MEASURING AND EVALUATING PERFORMANCE IN INTEGRATED SUPPLY CHAIN MANAGEMENT BY NDIBA KAMAU

Transcription

1 MEASURING AND EVALUATING PERFORMANCE IN INTEGRATED SUPPLY CHAIN MANAGEMENT BY NDIBA KAMAU A Project Report Submitted to the School of Business in Partial Fulfillment of the Requirement for the Degree of Master of Business Administration UNITED STATES INTERNATIONAL UNIVERSITY AFRICA FALL 2014

2 DECLARATION I, the undersigned, declare that this is my original work and has not been submitted to any other college or university other than the United States International University for academic credit. Signed: Ndiba Kamau (Student ID. No ) Date: This project paper has been presented for examination with my approval as the appointed supervisor. Signed: Dr. Paul Katuse Date: Signed: Dean, School of Business Date: i

3 COPYRIGHT Copyright Ndiba Kamau 2014 No part of this project may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic or mechanical without prior written permission of the author. ii

4 ACKNOWLEDGEMENT My appreciation goes to my supervisor, Dr. Paul Katuse for his guidance through this research project. Ndiba Kamau United States International University Africa 2014 iii

5 DEDICATION To my parents, the late Johnson Kamau Karuga and Jane Wambui Kamau, thank you for the care and best provisions in my upbringing and for your sacrifices. iv

6 ABSTRACT The purpose of this study is to examine performance measurement and evaluation in supply chain management in the healthcare industry considering a case of a pharmaceutical company and its supply chain partners in the donor sector. The specific objectives of the study were to explore integration of supply chain management in healthcare, to investigate supply chain evaluation approaches and explore the key performance indicators for the health care supply chain programs. The study employed a qualitative research approach. This was because the study aimed at obtaining specific information concerning measuring and evaluating performance in the donor funded supply chains administered by Phillips Healthcare Services Limited. The population of the study consisted of donor funded program implementing agencies, project managers and outsourced supply chain partners for the various supply chains considered. The data was collected through questionnaires. The questionnaires consisted of closed and open end questions and were administered to the respondents through interviews. Descriptive statistics was used to analyze the data using the Statistical Package for Social Sciences (SPSS) and the information was presented in the form of percentages and frequency distribution tables. The findings of the study showed that the various supply chain programs run had an integrated approach in managing their activities. However, most respondents disclosed that no specific supply chain performance measurement and evaluation approach had been specifically being used though most exhibited elements of the performance prism approach to measuring and evaluating their supply chains through stakeholder engagements. Key performance indices were also identified and most related to customer satisfaction. The major finding of the study conducted was that there was a consensus that measuring and evaluating performance was important in managing the supply chains. The study confirmed that with the various stakeholders involved, it was important that their activities be integrated so that they are aligned and able to develop approaches to achieving excellence in the performance of their supply chain programs. The major conclusion was that more needs to be carried out for the supply chains to develop key performance indices that would guide their activities towards achieving their v

7 objectives set out in their business strategy. This can be achieved through adoption of performance evaluation approaches that would help them work towards a balanced approach to managing various business activities relating to customers, internal business, finances and learning needs of the businesses. From the above conclusions, the study recommended that more collaborative efforts should be done and lead by senior leadership of the various organisations. In addition, approaches and tools to achieve balance across all business units involved in the supply chain should be used to guide performance and evaluation of the supply chains. For the various healthcare programs, industry players need to come up, jointly, with performance indicators that can be used to guide their work activities and benchmark their performance against set or desirable outcomes for the health concerns. Further research should be undertaken to investigate the sustainability of partnerships between donor agencies and the private sector in healthcare supply chains. The coordinated roles of governments and the private sector should also be considered to address concerns for the particular sectors in providing efficiency and excellence in delivery of the intended healthcare outcomes. vi

8 LIST OF TABLE Table 3.1: Target Population Table 3.2: Sample Size Table 4.1: Program Respondents Table 4.2: Job Description of the Respondents Table 4.3: Gender of the Respondents Table 4.4 Experience of Respondents Table 4.5 Level of Academic Qualification...30 Table 4.6: Assessment of Supply Chain Opportunities Table 4.7: Respondents Opinion on Senior Management Involvement in Visioning...31 Table 4.8: Development of Supply Chain Strategy by Partners Table 4.9: Benchmarking and Responsiveness to Market Needs Table 4.10: Partner Involvement in Joint Planning Sessions Table 4.11 Existence of Quality Management System.. 33 Table 4.12: Partnership Structure in Place Table 4.13: Information Sharing and Communication Network in Place.. 34 Table 4.14: Stakeholder Involvement and Commitment to Change.. 34 Table 4.15: Measuring Supply Chain Performance can help Manage Supply Chain 35 Table 4.16: Identification of Supply Chain Evaluation Approach/Model. 36 Table 4.17: Program Familiarity with Balanced Score Card Performance Model...36 Table 4.18: Stakeholder Perspective on Performance of Supply Chain...37 Table 4.19: Customer Perspectives Inform Performance of Supply Chain Table 4.20: Internal Business Objectives Table 4.21: Balanced Score Card Perspectives and Decision Making.. 38 Table 4.22: Customer Relationship Management and Collaboration Table 4.23: Innovation and Learning and Influence on Quality Improvement.. 39 Table 4.24: Procurement and Information Management...40 Table 4.25: Providing Information to customers...40 Table 4.26: Provision of Technical Support and Problem Solving Excellence Table 4.27: Flexibility to Meet Customer Needs Table 4.28: Delivery Documentation Quality Table 4.29: Staff Capability and Skills vii

9 Table 4.30: Delivery Frequency and Order Lead time Table 4.31: Comments on recommending supply chain partner Table 4.32: Appreciation of research conducted viii

10 TABLE OF CONTENTS DECLARATION... i ACKNOWLEDGEMENT... iii DEDICATION... iv ABSTRACT... v LIST OF TABLE... vii TABLE OF CONTENTS... ix CHAPTER ONE INTRODUCTION Background of study Statement of the Problem Purpose of the Study Study Objectives Significance of the Study Scope of the Study Chapter Summary... 7 CHAPTER TWO LITERATURE REVIEW Introduction Integrated Supply Chain Management Supply Chain Evaluation Approaches Supply Chain Performance Indicators Chapter Summary CHAPTER THREE RESEARCH METHODOLOGY Introduction Research Design Population and Sampling Design Population Sampling Design Sample Frame Sampling Technique Sample Size ix

11 3.4 Data Collection Methods Research Procedures Pilot testing of the Questionnaire Administration of the Questionnaire Data Analysis Methods Chapter Summary CHAPTER FOUR RESULTS AND FINDINGS Introduction General Information Integrated Supply Chain Management Supply Chain Performance Evaluation Approaches Performance Indicators Chapter Summary CHAPTER FIVE DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS Introduction Summary Discussion Conclusion Recommendations REFERENCES APPENDIX ONE: COVER LETTER APPENDIX TWO: QUESTIONNAIRE x

12 CHAPTER ONE 1.0 INTRODUCTION 1.1 Background of study In the current competitive markets scenario, supply chain management assumes a significant role and calls for serious research attention, as companies are challenged with finding ways to meet ever-rising customer expectations at manageable costs. To do so, businesses must search out which parts of their supply-chain process are not competitive, understand which customer needs are not being met, establish improvement goals, and rapidly implement necessary improvements (Jain et al., 2010). Supply chain management along with other similar terms such as network sourcing, value chain management have become subjects of increasing interest in recent years. It is recognised that supply chain should be seen as the central unit of competitive analysis (Macbeth & Ferguson, 1992; Cox, 1996). Companies will not seek to achieve cost reductions or profit improvement at the expense of their supply chain partners, but rather seek to make the supply chain as a whole more competitive (Christopher, 1992). Intensifying global competition, short life cycles of products and increased customer expectations have forced companies to invest and focus their attention on their supply chains. Along with continuous advances in communication and transport technologies, the need for continuous evolution of supply chain and effective management techniques is paramount (Simchi-Levi et al., 2008). Supply chain management means managing the series of activities concerning the planning, coordinating and controlling movement of materials, parts and products from suppliers to customers. This includes the management of materials, information and financial flows in the supply chain. The decisions are made at strategic, tactical and operational levels throughout the supply chain (Simchi-Levi et al., 2008). Gunasekaran et al. (2001) present that supply chain performance measures can be divided into financial and non-financial measures. Top management needs financial measures for management level decisions, but lower management and workers need operational 1

13 measures for daily business. Gunasekaran et al. (2001) states that there should be several kinds of measures to be used in performance metrics: balanced approach, strategic, tactical and operational levels and financial as well as non-financial measures. Supply chain management could be measured in various management or operation levels. Strategic level measures influence the top management decisions and also very often reflect the investigation of broad based policies and level of adherence to organisational goals. The tactical level deals with resource allocation and measuring performance against targets to be met in order to achieve results specified at the strategic level. Operation level measurements and metrics require accurate data and decision is made by low level managers. In operational level, metrics are relevant for day to day business and hence the main metrics are time related and non-financial metrics. Non-financial metrics include such as order lead time and delivery lead-time. Many of these metrics are timerelated but also cost-related. These metrics are for top management for making strategic decisions as well as long-term plans and strategies. Christopher (2001) describes a network of companies to which interdependent organisations are linked up can be regarded as a supply chain. The success of the individual organisation is dependent upon the management of its supply chain and is largely dependent on the performance of its suppliers (Christopher, 1999). However, most organisations within a supply chain operate independently with their own objectives which differ from the objectives of their supply chain partners. Due to the limited time in which companies can develop trust, it is widely accepted that supply chains require common systems to integrating, measuring and controlling key business processes (Childerhouse and Towill, 2000). Thus, each enterprise must seek not only to improve its own individual competitiveness but also to improve the competitiveness and performance of all enterprises in its supply chain. To succeed as a member of a supply chain and make the supply chain to work as a whole, firms must today develop strategic partnership arrangements with their key suppliers and customer enterprises. This involves sharing information, working together to reduce costs and to cut down lead-times and building total quality into all stages of the supply chain (Christopher, 1999). 2

14 Performance measurement systems are the focus of considerable attention in academic and practitioner communities. They clearly have a considerable contribution to make the management of performance of organisations. However, for this contribution to be realised, it is essential that the measurement systems used are relevant and appropriate for the environment and strategies of the organisation. Given the dynamic and rapidly changing environment in which most organisations compete, it is important that organisations effectively manage their measurement system so that it remains appropriate and provides information that is relevant to the issues that are of current importance (Mike & Andy, 2003). There has been considerable interest in performance measurement. Well rehearsed adages such as What gets measured gets done and You get what you measure suggest that implementing an appropriate performance measurement system will ensure that actions are aligned to strategies and objectives (Lynch & Cross, 1991). Increasingly, research evidence is demonstrating that companies that are managed using integrated balanced performance measurement systems outperform (Lingle & Schiemann, 1996) and have superior stock prices to those that are not measure managed. The supply chain consists of many stakeholders such as suppliers, manufacturers, retailers and activities such as forecasting, purchasing and marketing and hence, the complexity and large network affects one another s performance (Chan, 2003). Decision makers in supply chains usually focus on developing measurement metrics for evaluating performance (Beamon, 1999). Beamon suggests that performance measures in existing literature are in two types: qualitative and quantitative in which flexibility, supplier performance, costs, customer satisfaction and responsiveness for supply chain model are discussed. Three types of measures: resources, output and flexibility are identified. Li and O Brien (1999) proposed a model to improve supply chain efficiency and effectiveness based on four dimensions profit, lead-time performance, delivery promptness and waste elimination. Van der Vorst (2000) divided the performance indicators into three levels: The supply chain level (product availability, responsiveness, delivery reliability, quality and total supply chain costs), the organisation level (inventory level, throughput, time, 3

15 responsiveness, delivery reliability and total organisational cost) and the process level (responsiveness, throughput time, and process yield and costs). A performance measurement system provides information necessary for effective planning and control, decision making and actions. According to Kleijnen (1993), the feedback principle in the context of supply chain performance measurement is used by managers to compare a target value for a specific performance metric with its realisation and in the event of undesirable deviation; corrective action can then be taken. The feedback principle links an operational response in the supply chain to a given key performance indicator. This study contributes towards looking into the state of healthcare supply chain carried out by Phillips Healthcare Services in carrying out donor funded programs aimed at reaching the bottom of the pyramid groups in Kenya. Kenya faces a number of challenges in reaching its disadvantaged population that suffer from a myriad of health concerns ranging from HIV/AIDS, asthma, tuberculosis, diabetes, malnutrition and diarrhoea. Delivery of essential medicines to this population has been hampered by an ineffective supply chain system and by the high cost of the medicines. Currently, capacity building efforts are being carried out by donor agencies to support Kenyan health agencies in designing health delivery systems. Recently, donor agencies have partnered with the private sector in setting up healthcare supply chain programs with the aim of transferring these initiatives to the Ministry of Health departments in charge of implementing health policies in Kenya. However, as their capacities are being built, there is need for an informed method of evaluating the performance of the healthcare delivery systems to inform this process. Phillips Healthcare Services was identified as a private partner that has had the experience to provide these services before being transferred to the public sector and provides a useful case study in evaluating supply chain management performance in the healthcare sector in Kenya and beyond. 1.2 Statement of the Problem Kenya faces a myriad of health concerns for the bottom of the pyramid population that does not have access to a responsive, quality, reliable, affordable healthcare and medicine supplies hence, there is need to provide a responsive supply of essential medicines to this 4

16 population in Kenya, that form the majority of recipients, through an efficient supply chain. To ensure an efficient supply chain, performance evaluation of the supply chain must be undertaken to advice management of the processes involved. The healthcare sector is composed of complex sets of entities, activities and processes involving a wide range of participants, priorities and evaluation criteria. Governments invest a lot of money in healthcare directly or indirectly and expect high quality services from this sector. In reality, the performance of the sector has been different and characterised by inefficiencies, low productivity and dissatisfied clients. Performance measurement is an established concept that has taken renewed importance in a variety of organisations (Camarata et al., 2000). Performance measurement systems have been developed as a means of monitoring and maintaining organisational control which ensures that an organisation pursues strategies that lead to the achievement of its overall goals and objectives (Nani et al., 1990). Bititcti (2000) identified that performance measurement systems need to have the characteristics of being sensitive to changes in the external and internal environment of the firm, reviewing and reprioritising internal objectives when the changes in the external and internal environment are significant enough, deploying changes to internal objectives and priorities to critical parts of the firm to ensure alignment at all times and ensuring that gains achieved through improvement programs are maintained. Performance measurement provides the basis for a firm to assess how well it is progressing towards its predetermined objectives, identifies areas of strengths and weaknesses and decides on future initiatives with the goal of improving organisational performance. This study seeks to explore the extent to which various actors in health care supply chains measure, evaluate and manage performance of their supply chains upstream and downstream. 1.3 Purpose of the Study The purpose of this research was to analyse a supply chain and find out how integrated it is with other supply chain partners, performance measurement systems in use and the indicators that were applicable in ensuring efficient healthcare supply of essential medicines of the donor funded programs in providing healthcare related products to bottom of the pyramid population in Kenya. 5

17 1.4 Study Objectives The study was guided by the following research objectives that offered guidance as regards collection of the required information on the research topic. i. To explore integration of supply chain in healthcare. ii. To investigate supply chain performance evaluation approaches. iii. To explore key performance indices for the health care supply chain. 1.5 Significance of the Study This research will help understand the benefits of a performance measurement system in an integrated supply chain management in providing essential healthcare medicines to bottom of the pyramid groups. It will help determine the extent to which an integrated supply chain has been achieved for the organisation and its supply chain partners and identify performance indicators suitable for performance measurement of healthcare supply chains. Through this research, academicians will benefit from the knowledge generated to gain new insights in the field of supply chain management in the areas of performance evaluation and measurement of integrated supply chains in healthcare supply chain partnerships. From the various research questions and findings made, partnering organisations in supply chain industry will benefit from learning on how to integrate their business activities, develop aligning strategies and develop appropriate tools to measure and evaluate performance of their supply chains. 1.6 Scope of the Study The focus of this research is the evaluation of the performance management system of Phillips Healthcare Services and its Partners in Kenya. The time period for the analysis is The study does not go into details of the whole scope of the term supply chain management. This research is aimed at giving a view of the methods that can be used to evaluate if a supply chain is efficient or not based on a performance measurement system. 6

18 1.7 Chapter Summary This chapter has looked at supply chain management and its importance to an ever evolving global business environment. The chapter has offered definition of terms that are not common and this introduction provides a guide on what the research shall focus on. Chapter two shall look at literature review on supply chain management particularly as regards to evaluation of supply chain performance measurement systems. It will also explore existing studies and literature on the role of an integrated supply chain in building business partnerships. It will compare and critique other works previously covered on the topic. Chapter three identifies, defines and provides justification for the research design used in the study. It also provides the data collection instrument that was used and the population identified with sampling frames, techniques, size of the sample and data analysis methods. Chapter four provides an analysis of the findings and results from the data collected. The data presented makes use of quantitative and descriptive statistics to present the data gathered from the study. Chapter five discusses findings of the study and is based on the objectives set out for the study. Major conclusions are provided as well as recommendations for further studies. 7

19 CHAPTER TWO 2.0 LITERATURE REVIEW 2.1 Introduction This chapter presents a review of various factors related to supply chain management that are of importance as done by other researchers in previous studies. The development of this chapter will be guided by the research questions in chapter one which are what constitutes an integrated supply chain, the application of supply chain performance evaluation models and to identify performance indicators and which performance evaluation models best combines them. 2.2 Integrated Supply Chain Management The Nature of Supply Chain Management Supply chain management is a management philosophy aimed at integrating a network of upstream linkages (sources of supply), internal linkages (inside the organisation) and downstream linkages (distribution through to the ultimate customers) aimed at performing specific processes and activities that deliver products and services to satisfy customer demands. Supply linkages are the explicit and/ or implicit connections that a firm creates with critical entities in its supply chain in order to manage the flow and/ or quality of inputs from suppliers into the firm and outputs from the firm to customers (Rungtusamathan et. al, 2003). Christopher (2001) demonstrates that supply chain management involves a set of three elements; the first is supply management, which involves developing relationships and integration with suppliers. The second is demand management, which uses techniques to forecast demand accurately and develop relationships with customers. The third is logistics management, which focuses on how members of a supply chain manage the movement and storage of their products while integrating with other members of the supply chain. The supply chain is thus viewed as a series of processes linked together with cross company strategies and processes and its management enhances this idea and creates coordination amongst all processes of all members, both downstream towards end customers and upstream towards the suppliers of raw materials. The key objectives of 8

20 supply chain management are responsiveness, reliability and the delivery of value. To provide these features, supply chains must think in terms of how they can compete through their capabilities and ask which parts of the supply chain are better at which activities (Christopher, 2001). Supply chain management is complex and can prove to be difficult to implement. It is described as a multi-factor process, reliant upon close and long-term relationships within and between organizations (Saad et al., 2002). The success of a supply chain management system is associated with the challenge of developing a new culture based on shared learning along with greater transparency and trust. With increased reliance on suppliers, the emergence of business outsourcing and competition, the main challenge for the supply chain management organisation is to sustain and continuously improve the coordination and integration of all supply chain processes in order to enhance its overall performance. Based on this principle, it is therefore important to associate the concept of supply chain management based on continuous improvement with performance measurement The Integrated Supply Chain Supply chain integration means the co-operation between various functions in the supply chain. The key processes that can be integrated across the supply chain are: customer relationship management, customer service management, demand management, order fulfilment, procurement, manufacturing flow management and product development (Sillanpaa, 2010). The supply chain integration can be defined as the degree to which an organisation strategically collaborates with its partners and manages intra- and interorganisational processes in order to achieve efficient and effective flows of products, services, information, money and decisions (Sillanpaa, 2010). The above definition of supply chain management implies the following key characteristics of supply chain management which affect the design and implementation of a performance measurement system for a supply chain. A supply chain should be regarded as an integrated entity consisting of an interrelated network of multiple participants at various levels, linked together by complex interrelationships. Supply chain management is the integration of a number of core business processes. It reaches across 9

21 different organisations and across different functions within an organisation, covering the supplier base, all logistics entities, internal transformation processes and distribution. It also includes the customer at the end of the chain. One of the keys to supply chain success and advantage is the concept of integration. Supply chains are successful due to seamless physical flow of materials to the end customers and efficient information flows backwards and forward through the chain. This can however not be achieved if supply chain members are not integrated in terms of their processes, activities and systems. The advantages of integration include improved quality, innovation sharing, reduced costs and improved scheduling of production and delivery (Porter, 1985). The first step in achieving supply chain integration is through each company in the supply chain looking to their internal structure to see if they are aligned and integrated. Without the correct internal integration there cannot be effective integration throughout the supply chain. The traditional view of functional divisions needs to change to an approach based on customer focused material flow without boundaries. Instead of having functional specialists with their own individual goals and strategies, companies must align their internal functions along processes that lead to specific product and service value. Companies have to bring on board workers with a broad range of skills who are oriented to market success based on managing processes that deliver value to the customer (Christopher, 2001). The second step in achieving supply chain integration is through external integration. This can only be achieved when internal integration has been achieved and functional strategies have been aligned. To compete as a supply chain, there must be consistent competitive goals, objectives and criteria across the supply chain without conflicting priorities. When looking to integrate outside with other supply chain members, there must be a systems view of the supply chain. The view must encompass linkages in customer service, distribution, manufacture and procurement so as to deliver high service levels and low cost to customers. The need for this integrative view is that achieving cost or lead time reduction within one enterprise at the expense of other supply chain members simply transfers costs or delays to the end customer, leading to higher prices and customer dissatisfaction (Burt et al., 2001). 10

22 The other factor in achieving supply chain integration is the concept of shared capabilities and competencies. Previous thinking regarded the company as a separate competitive entity, where there was no reliance on other suppliers or customers. Within supply chain management, however, each member of the supply chain cannot be the best at every activity and they need to rely on capabilities outside the organisation. Strategy must then take into consideration which activities and capabilities each of the supply chain members will invest in and perform and which will be outsourced in order to add the most value to the supply chain as a whole (Cousins, 2002). In a recent survey, Stanley et al. (2009) identified five barriers singled out by respondents as inhibiting collaboration in their companies. Seventy-five percent agreed that organizational structures propagating turf protection was the most pervasive barrier. The four other barriers were singled out as resistance to change (58%), conflicting measures (55%), lack of trust (42%), and weak managerial support (42%). Robert et al. (2009) demonstrate that effective supply chain management relationships, whether informal or formal, are broadened and matured by building the following: Trust is perhaps the foundation of supply chain management. While trust is hard to quantify, it means that channel partners can have faith in the intentions and actions of each other, that individual company strategies are formulated with the good of the entire network in mind, and that companies will not use their position of power to abuse more dependent members. Reliability means that a company can count on its partners to exhibit consistent, predictable, and honest behaviour over the long run. Lack of congruence between commitments and behaviour erode supply chain relationships. In addition, the use of coercion to force partners to act in a prescribed way often results in less-than-reliable behaviour and is antithetical to the establishment of strong channel relationships. Competence is concerned with the capability of a partner to support and perform its channel the role as initially promised. Competence refers to the ability of the partner s organization to provide the people, processes, knowledge, experience, technology, and resources that will ensure the viability of the channel relationships. Risk is part of every business endeavour. Risk sharing in a supply chain relationship, however, often extends beyond normal uncertainties, because there is an implied external vulnerability arising from dependence on partners to perform their 11

23 agreed upon roles. Trust, reliability, and a willingness to risk all contribute to a sense of loyalty between channel partners. Loyalty is a two-way street, each partner not only performs predictably but is also willing to assist each other to resolve problems or ameliorate risk. Loyalty enables parties to engage in deeper commitment to the relationship and by extension enriches the entire supply chain system (Robert et al., 2009). 2.3 Supply Chain Evaluation Approaches The Evaluation of Supply Chains Considering the philosophy what you cannot measure, you cannot manage; measuring the supply chain performance becomes a very important process for companies and their supply chains in order to stay competitive. A major challenge in supply chain management is the coordination of the various activities and processes that take place between various parties involved in the value chain. Understanding the interdependencies and complexity of these activities in the supply chain is elementary to managing it (Holmberg, 2001). According to Van der Vorst (2000), supply chain performance is the degree to which a supply chain fulfils end user requirements concerning the relevant performance indicators at any point in time and at what supply chain cost. This information enables managers across the supply chain to monitor and improve actual performance, motivate all participants in the supply chain, confirm progress in terms of supply chain objectives, diagnose deviations from set objectives and provide a common database for the integrated supply chain information system (Lapide, 2000). The main objective of performance measurement is to provide valuable information which allows firms to improve the fulfilment of customer s requirements and meet the firm s strategic goals. Performance measurement provides information for management and decision makers; enable identifying the success and potential of management strategies and facilitating the understanding of the situation. In addition, performance measurement assists in directing management attention, revising company goals and reengineering business processes as well as for continuous improvement (Chan, 2003). 12

24 In view of the complexity of the supply chain, several organisations and practitioners in the field of supply chain management have developed unique approaches to evaluating supply chain performance Balanced Score Card Kaplan & Norton (1992) presented the balanced score card to measure the company performance from four perspectives: customer, internal business, financial and innovation and learning. The basic idea of the balanced score card is to maintain a balance between lagging and leading indicators and between internal and external performance. The balanced score card also facilitates to focus on the most critical measures by limiting the number of measures used. According to Wisner et al. (2005), customer satisfaction and service in the supply chain relates to both internal and external customers and has to do with the degree to which the customer is satisfied with the product and / or service delivered. This is one of the most multifaceted supply chain performance areas. It can include supply availability which can then be related to stock-out frequency, fill rate and full orders shipped. Customer satisfaction is also determined by operational variables such as cycle time, consistency of lead times and flexibility of supply. Reliability has to do with matters such as quality compliance, dependability and availability of information. Customer satisfaction also has some cost element that relates not merely to price but rather to all elements of the customer s total cost of ownership. Customer perception of service is highly intangible and has to do with how the customer experiences the overall relationship with the supplying firm. Clearly, very specific objectives need to be set for customer satisfaction. These objectives directly affect the competitiveness of the entire supply chain (Brewer et al., 2000). The internal business perspective has to do with those activities and processes that create the highest levels of customer satisfaction such as process productivity, cycle time reduction, improving and concentrating on core competencies, improving staff skills and using technologies that are the basis for competitiveness. The internal business perspective also emphasizes operational process, design and manufacturing excellence and the ability to introduce new products or services. The focus should be on the internal processes of the 13

25 supply chain as a whole which in turn cascades down to the level of individual organisations, functions and teams. In this way, individuals at every organisational and functional level become directly involved in setting overall supply chain objectives (Brewer et al., 2000). Innovation and learning in supply chain performance evaluation impact on the ability of all entities in the supply chain to continuously renew not only products and services but also those processes that ensure that the supply chain as a whole maintains a competitive advantage. The product development cycle time, the ability to implement innovative distribution routes and processes and the ability to introduce increased flexibility into the supply chain are ways of innovation and learning. A key element in innovation and learning is the ability in the chain to create, maintain and improve partnerships. This is because partnerships enable the supply chain to take advantage of the capabilities, skills, knowledge and resources of new entities thereby introducing innovative dimensions to competitiveness and ultimately to delivering customer service (Brewer et al., 2000). The financial perspective is a measure that confirms that a supply chain is indeed competitive and is delivering the required customer service. Financial measures are aimed at determining profitability and profitability growth for each of the supply chain entities and for the chain as a whole. Cost components in the supply chain that can be used to structure measures and metrics reflecting financial performance include material acquisition costs, total inventory costs, total logistics cost and the cost of information technology used in the supply chain. Financial measures are an essential part of supply chain performance evaluation as they confirm whether or not the strategies being implemented at the level of the supply chain and of its member enterprises are being successful (Brewer et al., 2000) Supply Chain Operations Reference Model The Supply Chain Council developed the supply chain operations reference model (SCOR) to provide a standard for the management of supply chains across industries. By placing the individual firm within the supply chain, it provides insights into additional opportunities for a firm s improvement. The application of the model requires the firm not only to undertake an internal investigation but also to investigate its supply chain 14

26 partners and to communicate with them. According to Wisner et al. (2005) the SCOR model identifies five key supply chain management processes. Plan involves planning of demand and supply, establishing and communicating plans for the supply chain and managing business rules, supply chain performance, inventory, transportation and regulatory requirements. Source process covers sourcing of stocked, make to order and engineer to order products including identifying and selecting suppliers, assessing supplier performance, managing incoming inventory and supplier agreements and authorising supplier payments. Make process involves executing make to order and engineer to order products including scheduling production, producing, testing, packaging, staging and releasing products for delivery and managing work in process, equipment, facilities and the production network (Wisner et al., 2005). Deliver covers managing orders, warehousing, transportation, delivery and installation of all products, from enquiry and quoting to shipment and carrier selection, receiving, picking, loading and shipping products, invoicing customers and managing import/ export process requirements. Return process involves returning purchased goods to suppliers and receiving finished goods returns from customers, including authorising and scheduling returns, receiving and disposing of defective or excess products, returning replacements of goods or credit and managing return inventories (Wisner et al., 2005). Plan process covers the entire supply chain and is therefore undertaken by all entities in the supply chain. The other four processes may be performed by each of the entities and linkages in the supply chain at various levels of complexity Wisner et al. (2005) Performance Prism According to Harrison and Van (2002), different stakeholders of organisations within a supply chain may have different views on what constitutes success and therefore use different ways to measure it. Stakeholders include shareholders, employees, customers, suppliers, the government and the communities in which the organisations operate. Recognising that there are different organisations with different stakeholders in a supply chain therefore implies that performance evaluation in a supply chain should not focus on a single measure of success but rather on a range of measures. Emphasis has been on financial measures based on past information while operational measures have often been 15

27 ignored. Out of this perspective, there has developed need for balanced measures that encompass operational as well as financial measures and consider not just the past but also the future (Harrison & Van, 2002). The performance prism takes account of the perspectives of the stakeholders of organisations within a supply chain. This way, performance measures that are relevant to a particular supply chain can be identified. This view sees the purpose of organisations within a supply chain as being to satisfy their stakeholders through the deployment of relevant strategies, processes and capabilities. An organisation s capabilities facilitate processes that in turn underpin the strategies that it has adopted to satisfy its stakeholders. In return for stakeholder satisfaction, firms will receive relevant contributions from their stakeholders such as investment, labour, raw materials, income from sales among other incentives. The relationship between and organisation and its stakeholders is therefore multi-dimensional (Neely et al., 2002). Stakeholder satisfaction involves identifying the need and demands of a firm s stakeholders. However, stakeholder contributions are also important as the relationship between an enterprise and its stakeholders is reciprocal. Performance is therefore not purely about satisfying the stakeholders needs but also about enhancing their contributions to the firm (Neely et al., 2002). 2.4 Supply Chain Performance Indicators Role of Performance Indicators Business organizations need to capitalize on supply chain capabilities and resources to bring products and services to the market faster, at the lowest possible cost, with the appropriate product and service features and the best overall value (Gunasekaran et al., 2001). Performance measures are important to the effectiveness of supply chain. Companies can no longer focus on optimizing their own operations to the exclusion of their suppliers' and customers' operations. There is an emerging requirement to focus on the performance measurement of the supply chain in which company is a partner (Charan et al., 2008). Interest on performance measurement has notably increased in the last 20 years (Taticchi et al., 2010). Companies have understood that for competing in continuously changing environment, it is necessary to monitor and understand firm 16

28 performances. Measurement has been recognized as a crucial element to improve business performance (Taticchi et al., 2010). Different perspectives of supply chain performance measures (are cost and non-cost perspective; strategic, tactical or operational focus (Gunasekaran et al., 2001); business process perspective and financial perspective (Beamon, 1999). The earlier focus of performance measurement was on financial perspective which is gradually changing to non-financial perspectives. Most of the models have gone through some empirical testing and some have only theoretical developments (Taticchi et al., 2010). Performance metrics have three basic functions: control, communication and improvement. Control means that the metrics enable managers and workers to evaluate and control the performance of resources. The performance is communicated for internal needs and external stakeholders by the metrics. Improvements mean the possibility to identify gaps between performance and expectations and to identify the areas where work is needed (Melnyk et al., 2004). Practitioners and specialists in the field of performance evaluation generally agree that the key guidelines for developing a performance evaluation system fall into two broad categories. Firstly, there is a philosophical management perspective providing conceptual direction on how to think about a performance evaluation system. Secondly, there is a pragmatic view emphasising the nature of the measures and performance indicators (Holmberg, 2000) Developing a Supply Chain Management Performance Evaluation System Neely et al. (2005) defined performance measurement system as a balanced and dynamic system that enables support of decision-making processes by gathering, elaborating and analyzing information. Taticchi et al. (2010) further elaborated this definition by commenting on the concept of balance and dynamicity'. Balance refers to the need of using different measures and perspectives that tied together give a holistic view of the organization. The concept of dynamicity refers instead to the need of developing a system that continuously monitors the internal and external context and reviews objectives and priorities. Effective supply chain management has been associated with a variety of advantages including increased customer value, increased profitability, reduced cycle times and 17

29 average inventory levels and even better product design (William et al., 2007). The objective of supply chain performance management therefore has to facilitate and enhance the efficiency and effectiveness of supply chain management. The main goal of supply chain performance management models and frameworks is to support management by helping them to measure business performance, analyze and improve business operational efficiency through better decision-making processes (Tangen, 2005). An effective, integrated and balanced supply chain performance management can engage the organisation s performance measurement system as a vehicle for organisational change. Supply chain performance management can facilitate inter-understanding and integration among the SC members. It makes an indispensable contribution to decision making in supply chain management, particularly in re-designing business goals and strategies, and re-engineering processes (Charan et al., 2008). Under the conceptual framework, supply chain measurement should reflect a systems approach. The supply chain must be regarded as an integrated system and must therefore be measured comprehensively. It is therefore not correct to consider that supply chain management performance can be measured by measuring only the performance of individual functional areas and organisations involved in the chain. The performance measurement system for the supply chain should have strategic issues as a basic point of departure. It should concentrate on areas that are strategically important for all supply chain participants and should measure these areas against common objectives. By focusing on common objectives, managers in the supply chain will support the support the supply chain s overall strategies (Holmberg, 2000). A performance measurement system should be derived from the company s objectives. Otherwise, the performance measurement system may support actions that have the opposite effect of those implied in the strategy (Tangen, 2004). A performance measurement system ought to consist of various types of performance measures covering all important aspects agreed as representing the success of a company. There must in turn be a balance between the various performance measures in the performance measurement system. A performance measurement system should be appropriately focused on shortand long-term results, different types of performances (e.g. cost, quality, delivery, flexibility and dependability), various perspectives (e.g. the customer, the shareholder, 18

30 the competitor, the internal and the innovativeness perspective), and various organisational levels (e.g. global and local performance). As performance evaluation systems for the supply chain evolve, more and more emphasis is placed on an approach that balances quantitative and qualitative measures including financial and non-financial measures. However, financial measures are criticised for their lack of forward looking approach by emphasising on past performance. Non-financial measures provide a broader perspective on performance evaluation. In designing a performance evaluation system for supply chain management, it cannot be measured by evaluating outputs and outcomes alone. It is essential to also evaluate the processes that generate these outputs and outcomes. In addition, the performance management system must always be designed with the customer in mind as it is the customer s perception that is the ultimate test of supply chain performance (Holmberg, 2000) Practical Determination of Performance Areas and Indicators According to Beamon (1999), a supply chain measurement system must place emphasis on three separate types of performance measures: Resource measures (generally costs); Output measures (generally customer responsiveness); and Flexibility measures (Ability to respond to a changing environment). Each of these three types of performance measures has different goals and purpose. Resource measures include: inventory levels, personnel requirements, equipment utilization, energy usage, and cost. Output measures include: customer responsiveness, quality, and the quantity of final product produced. Flexibility measure a system's ability to accommodate volume and schedule fluctuations from suppliers, manufacturers, and customers (Beamon, 1999). In determining the nature of performance areas to be used, a family of measures should be used that are limited and linked to each other. Performance measures that are not linked provide a disjointed view of actual performance and may result in a narrow and often sub-optimal view of performance in key areas. The measures should also reflect process performance taking into consideration the causal relationship between the results and the drivers that produce these results. Inter enterprise measures also need to be developed to measure performance in these supply chain processes that cut across 19

31 organisational boundaries contributing substantially to the integration of supply chain linkages (Lapide, 2000). 2.5 Chapter Summary In this chapter, the complexity of performance measurement at the levels of an integrated supply chain has been revealed. In spite of the difficulties resulting from this complexity, it is essential to evaluate performance. Furthermore, performance evaluation is also a useful tool in managing the interrelationships and linkages throughout the supply chain. Some guidelines for structuring a valid performance evaluation system for managing a supply chain have been provided and at the same time emphasised the fact that supply chains are generally unique and should therefore be evaluated by using only measures and norms valid and applicable for the specific supply chain. Three of the most commonly used performance evaluation systems have been briefly discussed to provide insight into current approaches to supply chain performance evaluation. The next chapter provides the research methodology by identifying, defining and providing justification for the research design used in the study along with the data collection tools used. Chapter four shows the results and findings from the data analysis described in this chapter. Chapter five discusses the findings of the study based on the objectives provided and presents conclusion as well as recommendations for further study. 20

32 CHAPTER THREE 3.0 RESEARCH METHODOLOGY 3.1 Introduction This chapter identified, defined and provided justification for the research design used in the study. The data collection instrument and population were identified along with sampling frames, techniques, the size of the sample for the study and the data analysis methods were defined. 3.2 Research Design According to Silverman (2000), before conducting research, it is crucial to set out the research approach as well as the related concepts, theories, methodologies and methods. In this study, there are two methods of research approach that are linked to the methods used. They are quantitative and qualitative research approach. These differed in many aspects and depended on a number of issues such as the research objective and methods. Quantitative approach produces results in broad term and entails collection of numerical data (Bryman, 2004). Quantitative approach put emphasis on measurement and analysis of casual relationships between variables and not processes (Denzin & Lincoln, 2005). However, this study did not seek to establish a cause effect relationship between the stakeholders related to supply chain performance measurement factors. Quantitative approach was not considered appropriate for this study as the intention was to gain insight in a natural setting based on respondents understanding the supply chain partnership with little interest in seeking representativeness. For this study, qualitative approach was most suitable to the research objectives. The approach to enquiry was adopted as the researcher s position suggests that people s knowledge, views, understanding, interpretation, experience and interactions are meaningful properties of the social reality which the research objectives are designed to explore (Mason, 2002). The research entailed views and opinions of supply chain practitioners about their supply chain activities and the performance of their supply chain. Since this thesis aimed at performance evaluation of supply chain which highly differed and depended on the 21

33 individual companies and branches, a qualitative approach was chosen due to the wide variety of expected results. In qualitative research, a large amount of information and data is gathered. To organise the work and handle the collected data, researchers should divide it into different categories or topics to simplify the process (Bryman, 2004). In this study, the information collected was separated into general information about supply chain management and specific information about supply chain performance measurement. This differentiation allowed to distinguish the different knowledge levels of the participants about supply chain management and offered the opportunity to let the participants become familiar with the general topic before answering more questions in detail. Furthermore, the specific part was divided into general and detailed questions concerning supply chain performance measurement problems and challenges. 3.3 Population and Sampling Design Population A population is the collection of elements about which we wish to make some inferences (Copper and Schindler, 2001). It can also be described as a collection of data that describes some phenomenon of interest (Quang and Hong, 2003). The population in the study comprised of participant s in various healthcare supply chain organisations. It consisted of 6 major categories of programs run; the project s senior management consisting of directors, managers overseeing supply chain services and outsourced supply chain services partners that were the main drivers in the supply chains. The target population was as shown on Table 3.1: Table 3.1 Target population Segment Target Population Percentage Program implementers Project managers Outsourced supply chain partners Total % 22

34 3.3.2 Sampling Design A research sampling design is that part of the research plan that indicates how cases are to be selected for observation (Polonsky and Waller, 2005). The design therefore maps out the procedure to be followed to draw the study s sample Sample Frame The sampling frame for this study was drawn from a list of clients served, their senior management teams, sub-contractors engaged and program managers. A sampling frame is a representation of the items available to be chosen for a sample (Porkess, 2004). A sample is a subset of data selected from a population (Quang and Hong, 2003). The sample of the study focused on key contact persons that had good experience in the supply chain process and those that handled the project at a substantial magnitude. The basic idea about sampling is that by selecting some of the elements in a population, we may draw conclusions about the entire population (Cooper and Schindler, 2001). Thus, it is an accurate representation of members of the population Sampling Technique The study used judgemental sampling to choose respondents. A judgemental sample was obtained according to the discretion of someone who is familiar with the relevant characteristics of the population. In this case, since the researcher is involved in the healthcare industry, samples are selected to the best of his judgement. Judgemental sampling to be used in this study provides an effective way of obtaining views from different players in the healthcare supply chain so as to make a holistic evaluation on the effectiveness of supply chain performance measurement in the healthcare supply chain. This sample was chosen because it helped to increase a samples statistical efficiency to provide adequate data for analysing the various subpopulations and to enable different research methods and procedures to be used in different strata (Cooper & Schindler, 2001). 23

35 Sample Size The choice of sample size is governed by the level of certainty that the characteristics of the data collected will represent the characteristics of the total population, the margin of error that is tolerable, the type of data analysis that will be performed and lastly, the size of the total population (Saunders et al., 2000). With an expected 100% response rate, 10% margin of error and 95% level of significance and an assumption of 80% that the sample will have the specified attribute that is being explored, the minimum calculated sample size for different players in the healthcare supply chain was about 72 out of a population of 90. Table 3.2 below shows the distribution of sample size for the various players in the healthcare supply chains. Table 3.2 Distribution of sample size Category Sampling Frame Sample size Program implementers Project managers Outsourced supply chain partners Total Source: Own 3.4 Data Collection Methods Methods of data collection are the ways to obtain relevant qualitative and quantitative data or information for a particular study from the relevant sources (Sekaran, 2003). Primary data collection method was used in this research. Primary data is sought for its proximity to truth and control over error (Cooper & Schindler, 2001). Data was collected using a questionnaire developed using guidance of the research questions. A questionnaire was used based on its advantage of economy of time and relative cheapness in terms of expense. The types of questions were a mix of open and closed end. The questionnaire was divided into 5 parts. The first part had a general overview of the respondents in relation to the contexts of the research, the second part focused on analysing the extent to which integration of the supply chain was achieved, the third focused on the approaches that were used to analyse performance of the supply chain, the 24

36 fourth part focused on indicators that could be used to inform supply chain performance and the final part provided a few open ended questions to the respondents. The questionnaire was structured and the respondent was guided by the interviewer through illustrated answers to ensure that the respondent understood them well and answer them sufficiently. To maximise response rates, validity and reliability of the questionnaire, the questions were made clear, accurate and simple. The respondents also received a cover letter explaining the purpose of the study and to ensure confidentiality. 3.5 Research Procedures Pilot testing of the Questionnaire A questionnaire was developed to address the objectives of the research. Pretesting was done by issuing the questionnaires to twelve respondents. Three questionnaires were developed for each of the programs served. Pretesting was done to ascertain suitability before they could actually be issued for acquisition of information. This enabled fine tuning of the questionnaire for objectivity and efficiency of the process, time taken to complete the questionnaire, clarity of instructions, unambiguous questions, and attractiveness of layout and relevance of questions. Contents, format, layout, and administrative procedures of the questionnaire were then modified accordingly Administration of the Questionnaire Questionnaires were administered to clients served in the partner Organisations. The questionnaire was estimated to take twenty minutes to complete. The questionnaires were administered by the researcher who conducted interviews and assisted the respondents to fill in the questionnaires. Confidentiality was assured and for respondents who wanted a summarised copy of the findings, an opportunity was provided to request. The researcher attended post-meeting sessions being held with the partner organisations accompanied with the research questionnaires to administer, interview and clarify on any issues that arose. 25

37 3.6 Data Analysis Methods The data collected was qualitative. Qualitative research approach with standardized openended interviews was used in this study. This procedure was expected to generate valuable and sufficient findings for the study. 3.7 Chapter Summary This chapter looked at the methodology that was used in carrying out the study. It examined descriptive research as the type of design that was used in the study which focused on measuring and evaluating performance of a supply chain. The section provided sample frames, techniques and sizes that were used. The use of a questionnaire as a data collection method was illustrated. The questionnaire developed was pretested before being issued to respondents. The next chapter, chapter four, shows the results and findings from the data analysis described in this chapter. Chapter five discusses the findings of the study based on the objectives provided and presents conclusion as well as recommendations for further study. 26

38 CHAPTER FOUR 4.0 RESULTS AND FINDINGS 4.1 Introduction This chapter analyses the findings and results from the data collected. The results are divided into four major subsections that include general information of the respondents, factors influencing integrated supply chain management, supply chain performance evaluation approaches and key performance indices related to supply chain management. This chapter makes use of quantitative and descriptive statistic to present data gathered from the field. The data was presented mainly in frequency and percentage tables touched on management experience of the respondents in healthcare sector as well as on the area of study such as integration of supply chain, approaches in evaluation of supply chain performance and key performance indices crucial in determining the performance of the supply chain. 4.2 General Information The study utilized respondents who were key staff and partners in the healthcare supply chain programs run by Phillips Healthcare Services Limited. The background information on programs, gender, experience and qualifications of the respondents were looked into. This section provides information relating to the healthcare program, job description of the staff, the years of experience in healthcare sector and level of academic qualification and skills. The response rate achieved for the study was 80% Program Respondents were selected from various partners working with health care service providers in Kenya catering for donor funded supply chain programs. As shown in Table 4.1, 27.8% of the respondents interviewed were from program implementers mainly comprising of non-state actors, 50% comprising of project managers who ran the various program s supply chain operations and 22.2% of supply chain partners who were mainly outsourced under third party logistics (3PL) structure. The highest number of respondents was from the project managers because of the various programs having managers charged in carrying out activities contracted by the program implementers. 27

39 Table 4.1: Program Respondents Frequency Percent Program implementers Project managers Supply chain partners Total Job Description of Respondents This study examined the occupation and designation of the respondents so as to determine what their role in the healthcare program was. The study showed that 27.8% of the respondents were supervisors, 52.8% were managers and 19.4% were directors. The job level that a respondent was at would help in determining what his or her response would be because they are involved with the relevant decision making process at different stages of the supply chain. These results are indicated in Table 4.2. Table 4.2: Job Description of the Respondents Frequency Percent Director Manager Supervisor Total Gender Out of 72 respondents, 58.3% were males and 41.7% were female as shown in the Table 4.3. This indicates that there were more male healthcare supply chain workers than there are females in the supply chain programs. A possible explanation for the higher number of males could be because of the nature of the profession and interest in supply chain management which determine their careers. 28

40 Table 4.3: Gender of the Respondents Frequency Percent Female Male Total Experience in Healthcare Sector This study examined the length which the respondents had been involved in the healthcare sector. The length of experience in healthcare would help know if they were conversant with the local health policies governing the sector. It would also help determine how conversant the respondents were with changes they would want to see being implemented in the sector. The results of the study showed that 6.9% had less than two years experience, 15.3% of the respondents had experience of between 3-5 years, 50% of the respondents had 6-8 years experience and 27.8% had over 9 years experience as shown in Table 4.4. This showed that a large proportion of the respondents had good experience in the healthcare sector and could report accurately about the healthcare program and trends in the industry. Table 4.4 Experience of Respondents Frequency Percent Less than two years years 6-8 years 9 years and over Total Level of Academic Qualification This study examined the levels of academic qualification of the respondents so as to determine the quality of contribution in management of the programs. The level of academic qualification showed that the largest proportion had bachelor s degree at 54.2%, 18% had attained master s degree qualification and 27.8% had diploma 29

41 qualifications as shown in Table 4.5. The result of this study showed that most respondents were suitably qualified and were able to make good decisions on matters relating to the supply chain programs. Table 4.5 Level of Academic Qualification Frequency Percent PhD Degree 0 0 Masters Degree Bachelors Degree Higher Diploma Total Integrated Supply Chain Management This section presents findings on the role of supply chain management integration in the healthcare sector as obtained from the respondents. It presents information about the involvement of the supply chain partners in the management of various interrelated supply chain processes and decision making responsibility of key staff involved in the programs Supply Chain Opportunities and Development of Implementation Plans A 100% of the directors, 100% of managers and 85% of supervisors felt that they were involved in the process of assessing supply chain opportunities and developing implementation plans for the programs as shown in Table 4.6. Table 4.6: Assessment of Supply Chain Opportunities Director Job description Manager Supervisor Total Involved in assessing supply chain yes opportunities no 3 3 Total

42 4.3.2 Development of Supply Chain Vision The majority of the respondents (100%), as shown in Table 4.7, felt that senior management of the partner organisations were involved in developing a desired supply chain vision for the programs run. They felt that senior management played an important role in providing a vision that guided them on their specific organization s goals and strategies on how they plan to identify and realize the opportunities. Table 4.7: Respondents Opinion on Senior Management Involvement in Visioning Director Job description Manager Supervisor Total Senior management s involvement yes in supply chain visioning no Total Development of Performance and Evaluation Strategies for Supply Chain among Partners Most respondents replied that partners played an important role in evaluating and providing feedback on the specific organization s performance and that there have been initiatives to improve processes carried out; 80% of the less than two years, 63.6% of the 3-5 years, 88.8% of the 6-8 years and 90% of the 9 years and above said that there was good involvement in this strategy process as shown in Table 4.8. Table 4.8: Development of Supply Chain Strategy by Partners Experience Total Less than 2 yrs 3-5 years 6-8 years 9 years and above Involvement in supply chain strategy yes development and implementation no Total

43 4.3.4 Benchmarking Many respondents felt that the programs run were well benchmarked and responsive to the needs of the healthcare sector concerned. As shown in Table 4.9, 70% of supervisors, 92.1% of managers and 92.8% of directors felt that their sectors was well benchmarked with trends in the industry and that the programs had a responsive system in place to address needs of the population in the sector concerned. Table 4.9: Benchmarking and Responsiveness to Market Needs Job description Total DirectorManagerSupervisor Senior management s involvement in sector yes benchmarking and developing responsive supply chain no Total Partner Involvement in Supply Chain Most respondents agreed that various partners were involved in sessions or meetings on matters relating to the supply chain s problems solving, planning and in provision of solutions to the supply chain processes. 90% of supervisors, 97.3% of managers and 92.8% of directors of the programs agreed that stakeholders were adequately involved in joint planning sessions as shown in Table Partners involved healthcare professionals, pharmacists, officials of health ministry and sub-contracted transporters. Table 4.10: Partner Involvement in Joint Planning Sessions Job description Total DirectorManager Supervisor Partners involved in joint problem solving and yes planning sessions for the supply chain no Total

44 4.3.6 Quality Management Systems Most respondents agreed that there was a quality management system that was in place to guide the supply chain processes carried out between partner organisations. 100% of all respondents said that there was a quality management system in place. This was mostly through the development and implementation of standard operating procedures and pursuance of quality management standards by the partner firms. This is shown in Table Table 4.11 Existence of Quality Management System Job description Total DirectorManagerSupervisor There exists a quality management system that yes guides work and relations amongst partners no Total Effectiveness of Partnership Structure Many of the respondents were in agreement that the various partners had organisational structures that could be easily identified and key staff in the various programs was easily identifiable; Table 4.12 shows that 85% of supervisors and 100% of managers and 100% of directors said that there was a clearly developed structure to guide partnership and its relations between the supply chains. Table 4.12: Partnership Structure in Place Job description Total DirectorManagerSupervisor There exists a quality management system that yes guides work and relations amongst partners no 3 3 Total

45 4.3.8 Information Sharing and Communication in Supply Chain Most of the respondents agreed that there was an adequate communication network in place to support the supply chain decision making process. Table 4.13 shows 90% of supervisors, 92.1% of managers and 85.7% of directors said that they were satisfied with the communication and feedback mechanisms in place for their respective supply chains. Table 4.13: Information Sharing and Communication Network in Place Job description Total DirectorManagerSupervisor Neutral An effective information sharing and Strongly communication framework is in place agree Total Stakeholder Involvement and Commitment to Change Most of the respondents were of the opinion that the stakeholders were actively involved and committed to change in the various supply chain programs; 86.8% of managers, 92.8% of directors and 75% of supervisors said that their organisations leadership were actively involved and address change management issues as shown in Table Table 4.14: Stakeholder Involvement and Commitment to Change Job description Total Director Manager Supervisor Neutral Stakeholder involvement in agree supply chain and commitment to making change strongly agree Total

46 4.4 Supply Chain Performance Evaluation Approaches This section presents findings on supply chain performance evaluation approaches as obtained from the respondents. It presents information about the involvement of the supply chain partners in the management of performance of supply chain and relates the information based on customer service, innovation and learning and internal business factors in managing their supply chains Measuring Supply Chain Performance Ninety percent (90%) of program implementers, 86.1% of project managers and 81.2% of supply chain partners strongly felt that measurement of their supply chains performance helped in better managing their supply chain as shown in Table Table 4.15: Measuring Supply Chain Performance can help Manage Supply Chain Respondent Total Program implementer Project manager Supply chain partner Measuring supply chain Agree performance of participating Strongly organisations can manage the agree supply chain Total Supply Chain Performance Evaluation Approach In discussions held on performance management approaches, 75% of program implementers, 91.6% of project managers and 93.7% of supply chain partners were indifferent as to whether there was a performance evaluation model that had been developed for their specific programs as shown in Table Directors and managers were aware of performance measurement approaches applicable but had not specifically identified particular one in use. 35

47 Table 4.16: Identification of Supply Chain Evaluation Approach/Model Job description Total Program implementer Project manager Supply chain partner Supply chain performance Disagree evaluation approach identified for the program. Neutral Total Balanced Score Card Performance Model Most respondents were neutral as to whether they were familiar with the balanced scorecard supply chain performance model. This was offered by 57.1% of directors, 71% of managers and 90% of supervisors who were neutral as shown in Table Table 4.17: Program Familiarity with Balanced Score Card Performance Model Job description Total Director Manager Supervisor Disagree Familiar with the balanced score card supply chain performance model neutral agree strongly agree Total Stakeholder Perspective on Supply Chain Performance Directors and managers would most likely be in contact with stake holders in the various programs; 85.7% of directors, 84.2% of managers and 80% of supervisors strongly 36

48 agreed that stakeholders played a critical part in informing their supply chain as shown on Table Table 4.18: Stakeholder Perspective on Performance of Supply Chain Job description Total DirectorManagerSupervisor Stakeholder perspective of the supply Agree chain has been used to inform the Strongly performance of our supply chain program. agree Total Customer Perspective 100% of directors, 100% of managers and 95% of supervisors were of the opinion that customer concerns were considered in their supply chains. As most were donor funded, getting drugs and health related supplies to customers cheaply, responsively and in continuous supply was their major area of focus in the supply chain cycles as shown in Table Table 4.19: Customer Perspectives Inform Performance of Supply Chain Job description Total DirectorManagerSupervisor Customer perspectives have been used yes to evaluate how the supply chain could add value for the customers. no 1 1 Total Internal Business Perspectives 90% of project implementers and 97.2% of project managers felt that there were well defined internal business objectives that had been set and were reviewed on a regular basis to inform their supply chain activities as shown in Table

49 Table 4.20: Internal Business Objectives Job description Total Program implementer Project manager Supply chain partner Internal business yes objectives have been developed with no partners. Total Balanced Score Card Perspectives and Interrelationships The largest proportion of respondents, 85.7% of directors, 94.7% of managers and 70% of supervisors felt that various aspects of the balanced scorecard helped in making better decisions in their various activities as shown in Table Table 4.21: Balanced Score Card Perspectives and Decision Making Job description Total DirectorManager Supervisor A combination of BSC process yes help understand interrelationships and improve decision making no process Total Customer Relationship Management Perspective There was a general feeling that good relationship management between partners was key in making decisions relating to forecasting demand and sourcing activities for their supply chain concerns. 78.9% of managers, 92.8% of directors and 75% of supervisors strongly agreed on this as shown in Table

50 Table 4.22: Customer Relationship Management and Collaboration Job description Total DirectorManagerSupervisor CRM is important for the supply Agree chain in conducting joint market Strongly analysis and demand forecasting. agree Total Innovation and Learning Perspective 90% of program implementers, 88.8% of project managers and 81.2% of supply chain partners strongly felt that innovation and learning activities had played a key aspect that helped improve the performance of their supply chains as shown in Table Table 4.23: Innovation and Learning and Influence on Quality Improvement Job description Program Project implementers managers Supply chain partner Total Innovation and learning has Agree played a role in ensuring cooperation among supply Strongly 18 chain partners to improve agree quality. Total Procurement and Information Management 92.8% of directors, 91.6% of managers and 94.4% of supervisors responded that they were satisfied with the procurement process and information sharing along their supply chains as shown in Table

51 Table 4.24: Procurement and Information Management Job description Total director manager supervisor An information sharing and procurement Yes process has been developed to ensure effective communication with suppliers No and contract administration. Total Performance Indicators This section presents findings on supply chain performance indicators as obtained from the respondents. It presents information about the performance indicators that the respondents felt important in managing their supply chains Provision of Order Entry and Information Exchange with Customer 100% of respondents agreed with the view that customer related information was provided by each of the partners along the supply chain as shown on Table Table 4.25: Providing Information to customers Respondent Total Program implementers Project managers Supply chain partner Supply chain partner provides Agree excellence in provision of order Strongly entry and information exchange 16 agree with customers Total

52 4.5.2 Technical Support and Solving Problems Most respondents felt that technical queries were adequately addressed by their partners. 90% of program implementers, 91.6% of program managers and 87.5% of supply chain partners responded that technical queries received were adequately addressed as shown on Table Table 4.26: Provision of Technical Support and Problem Solving Excellence Respondent Total Program implementer Project manager Supply chain partner Supply chain partner provides excellence in provision of technical support and solving problems with customers. Neutral agree strongly agree Total Flexibility of Service 92.8% of directors, 88.8% of managers and 70% of supervisors responded that their supply chain partners were flexible in meeting customer needs as shown in Table Most processes involved depended on others in the supply chain and were able to adapt to changes that occurred and respond to customers flexibly to meet their expectations Table 4.27: Flexibility to Meet Customer Needs Job description Total DirectorManagerSupervisor Supply chain partner is flexible in meeting yes customer s needs. no Total

53 4.5.4 Quality of Delivery Documentation Ninety five percent of program implementers, 91.6 % of project managers and 93.7% of supply chain partners were of the opinion that delivery documentations generated and provided in the supply chain were of acceptable quality as shown in Table Delivery documentation was considered key in ensuring that supplies are delivered as per customer expectations and enabled proper reporting in the supply chain. Table 4.28: Delivery Documentation Quality Respondent Total Program implementer Project manager Supply chain partner Neutral Supply chain partner provides agree quality delivery documentation. strongly agree Total Staff Quality and Capacity Development Most respondents considered it important to build skills and competencies required to carry out their supply chain functions. The supply chain functions were varied and required various skills set among various staff and partners in health care. This was mainly due to the various levels of stakeholders involved in the partnership structure and also depending on the need for responsiveness in addressing various concerns to be addressed in meeting the intended goals of the various donor funded programs being run by the company. 92.8% of directors, 86.8% of managers and 85% of supervisors felt that their skills and competencies had been developed over a period of time as shown in Table

54 Table 4.29: Staff Capability and Skills Respondent Director Project manager Supervisor Total Supply chain partner has provided quality staff and developed their employee capabilities Neutral agree strongly agree Total Frequency of Deliveries and Order Lead Time Most respondents considered reduction of deliveries within short order lead times a key indicator in carrying out supply chain operations as it enabled efficient use of resources and reduced costs. 100% of project managers, 95% of project implementers and 93.7% of supply chain partners agreed on this aspect as shown in Table Table 4.30: Delivery Frequency and Order Lead time Job description Total Program implementer Project manager Supply chain partner Supply chain partner has reduced yes frequency of deliveries to clients under the program with short order lead times no Total Open Ended Questions This section of the study sought to get respondents views on matters relating to the supply chain partnership that they were in and their general feeling of the research they were 43

55 interviewed on. It presents information on respondent s opinion about the relationships that they had in their supply chain programs and on the research conducted Recommendation of supply chain partner Most respondents felt that they would recommend their supply chain partners to other organisations conducting similar supply chain activities; 85.7% of directors, 97.3% of managers and 100% of supervisors expressed this view as shown in Table Table 4.31: Comments on recommending supply chain partner Job description Total DirectorManagerSupervisor Would you recommend your supply Yes chain partner to others? Neutral Total Personal Opinion of the Research Many of the respondents demonstrated appreciation for the research conducted with them and were of the opinion that there was more to be learnt in supply chain management. 100% of respondents appreciated having been involved in conducting the research as shown in Table Table 4.32: Appreciation of research conducted Appreciate conducting the research with them Job description Total Program implementer Project manager Supply chain partner yes No Total

56 4.6 Chapter Summary This section presented and analysed data collected from various respondents working with donor funded programs on performance evaluation of their supply chains. The chapter examined the level of integration of supply chain management, supply chain performance evaluation approaches and an investigation of key performance indicators applicable to the supply chains. Chapter five provides a summary and discussion of the data analysed and also provides conclusions and recommendations based on the findings. 45

57 CHAPTER FIVE 5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS 5.1 Introduction This chapter discusses the findings of the study. The discussions are based on the specific objectives that are aimed at determining elements that constitute supply chain integration, supply chain performance evaluation approaches and their application and performance indicators for critical process in the supply chain. The study is based on donor funded supply chains currently being carried out at Phillips Healthcare Service Limited as the case study. The chapter is organised into the following sections: a summary of the study, followed by discussions of the findings. Major conclusions are also presented in this chapter as well as recommendations for further studies. 5.2 Summary The general purpose of the study was to evaluate supply chain performance of donor funded healthcare supply chain programs managed by Phillips Healthcare Services Limited. The specific objectives were to explore integration of supply chain in healthcare, investigate supply chain performance evaluation approaches and identify key performance indices for the health care supply chain. A descriptive study design was used to evaluate supply chain programs integration, performance evaluation approaches and key performance indicators. The sample for this research was determined by the scope of work covered by the programs, the level of staff for the various programs and was divided into 3 main groups of respondents that constituted the program implementers, program managers and outsourced supply chain partners. The study considered 4 programs with 20 staff as respondents, 36 project managers and 16 outsourced supply chain partners. The questionnaires administered to workers in the healthcare supply chain were selected using stratified random sampling procedures. The research carried out used a data analysis method by administering questionnaires to the respondents. The data obtained from the questionnaires was analyzed using to generate appropriate frequencies and tables. The data analysis procedures used were of descriptive statistics. 46

58 The study sought the perceptions of the program implementers, program managers and outsourced supply chain partners on various areas related to elements that constitute supply chain integration, supply chain performance evaluation approaches and their application and performance indicators for critical process in the supply chain. The study at each stage looked at various factors that affected each of the research objectives. The study collected opinions as to how various respondents in the healthcare supply chain viewed the program s supply chain management. The findings ascertained that the respondents were aware of the importance of supply chain integration which they felt if well implemented could lead to efficiencies and effective management of the programs. Most were involved in the implementation of the programs with senior management involved in multi-stakeholder engagement activities through workshops and joint regular planning sessions. Some supply chain programs were able to provide quarterly fact sheets on their performance over a period of time developed jointly with other agencies involved in the areas of concern. There was also indication of quality management systems in place with some supply chains being ISO 9001:2008 certified. Key personnel for each of the supply chain programs were easily identified and provided good feedback on the partnerships involved. Elements of management of change were also picked form the respondents with key personnel indicating that they have been responsive to changes that occur in their sectors and ability to adopt new innovations in their supply chains. The study was able to determine that supply chain performance evaluation was a critical element in determining the success of the programs being carried out. Most programs had their own approaches in determining their supply chain s performance and varied among themselves. Generally, most programs involved various stakeholders in obtaining feedback on their performance and were able to act on information obtained in meetings, workshops and communications received primarily from the Ministry of Health and its Agencies. Customers were key to the various healthcare programs with over 300,000 recipients as the key focus. Most programs had objectives established that guided their work activities and to support efficient delivery of healthcare services to most of the population served in the country and its various regions. Relationship management was a critical element in management of the partnerships involved beyond contractual 47

59 obligations entered into. An elaborate procurement process was identified in most of the programs to ensure an efficient delivery system that enabled for cost effective delivery of quality affordable healthcare commodities to end users in the country. Innovativeness in the supply chains was crucial to most of the supply chains with most respondents elaborating the changes or modifications that have been put in place over the lifetime of the supply chain programs. The research showed that most of the respondents were qualified with degrees and professional certifications in healthcare supply chain management. In addition, most of the respondents had over 5 years of experience in the healthcare industry. This indicates that the program s key personnel had good experience in the industry and could confidently respond to the administered questionnaires. 5.3 Discussion This section of the research report focuses on discussions of the key findings of the study based on the specific objectives and in line with the literature reviewed on supply chain performance management Supply Chain Integration The observations made in the study from various respondents indicated that 95.8% programs were developed out of a need to partner with other organisations to develop an effective and efficient supply chain for their healthcare programs. Respondents felt that it was important for each of the partners involved needed to collaborate to ensure that objectives established for the programs were achieved. According to Christopher (2011), the first steps in achieving supply chain integration is through each company in the supply chain looking to their internal structures to see if they are aligned and integrated. This way, firms with their specialty areas can integrate their internal and external processes to achieve wider integration with other collaborating companies. The study indicated that for 100% of the programs, partner organisations had good interactions between senior management prior to roll out of the programs and in the course of implementing the programs. Involvement of leadership in the management of the programs indicated their commitment to the business, set up and use of 48

60 professionalism so as to ensure that efficiency was achieved. Strategic planning works well if it involves commitment of top management and quite often also that of middle and lower management so as come up with an integrative point of view (Raps, 2005). The various program managers and leadership of the programs had interactions on an ongoing basis to gauge performance of the programs and also to address major issues in the running of various activities involved. 94.4% of the respondents felt that there were good strategies that had been jointly developed in their programs. They were of the opinion that senior management was involved in developing shared vision, supply chain strategies and in benchmarking activities. Components in strategic supply chain integration include formation of strategic partnerships, management of inter- and intra-organisational processes in order to achieve efficiencies (Sillanpaa, 2010). According to the findings 90.27% respondents agreed that various stakeholders were involved in information sharing to address supply chain issues for the various programs being implemented while 100% felt that there was good interactions between senior management of organisations. The effective use of relevant and timely information by all functional elements within the supply chain is a key competitive and disguising factor (Tompkins et al., 1999). Strategic supplier partnerships highlight a direct, long-term relationship and encourage reciprocal plan and difficulty or problems solving efforts (Gunasekaran 2001). Such strategic partnerships are entered into to support shared benefits among the parties and ongoing participation in one of more key strategic areas (Yoshino et al. 1995). An effective supplier partnership can be a critical component of a leading edge supply chain (Noble 1997). The study revealed that 72.2% of the respondents were at manager level with degrees and could comfortably respond to the administered questionnaires based on their understanding. The findings showed that the respondents had had experience interacting with other players and professionals in the industry. According to Cousins (2002), a factor in achieving supply chain integration is the concept of shared capabilities and competencies. The result of this study showed that most programs were run by qualified 49

61 and experienced personnel and this is a key contributor to the effective management and operation of the various programs Supply Chain Performance Evaluation Approaches 86.1% respondents were of the opinion that measurement of performance of organisations involved in a supply chain could help better manage the supply chain process. The performance metrics have three basic functions: control, communication and improvement. Control means that the metrics enable managers and workers to evaluate and control the performance of the resources. The performance is communicated for internal needs and external stakeholders purposes by the metrics. Improvement means the possibility to identify the gaps between performance and expectations and to indentify the areas where the development work is needed (Melnyk et al. 2004). 80.5% of the respondents between partners strongly felt that customer relationship management was key in making decisions relating to forecasting demand and sourcing activities for their supply chains. Customer relationship management is a key element of supply chain practices (Noble, 1997). Strong relationships with supply chain members, including customers, are needed for successful implementation of supply chain management programs (Moberg et al. 2002). Close customer relationship allows an organisation to differentiate its product from competitors, sustain customer loyalty and dramatically extend the value it provides to its customer (Magretta 1998). 83.3% of the respondents strongly agreed that stakeholder s perspectives had been considered in their supply chain. They responded that due to the nature of healthcare and policies involved, a lot of stakeholder engagement was involved in the industry. The performance prism approach provided a balanced picture of the business, significantly highlighting external and internal measures, as well as enabling financial and nonfinancial measures and measures of efficiency and effectiveness (Neely et al., 2005). Well defined internal business objectives had been developed according to 76.4% of respondents. Many of the program implementers and project managers were relatively satisfied with measures that had been put in place to improve the operation of their supply chains. Brewer et. al (2000) argue that the internal business perspective has to do with 50

62 those activities and processes that create the highest levels of customer satisfaction. This was achieved through monitoring, evaluating and improving quality, efficiency and other business processes through a focus on operations, collaborations and innovation to meet the supply chain s healthcare expectations. 23.6% of those who were not directly involved were not aware of developments in this area. 87.5% of the respondents felt that through innovation and learning the ability of the supply chain to create, maintain and improve partnerships was critical because partnerships enabled the supply chain to take advantage of the capabilities, skills, knowledge and resources of various entities to deliver excellent customer service. Brewer et. al (2000) argue that innovation and learning in supply chain performance evaluation impact on the ability of all entities in the supply chain and also those processes that ensure that the supply chain as a whole maintains a competitive advantage. On elaboration of the interrelationships and combination of the balanced scorecard perspectives, 86.1% of the respondents agreed that the customer, business processes and innovativeness in the supply chain could help improve decision making processes among the supply chain participants. According to Kaplan and Norton (1992), the balanced score card aims to make the contribution and the transformation of soft factors and intangible assets into long-term financial success explicit and thus controllable Supply Chain Performance Indicators 77.7% of respondents were strongly of the opinion that their supply chain partners provided excellent information provision to customers relating to the supply chain. This is important in carrying out supply chain activities in the form of availability of proper information in order that proper decisions could be made by each of the entities involved. Quality of information sharing includes such aspects as the accuracy, timelines, adequacy, and credibility of information exchanged (Moberg et al., 2002). While information sharing is vital, the major of its impact on supply chain management depends on what information is shared, when and how it is shared and with whom (Holmberg, 2000). 51

63 90.2% of the project implementers and program managers were satisfied with the technical support and problem solving approaches for their customers. Supply chain partnership is a collaborative relationship between a buyer and seller which recognizes some degree of interdependence and cooperation on a specific project emphasizing direct, long term association and problem solving efforts (Lambert et. al, 2004). Technical queries related to patient drug interaction, technical data relating to treatment regimes, patient prescriptions among others that were addressed to specialized staff in the respective programs. Most respondents indicated that the queries were responded to in good time and records were available to countercheck this measure. 93% of the respondents were of the opinion that quality delivery documentation was provided by the supply chain partners. Accurate and reliable delivery documentation was important in the supply chain to enable proper reporting, tracking of customer concerns and ability to provide information for information generation and provision. Key information in the various documentation required related to stock levels, customer orders, and batch numbers among other data that was used to make decisions. By comparing these with the previously made agreement, it can be determined whether perfect delivery has taken place or not, and areas of discrepancy can be identified so that improvements can be made. 97.2% of the respondents were of the opinion that their supply chain deliveries were of acceptable levels of frequency of deliveries with short lead times in making the deliveries. The total order cycle time was measured by the time elapsed in between the receipt of customer order until the delivery of finished goods to the customer. The reduction in order cycle time leads to reduction in supply chain response time, and as such is an important performance measure and source of competitive advantage (Christopher, 1992). It directly interacts with customer service in determining competitiveness. 87.5% of the respondents were of the opinion that they had build up the capacities and skills of their staff over the period that they had been running their programs. Most shared that internal trainings, joint workshops and capacity building initiatives had been undertaken for most of the staff. Key supply chain agents require skills that enable them 52

64 to influence, motivate and manage others and perform functions different from their normal duties. These skills were necessary to move people from existing positions towards change goals, generate confidence in changes being made and to monitor their performance over time Respondent Opinion on Supply Chain Relationship 100% of the respondents expressed their satisfaction with the services provided by their partners and would recommend them to others. The specialized functions and processes involved in each of the partners were well appreciated. Lee & Billington (1992) and van Hoek et al. (2001) emphasized that to assess supply chain performance, supply chain metrics must center on customer satisfaction. Customer relationship management is a key element of supply chain practices (Noble, 1997). Committed relationships are the majority sustainable advantage because of their inherent obstacles to. The growth of mass customization and personalized service is leading to an era in which relationship management with customers is becoming crucial for corporate survival. Strong relationships with supply chain members, including customers, are needed for successful implementation of supply chain management programs (Moberg et al. 2002). In relation to customer relationships in the supply chains, customer satisfaction surveys had been conducted over the past years to evaluate the extent of customer satisfaction and areas of concern and improvement noted in the various programs. To a world class organisation, a happy and satisfied customer is of the utmost importance. In a modern supply chain customers can reside next door or across the globe, and in either case they must be well served. Without a contented customer, the supply chain strategy cannot be deemed effective. Customer should be satisfied with the product or service which are received. There are three elements of customer satisfaction such as pre-transaction satisfaction, transaction satisfaction and post transaction satisfaction (Christopher, 1994). 100% of the respondents appreciated the study conducted with them. There was positive feedback from the respondents and most were cooperative in providing information for the study. The respondents in the interviews were able to provide information on their supply chain partnership network and this helped gather further insights for the qualitative study based on their experiences with the organisations they worked with. The respondents were of the opinion that the research was relevant to their work area due to 53

65 the integration approach of the partnership structure covered in the supply chain where various organisations are involved and with clear mandates set out in carrying out their operations. This helped them assess their contribution to the supply chain and offered primary source of data. Secondary data was also gathered in the study based on feedback from the respondents as they could relate to their other partners and provide feedback relating to the other s performance in the partnership. Internal and external customer is an important role in the performance of supply chain. 5.4 Conclusion The study conducted provided substantial information on integrated supply chain management, performance evaluation approaches and key performance indices important for the evaluation of performance of the supply chains. Based on the findings made, the following conclusions are made from the discussion on the objectives of the study Integration of Supply chain Management The research conducted found that there were elements of supply chain integration for most of the supply chains. Elements relating to flow of goods, information and funds in the supply chain were well coordinated according to most of the respondents. This had helped them meet their customer s or client s needs as goods moved along the overall value chain. Internal and external integration was exhibited as various supply chain members performed specific processes, had close linkages, managed products and passed on information as processes moved across organisational and enterprise boundaries. The respondents were of the view that operational and strategic aspects in managing the supply chains had been implemented progressively with various outcomes achieved. Supply chain opportunities had been evaluated and guiding vision and strategy developed by the leadership involved in the programs. Well developed communication channels and organisational alignment had been put in place to help translate strategies into action. Adopting an all compassing specific performance measurement approach of donor funded healthcare supply chain is very complex due to specific characteristics of the chain Supply Chain Performance Evaluation Approach A performance evaluation approach involving a comprehensive set of indicators and inclusive of the varied characteristics of the programs was not conclusively found. The 54

66 supply chain performance evaluation approach varied across the various programs and their respondents. While no clearly defined model was in use, the performance prism model was established as the model applicable to the supply chains considered in the study. The respondents expressed that a lot of engagement activities were in place with various sector players to discuss national and policy, international treatment guidelines and obtain feedback from various players in the supply chains including suppliers and customers. Elements of the balanced score card were also considered such as customer s perspectives whereby the participating firms had a clear objectives of how they wanted their customers to perceive them. Internal business perspectives were also considered whereby operations relating to the supply chain had clearly defined objectives, measures and desired outcomes for the supply chains Supply Chain Key Performance Indices Responsiveness to customers and partners, flexibility of service, efficiency of processes and information quality were established to be the four main key performance components and formed the basis of a performance measurement system for the healthcare supply chains. Within these components, the most relevant indicators for measuring the performance of the healthcare supply chains were flexibility, lead time, customer concerns, technical support, product delivery and accurate information provision. These indicators were of high importance to the supply chain members and they were measurable and applicable to all supply chain members. For service performance to be controlled, there must be set against pre-determined standards. The ultimate standard is to achieve 100% conformity to customer expectations and this requires a clear and objective understanding of the customer s requirements and at the same time placing an obligation upon the supplier to shape to those expectations. Customer satisfaction measures ranked high for consideration as key aspect of ensuring that various performance measures were achieved. This mainly related to provision of crucial information for decision making, being flexible with customers requirements, quality of data, management training and skill development, and delivery outcomes for various health commodities. 55

67 5.5 Recommendations From the study s findings, the following are recommendations the researcher would like to provide for improvement and further studies Recommendations for Improvement Integration of Supply Chain Management Supply chain program partners in the various health care programs should find means and ways to collaborate and integrate effectively to reap full benefits of their partnerships. Hindrances to supply chain management are mainly cultural rather than technical and transactional relationships must be transformed into more ambitious relationships. Relationship models could be developed to have beneficial ones, have partners who are likely to provide value, select partners with capabilities and motivation towards the overall vision and jointly manage each other s performance and measure healthcare impacts. Senior leadership of the supply chain partnerships should also be actively involved and start out the collaborations with a long term perspective Supply Chain Evaluation Approaches The supply chain programs and partners involved need to make improvements in their commercial performance evaluation approaches and tools to benchmark the businesses to provide strategic information that could be used to identify opportunities in their respective supply chains. The participant in the supply chain programs should be involved and committed to common goals such as customer satisfaction, innovation and learning and internal business processes to enhance their business sustainability and competitiveness. There should be a complete service level standard tailored to the varying needs and desirable outcomes of the supply chain programs. Participants should all take part in developing a well planned, coordinated all encompassing performance measurement initiative to which all are capable of undertaking and deliver Supply Chain Key Performance Indices For improved performance of the supply chains and achieve excellence in supply chain management, performance measurement and improvement studies must be carried out throughout the respective supply chains. Businesses compete through seeking to deliver 56

68 superior customer value and logistics processes to provide means by which customer service is delivered. The various supply chain programs are unique and have different clients served for each of them. As such, metrics on customer service provisions and logistics processes should be studied further to inform on the desired outcomes for the program s deliverables. In developing the metrics, consideration should be factored in that customer service is a multi-faceted concept and logistics management plays a key role in enhancing customer lifetime value through increasing customer satisfaction and enhanced customer retention. To achieve this, market driven logistics strategies and redefinition of service objectives based upon customer s specific requirements should be developed. As supplier and buyers are involved, they should negotiate on the service standards as it is in either party s interest to provide service levels that would lead to a long-term mutual benefit Recommendations for Further Studies Further studies can be conducted to determine performance measurement and evaluation approaches especially in the healthcare supply chain services sector in both private and government or donor driven programs. The approaches should look at both strategic objectives for private, governmental and non-governmental organisation s purchasing and supply objectives to meet the needs of their clients that are recipients of their healthcare programs. A study can also be conducted to assess the viability and sustainability of donor and private sector supply chains engagements in the healthcare industry. This could be done by assessing which services and costs can best be handled by the various key sector players and those which can be outsourced to others. Some services are best run by government agencies and non-governmental bodies that can guide on national policy, guidelines and implementation while the private sector can be engaged in offering specialized services which are responsive, high quality and flexible in their approach to customer needs. 57

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75 APPENDICES APPENDIX ONE: COVER LETTER NDIBA KAMAU UNITED STATES INTERNATIONAL UNIVERSITY AFRICA P. O. BOX NAIROBI, KENYA Phone No.: Dear Respondent, I am carrying out a research on performance evaluation in the healthcare supply chain. This is in partial fulfilment of the requirement of the Master in Business Administration (MBA) program at the United States International University Africa. The research looks at Phillips Healthcare Services supply chain as the case study from which you have been selected as one of the respondents. The result of this study will provide interested entities in the supply chain with the necessary information to integrate their supply chains develop strategies in performance evaluation of healthcare supply chain projects and identify key performance indices for supply chain. You have been chosen as a respondent as you are well positioned to give valuable information as pertains to this field and particularly in the healthcare sector. This is an academic exercise and confidentiality is highly emphasised. Your name will not appear anywhere in the report. Kindly spare some time to complete the questionnaire attached. Thank you in advance. Yours sincerely, Ndiba Kamau 64

76 APPENDIX TWO: QUESTIONNAIRE This study is a requirement for the partial fulfilment of the Masters in Business Administration (MBA) at the United States International University Africa (USIU-A). The purpose of this study is to investigate strategies for measuring and evaluating performance of supply chains in the healthcare sector. This study uses Phillips Healthcare Service Limited as the case study. The findings of this study will provide the company and its supply chain partner s strategies for enhancing integrated approach to supply chain, performance evaluation of their supply chain and determine performance indicators that are best applicable in a performance evaluation system. This is an academic exercise and all information collected from respondents will be treated with very high confidentiality. PART 1: GENERAL INFORMATION Kindly answer all the questions either by ticking in the boxes or writing in the spaces provided. Program: Job Description: Director Manager Supervisor Officer Gender: Female Male How long have you worked in the healthcare sector? Less than two years 3 5 years 6 8 years 9 years and over What is your highest level of academic qualification? PhD Degree Masters Degree Bachelors Degree Higher Diploma Professional qualification 65

77 PART 2: INTEGRATION OF SUPPLY CHAIN MANAGEMENT Please tick the numeric value corresponding to your personal opinion for each statement. Strongly disagree Disagree Neutral Agree Strongly agree a) We were involved in assessing supply chain opportunities for the concerned program and developing implementation plans. b) Senior management of supply chain partner firms was involved in developing vision of the desired supply chain. c) A supply chain strategy was developed between partners to provide means of developing performance metrics, feedback, and evaluation and improvement initiatives. d) Benchmarking and high level briefings conducted has ensured that the network remains responsive to changing market. e) Joint sessions are held to improve problem solving skills, use planning and scheduling tools to ensure common understanding of the supply chain. f) A quality management system developed to ensure that supply chain collaboration has been achieved. g) An effective supply chain organisational structure has been developed and in use to support the partnership. h) An effective information sharing and communication network has been developed to support the supply chain. i) Program stakeholders are involved in the supply chain process and are committed to making change

78 PART 3: SUPPLY CHAIN PERFORMANCE EVALUATION APPROACHES Please tick the numeric value corresponding to your personal opinion for each statement. a) Measuring supply chain performance of participating organisations can manage the supply chain. b) A supply chain performance evaluation approach/model has been identified for the program. c) I am familiar with the balanced score card supply chain performance model. d) Stakeholder perspective of the supply chain has been used to inform the performance of our supply chain program. e) Customer perspectives have been used to evaluate how the supply chain could add value for the customers. f) Internal business objectives have been developed to support efficiency across the supply chain with partners. g) A combination of financial, customer, business processes and innovation factors could help the supply chain understand interrelationships and improve decision making process in the supply chain and its participants. h) Customer relationship management is important for the supply chain in conducting joint market analysis and demand forecasting. i) Innovation and learning has played a role in ensuring cooperation among supply chain partners to improve quality. j) A procurement and information management process has been developed to ensure effective communication with suppliers and contract administration. Strongly disagree Disagree Neutral Agree Strongly agree

79 PART 4: PERFORMANCE INDICATORS Please tick the numeric value corresponding to your personal opinion for each statement. Strongly disagree Disagree Neutral Agree Strongly agree Our supply chain partner provides excellence in the following: (i) Provision of adequate order entry methods and information exchange with customers (ii) Providing technical support and solving problems (iii) Flexibility of service to meet our customer need (iv) Quality of delivery documentation (v) Proving a range of products and services for the program. (vi) Providing quality staff and developing its employee capabilities. (vii) Reduced frequency of delivery and order lead times to clients

80 PART 5: RESPONDENT VIEWS Please provide your opinion on the questions raised on the space provided. 1. In your own opinion, would you recommend your supply chain partners to others conducting similar programs? 2. In your own opinion, did you find the research and the various issues raised relevant and helpful to your work area? END THANK YOU FOR TAKING TIME TO ANSWER THE QUESTIONNAIRE 69