BULLWHIP EFFECT AND SUPPLY CHAIN PERFORMANCE OF LARGE-SCALE RETAIL SUPERMARKETS IN NAIROBI CITY COUNTY, KENYA

Stella Mbenia, Dr. Paul Machoka

Abstract


The bullwhip effect happens when there is no or little coordination among the supply chain members and therefore bullwhip is considered an undesirable phenomenon in forecast-driven supply chain. The bullwhip effect distorts demand information within the supply chain, with each stage having a different estimate of what demand looks like. The retail business in Kenya has seen a tremendous transformation, with new firms capturing a significant portion of the market. The study sought to determine the relationship between bullwhip effect and supply chain performance of large-scale retail supermarkets in Nairobi City County, Kenya. The specific objectives were to examine effect of demand forecasting and rationing and gaming on supply chain performance of large-scale retail supermarkets in Nairobi City County, Kenya. The study was guided by theory of Constraints and inventory control theory. This study employed a descriptive research design. The target population for this study was six large-scale supermarkets licensed by county government of Nairobi. The unit observation was 324 finance, operations, and inventory managers. Yamane 1967 formula was used obtain a sample of 179 respondents selected using stratified random sampling technique. The study used questionnaires for data collection. In this study the sample for piloting was 18 management staff representing 10% of the sample. This study used content and construct validity. In this study Cronbach's Alpha Coefficient was used to measure questionnaires’ reliability. The SPSS version 28 was used to analyze data.  Data was analyzed using descriptive (frequencies, percentages, and mean) while inferential statistics (correlation and regression). Findings were tabulated. The university supervisors confirmed the questionnaire's validity, affirming that its items align with the sub-variables outlined in the conceptual framework. Also, demand forecasting exhibited an average variance explained of 0.723, and rationing and gaming 0.778. Additionally, supermarket performance scored 0.768 in average variance explained. Notably, all variables demonstrated AVE values exceeding 0.5, indicating that they satisfied the criteria for construct validity. demand forecasting, and rationing and gaming exhibited strong internal consistency, with Cronbach's Alpha values of 0.805 and 0.826, respectively. These values suggest that the items within each construct reliably measure their intended concepts. The findings revealed that all practices significantly contribute to improved supply chain performance, with rationing and gaming having the strongest impact (β = 0.296, p < 0.001), followed by demand forecasting (β = 0.285, p < 0.001), The study concludes that these practices are essential for optimizing supply chain efficiency and recommends that supermarkets enhance their focus on these areas, particularly on effective rationing and gaming strategies, to achieve superior supply chain performance.

Key Words: Bullwhip Effect, Supply Chain Performance, Large-Scale Retail Supermarkets, Demand Forecasting, Rationing and Gaming


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