components of supply chain management in the manufacturing sector

8/10/2019 Components Of Supply Chain Management In The Manufacturing Sector

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International Journal of Scientific Research and Engineering Studies (IJSRES)Volume 1 Issue 4, October 2014

ISSN: 2349-8862

www.ijsres.com Page 61

Components Of Supply Chain Management In The ManufacturingSector

William K. Koech

Department of Technology Education, Moi University

Richard K Ronoh

Department of computer science, Masinde MuliroUniversity of Science and Technology

Wesley K .Mutai

Department of Technology Education, Moi University

Kitainge

Department of Technology Education, University of Eldoret

Abstract: Kenya manuf actur in g sector whose shar e ofgross domestic product (GDP) has in creased very li ttl e overthe past two decades: contr ibu tes about 13% of the GDPreasons among many include competition from cheapproducts, inadequate research and development, i nsuff ici entmanagement, low capacity uti li zation and l imi ted technologydevelopment. T he aim of thi s study was to survey the extentof i mplementation of supply chain management (SCM) i nthe manufacturing sector as they strive to improve theirproductivity with the view to stay put in thi s era of globalmark ets competi tion. I t was conducted in selected

manufacturin g fi rms in N akuru Town. I t assessed thecomponents of SCM i n the manuf acturi ng sector. M ixedmethodology (Qualitative and Quantitative) was usedbecause it gives a deeper understandin g. Simpl e stratif iedran dom sampli ng technique was used in selecting 15 of thetotal 30 manuf acturin g industri es in Naku ru town, Kenyaand non-parametri c quanti tative data was coll ected, usingpurposive samplin g f rom participants using questionnai reand interview schedules to obtain quali tative informationfrom top managers, production, marketing, finance andhuman resource managers, and analyzed using descri ptivestati stics and chi square test with a level of sign if icance ofwith a level of signif icance of with a level of signif icance of

= 0.05. Using statistical presentation and software systems(SPSS).The results indicated that there are specificcomponents of SCM i n the manuf acturin g sectors. Andrecommended management to bring to the attention theawareness of SCM and facil itate identifi cation ofcomponents of SCM in the manufacturin g sector. The Kenyamanuf acturers associati on should embrace SCM as amodern management concept in th e manu factur in g sector.

Keywords: Supply Chain M anagement, Components,M anuf actur ing sector , Servi ces, Products

I. INTRODUCTION

Supply chain management (SCM) is referred to as aconnected series of activities which is concern with planning,coordinating and controlling materials, parts and finishedgoods from suppliers up to the customers (Stevens, 1989). It is

presented as an integrative philosophy to manage the totalflow of a distribution channel from supplies to the ultimateuser (Cooper and Ellram, 2001).

SCM focuses on the management of inventory throughthe entire supply chain such that a manager cannot emphasize

only one aspect of organizational management while ignoringother aspects, whether internal or parts of outsideenvironment.

An organization transforms inputs into outputs (Prasad,2003). The inputs may be; raw materials, information, humanresources, equipment, energy, and by applying certainconversion processes transforms these inputs into output offinished goods, services and information. In this process ofconversion the organization must take into consideration thedynamics of the outside environment and must continuallyinteract with the external variables.

A supply chain of a manufacturing enterprise is a networkof facilities that performs functions of procurement of

materials to intermediate and finished products anddistribution of finished production to customers (Billington, etal, 1993).

Supply chain runs from suppliers through to customers orstores 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 thatsupplies 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 goodsduring production and deliveries from suppliers are carefullytimed so that at each step of the process the next batch arrivesfor 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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Figure 1: Components of SCMFigure 1 shows the integration of the components i.e. the

plan, source, deliver, return covering from the supplierthrough the manufacturing firm to the customer. The successwill be defined by the level of integration and collaborationthat can be achieved by the end-to-end business partners in asupply chain. Brief explanation is given for each of thecomponents as shown in fig 1

PLAN: The is the strategic portion of SCM needed tomanage all the resources that go towards meetingcustomer demand for product or services. A big piece of

planning is developing a set of metrics to monitor thesupply chain so that it is efficient, cost less and delivershigh quality and value to customers.

SOURCE: Concerns the choosing of the suppliers thatwill deliver the goods and services needed to create

products MAKE: The manufacturing step where the activities

necessary for production,testing,packing ,and preparationfor delivery are scheduled. Measure quality levels,

production output, worker productivity. DELIVER: Logistics, coordinate the receipt of orders

from customers, develop a network of warehouse, pickingcarriers to get products to customers and set up aninvoicing system to receive payments.

RETURN: The problem part of the supply chain, create anetwork for receiving defective and excess products backfrom customers with delivered productThe literature review has shown that the performance of

the industrial sector has been on the decline for the lastdecade. It has faced low capacity utilization, decline in

productivity and limited technological advancement. The

manufacturing sector that contributes about 13% of GDPdeclined from a growth1 rate of 3.7% in 1996 to -1.5 % in2000 (The Republic of Kenya, 2000) Natural Development

plan, 2002-2008. The sector has not been dynamic enough tofunction as an engine of growth for the whole economy andhas not contributed significantly to foreign exchange earningsthrough export oriented manufacturing (The Republic ofKenya, 1996). This has been attributed to many reasons,which include; competition from far, inadequate research anddevelopment, change to modern management, low capacityutilization and limited technological development (TheRepublic 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 haveto be trained in the latest technologies, management skills and

processes in the area of design manufacturing and mostimportant the tools of integration (Singh, 1995). It is againstthis scenario that this study sought to establish the extent ofimplementation of SCM as a modern management concept byassessing the components. Researched benefits of SCM are:improve forecast accuracy, reduced inventory levels, reducedoperation costs for logistics, warehousing and manufacturing,improved planning and scheduling and improved customerservice (Steve Globle, 2006).

The Kenya vision 2030, has identified manufacturing asone of the prime movers of economic development (TheRepublic of Kenya, 2007). Since Mid 1980s Kenya has beenunder increasing pressure to strengthen its industrialcompetitiveness (Republic of kenya2000). This has been dueto a number of factors that include the various regionalintegration arrangement such as a General Agreement onTariffs and Trade (GATT), Common Market for Eastern andSouthern Africa (COMESA), and East Africa Co-operationEAC ; the opening up of the regional forces, places thecountry on a competitive edge (Republic of Kenya, 2000).

This greatly affects manufacturing industries especially inthe areas of handling, storage and issuing of raw materials andfinished products, which increase production cost. This is inthe wake of the government having declared her vision of

becoming a newly industrialized country (NIC) by the year2020 (Republic of Kenya, 1996).

SCM has been implemented in manufacturing sector toenable them to compete and to subsequently cope with theworld economic competition, this study surveyedimplementation of SCM in the manufacturing sector byassessing the components.

A strong SCM carefully implemented would enableKenyan manufacturing firms to compete favorably locally andinternationally in todays difficult business environment;where Firms are constantly searching for improvement in

product production, systems management and customersatisfaction.

The specific objective of this study was to: Identify thecomponents of supply chain management in manufacturingsector. Hypothesis tested was: there is no significantcomponent of supply chain management in place in themanufacturing sector.

II. METHODOLOGY

The Survey method was used to collect detaileddescription of SCM with a view to analyze, interpret, andreport the status in order to guide the practice in the immediatefuture and also to determine the adequacy of status bycompany with the established standards Lokesh,(1984).Manufacturing industries categorized into: - construction andengineering, Electrical Engineering, Food and Agriculture,Textiles, Mechanical Engineering, and Chemicals were pickedusing stratified, random sampling technique, which wasconsidered appropriate for obtaining reliable results. It isimportant to note that stratified sample normally correct anydisproportions. According to Leedy (1985) the followingfactors were considered while choosing the sample size; the


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homogeneity of sample, available resources, time and size ofthe population.

There were 30 manufacturing firms in Nakuru town. Thefirms 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 wassuitable because of the four types of industries represented inthe Nakuru town. Simple random sampling was used to selectthe 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 andengineering 2, Food and agriculture 6, Textile 4, Chemical 4.

The use of stratified sampling has the effect of reducingsample error due to difference in-group composition (Gall,Burg and Gall 1996). The sampling procedure involved listingof all manufacturing industries into 4 categories of:construction and engineering, food and Agriculture, Textile,and chemical, then a simple random sampling were used toobtain firms from each category.

Non-probability sampling also known as purposivesample 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 andcomprehensive knowledge on the subject of the study. Therewere 28 respondents that made up the sample size;construction(2),Food and agriculture(11),Textile(7),andChemical(8).

Questionnaires were used to collect data from topmanagers who in this study were considered well versed withthe subject under study. The questionnaire had both close-ended items and open-ended items. Also Structured InterviewSchedule was administered to obtain data for qualitativeanalyze. Face to face interview was conducted that involvedsome of the managers: general managers, finance, marketing,and human resource managers. The interview facilitatedgathering a lot of information and in greater depth. It alsohelped the researcher to collect supplementary informationabout the SCM in the manufacturing sector both in terms ofthe professional training and the environment that was of greatimportance 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 wasanalyzed qualitatively. Frequencies, means and percentageswere determined and subsequently used to describe the extentof implementation of supply chain management in themanufacturing sector. Chi-square(x 2)-test was used todetermine any significance difference in implementation ofSCM in terms of components the level of significance was setat alpha level of 0.05.

III. RESULTS AND DISCUSSION

The principal objective of this study in relation to thecomponents was to identify the components of SCM in themanufacturing sector.The hypothesis of the study sought tofind out whether there was any significant components ofSCM in place in the manufacturing sector, there were 28

respondents. This item had indicated the components of SCMas C1 plan, C2- source, and C3 make, C4 - deliver and C5

Return. There were 2/28(7.1%) respondents indicate C1 2,1/28(3.6%) respondent indicated, C1 3, 3/28(10.7%)respondents indicated C1-4, and 22/28(78.6%) respondentsindicated C1-5.

Table1 Shows the frequency distribution and the percentage proportions of SCM

Table Range Frequency Percentage

C1 C1-2 2 7.1

C2 C1-3 1 3.6

C3 C1-4 3 10.7

C4 C1-5 22 78.6

Key C1 Plan C3 make C5 - Return

C2 Source C4 Deliver

Source: SPSS ResultsTable 1: Components of Supply chain management

Table2 Shows the chi-square frequencies on SCMcomponents in place in the manufacturing industries.Component Observed (O) Expected (E) ResidualC1 2 2 7.0 -5.0C1 3 1 7.0 -6.0C1 4 3 7.0 -4.0

C1 5 22 7.0 15.0Source: SPSS result

Table 2: Chi-Square Frequencies on Components of SupplyChain Management

Table3 Shows The chi-square test statistics results.Components of SCM in place Chi- square df p-value

43.143(7.815) * 3 0.00 0.05

2Calculated = 43 .143, 2

Critical =(7.815) * df = 3, p = 0.000 =0.05

Table3: Chi- Square Test Statistics on components of supplychain management

Table 1 indicates the chi-square results. Showing p-value0.000, therefore (0.000< 0.05)

The results of this study indicated that there aresignificant components of SCM are in place in themanufacturing sector. There were 22(78.6%) respondents whoagreed, these components are: plan, source, make, deliver andreturn, indicating that the majority of the manufacturingindustries have put in place the components that are verycrucial for effective implementation of SCM.

The chi-square results Table1. Indicate, p-value 0.000 wasless than 0.05 (0.000 < 005) this hence implies that thehypothesis one that states; there are no significantcomponent(s) of SCM in place in the manufacturing sectorwas rejected. This supports the research by, Ellram andCooper, 1993 that a complete SCM should have specific


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components which are positively identified as plan, source,make, deliver and Return.

However there were still about six industries (21.4%) thatwere covered in this study that have not fully identified andoperationalize the SCM components.

IV. CONCLUSION AND RECOMMENDATION

Based on the data analyzed and the results obtained, themajor findings of the study include: a) Supply chainmanagement is being implemented in the manufacturingsector; b).Manufacturing firms are networked; c). Performanceof the manufacturing firms depends on the managementapproach employed; d). Industries are shifting fromtraditional management to supply chain management.

From the study it can be concluded that: there arecomponents i.e. plan, source, make, deliver, and return ofSCM in placed in the manufacturing sector, however there aresome industries still lagging behind and others are yet toidentification and operationalized of the SCM components.

The manufacturing sector, by structuring effectively thecomponents, and putting the levels of SCM in place, wouldfacilitate flow of materials and information shortening processtime, resulting in increased productivity, satisfying itscustomers, and increase their profit margin.

RECOMMENDATIONS: a) The management in themanufacturing sector should bring to the attention ofevery employee the awareness of supply chainmanagement; b) The management should facilitate theidentification of the SCM components to the employees;

c) The Kenya manufactures association should embraceSCM as a modern management concept in themanufacturing sector.

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[3] AR Jaurker, JS Saini, BK Gandhi. Heat transfer andfriction characteristics of rectangular solar air heater ductusing rib-grooved artificial roughness. Sol Energy2006;80:895 907.

[4] Cemil YamalI , Ismail Solmus Theoretical investigation ofa humidification dehumidification desalination systemconfigured by a double- pass flat plate solar air heaterDesalination 205 (2007) 163 177.

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components of supply chain management in the manufacturing sector

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