Abstract:
The purpose of the study was to examine the impact of efficient supply chain management on the
firm performance of seven (7) listed manufacturing companies at DSE using panel data analysis for
the period of eleven years (2010 to 2020). The data used were extracted from secondary data in
audited annual financial reports of the companies within the period of study. The data were analysed
using Stata version 15. The Ordinary Least Squares (OLS) regression model was used to determine
the coefficients. The study found that supply chain cost ratio variable had a positive relationship
with firm financial performance and was statistically significant at the 1% level, while days sales
outstanding had a negative impact on firm performance and was statistically significant at the 10%
level. The days' payable outstanding and responsive inventory had a negative relationship with firm
financial performance but was statistically insignificant. The study concludes that the supply chain
cost ratio is vital to enable the listed companies to maximise their profitability, and managers should
not be lenient in collecting the money from the advanced credit sales to their customers. The study
recommends businesses to align inventory levels with sales in order to prevent idle inventory and
further boost business profitability. The government should provide incentives to manufacturing
firms to help them recover from the effects of the COVID-19 pandemic. The capital markets security
authority should reduce the broker entry fee so as to enable more brokers to access the stock
market. This study focused on seven manufacturing companies that are listed on the DSE; further
investigation might be conducted in other sectors to see whether a similar correlation can be found.
Research can also be done on companies that do business in East Africa to see if the same link
can be ascertained.
