Influence of Supplier Diversification on Performance of Manufacturing SMEs in Nakuru County, Kenya

Abstract

This study aimed to evaluate the influence of supplier diversification on the performance of manufacturing SMEs in Nakuru County, Kenya. This study used a correlational research design. The target population was 304 respondents, including Supply Chain, Operations, Procurement Managers, and Accountants from 76 registered manufacturing SMEs in Nakuru County. A sample of 172 respondents was selected through stratified random sampling to ensure representation of all key informants. SMEs were identified from the county’s Department of Trade, Industrialization, and Cooperatives, and data were collected using structured questionnaires to ensure consistency and relevance to the study objectives. Descriptive analytics involving means and standard deviations were conducted. Pearson’s correlation analysis and linear regression analysis were used to test the relationship between the variables. The findings confirmed that supplier diversification significantly enhances the performance of manufacturing SMEs in Nakuru County. Respondents indicated that engaging multiple suppliers reduces dependency, improves supply continuity, and strengthens resilience. Firms actively sought new suppliers, maintained strong relationships with existing ones, and leveraged certified supplier databases to ensure transparency and reliability. Diversifying across geographic locations and supplier tiers was also seen to enhance flexibility and risk mitigation. The study established a strong positive link between supplier diversification and firm performance, showing that diversified firms are better equipped to maintain stability and respond to disruptions. The study concluded that supplier diversification enhances production efficiency, revenue growth, and responsiveness to market demands. Strong relationships with multiple suppliers improve customer satisfaction and supply continuity, while sourcing from different geographic locations boosts market share and competitiveness. Additionally, using certified supplier databases supports consistent profit margins and operational stability. The study recommends that manufacturing SMEs in Nakuru County adopt deliberate supplier diversification by engaging multiple suppliers across product categories and regions to reduce reliance on single sources. Managers should build strong supplier relationships, use certified databases for transparent sourcing, and proactively identify new suppliers to enhance resilience, revenue growth, and competitiveness.