Effect of Supply Chain Management Practices on Organizational Performance in Pharmaceutical Companies in Addis Ababa

Abstract

Supply chain is system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. The purpose of this research is to study the effect of supply chain management practices (supplier relationship management, customer relationship management, level of information sharing and quality of information sharing) on organizational performance of Medtech pharmaceuticals, Zaf pharmaceuticals, Amba pharmaceuticals, Cadila pharmaceuticals and Beker Pharmaceuticals. The study was employed through descriptive research design in which selection of respondents were done using stratified sampling technique which is a mixture of deliberate (purposive) and simple random sampling technique. The analysis was made using descriptive statistics and the significant relationship of the independent variables with the dependent variable was made using inferential statistics (correlation and regression analysis). From the descriptive analysis result, SRM has mean of 4.06 , CRM has mean of 3.77, LIS has mean of 3.89, QIS has mean of 4.14 and OP has mean of 3.94. From the correlation analysis result there were significant positive correlation between the two variables (quality of information sharing and customer relationship management) and organizational performance at (p<0.01) and (p<0.05) respectively. The other two variables (SRM and level of information sharing) have no significant correlation with organizational performance. Finally, according to the regression analysis result, only the two hypotheses (Ha2 &Ha4) which are customer relationship management and quality of information sharing has positive and significant influence on organizational performance is accepted. This implies that quality of information sharing and customer relationship management must be in the best attention of business organizations to take a proactive role in the management of their supply chain in establishing a strong position over its competitors and achieving its goals.