Mwangi - Supplier Relationship Management and Operational Performance of Sugar Firms in Kenya

SUPPLIER RELATIONSHIP MANAGEMENT AND OPERATIONAL
PERFORMANCE OF SUGAR FIRMS IN KENYA
MICHAEL MWANGI
D61/74742/2014
A RESEARCH PROJECT PRESENTED IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
THE DEGREE OF MASTER OF BUSINESS ADMINSTRATION
IN UNIVERSITY OF NAIROBI
DECLARATION
This research project is my original work and has not been presented for examination to
any other university.
Signature ………………………… Date …………………………
Michael Mwangi
D61/74742/2014
This research project has been submitted for examination with my approval as University
Supervisor.
Signature ………………………… Date …………………………
Akelo E.O
Lecturer, Department of Management Science
School of Business,
University Of Nairobi.
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DEDICATION
This project is dedicated to the Almighty God for His protection and strength that saw me
through my study successfully. I also dedicated this research to my loving parents;
PaulOnesimusMwangiand Margaret Wangui for their support and unending love that
have enabled me come this far in my academic pursuit. God bless them.
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ACKNOWLEDGMENT
My special and sincere thanks go to my supervisor Akeloforhis guidance, support, useful
comments and constructive critique which are all instrumental to the successful
completion of this research work. I also appreciate the support and encouragement from
my friends and family during the tough times that I had to balance between the demands
of this rigorous academic program and an equally demanding work environment. My
gratitude also goes to God Almighty who renewed my strength at every single stage of
this study.
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ABSTRACT
In an increasing competitive marketplace, firms are seeking new methods of enhancing

competitive advantage and therefore, purchasing is becoming a strategic function and a
key factor in competitive positioning. Supplier Relationship Management (SRM) plays
an important role in enhancing organisational performance through reduction of costs and
the optimization of performance in industrial enterprises. This study therefore sought to
assess the effect of supplier relationship management on operational performance of
sugar firms in Kenya. The study worked towards attaining the following objectives; To
determine the effect of supplier collaboration in product development on operational
performance of sugar firms in Kenya, To establish the effect of information sharing on
operational performance of sugar firms in Kenya, and To determine the effect of trust-
based relationship on operational performance of sugar firms in Kenya. Three theories,
namely the social capital theory, the theory of constraints, and the commitment trust
theory, anchored this study. The research absorbed a descriptive research design. The
study’s target population consisted of all the employees of the 13, currently operational,
sugar companies in Kenya serving in the companies’ supply chain departments (Chemelil
Sugar Factory; Kibos Sugar and Allied Factories; Muhoroni Sugar Factory; Mumias
Sugar Factory; Nzoia Sugar Factory; Sony Sugar Factory; South Nyanza Sugar Factory;
Sukari Industries Limited; Transmara Sugar Factory; West Kenya Sugar Factory; Butali
Sugar Factory; Kwale International Sugar Company and Kisii sugar factory).Primary data
was collected for analysis using questionnaires as instruments of collecting the data.
Analysis of the data was conducted through SPSS and the findings presented using
frequency tables, charts and graphs. The research established that trust-based
relationships, information sharing and supplier collaboartion in NPD positively impact
operational efficiency in the sugar sector in Kenya. It was also found that most of the
operations within the sugar firms are based on trust. In addition, the study concluded that
the sector is not highly efficient in managing all its operational undertakings. The
researcher recommends that the sugar firms should ensure that an effective supplier-
buyer information relationship structure is established, encourage supplier involvement in
product development and operational systems within the organisations should be made
reliable for the firms to attain operational excellence.
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TABLE OF CONTENTS
DECLARATION .......................................................................................................................................... ii
DEDICATION ............................................................................................................................................. iii
ACKNOWLEDGMENT.............................................................................................................................. iv
ABSTRACT.................................................................................................................................................. v
LIST OF FIGURES ................................................................................................................................... viii
LIST OF TABLES ....................................................................................................................................... ix
ACRONYMS AND ABBREVIATIONS ..................................................................................................... x
CHAPTER ONE ........................................................................................................................................... 1
INTRODUCTION ........................................................................................................................................ 1
1.1Background of the Study ..................................................................................................................... 1
1.1.1Supplier Relationship Management .............................................................................................. 2
1.1.2Operational Performance .............................................................................................................. 3
1.1.3 Sugar Firms in Kenya .................................................................................................................. 4
1.2 Research Problem ............................................................................................................................... 6
1.3Research Objectives ............................................................................................................................. 8
1.4 Value of the Study .............................................................................................................................. 8
CHAPTER TWO ........................................................................................................................................ 10
LITERATURE REVIEW ........................................................................................................................... 10
2.1 Introduction ....................................................................................................................................... 10
2.2 Literature Review.............................................................................................................................. 10
2.2.1 Social Capital Theory................................................................................................................. 10
2.2.2 Theory of Constraints (TOC) ..................................................................................................... 11
2.2.3 Commitment-Trust Theory ........................................................................................................ 12
2.3 Supplier Relationship Management .................................................................................................. 13
2.3.1 Trust-Based Relationship ........................................................................................................... 14
2.3.2 Information Sharing ................................................................................................................... 15
2.3.3 Supplier Collaboration in New Product Development ............................................................... 16
2.4 Operational Performance .................................................................................................................. 17
2.5 Empirical Review and Research Gap................................................................................................ 19
2.6 Conceptual Framework ..................................................................................................................... 20
CHAPTER THREE .................................................................................................................................... 22
RESEARCH METHODOLOGY ................................................................................................................ 22
3.1 Introduction ....................................................................................................................................... 22
3.2 Research Design................................................................................................................................ 22
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3.3 Target Population .............................................................................................................................. 22
3.4 Data Collection ................................................................................................................................. 23
3.5 Data Analysis .................................................................................................................................... 24
CHAPTER FOUR....................................................................................................................................... 27
DATA ANALYSIS, FINDINGS AND DISCUSSION .............................................................................. 27
4.1 Introduction ....................................................................................................................................... 27
4.2 Response Rate ................................................................................................................................... 27
4.3 Background Information ................................................................................................................... 27
4.3.1 Number of Employees ............................................................................................................... 28
4.3.2 Supply Chain Department Employees ....................................................................................... 28
4.3.3 Age of the Organisation ............................................................................................................. 29
4.4 Trust Based Relationships................................................................................................................. 30
4.5 Information Sharing .......................................................................................................................... 32
4.5.1 Aspects of Information Sharing ................................................................................................. 32
4.6 Supplier Collaboration in New Product Development...................................................................... 36
4.7 Operational Performance .................................................................................................................. 38
4.7.1 Aspects of Operational Performance ......................................................................................... 39
4.7.2 Efficiency Level of Operational Performance ........................................................................... 40
4.8 Correlation Analysis ......................................................................................................................... 42
4.9 Regression Analysis .......................................................................................................................... 43
CHAPTER FIVE ........................................................................................................................................ 47
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............................................................... 47
5.1 Introduction ....................................................................................................................................... 47
5.2 Summary of Findings ........................................................................................................................ 47
5.3 Conclusion ........................................................................................................................................ 50
5.4 Recommendation of the Study .......................................................................................................... 50
5.5 Implication of the Study on Policy, Theory and Practice ................................................................. 51
5.6 Limitation of the Study ..................................................................................................................... 52
5.7 Suggestions for Further Studies ........................................................................................................ 53
REFERENCES ........................................................................................................................................... 54
APPENDICIES ........................................................................................................................................... 59
Appendix I: Questionnaire to Employees ............................................................................................... 59
Appendix II: WorkPlan ........................................................................................................................... 64
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LIST OF FIGURES
Figure 2.1: Conceptual Framework............................................................................…...21

Figure 4.1: Number of Employees…..……………….………………………………….28
Figure 4.2: Supply Chain Department Employees………………………….……….…..29
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LIST OF TABLES
Table 3.1: Operationalization of Variables………………………………………………26

Table 4.1: Age of Organisation…………………………………………………………..30
Table 4.2: Trust Based Relationships….………………………………………….……..31
Table 4.3: Aspects of Information Sharing..………………………………………….....32
Table 4.4: Type of Shared Information………………………………………………….33
Table 4.5: Supplier Collaboration in New Product Development………………………36
Table 4.6: Aspect of Operational Performance……………....………………………….38
Table 4.7: Efficiency Level of Operational Performance……………………………….39
Table 4.8: Correlational Analysis…..................................................................................40
Table 4.9: Regression Analysis…………………………………………………….…....43
Table 4.10: ANOVA Table…………………………………………………….…..........44
Table 4.11: Regression Coefficients..……………………………………………….…..44
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ACRONYMS AND ABBREVIATIONS
COMESA Common Market for Eastern and Southern Africa
GDP Gross Domestic Product
JIT Just-In-Time
KESREF Kenya Sugar Research Foundation
KSB Kenya Sugar Board
MSC Mumias Sugar Company
NPD New Product Development
SD Standard Deviation
SPSS Statistical Package for Social Sciences
SRM Supplier Relationship Management
TOC Theory of Constraints
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CHAPTER ONE
INTRODUCTION
1.1Background of the Study
Kleinbaum,Kupper and Muller (2008) perceived Supplier Relationship Management
(SRM) as a detailed undertaking towards the management of a firm’s linkage with its
suppliers. Short range goals of SRM include increasingproductivity and reducing stock
and product cycle time while organisational goals to be attained in the long run through
the application of SRM entail increasingthe market size hence organisational income
margin(Ihiga, 2004). With the grouping of organisations under industries, a firm’
association with its suppliers has turned out to be a key factor. Organisations have
identified that establishing business relationships enhance its ability to effectively react to
the current competitive business landscape through enhancing cost management and
providing an opportunity for the organisations to concentrate on their key business
undertakings (Johnson, 2009). Generally, SRM is key for firms seeking to reduce their
operational costs while enhancing performance (Caeldries, 2008).
According to Ghaith, Ayman and Khaled (2014), manufacturing companies need to
ensure that the supply processes are reliable so as to ensure competiveness. They add that
supplier-buyer relationships need to benefit all the involved groups in order for them to
be effective. The trio also opined that even though the existing literature has brought out
SRM as a key aspect, the practices that detail this phenomenon still call for more
clarification. Therefore more research is needed on SRM as the current studies are
contradictory in findings and are mostly theoretical or conceptual with empirical studies
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being very few (Shin, Collier & Wilson, 2000). In addition, Mukolwe (2015) asserted
that the sugar industry in Kenya has registered poor performance which can be attributed
to poor SRM strategy within the firm’shence bad perception among the cane suppliers.
The researcher therefore sought to enhance knowledge of SRM within the sugar sector in
the country.
1.1.1 Supplier Relationship Management
According to Scannell, Vickery and Droge (2000), organisations that record high in-
housedeliveries invest in assisting and developing their suppliers and also in developing
strong associations with them. MacDuffie and Helper (1997) viewed that
suppliersoperating within lean production environmentsneed to ensure quality, delivery
and responsiveness in their processes further awakening a critical problem relating to
just-in-time (JIT) environmentthat links with transferring the needed stock from the buyer
to the suppliers therefore loweringthestock and its relevant costs among the buyers while
also increasing the same among the suppliers (Ghaith, Ayman&Khaled, 2014).
Handfield, Ragatz, Petersen, Monczka(1999) viewed that an effective inclusion of
suppliers within an organisation’ supply chain process is a key aspect for
competitiveness. These researchers also perceived that enhancing an organisation’
performancecan be attained through healthy associations with suppliers that entails
establishing trust, assisting suppliers enhance their processes, sharing relevant
information with the suppliers and including them in developing new products
(Langfield-Smith & Greenwood, 1998). Krause, Handfield and Tyler (2007) in a study on
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United State’ electronic and automotive sector;established that these aspects positively
relates to the buying firm’ performance.
Langfield-Smith and Greenwood (1998) opined a number of aspects determine the
success of a supplier-buyer relationship; effective communication and information
sharing, organisational adaptability, the inclusion of a firm’ employees in buying its
programs and absence of wide differences in the adopted technology and the industry in
which a firm operates. Wisner (2003) claimed that an organisation’ supplier-customer
management strategy positively its SRM strategy hence operational performance. Echtelt
et al. (2008) pointed to some major dimensions of SRM which included high levels of
trust, informationsharing, risk and reward sharing, cooperation, and involvement of
suppliers in new product development. Similarly, Ghaith, Ayman and Khaled (2014)
argue that five major dimensions act as components of the SRM. These components
include supplier quality improvement, trust-based relationships with suppliers, supplier
lead time reduction, supplier collaboration in new product development and supplier
partnership/development.
1.1.2 Operational Performance
Operational performance focuses on attaining efficient and effective systems that are
highly reliable and facilitate the achievement of excellence which exceeds customer
expectations (Kivite, 2015). So as to attain such sustainable operational outcome,
effective operational strategies are developed thatsupports the firms towards ensuring the
important operational aspects in the organisations are achieved. These aspects include
cost reduction, timely product development and production, product systems that are
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flexible and product quality assurance (Wachiuri, 2015).Operational performance has
been measured using different measures in the published literature. The most commonly
cited measures were cost, quality, flexibility, and delivery (Cuaet al., 2001; McKone et
al., 2001; Ahmad et al., 2010; Phan et al., 2011). According to Phanet et al. (2011), cost
performance is measured in terms of the unit cost of manufacturing while quality
performance is measured using product capability and performance. On the other hand,
flexibility performance is determined by organisational flexibility whiledelivery
performance is measured in relation to degree of timely delivery. According to Kivite
(2015), the general organizational performance culminates into independent and
functional performance metrics which includes, improved market share, enhanced
product quality, attained customer satisfaction and timely production.Most firms have
come to the realization that it is not sufficient to only enhance efficiencies within a firm
but also ensuring that the supply chain management is competitive, highly enhances the
likelihood of an organisation’ survival (Gold, Seuring&Beske, 2010). The researchers
also assert that this emanates from the fact that performance is not only tied among
organizations, but also between supply chains.
1.1.3 Sugar Firms in Kenya
The Kenyan economy is dominated by the agricultural sector even though only 10% of
the total land receives adequate rain. Agriculture accounts for 26% of the country’ Gross
Domestic Product (GDP) and 27% indirectly through linkages with agro-based and
associated industries (KESREF, 2009). The contribution of agriculture to the Kenyan
GDP is second to the service industry. The agricultural sector absorbs over 50% of the
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labor force and is dominated by small scale farmers who account for approximately 75%
of total agricultural output. The country’ sugar sector supports at least 6 million Kenyans
directly or indirectly. The sub-sector provides livelihood for over 250,000 small scale
farmers in the country (KSB, 2013). To enhance the Kenya’s economic growth and
development, it is therefore important to improve agricultural productivity (Nyoro, 2012).
Sugarcane is mainly grown in the former western and Nyanza provinces. The crop is also
grown in parts of Nandi, Kericho and Narok, Kwale and Tana-River counties. Up to 90%
of the total cane produce in the country is comes from small scale farmers. Sugarcane
production from large scale farmers and farms owned by sugar factories (nucleus estates)
accounts for 10% of the total production (KSB, 2003), an aspect that is in contrast to
other COMESA countries where plantations owned by sugar firms (Nucleus) account for
at least 60% of total cane production. The industry has thirteen operational sugar factories
namely: Chemelil Sugar Factory; Kibos Sugar and Allied Factories; Muhoroni Sugar
Factory (in receivership); Mumias Sugar Factory; Nzoia Sugar Factory; Sony Sugar
Factory; South Nyanza Sugar Factory; Sukari Industries Limited; Transmara Sugar
Factory; West Kenya Sugar Factory; Butali Sugar Factory; Kwale International Sugar
Company and Kisii sugar factory.With the sugar sector being critical to the economy, it
still performs dismally leading to persistent deficits in production (Mukolwe, 2015). Lack
of productivity growth in the sector is attributed to various factors including insufficient
cane supply; cane poaching; under-using factory capacity; lack of technological progress
and poor managerial capacities (KSB, 2011).
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1.2 Research Problem
Establishing a good SRM strategy positively impacts the overall operational performance
of an organisation (William, 2006). A keen look into earlier studies conducted on SRM
and organizational performance affirms that there is little research that has been
conducted, linking the two variables. For instance, in a study conducted by Kasisi,
Yususf and Iravo (2015) on the effect of SRM on performance of organizations of
selected sugar companies in Western Kenya, the research restricted itself to four
variables; organizational structure, value management, performance collaboration and
technology and concluded that these variables significantly influence performance. On
the other hand, Mugarura (2010) only measured the effect of adaptation, trust and
commitment on relationship continuity in her study on buyer-supplier collaboration on
selected private firms in Kampala. The results revealed that adaptation, trust and
commitment are key predictors of buyer-supplier collaboration. The study however does
not link the SRM practices measured to operational performance.
Similarly, Kosgei (2016) in a case study of the Kenya Airways limited studied the effect
of supplier relationship management on organizational performance. In this study four
variable in relation to SRM were measured against operational performance. The study
concluded that by an organization’ focus on supplier relationships, it isan essential
positioning towards enhancing overall market performance. The researcher however did
don’t address SRM and operational performance on the sugar sector. Tangus (2015)
limited her study on the effect of SRM practices on performance to manufacturing firms
in Kisumu. The SRM practices measured were supplier development, segmentation and
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information sharing andthe study concluded that an improvement on the three SRM
practices results to enhance levels of organizational performance. However, the research
did not measure other SRM aspects such as trust-based relationship and supplier
collaboration and their effect on operational performance.
The Kenyan sugar industry sugarcane yield stands at 65tonnes of cane per hectare, which
is way below the potential yield of 100 tonnes of cane per hectare under rain-fed
conditions (KESREF, 2009). For instance, in Mumias Sugar Company (MSC), the yield
from cane has been declining from 137 tonnes of cane per hactare in 1973 to an average
of 58 per hectare in 2010 (Mumias Sugar Company, 2010). A research by Wawire et al
(2006) established that this decline has been occasioned by a poor SRM strategy between
the farmers and the firms which results from a bad perception among farmers towards
contracted sugarcane farming in which both the farmer and the sugar milling firm have
some management obligations towards ensuring enhanced cane production.
Therefore, little is still known, as a result of the scarce studies, on the relationship
between of SRM and organizational performance especially of the Kenyan sugar firms.
Most of the studies conducted address other sub-sectors other than the Kenyan sugar
sector while others are conducted in other countries hence the findings may not directly
be applied in the Kenyan sugar sub-sector; which is against the criticality of the sugar
firms towards the Agricultural sector and the many challenges the industry is facing. In
this study, four aspects of SRM: supplier collaboration in product development, supplier
information sharing andtrust-based relationship were measured in seeking to establish the
impact of SRM on operational performance of the Kenyan Sugar firms.

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1.3 Research Objectives
The general objective of the study was to assess the effect of supplier relationship
management on operational performance of the sugar firms in Kenya. The specific
objectives were;
i. To determine the effect of trust-based relationship on operational performance
of sugar firms in Kenya.
ii. To establish the effect of information sharing on operational performance of
sugar firms in Kenya.
iii. To determine the effect of supplier collaboration in product development on
operational performance of sugar firms in Kenya
1.4 Value of the Study
The global business environment keeps changing hence businesses find themselves
dealing with the urgency of enhancing their operational efficiencies. The outcome of the
study is therefore beneficial to the sugar firmsmanagement. Theseorganizations acquire
insight in decision making on how well to establish their Supplier Relationship
Management so as to improve theoperationperformance of their respective
organisations.However, other sectors can also absorb the recommendations of the study.
Besides, the sugar industry in the country is such a significant sector that bears both
economic and social advantages. These benefits include provision of direct and indirect
sustainable livelihood to a number of Kenyans and enhancement of growth in other
subsectors of the economy. Therefore, the findings of this research enhance operational
performanceof the firms operating in the industry through facilitating their
8
transformationit into efficient and cost effective firms hence improve profitability hence
further improve the sector’ impact on the country’ economy and social developments.
The study also provides a knowledge platform for future research on Supplier
Relationship Management and operational performance. Theory wise, the study enhances
the understanding and applicability of the theories upon which it is anchored; the theory
of constraints, social capital theory and the commitment trust theory.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
Under this section, the study reviews various literatures relevant to this study. The
literature reviewed was summarized in thematic areas including; theoretical review that
covers three theories namelythe theory of constraints, social capital theory and the
commitment trust theory; supplier collaboration in product development; supplier
information sharing and trust-based relationship. The chapter also presents the research
gaps identified and the conceptual framework that depicts the association between the
dependent and explanatory variables.
2.2 Literature Review
The concept of Supplier Relationship Management has been developed and based on
some already existing theories. The researcher addresses some of the theories
underscoring the SRM principles covered in this study. These theories include;thesocial
capital theory, the theory of constraints, and the commitment trust theory.
2.2.1 Social Capital Theory
The social capital theory was established by Portes (1998). The researcher defines social
capital as the norms and networks that facilitate individuals or people groups to act
collectively. The Social capital theory is based on the principles that, while separate
groups in a capitalistic society seek to attain their individual objectives and goals hence
10
focus most on this, the various entities have recognized that working together with
likeminded partners, results to better outcome as compared to working in isolation. In
relation to suppliers, they strive to sell their products to any potential buyer who is
willing to give the best price while disregarding the nature of relationship between them.
Social Capital theory stresses the importance of establishing collaborations in terms of
working relationships between a buyer and a supplier in order to enhance the mutual
benefits. According to Granovetter (1992), this therefore demands that both parties
deploy their resources towards supporting one another in achieving a common objective.
The researcher also asserts that the buyer therefore commits their firm’s resources and
infrastructure to support their selected suppliers to enhance their capabilities in
production related activities whose effect is shared by the buying firms. The theory
basically assumes the relationship between the supplier and the buyer as collaboration. It
therefore anchors the study’s objective on the effect of supplier collaboration as an aspect
of SRM, on operational performance.
2.2.2 Theory of Constraints (TOC)
TOC is based on management philosophy and was argued out by Goldratt (1984). The
theory views any manageable system as being exposed to a small number of constraints
in attaining its goals. At any time there exists at minimum a single constraint limiting the
organization and the theory utilizes a focusing procedure to point out the constraint and
reorganize the entire firm basing on the constraint (Goldratt, 1984). The theory adopts the
assumption that organizational processes are vulnerable since the weakest individual or
part of the organization can always break the processes or adversely impact the outcome
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(Goldratt, 1997). According to Kosgei (2016), the underlying construct of TOC is that
firms may be assessed and influenced by changes in three parameters that include
throughput, inventory and operational expense. Inventory was defined as the entire
financial resource invested by an organizationin buying products that it seeks to sell
while operational expense refer to the expenditure by the organization so as to turn the
inventory into throughput.
Since a chain is as strong as its weakest link, the theory of constraints can be applied in
identifying the weaknesses in a supply chain system and therefore resulting to solutions
in the same thus enhancing the organization’ operational performance. Suppliers
relationship management is a key factor in fully establishing an organisation’ supply
chain. Therefore,organisational relationships need to be correctly managed, so that the
supply chain is strong as a result offunctioningrelationships. TOC therefore anchors the
study’s objective the impact of supplier information sharing on operational performance
since these aspects are viewed as constraints within the entire SRM strategy.
2.2.3 Commitment-Trust Theory
The theory argues that two key aspect, namely trust and commitment; need to be in place
so that an association is successful (Christopher, 2004). Thetheory of commitment-trust
was argued for by Annekie and Adele (2009) in their book “Relationship Marketing and
Customer Relationship Management”. They assert that relationship marketing entails
establishing bonds with suppliers through meeting their demands and honoring
commitments. Heikkila (2002) described trust as the confidence among both parties in a
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relationship based on the fact that the other party will not engage in something harmful or
risky that would endanger their relationship; businesses generally develop trust through
standing behind their promises. On the other hand, commitment entails a long-termdesire
to sustain a valued partnership.
According to an argument by Handfield (2002), rather than working for short-term
profits, organizations ascribe to the principles of relationship marketing which seeks to
establish the strong associations with their suppliers. Williams (2006) asserted that desire
influences the organisations continuous investment in enhancing and sustaining close
associations with customers.Through a number of relationship-building activities, the
organisation depicts its commitment to the suppliers. Martin (2003) the results of a
relationship based on commitment andtrust are cooperative behaviors that allow both
groups meet their needs. The theory is relevant in relation to this study since it explains
the study’ objective on effect of trust-based relationship on operational performance.
2.3 Supplier Relationship Management
Supply chain management has long-term objectives and short-term objectives. The long-
term objectives would include: creating value to customers, increase profits, improve
efficiency of production operations, and increasemarket share (Williams, 2006). On the
other hand, short-term objectives would generally include: improveproductivity, reduce
cycle time, and reduce inventory (Wisner & Tan, 2000). Generally, the strong
relationships with suppliers have been regarded as one major factorfor the Japanese
industrial competitiveness (Sako, 1992). Ghaith et al., (2014) identified trust-based
13
relationships with suppliers, supplier collaboration in new product development and
supplier partnership/development as among the components of SRM.
2.3.1 Trust-Based Relationship
According to MacDuffie and Helper (1997), there are three main categories of trust that
include competence trust where suppliers base their trust on the fact that the buyer is in a
position to undertake what they agreed; contractual trust that is based on the belief that
the buying organization will sustain the existing contracts and goodwill trust where trust
is based on the fact that the buyer will not take advantage but always seek to act on
mutual benefit basis. On the other hand, Heikkila (2002) identified two key categories of
trust in relation to supplier relationship which include reliability where the trust is based
on the fact that the organisationis reliable in executing what it promised and benevolence
where the trust is anchored on the fact that the other organisation is keen on the partner’
benefit hence does not engage in practices that may not be favorable to it.
Trust between the buyer and the supplier enhances cooperation, satisfaction, minimizes
conflicts, encourages sharing of information and results to strong associations (Doney&
Cannon, 1997). A study by Sako (1992) considered trust as the main aspect for the better
performance of Japanese organizations in comparison to British organizations.
Establishing trust not just a responsibility of the buyer only, but according to Doney and
Cannon (1997) it should also be treated as critical among the supplier organization, that
have to push, develop and sustainthe buying organization’ trust, more specifically when
such trust is viewed to be pretty beneficial the supplier. Even though building of trust is
14
viewed to be an expensive and time-consuming process, it results to strong andenhanced
buyer-seller relationships (Ghaith et al., 2014).
2.3.2 Information Sharing
Tangus (2015) argues that the sharing of information with other supply chain partners is
key in ensuring success of the entire supply chain process. Information sharing is
explained by Cooper and Ellram (1993) as frequent updating of information within a
supplier-buyer relationship structure so as to ensure an effective relationship. With a
dynamic and uncertain business landscape, a firm’ ability to timely gain the required
information is key in ensuring the organizations sustenance and performance. With the
suppliers being an integral part of the SRM, and SRM being a key to a firm’ strategies,
bearing the correct information on suppliers and their performance is quite important
(Kearney, 2013). Effective information sharing is characterized with being frequent,
genuine, and entailing close contacts between the buyer and the supplier (Krause
&Ellram, 1997).
An effective two-way communication is revealed by many researchers as being essential
to achieving a successful supplier relationship (Hahn et al., 1990; Veludoet al., 2004)
through creating rich knowledge. Bowersoxet al. (2003) presented the important nature
of information sharing as a result of the necessity of availing the organizations data to
their supplier so as to enhance the operational connectivity of an activity. Strategic
organization partners need to avail to one another data that includes inventory, sales and
demand forecasts, promotion strategies, marketing plans and general evaluation feedback
15
so as to cut down on the degree of uncertainty between each other thus facilitating proper
planning for their own organizational needs. According to Sanders and Premus (2005),
information sharing facilitates the improvements in visibility among organizations,
production planning and inventory management. Cannon and Perreault (1999) add that
information sharing also enhances product quality as well as developing easier transitions
during the engagements relating to new product development projects while Andersen
(1990) asserts that it facilitates commitment and cooperation and assists the buyer and
supplier through adapting processes with ease. Anderson &Weitz (1992) confirmed in
their study the increased commitment between partners in supplier relationship
management structure as a result of information sharing.
2.3.3 Supplier Collaboration in New Product Development
Handfield et al. (1999) argued that having sufficient understanding on the varied abilities
of suppliers is one of the key feature in the process of new product development
(NPD).Smith and Reinertsen (1991) asserted that an organisation’ suppliers need to be
involved in the process of new product development especially in the event of high level
technology while the organisation bears minimum expertise. Petersen, Handfield and
Ragatz(2003) adds that involving suppliers in NPD and sharing technically valuable
information is of great importance in the wake of complex technologies being applied.
Handfield et al. (1999) argued that with suppliers getting familiar with the buyer
organisation’ processes and objectives, they may set in place, early enough, the key needs
towards expected product development plans. Involving suppliers positively influences
the success of NPD processes when the following aspects are considered by an
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organization; top management support, learning and training, effective performance
measures, enhanced supplier’s qualifications, reward sharing and establishment of trust
aspects (Ragatz, Handfield&Scannell, 1997).
Handfield et al. (1999) established that organizations that involve suppliers in their
product development process record great improvements compared to organizations that
segregate the suppliers. Their findings were based on a study of 134 globally alongside
17 other case studies. De Toni and Nassimbeni (2000) argue that some organizational
benefits attached to including suppliers in NPD processes include reduce costs in
organizational development processes, quick available prototypes, reduced technical
changes, improved product quality, short lead-time in product development and enhanced
product innovativeness. On the other hand, Echtelt et al. (2008) opined that supplier
involvement in new product development allow the establishing of learning routines and
matching abilities for both organizations. However, a study by Petersen et al. (2003)
carried in both Japan and the US asserted that only trusted and carefully picked suppliers
must be involved in new product development projects. They also established that
involving suppliers in the process of NPD teams is important when the organization lacks
sufficient expertise.
2.4 Operational Performance
Operational performance is not only as a result of enhanced efficiency and reduced cost
but also improve the supplier’s involvement in the general strategy of the organization
(Wangeci, 2013). Trust, supplier collaboration and communication are identified key
17
elements that result to effective supplier relationships (Kosgei, 2016; Tangus, 2015).
These elements generally have a positive effect on organizational performance. Increased
competition and the globalization of markets in the recent years has greatly contributed
towards challenges linked with ensuring that products meet customer demands and are
made available both efficiently and effectively (Cooper, &Ellram, 1993). Many
organizations are therefore struggling to stay afloat and are faced with a myriad of
challenges, key among them being increased competition in the market as well as
operating in difficult economic conditions characterized by high inflation rates, high
interest rates, and volatility in currency fluctuations (Porter &Teisberg, 2006).
These forces have further resulted into external business environments that are generally
dynamic, uncertain, highly demanding and mostly devastating especially to those firms
that do not or are unable to prepare and respond to these changes (Burnet, 2010). The
organizations are therefore to align their internal operational practices in line with the
changing environment while focusing on their suppliers, customers and product
development alongside enhancing a culture of commitment within the management.
Waweru (2008) contends that firms go into business to prosper and the level of prosperity
or success is measured in terms of business performance. According to Burnet (2010),
organisations that attain a higher degree of operational efficiency have a higher chance of
survival and register great performance. Wangeci (2013) asserted that a number of
parameters can be used to measure organisational operational performance;operational
cost, quality of product, lead time, inventory level, planned maintenance and timely
product development.On the other hand, Schroeder andMallick (2010) pointed out cost,
18
quality, flexibility, and delivery as the major parameters for measuring operational
efficiency.
2.5 Empirical Review and Research Gap
Several studies have been conducted addressing the relationship between supplier
relationship management and operational performance. In a study seeking to establish the
role of supply chain relationships in the growth of small firms in Kenya, Mwirigi (2011)
targeted small enterprises that have loans with FAULU Kenya. In order to understand the
duties undertaken by supply chain relationships between respondent firms, the research
assessed several relationships. The research established that supply chain relationships
are key aspects in the development of small enterprises. Mwirigi asserts that they
contribute towards the growth and overall performance of these firms in several different
ways. The researcher concluded that creation of supply chain relationships is critical and
should be approached in a clearly structured manner so as to enhance its role in the
development of small enterprises.
Kosgei (2016) investigated the effect of supplier relationship management on
organizational performance. The researcher however limited the study to Kenya airways
limited and only analyze the effect of trust and mutual goals on
organizationalperformance. The researcher involved a cross sectional study design and
sampled 82 staff from all the department of Kenya airways ltd. Questionnaires were the
tools used to collects data. The research concluded that the organization had a great
opportunity to implement SRM strategies and therefore the management should show
19
commitment towards establishing SRM systems that can be monitored, appraised and
evaluated.
Kasisi et al. (2015) assessed the effects of Supplier Relationship Management on the
Performanceof Organizations in selected sugar companies in Western Kenya. The study
was guided by four research objectives that were; to determine the effect of the
organization structure, value management, collaboration and technology on the
performance of an organization the research adopted a survey design and targeted the
management and the procurement staff of three sugar companies; Mumias, West Kenya
and Butali Sugar Company. The researcher concluded that organizational culture, value
measurement, collaboration and technology are vital in attaining organizational
performance. The researcher however does not link SRM to operational performance and
also failed to measure SRM aspects such as trust-based relationship and supplier
information sharing.
2.6 Conceptual Framework
The conceptual framework depicts the association between the objectives of the research
that are linked to Supplier Relationship Management; supplier collaboration in
development of new products, supplier information sharing and trust-based-relationship,
and their impact on operational performance of sugar firms in the country. Trust between
the buyer and the supplier enhances cooperation, satisfaction, reduces conflicts,
encourages information exchange and results to long-term relationships (Doney&
Cannon, 1997). On the other hand, Tangus (2015) argues that the sharing of information
20
with other supply chain partners and establishing collaboration with suppliers in
developing new products are key in ensuring success of the entire supply chain process.
Fig 2.1: Conceptual Framework
Trust-based relationships
Operational performance:
Information sharing  Cost
 Quality
 Efficiency
Supplier collaboration in  Flexibility
. new product
development
Independent Variable Dependent Variables
Source: Researcher (2017)
21
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
Under this section presents the blueprint of the research methodology to be adopted,
describing it from the point of data collection to data analysis and presentation. The
chapter is divided in to the following sub-sections; research design, target population,
sampling design, data collection instruments, data collection procedures and finally data
analysis.
3.2 Research Design
A descriptivestudydesign was utilized in this study.Tangus (2015) adopted this research
design in his study that sought to establish the relationship between SRM and
organisational performance in manufacturing firms operating in Kisumu County, Kenya.
The research design was therefore adopted in analyzingSRM aspects including
collaborating with suppliers in developing new products, information sharing and trust
based relation and their effect on operational performance.
3.3 Target Population
The research’s population of interest consisted of all the 13 cane processing firms
currently operational in Kenya. These include Chemelil Sugar Factory; Kibos Sugar and
Allied Factories; Muhoroni Sugar Factory (in receivership); Mumias Sugar Factory;
22
Nzoia Sugar Factory; Sony Sugar Factory; South Nyanza Sugar Factory; Sukari
Industries Limited; Transmara Sugar Factory; West Kenya Sugar Factory; Butali Sugar
Factory; Kwale International Sugar Company and Kisii sugar factory.
To establish the effect of SRM on operational performance of sugar firms in Kenya, the
study deployed a census technique in obtaining the respondents to be used in the study.
Due to the fact that the size of the study’ population is minimal; 13 sugar firms, all the
sugar firms were censured for response in the study. One respondent; head of the supply
chain department, from each of the 13 firms were selected; assuming that the other
possible respondents have more or less the same nature and characteristics, such that the
results to be obtained can be generalized for the entire firm. The research settled for this
group of respondents because they are believed to be better placed in providing the
sought feedback since they engage with the suppliers of their various organizations’
hence conversant with their organization’ SRM practices and strategies. The category of
respondents also enhanced the reliability and precision of the collected data. The census
list was made up of 13 respondents.
3.4 Data Collection
The study collected primary data for analysis and employ both quantitative and
qualitative approaches in obtaining the data. The study used questionnaires as instruments
of collecting the data. Semi-structured questionnaires were deployed by the researcher
which consisted of two main sections; background information section and the section
that captures each of the research objectives. The questionnaires were designed so that
23
they can be easily completed by the respondents from each of the targeted companies
with no facilitation from the researcher. The data collection instrument wasdistributed
with the assistance of two trained research assistants. The researcher however first sought
authorization from the various sugar firms’ human resource departments. The
respondents were further required to complete the questionnaires which were then to be
collected after 3 days. These assisted in enhancing the overall response rate and also
minimize loss of the questionnaires.
3.5 Data Analysis
The questionnaires were initially cross-checked in order to ensure complete filling before
being coded so as to facilitate further analysis so as to enhance the accuracy of findings
after analysis. Data was analyzed usingboth Statistical Package for Social Sciences
(SPSS) and MS Excel packages. The results were further presented in tables, charts and
graphs. Quantitative data was obtained and summarized for analysis from the
questionnaires’ close-ended questions while qualitative data was obtained from open-
ended questions in the questionnaires. To assess the characteristic set up of the sample
and study areas, data on the respondents and the sugar firms was obtained and descriptive
analysis methods applied in describing the organisation’ and respondents background
information. Frequencies, mean and standard deviations was used to summarize the
findings.
To analyze the impact of supplier collaboration in developing new products, information
sharing and trust based relationship on operational performance of the Kenyan sugar
firms, the research deployed descriptive analysis method where several descriptive
24
statistics measures were determined including percentages, mean and standard deviation
(SD). To establish the strenghth and nature of association between the explanatory and
dependent variables, inferential analysis was conducted that includedPearson’s
correlation and regression analyses; the variables were measured and analyzed as
summarized in table 3.1 below. The regression model to be adopted by the study was as
indicated below;
Y = β0 + β1X1 + β2X 2 + β3X 3+ 𝜀
Where; Yi – Operational Performance (i = 1, 2, 3, 4) and Y1, Y2, Y3, Y4 = Cost, Quality,
Efficiency and Flexibility respectively
β0 - Constant
βi (i = 1,2,3) - Regression Coefficients
X1 – Supplier collaboration in developing new products
X2 – Information sharing
X3- Trust-based relationships
𝜀 - Error term
25
Table 3.1: Operationalization of variables
Variable Proxy of measure Data collection method Data analysis method

Trust-based Level of adoption and Questionnaire Descriptive analysis
relationship Impact of trust
Information Type and Impact of Questionnaire Descriptive analysis
Sharing shared information
Supplier Degree and Impact of Questionnaire Descriptive analysis
collaboration collaboration.
Relationship Type and nature of Questionnaire Correlation and
between variables association regression analyses.
Source: Researcher (2017)
26
CHAPTER FOUR
DATA ANALYSIS, FINDINGS AND DISCUSSION
4.1 Introduction
The study’ general objective was to assess the effect of supplier relationship management
on operational performance of the sugar firms in Kenya. The researcher undertook a
census study on all the sugar firms currently operational in the country. Data was
collected from all the heads of supply chain departments of the 13 firms. This section
therefore presents the findings and discussions of the analyzed data.
4.2 Response Rate
Questionnaires were distributed to each of the sugar firm’ head of supply chain
department; a total of 13 questionnaires were issued. All the 13 questionnaires issued
were completely filled-up and returned resulting to a response rate of 100.0%. The
response rate was attributed to the fact that the respondents were allowed 3 days to fill
and hand-in the research instruments.
4.3 Background Information
The study sought to establish some background information on the sugar firms. The
information collected include the number of staff employed by the organisation, number
of employees within the supply chain department and age of the organisation.
27
4.3.1 Number of Employees
Figure 4.1 represents the summary of findings on the number of employees within the
various targeted sugar firms.
Figure 4.1: Number of Employees
0% 0%
8%
< 50
51 - 100
38%
54% 101 - 250
251 - 500
> 500
Source: Research Data (2017)
The findings in figure 4.1 reveal that none of the firms had less than 100 employees while
slightly more than one-half (7, 53.6%) indicated that their organisations had between 101
and 250 employees. 38.5% and 7.7% of the respondents revealed that their firms had
between 251 – 500 and above 500 employees respectively. These findings further depict
that most (53.6%) of the sugar firms are middle sized organisationswith a near similar
number (46.2%) being large sized organisations.
4.3.2 Supply Chain Department Employees
The researcherinquired on the number of employees within the supply chain departments
of the various studied sugar firms. The findings were as presented in figure 4.2 below.
28
Figure 4.2: Supply Chain Department Employees
0%
15% 8%
<5
6 - 10
39%
11 - 15
38% 16 - 20
> 20
The findings on the number of employees within the supply chains departments indicated
that 15.4% (2) of the organisations had more than 20 employees serving in their supply
chain departments while on 7.7% (1) had less than 10 supply chain department
employees. These results indicate that most of the sugar factories engage in robust supply
chain activities as depicted by more than one half (53.4%) of them having not less than
16 employees serving within the respective supply chain departments. This further
indicates that the factories are generally sizeable.
4.3.3 Age of the Organisation
The respondents were asked to provide information on the length of period their
organisations had been in operation. The responses obtained were then analyzed and
presented in table 4.1.
29
Table 4.1: Age of the Organisation
Period Frequency Percentage (%)

Less than 5 yrs - 0.00
5 – 10 years 1 7.70
11 -15 years 1 7.70
16 – 20 years 4 30.70
Above 20 years 7 53.90
Total 13 100.00
The results depict that most (7, 53.9%) of the firms had been in operation for not less
than 20 years while 4 respondents representing 30.7% indicated that their firms had been
in operation for between 16 to 20 years. Only 1 (7.7%) of the firms had been operating
for between 5 to 15 years while none of the sugar companies had been incorporated in the
sector in the last 5 years. These results therefore confirm that the sector has not had new
entrants in the last 5 years.
4.4 Trust Based Relationships
The study sought to determine the effect of trust based relationships, as an aspect supplier
relationship management, on operational performance. The respondents were to provide
their feedback on the scale: 1=Strongly Agree, 2=Agree, 3=Not sure, 4=Disagree,
5=Strongly Disagree. The scores of strongly agree and agree have been taken to depict a
variable which had a mean score of 0 to 2.4 on the continuous likert scale of (0=
S.E<2.5). Similarly, the scores of ‘not sure’ are taken to represent a variable with a mean
score of 2.5 to 3.4 on the continuous likert scale: (2.5=M.E. <3.5) while the score of both
30
disagree and strongly disagree are taken to represent a variable which had a mean value
of 3.5 to 5.0 on a continuous likert scale; (3.5= L.E.<5.0). On the other hand, a standard
deviation with a value <1.0 implied that the responses were not varying significantly.
Table 4.2: Trust Based Relationships
Aspects of trust based relationships N M SD

Most of the organisation’ operations are based on trust. 13 2.37 .41
The trust between the organisation and its suppliers has 13 2.44 .32
enhanced cooperation and the length of relationship.
Trust based relationships in the organisation encourage 13 2.07 .43

information exchange between the firm and its suppliers.
The firm’ established trust with its suppliers has proved 13 1.93 .44
to be financially beneficial through reduced operational
costs.
The organisation intentionally pushes, develops and 13 3.11 .62
seeks to retaintrust with its suppliers.
Valid N (listwise) 13
From the findings on the aspects of trust based relationships as represented in table 4.2, it
is evident that most of the organizations’ operations are based on trust as depicted by the
mean of 2.37. A study of Japanese organisations bySako (1992) considered trust as the
main aspect for the better performance in comparison to British organizations. On the
other hand, the standard deviation of0.41(<1.0) evidences that the responses obtained do
not vary significantly. The mean of 2.44 depicts that the trust between the organisation
and its suppliers has enhanced cooperation and the length of relationship while the mean
31
of 2.07 indicates that the trust based relationships in the organisation encourage
information exchange between the firm and its suppliers. The respective standard
deviations of the findings on these variables (0.32 and 0.43<1.0) reveal that the responses
did not vary significantly. These findings are similar toconclusions made by Doney and
Cannon (1997).The mean of 1.93 depicts that the firms’ established trust with their
suppliers has proved to be financially beneficial through reduced operational costs. The
responses obtained however differed insignificantly (0.437<1.0). On the other hand, the
respondents were not sureas to whether their organisations intentionally push, develop
and seek to retaintrust with its suppliers. This was evidenced by the mean of 3.11 and
standard deviation of .62 which further indicated that the responses collected did not
significantly vary.The findings by Ghaith et al. (2014) confirmed that though building of
trust is viewed to be an expensive and time-consuming process, it results to strong
andenhanced buyer-seller relationships.
4.5 Information Sharing
The researcher established how various aspects of information sharing impact operational
performance and the various categories of information that the organisations share with
their suppliers. The results were presented in tables 4.3 and 4.4.
4.5.1 Aspects of Information Sharing
The respondents were to indicate how likely various aspects of information sharing
impact operational performance within the firms in a likert (1=Very Likely, 2=Likely,
3=Not sure, 4=Unlikely, 5=Very Unlikely). The scores on the continuous likert scale:
32
0=V.L<1.4 represent variables that are very likely to impact operational performance.
Similarly the scores on the likert scales 1.5=L<2.5, 2.5=N.S<3.5, 3.5=U.L<4.5 and
4.5=V.U<5 represent variables that are likely, not sure, unlikely and very unlikely to
impact operational performance respectively.
Table 4.3: Aspects of Information Sharing
Aspects of information sharing N M SD
Frequent sharing of information with other supply chain 13 2.41 .33

partners.
Establishing an effective supplier-buyer information 13 1.74 .28
relationship structure.
Ease access to the required supplier information at the 13 2.35 .45
right time.
Having the right information on suppliers and their 13 2.99 .51
performance.
Supplier involvement in product development enhance 13 2.21 .33
operational performance through establishing the
organisation’ learning routines and matching abilities.
Availing the organization’ data to their supplier so as to 13 3.46 .76

enhance the operational connectivity of an activity.
The findings as summarized in table 4.3 on the impact of various aspects of information
sharing on operational performance present the mean of 2.41, 1.74, 2.35 and 2.21
whichrespectively, depict that the organizations’frequent sharing of information with
other supply chain partners, establishing an effective supplier-buyer information
33
relationship structure within the organisations, ease access to the required supplier
information at the right time within the organisations and supplier involvement in product
development through establishing the organizations’ learning routines and matching
abilitiesare likely to impact operational performance. Additionally, their respective
standard deviations of .33, .28, .45 and .33 indicate that the responses given do not
significantly vary. Such finding was also arrived at byTangus (2015) who generally
argued that sharing of information with other supply chain partners is key in ensuring
success of the operational and supply chain activities. The results further indicate that the
respondents were however not sure on how likely having the right information on
suppliers and their performance impacts operational performance of the sugar firms; this
was depicted by the mean of 2.99. A standard deviation of .51(<1.0) further implies that
the feedback by respondents did not hugely vary. Similarly, the mean of 3.46 implies that
the respondents were not sure on the likely impact that availing of the organization’ data
to its supplier in order to improve the operational connectivity of an activity would have
on operational performance. The standard deviation of .76 (<1.0) reveals that the
responses obtained did not vary hugely. However, Bowersoxetet al. (2003) confirmed
that availingorganizations’data to their supplier enhances the operational connectivity of
an activity.
4.5.2 Type of Shared Information
The research sought to determine the type of information that the organisations share
with their various suppliers with intent of enhancing operational efficiency. The findings
were presented in table 4.4 below.
34
Table 4.4: Type of shared Information
Type of Information Yes No Rank
Freq. % Freq. %
Inventory level 7 53.85 6 46.15 3
Sales and demand forecasts 9 69.23 4 30.77 2
Promotion strategies 3 23.08 10 76.92 4
Marketing plans 3 23.08 10 76.92 4
General feedback to supplier 11 84.62 2 15.38 1
from supplier evaluation.
The results of the findings in relation to the type of information shared between the
organisations and their suppliers reveal that most of shared information is on general
feedback to supplier from supplier evaluation as depicted by the frequency of 11
(84.62%) hence ranked 1. The second most shared information by the organisations is on
sales and demand forecasts as reveled by the frequency of 9 (69.23%) while the third
ranked most shared information by the organisationsis on the level of inventory as
indicated in by the frequency of 7(53.85%). The findings also revealed that the least
shared information between the organisations and their suppliers included promotion
strategies and marketing plans which were both ranked fourth, bearing a frequency of 3
(23.0%).Generally, the findings depict that most (84.62%) of the organisations share
information on general feedback to their supplier evaluations. This further depicts that
most of the organisationsconduct supplier evaluations. On the other hand, less than one-
third (23.08%) of the organisations share information on promotion strategies and
35
marketing plans with their suppliers an aspect that may be explained by the sensitive
nature of such information. However, according to Premus (2005), strategic organization
partners need to avail to one another data that includes inventory, sales and demand
forecasts, promotion strategies, marketing plans and general evaluation feedback so as to
cut down on the degree of uncertainty between each other thus facilitating proper
planning for their own organizational needs.
4.6 Supplier Collaboration in New Product Development
The findings on the effect of various aspects of supplier collaboration in new product
development on operational performance have been summarized in table 4.5.The
respondents were to provide their feedback on the scale: 1=Strongly Agree to 5=Strongly
Disagree. The scores of strongly agree and agree take a mean score of 0= S.E<2.5 on the
continuous likert scale, the scores of ‘not sure’ represent a mean score of 2.5=M.E<3.5
on the continuous likert scale while the score of “disagree and strongly disagree” take a
mean value of 3.5= L.E<5.0 a continuous likert scale. On the other hand, a standard
deviation with a value <1.0 implied that the responses were not varying significantly.
36
Table 4.5: Supplier Collaboration in New Product Development
Aspects of supplier collaboration in NPD N M SD
The organisation treats knowledge on the varied 13 3.67 .57

competencies of its suppliers as key aspect in the process
of new product development.
Involving suppliers in the process of developing new 13 2.06 .50
products positively impacts the efficiency in operational
performance.
Availing information of the organisation’ operations to 13 2.31 .51
suppliers enhances future product development processes.
The organisation’ involvement of its suppliers in product 13 3.39 .60

development has resulted to the firm’ competitive edge
over its peers through enhanced operational performance.
Supplier involvement in product development enhance 13 2.22 .39

operational performance through establishing the
organisation’ learning routines and matching abilities.
The findings in table 4.5 reveal that the organisation do not treats knowledge on the
varied competencies of its suppliers as key aspect in the process of new product
development as depicted by the mean of 3.67 whereas the standard deviation of
0.57(<1.0) further depicts that the responses were varying insignificantly. A different
argument is however raised byHandfield et al. (1999) who asserted that having sufficient
understanding on the varied abilities of suppliers is key in the process of new product
development (NPD).The findings also indicated that the respondents are not sure if the
37
organizations’ involvement of its suppliers in product development has resulted to the
firm’ competitive edge over its peers through enhanced operational performance as
depicted by the mean of 3.39. Handfield et al. (1999) adds that supplier involvement in
NPD improves an organisation’ competitiveness. The findings of the researchas indicate
by the mean of 2.06, 2.31 and 2.31 respectively established that involving suppliers in the
process of developing new products positively impacts the efficiency in operational
performance, availing information of the organisation’ operations to suppliers enhances
future product development processes and supplier involvement in product development
enhance operational performance through establishing the organisation’ learning routines
and matching abilities.In addition, the respective standard deviations of these aspects
(0.50, 0.51 and 0.39) further indicate that the responses obtained were varying
insignificantly. These findings are in line with the assertion in Social Capital theory by
Portes (1998) who stresses on the importance of establishing collaborations in terms of
working relationships between a buyer and a supplier in order to enhance the mutual
benefits.
4.7 Operational Performance
The research sought to establish the impact of various operational aspects on operational
performance and the level of efficiency of variables of operational performance within
the sugar firms. The findings were as summarized in tables 4.6 and 4.7 below.
38
4.7.1 Aspects of Operational Performance
Table 4.6 summarizes the analysis of the results on various aspects relating to operational
performance of the sugar firms in a five point scale that ranged from ‘Strongly agree (1)’
to ‘Strongly Disagree’ (5). The scores of strongly agree and agree have been taken to
depict a variable which had a mean score of 0 to 2.4 on the continuous likert scale of (0=
S.E<2.5). Similarly, the scores of ‘not sure’ are taken to represent a variable with a mean
score of 2.5 to 3.4 on the continuous likert scale: (2.5=M.E.<3.5) while the score of both
disagree and strongly disagree are taken to represent a variable which had a mean value
of 3.5 to 5.0 on a continuous likert scale; (3.5= L.E.<5.0). A standard deviation of >1.0
implies a significant difference on the responses obtained from the respondents pertaining
the impact of the variable.
Table 4.6: Aspects of operational Performance
Aspects of operational performance N M SD

Effective management of supply chain positively impacts 13 1.32 .22
the operational performance of the organisation.
The organisation’ operational performance is greatly 13 1.00 .00
influenced by the external business environment.
The organisation effectively interacts with its environment 13 3.75 .62
so as to enhance its performance.
The operational systems within the organisation are 13 3.13 .45
reliable towards ensuring organisational operational
excellency is attained.
39
From table 4.6, the mean of 1.32 indicates that the respondents strongly agreed that
effective management of supply chain positively impacts the operational performance of
the organisations whereas the standard deviation of 0.22(<1.0) indicates that the
respondents did not vary significantly on this variable. The mean of 1.00 depict that the
respondents strongly agree that the organisation’ operational performance is greatly
influenced by the external business environment while the standard deviation of 0.00
implies that all the respondents provided the same feedback. These assertions are also
supported by Burnet (2010). The respondents were however not sure if the operational
systems within the organisation are reliable towards ensuring organisational operational
excellency is attained as revealed by the mean of 3.13 while the standard deviation of
0.45(<1.0) implies that the respondents did not vary significantly on this aspect. On the
other hand, the mean of 3.75 depicts that the organisations do not effectively interact with
their environment so as to enhance its performance. The respondents did not also
significantly bear varying opinions on this aspect as indicated by the standard deviation
of 0.62. According to an argument by Burnet (2010), firms should be able to effectively
respond to their external business environments while seeking to improve overall
performance since most of these environments are generally dynamic, uncertain and
highly demanding.
4.7.2 Efficiency Level of Operational Performance
The study established the level of efficiency of operational performance by measuring a
number of variables. The responses were to be provided on the scale of 1= High
Efficiency, 2= Medium Efficiency, 3= Low Efficiency. From the results, the scores of
‘High Efficiency’, ‘Medium Efficiency’ and ‘Low Efficiency’ are taken to represent
40
variableson the continuous likert scales of0=H.E<1.5, 1.5=M.E<2.5 and
2.5=L.E<3respectively.A standard deviation of >1.0 implies a significant difference on
the responses obtained from the pertaining the impact of the variable.
Table 4.7: Efficiency Level of Operational Performance
Measures of operational performance M SD Rank
Quality of product 1.06 .54 1

Planned maintenance 1.23 .37 2
Inventory level 1.27 .31 3
Total equipment efficiency 1.41 .44 4
Lead time 1.87 .27 5
Timely product development 2.11 .13 6
Flexible manufacturing practices 2.52 .21 7
Lean manufacturing practices 2.66 .19 8
Operational cost 2.71 .10 9
Risk analysis 2.78 .08 10
From the results summarised in the table 4.8, it was evident that the organisations are
highly efficient in producing quality products (Ranked 1), planning maintenance services
(Ranked 2), maintaining the right inventory level (Ranked 3) and ensuring total
efficicnecy of equipment (Ranked 4). The ranks are as depicted by the mean of 1.06,
1.23,1.27 and 1.41 respectively. The standard deviations of 0.54, 0.37, 0.31 and 0.44 <
1.00, further indicate that the responses varied insignificantly. The findings also revealed
that the firms were mildly efficient in ensuring a good lead time and timely product
development as depicted by the mean of 1.87 (Rank=5) and 2.11 (R=6) respectively. The
respective standard deviations of 0.27 and 0.13 also indicate that the responses on these
variables did not vary significantly. On the other hand, flexible and lean manufacturing
practices, operational cost and risk analysis recorded low level operational efficiency.
41
These were depicted by the mean of 2.52 (Rank=7), 2.66 (Rank=8), 2.71 (Rank=9) and
2.78 (Rank=10) respectively. Similarly, the responses obtained in relation to these
variables varied insignificantly as depicted by the standard deviation of 0.19, 0.10 and
0.08 respectively. Schroeder and Mallick (2010) pointed out that efficient management of
cost, quality and flexibility positively impact operational efficiency of organisations.
Therefore, the firms’ low efficiency level on operational cost, flexible manufacturing
practices and risk analysis may be attributed to the poor performance of the
organizations’ operational performance.
4.8 Correlation Analysis
Correlation analysis results were summarized in table 4.8. The results presented the
findings on the nature and type of relationships between the study variables; trust-based
relationship, information sharing, supplier collaboration in NPD and operational
performance.
Table 4.8: Correlation Analysis
Trust-based Information Supplier Operational

relationship sharing collaboration Performance
Pearson
1
Trust-based Correlation
relationships Sig. (1-
tailed)
Pearson
0.32 1
Information Correlation
sharing Sig. (1-
0.23
tailed)
Pearson
0.22 0.5 1
Supplier Correlation
collaboration Sig. (1-
0.18 0.1
tailed)
Pearson
0.61 0.41 0.58 1
Operational Correlation
performance Sig. (1-
0.17 0.25 0.18
tailed)
42
From the results, the values of r= .61 (P= 0.17) and r =.58 (P= .18) imply that trust-based
relationship and supplier collaboration in NPD have an averagely strong positive
relationship with operational performance. These further depict that an enhancement of
trust-based relationships and collaboration with suppliers in NPD within the sugar firms
result to an average improvement in the level of operational efficiency attained. On the
other hand, information sharing had a value of r = 0.41 (p=0.39) implying a weak but
positive relationship between operational performance and information sharing. The
result indicates that improved information sharing, to a small extent, results to an
improvement in the degree of operational efficiency recorded in the sugar firms. A study
by Kasisi et al. (2015) on the effect of SRM on performance also revealed a positive
association between the variables of trust and supplier collaboration and performance.
4.9 Regression Analysis
A regression analysis presenting the cumulative effect of the independent variable on the
dependent variables was conducted and the findings summarized in table 4.9, 4.10 and
4.11 below.
Table 4.9: Regression Analysis
Std. Error of the

Model R R Square Adjusted R Square Estimate
a
1 .74 .55 .32 .624
a. Predictors: (Constant), trust-based relationship, information sharing, supplier
collaboration in NPD
43
From table 4.9, the value of R square depicts that that trust-based relationship,
information sharing and supplier collaboration in NPD collectively affect operational
performance by up to 32.0%.
Table 4.10: ANOVA table
Model Sum of Squares Df Mean Square F Sig.

1 Regression .32 2 .16 .21 .03a
Residual 12.11 36 .34
Total 12.43 38
a. Predictors: (Constant), trust-based relationship, information sharing, supplier
collaboration in NPD
b. Dependent Variable: Operational performance
The significance value of 0.03 (< 0.05) reveals that the combined effect of trust-based
relationship, information sharing, supplier collaboration in NPD on operational
performance is statistically significant.
44
Table 4.11: Regression Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) .61 .54 0.46 .111

Trust-based .38 .16 .34 2.77 .001
relationships
Information .19 .10 .44 .92 .000
sharing
Supplier .22 .13 .22 1.62 .001
collaboration
in NPD
a. Dependent Variable: operational performance

The Constant = 0.61, indicates that if trust-based relationships, information sharing and
supplier collaboration in NPD were all rated as zero, operational performance would be
.61. Similarly, X1= 0.38, depicts that a unit change in trust-based relationships with a zero
rating of information sharing and supplier collaboration in NPD results to .99 units
increase in the level of operational performance. On the other hand, X2 = .19, shows that
a unit change in information sharing with a zero rating of trust-based relationship and
supplier collaboration results to .80 units increase in the level of operational performance
while X3 = 0.22, indicates that a unit change in supplier collaboration in NPD and a zero
rating of trust-based relationships and information sharing results in .83 units increase in
the degree of operational performance.
45
From table 4.9, the overall regression equation of the study is;
Y = 0.61 + 0.38X1 + 0.19X2 + 0.22X3 + £
46
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This study was conducted with an aim to establish the relationship between supplier
relationship management and operational efficiency. Three supplier relationship variables
were measured against operational performance; trust-based relationships, information
sharing and supplier collaboration in new product development. This chapter therefore presents
the summary of findings as presented in the previous chapter, conclusions and
recommendations derived from the findings, implication of the study on policy, theory
and practice, limitations of the study and suggestions for future studies with regard to
supplier relationship.
5.2 Summary of Findings
The study sought to establish the effect of trust based relationship on operational
performance of sugar firms in Kenya. The findings of the study established that most of
the organizations’ operations are based on trust and the trust between the organisation
and its suppliers has enhanced cooperation and the length of relationship, encouraged
information exchange between the firm and its suppliers and has proved to be financially
beneficial through reduced operational costs. These findings were also argued for by
Ghaith et al. (2014) who asserted that though building of trust is viewed to be an
expensive and time-consuming process, it results to strong andenhanced buyer-seller
relationships. On the other hand, it was not clear if theorganisations intentionally push,
develop and seek to retaintrust with its suppliers.
47
The research also sought to determine the effect of information sharing on operational
performance of sugar firms in Kenya. The findings indicate that frequent sharing of
information with other supply chain partners, establishing an effective supplier-buyer
information relationship structure, and ease access to the required supplier information at
the right time are likely to impact operational performance. The results also evidenced
that supplier involvement in product development enhances operational performance
through establishing the organisation’ learning routines and matching abilities. These
findings were in line with an argument by Cannon and Perreault (1999). The respondents
were however indifferent as to whether having the right information on suppliers and
their performance and availing the organization’ data to their supplier so as to improve
the operational connectivity of an activity would impact operational performance. Other
findings also revealed that the sugar firms share various categories of information with
their suppliers at varying degrees. The most shared information between the two parties
aregeneral feedback to supplier from supplier evaluation, information on sales and
demand forecasts and the level of inventory. Information entailing promotion strategies
and marketing plans were the least shared.
To determine the effect of SRM on operational performance of sugar firms in Kenya, the
study measured the effect of supplier collaboration in NPD. The findings depicted that
the organisations do not treat knowledge on the varied competencies of their suppliers as
key aspect in the process of new product development. The results were however not
clear as to whether the organisation’ involvement of its suppliers in product development
has resulted to the firm’ competitive edge over its peers through enhanced operational
performance. The study further established that involving suppliers in the process of
48
developing new products positively impacts the efficiency in operational performance,
availing information of the organisation’ operations to suppliers facilitates future product
development processes and involving suppliers in product development enhance
operational performance through establishing the organisation’ learning routines and
matching abilities. These results were similar to the findings by Handfield et al. (1999)
who argued that involving suppliers positively influences the success of NPD processes.
In line with the findings by Burnet (2010), the results confirmed that effective
management of supply chain positively impacts the operational performance of the
organisation and that the organisation’ operational performance is greatly influenced by
the external business environment. The results were however not clear if the operational
systems within the organisations were reliable towards ensuring organisational
operational excellence is attained. It was also evident that the cane processing companies
do not effectively interact with their environment so as to enhance its performance. In
relation to the level of efficeincy of operational performance within the sector, it was
revealed that the organisations are highly efficient in producing quality products,
planning maintenance services, maintaining the right inventory level and ensuring total
efficicnecy of equipment. The firms were however mildly efficient in ensuring a good
lead time and timely product development while low efficiency was depicted on
flexibility and leaness in manufacturing practices, operational cost and risk analysis.
Generally, a positive association was revealed to exist between the independent (trust-
based relationships, information sharing and supplier collaboartion in NPD) and
dependent varibles (operational performance) as it was also evidenced in the study by
Kasisi et al. (2015).
49
5.3 Conclusion
The study concluded that suppliers relationship management aspects such as trust-based
relationships, information sharing and supplier collaboartion in NPD positively impact
operational efficiency in the sugar sector in Kenya. With most of the operations within
the sugar firms being are based on trust, this has seen the companies enhance cooperation
and the length of relationship, encouraged information exchange between the firm and its
suppliers and resulted to financial benefits through reduced operational costs. The study
also concludes that frequent sharing of information with other supply chain partners,
establishing an effective supplier-buyer information relationship structure, and ease and
timely access to the required supplier information may influence operational
performance.
The study further concluded that involving suppliers in developing new products and
availing information of the organisation’ operations to suppliers improve operational
performance through establishing the organisation’ learning routines and matching
abilities. The research also concludes that the sector’ operations are greatly influenced by
the environment in which it operates therefore effective management of supply chain
improves its operational performance. The study also concludes that the sector is not
highly efficient in managing all its operational undertakings.
5.4 Recommendation of the Study
The study recommends that theorganisations should intentionally push, develop and seek
to retain trust with its suppliers in order to continually reap the benefits of trust-based
50
relationships that include reduced operational costs through improved operational
efficiency. The sugar firms should also ensure that an effective supplier-buyer
information relationship structure; is established that eases access to the required supplier
information as this also enhances the organisation’ operational performance. The
organisations should also ensure that information entailing promotion strategies and
marketing plans are well shared with the suppliers.
The researcher also recommends that supplier involvement in product development
should be encouraged so as to enhance efficiency in operational performance. The
organisations should establish learning routines and matching abilities of its suppliers
through availing operational information of the organisation to the suppliers. The study
recommends that operational systems within the organisations should be made reliable
for the firms to attain operational excellence. The companies should seek also to
effectively interact with their environment so as to enhance their performance. Since the
firms are mildly efficient in ensuring a good lead time and timely product development
and lowly efficienct in relation to flexibility and leaness in manufacturing practices,
operational cost and risk analysis, the reseracher recommends that effcicency in
managing these operational aspects sould be improved.
5.5 Implication of the Study on Policy, Theory and Practice
With the global business environment continuously transforming, businesses find
themselves dealing with the urgency of enhancing their operational efficiencies. The
findings of the study therefore provides the management of the sugar firms with insight in
51
decision making on how well to establish their SRM strategies so as to improve the
operation performance of their respective organisations.
The sugar industry in the country is such a significant sector with both economic and
social advantages. The findings of this research enhance operational performance of the
firms operating in the industry through facilitating the developing of progressive policies
among the relevant bodies hence transformation the industry into being efficient and cost
effective.
The study also provides a knowledge platform for future research on Supplier
Relationship Management and operational performance. Theory wise, the study will
enhance the understanding and applicability of the theories upon which it is anchored; the
theory of constraints, social capital theory and the commitment trust theory.
5.6 Limitation of the Study
Supplier relationship management is an issue that is of interest to a number of industries
in the country. However, this research was limited to only sugar firms operating within
the country. This was occasioned by a number of challenges that entail time and finances.
Several SRM variables have been identified to influence operational performance within
organisations. This research however restricted itself to only three variables; trust-based
relationships, information sharing and supplier collaboartion in NPD. A number of other
limitations were encountered in the process of undertaking this study with the major one
being having to push a number of respondents so as to provide the sought after data. The
researcher accomplished this by scheduling one-on-one meetings and constant follow-up
calls.
52
5.7 Suggestions for Further Studies
This study explored the relationship between SRM and operational efficiency within
sugar firms in Kenya. The researcher therefore opines that additional studies can be
conducted on other sectors of the economy like the manufacturing sector, NSE listed
companies, service industry or the government institutions. The effect of other SRM
variables such as quality improvement and supplier lead time, among others, on
operational efficiency of the sugar sector in Kenya can also be measured. This will
further assist enhance the knowledge and understanding of SRM and operational
efficiency.
53
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APPENDICIES
Appendix I: Questionnaire to Employees
Questionnaire Number: ___________________
Interview Date: __________________
Instructions
a) Please do not write your name on the questionnaire.
b) The information you give will be treated with confidentiality
c) Kindly provide answers to the questions as honestly and precisely as possible.
d) Indicate your choice by a tick (√)
Kindly answer the following;
SECTION A: BACKGROUND INFORMATION
1. How many staff has the organization employed?

Below 50 [ ] 51 – 100 [ ] 101 – 250 [ ] 251 - 500 [ ] Above 500 [ ]
2. How many employees are in the supply chain department?
Less than 5 [ ] 6 – 10 [ ] 11 – 15 [ ] 16 – 20 [ ] Above 20 [ ]
3. What age is your organisation?
Less than 5 [ ] 5 – 10 [ ] 11 – 20 [ ] 21 – 30 [ ] Above 30 [ ]
SECTION B: TRUST BASED RELATIONSHIPS
4. The statements below refer to trust based relationships, as an aspect supplier

relationship management, and its association to operational performance. Please
indicate your opinion on the following dimension [1=Strongly Agree, 2=Agree,
3=Not sure, 4=Disagree, 5=Strongly Disagree].
Statements 1 2 3 4 5
a) Most of the organisation’ operations are based on trust.
b) The trust between the organisation and its suppliers has enhanced
cooperation and the length of relationship.
c) Trust based relationships in the organisation encourage information
59
exchange between the firm and its suppliers.
d) The firm’ established trust with its suppliers has proved to be
financially beneficial through reduced operational costs.
e) The organisation intentionally pushes, develops and seeks to
retaintrust with its suppliers.
f) The organisation views the building of trust with its suppliers as a
costly and time-consuming process.
SECTION C: INFORMATION SHARING
5. The following aspects relate to information sharing and operational performance in

organisations. Please indicate how likely each aspect impacts operational
performance in your organisations using the following dimensions [1=Very Likely,
2=Likely, 3=Not sure, 4=Unlikely, 5=Very Unlikely].
a) Frequent sharing of information with other supply chain partners
b) Establishing an effective supplier-buyer information relationship
structure.
c) Ease access to the required supplier information at the right time.
d) Having the right information on suppliers and their performance.
e) Supplier involvement in product development enhance
operational performance through establishing the organisation’
learning routines and matching abilities.
f) Availing the organization’ data to their supplier so as to enhance
the operational connectivity of an activity.
6. Below are some of the types of information shared between organisations and their
suppliers. Kindly indicate which category your organusation avails to its suppliers.
Type of Information
i) Inventory levels Yes [ ] No [ ]
60
ii) Sales and demand forecasts Yes [ ] No [ ]
iii) Promotion strategies Yes [ ] No [ ]
iv) Marketing plans Yes [ ] No [ ]
v) General feedback to supplier from supplier evaluation Yes [ ] No [ ]
SECTION D: SUPPLIER COLLABORATION IN NEW PRODUCT

DEVELOPMENT
7. Below statements relate to supplier collaboration in new product development as a
supplier relation management tool in enhancing operational performance. Please
indicate your opinion on the following dimension [1=Strongly Agree, 2=Agree,
3=Not sure, 4=Disagree, 5=Strongly Disagree].
a) The organisation treats knowledge on the varied competencies of its
suppliers as key aspect in the process of new product development.
b) Involving suppliers in the process of developing new products
positively impacts the efficiency in operational performance
c) Availing information of the organisation’ operations to suppliers
enhances future product development processes.
d) The organisation’ involvement of its suppliers in product
development has resulted to the firm’ competitive edge over its peers
through enhanced operational performance.
e) Supplier involvement in product development enhance operational
performance through establishing the organisation’ learning routines
and matching abilities.
SECTION E: OPERATIONAL EFFICIENCY

8. Below statements relate to operational performance. Please indicate your opinion on
the following dimension [1=Strongly Agree, 2=Agree, 3=Not sure, 4=Disagree,
5=Strongly Disagree].
61
g) Effective management of supply chain positively impacts the
operational performance of the organisation.
h) The organisation’ operational performance is greatly influenced by
the external business environment
i) The organisation effectively interacts with its environment so as to
enhance its performance.
j) The operational systems within the organisation are reliable
towards ensuring organisational operational excellency is attained.
9. Below are some of the aspets used to measure operational performance in

manufacturing companies. Please indicate using the scale provided, the level of
efficiency of each of the variable in your organisation [H=High, M=Medium,
L=Low].
Operational performance Variable Level of Efficiency
H M L
1. Operational cost
1. Quality of product
2. Lead time
3. Inventory level
4. Planned maintenance
5. Timely product development
6. Lean manufacturing practices
7. Flexible manufacturing practices
8. Total equipment efficiency
62
9. Ability of global production
10. Risk analysis
THANK YOU
63
Appendix II: WorkPlan
Items of Year 2017
Work/Activities
July/August August September September November
Proposal writing
and defense
Preparation for and
data collection
Data analysis
Thesis writing
Submission of draft
thesis for review
Submission of final
thesis
Thesis defense
Corrections and
final submission
64
Appendix III: List of Sugar Companies in Kenya
1. Chemelil Sugar Factory
2. Kibos Sugar and Allied Factories
3. Muhoroni Sugar Factory
4. Mumias Sugar Factory
5. Nzoia Sugar Factory
6. Sony Sugar Factory
7. South Nyanza Sugar Factory
8. Sukari Industries Limited
9. Transmara Sugar Factory
10. West Kenya Sugar Factory
11. Butali Sugar Factory
12. KwaleInternational Sugar Company
13. Kisii sugar factory
65

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SUPPLIER RELATIONSHIP MANAGEMENT AND OPERATIONAL

PERFORMANCE OF SUGAR FIRMS IN KENYA

A RESEARCH PROJECT PRESENTED IN PARTIAL

FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF

THE DEGREE OF MASTER OF BUSINESS ADMINSTRATION

any other university.

Signature ………………………… Date …………………………

Signature ………………………… Date …………………………

Lecturer, Department of Management Science

through my study successfully. I also dedicated this research to my loving parents;

My special and sincere thanks go to my supervisor Akeloforhis guidance, support, useful

of this rigorous academic program and an equally demanding work environment. My

In an increasing competitive marketplace, firms are seeking new methods of enhancing

Figure 2.1: Conceptual Framework............................................................................…...21

Table 3.1: Operationalization of Variables………………………………………………26

COMESA Common Market for Eastern and Southern Africa

GDP Gross Domestic Product

KESREF Kenya Sugar Research Foundation

KSB Kenya Sugar Board

MSC Mumias Sugar Company

NPD New Product Development

SPSS Statistical Package for Social Sciences

SRM Supplier Relationship Management

TOC Theory of Constraints

margin(Ihiga, 2004). With the grouping of organisations under industries, a firm’

providing an opportunity for the organisations to concentrate on their key business

operational costs while enhancing performance (Caeldries, 2008).

According to Ghaith, Ayman and Khaled (2014), manufacturing companies need to

1.1.1 Supplier Relationship Management

suppliersoperating within lean production environmentsneed to ensure quality, delivery

and responsiveness in their processes further awakening a critical problem relating to

Handfield, Ragatz, Petersen, Monczka(1999) viewed that an effective inclusion of

suppliers within an organisation’ supply chain process is a key aspect for

competitiveness. These researchers also perceived that enhancing an organisation’

performancecan be attained through healthy associations with suppliers that entails

establishing trust, assisting suppliers enhance their processes, sharing relevant

relates to the buying firm’ performance.

Langfield-Smith and Greenwood (1998) opined a number of aspects determine the

success of a supplier-buyer relationship; effective communication and information

sharing, organisational adaptability, the inclusion of a firm’ employees in buying its

which a firm operates. Wisner (2003) claimed that an organisation’ supplier-customer

trust, informationsharing, risk and reward sharing, cooperation, and involvement of

include supplier quality improvement, trust-based relationships with suppliers, supplier

1.1.2 Operational Performance

expectations (Kivite, 2015). So as to attain such sustainable operational outcome,

performance is measured in terms of the unit cost of manufacturing while quality

flexibility performance is determined by organisational flexibility whiledelivery

performance is measured in relation to degree of timely delivery. According to Kivite

(2015), the general organizational performance culminates into independent and

functional performance metrics which includes, improved market share, enhanced

likelihood of an organisation’ survival (Gold, Seuring&Beske, 2010). The researchers

organizations, but also between supply chains.

1.1.3 Sugar Firms in Kenya

associated industries (KESREF, 2009). The contribution of agriculture to the Kenyan

development, it is therefore important to improve agricultural productivity (Nyoro, 2012).

of productivity growth in the sector is attributed to various factors including insufficient

and poor managerial capacities (KSB, 2011).

Yususf and Iravo (2015) on the effect of SRM on performance of organizations of

variables; organizational structure, value management, performance collaboration and