Business Process Innovation and Demand Forecasting Performance of Oil Marketing Companies in Kenya

Abstract

The oil industry has a significant impact on a country's economic growth, contributing about 4.8% of Kenya's GDP through oil imports. Business process innovation enables organisations to adopt new or improved methods that enhance efficiency and productivity by leveraging new technologies. However, the performance of these firms, measured by metrics such as profitability and market share, is often hindered by their inability to align operational processes with market realities. This study focused on the influence of business process innovation on demand forecasting performance among oil marketing companies in Kenya. The study applied systems theory, using resource replenishment, process alignment, and task coordination as indicators for measuring business process innovation. Out of a population of 143 registered oil marketing companies, 81 firms were purposively selected as the study sample. Primary data were collected through open-ended questionnaires, with 51 responses successfully returned and deemed usable for analysis, reflecting a response rate of 71.83%. Secondary data was obtained from reports published by ERPA on demand forecasting performance, and moving averages were used to analyse the data. The multiple regression analysis revealed that business process innovation accounted for a 40.8% change in demand forecasting performance. The correlation analysis confirmed a strong and positive relationship between business process innovation and demand forecasting performance (r=.639, p=.000). Consequently, the study indicates that business process innovation has a statistically significant relationship with demand forecasting performance (p=.000). Therefore, it recommends that companies regularly review and improve their core operations, focusing on reducing bottlenecks and accelerating data flow.