International Journal of Scientific Research and Engineering Studies (IJSRES)

Volume 1 Issue 4, October 2014

ISSN: 2349-8862

Components Of Supply Chain Management In The Manufacturing

Sector

William K. Koech

Wesley K .Mutai

Department of Technology Education, Moi University

Department of Technology Education, Moi University

Richard K Ronoh

Kitainge

Department of computer science, Masinde Muliro

University of Science and Technology

Department of Technology Education, University of Eldoret

Abstract: Kenya manufacturing sector whose share of

gross domestic product (GDP) has increased very little over
the past two decades: contributes about 13% of the GDP
reasons among many include competition from cheap
products, inadequate research and development, insufficient
management, low capacity utilization and limited technology
development. The aim of this study was to survey the extent
of implementation of supply chain management (SCM) in
the manufacturing sector as they strive to improve their
productivity with the view to stay put in this era of global
markets competition. It was conducted in selected
manufacturing firms in Nakuru Town. It assessed the
components of SCM in the manufacturing sector. Mixed
methodology (Qualitative and Quantitative) was used
because it gives a deeper understanding. Simple stratified
random sampling technique was used in selecting 15 of the
total 30 manufacturing industries in Nakuru town, Kenya
and non-parametric quantitative data was collected, using
purposive sampling from participants using questionnaire
and interview schedules to obtain qualitative information
from top managers, production, marketing, finance and
human resource managers, and analyzed using descriptive
statistics and chi square test with a level of significance of
with a level of significance of with a level of significance of
= 0.05. Using statistical presentation and software systems
(SPSS).The results indicated that there are specific
components of SCM in the manufacturing sectors. And
recommended management to bring to the attention the
awareness of SCM and facilitate identification of
components of SCM in the manufacturing sector. The Kenya
manufacturers association should embrace SCM as a
modern management concept in the manufacturing sector.
Keywords: Supply Chain Management, Components,
Manufacturing sector, Services, Products

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I.

INTRODUCTION

Supply chain management (SCM) is referred to as a

connected series of activities which is concern with planning,
coordinating and controlling materials, parts and finished
goods from suppliers up to the customers (Stevens, 1989). It is
presented as an integrative philosophy to manage the total
flow of a distribution channel from supplies to the ultimate
user (Cooper and Ellram, 2001).
SCM focuses on the management of inventory through
the entire supply chain such that a manager cannot emphasize
only one aspect of organizational management while ignoring
other aspects, whether internal or parts of outside
environment.
An organization transforms inputs into outputs (Prasad,
2003). The inputs may be; raw materials, information, human
resources, equipment, energy, and by applying certain
conversion processes transforms these inputs into output of
finished goods, services and information. In this process of
conversion the organization must take into consideration the
dynamics of the outside environment and must continually
interact with the external variables.
A supply chain of a manufacturing enterprise is a network
of facilities that performs functions of procurement of
materials to intermediate and finished products and
distribution of finished production to customers (Billington, et
al, 1993).
Supply chain runs from suppliers through to customers or
stores and requires process technology and people for success;
this is true regardless of the industry. SCM uses a tool called
just in time (JIT); a manufacturing system which states that
supplies are purchased in the time to be used, parts are
produced in time to be transported and sold (Kalpakjian,
1991). It is a system in which both the movement of goods
during production and deliveries from suppliers are carefully
timed so that at each step of the process the next batch arrives
for processing just as the preceding batch is completed. This
result to a system with no idle items waiting to be processed
(Stevenson, 1999).
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International Journal of Scientific Research and Engineering Studies (IJSRES)

Volume 1 Issue 4, October 2014
ISSN: 2349-8862

Figure 1: Components of SCM

Figure 1 shows the integration of the components i.e. the
plan, source, deliver, return covering from the supplier
through the manufacturing firm to the customer. The success
will be defined by the level of integration and collaboration
that can be achieved by the end-to-end business partners in a
supply chain. Brief explanation is given for each of the
components as shown in fig 1
PLAN: The is the strategic portion of SCM needed to
manage all the resources that go towards meeting
customer demand for product or services. A big piece of
planning is developing a set of metrics to monitor the
supply chain so that it is efficient, cost less and delivers
high quality and value to customers.
SOURCE: Concerns the choosing of the suppliers that
will deliver the goods and services needed to create
products
MAKE: The manufacturing step where the activities
necessary for production,testing,packing ,and preparation
for delivery are scheduled. Measure quality levels,
production output, worker productivity.
DELIVER: Logistics, coordinate the receipt of orders
from customers, develop a network of warehouse, picking
carriers to get products to customers and set up an
invoicing system to receive payments.
RETURN: The problem part of the supply chain, create a
network for receiving defective and excess products back
from customers with delivered product
The literature review has shown that the performance of
the industrial sector has been on the decline for the last
decade. It has faced low capacity utilization, decline in
productivity and limited technological advancement. The
manufacturing sector that contributes about 13% of GDP
declined from a growth1 rate of 3.7% in 1996 to -1.5 % in
2000 (The Republic of Kenya, 2000) Natural Development
plan, 2002-2008. The sector has not been dynamic enough to
function as an engine of growth for the whole economy and
has not contributed significantly to foreign exchange earnings
through export oriented manufacturing (The Republic of
Kenya, 1996). This has been attributed to many reasons,
which include; competition from far, inadequate research and
development, change to modern management, low capacity
utilization and limited technological development (The
Republic of Kenya 2002).
To survive in a competitive business environment, a
manufacturing firm has to evolve efficient manufacturing
process and technology bring people into picture, people have
to be trained in the latest technologies, management skills and
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processes in the area of design manufacturing and most

important the tools of integration (Singh, 1995). It is against
this scenario that this study sought to establish the extent of
implementation of SCM as a modern management concept by
assessing the components. Researched benefits of SCM are:
improve forecast accuracy, reduced inventory levels, reduced
operation costs for logistics, warehousing and manufacturing,
improved planning and scheduling and improved customer
service (Steve Globle, 2006).
The Kenya vision 2030, has identified manufacturing as
one of the prime movers of economic development (The
Republic of Kenya, 2007). Since Mid 1980s Kenya has been
under increasing pressure to strengthen its industrial
competitiveness (Republic of kenya2000). This has been due
to a number of factors that include the various regional
integration arrangement such as a General Agreement on
Tariffs and Trade (GATT), Common Market for Eastern and
Southern Africa (COMESA), and East Africa Co-operation
EAC ; the opening up of the regional forces, places the
country on a competitive edge (Republic of Kenya, 2000).
This greatly affects manufacturing industries especially in
the areas of handling, storage and issuing of raw materials and
finished products, which increase production cost. This is in
the wake of the government having declared her vision of
becoming a newly industrialized country (NIC) by the year
2020 (Republic of Kenya, 1996).
SCM has been implemented in manufacturing sector to
enable them to compete and to subsequently cope with the
world economic competition, this study surveyed
implementation of SCM in the manufacturing sector by
assessing the components.
A strong SCM carefully implemented would enable
Kenyan manufacturing firms to compete favorably locally and
internationally in todays difficult business environment;
where Firms are constantly searching for improvement in
product production, systems management and customer
satisfaction.
The specific objective of this study was to: Identify the
components of supply chain management in manufacturing
sector. Hypothesis tested was: there is no significant
component of supply chain management in place in the
manufacturing sector.

II.

METHODOLOGY

The Survey method was used to collect detailed

description of SCM with a view to analyze, interpret, and
report the status in order to guide the practice in the immediate
future and also to determine the adequacy of status by
company with the established standards Lokesh,(1984).
Manufacturing industries categorized into: - construction and
engineering, Electrical Engineering, Food and Agriculture,
Textiles, Mechanical Engineering, and Chemicals were picked
using stratified, random sampling technique, which was
considered appropriate for obtaining reliable results. It is
important to note that stratified sample normally correct any
disproportions. According to Leedy (1985) the following
factors were considered while choosing the sample size; the
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International Journal of Scientific Research and Engineering Studies (IJSRES)

Volume 1 Issue 4, October 2014
ISSN: 2349-8862
homogeneity of sample, available resources, time and size of
the population.
There were 30 manufacturing firms in Nakuru town. The
firms were stratified by the category of industry out of which:
2 were construction and engineering, 12 food and agriculture,
8 textiles and 8 chemical. Stratified random sampling was
suitable because of the four types of industries represented in
the Nakuru town. Simple random sampling was used to select
the industries of each category. There were 15 industries,
which was at least 50% of the manufacturing industries in the
Nakuru town, and were distributed as, Construction and
engineering 2, Food and agriculture 6, Textile 4, Chemical 4.
The use of stratified sampling has the effect of reducing
sample error due to difference in-group composition (Gall,
Burg and Gall 1996). The sampling procedure involved listing
of all manufacturing industries into 4 categories of:
construction and engineering, food and Agriculture, Textile,
and chemical, then a simple random sampling were used to
obtain firms from each category.
Non-probability sampling also known as purposive
sample was used to select at least one respondent that took
part in this study in each of the 15 industries. This was done
purposively to obtain respondent with specific or insight and
comprehensive knowledge on the subject of the study. There
were 28 respondents that made up the sample size;
construction(2),Food
and
agriculture(11),Textile(7),and
Chemical(8).
Questionnaires were used to collect data from top
managers who in this study were considered well versed with
the subject under study. The questionnaire had both closeended items and open-ended items. Also Structured Interview
Schedule was administered to obtain data for qualitative
analyze. Face to face interview was conducted that involved
some of the managers: general managers, finance, marketing,
and human resource managers. The interview facilitated
gathering a lot of information and in greater depth. It also
helped the researcher to collect supplementary information
about the SCM in the manufacturing sector both in terms of
the professional training and the environment that was of great
importance in interpreting the data.
Statistics and Presentation System Software (SPSS)
package, was used to analyze data from the questionnaire.
While data collected from the interview schedule was
analyzed qualitatively. Frequencies, means and percentages
were determined and subsequently used to describe the extent
of implementation of supply chain management in the
manufacturing sector. Chi-square(x2)-test was used to
determine any significance difference in implementation of
SCM in terms of components the level of significance was set
at alpha level of 0.05.

III.

RESULTS AND DISCUSSION

The principal objective of this study in relation to the

components was to identify the components of SCM in the
manufacturing sector.The hypothesis of the study sought to
find out whether there was any significant components of
SCM in place in the manufacturing sector, there were 28
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respondents. This item had indicated the components of SCM

as C1 plan, C2- source, and C3 make, C4 - deliver and C5
Return. There were 2/28(7.1%) respondents indicate C12,
1/28(3.6%) respondent indicated, C13, 3/28(10.7%)
respondents indicated C1-4, and 22/28(78.6%) respondents
indicated C1-5.
Table1 Shows the frequency distribution and the
percentage proportions of SCM
Table

Range
Percentage

Frequency

C1

C1-2

7.1

C2

C1-3

3.6

C3

C1-4

10.7

C4

C1-5

22

78.6

Key

C1 Plan

C3 make

C2 Source

C4 Deliver

C5 - Return

Source: SPSS Results

Table 1: Components of Supply chain management
Table2 Shows the chi-square frequencies on SCM
components in place in the manufacturing industries.
Component
Observed (O) Expected (E) Residual
C1 2
2
7.0
-5.0
C1 3
1
7.0
-6.0
C1 4
3
7.0
-4.0
C1 5
22
7.0
15.0
Source: SPSS result
Table 2: Chi-Square Frequencies on Components of Supply
Chain Management
Table3 Shows The chi-square test statistics results.
Components of SCM in place

Chi- square

df

43.143(7.815)* 3
2

p-value
0.00

0.05

Calculated = 43.143, Critical =(7.815) * df = 3, p = 0.000 =

0.05
Table3: Chi- Square Test Statistics on components of supply
chain management
Table 1 indicates the chi-square results. Showing p-value
0.000, therefore (0.000< 0.05)
The results of this study indicated that there are
significant components of SCM are in place in the
manufacturing sector. There were 22(78.6%) respondents who
agreed, these components are: plan, source, make, deliver and
return, indicating that the majority of the manufacturing
industries have put in place the components that are very
crucial for effective implementation of SCM.
The chi-square results Table1. Indicate, p-value 0.000 was
less than 0.05 (0.000 < 005) this hence implies that the
hypothesis one that states; there are no significant
component(s) of SCM in place in the manufacturing sector
was rejected. This supports the research by, Ellram and
Cooper, 1993 that a complete SCM should have specific

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International Journal of Scientific Research and Engineering Studies (IJSRES)

Volume 1 Issue 4, October 2014
ISSN: 2349-8862
components which are positively identified as plan, source,
make, deliver and Return.
However there were still about six industries (21.4%) that
were covered in this study that have not fully identified and
operationalize the SCM components.

c) The Kenya manufactures association should embrace

SCM as a modern management concept in the
manufacturing sector.

REFERENCES
IV.

CONCLUSION AND RECOMMENDATION

Based on the data analyzed and the results obtained, the

major findings of the study include: a) Supply chain
management is being implemented in the manufacturing
sector; b).Manufacturing firms are networked; c). Performance
of the manufacturing firms depends on the management
approach employed; d).
Industries are shifting from
traditional management to supply chain management.
From the study it can be concluded that: there are
components i.e. plan, source, make, deliver, and return of
SCM in placed in the manufacturing sector, however there are
some industries still lagging behind and others are yet to
identification and operationalized of the SCM components.
The manufacturing sector, by structuring effectively the
components, and putting the levels of SCM in place, would
facilitate flow of materials and information shortening process
time, resulting in increased productivity, satisfying its
customers, and increase their profit margin.
RECOMMENDATIONS: a) The management in the
manufacturing sector should bring to the attention of
every employee the awareness of supply chain
management; b) The management should facilitate the
identification of the SCM components to the employees;

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