Effect of Supply Chain Risk Management Practices on Performance of Manufacturing Firms in Kenya

Abstract

The purpose of this study was to establish the effect of supply chain risk management practices on performance of manufacturing firms in Kenya. The study specifically looked at the effect of risk identification and hedging on performance of manufacturing firms in Kenya. The target population included 494 large manufacturing firms licensed under the Kenya Association of Manufacturers. A sample size of 138 firms was determined through a formula and sampled using stratification. The study used primary data sources collected through structured questionnaires. The collected data was analysed using descriptive and inferential statistics to reveal that supply chain risk management practices (risk identification and hedging) positively and significantly affected performance manufacturing firms in Kenya. The study recommended the need for manufacturing firms to put in place better risk identification practices such as continuously conducting pre-screening of suppliers’ capacity, inventory forecasting and also conducting periodic procurement analysis so as to detect and hedge against risk thus improving their performance. There is also a need to ensure that there exist between hedging practices such as increasing buffer stock, reducing order cycle times and sharing supply chain costs with partners through outsourcing in order to improve their performance.

Keywords: Risk Identification, Hedging, Performance of Manufacturing Firms