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EFFECTS OF PIRACY ON SUPPLY CHAIN PERFORMANCE ON ORGANZIATIONS: A CASE OF MOTOR VEHICLE INDUSTRY IN KENYA


Charles Kiptanui Boen

Masters Student, Jomo Kenyatta University of Agriculture and Technology, Kenya


ABSTRACT

Piracy is a crime that preys upon the cargo supply-chain, slowly feeding off its network of intricate transportation systems. The vulnerability of the maritime sector has been noted in several prominent private and public government documents, both domestic and worldwide. In addition to maritime terrorism, the maritime region harbors many other threats to countries sovereignty, natural resources, environment, economic prosperity, and social welfare. Statistics from republic of Kenya shows that the country lost billions on maritime piracy. Further statistics shows that Toyota Kenya incurred losses of billions when a ship was hijacked by pirates of Somali origin. This Study seeks to determine the effects of piracy on supply chain in Kenya with reference to Motor Vehicle Industry in Kenya and contribute to other studies by ascertaining if piracy affects supply chain. The researcher used descriptive research design in collecting the data from respondents. The target population was from Toyota Kenya, the population was divided into several groups with distinct characters as Management, sales staff and customers. The sample size of the study was 104 which represent 15% of the population size and consist of senior management, middle management and support staff. Descriptive statistics especially, frequencies and cross tabulation will be applied to help establish patterns, trends and relationships and to make it easier for the researcher to understand and interpret implications of the study. Presentation of data was in form of Tables, Pie-charts and Bar graphs only where it provide successful interpretation of the findings. Descriptive data was provided in form of explanatory notes. Inferential statistics was used to establish the relationship between value chain and piracy. The study found that commodities which were lost through piracy do affected the supply chain performance to a greater extent, that the quantity of goods lost affects revenues for the company through, loss of customers, increased insurance premium, increase lump sum and also via loss of merchandise. The study revealed that piracy brought about rise in transportation costs, and at the same time it made the competition to be stiff them.  The study found that there are fears that if the price of shipping, including insurance premiums, continues to rise, regional trade will also go down. The study found that piracy affected the company lead time through increased route of transportation, delay in delivery of stock, holding of ships with consignments, lateness of the merchandise and theft of stock in transit and throughout this time the company lost some of its customers. The study recommends that risk assessment should be done when establishing the transportation routes which is synonymous with the uncertainities expected which can be assessed by objective information and probability distribution for relevant supply chain risks or consequences which can be derived.


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