Inventory Management Practices and Service Delivery of Major Supermarkets in Kenya

Abstract

In the present day business environment, organizations must be cognizant of the role that their supply chain play for firms to survive and meet their customer demands. An efficient supply chain is necessary in ensuring a timely delivery and quality standards to the market. The general objective of the study was to establish the effect of inventory management practices on service delivery of supermarkets in Nairobi. The specific objectives was to establish the inventory management practices commonly used by supermarkets in Nairobi, namely, the vendor managed inventory, economic order quantity, just-in-time and the A-B-C model. In addition, the sought to determine the relationship between inventory management practices and service delivery of major supermarkets in Nairobi, Kenya. The target population comprised of the supermarkets Operations manager and Procurement manager that were deemed to be knowledgeable to the research subject matter. Primary data was collected using a questionnaire with both open ended and closed ended questions and administered using drop and pick later method. For analysis, both descriptive and inferential statistics were utilized and the results interpreted in terms of percentages and means score and presented in tables and figures. The study established that the supermarkets have employed the four inventory management practices in different proportions with the Just-in-time inventory system being the most commonly used followed by the vendor managed system. The JIT system is used popularly used by the supermarkets in managing the perishable goods such as milk, bread and groceries while the vendor managed inventory system is used in managing the high value products in conjunction with the ABC system where the high value and small in size products are supervised by dedicated members of staff in addition to the use of security mechanism. The findings show that the adoption of the inventory management practices has majorly led to the improvement of the relationship between the supermarket and its suppliers and from the same positive relationship; there is high product availability in the supermarket. The regression analysis reveal that the four independent variables contribute about 55.8% to the service delivery level of the supermarkets while other factors not studied in this research contributes 44.2% of the supermarket service deliver. The study recommends that for effective inventory control, the management should adopt an effective working capital management policy that will optimize the payment to suppliers and hence facilitate efficient delivery of products.