Effect of supplier relationship management on the relationship between electronic data interchange integration and supply chain performance in sugar manufacturing firms in western Kenya

Abstract

Globally and in Kenya to be specific, there has been a challenge on cost of manufacturing. Manufacturing cost has been rising for; a status report from the Sugar Directorate indicates that wholesale price of sugar in February 2017 was at average Sh 5, 352 per 50 kg, compared with Sh 4, 432 in the same period last year. In Kenya, sugar cane production decreased from 6.7 million tons in 2013 to 6.5 million tons in 2014 as reported in Economic Survey of 2014. Moreover, despite reporting increased cane delivery in 2015, supply chain in sugar firms remained dismal indicating inefficient firm processes and overall poor performance due to high cost of production. Its argued that supply chain(SC)s may use Electronic data interchange integration(EDII) to mitigate on cost and improve firm performance.SRM is management of all interactions with suppliers, while SCP performance means responsiveness, timeliness and reliability However; studies have not addressed this adequately. The purpose of this study was to determine the effect of supplier relationship management on the relationship between electronic data interchange integration and supply chain performance among sugar firms in western Kenya, the study established effect of electronic data interchange integration on supply chain performance; effect of supplier relationship management on supply chain performance; and effect of supplier relationship management on the relationship between electronic data interchange integration and supply chain performance. This study was anchored on resource based, transaction cost analysis, and social exchange theories. Correlation research design was used. Target population was 300 supply chain employees from 10 sugar manufacturing firms in western Kenya. A sample of 169 was drawn using cluster, purposive and simple random sampling. 10% of the sample was used to pre-test the questionnaire. Questionnaire and interview guides were used to collect primary data. Secondary data was obtained from Company’s’ records. Validity and reliability results were ≥ 0.7.9. EDI explained 55.1% of the variation in performance (R2=0.551), e-sourcing (β = 0.170, p<0.05); e-invoicing (β = 0.255, p<0.05), e-ordering (β = 0.208, p<0.05), and e-payment (β = 0.264, p<0.05) were positive and significant predictors of performance. SRM explained 40.2% of the variance in performance (R2=0.402). SRM moderates the relationship between EDI and performance (R2 change = 0.0354, p=0.0012). The study concluded that EDI, SRM have significant effects on SCP and that SRM has moderating effect on the relationship between EDI and SCP. The study recommends that adopted EDII in SCP should be implemented consistently for improved performance and because SRM has a significant relationship between EDII and SCP it should been enhanced for increased performance. Findings may provide useful information for policy formulation for faster decision making in enhancing increased customer service level in the sugar firms and availability of research literature for further research