Inventory management practices and operational performance of Kenya animal feeds industry

Abstract

The 21st century business environment is highly competitive and extremely volatile. Interference of business norms is not only subjected to externalities but also to internal perspectives. Effectiveness and efficiency have become major sources of success in many areas with every entity struggling to cope with the wave of change and expected quality standards and levels. Duly then, handling and operational costs have increased exponentially putting more pressure on performance. As a one of the means to drive and overturn this rising trend, business entities have unanimously instituted and operationalized inventory management practices. The practices aid in optimizing various operation sections and further reduce resource wastage within inventory and inventory handling, especially in the animal feeds industry. Inventory and inventory handling in this case is viewed as a major determinant of operational performance as well as an easy source of firm failure. It is therefore important for operations managers and the entire animal feeds industry to understand the link between the inventory management practices and operational performance. This research project focuses in proving this information so that feasible decisions are made accordingly. The context, which is the animal feeds producing industry, is inventory intensive to the extent that inventory handling forms 80% of all operations. In addition, all the core operating activities in animal feeds producing industry involves 90% inventory handling. This study therefore sought to determine the inventory management practices used by animal feeds producing companies in Kenya as well as establishing the impacts of the practices on the companies’ operational performance. A sample size of twenty four firms was approached using a descriptive research design. A questionnaire and a study guide were used to collect data which was analyzed based on the objectives. To obtain for the first objective, descriptive statistics was used while correlation and regression was used to obtain the second objective. From the statistical means, the practices were found to be intensively applied. From the correlation analysis, a high relationship value was established between operational performance and inventory management practices. The study concludes that inventory management practices significantly determine operational performance. Limitations of the study include the use of four inventory management practices in spite of existence of a large pool and the focus on the manufacturers when operational performance is a function of the entire the supply chain. To deal with these limitations, the study suggests for further research: one involving all the possibly available practices and another on considering the entire supply chain, or a combination of both.