Inventory management automation and the performance of supermarkets in western Kenya

Abstract

In today’s highly competitive business environment, organizations are striving to achieve effectiveness, cost efficiencies and economies of scale. Most of these organizations hold inventory so as to meet their customers’ needs. However, managing these inventories in order to achieve their objectives has posed a great challenge to the firms. Many firms have not yet established how much to invest in inventories and the right inventory levels to hold so as satisfy customers. Organizations have therefore turned to using modern technology to overcome such challenges. Specifically, the study sought to address the following two objectives; to establish the extent of inventory management automation and to determine the effect of inventory management automation on the performance of supermarkets in Western Kenya. The study employed a survey design and targeted all the supermarkets in Kisumu, Kakamega and Bungoma. Data was collected from 11 out of the 12 operational supermarkets and a response rate of 90.9% was achieved. Data was gathered using structured questionnaires and analysed using both descriptive and inferential statistics, with the help of Statistical Package for Social Sciences (SPSS). The findings of the study revealed that inventory management automation affected the performance of the supermarkets and that there was a positive linear relationship between inventory management automation and the performance of the supermarkets. The linear regression model used revealed that 56.7% of the supermarkets’ performance could be explained by inventory management automation (r2=0.567). The extent of inventory management was found to be high among the supermarkets, with an overall mean score of 3.94, and the performance was also found to be high with an overall mean score of 4.1both variables being rated on a scale of 1 to 5. The study recommended that supermarkets should automate their inventory management systems so as to improve customer service delivery levels and reduce operational costs. It was also recommended that the supermarkets should decentralize their management structures, encourage specialization of labour and do enough research before investing in any new technology. The study suggested that further research should be conducted on the effect of inventory management automation on inventory investment and profits, effect of automation on demand forecasting accuracy as well as challenges faced by the supermarkets in automating their inventory management systems and how to overcome them.