Supply Chain Management Practices and Operational Performance of SMEs in Nairobi County, Kenya

Abstract

Small and medium-sized enterprises are a major contributor to economic growth in the largest economy in the East African region, Kenya. The purpose of this study was to determine the effects of supply chain management (SCM) practices on the operational performance of small and medium-sized enterprises (SMEs) in Nairobi County, Kenya. Due to the role that SMEs play in economic development, an integrated supply chain management approach is required for attaining desired levels of operational performance based on cost, flexibility, and delivery speed. In addition, the study also identifies the best in class supply chain management practices that SMEs use as a benchmark against set standards. This study adopts a descriptive research design. The target population is SMEs in Nairobi County where a sample of 45 firms was drawn using stratified sampling. The enterprises are represented by the subsectors of trade and information technology. Data was collected using questionnaires administered by the researcher and analyzed using descriptive statistics of percentages and inferential statistics of a regression analysis. The research findings show that supply chain management practices positively impact the operational performance of SMEs across the sectors of trade and information technology. SMEs are of the opinion that supply chain practices of purchasing, logistics, and customer services are significant for business operations and hence an opportunity to outdo competition. The study concludes that SMEs should adopt SCM as part of their business strategies to enhance their operational performance. The study recommends that awareness about SCM should be raised for SMEs to align them with their business strategies.