Effect of Production Flexibility on Performance of State-Owned Sugar Companies in Western Region, Kenya By IJISRT

Abstract

The underperformance of the Kenyan sugar sector is a major issue that is affecting the ability of the sector to generate revenues or profits that can be used for supporting economic growth and development. Even though the current sugarcane cover is more than 220,000 ha, productivity has remained low achieving only 55 tonnes/ha. Meanwhile, production costs rose sharply reaching US$1007/tonne in 2018. Strategic flexibility in the form of production flexibility has been proposed as a potential solution to help improve the performance and competitiveness of the sugar sector. The aim of this study was to examine the effects of production flexibility on the performance of state-owned sugar companies in Western Kenya. A cross-sectional interview was conducted on a sample of 63 supervisors from the sugar factors selected (Miwani, Mumias, Nzoia, Sony Sugar, Muhoroni and Chemelil Sugar Companies). The regression analysis depicting the relationship between the strategic performance of these organizations and the production flexibility approaches put in place shows that the relationship was significant, F (9, 53) = 27.076, p = 0.000. In this relationship, there was a strong positive relationship between production flexibility and the strategic performance of the organizations in the market. Therefore, the relationship implied that the amount of responsiveness to potential changes in the market through product design changes and the development of new products and new services was pivotal for the strategic performance and productivity of the factories. The other two factors included in the model namely education and years of experience of the employees did not affect the strategic performance of these factories. From the study, it is recommended that there is need for public sugar companies to adjust production capacity, adopt automation and evolving technologies so as to improve on their performance and be able to remain competitive in the market.