The Impact of Efficient Supply Chain Management on Firm Performance:

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.