Thesis:

Effect of supply chain optimization on performance of tea processing firms in Kericho county, Kenya

The study researched on effect of supply chain optimization on performance of tea processing firms in Kericho County, Kenya. Tea processing firms in Kericho County face challenges such as rising cost of production, high cost of fuel and packaging materials. Appropriate implementation of supply chain has positive impacts such as increase customer satisfaction, improved efficiency and quality on manufacturing firm. The study direct variables included; effects of demand management on performance, effects of inventory optimization on performance, effects of logistics optimization on performance and effects of technology optimization on performance. On demand management the study focused on forecasting demand, demand communication and demand prioritization. On logistics optimization, the study focused on supplier management, warehouse management and transport management. On inventory optimization the study focused on inventory planning, inventory control and safety stock and on technology optimization the study focused on visibility, automation and data analysis. The study indirect variables were profits, customer service and lead time. The study was supported by contingency theory, theory of constrains, resource-based theory and theory of dynamic capabilities. The study used census approach. 18 tea processing firms in Kericho County were considered the target population. Structured questionnaires were used for collection of both qualitative and quantitative data. To test for reliability of the questionnaire, Cronbach alpha coefficient of 7 and above was considered reliable while for validity convenience sampling was used. SPSS version 21 was used for data analysis. The data collected were then analyzed using descriptive, inferential and correlation analysis. Descriptive analysis, data were presented in form of tables containing measure of central tendencies such as mean and standard deviation while inferential analysis Pearson correlation coefficient was used to determine magnitude of the relation of direct and indirect variables. Regression analysis was used for determination of the relationship between direct and indirect variables. The study findings revealed that supply chain optimization positively affect performance of tea processing firms. The study findings also indicated a positive relationship between demand management, logistics optimization, inventory optimization and performance of tea processing firms such as profits, customer service and lead time. Regression analysis revealed that the study variables affected 40% of performance of tea processing firms while the remaining 60% was affected by factors not mentioned. The study revealed that demand management in terms of demand forecasting, demand communication and demand prioritization positively affect performance. The study findings also revealed a positive relationship between supplier management, warehouse management, transport management and good performance of tea processing firms. The study established that inventory management, inventory control and safety stock help firms improve in performance while technology optimization increase visibility, automation and data analytics. This will led to increased profits, reduce lead time and enhanced customer service. The study recommended that tea processing firms’ production, sales and warehouse departments should manage customers’ demands, optimize logistics, optimize inventory and technology in order to benefit from good performance. The study further suggested other areas that need further research to enable other researchers to fill the gap.