Inventory Management Practices and Productivity of Large Manufacturing Firms in Nairobi, Kenya
Abstract
The past 20 years have seen an increase in research focusing on operational issues
relating to supply chain management. Most of the research has been related to multiechelon
inventory models. Inventory plays a big part in the manufacturing firms as it
accounts for more than 50% of the annual turnover. The motivation of the study was
based on the fact that long term success and survival of any organization depends entirely
on how well organizations are managing their costs. The study focused on answering the
following research questions; what inventory management practices are being used in
large manufacturing firms in Nairobi, Kenya? Is there any relationship between inventory
management practices and productivity of large manufacturing firms in Nairobi, Kenya?
The study was based on theory of constraints and Lean theory. The Research design used
was descriptive design. The population of study comprised of large manufacturing
companies that are based in Nairobi. According to the Kenya Association of
Manufacturers, there are a total of 499 large manufacturing companies operating in
Nairobi. The sample size of the study included 50 large manufacturing companies. The
study used primary data which was collected using a questionnaire and data was analyzed
using descriptive statistics including mean and standard deviation by use of the relevant
computer packages such as Microsoft Office Excel and Statistical Package for Social
Sciences (SPSS) program. The study concluded that inventory management practices
positively affect the productivity of large manufacturing firms in Nairobi, Kenya.
Effective inventory management has become a critical issue for firms’ productivity.
Large manufacturing firms have saved millions of dollars in costs and decreased
inventories while improving efficiency and customer satisfaction though inventory
management practices. Inventory management has resulted to integration of better
production methods to minimize costs and wastages. The study recommends that
inventory management should to be recognized as a top management function; control
measures should be taken on stock by fully adopting lean inventory systems that greatly
improve the performance of the procurement function; strategic supplier relationships
should be maintained by adopting Vendor Managed Inventory; firms should adopt
information technology in inventory management; and adhere to the legal policies in
place as they will help the procurement function to manage its inventory and improve on
performance because of the legal framework that is provided.
Publisher
University of Nairobi