IMPACT OF SUPPLY CHAIN RISK MANAGEMENT ON SUPPLY CHAIN

DISTRIBUTION IN RETAILING INDUSTRY IN KENYA: A CASE STUDY OF

KHETIA'S SUPERMARKET

AUSTIN NDERITU – HDE223-2265/2021

A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF PROCUREMENT

INTRODUCTION

1.1 Background of the study

Effective supply chain distribution is essential for satisfying consumer demands and maintaining

competitiveness in the highly competitive retail sector (Christopher, 2016). The intricate network

of supply chain operations, however, presents a number of difficulties for the retail industry. It

also exposes companies to a range of hazards that have the potential to impede distribution

efforts and undermine overall performance (Christopher, 2016).

Supply chain risk management (SCRM) encompasses the strategies, processes, and tools

employed by organizations to identify, assess, mitigate, and monitor risks within their supply

chains (Ponomarov & Holcomb, 2021). It includes proactive measures such as risk identification,

assessment techniques, risk mitigation tactics, and ongoing monitoring and adaptation. Despite

its recognized importance, there remains a gap in understanding how effective risk management

techniques impact supply chain distribution, particularly in the context of the retail sector in

Kenya.

Identifying, evaluating, mitigating, and monitoring risks within supply networks are all part of

supply chain risk management (SCRM) (Ponomarov & Holcomb, 2021). This comprises

methods for risk identification, assessment, mitigation, and continuous monitoring as well as

strategies for adaptation. Numerous external factors and market dynamics, such as shifts in

consumer preferences, market trends, the competitive landscape, the regulatory environment, and

the state of the economy, have an impact on the retail industry (Simchi-Levi et al., 2019). These

dynamics shape the operating environment for retail businesses and impact their supply chain

strategies and distribution practices. Organizational resilience refers to the ability of retail
businesses to adapt and recover from disruptions within their supply chains (Ponomarov &

Holcomb, 2021). Factors such as agility, flexibility, redundancy, and contingency planning

enable organizations to maintain continuity in operations despite unforeseen events or

challenges.

Supply chain distribution performance, as elucidated by Simchi-Levi et al. (2019), constitutes a

pivotal aspect of retail operations, encapsulating the efficiency and effectiveness of distribution

activities. This metric serves as a barometer for a retail organization's capability to seamlessly

manage the flow of goods from suppliers to customers, ensuring timely delivery, accurate order

fulfillment, and optimal inventory management. Metrics such as delivery times, order accuracy,

inventory management, transportation costs, and overall customer satisfaction are employed to

gauge distribution efficacy. A high-performing distribution system excels in these facets,

leveraging advanced technologies, streamlined processes, and strategic partnerships to meet

customer demands promptly, accurately, and cost-effectively.

However, there are challenges to be met if supply chain distribution performance is to remain

strong. Demand patterns that fluctuate, capacity constraints, supply chain disruptions, and

competitive pressures provide serious issues for distribution operations. To go beyond these

challenges, retailers must employ proactive risk management strategies. These methods entail

meticulous preparation, ongoing observation, and fast response times. Retailers that prioritise

important indicators and use robust risk mitigation strategies can enhance their distribution

networks to respond to dynamic market conditions, elevate consumer contentment, and foster

long-term, sustainable growth within the retail industry.

1.1.1 Global perspectives

to the growing complexity and interconnectedness of supply chains across borders (Christopher,

2016). Globalization has led to extended supply chains, involving multiple suppliers,

manufacturers, distributors, and retailers spread across different countries and regions. This

interconnectedness exposes global supply chains to a wide range of risks, necessitating robust

risk management practices to mitigate potential disruptions.

Several studies conducted globally highlight the significance of SCRM in addressing the

challenges faced by global supply chains. For instance, Christopher (2016) emphasizes the

importance of proactive risk management strategies in mitigating risks such as geopolitical

tensions, natural disasters, trade disruptions, and supply chain disruptions. These risks can have

far-reaching consequences, impacting not only individual businesses but also entire supply chain

networks and global trade flows.

Moreover, researchers have identified the need for enhanced collaboration and information

sharing among supply chain partners to effectively manage risks in a global context. For

example, Manuj and Mentzer (2019) discuss the role of collaborative risk management practices

in improving supply chain resilience and responsiveness. By fostering closer relationships with

suppliers, manufacturers, logistics providers, and other stakeholders, companies can better

anticipate and mitigate risks throughout the supply chain.

Furthermore, technological advancements have enabled the implementation of innovative risk

management tools and techniques in global supply chains. Kumar and Teich (2020) explore the

use of technologies such as artificial intelligence, blockchain, Internet of Things (IoT), and

predictive analytics in enhancing supply chain visibility, traceability, and risk prediction. These
technologies empower businesses to monitor and manage risks in real-time, enabling faster

decision-making and response to potential disruptions.

1.1.2 Regional Perspective

In examining the regional perspective of supply chain risk management (SCRM) in Africa, it's

important to consider the unique challenges and opportunities faced by businesses operating on

the continent. While there is a growing recognition of the importance of SCRM in mitigating

risks and enhancing supply chain resilience, the adoption and implementation of SCRM practices

vary across African countries and industries. Several studies have shed light on the state of

SCRM in Africa and the approaches employed by firms to manage supply chain risks (Simba et

al., 2017); (Le-roy et al., 2020); (Van Nieuwenhuyzen, et al., 2018)

Research conducted in Africa such as Simba et al. (2017); Le-roy et al. (2020) and Van

Nieuwenhuyzen, et al. (2018) has highlighted the diverse range of risks faced by businesses,

including geopolitical instability, infrastructure deficiencies, regulatory complexities, and

economic uncertainties. These risks can disrupt supply chain operations, leading to delays,

increased costs, and decreased customer satisfaction. Despite these challenges, some firms in

Africa have proactively implemented SCRM practices to mitigate risks and improve supply

chain performance. For example, a study by Nyang'au (2017) examined SCRM tactics in Kenyan

food and beverage manufacturing companies, emphasizing the importance of proactive risk

reduction strategies in enhancing supply chain efficiency.

Furthermore, there are examples of African firms leveraging SCRM to navigate the complexities

of the business environment and gain a competitive edge. For instance, in the retail sector,

companies like Khetia's Supermarket in Kenya may employ SCRM practices to optimize their
supply chains, ensure product availability, and meet customer demands. These firms recognize

the importance of identifying, assessing, and mitigating risks across their supply chains to

maintain operational resilience and drive business success.

In general, firms operating in Africa are becoming more conscious of the importance of SCRM,

even though its adoption may still be in its early stages. In order to successfully manage supply

chain risks, there is opportunity for increased investment in SCRM processes and enhanced

stakeholder collaboration as the African business landscape continues to develop and grow

(Simba et al., 2017); African businesses may improve their competitiveness, promote sustainable

growth, and aid in the creation of strong and resilient supply chains throughout the continent by

adopting SCRM best practices and principles.

In Kenya, like in many African countries, the retail sector operates amidst unique challenges and

opportunities. Research conducted in Africa highlights the diverse range of risks faced by

businesses, including geopolitical instability, infrastructure deficiencies, regulatory complexities,

and economic uncertainties (Nyang'au, 2017). Despite these challenges, some local firms, such

as Khetia's Supermarket, have successfully adopted SCRM practices to mitigate risks and

improve supply chain performance. These firms recognize the importance of identifying,

assessing, and mitigating risks across their supply chains to maintain operational resilience and

drive business success. However, there is still a need for more empirical research to understand

the specific risk factors affecting distribution processes in the Kenyan retail industry and to

improve current risk mitigation techniques (Wakasala, 2020; Wairimu, 2023). This study aims to

address this gap by examining the impact of SCRM on supply chain distribution performance in

the retail industry, with a focus on Khetia's Supermarket as a case study. Through this research,

organizations can gain vital insights into customizing risk management techniques to the specific
requirements of the retail setting, strengthening distribution efficiency, and resilience in the face

of prevailing uncertainties.

1.2 Statement of the problem

Effective supply chain distribution is essential for satisfying consumer demand and maintaining

competitive advantage in the ever-changing retail industry. But the complex web of supply chain

operations exposes retail businesses to a range of hazards that might impair overall performance

and disrupt distribution activities (Christopher, 2016).

Although supply chain risk management is widely recognized as important, current research

indicates that there is still a lack of understanding on how effective risk management techniques

affect supply chain distribution results in retail settings. While previous research (Manuj &

Mentzer, 2019; Kumar & Teich, 2020) provides valuable insights into risk management

strategies and their overall effects on supply chain performance, there is still a dearth of

empirical studies that explicitly examine the relationship between risk management and

distribution efficiency in retail settings.

In addition, Nyang'au's (2017) analysis of supply chain risk management tactics in Kenyan food

and beverage manufacturing companies emphasizes how crucial proactive risk reduction is to

improving supply chain efficiency. In a similar vein, Wakasala (2020) investigates how supply

chain resilience techniques affect small and medium-sized supermarkets in Nairobi County,

highlighting the importance of techniques like risk management culture and strategic

collaboration in enhancing supply chain performance. Furthermore, Wairimu (2023) examines

the connection between resilient retail chains in Kenya and dynamic supply chain capabilities,

emphasizing the vital role that agility and innovation play in boosting resilience.
Furthermore, supply chain management faces particular difficulties due to the dynamic retail

environment, which is marked by quick changes in consumer preferences, market dynamics, and

outside influences (Simchi-Levi et al., 2019). The dynamic risk environment that retailers face

may not be sufficiently addressed by traditional supply chain risk management frameworks. This

emphasizes the need for a more thorough investigation of the particular risk factors affecting

distribution processes and the corresponding mitigation strategies implemented (Ponomarov &

Holcomb, 2021).

It is therefore necessary to conduct empirical research to examine the ways in which supply

chain risk management procedures—which include risk identification, assessment, mitigation,

and monitoring—have an impact on supply chain distribution performance in the retail industry.

Organizations can get vital insights into customizing risk management techniques to the specific

requirements of the retail setting by filling this gap in the literature. This will strengthen

distribution efficiency and resilience in the face of prevailing uncertainties. Within this

framework, the Khetia's Supermarket case study will offer a useful perspective for analyzing the

implementation and efficacy of supply chain risk management techniques in an actual Kenyan

retail setting.

1.3 Research Objectives

1.3.1 General Objective

To determine the impact of supply chain management on supply chain distribution in retailing

industries.
1.3.2 Specific Objectives

1. Determine the supply chain distribution risks in the retail sector.

2. Evaluate how identified hazards affect the effectiveness of distribution.

3. Assess and improve current risk-reduction tactics.

4. Create a structure for continuing supply chain distribution risk monitoring.

1.4 Study Questions

1. What is the impact of supply chain management on supply chain distribution in retailing

industries?

2. What particular risks are involved in the supply chain distribution process for the retail

industry?

3. What impact do the risks that have been discovered have on how well distribution systems

work in the retail industry?

4. What are the retail industry's existing approaches to risk mitigation, and how successful are

they?

5. In order to more effectively address the risks highlighted, how can the current risk mitigation

techniques be improved?

1.5 Justification of the Study

The outcome of this study may benefit other researchers, university students, people working in
retail sectors and the Khetia’s supermarket in developing strategies to realize the gaps in their
supply chain that are exposed to risk.
1.6 Significance of the study

The significance of this study lies in its potential contributions to both academia and industry

within the context of the retail sector in Kenya. By investigating the impact of supply chain risk

management (SCRM) on supply chain distribution in a real-world setting, particularly through

the case study of Khetia's Supermarket, this research aims to address several critical gaps in the

existing literature.

First off, by offering empirical insights into the connection between supply chain distribution

performance and SCRM practices in Kenya's retail sector, this study closes a big gap in the

literature. Even though SCRM is commonly acknowledged as being important, little is known

about how exactly it affects distribution efficiency, particularly in the context of retail. The study

intends to increase scholarly understanding and contribute to theoretical breakthroughs in supply

chain management by empirically examining this link.

Second, practitioners, legislators, and retail companies in Kenya and elsewhere may find use for

the study's conclusions. The study offers practical insights for enhancing supply chain resilience

and performance in the retail industry by pinpointing the precise risks present in supply chain

distribution operations and assessing the efficacy of existing risk mitigation strategies. With the

use of these insights, customized SCRM strategies may be developed, improving retail firms'

sustainability and competitiveness in the face of shifting risk profiles and dynamic market

conditions.

In addition, the case study of Khetia's Supermarket provides a real-world example of SCRM

application in a Kenyan retail environment. In addition to improving the research findings'

relevance and applicability, this practical application is a great resource for other retail

companies looking to improve their supply chain management and risk control procedures. The
study's overall significance stems from its ability to advance academic understanding as well as

real-world supply chain management advancements in Kenya's retail sector and other

comparable settings around the globe.

1.7 Scope of the study

This study's scope includes a thorough assessment of how supply chain risk management

(SCRM) affects supply chain distribution in Kenya's retail sector, with a particular emphasis on

Khetia's Supermarket as a case study. The goal of the study is to investigate several SCRM

practice dimensions and how supply chain distribution performance in the retail industry is

affected by them.

Geographically speaking, the study's primary focus will be on retail establishments in Kenya.

The research will primarily focus on the unique setting of Kenya's retail business, even though

the conclusions and insights may have wider applicability to other areas or nations with similar

market features and supply chain dynamics. The study will also focus on supply chain

distribution and the state of SCRM practices in the retail sector, with a temporal scope. The

framework will be provided by historical perspectives and trends, but the main focus will be on

current problems and difficulties faced by Kenyan retail enterprises.

The study's thematic scope entails an exploration of multiple facets of supply chain management,

specifically as they pertain to supply chain distribution in the retail sector, including risk

identification, assessment, mitigation, and monitoring. The study will look into the particular

risks associated with distribution processes, how they affect distribution efficiency, how risk

mitigation strategies are currently being used, and how to make improvements to present risk

management practices.
The identification of important research objectives and questions to direct the investigation

procedure is also included in the study's scope. With a focus on Khetia's Supermarket as a case

study, these aims and questions will help frame the inquiry and guarantee that the study

addresses essential topics pertinent to the relationship between SCRM and supply chain

distribution performance in the Kenyan retail business.