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Lean Supply Chain Management in Manufacturing sector of Kenya

Abstract

There are number of companies who have achieved success due to the revolutionary practices of lean supply chain management. As every party to the business is under force to maintain their costs, inventories and profits along with meeting the needs of their customers, it has become important for the companies to revamp the business operations as leaner and more effective and achieve the desired business results. Lean supply chain management is the best alternative to get these consequences (Borac, Milovanovic & Andjelkovic, 2010).

This study explores the practice of lean supply management and its implementation in the manufacturing sector of Kenya. It collects data through secondary sources for the analysis of the subject. The study finds out that the practice helps the firms in reducing the cost, increase profitability and sustainability in the market. Further, it is concluded from the review of literature that the management in manufacturing sector of Kenya should put efforts in getting more knowledge and skills to adopt the practice properly.

Introduction

Manufacturing sector is adopting innovative practices for management such as lean management, supply chain management for continuous grown and development of the business. There is global competition in the market which requires the companies to integrate all the parties such as suppliers and consumers in business. The businesses should pay attention to the processes such as the design and assembly of the products by the suppliers, transportation mode of the products, storage and demands of the end-users of the products (Stehn, 2008). All the parties in business i.e. manufacturers, suppliers, wholesalers, retailers, third party etc. who are related to supply chain are trying to continuously reduce the costs and maintain the inventories to make profits along with meeting demands of the customers. The best alternative to achieve this desired goal is lean supply chain management (Borac, Milovanovic & Andjelkovic, 2010). Supply chain management can be defined as planned activities implemented to associate effectively the suppliers, warehouses, retail outlets, manufacturers, transportation and ultimate customers in order to provide the product or service at the right time at the right place and quantity. Further, lean refers to the flexible process of applying change when required and does not involve standard process. It is a flexible way of improving the efficiency. Lean can be implemented in relation with the management of logistics when supply chain is concerned (Kozlov, 2015). The concept of lean logistics is concerned with waste elimination from the supply chain whether internal or external which can be achieved through reduction in unnecessary inventories, processing time and excessive costs (Myerson, 2012). It is formed in order to attract and not force push the inventory of business (Jaskanwal, Deep and Rajdeep, 2013).

Supply chain management consists of the plan making process and management related to all the activities including procurement, attracting, transformation, transportation and management of the logistics (HITT, 2011). It includes cohesion and integration of channel partners that might include the suppliers, warehouses, intermediaries, customers etc. The functions of demand and supply are integrated through the process of supply chain management across organizations. It can be referred as the base requirement for the organizations to sustain the 21st century competition. It tends to reduce waste, ultimately, focusing on addressing the issues of time, costs and inventory (Borac et al., 2010). Lean Supply Chain Management can be defines as strategic and functional management which makes use of latest technology such as internet to produce the integrated supplier and facility associate networks. This kind of network is authorized to implement excellent, unique value proposition for customers at the optimal costs via associative and real-time collaboration of product transfer, important information of the marketplace, making demand as a priority and logistics management.

The study states that the businesses today are affected by the consumer needs that are constantly changing, product profile, market demographics and geographical locations. Hence, organizations need to adopt such methods and tools which enhance their flexibility and adapt to the changing environment. This had made many manufacturing facilities to close their establishments and take the route of outsourcing and offshoring to reduce costs which makes the supply chain altogether complex. There is a challenge of dealing with the global market speed, being flexible through reducing the waste of time and efforts and excessive materials. Thus, the solution to all these challenges is the Lean philosophy of supply chain management.

The manufacturing process is an art form of converting the raw material into consumable final goods through the mechanization processing. This paper presents the concept of lean supply chain management in the manufacturing sector of Kenya. Manufacturing process consists of formation that is involved in the physical, automated or chemical conversion of raw materials into final products. Kenya is engaged in large proportion in the manufacturing sector which offers its products to local markets as well as it exports the products to the rest of the globe especially East Africa. Many multinational companies have established their subsidiary companies in Kenyan market. The manufacturing sector of Kenya has great potential for creation of employment, wealth creation and eliminating the poverty, hence, can be considered as an important industrious sector contributing to the national growth and development (Wanjora Kariuki and Wangethi Waiganjo, 2014). It aims at achieving the goals of the country set for long term such as Removal of poverty, and goal directing at global partnerships across the world for growth. This study works on the purpose of evaluating the lean supply chain management implementation in the manufacturing sector of Kenya, its advantages and challenges faced through the review of various literatures available and inferences made thereof. Further, this will lead to the research questions for future studies relevant to the subject.

Review of Literature

The term lean production can be represented by the simple term Lean, which denotes the practice which considers the only goal of value creation for the end-users, to eliminate defect in the products with an aim of reducing the waste. The concept is derived from the manufacturing sector of Japan. Krafick, 1988 in one of his article had coined this term. Lean refers to the set of techniques which assist in identifying and eliminating the wastage. Further, as there is reduction of waste, there is improvement of quality in production and the processing time and expenses are also reduced (Singh and Pandey, 2015). Hence, it leads to value creation for the customers with optimal resources. Liker (2004), has mentioned that there are 8 types of wastes that have been given in Toyota production system in the business processing. It has been concluded by Wu and Wee (2009) that the concept of lean includes a set of activities which aim at eliminating waste while declining NVA processes and adding the value. Lean enterprise (2010) mentions that the management needs to change their level of thinking in order to achieve optimization in the flow of goods and services flowing through the entire channel of technologies, functions to consumers and asset (LaSalle, Manrodt and Vitasek, 2010). There has been much research on the area of components of lean supply chain management (Eaton, 2013). The process has been extended from a single organization to include the complete supply chain giving out the term lean supply chain. The components that have been discussed are lean manufacturing, procurement and transportation. The lean procurement deals with mechanized procurement and E-procurement. The concept of e-procurement deal with applications that are web based performing the transactions, bidding, sourcing and various auctions (Kallrath & Maindl, 2006). Further, automated procuring system removes the manual system from the various functions of procurement. It is argued by the authors that there should be visibility in terms of lean procurement system. The operations that are happening at the customer’s end should be visible to its suppliers and vice versa. As per Oracle (2006), the main objectives of lean procurement strategy are to reduce the barriers for free flow of knowledge to the supply chain, building a system that has real visibility in the materials, the focus of push based supply chain should be moved to pull based consumption mode (Cudney and Elrod, 2011). The term lean production denotes an assimilative activity of SCM which is formulated to get high quantity of production with lowest possible inventories and raw material as said by Huang, (2012). The basis for this concept is that there should be a demand for the product to be produced (Reimann and Ketchen, 2017). Hence, lean production is a system where there is a backward motion from the consumers till the procuring of raw materials as mentioned by Davis and Heineke (2005). It has its origin in Japan, but is successfully implemented in the world. Karlsson and Ahlstrom (1996) said that storage of parts and materials in stock will now add any value to them, hence, should be removed. As mentioned by Cooper (2000), lean transportation is an activity which includes wholesome carrier packages, administrative process to improve transportation and mechanized functions, selecting the best suited mode of transport and attracting orders, multi-stop shipments, cross docking, making the standards for right sizing, import processes and export transport functions, incoming transport and vice versa (Kumar, Kumar and Singh, 2014). The lean system is very famous for its universal application to the industry despite of its type, as mentioned by Lander and Liker (2007), based on the fact that it is very common sense and easy to follow (Moori, Pescarmona and Kimura, 2013). Further, it is insisted that there should be collaboration between JIT and transportation functions to make it a success.

This paper refers to the studies made on adoption of lean supply chain in manufacturing sector of Kenya and challenges faced in the implementation. Many studies have been done in the field of lean supply chain management, but with reference to the manufacturing sector of Kenya, it has been found by Moori, Pescarmona and Kimura, (2013) that lean supply management is getting into the sector quickly but some of the important practices of lean are not properly adopted by the companies. Basically, the operations of the organization have the lean supply activities into it. As stated by Nyoaga, (2015) some of the practices that have been adopted by the firms are preventative maintenance, manufacturing processing balance and shortening the basic processing time. Lean procurement is not adopted by the firms in the manufacturing sector of Kenya. Lean practices have helped the manufacturing firms to increase their operational effectiveness through adoption of such practices that are strategically aligned (Moori, Pescarmona and Kimura, 2013). The studies also stated the reasons for adopting lean practices by the manufacturing firm which included the prime reason of cost reduction, sustaining in the competitive market, removal of defects along with the motive of increased profits and revenue (Kumar, Kumar and Singh, 2014). Further, there are some challenges that the implementation of lean supply chain management has to face amongst the firms of Kenya such as the employees are not ready to accept the change brought in by the lean, non-flexible rules and procedures of the organizations, lack of proper relationships between the firms and their suppliers being the major one, lack of involvement of top management (Magutu, Aduda and Nyaoga, 2015). It has been emphasized by Lamming (1993) that lean management would not succeed unless relationships are closely knit and based on trust and a climate of openness is established in the organization. Hence, it can be found out that the process of lean supply chain management has been implemented in most of the organizations of manufacturing sector in the country in order to minimize the waste in the process (Arani et al., 2016). Further, the literature signifies increase in customer satisfaction due to timely delivery of the products and services. The companies store those materials that are required by the organizational processes and always keep the inventories updated to assure the smooth flow of goods in order to minimize overstocking; increasing the profits of the company that would be used in reinvesting; there is a transparency and involvement of the suppliers in case of development of any new product which has helped the firms to integrate the processes and systems keeping the suppliers along. This results in improved performance.

Evaluation

From the above analysis of the subject with reference to the market of Kenya, it is clear that the management of the companies need to invest time and money in achieving more knowledge on the lean concept and its implementation. In order to implement proper practices of lean, there should be well formulated policies and procedures in the organization based on the overall objectives and strategies along with periodical follow up and monitoring. Empirically, the issues that the firms are facing in its implementation are a key to the process of continuous development. According to me, the literature review rightly states that those organizations which adopt the lean supply chain management properly will outperform the competition and continue to explore innovative practices which will target value creation and sustainability. There is a need to change and develop the supplier relationships in the manufacturing sector in order to implement the lean concept smoothly (Kumar, Kumar and Singh, 2014). Challenges should be taken positively and corrective measures to be implemented henceforth to achieve the aim of cost minimization. This study will help the manufacturing firms of Kenya in identifying the scope and benefits of adopting the lean management system and challenges that might become barriers in the implementation. The scope of the study may be limited because it only covers the manufacturing sector of Kenya.

Since, this paper emphasizes on the lean management practices adopted by the manufacturing sector of Kenya, further studies can be carried on to find out the factors controlling the adoption of lean practices in Kenya. Another avenue for future research can be the implementation of lean supply chain management practices in the service sector of Kenya which is a flourishing market of the country.

Conclusion

Based on the analysis of the various studies and discussions, it can be clearly stated that there is adoption of lean supply chain strategies in the manufacturing firms of Kenya which contribute to the overall organizational performance and competitive edge in this global climate. The improvement in firm’s performance can be seen through the reduction in waste of manufacturing process, processing time, reduction in consumer lead time, and increase in the feedback to consumers. The study also shows that the implementation faced several challenges such as resistance from the workers, top management involvement, limitation of the resources, poor relations with suppliers etc. These challenges slow down the benefits of lean supply management strategy. The study stands on the reasons of adoption of lean supply chain management practices by the firms such as cost reduction, elimination of waste, increased competitive edge, profitability, and customer trust, elimination of extra time and resources and long term sustainability. The results of this study clearly show the positive performance and effect of lean concept on manufacturing sector in Kenya. With the increased globalization and high competition, the companies are investing in innovative practices such as lean supply chain.

References

Arani, W., Mukulu, E., Waiganjo, E. and Wambua, J. (2016). Strategic Sourcing an Antecedent of Supply Chain Resilience in Manufacturing Firms in Kenya. International Journal of Academic Research in Business and Social Sciences, 6(10), pp.5-10.

Cudney, E. and Elrod, C. (2011). A comparative analysis of integrating lean concepts into supply chain management in manufacturing and service industries. International Journal of Lean Six Sigma, 2(1), pp.5-22.

Eaton Corp, USA/Ireland. (2013). Filtration Industry Analyst, 2013(8), p.6.

HITT, M. (2011). RELEVANCE OF STRATEGIC MANAGEMENT THEORY AND RESEARCH FOR SUPPLY CHAIN MANAGEMENT. Journal of Supply Chain Management, 47(1), pp.9-13.

Höök, M. and Stehn, L. (2008). Applicability of lean principles and practices in industrialized housing production. Construction Management and Economics, 26(10), pp.1091-1100.

Kallrath, J. and Maindl, T. (2014). Real Optimization with SAP® APO. Berlin: Springer Berlin.

Kozlov, A. (2015). Lean supply chain design principles. European Journal of Economics and Management Sciences, 2, pp.32-36.

Kumar, R., Kumar, V. and Singh, S. (2014). Role of lean manufacturing and supply chain characteristics in accessing the manufacturing performance. Uncertain Supply Chain Management, 2(4), pp.219-228.

Kumar, R., Kumar, V. and Singh, S. (2014). Role of lean manufacturing and supply chain characteristics in accessing the manufacturing performance. Uncertain Supply Chain Management, 2(4), pp.219-228.

Magutu, P., Aduda, J. and Nyaoga, R. (2015). Does Supply Chain Technology Moderate the Relationship between Supply Chain Strategies and Firm Performance? Evidence from Large-Scale Manufacturing Firms in Kenya. International Strategic Management Review, 3(1-2), pp.43-65.

Moori, R., Pescarmona, A. and Kimura, H. (2013). Lean Manufacturing and Business Performance in Brazilian Firms. Journal of Operations and Supply Chain Management, 6(1).

Reimann, F. and Ketchen, D. (2017). Power in Supply Chain Management. Journal of Supply Chain Management, 53(2), pp.3-9.

singh, j., singh, r. and singh, s. (2013). Application of Lean and JIT principles in Supply Chain Management. International Journal of Management Research and Business Strategy, 2, pp.85-98.

Singh, S. and Pandey, S. (2015). Lean Supply-Chain:A State-of-the-art Literature Review. Journal of Supply Chain Management Systems, 4(3).

Wanjora Kariuki, P. and Wangethi Waiganjo, E. (2014). Factors Affecting Adoption of Reverse Logistics in the Kenya Manufacturing Sector: A Case Study of Coastal Bottlers Company. International Journal of Academic Research in Business and Social Sciences, 4(9).

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