamless, value-focused supply chain performance. (Lai, Edwin, 2008).
Competitive advantage can be achieved through: first, collaborating to integrate the value chain
virtually. Collaboration can be at three levels: across functions, across the value chain, and
beyond the value chain. For collaboration to work, it must be led by the dominant player, based
on a win-win partnership with shared goals, and focused on the long term with clear markers for
success. Secondly through replacing the one-size-fits-all with a tailored approach. Organizations
are more diverse than ever, thus taking a one-size-fits-all supply chain approach does nothing
more than compromise segment-specific needs. Thirdly, planning more frequently and across
multiple horizons. Supply chain managers must be able to see the big picture while also focusing
on the details (Sun, Hsu, & Hwang, 2009). The key to doing both is infrequent and multi-horizon
planning sessions: weekly reviews for short-term planning and regular reviews for long-term
planning. Fourthly, implementing pull replenishment across the value chain. To deal with
pressure on costs and services, leading supply chain organizations to implement pull
replenishment strategies across their entire value chains from customers to vendors. Lastly
actively managing complexity. The best supply chain strategies integrate complexity
management in all planning processes to prune that which is non-value added and capitalize on
that which is value added.
2.4 Empirical Review
Recent literature in the supply chain has an address and proposes that the key factor to surviving
in these changing situations is through agility by the formation of the responsive supply chain.
Researchers and scholars have advanced theories and concepts to demonstrate the importance of
27
supply chain agility in any sector of an economy. Based on the study of (Jovanovic, 2007). the
assessment and prioritizing of suppliers for purchasing are considered as a key factor affecting
the ability of supply process.
Wong, (2011) addressed the change in consumer demands as the most important environmental
pressure, and in addition to the aforementioned issue, (Liao & Chu, 2013). stated that social
factors should be considered as some effective environmental pressures in an agile supply chain
and that business processes and structures, supply chain agility, and performance outcomes are
inextricably linked in many ways.
2.4.1 Environmental Uncertainty
Rapid changes and turbulence in business operations environment and the advent of cooperation
among firms have made supply chain management (SCM) important in determining the
sustainable growth for contemporary companies. In this context, in a complex network
relationship, which links among firms, lots of uncertain factors could affect the performance of a
supply chain (Chen, Tsai, Huang, & Liang, 2012). Accordingly, recognizing the factors of
environment uncertainty is important for firms to plan a supply chain strategy. Thus, a structural
fit model is needed to address the relationship between supply chain integration (SCI) and
environment uncertainty (EU). (Chen, Tsai, Huang, and Liang 2012). study tends to deepen the
knowledge of performance implication of fit between SCI and EU. The researchers contend that
this strategic alignment may contribute to supply chain performance. Based on the SCI-EU fit
model, companies can evaluate the uncertainty in their situations based on the subjects they
should integrate in order to gain the supply chain performance (Chen, Tsai, Huang, & Liang,
2012).
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Understanding the requirement of a successful fit among strategies is of interest to both
practitioners and academics. The overall picture emerging from (Paulraj & Chen, 2007). the
study highlights the performance implication of fit among two aspects, namely supply chain
integration and environment uncertainty (Paulraj & Chen 2007). suggest that their study is one of
the few studies offering performance implication of fit among those dimensions. The researchers
further claim that further empirical study is required to exemplify the correctness of the model
and by conducting alternative perspective of fit with statistical analysis, it is possible to find a
more proper fit that has more significant effect on performance implications (Paul raj & Chen,
2007).
Environmental uncertainty plays a crucial role in the implementation of strategic supply
management initiatives (Sun, Hsu &Hwang 2009). adopts the resource dependence theory to
explain the direct effect of supply chain uncertainties on strategic supply management,
operationalized as a second-order construct comprising strategic purchasing, long-term
relationship orientation, interfirm communication, cross-organizational teams and supplier
integration (Sun, Hsu, & Hwang, 2009). Using structural equation modeling, the 200-firm
sample provided evidence that strategic supply management is driven by supply and technology
uncertainty. Demand uncertainty, on the other hand, was not found to have a significant impact
on strategic supply management. Findings further support the link between strategic supply
management and the performance of both buying and supplying firms (Sun, Hsu, & Hwang,
2009).
Wong, Boon-itt, & Wong( 2011) extends prior supply chain research by building and empirically
testing a theoretical model of the contingency effects of environmental uncertainty (EU) on the
relationships between three dimensions of supply chain integration and four dimensions of
29
operational performance. Based on the contingency and organizational information processing
theories, the researchers argue that under a high EU, the associations between supplier/customer
integration, and delivery and flexibility performance, and those between internal integration, and
product quality and production cost, is strengthened (Wong, Boon-itt, & Wong, 2011). These
theoretical propositions are largely confirmed by multi-group and structural path analyses of
survey responses collected from 151 of Thailand’s automotive manufacturing plants (Wong,
Boon-itt, & Wong, 2011). The researchers contribute to operations management contingency
research and provide theory-driven and empirically proven explanations for managers to
differentiate the effects of internal and external integration efforts under different environmental
conditions (Wong, Boon-itt, & Wong, 2011).
2.4.2 Technology
Technology is a vehicle to enhance supply chain competitiveness and performance by enhancing
the overall effectiveness and efficiency of the logistics system. Hence choosing the right
technology for various logistics activities or sub-processes is very crucial to any business to gain
a competitive advantage in today's competitive market (Ugboma, Emeghara, Ikeogu, & Ugboma,
2008). For instance, a cycle manufacturer must see how it can integrate the smallest component
provider- namely, a brake shoe supplier and the dealer at the rural center, in order to optimize
production, run and retain the customer instead of losing to the competitor. Today integration in
the supply chain is possible due to available technology leading to efficiency in the supply chain
only if the supply chain partners adopt the right strategy (Ugboma, Emeghara, Ikeogu, &
Ugboma, 2008).
New information technologies and e-business solutions have transformed supply chain
operations from mass production to mass customization. (Basu and Siems, 2004) assesses the
30
impact of these innovations on economic productivity, focusing on the macroeconomic benefits
as supply chain operations have evolved from simple production and planning systems to today's
real-time performance management information systems using advanced e-business technologies
(Basu & Siems, 2004). While many factors can influence macroeconomic variables, the impact
of IT-enabled supply chains should not be overlooked. (Basu and Siems 2004) find evidence that
the impact of e-business technologies on supply chain operations have resulted in a reduced
"bullwhip effect," lower inventory, reduced logistics costs and streamlined procurement
processes. According to the researchers, the improvements, in turn, have likely helped to lower
inflation, reduce economic volatility, strengthen productivity growth, and improve standards of
living (Basu & Siems, 2004).
Integration of supply chain activities and the technologies to accomplish it have become
competitive necessities in most industries. Accordingly, the trend toward greater use of supply
chain technologies is on a clear path forward. (Patterson, Grimm, and Corsi 2003). note that with
almost daily technology advancement globally in every facet of the business, organizations need
to synchronize by adopting and implementing new electronic commerce and supply chain
technology in order to protect market share, not to mention improve market penetration.
(Patterson, Grimm, and Corsi 2003) develops a model of the key factors influencing the adoption
of supply chain technology. The following set of variables were hypothesized to have a
significant impact on the pace of technology adoption: firm size, organizational structure,
integration of supply chain strategy with overall corporate strategy, past financial performance,
supply chain partner pressure, transaction climate and environmental uncertainty (Patterson,
Grimm, & Corsi, 2003). The model provides a better understanding of the supply chain
technology diffusion process.
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(Fasanghari ,2014). at first presented the definition of IT; IT and SCM; afterward, the impact of
IT on SCM is illustrated in a framework. (Fasanghari ,2014) denotes that the impact of IT on
SCM is much larger as it facilitates inter-organizational communication and in turn, reduces
cycle times and develops collaborative work. IT provides opportunities for an organization to
expand their markets worldwide. Also, IT enhances teamwork and customer relationship
management. To evaluate the impact of IT on SCM of the automobile industry of Iran, it was
tested by 8 experts of Iranians automobile industry supply chains, which 90% were pleased with
the obtained results (Fasanghari, 2014). The proposed framework supported IT based SCM and
can be used as a controller to evaluate the SCM progress through the use of IT.
2.4.3 Consumer Preferences
Subaskaran& Anojan (2015) focused on finding the consumer's preference effect consumer's
buying behavior of all soft drinks which consumed by ordinary consumers in Northern Province.
The study entailed two main established variables which are consumer's preference include four
sub-variables such as perceived product, perceived price, perceived place, perceived promotion
and consumer's buying behavior include four sub-variables such as culture, Social factors,
personal factors, psychological factors (Subaskaran & Anojan, 2015). The main objective was to
evaluate the consumer’s preference and buying behavior of soft drinks. The survey explored the
level of influence of consumer’s buying behavior, customer personal information which consists
of gender, the location of business, income level, brand, consuming period, preference and
advertising media and also through research information which includes the dimensions of all
variables (Subaskaran & Anojan, 2015). Information collected from 300 samples in the Northern
Province for the study shows that Pepsi manufacturer can innovate further varieties which should
32
be safety for health and special varieties of soft drinks; Pepsi can also make attractive
advertisement continuously and find new ways of advertising (Subaskaran & Anojan, 2015).
(Opoku & Akorli 2009) undertook a study to examine empirically consumer attitudes towards
local and imported products in a developing country market. A survey was conducted to elicit
responses from a cross section of the Ghanaian community. The country of origin image in the
study was measured following the Roth and Romeo approach. The results of their study suggest
that country of origin is more important than price and other product attributes, the Ghanaian
consumer holds the 'Made in Ghana' label in low regard relative to foreign labels, whilst superior
quality and consumer taste are the 2 most important reasons for the Ghanaian consumers’
preference for foreign products (Opoku & Akorli, 2009).
Brand names have an effect on consumers’ evaluation of a product. According to (Lowengart
,2012). most studies deal with a single measure of the brand effect such as choice, preference or
perceptions about the product; few have investigated how branding affects consumers’ choice
process when sensory-based factors are involved, especially after tasting the product. (Lowengart
,2012). the study examines the role of branding on consumer behavior through blind and non-
blind taste tests of wine. Using a conceptual value model and a probabilistic choice model the
author analyzes consumers’ choice process between different wines. Results indicate that there is
a differential brand effect on the saliency of sensory-based attributes in the choice process
(Lowengart, 2012). More reputable brands have a positive effect on the saliency of some of these
attributes
2.4.4 Competitiveness
Li, Ragu-Nathan, Ragu-Nathan, &Subba Rao (2006) provides empirical justification for a
framework that identifies five key dimensions of SCM practices and describes the relationship
33
among SCM practices, competitive advantage, and organizational performance. The researchers
examine three research questions: (I) do organizations with high levels of SCM practices have
high levels of competitive advantage; (ii) do organizations with high level of SCM practices have
high levels of organizational performance; (iii) do organizations with high levels of competitive
advantage have a high level of organizational performance? (Li, Ragu-Nathan, Ragu-Nathan, &
Subba Rao, 2006). For the purpose of investigating these issues, a comprehensive, valid, and
reliable instrument for assessing SCM practices was developed. The instrument was tested using
rigorous statistical tests including convergent validity, discriminant validity, reliability, and the
validation of second-order constructs (Li, Ragu-Nathan, Ragu-Nathan, & Subba Rao, 2006). The
study provides empirical evidence to support conceptual and prescriptive statements in the
literature regarding the impact of SCM practices.
Business today is in a global environment. The environment forces companies, regardless of
location or primary market base, to consider the rest of the world in their competitive strategy
analysis (Shailendrakumar, 2007). Firms cannot isolate themselves from or ignore external
factors such as economic trends, competitive situations or technology innovation in other
countries if some of their competitors are competing or are located in those countries. Companies
are going truly global with Supply-chain Management (SCM) (Shailendrakumar, 2007). A
company can develop a product in the United States, manufacture in India and sell in Europe.
Companies have changed the ways in which they manage their operations and logistics activities.
Changes in trade, the spread and modernization of transport infrastructures and the
intensification of competition have elevated the importance of flow management to new levels
(Shailendrakumar, 2007).
34
Supply chain management (SCM) has been considered as the most popular operations strategy
for improving organizational competitiveness in the twenty-first century. In the early 1990s,
agile manufacturing (AM) gained momentum and received due attention from both researchers
and practitioners (Gunasekaran, Lai, & Edwincheng, 2008). In the mid-1990s, SCM began to
attract interest. Both AM and SCM appear to differ in philosophical emphasis, but each
complements the other in objectives for improving organizational competitiveness (Gunasekaran,
Lai, & Edwincheng, 2008). However, the issues of cost and the integration of suppliers and
customers have not been given due consideration in AM. By contrast, the cost is given a great
deal of attention in SCM, which focuses on the integration of suppliers and customers to achieve
an integrated value chain with the help of information technologies and systems. Considering the
significance of both AM and SCM for firms to improve their performance, the researchers
attempt to analyze both AM and SCM with the objective of developing a framework for
responsive supply chain (RSC) (Gunasekaran, Lai, & Edwincheng, 2008).
The researchers compare their characteristics and objectives, review the selected literature, and
analyze some case experiences on AM and SCM, and develop an integrated framework for an
RSC (Gunasekaran, Lai, & Edwincheng, 2008). The proposed framework can be employed as a
competitive strategy in a networked economy in which customized products/services are
produced with virtual organizations and exchanged using e-commerce (Gunasekaran, Lai, &
Edwincheng, 2008).
In today's competitive business, most of the firms increased focus on delivering value to the
customer. The focus on the attention of businesses is providing products and services that are
more valuable compared to its competitors (Sukati et al., 2012). This forces supply chain to be
more responsive and create competitive advantage. Sukati et al. (2012) research investigated the
35
impact of supply chain integration on competitive advantage. The study also assesses the impact
of supply chain responsiveness on a firm's competitive advantage. The data collection instrument
used was a questionnaire which was administrated to a total sample of 400 managers in Malaysia
manufacturing industry (Sukati et al., 2012). The response rate was 62% while 50% was usable
questionnaires. Sample selection was based on convenience sampling. The data were analyzed
using mean, standard deviation, and the correlation between independent and dependent
variables (Sukati et al., 2012). The analyses involved statistical methods such as reliability and
validity tests and multiple regressions. The research findings supported the hypotheses that
supply chain integration positively impact supply chain responsiveness and competitive
advantage (Sukati et al., 2012). The finding also showed that supply chain responsiveness was
positively associated with the competitive advantage of a firm.
2.5 Critique of Literature Review
From the literature reviewed, different authors have given different dimensions of the supply
chain agility management that are not comprehensive in the effective implementation of
management of supply chain operations system in an organization. According to (Sun, Hsu
&Hwang 2009). Agility and flexibility will matter as much as cost going forward the more
digitally integrated the supply chain, the faster companies can respond to change. Digitized
processes can be reconfigured far more quickly than manual processes Better, faster decisions
and exchange of information Tapping into supplier expertise and innovation.
Flexibility & Agility with Technology Digitized Collaborative Easy End-to-End Data-driven
User Experience, Adoption, Mobile capabilities Digital relationships, processes, collaboration
Easier, seamless collaboration internally & externally No more siloed processes and information
Data is the new oil and procurement is a big desert (Agarwal, Shankar, Tiwari,2007).
36
Supply Chain Operation Management involves collaboration across the enterprise and among
channel members to design and manage value-added material, information and cash flows to
meet the needs of the end customer (Huggins, 2009). The development and integration of people
and technological resources underlie successful supply chain integration. (Ontañón & Meseguer,
2015). However, Companies are investing resources--of both time and capital--to improve their
supply chain capabilities. But many are not pleased with the return on these investments. The
lack of coherent management of supply chain operations strategy typically lies at the root of the
problem.
2.6 Summary of Literature
Recent literature in supply chain address and proposes that the key factor to surviving in these
changing situations is through agility by the formation of the responsive supply chain. Supply
chain agility cab is a key element in gaining the advantage and improving service delivery in
Kenya Medical health sector. With this upward level of unpredictability, Supply chain agility
enhance competition and improve service delivery in any organization through producing and
giving inventive products to its customers in a timely and cost-efficient manner. The
pharmaceutical sector plays a significant role in the medical and health system of any country.
Thus, implementing supply chain agility in Medical sector in Kenya would improve service
delivery, customer satisfaction, increase market opportunity, decreased overall risks, and reduced
total costs and finally reduce mortality rates both in infants and adults.
2.7 Research Gaps
Supply chain agility has become the most dominant competitive tool for organizations and
companies operating in such an uncertain and ever-changing business environment. Despite its
importance, there has been limited theory development in the firm supply chain agility area
37
((Swafford, Ghosh, & Murthy, 2006) Elements and linkages among agility elements are
underdeveloped, and it is uncommon for any two authors to adopt the same definition. David&
Ketchen (2007), asserts that uniquely integrated priority are needed for best value supply chain
agility to excel which are currently missing. A rigorously validated survey instrument is also
needed to enable researchers to credibly build on theories regarding causal links among agility-
related capabilities, practices, and performance outcomes. For example, there is a lack of
understanding of what collaborative performance means and what it implies on the development
of appropriate performance measurement systems (Park & Talbot, 2012) Further, a
comprehensive measurement instrument that draws on the foundations of social and life science
theory is needed and empirically validated so that researchers can rigorously expand agility
theory. According to Ching (2006), there is ambiguity in the assessment of agility, where most
measures are described subjectively using linguistic terms.
38
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter sets guidelines to be followed in the remainder section this study. It involves the
collection, measurement, and analysis of data. It involves the following subsections: research
design, target population, data collection instruments, data collection procedures and finally data
analysis.
3.2 Research Design
This study adopted a descriptive research design using a case study of KEMSA. A descriptive
study is undertaken to ascertain and can describe the characteristics of the variables of interest in
a situation (Edmondson& McManus, 2007). The goal of a descriptive study is to describe
relevant aspects of the phenomena of interest from an individual, organizational, industry-
oriented, or another perspective. In many cases, such information may be vital before even
considering certain corrective steps. Case studies involve in-depth, contextual analyses of
matters relating to similar situations in other organizations (Illari, & Williamson, 2012).
According to Smith (2007) a descriptive study is concerned with finding out the what, where and
how of a phenomenon. This study therefore, generalize the findings on the effects of agility on
supply chain performance in KEMSA.
3.3 Target Population
Population refers to the entire group of people, events, or things of interest that the researcher
wishes to investigate. According to Cooper&Schindler (2006). A population is a group of
individuals, objects or items from which samples was taken for measurements. The target
39
population of this study constituted 110 of senior and middle supply chain and operation staff of
KEMSA. The selection comprised the six operation departments in KEMSA staff working in the
Procurement and Supply, Distribution Functions, Technical Advisory, Quality Assurance,
Warehousing Function, Finance Department. The population consisted of 110 employees in
operation management base in Embakasi supply chain center and KEMSA head office at
Commercial Street. Their strategic location, concentrated in Embakasi Supply Chain Center and
their similar organizational structures made it suitable in gathering reliable information that
reflects supply chain agility on the management of operations.
3.4 Sample and Sampling Technique
The study employed a census approach to collect data from the all the 110 respondents mainly
involved in the management of operation hence no sampling techniques was used. In a census
survey, data was collected for all units in the population, if the population is small, a census may
be preferable. This is because to produce estimates with small sampling error it may be necessary
to sample a large fraction of the population. In such cases, for minimal additional cost, data can
be available for the entire population instead of just a portion of it (Statistics Canada, 2010). The
approach involved gathering information from every member of the target population. A
sampling frame includes every member of the study population from which a sample is to be
taken (Cooper & Schindler, 2003). This method is appropriate because it reduces on biases in
research since all the respondents was given an equal chance to participate in the study
(Mugenda & Mugenda, 2003).
40
Table 2.1: The study population was divided into six categories as shown in table
KEMSA department Target population (operations
management)
Percentage
1 Procurement and Supply 25 0.22%
2 Technical Advisory 15 0.13%
3 Quality Assurance 10 0.09%
4 Distribution Functions 25 0.22%
5 Warehousing Function 25 0.22%
6 Finance Department 10 0.09%
TOTALS 110 100%
3.5 Instruments for Data Collection
A well laid out questionnaire was used for primary data collection from respondents and
designed to address the research objectives. According to (Adams,2008). a questionnaire is a
series of questions on a topic which respondent’s opinions are sought. Questionnaires are used as
they are easy to analyze; large amounts of information can be collected. The questionnaire
employed a point Likert scale to determine the extent to which supply chain agility for
management of supply chain operations is related to supply chain performance
This allows respondents to extensively respond to the topic under study. Questionnaires was easy
to analyze, mail to respondents, cost effective and reduced bias because they had uniform
question presentation (more objective) and most statistical analysis software can easily process
them. The questionnaire was divided into three parts; part one dealt with the general information
of the respondent; part two determined the operational components of supply chain agility; part
41
three dealt with management of supply chain operations for supply chain performance in
KEMSA
3.6 Data Collection Procedures
A well laid out questionnaire was used for data collection from respondents and was designed to
address the research objectives(Adams,2008). a questionnaire is a series of questions on a topic
which respondent’s opinions are sought. Questionnaires are used as they are easy to analyze,
large amounts of information can be collected, cost effective, can be carried out anybody with
limited effect on its validity and reliability. The questionnaire was self-administered to all the
respondents for period of a week to give the respondents adequate time to respond to the
questions, telephone follow-ups, was further used to enhance the response rate; The
questionnaire was accompanied with an introduction letter, this letter contained an adequate brief
about the research under study and was signed by the research for authenticity.
3.7 Pilot Test
(Kothani, 2006). states that piloting of the research instrument is administering the instrument to
a small representative sample identical to but not including the group one is going to survey.
(Joppe ,2000). explains reliability of research as determining whether the research truly measures
what is intended to measure or how truthful the research results will be. According to Cooper
and Schilder (2011), 1% of the sample should constitute the pilot test which should not be
included in the final study. The pilot test involved selecting five respondents from the KEMSA
operations employees and issuing them with the questionnaires. According to (Mugenda
&Mugenda ,2003) the respondents on which the questionnaire was pretested, was not part of the
target population of the study. The information obtained during the pre-testing of the
questionnaire was used to revise and improve on the questionnaire.
42
3.7.1 Reliability of Research
Reliability is the Reliability is the measure of the degree to which the research instrument yields
the same results of data, after repeated trials (Mugenda & Mugenda, 2003). To minimize errors,
the study was use test and retest method in order to test the reliability of the research instrument.
This procedure reveals the questions that are vague that can lead to respondents interpreting them
differently hence adjustments accordingly. Ambiguous questions were revised to collect the
desired information. After piloting, Cronbach’s alpha, a coefficient or reliability that gives an
unbiased estimate of data generalizability was used to test the reliability of the answered
questionnaires. According to Zinbarg,(2005), Cronbach’s alpha is a coefficient of reliability that
gives an unbiased estimate of data generalizability. An alpha value higher than 0.75, indicated
that the gathered data had a relatively high internal consistency and could be generalized to
reflect opinions of all respondents in the target population
3.7.2 Validity of Research
Validity refers to how well a test measures what it is supposed to measure. (Kloda, 2016) suggest
that the validity of a test instrument is asking the right question framed from the least ambiguous
way. (Serekan ,2003) describes validity as the agreement between the researcher’s conclusion
and the actual reality. Content validity refers to the degree to which the content of the items
reflects the content domain of interest (Rubio, Berg-Weger, Tebb, Lee, & Rauch, 2003) The
research adopted the content validity to measure the validity of the instruments to be used in this
study. The context of validity coefficient index of 0.75 was used to test the validity of the
questionnaire (Mugenda & Mugenda, 2003). Content validity enables data being collected to be
reliable in representing the specific content of a particular concept. Supervisors and the research
experts in the Department of operations and supply chain was used to evaluate the applicability
43
and appropriateness of the content, clarity, and adequacy of the research instrument from a
research perspective. Validity was also checked during piloting to ensure all the items to be in
the main study were functioning.
3.8 Data Processing and Presentation
The completed questionnaires were edited for completeness and consistency. Pearson coefficient
correlation analysis was used to determine the relationship between each of the effects of supply
chain agility and management of supply chain operations. The study employed a multiple
Regression analysis to estimate the causal relationships between factors under study. With the
aid of Statistical Package for Social Sciences SPSS v 21.0, the research thus performed a
multiple regressions analysis on primary data to estimate the beta values of factors and t-test to
determine the significance of the coefficients at 95% confidence level. F–test statistics was used
to determine the overall significance of the model at a confidence level of 95%. The results of
analyzed data were presented using tables and charts with a brief description thereafter.
The multiple regression equations of the study are shown below;
y = α + β1
x1 + β
2x
2 + β
3x
3 + β
4x
4 + e
Where;
y= operation management
α = Constant
β1… β4 = the slope representing the degree of change independent variable due to a unit change
in an independent variable.
44
X1 = Environmental Uncertainty
X2= Technological Advancement
X3= Consumer Preference
X4= Competitiveness
e= error
45
CHAPTER 4
DATA ANALYSIS AND PRESENTATION
4.1 Introduction
This chapter entails the analysis and discussion of the data that was collected during the survey.
The research findings are based on the questions that were asked to the participants through a
questionnaire distributed to the selected sample. The main aim of the study was to evaluate the
effects of supply chain agility on management of operations in government medical supply
agency within the context of the Kenya Medical Supplies Agency
4.2 Response Rate
The results indicated in Table 4.1 indicated that a sample size of 110 respondents was targeted
for this study, with 104 respondents returning fully filled questionnaires. Mugenda and Mugenda
(2003) indicated that a response rate of 50% is adequate for analysis and reporting; a rate of 60%
is good and a response rate of 70% and above is excellent. Therefore, the response rate of 94%
was excellent for the study.
Table 4.1: Response Rate
Response Frequency Percentage
Returned questionnaires 104 94.5
Unreturned questionnaires 6 5.5
Total 110 100
4.3 Results of pilot
Table 4.2 illustrates the findings of the study concerning the reliability analysis. In this study,
reliability was ensured through a piloted questionnaire that was subjected to a sample of 11
respondents. This represented 1% of the sample size. From the findings, the coefficient for
46
Environmental uncertainty was 0.8905, Cronbach’s alpha coefficients for Technological
advancement was 0.7980, Cronbach’s alpha coefficients for Consumer preference was
0.8761while Cronbach’s alpha coefficients for competitiveness was 0.7708. These were greater
than 0.7 thresh hold for this study.
Table 4.2: Reliability Results
Variable Cronbach’s No of Item
Environmental Uncertainty 0.8905 11
Technological Advancement 0.7980 11
Consumer Preference 0.8761 11
Competitiveness 0.7708 11
4.4 Demographic findings
4.4.1 Gender of the respondents
To get a better understanding of the research demographics of population in general and the
sampled population in specific, the study enquired about the gender of the participants. A
presented in the figure 4.1 below provides that, 66.35% of the participants were male, while the
remaining 33.65 were female. This gender composition in the sampled population was relative to
the number of male and female employees working in the company.
47
Figure 4.1: Gender of the Respondents
4.4.2 Age of the respondents
From the results presented in Table 4.3 show that, majority of the respondents were in 25 to 44
years’ age bracket with 75.9%. With only 5.7% aged 45-54 years and 18.2% aged 18-24 years.
This shows that majority of employees working in Kenya medical supply authority were middle
age. Hence there for respondents were mature in age and were in a position of providing relevant
information regarding effects of supply chain agility in management of supply chain operations
Table 4.3: Age of the respondents
Years Frequency Percent
18-24 19 18.225-34 26 25.035-44 53 50.945-54 6 5.7Total 104 100.0
4.4.3 Education Level of the respondents
As observable form the table Table4.3, majority of the participants had a bachelor’s degree or
university diploma. These two categories had a cumulative percentage of 85.4%. Participants
33.65%
66.35%
Gender
male
female
48
with a master’s degree only accounted for 14.4% of the population. This implied that with half of
the population of all procurement specialists with college diploma and master’s degree. Along
with the educational background, they had the abilities within their career to focus on
management of supply chain functions competently.
Table 4.4:Education Level of the respondents
Education level Frequency Percent
college 42 40.3
Bachelor’s degree 47 45.1
Master’s degree 15 14.4
Total 104 100.0
4.4.4 Job designation of the respondents
As summed up in the table 4.4 below, the study further obtained the job designation of the
respondents picked from a sample of staff members involved in management of operations
Table 4.5: Education Level of the respondents
Designation Frequency Percent
Procurement and Supply 24 23.0
Technical Advisory 14 13.4
Quality Assurance 9 8.6
Distribution Functions 24 23.0
Warehousing function 24 23.0
Finance function 9 8.6
Total 104 100.0
49
The respondents were requested to indicate their job category. From the findings in Table 4.5
which showed that the percentage of staff working in Procurement, Distribution and
Warehousing was relatively equal, with a cumulative percentage of 69. 0%. representing
majority while that in technical team was 13.4 %, quality assurance and finance 8.6%. This
implied that data was collected from staffs who were majorly involved in the management of the
supply chain operations.
4.4.5 Respondents Period of Working
From the findings, the respondents had worked at KEMSA as indicated in Table 4.6 below,
61.4% had worked for a period of 6 to 15 years, followed by those who had worked for duration
of 1 to 5 years, with an 18.2%. 20.1% had worked for over 6 years. This is a clear indication that
most of the respondents had worked long enough in KEMSA and were well experience in the
supply chain operations. Hence delivering procurement within an operating model that connects
commercial and technical capability to drive optimal operational excellence
Table 4.6: Respondents Period of Working
Years Frequency Percent Cumulative Percent
1-5 years 19 18.2 18.26-10 years 35 33.6 51.811-15 years 29 27.8 79.9over 16 years 21 20.1 100.0Total 104 100.0
4.5 Descriptive Analysis
4.5.1 Environmental Uncertainty
The respondents were requested to indicate the extent to which the social factors, that includes
the inventory life cycle, and the market unpredictability. affect operations management in
KEMSA
50
Table 4.7: Social Factors
Social factors
Minimum
Maximum
Mean
Variance
Standard Deviation
Economic factors, like Interest rates, inflation, changes in disposable income
1.00 5.00 3.50 1.92 1.39
Stakeholder that is affected by org’s decisions and policies and that can influence organization
1.00 5.003.63 1.81 1.35
Customers taste and preferences 1.00 5.00 3.30 0.91 0.95
Physical environment for distribution considerations
1.00 5.00 2.45 1.20 1.10
Social support networks- linked to better health. Culture - customs and traditions
3.00 5.003.68 0.63 0.79
Health services - access and use of services that prevent and treat disease influences health
2.00 5.003.82 0.73 0.86
Competitors policies regarding pricing new products, services offered and other incentives it is giving to customers
1.00 5.00
3.34 1.49 1.22
Rating scale
5- Strongly Agree 4- Agree 3- Agree nor Disagree 2- Disagree 1-Strongly Disagree
From the findings in Table 4.7 show that, 29% of the disagree that Competitors policies
regarding pricing new products, services offered and other incentives it is giving while. 28%
score was recorded for the agree position while 34% was recorded for strongly on Economic
51
factors, like Interest rates. The respondent strongly agreed Social support networks- linked to
better health. Culture - customs and traditions with a mean of 3.82 and standard deviation of
0.73, followed by the agree position, with 14%. Overly, only a cumulative percentage of 34%
felt that social factors had impact on KEMSA supply chain management. On management of the
operations since the social cultural factors management is decision making which should be
adjusted to those relevant environmental changes. The finding concurred with (Paulraj & Chen
2007). Factors Influencing Consumer Behavior include Cultural, Subculture Social Class, is the
fundamental determinant of a person’s wants and behaviors acquired through socialization
processes with family and other key institutions.
4.5.1.2 Life Cycle in Inventory
The study provided the extent to which respondents agreed on the effect on the inventory life
cycle on affect the environmental uncertainty for the management of the operations in kemsa.
From the findings in Figure 4. 2, respondents strongly agreed Life Cycle Assessment Raw
material extraction Manufacturing Production Disposal Transportation Recycling Use with 25%
of the participants taking the position in this question. However, 20% of the participants took the
agree potion and 19% the disagree position both the agree and strongly disagree recorded an
18% score.
52
Figure 4.2: Life-Cycle in Inventory
The study provided that Life Cycle in Inventory in KEMSA required audit Cycle in which tested
Acquire and record raw materials, labor, and overhead Acquisition and Physical controls over
raw materials, work in process, and finished goods inventory. This clearly implies that the
participants were neutral on the impact of the Life cycle inventory on the KEMSA operations
management. The finding concurred with (Agarwal, Shankar, Tiwari,2007). That Life-Cycles
Causes Fast Changing Consumer Preferences Rapid Rate of Innovation Procurement Issues
Forecasting with no historical data Long Lead-times Perishable Inventory Introduction Time.
18%
19%
25%
18%
20%
Life-Cycle in InventoryStrongly Disagree
Disagree
Neither Agree norDisagree
Agree
53
4.4.3 Market unpredictability
Figure 4.3: Market unpredictability
The study sought the extent to which Market unpredictability affect KEMSA business
environments on management of the operations from the findings in Figure4.3, above, market
unpredictability is a crucial environmental factor that affects the operations management of a
firm. From the graph, 39% of the participants strongly agreed to this environmental factor having
a significant effect on operations management. 36% of the participants further agreed that market
unpredictability has a significant effect. From an analytical perspective, the agree and strongly
agree positions give a cumulative percentage of 75%. The strongly disagree position received the
minimum score of 2%, followed by disagree position with 10% and finally, the neither agree nor
disagree with a percentage of 13%
The descriptive statistics of this environmental factor were characterized by a weighted average
of 1.00 and a standard deviation of 1.01. A minimum score of 2 and a maximum of 5 were
recorded in this question. Analytically, while the standard deviation indicates some variations in
the participants’ responses, the high weighted average of 4.00 indicates that the majority of the
participants viewed market unpredictability as a significant environmental factor affecting
2%
10%13%
36%39%
0%5%
10%15%20%25%30%35%40%45%
Strongly Disagree Disagree Neither Agree norDisagree
Agree Strongly Agree
Market Unpredictability
Rating
54
sustainable operations and agility in supply chain management. Analytically, majority of the
scores recorded for this b factor were towards the strongly agree extreme and hence the latter can
be vied as a crucial aspect that must be considered in supply operations chain management. The
finding agreed. (Fasanghari ,2014) companies move away from customization toward
standardization, there is a shift from flexibility and a high-performance design quality to a
consistent quality and cost. Some relevant issues Other views on defining Supply Chain Strategy
Supply Chain Strategy and Uncertainty.4. 5. 2 Technological Advancement
4.5.2.1 Supply chain management software system
Figure 4.4: Supply chain management software system
The study finding sought the impact of technology on supply chain management agility. This
was achieved through the respondents indicating the extent to which a set of statement that the
participants had to indicate their level of agreement or disagreement. From the study Figure4.4
chart, 39% of the respondents strongly agreed that supply chain management software impacts
supply chain operations; 31% of the respondents agreed while 29% of the respondents neither
agreed nor disagreed. The disagree position recorded the least score (1%) about the effect of
software management system on supply chain agility and operations management. It is crucial to
0% 1%
29%
31%
39%
Supply chain management software system
Strongly Disagree
Disagree
Neither Agree nor Disagree
Agree
Strongly Agree
55
note that no scores were recorded for the strongly agree position. Analytically, majority of the
scores recorded were towards the positive extreme, an aspect that indicates that most the
respondents felt that the use and existence of a management system greatly impacts the firm’s
operations. From the study this implied that information technology’s role in the supply chain its
primary role is to create integrations or tight process and information linkages between functions
within a firm (Fasanghari, 2014). Organizations must embrace technologies that can effectively
manage supply chains, this point, the notion of virtually seamless information links within and
between organizations is an essential element of integrated supply chains
4.5.5.2 Information Technology Practices
The study finding sought to measure whether the information and technological practices
employed by the organization affect the company’s operations management. The results are
presented in the pipe chart below.
Figure 4.5: Information and technological practices
From the findings Figure4.5, 47% of the respondents strongly agreed that the information and
technological practices adopted by the company affect its operations management. 31% of the
1%
5%
16%
31%
47%
Information and Technological Practices
Strongly Disagree
Disagree
Neither Agree nor Disagree
Agree
Strongly Agree
56
respondents agreed while 16% of the participants neither agreed nor disagreed. Essentially the
negative extreme had minimal scores, with the strongly disagree position recording 1% and the
disagree position 5% respectively. Analytically, the strongly agree and agree position had a
cumulative percentage of 78%. This clearly indicates that majority of the participants considered
information and technological practices to be a crucial technology factor affecting operations
management
On the same note, a weighted average of 4.20 was recorded in this question, coupled with a 0.79
standard deviation. A minimum score of 1 and a maximum of 5 were recorded. Essentially, the
standard deviation indicates low variations in the participants’ responses, which indicates
consolidated feedback towards the positive extreme. The high weighted average and low
standard deviation clearly stipulates that information and technological practices are crucial
technology aspect that affect the KEMSA operations
4.5.5.3 Benefits of Using Information Technology
The respondents were requested to indicate the kind of benefits information technology.
Essentially, information technology remains a crucial aspect in today’s management of
operations
Table 4.8: Benefits of using IT
Benefits of Using IT
Respondent’s rating
Strongly Disagree
DisagreeAgree nor Disagree
AgreeStrongly Agree
supporting Inventory Management 38% 42% 4% 9% 7%
57
Enhancing warehouse and logistics management
3% 16% 34% 27% 20%
Real time business operations - Direct online communication between trading partners
33% 19% 33% 5% 11%
Information of product, manufacturer, price was recorded on computer system
1% 0% 13% 38% 48%
Real time bases to determine product wise demand forecast
0% 6% 21% 32% 41%
Monitoring of commodities on transit 1% 0% 24% 31% 44%
Global Considerations in Using SCM/ERP System
1% 0% 13% 38% 49%
The finding from the study as indicated in the above Table4. 8: show that, four main benefits of
IT in supply chain management were identified. To begin with, recording of product information,
manufacturer, and prices was found to be a crucial benefit of information technology. This was
characterized by strong+ agreement by 48% of the respondents, agreement by 38% and 13%
nether neither agreed nor disagreed. On a different note, the participants also noted information
technology to be crucial in demand forecasting. Further monitoring of products on transit and
real time business operations, including direct online communication between the trading
partners were fund to be crucial aspect.
Overly, a weighted average of 3.55 was recorded for all the responses in this question.
Essentially, this average translates to agree position when rounded off to the nearest Likert scale
rating. A standard deviation of 1.0 was recorded, characterized by minimum value of 1 and
maximum value of 5. In summation, Information Technology adoption at KEMSA is associated
with vast benefits and hence bears significant effect on the operations management o of the
company.
58
4.6 Consumer Preferences
4.6.1 Differentiated customer products and services
The respondents were requested to indicate the kind of Differentiated customer products and
services that were in place from the findings in Figure4.6. Based on the study show that, 32% of
the respondents strongly agreed that customer differentiated products and services are a crucial
component of tastes and preferences, and which affects the operations management of a firm.
26% agreed while 31% neither agreed no disagreed. The strongly disagree position received the
minimum score of 2%, followed by the disagree position that scored 10%. This mainly explains
the 0.92 standard deviation and 3.75 weighted average. The 3.75 weighted average clearly lies
within the agree position, an indicator that customer preferences have a significant effect on the
operations management of a firm.
The respondents agreed that customer preferences have a significant effect on the operations
management of a firm. Precisely, the customers were described to be very price sensitive and the
company had seen an increase in its market share over the last five years According to
Gunasekaran, Lai, & Edwincheng (2008) Introduction to Creating Differentiated Value The
mechanisms of a value proposition in action Companies that demonstrate an ability to grow share
in key markets organically have a powerful, clear and compelling value proposition
59
Figure 4.6: Differentiated customer products and services
4.6.3 Factors to Consider when pricing a product
The study below show Factors to consider when pricing a product this question aimed at
establishing the factors that impact the KEMA product pricing. These factors include the quality
of the product, the customer needs, tastes and preferences, the price benchmarks in the industry,
profit margins and the operational and product costs.
Table 4.9: Factors to consider in pricing of products
Factors to consider during pricing of your products.
Respondent’s rating
Strongly Disagree
DisagreeAgree nor Disagree
AgreeStrongly Agree
Quality of the product 4% 7% 5% 53% 32%
The customer needs, tastes and preferences 2% 2% 10% 54% 33%
Benchmarking prices with Competitors 4% 7% 5% 53% 32%
Profit margins 5% 8% 2% 42% 43%
Operational and production costs 3% 2% 0% 57% 38%
2%
10%
31%
26%
32%
customer differentiated servces and products
Strongly Disagree
Disagree
Agree nor Disagree
Agree
Strongly Agree
60
From the above table, it can be clearly observed that all the cumulative percentage of the agree
and strongly agree position for all the five statements was above 80%. this clearly depicts that
almost all the respondents felt that the listed factors impacted the pricing a of a firm’s products
and services. In turn, pricing affects the customer tastes and preferences, which in results
influences the operations of a firm an organization has to operate in a way that ensures that
customers derive maximum benefit from its operations,
Figure 4.7: Factors to consider when pricing a product
This is well presented in the comparative bar chart above, which shows that the agree and
strongly agree positions had the highest scores across all the five statements. As it can be
observed, the strongly disagree had the best score, followed by the disagree position and finally,
neither agree nor disagree. A weighted average of 4.7 and standard deviation of 0.90 were
obtained. The maximum score recorded was 5, while the minimum was 1. The high weighted
average indicates participants’ agreement that the company’s pricing model is affected by several
factors.
0%
10%
20%
30%
40%
50%
60%
StronglyDisagree
Disagree Agree norDisagree
Agree StronglyAgree
Respondent’s rating
Quality of the product
The customer needs, tastes andpreferences
Benchmarking prices withCompetitors
Profit margins
Operational and production costs
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4.7 Competitiveness.
4.7.1 Competitive Strategies
This study aimed at establishing the main strategies that are employed by KEMSSA to retain and
possibly improve its competitiveness in the industry. Essentially, the competitiveness of a firm
affects its profitability in both short and long-term as the latter impacts businesses’ ability to stay
focused on the corporate objectives and enhance its managerial efficiency.
Figure 4.8: Competitive strategies
The study the extent to which respondents agreed on the Competitive Strategies on management
of the operations. From the findings in Table 4.8, the pie chart below indicates that 49% of the
participants agreed that the implementation and use of different competitive strategies. While
41% agreed that kemsa advocates for innovations that are targeted toward improving
organizational processes and new product designs, those who strongly agree the organization
adopted the standard operation and management practices and procedures advocated by ISO
%25% of the participants were neutral on the use of the competitive strategies while 17%
strongly agreed. The least score was recorded in the disagree position, with only 2% of the
0
10
20
30
40
50
60
70
80
Strongly Disagree Disagree Agree nor Disagree Agree Strongly Agree
My company practices activecompliance with national andinternational conventions andregulationsMy company has adopted thestandard operation andmanagement practices andprocedures advocated by ISOMy company has a quality controland assurance department
All the materials produced areinspected for quality purposes.
62
participants, followed by the disagree position with 7%. Additionally, a weighted average of 3.73
and a standard deviation of 0.62 were obtained. The minimal standard deviation can be used to
explain the seemingly clustered responses between the neither agree, agree and strongly agree
positions.
The respondents also agreed that he organization’s positioning in terms of following dimensions
of competence: Quality performance, consistent quality, reliability Time, delivery speed,
development speed and Flexibility mix of products, mix of volume/packaging was import for
remaining competitive as well for Operations and Supply Chain Management.
Figure 4.9: Respondents ratings on adoption of competitive strategies
4.7.2 Cost Leadership Strategies
The study found show that Costs are a crucial component of management and their essence in
retaining a firm’s competitiveness cannot be underestimated. In this question the study wished to
elicit the cost leadership strategies adopted by KEMSA. This entailed strategies such as heavy IT
investment, purchasing economies of scale, production of highly standardized products, price
slashing to attract prospective customers and invest mg in research and development. As
observable in the table below, majority of the participants took the agree and strongly agree
2%
7%
25%
49%
17%
competitive strategy
Strongly Disagree
Disagree
Agree nor Disagree
Agree
Strongly Agree
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positions in all the statements. At least, each of the cost leadership strategy had a cumulative
percentage above 80% for both agree and strongly agree. (Shailendrakumar, 2007). Business
today is in a global environment. The environment forces companies, regardless of location or
primary market base, to consider the rest of the world in their competitive strategy analysis
Table 4.10: Cost leadership strategies
Cost Leadership strategies Respondent’s rating
1 2 3 4 5
Purchasing Economies of scale from suppliers 4% 7% 5% 53% 32%
Heavy IT investments 2% 2% 10% 54% 33%
Producing highly standardized products 3% 2% 0% 57% 38%
Research and development 1% 11% 1% 55% 33%
Price slashing to potential customers. 7% 11% 40% 38% 4%
Low prices relative to other firms that compete within the target market.
22% 34% 23% 19% 2%
Sourcing its products in low-wage countries and by offering a very basic level of service.
1% 11% 1% 55% 33%
4.5.5 Management of Supply Chain Operations
4.5.5.1 Process Management
The respondents were requested to indicate the kind of Business process management that was in
use in KEMSA offers its suppliers. From the findings in Table4.11 below, it can be observed
that seven of the concepts received a cumulative rating of agree and disagree options above 80%.
The findings as well show that 55% of the participants strongly agreed with the the given
stantements regadinging improving Portfolio management techniques. 33% agreed Develops a
Continuous Process Improvement Program methods. 20% neither agreed nor disagreed, 10%
disagreed and the remaining 3% strongly disagreed.
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The study found that respondents agreed that the surveyed population strongly believed that
inventory and management of processes as assets, portfolio management techniques, process
centric design and redesign principles. Continuous improvement programs, polices/rules and
performance measures, process quality evaluation and business process portfolio are crucial
strategic concepts that are perceived by the KEMSA personnel to be crucial in the operations
management. The finding agreed with Sukati et al., (2012) Concerned with cross-functional,
enterprise-level business processes associated with customers and how organizations can take a
cross-functional view to drive customer satisfaction
Table 4.11: Business process management
Business Process ManagementRespondent’s rating
1 2 3 4 5
Inventory & manage processes as assets 2% 0% 2% 52% 44%
Portfolio management techniques 1% 11% 1% 55% 33%
Process-centric” design & redesign principles 3% 4% 2% 46% 45%
Processes, polices/rules, performance measures (KPIs)
4% 7% 5% 53% 32%
Develops a Continuous Process Improvement Program methods
2% 2% 10% 54% 33%
Rigorous change management techniques 5% 29% 38% 10% 18%
Factoring out Core” vs. “Non-core” processes 0% 10% 63% 12% 16%
Sustains results 5% 29% 38% 10% 18%
Using evaluation criteria 0% 10% 63% 12% 16%
Evaluate process quality 5% 8% 2% 42% 43%
Develops a Business Process Portfolio 3% 2% 0% 57% 38%
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4.8.2 Strategy
Table 4.12: Rate of strategy Monitoring, development and implementation
strategy Monitoring, development and implementation
Minimum Maximum Mean Std. Deviation
Implementation is evaluated 1.00 5.00 3.75 0.64
After any change the direction of activities is soon regained
1.00 4.00 2.71 0.48
Perceived problems in implementation are not tackled
1.00 4.00 2.24 0.63
Strategy alert control, sudden unexpected event.
1.00 5.00 3.50 0.95
The checking of environmental conditions 1.00 5.00 2.68 0.47
The study sought the extent to which Rate of strategy Monitoring, development and
implementation in supply agility. From the findings in Table4.12illustrates that strategy
implementation and monitoring were; Implemented and evaluated, after any change the
direction of activities is soon regained (score= 3.75, approximately= very great extent) the
standard deviation for both was also less than 1, indicating that most of the responses were
close to average score. This was followed by determining Strategy alert control, sudden
unexpected event and checking of environmental conditions with a score of 2.24-great extent.
Further the responds agreed that the management and put in place strategy alert controls and
measures to control unexpected sudden happening.
The respondents in KEMSA agreed the purpose of setting Strategy alert control, sudden
unexpected event. is to convert managerial statements of strategic vision and business mission
into specific performance and management of the supply chain operations. The finding
concurred with (Basu and Siems 2004) Strategy implementation concerns the managerial
exercise of putting a freshly chosen strategy into place. Strategy execution deals with the
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managerial exercise of supervising the ongoing pursuit of strategy, making it work, and showing
measurable progress in achieving the targeted results.
4.8. 3 Customer integration
Table 4.13: The extent of information sharing between your organization and major
customers
Customer integration Minimum Maximum Mean Std. Deviation
Sharing market information 1.00 5.00 2.62 1.23
Customer follow up 2.00 5.00 4.05 0.45
Computerization of orders 2.00 5.00 3.76 0.30
Customer Need Assessment 1.00 5.00 3.00 1.44
customers’ future needs 1.00 5.00 3.33 1.12
Per the findings in Table4.13 show that Customer follow up and Computerization of orders on
the information sharing between the organization and major customer had a mean score of 4.05
and 3.7, and great extent of application in the organization.
This research provided that the relationship between customer satisfaction, trust, and information
sharing to customer loyalty in the KEMSA pharmaceutical products was through customer
satisfaction, trust, and information sharing that affect customer loyalty becomes very important
to win the competition. The finding agreed with (Subaskaran & Anojan, 2015). that Sharing
market information and analyses of the customers’ future needs was at very law extend, hence
not leveraging the organization operation on the forecasting of the customer need
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4.8.4 Supplier integration
Table 4.14: The extent of information sharing between your organization and major
suppliers
Supplier integration Minimum Maximum Mean Std. Deviation
Information exchange 1.00 5.00 3.29 0.56
Demand forecast with suppliers 2.00 5.00 3.02 0.89
Inventory levels 1.00 5.00 3.51 1.05
Production schedule 1.00 5.00 3.10 1.00
Innovation and Technology 1.00 5.00 3.08 1.31
supplier involvement in new product development
2.00 5.00 3.35 0.75
The findings in the above Table4.14 show that Inventory levels in the ware house was highly
ranked with a mean of 3.51 implication of suppler involvement in stock management. supplier
involvement in new product development, scored 3.35 which was approximately to very great
extent, with a standard deviation of 0.75, followed by information exchange and demand
forecasting with suppliers which scored 3.29 and 3.02 respectively.
The respondents agreed that that Strategic network optimization, including the number, location,
and size of warehousing, distribution centers, and facilities.¢ Strategic partnerships with
suppliers, distributors, and customers, creating communication channels for critical information
and operational improvements such as cross docking, direct shipping, and third-party logistics.
According to Jovanovic (2007), Product life cycle management, new and existing products can
be optimally integrated into the supply chain and capacity management activities. (Paulraj &
Chen 2007). Information technology chain operations. Where-to-make, and make-buy decisions.
68
Aligning overall organizational strategy with suppliers’ strategy. It is for long term and needs
resource commitment.
4.8.5 Internal integration
Table 4.15: The extent of information sharing between your supply chain and internal
functions
Internal integration Minimum Maximum Mean Std. Deviation
Data integration among internal functions 1.00 5.00 3.35 0.89
ERP use between international functions 2.00 5.00 3.76 0.61
Real-time information on inventory 1.00 5.00 3.75 0.64
Logistics related operational data 2.00 5.00 2.79 0.91
ERP1 and ERP11 management systems 2.00 5.00 3.88 0.39
The respondents were requested the extent of internal information integration as provided in the
above Table4.15 the finding show that the highly rated use of ERP1 and ERP11 management
systems for sharing information internally (score of 3.88=very great extent) the standard
deviation (0.39) was also the lowest. This was followed by Data integration among internal
functions and ERP use between international functions with mean of 3.35 and 3.76 respectively.
The respondents also agreed that agreed sharing of the operation information between the
department was of great impact on management which contributed to performance of supply
chain. According to (Huggins, 2009) communication and collaboration through social
technologies raised the productivity of interaction workers. use technology for internal
communication to have documented communication strategies to use leading-edge
communication tools for operations.
69
4.9 Multiple Regression Analysis
The study conducted a multiple regression analysis to establish the relationship between the
dependent and the independent variables. This was in line with the core aim of the study, which
was to establish how environmental, technological, competitiveness and consumer preferences
affect operations management at KEMSA. The study used SPSS V.22 to code, transform and
analyze the data. The descriptive of the five variables are presented in the table below.
Table 4.16: Descriptive statistics of the variables
Descriptive Statistics Mean Std. Deviation N
Operations Management 3.9825 .13372 104
Environment_ Uncert. 3.9269 .15516 104Technological _Advant. 4.0293 .20463 104Consumer _Preference 4.0065 .14794 104Competitiveness 3.8573 .16810 104
4.9.1 Model Summary
The study found in the table below, the R Square, which is the coefficient of determination, was
used to measure the dependent variable variations and their effect on the dependent variables. As
observed, The R Square value is 0.714; this value is between 0 and 1. Analytically, this shows
that 71.4% of variations in the dependent variable can be explained by the independent variables.
Analytically, 71.4% of variation in KEMSA supply chain management operations which is
explained by environmental, technological, competitiveness and consumer preferences factors,
while the remaining 28.6% is associated with factors that re not within the scope of this study.
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Table 4.17: Regression analysis model summary
Model Summary
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
Durbin-Watson
1 .845a .714 .703 .07290 .590
a. Predictors: (Constant), Compet, Cons_Pref, Tech_Adv, Env_Uncert
b. Dependent Variable: supply chain Operations Management
The finding show that significant value of the R Square value, coupled with the Durbin-Watson
value of 0.5, the four independent variables outlined above are very crucial and bear significant
effect on the dependent variable. This study hence identifies the four variables as important
aspect to consider in streamlining operations management practices of a firm to achieve agility
and efficiency in operations.
4.9.2 F-Test (On Way Anova)
F Test was done through One Way Anova to test the effect of all the independent variables on
the dependent variable in a simultaneous manner. From a statistical perspective, the F-Test is
done to show whether there is a joint effect of independent variable on the dependent variable.
The results of the test are presented in the tables below. The critical value for the analysis is
2.464, and was computed through the use of k-1 numerator (4) and N-k denominator (99)
degrees of freedom. The F value obtained (61.891) is greater than the F Critical Value (2.464).
Additionally, the significance value obtained is 0.000, which is less than the set value of 0.05.;
Owing to the fact that the F value is greater than the critical value, and the significance level is
71
lower than the set level, it can be concluded that environmental, technological, competitiveness
and consumer preferences factors have a significant effect on the KEMSA operations
management
Table 4.18: Anova
ANOVAa
Model sum of Squares df Mean Square F Sig.
1
Regression 1.316 4 .329 61.891 .000b
Residual .526 99 .005
Total 1.842 103
a. Dependent Variable: supply chain Operations management
b. Predictors: (Constant), Compet, Cons_Pref, Tech_Adv, Env_Uncert
F critical value 2.464
4.9.3 Coefficients
The multiple regression analysis also produced regression coefficient, precisely the t values and
the significance level. The regression coefficient obtained is presented in the table below. These
coefficients are as well crucial in establishing the relationship between the dependent and the
independent variable. The main aim of the study was to establish the effect of that
environmental, technological, competitiveness and consumer preferences factors have a
significant effect on the KEMSA operations.
72
Based on the straight-line formula we used was
y = ax + b
This is saying that y, the dependent variable, is reached by multiplying x, the observed variable,
by a certain number, a, and then adding another number, b. to predict y from more than one
independent variable, then there is the need for a different regression coefficient for each. Since
in the current context entails predicting y (operations management) from four independent
variables namely environmental, technological, competitiveness and consumer preferences, the
applicable equation for the analysis can be given in the form of
y = a + b1x1 + b2x2 +b3x3+b4x4
Using the coefficients presented in the table below:
Y=2.12+0.544x1+0.138x2+0.334x3+0.132x4
This means that KEMSA operations management =2.122 + 0.544*Environmental Uncertainty +
0.138*Technological_ Advancement + 0.334* Consumer Preferences + 0.132*Competitiveness
Table 4.19: Coefficients Results
Coefficientsa
Model Unstandardized Coefficients t Sig. 95.0% Confidence Interval for B
B Std. Error Lower Bound Upper Bound
1
(Constant) 2.122 .399 5.322 .000 1.331 2.913
X1-ENVIR. .544 .054 10.158 .000 .437 .650
X2-TECH. .138 .039 3.497 .001 .060 .216
73
X3-CONS. .334 .052 -6.439 .000 .437 .231
X4-COMPET .132 .046 2.851 .005 .040 .224
a. Dependent Variable: supply chain Operations Management
From the equation derived and based on the data presented in the table above, taking all other
factors into account but the independent variables in this study at zero, the operations
management of KEMSA would be 2.122 (constant). These findings further clearly show that
when all the independent variables are at zero, a unit increase in environmental uncertainty
affects the operations management by 0.544; a unit increase in technological advancement
affects the operations management by 0.138; a unit increase in consumer preferences affects the
operations management of KEMSA by 0.334 and finally, a unit increase in competitiveness
affects the KEMSA operations management by 0.132.Essentially, environmental uncertainty
bear the highest effect on operations management, followed by consumer preferences,
technological advance then finally, competitiveness. At 95% confidence and 0.05 significance
level, environmental uncertainty and consumer preferences had a significance level of 0.000,
while technological Advancement and Competitiveness had a significance of 0.001 and 0.005
respectively
The most significant factors that affect operations management can therefore be said to be
environmental uncertainty and consumer preferences.
74
CHAPTER FIVE
SUMMARY OF RESULTS, CONCLUSION AND RECOMMENDATION
5.1 Introduction
In this chapter the researcher makes summary of the study then draws conclusion and gives
recommendations based on the research findings and analysis done in previous chapter. The
summary is a brief overview of the research process while conclusion is the report of the crucial
findings and the recommendations are suggestions and advice based on the research findings
5.2 Summary of the Study
The study was carried to evaluate the effects of supply chain agility on management of supply
chain operations in Kenya medical supplies authority KEMSA. A census survey of 110
respondents was carried out from data are collected for all units in the population major involved
in the management of the operations. With 104 respondents, fully filled questionnaires. Which
was a response rate of 95%. The percentage of male respondents was 66.35% while that of
female respondents was 33.65%. with most the respondents aged between 25-44 years and
worked in the organization for a period of 6to 15 years guaranteeing adequate knowledge of the
organization’s supply chain operations.
5.2.1 Environmental Uncertainty
Environmental Uncertainty was considered by of the respondent to be a factor of consideration in
management of operations because it was found that Agility requires developing new
collaborative partnerships, and adopting an experimental approach to exploring possible
75
opportunities, all within an environment of deep market uncertainty. Also, respondents found
that to see business opportunities that arise by addressing critical social and environmental
challenges. Finding ways to create product lifecycles with lower footprints enhances brand
reputation, boosts revenue, and stimulates innovation.
5.2.2 Technological Advancement
Technological Advancement were believed to have been carried in the organization by 62.5% of
the respondents. Where ICT application such as Supply Chain Management Software Systems
Electronic data interchange (EDI), Manufacturing resource planning (MRP 11) &MRP 1 and
Customer relationship management (CRM) where most regarded for management of operation.
World Class Manufacturing (WCM) based on TQM, JIT, and CIM Responsive & Efficient
Manufacturing High quality & cost effective Products Market share & Brand/competency
Recognition. Expand the ecosystem and increase diversity through technology development and
acquisition of select semiconductor technologies, materials, and design know-how.
5.2.3 Consumer Preference
Consumer Preference taste management practices were n very much emphasized, the
respondents asserted that KEMSA organized joint activities with customers. The prices of
different commodities, consumers decide on the quantities of these commodities per their paying
capacity, and tastes and preferences. Understand which features or product attributes are most
important to potential consumers of a specific market segment. Customer Purchase Factors:
Understand which components create the most value for your target audience and which have the
greatest impact on purchase decisions. Go deeper to understand exactly which variants of each
component are most appealing to your customers Pricing Optimization: By looking at how
76
customers make decisions; the economic impact of price changes can be assessed. Understanding
what is important to your target consumers helps you effectively market, position, price and
differentiate.
5.2.4 Competitiveness
Competitiveness, also agreed by majority to have been that KEMSA had the ability to add more
value for its customers than its rivals and attain a position of relative advantage• A situation
where a business has an advantage over its competitors by being able to offer better value,
quality and/or service as well though Comprehensive Description Rivalry among firms resulting
to prices war. Optimal pricing for monopolistic platform and Increasing consumer warranties or
service The regression analysis revealed that the supply chain agility was significantly influenced
by Environmental Uncertainty, Technological Advancement, and Consumer Preference taste
however market Competitiveness insignificantly influenced management of the supply chain
operations according to the responses of the respondents.
5.3 Conclusion of the study
The study concluded that Environmental Uncertainty The study concluded that Consumer
Preference Understanding the Customer and Supply Chain Uncertainty Implied demand
uncertainty: resulting uncertainty for the supply chain given the portion of the demand the supply
chain a unit increase in environmental uncertainty affects the operations management by 0.544.
the organization to serve its customer through a well-managed supply chain operations linked to
the changing business environments
Technological Advancement improved customer and supplier relationships and a more complete
view of inventory data., The most advanced supply chains are using technology such as EDI,
automated data collection and WMS to connect your procurement team to the remainder of your
77
supply chain using a constant flow of data. The study provided that a unit increase in
technological advancement affects the operations management by 0.138 Hence the organization
work on achieving responsive supply chain for the management of its operations
The study concluded that Consumer Preference Given the prices of different commodities,
consumers decide on the quantities of these commodities per their paying capacity, with a unit
increase in consumer preferences affects the operations management of KEMSA by 0.334. The
study found that for KEMSA to respond appropriate to the customer needs its supply chain
operation management must be aligned to customer taste
The study concluded that Competitiveness Managing supply chain flows and assets, to maximize
supply chain surplus must develop Competitive strategy that set of customer needs a firm seeks
to satisfy through its products and service as well the study found that unit increase in
competitiveness affects the KEMSA operations management by 0. 132.Essentially hence through
the strategies put in place the organization gain competitive advantage to his competitors through
the operation management
5.4 Recommendation of the study
The study recommends that legal intervention in protecting public institutions against
inappropriate information offered by fraudulent suppliers, emphasizing on performance
measurement and laying down proper checks for all contracts, setting supplier selection
structures that avoid political interference and augmenting of supplier relationship management
practices to ensure supplier and public institutions work towards the same goal.
based on the regression analysis technological advancement, competitiveness, consumer
preference and environmental uncertainty can only explain 71.4% of the variations supply chain
78
operations management at KEMSA. This implies that 28.6% of variations in the operations
management is linked to other factors. A study is therefore required to establish the additional
factors and their level of effect on agility in supply chain management operations at KEMSA
, the study had limited resources at disposal and therefore the study conducted is only small
scale and hence the findings may not be accurately generalized to all government parastatals
operating in the Kenyan context. Therefore, a more intensive investigation with a larger sample
is required to establish more profound results.
5.5 Areas for Further Study
This study focused on effects of supply chain agility on the management of the supply chain
operations in government medical agency. A further study should be carried out to determining
effects of supply chain agility on the management of the supply chain A further study could be
carried out to determine the challenges involved in management of the supply chain operations in
government institutions will also bring more light to this field and enhance supply chain
knowledge.
79
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APPENDICES
APPENDIX 1; LETTER OF INTRODUCTION
P.O. Box 47715 - GPO 00100
Nairobi. Kenya.
Dear respondent,
REF:DATA COLLECTION
I am a student of the Jomo Kenyatta University of Agriculture and Technology currently
conducting a research on supply chain agility on the management of the supply chain operations
in Government Medical Institution, to fulfill the requirement of the award of masters of science
in procurement and logistics.
You have been selected to participate in this study and it is my kind request for your assistance in
completely filling the attached questionnaires accordingly and as honestly as possible
The response will be treated with the utmost confidence as the information is strictly for
academic purpose
Your assistance and cooperation will be highly appreciated
89
Yours sincerely
Ambrose kamanda
HD311-C004-1980/2016
APPENDICES
APPENDIX 1: QUESTIONNAIRE
INTRODUCTION:
This information is being sought solely for academic purposes and will be treated in strict
confidence. Kindly answer the questions by writing a brief statement or checking in (√) on the
correct answer on boxes provided. Please answer all questions.
SECTION 1: DEMOGRAPHIC INFORMATION
1. Gender Male [] female []
2. Age 18-24 years [] 25-34 years [] 35-44 years [] 45-54 years [] Over 55 years []
3. What is your highest level of education?
a. Secondary []
b. College/University Diploma []
c. Bachelor’s Degree []
d. Master’s Degree []
e. PHD []
f. Other (please specify) ……………………………………………….
4. How many years have you worked for the organization?
1-5 years [] 6-10 years [] 11-15 years [] Over 16 years []
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5. What is the name of your department?...
1 Procurement and Supply []
2 Technical Advisory []
3 Quality Assurance []
4 Distribution Functions []
5 Warehousing Function []
6 Finance Department []
SECTION 2: ENVIRONMENTAL UNCERTAINTY
6. How does business environmental forces potentially affect your organization's performance
and operations
Give your ratings on the scale of 1-5
5- Strongly Agree 4- Agree 3- Agree nor Disagree 2- Disagree 1-Strongly Disagree
Social factors
Respondent’s rating
1 2 3 4 5
Economic factors, like Interest rates, inflation, changes in disposable
income
Trends in the physical characteristics of population such as gender,
age, level of education, income, geographical location
Stakeholder that is affected by org’s decisions and policies and that
can influence organization
Customers taste and preferences
Physical environment for distribution considerations
Social support networks- linked to better health. Culture - customs and
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traditions
Health services - access and use of services that prevent and treat
disease influences health
Competitors policies regarding pricing new products, services offered
and other incentives it is giving to customers
Explain...............................................................................................................................................
............................................................................................................................................................
7. What are the laid down measures to considered on Assessment of Life-Cycle in Inventory for
all the pharmaceuticals commodities?
Please indicate the extent of Assessment of Life-Cycle in Inventory, Give your ratings on the
scale of 1-5 (Where 1 = Not at all 2 = Little extent 3 = Moderate extent 4 = Great extent 5 =
Very great extent)
Assessment of Life-Cycle in Inventory Respondent’s rating
1 2 3 4 5
Companies consumer & citizen government politics regulations
marketing
Product portfolio matrix for product strategy of companies Goal
Scope
The delivery of competitively priced goods and services that satisfy
human needs and bring ‘quality of life
Life Cycle Assessment Raw material extraction Manufacturing
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Production Disposal Transportation Recycling Use
Explain...............................................................................................................................................
................................................................................................................................................
8. To what extent does your organization use the identified approaches to managing market
unpredictability
Please indicate the extent of application approach to the management of market unpredictability
of Give your ratings on the scale of 1-5 (Where 1 = Not at all 2 = Little extent 3 = Moderate
extent 4 = Great extent 5 = Very great extent)
Market unpredictability Respondent’s rating
1 2 3 4 5
Learning from Competitors
Target Marketing Market Segmentation: Divide the market into
segments of customers
choosing target markets and building profitable relationships with them
SWOT analysis: Threats and Opportunities
Explain...............................................................................................................................................
............................................................................................................................................................
SECTION 3: TECHNOLOGICAL ADVANCEMENT
9. Which of the below Information Technology for Supply Chain Management Software
Systems does your organization use and to what extent Give your ratings on the scale of 1-5
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(Where 1 = Not at all 2 = Little extent 3 = Moderate extent 4 = Great extent 5 = Very great
extent)
Supply Chain Management Software Systems Respondent’s rating
1 2 3 4 5
Electronic data interchange (EDI)
Material Requirements Planning (MRP
Manufacturing resource planning (MRP 11)
Enterprise resource planning (ERP)
Supply chain management systems (SCMS)
Customer relationship management (CRM)
Explain...............................................................................................................................................
............................................................................................................................................................
10.To what extent do the following information and technology tool enable your organization to
gather information from the suppliers and the market? Give your ratings in the scale of 1-5
(Where 1 = Not at all 2 = Little extent 3 = Moderate extent 4 = Great extent 5 = Very great
extent)
94
Information and Technological Practices Respondent’s rating
1 2 3 4 5
Reference checks with other procuring entities
Market survey on potential suppliers
Request for information from suppliers
Request for proposal from suppliers
Competitive bidding by suppliers
Pre-qualification of suppliers
Price, delivery, quality, and service
Pre-bid meetings/conferences
Explain...............................................................................................................................................
............................................................................................................................................................
11.Please indicate your degree of agreement or disagreement in the following benefits of Using
IT in supply chain management in your organizations
Benefits of Using IT Respondent’s ratingStrongly Disagree
Disagree
Agree nor Disagree
Agree
Strongly Agree
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supporting Inventory Management
Enhancing warehouse and logistics managementReal-time business operations - Direct online communication between trading partnersInformation of product, manufacturer, price was recorded on computer systemReal-time basis to determine product wise demand forecastMonitoring of commodities on transit Global Considerations in Using SCM/ERP System
Explain……………………………………………………………………………………………
………………………………………………………………………………………………………
…………………………………………………………………………………………
12. To what extent do the following Supplier early involvement in product development affect
the quality, product innovation and service delivery to your final customers of your organization
and supply chain operation performance? Give your ratings in the scale of 1-5 (Where 1 = Not at
all 2 = Little extent 3 = Moderate extent 4 = Great extent 5 = Very great extent)
Supplier early involvement in product development Respondent’s Rating
1 2 3 4 5
Quality of goods/services/works
Delivery schedules of goods and services
Price of goods/services/works
Terms of payment of goods and services
Quality of purchasing materials
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Explain……………………………………………………………………………………………
………………………………………………………………………………………………………
…………………………………………………………………………………………………
Goods manufacturing practices
Product quality assurance and certification
Technical support and after sales service
Past performance of suppliers
Financial capacity of suppliers
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SECTION 4: CONSUMER PREFERENCES
13.Please indicate your degree of agreement or disagreement in the following set of
statements.
Explain.........................................................................................................................................
......................................................................................................................................................
............
Optimal pricing for monopolistic platform
Customer differentiated services and products Respondent’s ratingStrongly Disagree
Disagree
Agree nor Disagree
Agree
Strongly Agree
My company has an established research and development strategy for product design and developmentMy company conducts a market research often to elicitand understand consumer needs and preferences My company usually conducts a consumer feedback survey to assess customer satisfactionMy company’s product development operations are reliant on.My company often uses price competition as a marketing strategy.I perceive our products to be price sensitiveMy company capitalizes on reducing operational cost to reduce product price escalationOur targeted customers have a higher bargaining power and hence we have little control over their choicesMy company is always innovating new ways to differentiate the products from those of the competitorsMy company has realized an increase market share over the last five yearsIntegrating the consumer tastes and preferences is a core consideration our product designMy company uses price sensitive meter to collect the prevailing prices in the market
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Increasing consumer warranties or service
Staging advertising battles
Explain.........................................................................................................................................
......................................................................................................................................................
............
14.Pease indicates your degree of agreement or disagreement according to your company
pricing decision making in the following set of statements.
Factors to consider during pricing of
your products.
Respondent’s rating
Strongly
Disagree
Disagr
ee
Agree
nor
Disagree
Agr
ee
Strongl
y
Agree
Quality of the product
The customer needs, tastes and preferences Benchmarking prices with Competitors
Profit margins
Operational and production costs
Explain.........................................................................................................................................
......................................................................................................................................................
............
SECTION 5: COMPETITIVENESS.
15. Please indicate your degree of agreement or disagreement in the following set of
statements.
Rating scale
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5- Strongly Agree 4- Agree 3- Agree nor Disagree 2- Disagree 1-Strongly Disagree
Explain.........................................................................................................................................
......................................................................................................................................................
............
16.Please indicate the extent of application of Cost Leadership strategies in your
organization, Give your ratings on the scale of 1-5 (Where 1 = Not at all 2 = Little extent 3 =
Moderate extent 4 = Great extent 5 = Very great extent)
StatementRespondent’s rating
Strongly Disagree
Disagree
Agree nor Disagree
Agree
Strongly Agree
My company practices active compliance with national and international conventions and regulationsMy company has adopted the standard operation and management practices and procedures advocated by ISO
My company has a quality control and assurance departmentAll the materials produced are inspected for quality purposes.All our suppliers must comply with the company’s quality standard and operational procedures
Willingness to share sensitive information
All organization stakeholders are involved in new product development and value analysesMy company advocates for innovations that are targeted toward improving organizational processes and new product designsThe company managers and leaders are well versedwith the theme of change managementMy company uses the Just in Time procurement system to reduce production costs and maximize profits
Cost Leadership strategies Respondent’s rating
100
Explain.........................................................................................................................................
......................................................................................................................................................
............
SECTION 6: MANAGEMENT OF SUPPLY CHAIN OPERATIONS
17.Process Management -Techniques for Improving Execution, Adaptability, and
Consistency of the business
What business process Methods Does to help manage operation in your organization
, Give your ratings on the scale of 1-5 (Where 1 = Not at all 2 = Little extent 3 = Moderate
extent 4 = Great extent 5 = Very great extent)
Business Process Management Respondent’s rating
1 2 3 4 5
Inventory & manage processes as assets
Portfolio management techniques
Process-centric” design & redesign principles
1 2 3 4 5
Purchasing Economies of scale from suppliers
Heavy IT investments
Producing highly standardized products
Research and development
Price slashing to potential customers.
Low prices relative to other firms that compete within the target market.Sourcing its products in low-wage countries and by offering a very basic level of service.
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Processes, polices/rules, performance measures (KPIs)
Develops a Continuous Process Improvement Program methods
Rigorous change management techniques
Factoring out Core” vs. “Non-core” processes
Sustains results
Using evaluation criteria
Evaluate process quality
Develops a Business Process Portfolio
Explain.........................................................................................................................................
......................................................................................................................................................
............
18. Please indicate your degree of agreement or disagreement according to your company
Business Process Methods Value and importance in the following set of statements
Rating scale
5- Strongly Agree 4- Agree 3- Agree nor Disagree 2- Disagree 1-Strongly Disagree
Business process Methods Value and impotence
Respondent’s rating
Strongly Disagree
Disagree
Agree nor Disagree
Agree
Strongly Agree
Market & technology trends
A cost-cutting or productivity initiative
A systematic approach to managing and improving specific processesProvides structure, methods & tools to align the workforce & IT with business strategyhelping organizations to execute & adapt
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Explain
................................................................................................................................................
................................................................................................................................................
........
STRATEGY
Rating scale
19.Which of the following Strategy Monitoring and development of implementation
problems have your company experienced?
Rating scale
5-Not at all 4- Little extent 3- Moderate 2- Great extent 1- Very great extent
Strategy Monitoring and development of implementation Respondent’s rating
1 2 3 4 5
Implementation is not evaluated
After any change the old direction of activities is soon regained
Perceived problems in implementation are not tackled
Strategy alert control, sudden unexpected event.
The checking of environmental conditions
Explain.........................................................................................................................................
......................................................................................................................................................
............
Information Integration
while consistently achieving performance measures & business objectivesthe advantage is created when a firm integrates the activities of its value chain
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Dimensions of supply chain information integration
Customer integration
20.Please indicate the extent of information sharing between your organization and major
customers. Give your ratings in the scale of 1-5 (Where 1 = Not at all 2 = Little extent 3 =
Moderate extent 4 = Great extent 5 = Very great extent)
Customer integration Respondent’s rating
1 2 3 4 5
Sharing market information
Customer follows up
Computerization of orders
Customer Need Assessment
customers’ future needs
Explain.........................................................................................................................................
......................................................................................................................................................
............
Supplier integration
21.Please indicate the extent of information sharing between your organization and major
suppliers Give your ratings on the scale of 1-5 (Where 1 = Not at all 2 = Little extent 3 =
Moderate extent 4 = Great extent 5 = Very great extent)
Supplier integration Respondent’s rating
1 2 3 4 5
Information exchange
Demand forecast with suppliers
Inventory levels
Production schedule
Innovation and Technology
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supplier involvement in new product development
Explain...................................................................................................................................
..........................................................................................................................................
Internal integration
22.Please indicate the extent of information sharing between your supply chain and internal
functions Give your ratings on the scale of 1-5 (Where 1 = Not at all 2 = Little extent 3 =
Moderate extent 4 = Great extent 5 = Very great extent)
Internal integration Respondent’s rating
1 2 3 4 5
Data integration among internal functions
ERP use between international functions
Real-time information on inventory
Logistics related operational data
ERP1 and ERP11 management systems