Economic Benefits of Integrating Supply Chain in the Electricity Sub-Sector in Kenya

Abstract

Purpose: With a declining purchasing power, ravage by calamities and unfavourable political environment, the electricity sub-sector in Africa has witnessed dwindling fortunes in the recent past. Although average access to electricity in the region has been rising steadily, tariffs have been increasing while government tariffs subsidies have become unsustainable, forcing an introspection, to turn the tides. This article investigated the relationship between integrated logistics systems in supply chain management and business economic benefits in the electricity subsector in Kenya. The resource-based view theory of competitive advantage and the institutional theory of systems and structures were used to address the role of integrated logistics systems as a major driver of competitiveness in supply chain activities.
 Methodology: Descriptive research design and regression analysis were applied to ascertain the association between quality management practices, resource activation, and capability level on one hand and business economic benefits (BEB) in form of customer satisfaction, cost reduction, and cycle time reduction on the other.
 Findings: The results indicate that there is significant statistical relationship between integrated logistics systems and overall performance in the energy sub-sector in Kenya. Specifically; quality management practice, resource activation level and capability levels positively and significantly influence cycle time reduction; quality management practice and resource activation level positively and significantly influence quality of customer satisfaction in a firm's operations. The overall regression model is of the form: P =5065 + 604Q +155R +74C, where P is overall performance; Q is quality management practice; R is resource activation level and C is capability level. Therefore integrated logistics systems are an imperative component of supply chain as it accrues overall business economic benefits in, inventory management, customer satisfaction, and efficacy in business operations. Integrated logistics systems enhances a firm's competitiveness and facilitates the attainment of competitive advantage. Investing in integrated logistics systems should therefore be a top priority for firms keen on growth.
 Unique contribution to theory, practice and policy: The research expands knowledge in the growing logistics and supply chain integration sphere in the service industry and beyond. It acts as a benchmark for further studies in the electricity subsector and other segments of the economy to inform policy and decision-making. The study calls for firms to embrace integrated logistics systems and invest in training and capacity building for its personnel to catalyze firm and customer value.