INFLUENCE OF SUPPLY CHAIN STRATEGIES ON ACHIEVEMENT OF COMPETITIVE ADVANTAGE

INFLUENCE OF SUPPLY CHAIN STRATEGIES ON ACHIEVEMENT OF
COMPETITIVE ADVANTAGE IN SEED MANUFACTURING COMPANIES IN
NAIROBI COUNTY, KENYA



BY
ROSE WAKANYI MWAURA




A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of
Master of Business Administration (MBA), Strategic Management Option


Graduate Business School
Faculty of Commerce
The Catholic University of Eastern Africa



August, 2015
i








































ii

DEDICATION
I dedicate this thesis to my family members who have lived to witness my academic
achievements.

















iii

ACKNOWLEDGEMENT
My great appreciation and thanks goes to the Almighty God for his grace and good
health. Secondly, to my supervisors who have passionately encouraged and guided me.
To my colleagues for making valuable contributions and observations as I prepared the
research report.




















iv

ABSTRACT

The concept of supply chain management is relatively a recent idea in agribusiness
management literature, efficient agriculture supply chains can result from stable networks
and common relations traders and retailers. The main aim of this research is to assess the
influence of supply chain strategies i.e. lean, agile and le agile strategies on achievement
of competitive advantage in seed manufacturing companies targeting supply chain
managers and strategic planning managers. The study was carried out on twenty seed
companies in Nairobi County. Questionnaires with closed and open ended questions was
used as study instruments and issued to the respondents on a drop and pickup later basis
that was collected after two weeks. Data was analyzed using both descriptive and
inferential statistics with the aid of the computer software the statistical package for
social sciences (SPSS). Inferential statistics techniques utilized were correlation and
analysis of variance (ANOVA).
The findings indicated the companies employed either of the supply chain strategies i.e.
lean, agile and le agile. The supply chain strategies as indicated by the study influenced
competitive advantage, the strategies correlated very strongly to competitive advantage.
The findings also indicated that government policies as moderating effects play an
integral role on the relationship of supply chain strategies. The main conclusion is that
supply chain strategies can influence competitive advantage if well employed by the
companies. The study recommends that seed manufacturing companies should develop
competitive advantage capabilities that cannot be imitated by other competitors.
Management need to take a keen interest specifically on supply chain strategies and the
need to adopt and implement good supply chain strategies to have higher competitive
advantage.
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TABLE OF CONTENTS
DECLARATION .............................................................................................................................. i
DEDICATION ................................................................................................................................. ii
ACKNOWLEDGEMENT .............................................................................................................. iii
ABSTRACT .................................................................................................................................... iv
LIST OF TABLES .......................................................................................................................... ix
LIST OF FIGURES ......................................................................................................................... x
LIST OF ABBREVIATIONS ......................................................................................................... xi
CHAPTER ONE .............................................................................................................................. 1
INTRODUCTION ........................................................................................................................... 1
1.1 Background of the study ............................................................................................... 1
1.1.1 Supply Chain ...................................................................................................... 1
1.1.2 Competitive Advantage ...................................................................................... 5
1.1.3 Agribusiness in Kenya ........................................................................................ 6
1.2 Statement of the Problem .............................................................................................. 9
1.3 Research objectives ..................................................................................................... 11
1.3.1 General Objective ................................................................................................. 11
1.3.2 Specific objectives................................................................................................ 11
1.4 Research Questions ..................................................................................................... 11
1.5 Significance of the study ............................................................................................. 12
1.6 Scope and Delimitation of the study ........................................................................... 13
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1.7 Theoretical Framework ............................................................................................... 13
1.8 Conceptual framework ................................................................................................ 14
1.9 Operationalization framework .................................................................................... 16
CHAPTER TWO .............................................................................................................. 18
LITERATURE REVIEW ................................................................................................. 18
2.0 Introduction ................................................................................................................. 18
2.1 Review of Theories ..................................................................................................... 18
2.1.1 Transaction Cost Theory .................................................................................. 18
2.1.2 Resource-based view ........................................................................................ 19
2.1.3 Knowledge-based view ..................................................................................... 21
2.1.4 Strategic Choice Theory ................................................................................... 22
2.1.5 Agency Theory ................................................................................................. 22
2.1.6 Porters Theory of Competitive Advantage ....................................................... 23
2.2 Empirical Review........................................................................................................ 26
2.2.1 Supply Chain Strategies .................................................................................... 26
2.2.2 Lean supply Chain strategy .............................................................................. 27
2.2.3 Agile Supply Chain Strategy ............................................................................ 30
2.2.4 Le agile Supply Chain Strategy ........................................................................ 32
2.3 Competitive Advantage .............................................................................................. 35
2.4 Criticism of the Theories ............................................................................................ 38
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2.5 Knowledge Gap .......................................................................................................... 39
CHAPTER THREE .......................................................................................................... 41
RESEARCH DESIGN AND METHODOLOGY ............................................................ 41
3.0 Introduction ................................................................................................................. 41
3.1 Research Design.......................................................................................................... 41
3.2 Target Population ........................................................................................................ 42
3.3 Description of the Sample and Sampling Procedure .................................................. 42
3.4 Data Collection ........................................................................................................... 42
3.5 Validity and Reliability of Research Instrument ........................................................ 43
3.7 Ethical Considerations ................................................................................................ 44
CHAPTER FOUR ............................................................................................................. 46
DATA ANALYSIS, PRESENTATION AND INTERPRETATION .............................. 46
4.0 Introduction ................................................................................................................. 46
4.1 Response rate .............................................................................................................. 46
4.2 Bio Data of the Respondents....................................................................................... 46
4.3 Descriptive statistics ................................................................................................... 49
4.3.1 Supply chain strategies in seed manufacturing companies .................................. 49
4.3.2 Lean Supply Chain Strategy and Competitive Advantage ................................... 50
4.3.3 Agile Supply Chain Strategy and Competitive Advantage .................................. 51
4.3.4 Le Agile Supply Chain Strategy and Competitive Advantage ............................. 53
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4.3.5 Other factors that contributed to success of the supply chain strategies .............. 54
4.3.6 Government policies in influencing supply chain strategies ................................ 55
4.4 Correlation Analysis of the supply chain strategies and competitive advantage ........ 56
4.5 Discussions of the findings ......................................................................................... 59
CHAPTER FIVE .............................................................................................................. 61
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS..................................... 61
5.0 Introduction ................................................................................................................. 61
5.1 Summary of findings................................................................................................... 61
5.1.1 Supply chain strategies employed ........................................................................ 61
5.1.2 Influence of supply chain strategies on achievement of competitive advantage .. 62
5.1.3 The moderating effect of government policies .................................................... 62
5.2 Conclusions ................................................................................................................. 63
5.3 Recommendations ....................................................................................................... 64
5.4 Limitation of the study ................................................................................................ 64
5.5 Suggestions for further study ...................................................................................... 65
References ......................................................................................................................... 66
APPENDICES .................................................................................................................. 73
APPENDIX 1: QUESTIONNAIRE .............................................................................. 73


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LIST OF TABLES
Table 4.1: Questionnaire response rate…………………………………………………. 46
Table 4.2: Number of Years in business…………………………………....................... 47
Table 4.3: Number of employees in the company……………………………………… 47
Table 4.4: Size of the company……………………………………………………. ...….48
Table 4.5: Position in the company……………………………………………………... 48
Table4.6: Supply Chain strategies employed…………………………………………… 59
Table 4.7: Lean supply chain strategy and competitive advantage……………………. .50
Table 4.8: Agile supply chain strategy and competitive advantage……………………. 52
Table 4.9: Le Agile supply chain strategy and competitive advantage………………… 53
Table 4.10: Government policies in influencing supply chain strategies………………..55
Table 4.11: Summary correlation of Lean strategy and Competitive Advantage………. 57
Table 4.12: Summary correlation of Agile strategy and Competitive Advantage……… 57
Table 4.13: Summary correlation of Le agile strategy and Competitive Advantage…….58







x

LIST OF FIGURES
Figure 1.1: How different sectors contribute to Kenya’s economic growth…………….7
Figure 1.2: Conceptual Framework……………………………………………………...15
Figure 1.3: Operational framework………………………………………………………16
Figure 4.1 Other factors that contributed to success of the supply chain strategies……..55
Figure 4.2 Government policies in influencing supply chain strategies…………………57
















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LIST OF ABBREVIATIONS
SPSS-statistical package for social science
ANOVA- Analysis of variance
SCM-supply chain management
CLM-Council of Logistics Management
GDP- Gross domestic product
FAO- Food and Agriculture Organization
RBV-Resource Based View
ISO-International Organization for Standardization





1
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
The concept of supply chain management is relatively a recent idea in agribusiness
management literature, though supply chain as such is few decades old. Efficient and fair
agriculture supply chains can result from stable networks and common relations between
input suppliers, producers, processors, traders and retailers. In recent years, crucial
growth has been made in the development of new approaches for analyzing the
arrangement and dynamics of agriculture supply chains and networks (Christopher,
2005). Similar to any other supply chain, the agriculture supply chain or supply chain for
agriproducts is also a network of organizations involved in a number of processes and
activities to meet the customer demands and satisfy them. Agrifood chains are complex
systems involving multiple multifaceted firms usually working together within specific
industry sectors (Bryceson & Smith, 2008).
1.1.1 Supply Chain
Market globalization and steep competition are increasing the need for more efficient and
effective strategies in meeting evolving market demands. Adopting a more integrated
approach to supply chain relationship management has been increasingly viewed as a
way of meeting changing customer needs and creating a competitive edge. Supply chains
encompass the end-to-end flow of information, products, and money. For that reason, the
way they are managed strongly affects an organization's competitiveness in such areas as
product cost, working capital requirements, speed to market, and service perception,
among others. In this context, the proper alignment of the supply chain with business
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strategy is essential to ensure a high level of business performance (Martin & John,
2005).
Council of Logistics Management (CLM) defines Supply chain management as the
systemic, strategic coordination of the traditional business functions and tactics across
these businesses functions within a particular organization and across businesses within
the supply chain for the purposes of improving the long-term competiveness and
performance of the individual organizations and the supply chain as a whole. Supply
chain management has been defined explicitly to recognize the strategic nature of
coordination between trading partners and to explain the dual purpose of supply chain
management. The goal of SCM is to integrate both information and material flows
seamlessly across the supply chain as an effective competitive weapon (Feldmann.et al.,
2003)
The concept of supply chain management has received increasing attention from
academicians, consultants, and business manager’s alike (Croom. et al., 2000) .Many
organizations have begun to recognize that supply chain management is the key to
building sustainable competitive edge for their products and or services in an increasingly
crowded marketplace. The concept of supply chain management has been considered
from different points of view in different bodies of literature such as purchasing and
supply management, logistics and transportation, operations management, marketing,
organizational theory, and management information systems. Various theories have
offered insights on specific aspects or perspectives of supply chain management, such as
industrial organization, associated transaction cost, resource-based and resource-
dependency theory.
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In the business world, the customer, who is perceived as the ‘king’, is the driver of
change in the market place. Their changing attitudes are pushing businesses to rethink
their strategies, and those that are able to stand up to the challenge are taking advantage
of it. Customers are not only demanding products and services to be delivered at almost
immediate availability, but their needs are constantly changing as well, the market is
dominated by uncertainty and unpredictability. This implies that manufacturing
companies, due to their dependence on customers for the products they provide, now
have to perform within a global market where competition is becoming more and more
difficult and intense. The result is that the production and logistics and supply chain
processes are becoming increasingly complex (Kim 2006).
Complexity and uncertainty is what companies have to overcome in their supply chain in
order to compete better in the face of the ongoing global economic downturn in which
most companies are facing shrinking sales volume and have to layoff most of their
employees, it is indisputable that the way to maintain viability in operation lies in cutting
cost, reduce inventory, and rendering the organization as efficient and effective as
possible. It is necessary that those factors that define business competition and success be
put in place as soon as possible, as much as product durability, adaptability, and
reliability are crucial for consideration, important business competitive driving forces
such as speed, quality, flexibility, efficiency, innovation, and pro – activity and time to
market can be determining factors. These factors have been identified by Yusuf et al.
(1999) as competitive foundations of agility. In order to meet challenges and stay
competitive in business, it is necessary for a company to develop a supply chain strategy
that incorporates these factors.
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Nowadays, a company’s supply chain strategy is becoming increasingly critical in
meeting the overall goals of the company and maintaining it on a competitive platform.
Kim (2006) points out that Supply Chain Management (SCM) and competitive
performance are closely linked. He argues that To be successful in Supply Chain
Management applications which aim to achieve high supply chain advantage, external
integration with suppliers and customers in addition to integration between the inside
functions in the company are needed (Kim, 2006). Supply chains integrate a range of
partly independent companies, but the competitive advantage lies in integrating activities
(Peck & Juttner, 2000). It is important to know which integration style will provide
competitive advantage or if supply chain integration has an effect on competitive
advantage.
Supply chain management reflects the external integration which means companies’
relations with upstream suppliers and downstream customers. But it includes strategic
internal integration degree apart from the external integration. It is mentioned that
internal integration is the first step to achieve the supply chain integration and new
opportunities will be obtained by integrating with the suppliers, distributors and
customers to improve the internal operations (Rosenzweig et al., 2003).
Leavy (2006) emphasis that making supply chain management a competitive advantage
requires meeting two main challenges, the strategic challenge and integration challenge.
Capabilities such as quality, delivery, flexibility and cost make contribution to the
competitive advantage of a business (Vickery et al., 2003). The company has to offer
lower price in comparison with its competitors or in order to put high prices the value of
the products offered should be higher in comparison with the competitors (Kim, 2006).
Product quality and mix should meet or exceed the customers’ expectations. They should
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have high order execution rate, low order cycle time and accurate order and delivery
information. These competitive capabilities ensure that company satisfies its customers
and reach good market performance (Tracey et al., 1999).
Many companies are now focusing on improving and developing their supply chain
processes because this can play a significant role in customer service and thus
profitability. Therefore, developing a competitive supply chain based on speed,
flexibility, innovation, quality, and responsiveness to deal with these unpredictable
market situations has become essential for most organizations. The target is to reduce
cost through increase efficiency and effectiveness. These are key characteristics of agile
and lean capabilities. The development of the concept of lean production has greatly
improved companies and customers’ need in terms of profitability on one hand and
quality on the other. However, with a changing customer need to deliver services and
products at shortest time possible, the lean concept falls short in meeting this particular
need alone. This calls for the development of a supporting concept such as agility to
complement leans ability. While 'lean' focuses on efficiency of operations and cost
savings, 'agility' focuses on flexibility and responsiveness of operations. Agility thus
complements and builds on lean to render an organization more competitive. (Jackson &
Johansson, 2003).
Ross (1998) emphasizes that “today’s enterprise must refocus its efforts away from
conventional business centered around transaction management and narrow performance
metrics, and towards strategies that recognize to achieve competitive advantage.
1.1.2 Competitive Advantage
Competitive advantage is the extent to which companies are able to create a defensible
position over its competitors (McGinnis & Vallopra, 1999).In today’s global competition
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environment, facing the rapid technology progress and high customer expectations,
companies find it hard to win the competition only depending one’s own capacity (Su et
al.,2008). In this situation, the establishment of the supply chain partnership among
companies and the coordination of the partners are highly valued. Also, many companies
struggle in justifying the cost of quality within their supply chain, but many companies
fail to see the cost associated with varying quality levels from their suppliers. In order to
create a quality product, which is one of the competitive advantages, company must
address all aspects of the supply chain, including individual processes and supplier
selection (Franca et al., 2010). This is the main role of the supply chain management.
There are some dimensions of supply chain performance based on supply chain processes
and management which have direct influence to competitive advantage: resource, output,
flexibility, innovativeness and information. So, improving supply chain performance has
become one of the critical issues for gaining competitive advantage for companies.
Supply chain is a dynamic management tool and continuously improving performance
has become a critical issue for most suppliers, manufactures and the related retailers to
gain and sustain competitiveness (Cai et al, 2009).
1.1.3 Agribusiness in Kenya
Agriculture is a major driver of Kenya’s economic growth. Its contribution to the
country’s GDP is around 25 percent, not counting indirect contributions through links
with manufacturing, transport and communication, wholesale and retail and financial
services. Agriculture is profoundly important to nearly every one of Kenya’s 41 million
people. Around three quarters depend on the sector for their livelihood and survival, and
around 90 percent of rural incomes come from agriculture. ((National Agribusiness
Strategy Kenya, 2012)
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Source:-National Agribusiness Strategy© Government of Kenya 2012
Figure 1.1 Contribution of different sectors to Kenya’s economic growth
According to FAO (1997), agribusiness is a term used to mean farming; plus all the other
industries and services that constitute the supply chain from farm through processing,
wholesaling and retailing to the consumer.
At a continental level, the wider category of agribusiness, including both upstream (input)
activities and downstream processing activities, as well as distribution and marketing, is
estimated to account for approximately one fifth of GDP for sub-Saharan Africa and just
under half of the region’s value added in manufacturing and services (Jaffee et al. 2003).
Defined as a component of the manufacturing sector where value is added to agricultural
raw materials through processing and handling operations, agro-industries are an
important source of employment and income generation worldwide (Da Silva et al.,
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2009). Indeed, in most developing countries agro-industries are dominant in terms of
their contribution to value-added in manufacturing.
The private sector is largely responsible for the supply of seed, agrichemicals, farm
machinery, and the supply of processing equipment and materials. Suppliers range from
local agro-chemical stockiest, animal feed millers and small and medium sized enterprise
(SME) agro-machinery fabricators, to large multinational companies involved in
manufacturing, distribution and wholesaling. A rapidly changing and increasingly
complex market environment, increasing globalization of agricultural markets presents
agribusiness owners with complex challenges. They must work around increasingly
complex economic landscapes, which include growing specialization in distribution
channels and logistics; rapidly changing and differentiated consumer preferences; and
increasingly complicated norms, standards and technical specifications (National
Agribusiness Strategy Kenya, 2012)
Kenya has a competitive geographical location. It is well placed as trade hub for East
Africa, with ports and access to sea transport. Kenya has easy (competitively placed)
preferential market access to North African, Asian and European markets when compared
to many other African countries. Further, Kenya has a large tourism industry which
through the nature of flying in tourists offers competitive transport rates to businesses
wishing to seeds. Due to its wide and diverse climatic conditions the country is able to
produce a wide selection of produce over an extended harvest time. For example Kenya
is able to supply fresh mangoes to the market for 8 months of the year where India and
Pakistan have only a three month harvest period. On the other hand, Mango exporters
complain that 20% of the cost in exporting fresh mangoes is in the form of taxes; this is
9

making them un-competitive in supplying the North African market.(Ministry of
Agriculture, 2010)
The productivity of the agricultural sector is constrained by inefficiencies in the supply
chain, resulting from limited storage capacity, lack of post-harvest services and poor
access to input markets. These constraints in supply chain reduce Kenya’s bargaining
power and competitive advantage in local and global agricultural markets.
1.2 Statement of the Problem
Industries manufacturing products from agricultural resources are developing rapidly but
complexities in supply chains of products often result in economically unviable cost
structures. It seems that many companies in the agriculture related industries have started
worrying about their current competitive positioning since profits of agricultural products
are among the lowest (Xiao, Leung, Zhang& Lai 2009)
Saturation of food markets and changing consumer demands, powerful application of
information and communication technologies and the internationalization of the agri-
industrial sector are the major driving forces affecting supply chain development and
forcing the strategic realignment of traditional buyer/ seller relationships along the chain.
Moreover, consumer demands with respect to the ecological and socio -economic
sustainability of agricultural production and to issues of food safety are coming more and
more to the fore. In order to survive in this highly competitive environment,
distribution/production companies must respond to these challenges (Lancioni, Smith &
Oliva, 2000). The Kenya Agriculture supply chains have been unable to display
consistency and stability. The supply chains have frequently experienced costly
discontinuities in the current dynamic markets and vastly-changing technological
environments. The supply chains are inflexible and susceptible to disruption since they
10

are unable to swiftly and suitably respond to emerging global changes, certification
requirements, and governmental and regulatory changes.
Previous researchers have focused on various areas of supply chain, Morash and Lynch
(2002) studied of global supply chain capability and performance. In another study Wu,
Yeniyurt, Kim and Cavusgil (2005) illustrated the impact of IT on organizational supply
chain capabilities and performance. Chee et al (2005) in Seol ,South Korea explored the
effective SCM practices in Toy Industry, they established three main SCM practices for
toy retailers in terms of ordering behaviors (one-off, JIT and mixed model) and one
dominated SCM practice for Toy manufacturers (traditional mass-production or push
model).
Supply chains strategies lean, agile and leagile, strongly affects an organization's
competitiveness in such areas as cost, working capital requirements, Flexibility, service
perception, and human resource among others. In this context few companies have
adopted supply chain strategies, it’s critical to understand, that proper alignment of the
supply chain with business strategy is essential to ensure high levels of competitive
advantage. From the literature reviews, it is evident that there is no known study that has
mainly focused on addressing this gap. There has been little focus, research study that
relates supply chain strategies and competitive advantage of agribusiness firms in Kenya.
The sector includes multinationals and local companies where competition is quite
intense. There is also limited literature available on agriculture supply chain processes
and this has created a major knowledge gap amongst supply chain managers on how to
improve the process in the agriculture industry. The study focused on the main objective
11

to investigate the influence of supply chain strategies on achievement of competitive
advantage in seed manufacturing companies in Nairobi County.
1.3 Research objectives

In order to achieve the overall research aim to answer the research questions below
objectives have been set.
1.3.1 General Objective
The purpose of this study was to establish the influence of supply chain strategies on
achievement of competitive advantage in seed manufacturing companies in Nairobi
County.
1.3.2 Specific objectives
The research addressed the following Specific objectives:
i. To establish supply chain strategies in seed manufacturing companies in
Nairobi County.
ii. To establish the influence of supply chain strategies in achieving competitive
advantage in seed manufacturing companies in Nairobi County.
iii. To determine the moderating effects of the relationship between supply chain
strategies and competitive advantage in seed manufacturing companies in
Nairobi County.
1.4 Research Questions
This study aims to answer the following questions.
i. What Supply Chain strategies are practiced in seed manufacturing companies in
Nairobi County?
ii. How do supply chain strategies influence competitive advantage in seed
manufacturing companies in Nairobi County?
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iii. What are the moderating variables influencing supply chain strategies in seed
manufacturing companies?
1.5 Significance of the study
Understanding how supply chains strategies influence competitive advantage in
agribusiness sector will be useful to the stakeholders in several ways; first, availing the
outcome of the study to the agribusiness stakeholders will not only increase awareness
regarding the usefulness of having supply chain strategies in enhancing business
processes and creating competitive advantage but will also spur investments in areas of
supply chain by the businesses, hence, making them more competitive and profitable.
The other stakeholders are customers who will benefit on improved service delivery;
efficient supply chains will always ensure organizations are able to meet the market
demand.
The government which has expressed immense interest in supply chain and the
agriculture sector been an area driving the economy sectors may find the outcome of this
study useful and together with other related studies may be used as material for policy
review and formulation. The researchers will also benefit from the study as it addresses
the knowledge gaps on the influence of supply chain strategies on achievement of
competitive advantage in seed manufacturing companies in Nairobi County and also
identify areas of further research.
The aim of this research work is to understand how changes in market conditions, driven
by an ever changing customer demand, have resulted in the development of frameworks
for integrated approach in supply chain in agribusiness, and how this has in turn
contributed to a competitive advantage. The study thus seeks to point out the influence
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that the concepts of lean and agile as supply chain strategies can have on competitive
advantage in agribusiness sectors in Kenya.
1.6 Scope and Delimitation of the study
The scope of the study was under supply chain management with the primary interest
within the framework of lean, agile and le agile supply chain strategies and their
influence on achievement competitive advantage seed manufacturing companies in
Nairobi County. It was conducted in twenty seed manufacturing companies within
Nairobi County, Kenya. The conclusion was based essentially on theoretical literature
and results from the questionnaires that were issued to the supply chain managers and
strategic planning managers.
This research was scheduled to be completed in a specific time frame of less than six
months. Primary data and secondary data were used to cover this research.
1.7 Theoretical Framework
Traditionally, supply chain management has been viewed predominantly as a process for
moving materials and goods. From this view, supply chain management has been viewed
as a support function that helps organizations implement their strategies. Best value
supply chains take an important additional step, their focus is on strategic supply chain
management, the use of a supply chain not merely as a means to get products to where
they need to be, but also as a means to enhance key outcomes that drive firm
performance(Hult et al., 2004). In other words, strategic supply chain management
elevates supply chain management from a function that supports strategy to a key
element of strategy.
The notion of supply chains can become clearer and richer if examined from a variety of
important theoretical perspectives. A number of experts in the field of supply chain
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management have tried to provide theoretical foundations for some areas of supply chain
management by adopting organizational theory.
Lavassani, Movahedi and Kumar (2009) studied the roots of five organizational theories.
That include, transaction cost theory, resource-based view, knowledge-based view,
strategic choice theory and agency theory .These theories and views are proposed by
several authors to have the potential for explaining various aspects of supply chain
management. It is argued that each of these concepts has application and some
shortcomings in describing the processes associated with various activities in supply
chain management. Following that, the shareholder theory is introduced and explicitly
described, as an appropriate complementary theory for analyzing supply chain
management. It has started to attract more attentions for its application in supply chain
management studies.
1.8 Conceptual framework
Mugenda and Mugenda (2003) define a conceptual framework as a hypothesized model
identifying the concepts under study and their relationships. It provides an outline of the
preferred approach in the research and also outlines the relationships and the desired
effects, forming independent and dependent variables respectively. In this study, the
independent variables are supply chain strategies, while the dependent variable are
competitive advantage.





15





Independent variables Dependent variables



Moderating variable

Figure1.2: Conceptual Framework


Competitive advantage

Supply Chain strategies
Lean Strategy
Agile strategy
Le agile strategy

Government policies

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1.9 Operationalization framework
The operation frame work shows the various parameter for the independent variables. It
further shows how the independent variables are measured



Figure1.3: Operationalization Framework
Lean Strategy
Agile Strategy

Le agile strategy

Competitive
Advantage
Measurement
Dependent
Variable
Cost



Lead time

Quality

Independent
Variables

Service Level

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Lead Time: indicates the ability of the manufacturing firm to execute a particular job
from the date of ordering to the date of delivery quickly and as soon as the order is
placed. Lead-time needs to be minimized in lean manufacturing as by definition excess
time is waste, and leanness calls for the elimination of all waste. Lead-time also has to be
minimized to enable agility, as demand is highly volatile and thus difficult to forecast.
Cost: indicates the extent to which the minimization of expenses is manifested in
company operations (the cost of capital, overhead and any recorded cost of production
and distribution). This is an essential factor to be minimized in lean and agile
manufacturing in order to maximize the profit of factory.
Service Level: indicates the extent to which customer orders can be executed with
market-acceptable standards of delivery.
Quality: indicates the standard of the finished product, and needs to be maximized in
lean and agile manufacturing in the form of minimal defects and maximal reliability, thus
satisfying customers with the desirability of the product’s properties or characteristics





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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
The chapter reviews selected literature and examines both general and specific theories
that have been done in the area of supply chain management and competitive advantage.
The literature review examines how various studies have analyzed the concept of supply
chain and determines either its success or failure.
2.1 Review of Theories
Lavassani, Movahedi and Kumar (2009) studied the roots of five organizational theories.
These five theories and views are: transaction cost theory, resource-based view,
knowledge-based view, strategic choice theory and agency theory. It is argued that each
of these concepts has application and some shortcomings in describing the processes
associated with various activities in supply chain management.
In the last two decades, one of the most important debates emerged in the field of
strategic management is how firms achieve and sustain competitive advantage. This
debate has led to two basic schools which can be classified as positioning school (porters
five model) and resource based school.
2.1.1 Transaction Cost Theory
Ronald Coase, Chester Barnard, and Herbert Simon are among the early authors who
describe the contributions of transaction cost theory to the existence of firms (Scott,
2003; Williamson, 2005). The early studies of transaction cost theory as described in the
works of Coase (1937) and others had paid little attention to the internal operation of the
organization (Pitelis and Wahl 1998, as cited in Foss 1999). Williamson (1975, 1981)
19

further expanded the application of transaction cost theory by highlighting the role of
transaction cost theory in promoting vertical integration and trust in organizations. These
aspects of transaction cost theory are supporting evidences for the role of supply chain
management in organizations. Whether we look at supply chain, as a network or as an
integrated process, the transaction cost theory explains the vertical connection and
integration of various elements of organizational supply chain, from second tier and first
tier suppliers to first tier and second tier customers. Grover and Malhotra (2003) in their
well-cited study conduct an extensive investigation on the application of transaction cost
theory in supply chain management. In their empirical study of 1000 purchasing
managers, Grover and Malhotra (2003) conclude that transaction cost theory applies to
organizational supply chain management in four facets: effort, monitor, problem, and
advantage. Effort to “build and maintain the relationship” with suppliers; cost of
“monitoring the performance of suppliers”; resolving the problems that arises in the
business relationships; and engagement of suppliers in “an opportunistic behavior”.
However, transaction cost theory is primarily concerned with the direct economic factors
in organizations and hence fails to address some important aspects of the operation of
organizational supply chain, including personal and human relations among actors in the
supply chain.
2.1.2 Resource-based view
It’s mostly concerned with the economic aspect of operations in organizations. However,
it provides more insight into understanding of value systems in the organization as it
emphasizes the importance of knowledge as a production factor in organizations.
Lavassani et al. (2009) identified two main schools of thought in the development of
resource-based view, namely, classical and modern schools of thought. The classical
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school of thought describes that for achieving higher competitive advantage organizations
pursue the acquisition of better economic resources. One of the criticisms to the classical
view of organization is that it views organizations as black boxes of operation, where
inputs and outputs of the system are the main focus (Foss, 1999).
More attention has been paid to the application of resource-based view in organizational
supply chain management during the past decade. Morash and Lynch (2002) employed
resource based view in their study of global supply chain capability and performance.
Furthermore, they applied this relational aspect of resource-based view to “supply chain
wide collaboration”.
For competitive advantage the resource based view suggests that Firms can earn
sustainable super normal profits if they have superior resources and these resources
should be Valuable, Rare, non-imitable and Non substitutable (Grant, 1991). The
fundamental principle of the resource based view is that the basis for a competitive
advantage of a firm lies primarily in the application of the bundle of valuable resources
available at the firm’s. According to Fahy and Smithee (1999), Resource based view
starts with the assumption that the desired outcome of managerial effort within the firm is
to gain competitive advantage. Achieving competitive advantage allows the firm to earn
economic rents or above average returns. In turn, this focuses attention on how firms
achieve and sustain these advantages. The resource based view contends that the answer
to this question lies in the possession of certain key resources, that is, resources that have
characteristics such as value, barriers to duplication and appropriability. A competitive
advantage can be obtained if the firm effectively deploys these resources in its product-
markets. Therefore, the RBV emphasizes strategic choice, charging the firm’s
21

management with the important tasks of identifying, developing and deploying key
resources to maximize returns.
2.1.3 Knowledge-based view
Knowledge-based view as a relatively newer view of organizational processes considers
intangible resources of organizations as well. Grand (1997) who made significant
contributions to the development of knowledge-based view, describes the contribution of
several authors from various dimensions to the development of this view. These
dimensions are: organizational learning, evolutionary economics, organizational
capabilities and competencies, and innovation and new product development. While the
economic view of operations, such as those described by transaction cost theory and
classical resource-based view, promote the acquisition of factors of production i.e. labour
and capital, for achieving organizational goals, the knowledge-based view promotes the
sharing of knowledge. From the supply chain management perspective, this view
provides evidence of value creation through knowledge sharing in internal and external
organizational supply chain collaboration. Ketchen and Giunipero (2004) mentioned the
application of knowledge-based view in strategic management of organizational supply
chain management. They tried to illustrate the utilization of this view to explain the effect
of knowledge sharing across supply chain, in firms’ outcomes. While this view has been
used to illustrate the role of knowledge sharing in value creation, less attention has been
paid to describe the process by which, the knowledge sharing can positively affect the
organizational output.
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2.1.4 Strategic Choice Theory
Child (1972) traces the origins of strategic choice theory in the works of researchers in
US (Blau, Hage and Aiken, Hal, Lawrence, and Lorsch) and UK (Pugh and Woodward)
Ketchen and Hult (2007). This theory is concerned with the decision-making in
organizations for achieving the defined goals. One of the limitations of the strategic
choice theory in describing supply chain activities is that this theory is more concerned
with the governance structure and political forces in decision making and has less
attention to the functional execution of organizational processes. In his 1997 paper, Child
highlights this perspective by describing that the strategic choice theory emphasizes the
role of authoritative management group who can “influence the structures of their
organizations through an essentially political process”.
Ketchen and Hult (2007) consider strategic choice theory as an appropriate theory for
describing ‘strategic supply chain management’ studies. According to these authors,
strategic choice theory with focus on best value selection, can describe, the extent to
which ‘best value supply chain’ models can affect the organizational outcome –in
comparison to ‘traditional supply chain’; the extent to which ‘best value supply chain’
models can ‘enact their environment’ –in comparison to ‘traditional supply chain’.
However, unlike “externally focused approaches such as institutional theory” the
strategic choice theory focuses on strategies at intra-organizational level to provide
certain capabilities such as agility and adaptability (Ketchen & Hult, 2007).
2.1.5 Agency Theory
The agency theory was promoted with the seminal works of Max Weber .The classic
view of agency theory as develop by the works of Max Weber and others was mostly
concerned with the conflict of interest between the political master and state officials.
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This view was built on the foundation of the traditional view of organization that views
organizations as black boxes of operations, where the “relationship between performance
and incentives” was overlooked (Shook, Adams, Ketchen and Craighead 2009). New
institutionalism view of organizations opened the black box of organizational operations
and paved the way for the contemporary view of agency theory. In the old
institutionalism view, opportunistic behavior based on the rational system view was
dominant. However, the new institutionalism view of the organizations, promotes the
delegation of responsibilities and operation, through an open system view towards the
environment.
The agency theory, from either classical or traditional perspectives provides contributions
to the understanding of supply chain strategies. Agency theory has been applied to
various activities associated supply chain management including, outsourcing and supply
chain collaboration (Kwon & Suh, 2004).
2.1.6 Porters Theory of Competitive Advantage
Michael E. Porter in 1980, developed the five models for competitive advantage that
include Bargaining power of customers, Bargaining power of suppliers ,Intensity of
existing competitive rivalry, Threat of new entrants and Threat of substitute products. It
is a framework which is generally used for the analysis of industry and development of
business strategy. It is mainly based on the premise that a corporate strategy should meet
the opportunities and threats in the organization’s outer environment. Porter identified
five competitive forces that, according to him, shape every industry and every market.
These forces determine the intensity of competition and hence the profitability and
attractiveness of an industry. According to this model, the objective of corporate strategy
24

should be to manage these competitive forces in a way that improves the position of the
organization and achieve competitive advantage.
The intensity of these forces highly determines the average expected level of profitability
in an industry and their thorough understanding, both individually and in combination, is
beneficial in deciding what industries to enter, and in assessing how a firm can improve
its competitive position .The strength of each of the five forces is inversely proportional
to the price and profits such that a weak competitive force may serve as an opportunity,
while a strong one, may serve as a threat (Hill & Jones, 2007).
Threat of new entrants refers to the possibility that the profits of established in the
industry may be eroded by new competitors. The extent of the threat depends on existing
barriers to entry and the combined reactions from existing competitors. If entry barriers
are high or the new-comer anticipates a sharp retaliation from established competitors,
threat of entry becomes low. The circumstances discourage new competitors. The major
barriers to new entries are many including patents and brand identification (Bateman &
Snell, 2004).
Bargaining power of buyers, may threaten an industry by forcing down prices, bargaining
for higher quality or more services, and playing competitors against each other. This
consequently reduces profitability. The power of each buyer group depends on the
attributes of the market situation and the importance of purchases from that group
compared with the overall business. Bargaining power of suppliers can pressurize an
industry through price increments or quality reduction of the purchased products.
Powerful suppliers can squeeze the profitability of an industry so far that they can't
recover the costs of raw material inputs. (Hill & Jones, 2007).
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Threat of substitute products, industries compete with industries producing substitute
products and services .These substitutes reduce the potential returns of an industry by
placing a ceiling on the prices in that industry. Identifying substitute products involves
searching for other products or services that can perform the same function as the
industry’s products. Rivalry among established firms is the competitive struggle between
industries to gain market share from each other. It is jockeying for position whereby
industries use tactics like price competition, advertising battles, product introductions,
quality competition, and increased customer service or warranties. (Hill & Jones, 2007).
Porter identified the competitive generic strategies that can be applied after successful
competitive analysis that is, cost leadership and differentiation strategy for the broad
industry, and focus strategy for the narrow market segments. The focus strategy consists
of the low cost focus strategy and focus differentiation strategy. In cost leadership
strategy, an organization can decide to become the low cost producer in its industry by
charging the lowest price or rates for its services (Porter, 1980). The sources of cost
advantage for such an organization may include economies of scale, proprietary
technology, preferential access to raw materials and other factors. A low cost producer
must find and exploit all sources of cost advantage as well as be in a position to be an
above average performer in its industry to such an extent that it can command prices at or
at least near the industry average. By utilizing differentiation strategy, an organization
can be unique in its industry or products in areas that are highly valued by its clients. This
may involve selecting one or more attributes that many buyers in the in the industry
perceive as important, and then uniquely positions itself to meet those needs. This
uniqueness is rewarded by charging a premium price (Hamel .G.2002).
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2.2 Empirical Review
The empirical review in this literature will look into the supply chain strategies in
agribusiness i.e. lean, agile and hybrid which is a combination of the lean and agile
strategies for competitive advantage in agribusiness.
Supply chain has become an important focus of competitive advantage for organization
business. The management of supply chain study emphasizes how to maximize the
overall value of the firm by better using and deployment of resources across the whole of
the firm. A supply chain is the set of values adding activities connecting the enterprise’s
suppliers and its customers. The principle of supply chain activity is receiving input from
firm’s suppliers, add value, deliver to customers A supply chain encompasses all the
parties that involved, directly or indirectly, in fulfilling a customer request. The supply
chain includes manufacturer, suppliers, transporters, warehouses, retailers and even
customers themselves. Within each organization, such as a manufacturer, the supply
chain includes all function involved in receiving and filling a customer request. These
functions includes new product development, marketing, operation, distribution, finance,
customer service and other function that related to serving customer request (Chopra and
Meindl, 2007). Effective supply chain management is important to build and sustain
competitive advantage in product and services of the firms. To achieve a competitive
advantage and better performance, supply chain management strategy need support the
business strategy.
2.2.1 Supply Chain Strategies
Today’s competition is not between autonomous business entities, but between integrated
supply chains (Lambert & Cooper, 2000). Therefore, supply chain management has
received increasing attention from practitioners and academia. Effectively managing the
27

flow of materials from supply sources to the ultimate customer represents a major
challenge for today’s managers .Thus, firms need to posses a clear strategic planning in
order to effectively organize such complicated activities, resources, communications, and
processes. Prior research has identified three major supply chain strategies: lean, agile,
and lean & agile (hybrid) strategies (Yusuf, Gunasekaran, Adeleye, & Sivayoganathan,
2004). Research on supply chain strategy is closely linked with product characteristics.
Fisher (1997) and Christopher and Towill (2000) put forward that supply chain strategies
must match with product characteristics, competitive strategies, and the environment in
order for them to be effective.
2.2.2 Lean supply Chain strategy
Womack, Jones and Roos (1990) introduced the business world to the premise of lean
production in their seminal book the machine that changed the world. The book
examined how the techniques employed by Japanese automakers, namely Toyota,
outpaced the performance achieved by U.S and European competitors. Much has been
written in the academic and popular business press about Toyota much envied weapon,
the Toyota production system (TPS).
Taiichi Ohno (1998) believed that the fundamental success of any company is elimination
of waste or muda. Waste, is defined as anything that interferes with the smooth flow of
production (McDuffie & Helper, 1997). The National Institute of Standards and
Technology Manufacturing Extension Partnership’s Lean Network defines lean as a
systematic approach to identifying and eliminating waste through continuous
improvement, flowing the product at the pull of the customer in pursuit of perfection.
Taiichi Ohno (1998), developed a list of seven basic forms of waste i.e. defects in
production, overproduction, inventories, unnecessary processing, unnecessary movement
28

of people, unnecessary transport of goods, waiting by employees. Womack and Jones
(1996) added to the list with the muda of goods and services that fail to meet the needs of
customers. Womack, Jones and Roos, add that in comparison to mass production
approach, a lean company calls for far less inventory and incurs fewer defects while
providing greater variety in products. The potential offered by lean principles has been
embraced by practitioners and researchers alike. Beyond manufacturing, lean principles
have also found application in logistics product development and launch & accounting.
(Disney, Naim, andTowill 1997; Jones, Hines, and Rich 1997; Wu 2002),
Womack and Jones (1996) extended their original conceptualization of lean operations to
the broader enterprise. The contented that the lean enterprise is one that identifies the
value inbuilt in specific products, identifies the value for each product, supports the flow
of value, lets the customer pull value from the producer, and pursues perfection. It is
through this comprehensive, enterprise wide approach to lean implementation that the
theory extends beyond functional strategy to a broader supply chain strategy employed by
the company. Lean typically relies on a shorter forecast horizon and ability to adapt
should production schedules change.
Lean management is essentially process oriented as it seeks to eliminate all non-value
adding activities and reducing waste within an organization. It does so by moving out
unnecessary processes and aligning the whole processes in a systematically continuous
flow to optimize the utilization of resources in order to solve problems. A company that
has adopted lean production concept can design, manufacture, and distribute products in
less than half the time taken by other companies by using less than half of their resources
(Womack et al., 1996).Lean production can also be consumer oriented lean production is
about doing things that add value from customer’s perspective.
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Lean has changed the rules of competition and has induced “post-maturity” growth phase
(Smeds, 1994) in organizations implementing it. Several research studies have shown that
a lean strategy produces higher levels of quality and productivity and better customer
responsiveness (Krafcik & Nicholas, 1998). The impact on lean strategy is mostly based
on empirical evidence that it improves the company’s competitiveness. The impact of
lean thinking as a strategy is important not only in manufacturing but also for the entire
organization. The impact for organizations is the adjustment in thinking towards a “total
cost” concept which ignores individual cost structures such as transportation and
warehousing and focus on the total cost of delivering value to the customer (Goldsby &
Martichenko, 2005). This focus provides support for the argument that it is the collective
responsibility of all managers to continually strive for improvement within and between
organizations. Lambert (1998) suggests that the structure of activities/processes within
and between companies is crucial for achieving superior competitiveness and
profitability.
Though many variables may affect the success of a lean manufacturing implementation,
many researchers agree that commitment by top management is vital (Womack & Jones
1996). Management that fails to embrace the implementation may intentionally or
unintentionally sabotage the effort .Top management should not only demonstrate
commitment and leadership, it must also work to create interest in the implementation
and communicate the change to everyone within the organization .Management must be
visibly connected to the project and participate in the lean manufacturing events. A lack
of investment by upper management in the lean management implementation may also
affect the success of the implementation in less visible ways. If employees feel that the
30

executive team does not respect their efforts, discouragement may take hold and the lean
management effort will fail (Boyer & Sovilla, 2003).
2.2.3 Agile Supply Chain Strategy
While lean management emphasizes the pursuit of process efficiency, generating the
greatest outcome from the least input through the minimization of wastes, agility refers to
effective flexible accommodation of unique customer demands (Christopher
2000).Naylor, Naim and Berry (1997) suggest that the agile company is one that uses
market knowledge and virtual corporation to exploit profitable opportunities in volatile
market places. Instead of relying on speculative notions of what might be demanded the
quantity of demand, not committing to products until demand becomes known. While
lean management typically calls for make to stock replenishment driven by short term
forecast, agile supply chains employ make to order provisions, producing what has
already been sold or committed in the market place.
The key to providing agile response is flexibility throughout the supply chain .In
manufacturing this would call for the ability to produce in large or small batches
minimizing the pain associated with setups and product changeovers often cited as a
component of lean manufacturing. Beyond the capabilities of the focal firm the rest of the
supply chain must be responsive as well for agile market accmodation.Response based
supply chains are always characterized as short, with few or no intermediaries. Supply
should be located nearby and information sharing among the parties must be open and
frequent (Christopher 2000; Christopher and Towill 2001)
Advocates for agility have established a strong voice in practice and research .many
companies are realizing that the costs and risks associated with holding speculative
inventory are too great. This is particularly true with products that have a short lifecycle
31

or erratic demand where risks of obsolescence are high (Christopher and Towill
2001).Though lean and agile strategies are often pitted as opposing paradigms they share
a common objective, meeting customer demands at the least total cost. It is on the nature
of that demand and the basis of meeting demands in which the two approaches differ.
(Goldsby & Garcia-Dastugue 2003).
Yusuf et al. (2003) claim that there are four pivotal objectives of agile manufacturing as
part of an agile supply chain. These objectives are, customer enrichment ahead of
competitors, achieving mass customization at the cost of mass production, mastering
change,uncertainty through routinely adaptable structures and leveraging the impact of
people across enterprises through information technology. This list clearly shows that
enhanced responsiveness is a major capability of an agile supply chain.
The implication of uncertainty for supply chain processes is that they need to respond
rapidly to unknown problems and to avoid negative impacts. There are two relevant
features of agility: flexibility and complexity (Calvo, Domingo, Sebastian, 2008).
Flexibility has been identified as a key productive factor for success or competitive
advantage (Suarez et al. 1995) but it is required to handle a high variety of products. The
variety of products increases the complexity (Wiendahl and Scholtissek, 1994). So, the
cost of agility may be linked with actions like buying flexible machines, efficient
information systems to share data in real time, capacity enhancement to tackle sudden
demand, extra manpower to cope with extra production volumes and decreased time of
production, selecting, developing and nurturing of highly dependable multiple suppliers
to provide supply flexibility, developing capability for faster transportation in terms of
larger fleet, technological up gradation(Shukla, Deshmukh, Kanda, 2010). Moreover, if a
customer requires the company to deliver once a day, the company may not be able to fill
32

up a truck, even through partial truckloads waste energy (Lee, 2010). However, based on
flexibility and the response to customer, agility also includes cost reduction, high quality
of products and the delivery conditions and service (Goldman and Nagel, 1991).
Collaboration with multiple companies, different relationships with business partners or
to outsource the work to a third party may be a solution (Lee, 2010). Researchers in
recent years have suggested that the two approaches need not necessarily represent
apposing views; rather they may be merged in a variety of ways to create leagile
approach strategies. (Goldsby & Garcia-Dastugue 2003).
2.2.4 Le agile Supply Chain Strategy
Naylor, Naim, and Berry (1997) coined the term “leagile” refer to hybrids of the lean and
agile approaches. This combined approach is known as `Leagility’ and, as a consequence,
the supply chain can thereby adopt a lean manufacturing approach upstream, enabling a
level schedule and opening up an opportunity to drive down costs upstream while
simultaneously still ensuring that downstream of the de-coupling point there is an agile
response capable of delivering to an unpredictable marketplace. Leagile is the
combination of the lean and agile paradigms within a total supply chain strategy by
positioning the decoupling point so as to best suit the need for responding to a volatile
demand downstream yet providing level scheduling upstream from the marketplace.’
while the decoupling point is the point in the material flow streams to which the
customer’s order penetrates. It is here where order-driven and the forecast driven
activities meet. As a rule, the decoupling point coincides with an important stock point in
control terms a main stock point from which the customer has to be supplied(Naylor et al.
1997).Building on the concept of the blended strategy set forth by Naylor et al.,
Christohper and Towill (2001) conceived three distinct hybrids. The first hybrid approach
33

embraces the Pareto (80/20) rule, recognizing that 80% of company revenue is generated
from 20% of the company’s products. They suggested that the first moving products that
make up the dominant 20% of the product line can be produced in a lean, make to stock
manner given that the demand is relatively stable for these items and that efficient
replenishment is the appropriate objective. The remaining 80% should be produced in an
agile less anticipatory manner employing make to order production to generate supply of
those items ordered when they are needed. This strategy is often called a mixed model
approach in manufacturing environments (Goldsby & Garcia-Dastugue 2003).
The second leagile strategy involves having temporary capacity to meet the needs of peak
demand. Most companies experience a base level of demand over the course of the year
.This base level of demand can be accompanied in a lean manner using the company’s
own resources to employ smooth production principles to maintain highly efficient
operations. However when demand spikes over the course of the peak seasons o heavy
promotions periods,outside capacity is procured to meet the heightened demand of these
distinct time windows. The procurement of outside capacity for coverage in this situation
is viewed as the agile component of this hybrid approach. Many companies engage in
leagile supply, manufacturing and logistics to support seasonal demands Christohper &
Towill (2001).
The third hybrid calls for postponement .This refers to delaying the final form of a
product until an order is received from customers dictating the quantity and quality of
goods demanded (Feitzinger and Lee 1997).This approach works best for goods that can
be developed from common materials into a near finished state with final touches to the
product providing for a diverse assortment that accommodates distinct customer needs.
The premise calls for lean operations in the production of generic ,semi-finished products
34

and Agile accommodation in the customization process(Mason-Jones,Naylor,& Towill
2000)
Mason-Jones et al. (2000) propose a leagile model where the lean and agile systems
operate at different points in a manufacturing supply chain. A key element of this model
is a “decoupling point,” which separates the lean processes from the agile processes in
the supply chain. The lean processes are on the upstream side of the decoupling point,
and the agile processes are on the downstream side. The decoupling point also acts as a
strategic point for buffer stock, and its position changes depending on the variability in
demand and product mix. An increase in product mix and fluctuating volume would force
the decoupling point to move upstream, making the supply chain system more agile. A
more stable business environment with reduced variability in demand or product mix
would move the decoupling point downstream, making the supply chain system leaner.
Prince and Kay (2003) develop a similar model that is applicable to a single
manufacturing plant. They suggest the application of lean and agile concepts at different
stages of the same manufacturing process. The proposed rationale uses enhanced
production flow analysis to identify virtual groups. Virtual groups are machine groups
and part families within a production system to which lean and agile concepts are
applied. A decoupling point, which maintains an expected level of buffer stock, exists
between two virtual groups. The specification of a decoupling point in the two leagile
models described above makes them theoretically consistent with Harrison (1997) and
Christopher and Towill (2000), since the decoupling point ensures that the lean and agile
systems do not coexist; they have a demarcation point between them. Thus, determining
whether to call a manufacturing system leagile depends on where a boundary is placed
around the system or sub-units within the system. A supply chain can be considered
35

leagile when it has two portions, one portion of the chain agile and the other lean.
Similarly, Prince and Kay (2003) define a point within a single manufacturing enterprise
where agile production groups are separated from lean groups.
2.3 Competitive Advantage
Competition is a fact of business life, a business should endeavor to develop strategies to
compete successfully in the market place for it to enhance its chances of growth and
therefore perform far above industry average. In an increasingly competitive agricultural
industry, the absence of well-defined competitive strategies leads to weak competitive
positions and hence performance below the industry average. Competitive advantage is a
management concept that has been so popular in the contemporary literature of
management nowadays. The reasons behind such popularity include the rapid change that
organizations face today, the complexity of the business environment, the impacts of
globalization and unstructured markets, the ever changing consumer needs, competition,
the revolution of information technology and communications, and the liberation of
global trade (Al-Rousan & Qawasmeh, 2009).
One of the organizations' major concerns is to care about customers' needs and wants and
transform such needs and wants into targeted aptitudes or areas called "competitive
dimensions". These dimensions that organizations focus on and show great interest in,
while providing services and products so as to meet market demand, can help
organizations achieve competitive advantage. These competitive dimensions are four and
include cost, quality, time and flexibility. Organizations must make some kind of
compromise between the cost and the characteristics of their products and services. In
general, most organizations choose to cut total cost by stripping fixed costs and applying
36

continuous control on raw materials, reducing employee compensation rates, and by
achieving higher levels of productivity (Al-Rousan & Qawasmeh, 2009)
Quality can be achieved by adding unique attributes to products to enhance their
competitive attractiveness so as to benefit customers in the final stage. Also, quality can
be achieved through a couple of dimensions such as the quality of design which means to
adapt product design to its function and the quality of conformity which stands for the
organizational capability to transform inputs to conformable outputs or outputs in
accordance to the specific design characteristics, and the focus on quality will be
reflected in competitive advantage and profitability of the organization. (Krajewski &
Ritzman, 1999)
Organizations can consider the time factor to compete among each others. Delivery time
can be a source of competitive advantage when organizations try to reduce the period of
time between receiving and accepting customer orders and provisions of products or
services to customers. It is also a measure of the organizations' adherence to delivery
schedules agreed upon with customers. The speed of product development also refers to
the time factor that is the time period between product idea generation till achieving the
final design or production (Stonebrake and Leong, 1994). Flexibility can be viewed as the
ability of the processes to switch from one product to another or from one customer to
another at the least cost or impact. Flexibility also can be defined as the ability to adapt
the production capacity to changes in the environment or market demands. It also
encompasses product flexibility in the first place which is defined as the ability of the
organization to trace changes in consumers' needs, tastes and expectations so as to carry
out changes in product designs. The second flexibility has to do with volume which
stands for the organization's capability to respond to changes in consumer demand. It is
37

believed that such flexibility can yield benefits such as introducing new products along
with product variety, and controlling volume and delivery time (Al-Rousan &
Qawasmeh, 2009).
Porter (1985) introduced the following five competitive forces that shape the strategy:
bargaining power of buyers, threats of new entrants, bargaining power of suppliers,
threats of substitute products or services, and rivalry among existing competitors. The
strongest competitive force can be considered as the basis for the strategy formulation
(Porter, 2008). Based on Porter’s model, the competitive advantage of a company can be
based on product differentiation or lower prices. Porter’s generic competitive strategies
model introduces three main competitive strategies, including product differentiation,
cost leadership and focus (market segmentation). Applying the appropriate strategy
depends on the targeted market scope either broad or narrow and the customer’s
expectations either lower cost or product differentiation.
According to Porter 1985, generic competitive strategies model, if the customers are cost
conscious or price-sensitive and the company targets a broad industry market, then cost
leadership is the right strategy. In cost leadership, the company sets out to become the
lowest cost producer in its industry using solutions like economies of scale, preferential
access to raw materials, economical distribution channels, proprietary technology, and so
on. If the company targets a broad industry market and the customers expect products
with unique characteristics, then the product differentiation strategy will be appropriate.
Differentiation involves offering a product that is perceived throughout the industry as
unique. The uniqueness of a product or service may be associated with the special
features of the product, including innovative technology, unique design, size and shape.
When the company competes in a focused market segment with a narrow scope, it can
38

exploit from both differentiation and cost leadership strategies in the targeted segment,
which is called a focus strategy. Companies are enhancing their innovative and
competitive ability by focusing on their core competencies and leaving marginal
activities to a selected group of competent suppliers (Sheth & Sharma, 1999).
2.4 Criticism of the Theories
The theories described above have been criticized on their application to supply chain. In
this case we will look at the shortcoming of each theory in the context of supply chain
Transaction cost theory is a valuable framework for describing the vertical integration in
supply chain studies. However, this theory mostly carries a traditional view of
organizations as black boxes of operation. Therefore, this theory does not provide strong
guidelines at intra-organizational level for value creation, Lavassani, Movahedi & Kumar
(2009)
Resource-based view and knowledge-based view pay more attention to value creation,
however their value creation mechanism is mostly influenced with the Ricardo (1817)
rent perspective of value creation, which stems from acquisition of the resources
Knowledge-based view addresses some perspectives of collaboration, it focuses merely
on the actors and consequently processes, which are directly involved with the
organizational operations. Lavassani et al. (2009).The resource based view has been
criticized for failing to propose strategies for organizations to acquire the resources
required for growth and achieving competitive advantage. Another criticism to this view
is that it is mostly concerned with the tangible resources.
Strategic choice theory provides valuable insight by opening the organizational
operations to the external environment and provides roadmaps for manipulation of
environmental features. However, this theory is more concerned with the governance
39

structure and political forces in decision-making and pays less attention to the functional
execution of organizational processes (Ketchen & Hult (2007).
Agency theory provides justifications for the behavior of organizational player at
individual, group and organizational level, similar to strategic choice theory, it has a
static view towards the stakeholders as actors, which need be managed and structured in
the most optimal way to achieve individual, group and/or organizational goals. While
strategic choice theory and agency theory recognize the complex relations among the
organizational actors, they do not provide a mechanism to explore and identify these
relationships (Shook, Adams, Ketchen & Craighead ,2009).
The porter’s theory of competitive advantage has also been criticized, the model assumes
static market structures. In today’s dynamic structures with rapid technological change,
with consequent irrelevance of one or more of the forces, the model may not provide
sufficient insights for preventive action. The model assumes competition as a driving
force with organizations trying to derive an advantage at the expense of others. This is
hardly the case today with competition often holding the key, strategic alliances
becoming ever more popular, and virtual networks being a reality
2.5 Knowledge Gap
Agriculture in Kenya is most important sector for food security and socio-economic
development. Agriculture accounts for about 25% of the GDP and employed about 60%
of the country’s population. This paper examines the influence of supply chain strategies
on achievement of competitive advantage in seed manufacturing companies in Nairobi
County. It will cover important aspects of agriculture supply chain in Kenya identifying
of issues of the different supply chain strategies and transformation in the agriculture due
to various supply chain strategies interventions. There is wide research gap in this sector,
40

having such potential and prospectus for overall growth there is not much research in this
field of agribusiness in supply chain management.
There is little understanding of the supply chain’s role in the competitiveness and
sustainability of agribusiness industry. Although some argue that the supply chain is now
the arena for competition for global industries (Ketchen and Hult, 2007), then supply
chains need to take a strategic approach toward relationship and capability building if
they are to remain competitive in what is now a dynamic global market. Strategic supply
chain management is still evolving as a competency at both the academic and practitioner
level (Hitt, 2011) with potential gaps in the literature in the areas of knowledge
dissemination, practice and research for the near-term future of supply chain
management. In spite of having various studies undertaken on supply chain by various
researchers, and others, none of the studies have specifically addressed the supply chain
strategies within the agriculture sector.
They further never showed if supply chain strategies influence competitive advantage
hence the need to study the linkage between supply chain strategies and competitive
advantage. The intended study therefore will focus on supply chain strategies and their
influence on competitive advantage with the aim of showing clearly if having supply
chain strategies in an agribusiness firm provides competitive advantage. There has been
little focus research study that relates supply chain strategies and competitive advantage
of agribusiness firms in Kenya. There is also limited literature available on agriculture
supply chain processes and this has created a major knowledge gap amongst supply chain
managers on how to improve the process in the agriculture industry.
41

CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.0 Introduction
The chapter gives an explanation of the research designs and methodology and
justification for having used this research design. It also describes the characteristic of the
population that was used in the study, detailed description of sampling methods used and
procedures, data collection instruments and the procedure of data collection, finally it
describes the appropriate data analysis method used to generate the data.
3.1 Research Design
Research designs are the specific procedures involved in the research process that include
Data collection, data analysis, and report writing. It’s a plan that is used to generate
answers to the research problem (Creswell, 2008). The study was based on quantitative
research, and adopted the descriptive research approach. The objective of quantitative
research is to develop and employ mathematical model, theories and /or hypotheses
pertaining to natural phenomena, it enables one to establish conceptual models and
frameworks and also to know some vital variables and analyse the connection between.
Descriptive research is a scientific method of investigation where data is collected and
analyzed in order to describe the current conditions, terms or relationships concerning a
problem (Mugenda and Mugenda 2003). The design was suitable because it’s concerned
at describing the influence of supply chain strategies on achievement of competitive
advantage in seed manufacturing companies in Nairobi County.
42

3.2 Target Population
Mugenda and Mugenda (2003) define population as an entire group of individuals, events
or objects with some observable characteristics. Therefore based on this definition, the
target population of this study was fourty respondents from twenty seed manufacturing
companies in Nairobi County where the top supply chain managers and strategic planning
managers responded to the questions issued in the questionnaire. These groups of
respondents were targeted because the study intended to focus on respondents who are
able to provide an overall understanding of supply chain strategies and competitive
advantage of the firm.
3.3 Description of the Sample and Sampling Procedure
Sampling is the procedure a researcher uses to gather people, places or things to study. It
is a process of selecting a number of individuals or objects from a population such that
the selected group contains elements representative of the characteristics found in the
entire group. A sample is a finite part of a statistical population whose properties are
studied to gain information, about the whole (Orodho 2004). The study adopted a census
technique, studying the entire population because the target population is small, within
reach and manageable.The questionnaire were administered to two employees in the
twenty seed manufacturing companies to give a population of fourty respondents. The
employees are the supply chain managers and strategic planning managers.
3.4 Data Collection
Primary data was collected using structured questionnaires with both close-ended and
open-ended questions. The respondents of the study were selected from the supply chain
department team of the twenty seed manufacturing companies in Nairobi County.
Primary data will be collected from respondents, two employees; the head of supply
43

chain and strategic planning manager will be selected as respondents. Therefore a total of
forty respondents are expected. Questionnaires were administered to respondents during
working hours on a drop and pick later method was applied.
Secondary data was gathered from library material, supply chain journals and reports,
media publications and various Internet search engines covering the supply chain
management and competitive advantage. It helps to better understand and explain our
research problem, broaden the base from which scientific conclusion can be drawn etc.
All these are because it is an already existing data that can be used almost at any time it is
needed. Secondary data was used in introduction and literature reviews of the research
proposal to provide data gathered from various researchers and further explain the
various theories in the research.
3.5 Validity and Reliability of Research Instrument
Validity of research instrument refers to the extent to which a test or instrument measures
what it was intended or supposed to measure. This research study adopted content
validity that was determined through seeking opinions of experts in the field of study
especially in the department of supply chain in seed crop supply manufacturing
companies in Nairobi Kenya.
Reliability of research instruments refers to the degree to which a research instrument
yields consistent results or data after repeated trials (Mugenda and Mugenda, 2003).
Reliability of the research instrument was enhanced through test-retest method and
coefficient correlation method will be used to determine reliability. Reliability
Coefficient alpha (?) - (Cronbach’s alpha) is the most widely used, it estimates test score
reliability from a single test administration using information from the relationship
among test items. Reliability coefficient range from 0.00 to 1.00, with higher coefficients
44

indicating higher levels of reliability (Cronbach’s (2004). Questionnaires were
administered to the same individuals at different times in a span of two weeks after the
first administration.
3.6 Data Presentation and Analysis
Data analysis refers to examining what has been collected in a survey or experiment, and
making deductions and inferences (Kombo and Tromp, 2006). It also refers to a variety
of activities and processes that a researcher administers to a database in order to draw
conclusions and make certain decisions regarding the data collected from the field.After
data collection, the questionnaires will be coded, edited to detect errors and omissions to
enhance accuracy and precision. The three objectives were analysed using both
descriptive and inferential statistics to describe and examine the relationship between the
variables attained from the administered questionnaires with the aid of the computer
software the statistical package for social sciences (SPSS). Descriptive statistics involved
are mean, frequencies and percentages. The purpose of descriptive statistics is to
meaningfully describe a distribution of scores or measurements, using a few indices. It
transforms large groups of members into a more manageable form. It helps with the
transformation of raw data into a form that will make it easy to understand and interpret.
Inferential statistics involved use of correlation analysis and analysis of variance
(ANOVA). They were run with supply chain strategies as the independent variables and
competitive advantage as the dependent variable.
3.7 Ethical Considerations
A letter of consent was sent to the twenty companies to request for participation of the
staff in the research. The interviewer was informed openly on the reasons for the
45

interview and the study so that when the interviewer is giving information they are best
informed.
The respondents were kept completely anonymous in the research and maintain
confidentiality. The benefits of assuring the participants of anonymity and confidentiality
is that they would be more willing to consent to an interview and that they would be more
likely to reveal more and higher quality information, including personal opinions and
insights that they would not otherwise want to be quoted as saying.











46

CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND INTERPRETATION
4.0 Introduction
This chapter presents the findings on influence of supply chain strategies on achievement
of competitive advantage in seed manufacturing companies in Nairobi County, Kenya.
The findings are presented following the research questions as stated in chapter one.
4.1 Response rate
The study was able to get a response from 38 respondents out of the 40 questionnaires
distributed to the seed manufacturing companies in the study area as shown in Table 4.1;
this represented a response rate of 95% which was acceptable (Kothari, 2004)
Table 4.1: Questionnaire response rate
Number of questionnaires
issued
Number of questionnaires
returned
Response rate
(%)

40 38 95

4.2 Bio Data of the Respondents
The study sought to determine the demographic characteristics of the respondents as they
are considered as categorical variables which give some basic insight about the
respondents. The characteristics considered in the study were; number of years in
business/industry, number of employees in the company, size of the company and
position in the organization in the seed manufacturing companies.
47

The study aimed to determine how long respondents have been in the organization. The
findings on number of years in business/industry of the respondents were summarized in
Table 4.2
Table 4.2: Number of Years in business
Number of Years in business/industry Frequency Percent

0 to 5 years 9 23.7
6 to 10 years 10 26.3
11 to 15 years 8 21.1
16 to 20 years 4 10.5
0ver 20 years 7 18.4
Total 38 100.0

The findings suggest that respondents have been in the company / industry for 6-10 years
(26.3%).The respondents have been with the organization for a reasonable time. More so,
the years in industry of the respondents places them in a good position to handle
management issues in their organizations.
The study aimed to determine the number of employees in the company. The findings are
summarized in Table 4.3.
Table 4.3: Number of employees in the company
Number of employees in the company Frequency Percent

1 to 119 22 57.9
120 to 249 7 18.4
250 t0 499 2 5.3
0ver 500 7 18.4
Total 38 100.0

The findings indicate that the number of employees range between 1-119 at 57%.This
already shows a lean organization. A bloated or very large organization can make
48

organization inefficient. Lean ensures that the organization is streamlined and dealing
with the core business and outsourcing other services that are not considered core.
The study aimed to determine the Size of the company the company, whether large,
medium or small sized company. Majority of the respondents rated the companies as
medium sized (42.1%). The findings are summarized in Table 4.4
Table 4.4: Size of the company
Size of the company Frequency Percent

Large size 13 34.2
Medium sized company 16 42.1
Small sized company 9 23.7
Total 38 100.0

The study aimed to determine the position of the respondent in the company whether a
supply chain manager or a strategic planning manager.52.63% of the respondents were
supply chain manager and 47.37 % were strategic planning manager. These people are
expected to have adequate knowledge of their organizations systems and processes. The
findings are summarized in Table 4.5.
Table 4.5: Position of respondents in the company
Position in the company Frequency Percent

supply chain manager 20 52.63
Strategic planning manager 18 47.37
Total 38 100.0

49

4.3 Descriptive statistics
This section presents the results of the descriptive statistical analyses of the data and their
interpretations. The descriptive statistics used are the mean, frequencies, percentages and
Anova. The descriptive statistics helped to develop the basic features of the study and
form the basis of virtually every quantitative analysis of the data. The results were
presented in terms of the study objectives.
4.3.1 Supply chain strategies in seed manufacturing companies
The study sought to explore the supply chain strategies practiced in the seed
manufacturing company. The respondents were asked to indicate to which extent the
various appropriate strategies are employed. A five-point Likert scale anchored from 1=
very small extent; 2= small extent; 3= moderate; 4= large extent, 5= Very large extent
was used. The findings are summarized in Table 4.6
Table 4.6: Supply Chain strategies employed
Supply Chain
Strategy
Very
small
extent
small
extent
Moderate
Large
extent
very large
extent
Mean
1 2 3 4 5
Lean 1(2.6) 3(7.9) 6(15.8) 11(28.9) 17(44.7) 4.05
Agile 2(5.3) 3(7.9) 7(18.4) 9(23.7) 17(44.7) 3.95
Le agile 2(5.3) 7(18.4) 6(15.8) 13(34.2) 10(26.3) 3.56

The findings in Table 4.6 above established that the lean strategy was employed by most
organization at a mean of 4.05. This was followed by the agile strategy at a mean of 3.95
and the le agile strategy was employed with the organizations at a mean of 3.56. For
50

instance, Oliveira (2003) argued that it is imperative for any firm that seeks to gain a
competitive advantage to explore and exploit its resources in a manner that can give it a
strategic advantage.
4.3.2 Lean Supply Chain Strategy and Competitive Advantage
The study sought to explore the lean supply chain strategy and competitive advantage
with the metrics of competitive advantage aspects i.e. cost, lead time, quality and service
level. The respondents were asked to indicate to which extent the lean supply chain
strategy have influenced competitive advantage. A five-point Likert scale anchored from
1= very small extent; 2= small extent; 3= moderate; 4= large extent, 5= Very large extent
was used. The findings are summarized in Table 4.7
Table 4.7: Lean supply chain strategy and competitive advantage
Supply
Chain
Strategy
Metrics Very
small
extent
small
extent

Moderate
Large
Extent
Very
Large
Extent
Mean
1 2 3 4 5
Lean
strategy
Cost 1(2.6) 1(2.6) 4(10.5) 17(44.7) 15(39.5) 4.16
Lead time 1(2.6) 3(7.9) 1(2.6) 17(44.7) 16(42.1) 4.16
Quality 3(7.9) 2(5.3) 5(13.2) 15(39.5) 13(34.2) 3.87
Service Level 2(5.3) 2(5.3) 7(18.4) 11(28.9) 16(42.1)
3.97

The results in Table 4.7, it can be deduced that the lean supply chain strategy have
influenced competitive advantage. This is indicated by the metrics of competitive
advantage used in the study i.e. cost, lead time, quality and service level. Cost indicates
51

the extent to which the minimization of expenses is manifested in company operations, as
indicated 44.7% agree that cost has reduced at a mean of 4.16. The findings also indicate
that lead time, the ability of the manufacturing firm to execute a particular job from the
date of ordering to the date of delivery quickly and as soon as the order is placed was
reduced at a mean of 4.16 and 44.7% indicating this occurred at a large extent. Lean
strategy influenced quality i.e. indicates the standard of the finished product to a small
extent as indicated on the above table .The respondents thought that lean strategy had an
impact on quality 39.5% at a mean of 3.87.Service level was also high with lean strategy
as indicated by respondents 42.1% at a mean of 3.97 .These findings imply that use of
lean strategy had influenced competitive advantage in seed manufacturing companies in
Nairobi County, Kenya.
4.3.3 Agile Supply Chain Strategy and Competitive Advantage
The study sought to explore the agile supply chain strategy and competitive advantage
with the metrics of competitive advantage aspects i.e. cost, lead time, quality and service
level. The respondents were asked to indicate to which extent the agile supply chain
strategy have influenced competitive advantage. A five-point Likert scale anchored from
1= very small extent; 2= small extent; 3= moderate; 4= large extent, 5= Very large extent
was used. The findings are summarized in Table 4.8





52


Table 4.8: Agile supply chain strategy and competitive advantage
Supply
Chain
Strategy
Metrics
Very
small
extent
small
extent
Moderate Large
Extent
very
large
Extent
Mean
1 2 3 4 5
Agile
strategy
Cost 5(13.2) 11(28.9) 1(2.6) 8(21.1) 13(34.2) 3.34
Lead time 2(5.3) 2(5.3) 1(2.6) 21(55.3) 12(31.6) 4.03
Quality 1(2.6) 1(2.6) 16(42.1) 2(5.3) 18(47.4) 3.53
Service Level 4(10.5) 8(21.1) 6(15.8) 4(10.5) 16(42.1) 3.53

From the findings above, it can be deduced that the agile supply chain strategy have
influenced competitive advantage. This is indicated by the metrics of competitive
advantage. Cost indicates the extent to which the minimization of expenses is manifested
in company operations, as indicated the agile strategy did not greatly influence cost as
indicated by 34.2% at a mean of 3.34.The findings also indicate that lead time, the ability
of the manufacturing firm to execute a particular job from the date of ordering to the date
of delivery quickly and as soon as the order is placed was reduced as indicated by 55.3%
of the respondents at a mean of 4.03. Agile strategy influenced quality as indicated by
47.4 % of the respondent and service level as indicated by 42.1 % all with at a mean of
3.53.These findings imply that use of agile strategy had influenced competitive advantage
in seed manufacturing companies in Nairobi County, Kenya.
53

4.3.4 Le Agile Supply Chain Strategy and Competitive Advantage
The study sought to explore the Le agile supply chain strategy and competitive advantage
with the metrics of competitive advantage aspects i.e. cost, lead time, quality and service
level. The respondents were asked to respond by indicating to what extent the le agile
supply chain strategy have influenced competitive advantage. A five-point Likert scale
anchored from 1= very small extent; 2= small extent; 3= moderate; 4= large extent, 5=
Very large extent. The findings are summarized in Table 4.9
Table 4.9: Le Agile supply chain strategy and competitive advantage
Supply
Chain
Strategy
Metrics

Very
small
extent
small
extent
Moderate Large
Extent
Very
Large
Extent
Mean
1 2 3 4 5
Le agile
strategy
Cost 1(2.6) 5(15.8) 1(2.6) 17(44.7) 14(36.8)
4.00
Lead time 1(2.6) 1(2.6) 17(44.7) 4(10.5) 15(39.5) 4.16
Quality 4(10.5) 11(28.9) 6(15.8) 8(21.1) 9(23.7) 3.34
Service Level 1(2.6) 3(7.9) 1(2.6) 17(44.7) 16(42.1) 4.16

From the findings above, it can be deduced that the Le agile supply chain strategy have
influenced competitive advantage. This is indicated by the metrics of competitive
advantage. Cost indicates the extent to which the minimization of expenses is manifested
in company operations, as indicated by 44.7% of respondents at a mean of 4.00. The
findings also indicate that le agile strategy influenced lead time moderately as shown by
44.7% of the respondents with a mean of 4.16; on the other hand le agile strategy
influenced service level as shown by 44.7% of respondents at a mean of 4.16. Le agile
54

strategy influenced quality i.e. indicates the standard of the finished product to a small
extent as indicated on the above table by 28.9% of the respondents at a mean of 3.34.
These findings imply that use of Le agile strategy had influenced competitive advantage
in seed manufacturing companies in Nairobi County, Kenya.
4.3.5 Other factors that contributed to success of the supply chain strategies
The study aimed to establishing which other factors have an effect on supply chain
strategies. Data collected from the field established that 26% of the respondents felt that
resource availability had the most effect in contributing to successful supply chain
strategies. Customer engagement and management involvement also contributed to
successful supply chain strategies as 21% of respondents felt. Other factors that were
mentioned by respondents included team work and total quality management at 3%,
technology was also mentioned by the respondents at 10%.some of the respondents did
not provide any feed back to the question at 16%.

Figure 4.1 Other factors that contributed to success of the supply chain strategies
55

4.3.6 Government policies in influencing supply chain strategies
The study aimed to establish the moderating effects of government policies on the
relationship between supply chain strategies and attainment of competitive advantage.
Majority of the respondents 55.26 % felt that the government had an influence on the
effectiveness of supply chain strategies towards the realization of competitive advantage.
The findings are summarized in Table 4.10.
Table 4.10: The moderating effects of Government policies
Frequency Percent

Yes 21 55.26
No 17 44.74
Total 38 100.0

The government policies employed by any country play an integral role in the success of
any organizations. They can influence or deter the strategies of an organization. The
below chart indicates the policies that the respondents felt that influenced the supply
chain strategies in their company.
56

Figure 4.2 Government policies in influencing supply chain strategies
Some of the respondents did not feel that the government policies influenced the supply
chain strategies (44.74%).The government policies that were mentioned by the
respondent (55.26%) who felt that the government had an influence included Government
Seed Regulation, ISO Certifications, Licensing, Market Restriction, Stream lined
policies, Technology and trade unions.
4.4 Correlation Analysis of the supply chain strategies and competitive advantage
Correlation analysis is used to measure the degree of relationship between two variables.
It is a relative measure of values that ranges from the positive to negative. Negative
correlation implies that the variables under test are moving in opposite directions, that is,
they have an inverse relationship. On the other hand, positive correlation implies that the
variables are moving in the same positive direction (Kothari, 2004).The correlation
analysis was used to determine whether lean strategy influenced competitive advantage in
seed manufacturing companies.

57

Table 4.11: Summary correlation of Lean strategy and Competitive Advantage
Cost Lead Time Quality Service Level
Lean
Strategy
Pearson
Correlation
.750 .626 .732 .675
Sig. (2-
tailed)
.000 .000 .000 .000
N 38 38 38 38
Correlation significant at the 0.05 level (2-tailed)
As indicated above in table 4.11 the correlation matrix shows that a strong relationship
exists between the lean strategy and the aspects of competitive advantage. The strongest
relationship was between lean strategy and cost (r = 0.750) and lean strategy and quality(r
= 0.732).This indicates that organizations that employed lean strategy had competitive
advantage in terms of cost and quality. The lean strategy was also correlated with lead
time( r = 0.626) and service level (r = 0.675 ).The Karl Pearson’s product moment
coefficient of correlation also suggests that the relationship is positive implying lean
strategy influenced competitive advantage as indicated by the metrics i.e. cost, lead time,
quality and service level.
A correlation analysis was used to determine whether agile strategy influenced
competitive advantage in seed manufacturing companies.
Table 4.12: Summary correlation of agile strategy and Competitive Advantage
Cost Lead Time Quality Service Level
Agile
Strategy
Pearson
Correlation
.810 .671 .712 .522
Sig. (2-
tailed)
.000 .000 .000 .000
N 38 38 38 38
Correlation significant at the 0.05 level (2-tailed)
As indicated in table 4.12 above the strongest correlation was observed between agile
strategy and the aspects of competitive advantage, cost (r=0.810) and quality (r=0.712).
58

This indicates that organizations that employed agile strategy had competitive advantage
in terms of cost and quality. The agile strategy was also correlated with lead time( r =
0.671) and service level (r = 0.522 ).The Karl Pearson’s product moment coefficient of
correlation also suggests that the relationship is positive implying agile strategy
influenced competitive advantage as indicated by the metrics i.e. cost, lead time, quality
and service level.
A correlation analysis to determine whether the Le agile strategy influenced competitive
advantage in seed manufacturing companies was also conducted. The table below 4.13
shows a positive correlation.
Table 4.13: Summary correlation of Le agile Strategy and Competitive Advantage
Cost Lead Time Quality Service Level
Le agile
Strategy
Pearson
Correlation
.582 .522 .589 .568
Sig. (2-tailed) .000 .000 .000 .000
N 38 38 38 38
Correlation significant at the 0.05 level (2-tailed)
From the findings above it shows that a significant relationship exists between the le agile
strategy and the aspects of competitive advantage exhibited in cost (r=0.582) and quality
(r=0.589), this was followed by service level with (r=0.568) and finally lead time with
(r=0.522).The Karl Pearson’s product moment coefficient of correlation also suggests
that the relationship is positive implying le agile strategy influenced competitive
advantage as indicated by the metrics i.e. cost, lead time, quality and service level.
59

4.5 Discussions of the findings
The findings established which supply chain strategies were employed. The lean strategy
was the most widely used by most organizations with a mean of 4.05, followed by agile
with a mean of 3.95 and le agile strategy with a mean of 3.56. Fisher (1997) and
Christopher and Towill (2000) put forward that supply chain strategies must match with
product characteristics, competitive strategies, and the environment in order for them to
be effective.
The finding also established the influence of the supply chain strategies in influencing
competitive advantage. The aspects of competitive advantage that were used were cost,
lead time, quality and service Level. Womack et al.,(1996),Lean management is
essentially process oriented as it seeks to eliminate all non-value adding activities and
reducing waste within an organization. Taiichi Ohno (1998), developed a list of seven
basic forms of waste i.e. defects in production, overproduction, inventories, unnecessary
processing, movement of people, transport of goods, waiting by employees company that
has adopted lean production concept can design, manufacture, and distribute products in
less than half the time taken by other companies by using less than half of their resources
.The lean and agile strategy showed a very strong positive correlation in cost and quality.
The lead-time and service level also showed a positive correlation. There are two relevant
features of agility: flexibility and complexity (Calvo, Domingo, Sebastian, 2008).
Flexibility has been identified as a key productive factor for success or competitive
advantage (Suarez et al. 1995) However, based on flexibility and the response to
customer, agility also includes cost reduction, high quality of products and the delivery
conditions and service (Goldman and Nagel, 1991).
60


Naylor, et al., (1997) coined the term “le agile” refer to hybrids of the lean and agile
approaches and calls for postponement. The le agile correlation also exhibited positive
correlation to the aspects of competitive advantage with a correlation above 0.5 .This le
agile strategy refers to delaying the final form of a product until an order is received from
customers dictating the quantity and quality of goods demanded (Feitzinger and Lee
1997).
The study was further interested in establishing the moderating effects of government
policies on the relationship between supply chain strategies and attainment of competitive
advantage. 55.26 % of the respondents indicated that the government had an influence on
the effectiveness of supply chain strategies towards the realization of competitive
advantage. The government policies indicated by the respondents included Government
Seed Regulation, ISO Certifications, Licensing, Market Restriction; Stream lined
policies, Technology and trade unions. Though many variables may affect the success of
a lean manufacturing implementation, many researchers agree that commitment by top
management is vital (Womack & Jones 1996). Management that fails to embrace the
implementation may intentionally or unintentionally sabotage the effort.



61

CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This chapter presents a summary of the research findings. It then gives conclusions
derived from the study, recommends and finally it gives suggestions for further studies.
5.1 Summary of findings
The purpose of this study was to assess the influence of supply chain strategies on
achievement of competitive advantage in seed manufacturing companies in Nairobi
County, Kenya. The study had three research questions, the first question sought on
supply chain strategies i.e. Lean, agile and le agile practiced by the companies. The
second question was the influence on supply chain strategies on achievement of
competitive advantage, the metrics of competitive advantage that were used in the study
include cost, and lead time, quality and service level. The third question established how
moderating variables like government policies have an influence on supply chain
strategies on achievement of competitive advantage in seed manufacturing companies in
Nairobi, County Kenya. The analysis of the data obtained below major findings.
5.1.1 Supply chain strategies employed
Majority of the respondents were aware of the supply chain strategies used in their
company, either in a very large extent or a moderate extent. This implied that the
majority of the metrics of competitive advantage i.e. cost, quality, lead time and service
level are to be considered in the organization. The lean strategy was at a mean of 4.05
with 44.7% indicating the strategy was employed at a very large extent, followed by agile
strategy with a mean of 3.95 and 44.7 % of respondents indicating it was employed at a
62

very large extent. Finally the le agile was at a mean of 3.56 with 34.2% indicating it was
employed at a large extent.
5.1.2 Influence of supply chain strategies on achievement of competitive advantage
Secondly, on the influence on supply chain strategies on achievement of competitive
advantage the study revealed that the supply Chain strategies influenced competitive
advantage on cost, quality, lead time and service level. The strategies correlated very
positive with the competitive advantage metrics.
The lean strategy indicated strong correlations in cost (r = 0.750) and quality(r =
0.732).This indicates that organizations that employed lean strategy had competitive
advantage in terms of cost and quality. The lean strategy was also correlated with lead
time at (r = 0.626) and service level (r = 0.675).
The agile strategy correlated strongly also in, cost (r=0.810) and quality (r=0.712). This
indicates that organizations that employed agile strategy had competitive advantage in
terms of cost and quality. The agile strategy correlated with lead time at (r = 0.671) and
service level (r = 0.522).
The le agile strategy had a strong correlation between the metrics of competitive
advantage above r=0.5. The Karl Pearson’s product moment coefficient of correlation
also suggests that the relationship is positive implying le agile strategy influenced
competitive advantage as indicated by the metrics i.e. cost, lead time, quality and service
level.
5.1.3 The moderating effect of government policies
Moderating variables like government policies on influence of supply chain strategies on
achievement of competitive advantage. 55.26% of the respondents felt that government
63

policies had an influence on supply chain strategies on achievement of competitive
advantage. The policies mentioned by the respondent included Government Seed
Regulation, ISO Certifications, Licensing, Market Restriction, Stream lined policies,
Technology and trade unions.
Thus, the study inferred that use of supply chain strategies can influence achievement of
competitive advantage. Grant (1991) in his study said that every firm in the market can be
viewed as a collection of resources whose form of productive use depends on its
manager’s visions and perceptions. If these resources are somewhat rare, scarce,
specialized, and complimentary and value adding, they can be used as sources of
competitive advantage, making firms to be super
5.2 Conclusions
Based on the findings of this research the following conclusions were made relating to
the research objectives.
The study concluded that either of the supply chain strategies i.e. lean, agile or league
were been employed by the companies. The lean strategy was at a mean of 4.05 with
44.7% indicating the strategy was employed at a very large extent, followed by agile
strategy with a mean of 3.95 and 44.7 % of respondents indicating it was employed at a
very large extent. Finally the le agile was at a mean of 3.56 with 34.2% indicating it was
employed at a large extent.
The study concluded that there is a significant influence of supply chain strategies and
achievement of competitive advantages. The companies had competitive advantages as
shown by the metrics i.e. cost, lead time, service level and quality. This may be because
of the nature and dynamism of the agribusiness environment therefore the need to stay
64

abreast with it. The strategies correlated very positive with the competitive advantage
metrics.
The government has also a role on companies when they apply their supply chain
strategies .As the study found 55.26% of the respondents agree that the government had
an influence for the companies to employ the supply chain strategies in order to achieve
competitive advantage. The policies indicated by the respondent included Government
Seed Regulation, ISO Certifications, Licensing, Market Restriction, Stream lined
policies, Technology and trade unions
5.3 Recommendations
Based on the findings, discussions and conclusions of this research, the following
recommendations are made:
Firms should develop competitive advantage capabilities that cannot be imitated by other
competitors in the area of creativity and innovations which will ensure they remain
competitive in the industry.
Management need to take a keen interest specifically on supply chain strategies. The
study findings strongly confirm this thus agribusiness companies need to adopt and
implement good supply chain strategies to have higher competitive advantage. More so,
this will ensure that interests of the firm are served as well as sustaining customer
customers and marinating customer satisfaction. The government should provide a more
enabling environment that would encourage agribusiness firms to achieve their
objectives.
5.4 Limitation of the study
There were some limitations due to the time constraints of this research for example,
sample selection method was not adequate enough thus a limitation in getting meaningful
65

results. It would therefore be recommended that a bigger sample covering all counties
should be employed in a similar study targeting the same industry or another. This would
also enable use of advanced data analysis techniques.
The findings of this study and application thereof are limited to seed manufacturing
companies in Nairobi County in Kenya. They may not be applicable directly to other
organizations operating outside the Kenyan seeds industry. It is therefore important to
note that they can only be used for Comparative purposes and not any direct application
in another country.
5.5 Suggestions for further study
The study covered the areas in the main objectives which were not exhaustive in the
determining the influence of supply chain strategies in achievement of competitive
advantage. However, more studies could be instrumental in augmenting the outcome of
this study and expanding its scope. Future studies should explore the reasons behind the
Challenges of supply chain strategies applied by seed manufacturing companies. Factors
affecting the implementation of supply chain Strategies among seed manufacturing
companies should be investigated. Researchers should go ahead and establish the reasons
behind the failure of supply chain strategies implementation hence establish long term
solutions.


66

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73

APPENDICES
APPENDIX 1: QUESTIONNAIRE
Dear Sir/Madam
I am Rose Wakanyi Mwaura a student at the Catholic University of Eastern Africa
pursuing Masters in Business Administration. I’m conducting a research for partial
fulfillment of the requirement for the award of a masters’ degree. The research seeks to
investigate the ‘Influence of supply chain strategies on achievement of competitive
advantage in seed manufacturing companies in Nairobi County, Kenya. The
definitions of the strategies in this survey are;
Lean manufacturing is a systematic method for the elimination of waste within a
manufacturing process. The goal of lean is to reduce all types of waste (inventory, unused
capacity, poor quality, obsolete items, etc.), in order to minimize costs.
Agile manufacturing is a term applied to an organization that has created the processes,
tools, and training to enable it to respond quickly to customer needs and market changes
while still controlling costs and quality.
Le agile is the combination of the lean and agile paradigms within a total supply chain
strategy by positioning the decoupling point so as to best suit the need for responding to a
volatile market demands
Participation in the research study is absolutely voluntary. Any information you forward
will be treated with utmost confidentiality and will not be used for any purpose other than
study objectives. Kindly adhere to the guidelines.
Please tick [?] the appropriate answers in the boxes provided and also write down the
appropriate answers in the spaces provided. Do not write your name on the questionnaire.
Thank you in advance for your time and cooperation.
74

SECTION 1: Bio-Data of Respondents
1. For how long have you been in this business/Industry?
Years In the Industry Please Tick
0 – 5 years
6 – 10 years
11 – 15 years
16 – 20 years
Over 20 years

2. How many employees does the company have?
Number of employees Please Tick
1-119
120-249
250-499
Over 500

3. What is the size of your company in terms of market share?(please tick[?])
a. Large sized company ?
b. Medium sized company ?
c. Small sized company ?
4. What is your position in the organization/department ?(please tick[?])
a. Supply Chain Manager ?
b. Strategic Planning Manager ?

75

SECTION 2: Supply chain strategies in seed manufacturing companies in Nairobi
County
5. Please indicate the extent to which the following supply chain strategies are practiced
within your organization (on a scale of from 1 to 5, where I and 5 represents very
small extent and very large extent respectively.

Supply Chain Strategy Ratings
1 2 3 4 5
Lean Strategy
Agile Strategy
Le agile Strategy

SECTION 3:-Lean supply chain strategy and competitive advantage
Lean manufacturing is a systematic method for the elimination of waste within a
manufacturing process. The goal of lean is to reduce all types of waste (inventory, unused
capacity, poor quality, obsolete items, etc.), in order to minimize costs.
6. Please rate the extent to which lean supply chain strategy have influenced competitive
advantage. On a scale of 1-5 where;
1= very small extent; 2= small extent; 3= moderate; 4= large extent, 5= Very large extent
76


Strategy Metrics Metric Statements Ratings
1 2 3 4 5
Lean
Strategy
Cost Application of lean strategy has helped
in cost reductions.

Lead time Lean strategy has enhanced short lead
times.

Quality Lean strategy has increased product
Quality.

Service Level Lean strategy has improved customer
satisfaction.


SECTION 4:-Agile supply chain strategy and competitive advantage
Agile manufacturing is a term applied to an organization that has created the processes,
tools, and training to enable it to respond quickly to customer needs and market changes
while still controlling costs and quality.
7. Please rate the extent to which agile supply chain strategies have influenced
competitive advantage. On a scale of 1-5 where
1= very small extent; 2= small extent; 3= moderate; 4= large extent, 5= Very large extent


77

Strategy Metrics Metric Statements Ratings
1 2 3 4 5
Agile
Strategy
Cost Application of Agile strategy has helped
in cost reduction

Lead time Agile strategy has enhanced short lead
times.

Quality Agile strategy has increased product
Quality.

Service Level Agile strategy has improved customer
satisfaction.


SECTION 5:-Le agile supply chain strategy and competitive advantage
Le agile is the combination of the lean and agile paradigms within a total supply chain
strategy by positioning the decoupling point so as to best suit the need for responding to a
volatile market demands
8. Please rate the extent to which le agile supply chain strategies have influenced
competitive advantage. On a scale of 1-5 where;
1= very small extent; 2= small extent; 3= moderate; 4= large extent, 5= Very large extent



78

Strategy Metrics Metric Statements Ratings
1 2 3 4 5
Le Agile
Strategy
Cost Application of Le agile strategy has
helped in cost reduction

Lead time Le agile strategy has enhanced short lead
times.

Quality Le agile strategy has increased product
Quality.

Service Level Le agile strategy has improved customer
satisfaction.


9. What other factors (if any) contributed to the success of the supply chain strategies in
your organization……………………………………………………………………….
…………………………………………………………………………………………
…………………………………………………………………………………………
10. Have government policies influenced the supply chain strategies in your organization.
Yes/No (tick one applicable)
Yes ? No ?
If Yes, please mention these policies below
……………………………………………………………………………………………
……………………………………………………………………………………………
THANK YOU FOR TAKING THE TIME TO COMPLETE THIS QUESTIONNAIRE
YOUR VIEWS ARE IMPORTANT AND WILL REMAIN CONFIDENTIAL



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