Factors Affecting Effective Distribution of Perishable Goods in Kenyan Retail Sector

Abstract

FACTORS AFFECTING EFFECTIVE DISTRIBUTION OF PERISHABLE PRODUCTS IN THE RETAIL SECTOR IN KENYA (A CASE STUDY OF NAKUMATT KAREN) NAME: FLORAH ADHIAMBO ODHIAMBO A RESEARCH PROPORAL SUBMITTED TO THE DEPARTMENT OF ENTERPRENEURSHIP, PROCUREMENT AND DEVELOPMENT IN THE SCHOOL OF HUMAN RESOURCE DEVELOPMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DIPLOMA IN PURCHASING ANS SUPPLIES MANAGEMENT OF JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY. 2015 DECLARATION This proposal is my original work and has not been presented for a diploma in any other University …………………………… ……………………... Signature Date This proposal has been submitted for examination with my approval as University Supervisor. …………………………... ……………………… Signature Date ABSTRACT Distribution management in the Perishable productsin retail outlets in Kenya has passed through many stagesand made various strides to enhance its operations so that members and the general public arebenefiting from in a broad perspective. Although thegovernment has been involved instreamlining the distribution system in the perishable products industry, it is marred by inefficiencies. The study will be conducted out at Nakumatt Holdings which is located in Nairobi Karen shopping center. Efficiency in distribution management has not only become a cost reduction technique but also ensures goods availability and avoidance of delays through uninterrupted and timely issues. The general objective of this research will be to determine the factors affecting effective distribution of perishable products in retail sectors in Kenya with a precise reference to Nakumatt Karen.The study will be guidedby the following specific objectives: To find out the effect of warehousing on effectivedistribution of perishable products; To investigate how channel of distribution affects the effective distribution of perishables products; to assess the effect of procurement planning on effective distributionofperishable products and to establish the effect of supplier relationship on effective distribution ofperishable products.We will formulate four research questions. The answers to the research questions will establish a basis upon which factors affecting the distribution of perishable goods in Nakumatt Karen supermarket will be determined..The expected beneficiary will be as follows: Management of Nakumatt Holdings, Other Researchers and Government of Kenya. The theoretical approach that will be used in this study will be by the use of literature review and conceptual framework.In literature review we will discuss the various dimensions in distribution of perishable goods such as definition of distribution, factors affecting effective distribution, theories related to distribution and research gaps the study will seek to fulfill. In chapter three the researchers will employ a case study approach. The chapter will identify the research design, population, sample frame, sample and sampling procedure, instruments, data collection procedure, pilot test and data processing and analysis will also be used in the study. The research instrument that will be used is questionnaire. The study will use quantitative approach and data will be analyzed and presented using charts, tables and percentages. The results of the study will inform the company on the factors to put more emphasis in order to improve the desired results in the distribution effectiveness. LIST OF TABLES LIST OF FIGURES ACCRONYMS SCM: Supply Chain Management JIT: Just In Time DC: Distribution Centre SRM: Supplier relationship management SCOR:Supply Chain Operations Reference FFV:Fresh Fruits and Vegetables. DEFINITION OF TERMS Distribution- is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.it is one of the four elements of the marketing mix. Distribution management- is an overarching term that refers to numerous activities and processes such as packaging, inventory, warehousing, supply chain and logistics. Retail- is the process of selling consumer goods and/or services to customers through multiple channels of distribution to earn a profit. Perishable products- are those that worsen in quality over time, and become lesser in value. Perishable goods decay rapidly if not refrigerated, or if some other preservation technique is not employed. Supplier relationship management(SRM) - is the discipline of strategically planning for, and managing, all interactions with third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions. Procurement planning- is the process used by companies or institutions to plan purchasing activity for a specific period of time. This is commonly completed during the budgeting process. Distribution Channel- is the chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. Warehousing- is the process of storing goods within a storage facility. A sample-is the group of people who take part in the investigation. The people who take part are referred to as “participants”. Sampling- is the process of selecting participants from the population. Thetarget population- is the total group of individuals from which the sample might be drawn. Analyzing My Personality CHAPTER I INTRODUCTION Background of the Study After a company has defined its target market and desired positioning, it should identify its effective distribution channel. A distribution channel is the external contractual organization that management operates to achieve its distribution objectives (Rosenbloom, 2011). According to Amara (2012), it is a set of management, institutions, agencies and establishments in which a product must follow from the producer to the consumer. Dent (2011) notes that distribution channel performs the work of moving goods from producers to consumers, thus, helping to overcome the place, time and possession gaps that separate services and goods from those who want and need them. They provide a link between consumption and production by filling discontinuity that exists between them (Rosenbloom, 2011). Distribution involves warehousing, inventory management, transport and delivery. These ensure flow of goods up to the end consumers where utility is created. Distribution is also the process of planning, implementing, and controlling efficient and effective flow and storage of goods, services, and related information from the point of requirement (Rosenbloom, 2011). The main purpose of distribution management is to provide the customer with the right goods delivered at the place, at the right time and right conditions in accordance with customer expectation (Dent, 2011). This implies that distribution time and channel has a strong link with the profitability of an organization especially on the perishable goods. Distributions of perishable goods have posed major threats to retail outlets on a global scale. Many companies worldwide have experienced several loses due to the distribution and maintenance of the fast moving consumer goods and perishable goods in the shelves (Farahani, Grunow & Günther, 2012). This happens when these materials spoil before their consumption by the customer. For example, Hopkins Company has been faced with several challenges in handling and distributing perishable goods. According to Amorim, Günther, and Almada-Lobo (2012), one of the challenges in Hopkins is how to store and distribute such products. As a result, the company has faced major losses up to 60% specifically on perishable products. Moreover, Fast Food market, a USA based retail outlet for fast consumer moving goods have faced several challenges in handling the perishable goods. As stated by Chen and Zhong (2013), cases where these problems of managing such products are external hence become uncontrollable by the management. For example, when the shelve life a product is due but the consumers are not available. As such, it is convincible that distribution of perishable product has become a worldwide issue that jeopardizes the performance of retail outlets on a global scale. Kenya is no different either, with realization that these products have become part and parcel of people’s lives in Kenya, several retail sector outlets have been dominated by products such as fruits, vegetables (George & Iravo, 2014). However, their management has posed several challenges such that it is a few retail outlets that can manage them effectively. In that manner, several kiosks and small retail outlets have either resorted to certain mechanisms that only serve few customers or have stopped their sales. This is because of a constant increase of consumption of the perishable products increases requirements and complexity put on the process of distribution of such products (George & Iravo, 2014). On the other hand, the trend of increase of consumption of such products encourages different organizations to get more and more involved in this promising field of logistics. However, majority of these enterprises face certain problems, since the critical factor of successful performance in the field of distribution of perishable products is ability of particular enterprise to create and maintain modern, dynamic and competitive system for distribution of perishable goods. As noted by Obat (2013) Kenya is one of the countries in East Africa that has been dominated by several big outlets such as Nakumatt, Ukwala, Tuskys, Naivas among others. However, these supermarkets performance have been slowed by a general performance on distribution of perishable goods. For example, The retailing industry plays a crucial role in the overall economy of Kenya contributing 10% to GDP and an estimated total wage payment of Ksh. 86.7 million within the private sector in 2012 (Economic Survey, 2013). Conversely, Obat (2013) says that a proper handling and distribution of perishable products can ultimately raise the GDP according to the consumption trend and demand of such products in the market. He further notes that several individuals in Kenya buy few perishable products due to lack of proper storage mechanism. Nakumatt Karen being one of the major retail outlets in Kenya has been hit by the performance of perishable goods. Other than shoplifting and paper work errors, the company presents huge losses of which 60% has been caused by the perishable goods on the shelves (Hidaya, 2014). This is due to their spoilage before the shelf life date. Moreover Rejection and little consumption of these products by the customers has become a major concern of the retail shop. Nakumatt holdings profile Nakumatt holdings limited was established in 1987,is the country leading retail with a total of 19 branches over Kenya holding a wide range of 50000 quality product in any branch to meet and suit the needs of all segment in the economics sector in Kenya in accessible and affordable way (Bosco, 2014). Nakumatt stays ahead of competition by providing quality and variety at a competitive price for its product. The chain has well designed stores with wide aisles to walk around and attractive display units for convenient shopping. Besides corporate endeavor, Nakumatt operations are tailored to be highly sustainable on all front, spearheading community development projects on aspects such as health, entrepreneurship, sport ,cultural, environment, education and urban restoration and given the role that retailer sector is currently sector is currently playing in the east African economy (Bosco, 2014). The retail industry is very vibrant and developing at a very fast rate. According to a recent global research study by research and markets, Nakumatt remain the fastest growing retail format followed by convenience stores (Hassler & Ryder, 2010). According to convenience stores market-worldwide (2005-2008) report; attributes, economic growth, technology advancements, rising income levels, changing consumer preferences and convenience are the major market forces for the convenience store industry. Statement of the Problem Perishable productshavebecome one of themajorchallenges that affecttheperformanceof the large retail sectors on a global scale (Haenlein, & Park, 2013). In themarket, distribution has a significantrole in theindustry as itinfluencesthesaleandservices within an organization, especially, perishable goods. Theperformance of distribution logistics of perishable goodsimpacts immensely on theperformance of an all-inclusiveorganization (Brian, 2009). It is becauseitconnectsthebody to thecustomers, thus, has an influence on customersatisfaction that affectscustomerloyalty, debatably themostsignificant asset of the organization. Theretailsectorshavebeenmostlyaffected by theperformance of perishable goods in Kenya and Worldwide (Haenlein, & Park, 2013). A 2007 studycarried by Hassler et. al revealsthat, other than paperworkerrorsandthetheft, perishable goods not sold within shelflifehavecontributed majorly to theshrinkage of accounts in the Global Retail Theft Barometer 2008.Thedistributions of theseproductshavebecomean important factor that has jeopardized their performance on theshelvesthuscontributing to shrinkageandenormousloses in retailsectors. Nakumatt, a retailshop in East Africa is one of theshops that havebeenaffected by thedistribution of perishable goods, and has incurredlossesdue to distribution of suchproducts. Asposited by Hidaya (2014), in a statement of financial controller, the perishable goodsaccountfor 60% lossesthat Nakumatt retail shopincur per year on top of shoplifting in the supermarket. The supermarket has not implementedprecisesystemssuch as Procurement Planning and warehousing that will preventthespoilage of perishable products (Hidaya, 2014). According to Cochran (2004) whenprimaryfactorsaffectingdistributionsare identified, theretailshop will reducelossesitincurs by more than 50%. Themajoraim of thisstudy will be to investigatefactorsaffecting effectivedistribution of perishable products in retailsector in Kenya with a precisereference to Nakumatt Karen. Objective of the Study General Objectives The general objective of the study will be to establish the factorsaffecting effectivedistribution of perishable products in retailsectors in Kenya. Specific Objectives To study the effect of supplier relationship on the effective distribution of perishable products in the retail sector in Kenya at Nakumatt Karen. To investigate how channel of distribution affects the effective distribution of perishables products in the retail sector in Kenya at Nakumatt Karen. To determine how procurement planning affects the effective distribution of perishables products in the retail sector in Kenya at Nakumatt Karen. To find out how warehousing affects the effective distribution of perishable products in the retail sector in Kenya at Nakumatt Karen. Research Questions How does supplier relationship affect the distribution of perishable products retail sector in Kenya? To what extent does channel of distribution affects the distribution of perishable products retail sector in Kenya? In what ways does procurement planning effect on the distribution of perishable products retail sector in Kenya? What influence does warehousing have on distribution of perishable products retail sector in Kenya? Justification The findings of this study are very imperative to the researchers and scholars in several ways. The finding will add and enhance understanding on factors that have great influence on distribution of perishable products in retail shops in Kenya. Moreover, this study will provide further materials and foundation for related research in future. For policy makers such as the government and other non-governmental organizations, the study will assist the implementation policies at streaming distribution of perishable goods within the country. At the same time, the policy makers will acquire knowledge on the distribution of perishable goods as well as fast moving products. Therefore, various industries will obtain the knowledge and guidance from this study in designing superb policies that will ensure appropriate implementation of relevant policies. The study will help the management of retail outlets to address the shortcomings in the distribution of perishable products to the supermarkets, challenges experienced in the implementation of distribution strategies, and provide guidance in the up scaling of its distribution for increased profits. It will also introduce new comparative knowledge for managers to deal with challenges arising from the choice of product distribution channels. The scope of the study The scope of the study will be to find out the factors affecting the distribution of perishable products in the retail sector in Kenya, this will be carried out in Nakumatt Holdings which is located in Nairobi Karen shopping center. The research intends to collect data from the employees of this organization, which include top management, head of department and subordinate staff. CHAPTER 2 LITERATURE REVIEW Introduction This chapter presents the literature review in form of both theoretical and conceptual framework. The chapter specifically discusses the theoretical foundation, retail distribution channels as well as supermarket distribution channels. It focuses on the review of the past studies of other scholars on the effective distribution of perishable products in the retail sectors from a global and Kenyan perspective. It also covers the objectives of the study acknowledging the sources of the information about the objectives, the critical analysis of the theoretical review and the summary on the main concepts of distribution, its importance to an organization and probable key factors to obtain efficiency in distribution of perishable products. The chapter ends with research gaps the study seeks to fill. Theoretical review The purpose of theoretical review is to specifically look into factors affecting effective distribution of perishable goods in supermarket in Kenya, with a specific reference to Nakumatt supermarket located at Karen shopping Centre in Nairobi. This study is based on the theory of SCOR, Partnership theory, as well as the Bargaining Theory of Distribution Channels. Supply Chain Operations Reference (SCOR) theory Supply chain operations reference model (SCOR) was first developed by the management consulting firm PRTM (management consulting subsidiary of PwC). Currently, it is the part of price water house coopers and was endorsed by supply chain council as a supply chain management diagnostic tool (Zhou et al. 2011). The management defines SCOR as a tool that enable the users to address, improve and communicate the activities within a supply chain and all the other parties involved (Sürie & Reuter, 2015).This model was developed to clearly show the cycle involved in satisfying the customer demands and is based on the process modeling, performance measurements, and best practices. The process modeling pillar assists in describing simple and very complex supply chain activities. Noted by Sürie and Reuter (2015) SCOR is based on a number of distinct management processes which include planning, sourcing, make decisions, deliver and return. Plan as a management process entails balancing aggregate demand and supply to develop a course of action which will best meet the source, production, and delivery requisition. Source is about procuring of goods and services that will meet the demand in the market. Deliver are the processes of providing finished goods and services to meet the demand, and also includes order, transport, and distribution management. Finally return entails processes associated with the return and receiving of reimbursed products for reasons best known by the customer (Zhou et al. 2011). The scope of the model covers the International Journal of Social Sciences and Entrepreneurship Vol.1, Issue 7, 2013.Interaction of the customer from order entry to invoice payment, all product transactions from the supplier to the customer in the supply chain including the spare parts, supplies, and the interaction in the market from understanding the knowledge on demand aggregate to the fulfillment of each order made. The theory was developed for effective communication among partners of the supply chain. It also facilitates collaboration within the supply chain and horizontal integration (Bai & Koh, 2012).The model is used to describe measure and evaluate supply chains in a move of supporting the strategic plan and continuous improvement. The performance measurements pillar contains more than 150 key indicators that are used to measure performance of the supply chain operations (Zhou et al. 2011). The SCOR performance metrics are organized in some of a hierarchy and level 1 metrics are typically used by top management decision makers to measure overall supply chain performance. Level 1 metrics are primary and do not necessarily relate to a SCOR level process which are plan, source, make, deliver, and return (Bai & Koh, 2012). The best practices pillar basically identifies what activities should be performed once the performance of the supply chain operations has been measured and performance gaps identified .The SCOR model defines best practice as a current which must not be emerging, structured; with stated goals, scope, process and procedure, proven; that is with proven success and repeatable method for making a positive impact on desired operational results. Partnership Theory The common models through which theorists study the relationship between the supplier and buyer is known as the partnership theory (Kelly, 2012). In its basic nature, the partnership model depicts the buyer and suppliers as partners with a common interest which is customer satisfaction. Partnership is a business relationship based on mutual trust, openness, shared risks and rewards that enables an organization gain competitive advantage leading in the company achieving a performance that is far much greater than the firms would have achieved when operating as single entities. This model requires efficient information exchange between the buyer and supplier which is a critical element of any partnership. The theory further states that any partnership is always based on the value and respect for each other. The solid and long term relationship simply implies continuous improvement of the organization performance (Kelly, 2012). Suppliers must provide better services that are of high quality than its competitors at a price reasonable and still achieve goals to remain in business (Oldham, 2014). Partnership model according to Oldham (2014) increases a company’s efficiency through way of cooperation; both parties obtain cost reductions which leads to price reductions and therefore increasing the market share and profit margin as well. This leads to a company gaining a competitive edge and efficiency. The characters which form the perceived attributes of partnership include the following; high frequency of both formal and informal communication, co-operative attitude, trusting relations are built, problem solving that is win negotiation style, long term business agreement, open sharing of information and vendor certification, and defect prevention approach. Motivation factors, environment, strengths, and duration of operation vary in different partnership formed. However, there is never an ideal relationship that is recommended (Kelly, 2012). There are three types of partnership; the type 1 which is the most used. Companies recognize each other as partners, all the activities are co-ordinated, and planning is short term. Only one division within the organization is involved (Oldham, 2014).The second type is the type 2 partnership which basically integrates activities rather than coordinating as in the case in type 1.There are multiple divisions and entails a long term horizon. The last type of partnership is the type 3 partnership which is not used frequently. Companies share high operational integration and each views the other as an extension of their firm. The partnership theory has three elements which are drivers, facilitators and components. The drivers: each party must have a driver strong enough to provide them with realistic expectations of significant benefit through strengthening of the relationship. Facilitators on the other hand include corporate compatibility, mutuality, managerial philosophy and techniques and symmetry. The final element is the components which are the factors that can be controlled in a partnership by the management. They include planning, joint operating controls, communications, risk/reward sharing, trust and commitment, contract style, scope and financial investment (Zhou et al. 2011). In conclusion in order to gain leadership position against your competitors and ensure the company grows, partnership can be used to achieve the above. Bargaining Theory of distribution channels A critical factor in channel relationships between manufacturers and retailers is the relative bargaining power of both parties (Haucap et al, 2013). In this article, the authors develop a framework to examine bargaining between channel members and demonstrate that the bargaining process actually affects the degree of coordination and that two-part tariffs will not be part of the market contract even in a simple one manufacturer-one retailer channel. To establish the institutional and theoretical bases for these results, the authors relax the conventional assumption that the product being exchanged is completely specifiable in a contract. They show that the institution of bargaining has force, and it affects channel coordination when the complexity of non-specificity of the product exchange is present (Palmer, 2012). The authors find that greater retailer power promotes channel coordination. Thus, there are conditions in which the presence of a powerful retailer might actually be beneficial to all channel members. The authors recover the standard double-marginalization take-it-or leave-it offer outcome as a particular case of the bargaining process. They also examine the implications of relative bargaining powers for whether the product is delivered "early" (that is., before demand is realized) or "late" (that is., delivered to the retailer only if there is demand). The authors present the implications for returns policies as well as of renegotiation costs and retail competition. 2.2.1 Empirical Review Several studies have been conducted in relation to distribution of perishable goods in the retail sectors. Distribution is often viewed as that which covers abroad range of activities aim at efficient movement of finished goods from the end of the production line to the consumers. Chege (2014) in his own contribution stated that distribution management involves the integration of the six activities of distribution namely, transportation, warehousing, inventory control, material handling, order processing, and protective packaging into a complete distribution strategy. Kamau (2014) carried out a study on the response strategies adapted by Nakumatt Holdings to the challenges of distribution of perishable goods in Kenya. Basing on its methodology, the study adopted a case study research design because only one organization was involved. The study used primary data collection using an interview guide. The data obtained from the interviews were mainly qualitative. Content analysis was used to analyze the findings. The study established that the strategies developed were tied to the overall corporate strategy to enable the Organization attain its strategic goals. According to Kamau (2014) the challenges facing the Organization were both internal and external. They included: Changes in consumer buying habits and motives; changes in the marketing mix; changes in the availability of middlemen; changes in resources; changes in competition; and changes in all the environmental factors call for a modification or a redesign of a company’s distribution structure. 2.2.2Conceptual framework Conceptual framework as a detailed description of the phenomenon under study accompanied by a graphical or visual depiction of the major variables of the study. According to Ally (2011), conceptual framework is a diagrammatical representation that shows the relationship between dependent variable and independent variables. In the study, the conceptual framework will look at the factors affecting effective distribution of perishable products in retail sectors in Kenya. Independent variables Dependent variable Channel of distributionSupplier relationshipProcurement PlanningWarehousingEffective distribution ofPerishable Products Channel of distribution Supplier relationship Procurement Planning Warehousing Effective distribution of Perishable Products Figure 1: Factors affecting Effective Distribution of Perishable Products 2.2.3 Dependent Variable Effective Distribution of perishable products The food distribution system in Kenya is complex. Many players including middlemen produce, manufacture, transport, distribute, market, and sell every type of food product imaginable. By the time a product is placed on a grocery store shelf, it has traveled countless miles and has been handled by many people. Each person has evaluated and scrutinized the product to assess its risk and opportunity. Each has considered quality, price, labeling, and marketing plans. By the time the product is purchased, the manufacturer, broker, distributor, and retailer have all determined it to be viable and profitable, and the end consumer has deemed it to be of significant value. Creating the product is only half the battle; the next step is to distribute and market it. While some manufacturers can market their products directly to consumers (through farmers’ markets, online sales, or DSD), most food manufacturers need to use middlemen to reach the final consumers and thus distribution become of utmost importance. Distribution is where intermediaries, such as wholesalers and retailers, split large production runs into small amounts (breaking bulk) and create an assortment of products to offer customers (Bajaj, 2013). Distributors facilitate or help the flow of the transaction by physically moving product, information, or funds through the distribution channel. Distribution systems, thus, provide a standard of living for customers by moving products from producers to users in the most cost efficient manner as possible. This calls for marketing systems to constantly look for ways to lower the overall cost of distribution channels while striving to improve relationships between channel members. The main functions of a distribution system are ordering, warehousing, and physical movement of the product from producers to end users. Much has been said both from foreign and local authors about distribution and logistics on perishable agricultural products. Sürie and Reuter (2015) stated that distribution comprises of the tasks involved in planning, implementing, and control of the physical flow of material and final goods from the point of origin to the point of use to meet the needs of consumers at a profit. The authors reveal that many enterprises states their physical distribution objectives as getting the right goods to the right place at the right time. According to Zhou et al. (2011), this perception evidences that distribution involves all the activities required to physically move raw materials from the point of purchase to the final users of the products. Bajaj (2013) notes that distribution is concerned with the identification of movement required to integrate overall logistics to customer’s satisfaction. On the other hand, Bosco (2014) defines distribution as a set of activities including order processing material handling, inventory management, warehousing and transportation used in the movement of products to consumers as the end users. An effective and efficient distribution system should be in place to deliver the right quantity of goods at the right place and time with the right support services to the customers. In support of the above, Sürie and Reuter (2015) on their own view said that all activities involved in getting goods to the right place, at the right time, right price and quantity can be described under the term distribution. Oldham (2014) still went on to say that distribution is concerned with the identification of movement required and the establishment of plans to integrate over all logistics operations to customer’s satisfaction. An effective and efficient distribution system should be in place to deliver the right quantity of goods at the right place and time with the right support services to the customers. Thus distribution is an important activity that complete the work of satisfying the target achieve. Product shelf life is one of the greatest challenges and constraints in fresh food industries. Due to the perishable nature of these products, inventory levels across fresh food distribution chains have to be very low in order to avoid waste due to product expiration and spoilage. Retail outlets channel has been characterized as a service with high degree of labor intensity, and low degree of interaction and customization (Bosco, 2014). Examples of retailers in Kenya include the supermarkets, kiosks (very small convenience stores), hawkers, butcheries, fuel stations among others. While the traditional marketing emphasis in retail outlets channel has been on product quality (goods), growing research in service quality has made many retailers to understand the importance of service quality in their retail offerings. 2.2.4 Independent Variables How Supplier Relationship Affects Distribution of Perishable Products Supplier Relationship Management also called Vendor Relationship management is a set of principles, processes and tools that can assist organization to maximize relationship value with suppliers and minimize risk management of overhead through the entire supplier relationship life cycle. According to Bosco (2014) supplier relationship is a comprehensive approach to managing an organization’s interactions with the firms that supply the products and services it uses. The immediate objective of SRM is to streamline and make more effective the sourcing processes between an enterprise and its suppliers. Indirectly, SRM is also aiming at quality-related improvements of information, products, services, and work force capabilities. Effective SRM requires understanding of which suppliers are the most strategic to the organization and which are less important. Supplier relationships play a key role in many organizations. These roles include a limited to optimize value through cost reduction, innovation, risk mitigation, and growth throughout the relationship life cycle. Research indicates that parties entering a supply relationship are sometimes dissatisfied in about five to nine months later. According to Parfitt et al. (2010), just like any other industry where adversarial and confrontational attitudes exist suspicions can be fueled and the relationship between the supplier and contractor can be dominated. Various organizations adopt a particular kind of supplier model that can enhance competitive advantage of a given company or organization. However, other companies may decide to adopt either an adversarial supplier buyer model or an interactive or lammings supplier buyer model. Basing on the notion that supplier relationship plays a fundamental role in the distribution of perishable products; the supplier relationship might be faced with various challenges that may end up deterring it from promoting effective distribution of perishable products in the supermarket. These challenges may include but may not be limited to calculation of the return on investment (ROI), an occurrence of the SRM sales pitch, difficult communication among suppliers and organizations, and lack of enough time (Parfitt et al., 2010). Basing on various issues that affect the...