1.1.3 Pharmaceutical Industry in Kenya
According to Kenya National Bureau of Statistics (2012), Kenya is currently the regional hub for production of pharmaceutical products in the Common Market for Eastern and Southern Africa (COMESA) region, contributing about 50% of the regions’ market. Currently, over 60% of the region’s estimated 50 recognized pharmaceutical manufacturers are based in Kenya with about over 10,000 drug molecules being registered by The Kenya pharmacy and poison board -(Export Processing Zones Authority, 2005). These products are grouped according to various and specific levels of outlet as free sales/ over the counter, pharmacy technologist dispensable, or pharmacist dispensable/ prescription only.
The pharmaceutical industry business chain entails three segments, namely; the manufacturers, distributors, retailers and the final consumer. All these play a major role in supporting the country’s health sector, which is estimated to have over 4,600 health facilities countrywide (Kenya National Bureau of Statistics, 2012).
Pharmaceutical manufacturers function in an intricate atmosphere due to their production processes that involves numerous interconnected steps that use lots of materials from diverse suppliers (Altria and Carleysmith 2009).
Kenya Medical supplies Agency (KEMSA) manages all drug supplies to government hospital in the country and hence is the biggest purchaser of medicine produced both locally and through importation (Mussumba, 2014). KEMSA procures about 45 % of the pharmaceuticals in the Kenyan market by advertising through open tendering program and supplies them to hospitals categorized from level 1 to level 6 and referral hospitals in the country, all giving a total of about 4600 health facilities in the entire country.
McFarlane ; Sheffi (2003) observes that an entirely distinct “set of objectives, drivers, and constraints become dominant” once a drug has been launched. The main participants in drug supply network include manufacturers, government agencies, research organizations, distributors, hospitals, clinics, pharmacies. This supply network is also responsible for the distribution of prescription drugs, over-the-counter medicines, generics, and biologics having distinct handling needs and operational goals (McFarlane ; Sheffi, 2003).
1.2 Research Problem
The impact of lean practices on a business success is paramount. Companies flexibility and profitability is enhanced through lean practices, implementation tools and methods. The process of lean implementation entails “pull production, quality development, process focus, continuous improvement, value stream management, and worker empowerment” (Shah ; Ward, 2007, Pal ; Kachhwaha, 2013). Lean practice endeavors to maximumly gratify customer needs through waste reduction. Elimination of wastes can be considered in the human resources, design, production processes and activities, distribution, and inventory sections (Sang, Khairuzzaman, Abdul, Boon ; Yew, 2013; Kannan, Selladurai, ; Karthi, 2013). Shah and Ward (2003) observe that implementing lean practice tools and methods help cut such wasted effort. Initially, supply chain players should understand the lean concept, and then applying its objectives through high echelons of partnerships and cooperation.
Various research works and articles on lean practices focus on the implementation of systems, as well as their impact on operational performance (Demeter ; Matyusz, 2011; Shah ; Ward, 2007; Pal ; Kachhwaha, 2013; Cudney ; Elrod, 2011; Cua, McKone ; Schroeder, 2001; Corbett ; Klassen, 2006). There is scarce research on the application of the lean concept in the supply chain and detect the most significant tools and methods that help achieve the objectives of the lean concept. The study by Onyango (2014) among state corporations in the health ministry connects LSCM and organization performance with workplace organization taking the biggest effect while problem solving showed the lowest effect on the firms studied. Research of Azagedan et al. (2013) has found that the environmental uncertainty affects lean operations and lean purchasing practices. As a result, intricate atmospheres make it hard to detect, diagnose and respond to hitches.
Mutual interactions between lean practices and supply chain integration across the supply chain network were previously studied, but no studies were found that described the conditions for lean adoption and integration within an intricate pharmaceutical network.
1.3 Major objective
This research intends to determine ways to effectively implement lean practices and evaluate the supply chain performance of Pharmaceutical companies in Kenya.
This research endeavors to answer:
1) Which are the most important tools and techniques that carry out the objectives of the lean practices in the supply chain of the pharmaceutical industry?
2) What are the appropriate connections and circumstances for the extension of lean practices across the supply chain in the pharmaceutical industry in Kenya?
1.4 Specific Research objectives
The study will be guided by the following objectives:
1) To identify the most important tools and techniques that carry out the objectives of the lean practices in the supply chain of the pharmaceutical industry.
2) To evaluate the appropriate connections and circumstances for the extension of lean practices across the supply chain in the pharmaceutical industry in Kenya.
1.5 Value of the Study
Pharmaceutical manufacturers: this study will provide industry policy makers and managers with valuable information regarding manufacturing.
Other organizations: organizational policy makers and managers with benefit with valuable information regarding lean practices in manufacturing emanating from the findings of this study.
Academicians and practitioners: It is expected to add more knowledge in field of supply chain management and therefore scholars are to benefit from this.
