EFFECT OF BULLWHIP ON PERFORMANCE OF MILK PROCESSING FIRMS IN KENYA
Rosemary Kathambi Mathae - Master of Science (Procurement and Logistics), Jomo Kenyatta University of Agriculture and Technology, Kenya
Samson Nyang’au Paul (PhD) - Jomo Kenyatta University of Agriculture and Technology, Kenya
Lydia Kwamboka Mbura - Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Numerous researches have been carried out on how various strategic practices affect organizational performances. There are different factors that affect supply chain performance and the Bullwhip phenomenon (commonly referred to as Bullwhip Effect- BWE) is one of them which suggest demand order variabilities are amplified as one moves up a supply chain which causes inefficiencies resulting to huge operating costs for upstream suppliers. However, there exists minimal information on the effect of Bullwhip on performance of milk processing firms in Kenya. Therefore, it is in this observation that this study is a step forward in filling this gap in literature by reviewing on the bullwhip phenomenon and its effect on performance of milk processing firms. The study adopted a case study design and therefore it was confined to the New Kenya Cooperative Creameries Limited Headquarters in Nairobi. The study is built upon the theories of theory of constraints and transaction cost economics. Various factors can cause BWE and in line with this, the study was guided by specific objectives which are to determine how information sharing, inventory management approaches, shortage gaming and distribution channels affect performance of milk processing firms in Kenya. A descriptive research design was adopted and the target population was all the departments at New KCC Ltd headquarters totaling to 167. Stratified sampling technique was applied to arrive at a sample size of 117 respondents from the list of staff. The main instrument of data collection used was structured questionnaires with both closed and open-ended questions which were pretested using a pilot study for validity and reliability. Descriptive analysis was used in this research to enable the study calculate the mean value, standard deviation and percentages during the data analysis process. Tables and diagrams were obtained for data presentation. Descriptive and inferential statistics data analysis results revealed that information sharing, inventory management approaches, shortage gaming and distribution channels hampered the performance of milk processing firms at New KCC Ltd. The findings reveal that information sharing had the greatest effect on the performance of New KCC Ltd followed by shortage gaming and then inventory management approaches and lastly distribution channels which had a negative effect on the performance of New KCC Ltd. These are the major factors that mostly bring about bullwhip phenomenon which has an effect on the organization’s performance. The study recommends focusing on the ICT tools adopted in order to reduce inventory levels in the organization, focusing on transport planning and management which were found to affect performance of the organization, focus on inventory management approaches used by the organization to improve the market share of the organization and focusing on pricing which is a significant attribute through which a firm executes its competitive strategy. The study is expected to be of great use to all the players in the supply chain so that they can realize the impact of these SCM practices that bring about BWE which has a negative effect on performance of their organizations. The study is also expected to be of profound importance to the Kenya Dairy Board and other policy makers in the government since it will enable them further embrace and formulate policies that will continuously improve the performance of the milk processing firms in Kenya.
