An Analysis of Transportation Costs and Performance of Public Sugar Manufacturing Firms in Kenya

Abstract

The sugar industry in Kenya has been in existence since the early 1920s. A report by the Export Processing Zone Authority (2015) indicates that the sugar industry supports more than six million people in the country; representing more than 16% of the entire Kenyan population. The sector has had immense operations management challenges contributing to poor performance of public sugar manufacturing firms. These challenges include: high transportation costs of both raw materials and finished products. This has led to most public sugar manufacturing firms requiring bailout from the government contrary to their private counterparts. This study was anchored on three theories; Resource Based Theory, Systems Theory and Dynamic Capabilities Theory to establish effect of operations management on performance of public sugar manufacturing firms in Kenya. The specific objective was to establish how transportation costs affect performance of public sugar manufacturing firms in Kenya. The unit of analysis was six public sugar manufacturing factories in Kenya that were operational for the last 10 years that is from 1st January 2009 to 31st December 2018. The study used a mixed research design; specifically, cross-sectional and explanatory research designs. The target population of the study was stratified as 6 operations managers and 60 heads of departments of public sugar manufacturing firms in Kenya. The study used both primary and secondary data. Data was analyzed using both descriptive and inferential statistics. The findings obtained R value at 0.295 and R2 of 0.087 on variation of performance of public sugar companies caused by transportation costs. An analysis of variance (ANOVA) was computed and resulted to [F (1, 49) = 4.563, P<.05] it was evident that transportation costs influence performance of public sugar manufacturing firms in Kenya and thus it is a significant predictor.