Effective Supply Chain Management and Performance of Commercial State Corporations in Kenya

Abstract

Supply Chain Management (SCM) is central to the effectiveness and accountability of commercial state corporations in Kenya, which play a critical role in national development. Despite their importance, these corporations face persistent challenges, including procurement malpractices, bureaucratic inefficiencies, and a slow adoption of digital systems, all of which undermine their performance. This study examined the effect of SCM practices, specifically Supplier Relationship Management, Technology and Digital Integration, Inventory Management, and Logistics and Distribution, on the performance of selected commercial state corporations in Kenya. A mixed-methods, sequential explanatory design was employed, combining a survey of 135 employees from nine corporations with in-depth interviews from 12 key informants. Quantitative data were analyzed using descriptive statistics, correlation, and multiple regression, while qualitative insights were thematically analyzed to complement and contextualize the findings. The findings revealed that SRM had a strong positive correlation with performance but was not a significant predictor in the regression model, indicating that supplier partnerships alone cannot guarantee efficiency without supporting systems. Technology integration emerged as the most critical driver of performance, with digital tools such as ERP, IFMIS, and e-procurement significantly enhancing efficiency, transparency, and accountability. Inventory management was also found to have a significant effect, with practices such as accurate forecasting, automation, and JIT reducing wastage and costs. Logistics and distribution positively influenced performance through improved service delivery and cost reduction, though their effectiveness was moderated by external factors such as infrastructure and fuel costs. Collectively, SCM practices explained 94% of the variance in organizational performance (R² = 0.940), highlighting their centrality in enhancing efficiency, compliance, and service delivery in state corporations. The study concludes that while all four SCM practices are important, technology integration and inventory management are the strongest predictors of performance, while SRM and logistics function as complementary enablers. It recommends that state corporations prioritize digital transformation, strengthen inventory systems, and address external logistical challenges through infrastructure investments and partnerships.