Inventory Management Practices and Performance of Consumer Goods Manufacturing Firms in Nairobi Kenya

Abstract

The purpose of this research study was to establish the inventory management practices and performance of consumer goods manufacturing firms in Kenya. The research objectives of the research study were to establish the extent to which inventory management practices are implemented by consumer goods manufacturing firms in Kenya; to determine the impact of inventory management practices on operational performance of consumer goods manufacturing firms in Kenya; and, to establish the challenges faced by consumer goods manufacturing firms in the implementation of inventory management practices in Kenya. The research study was conducted via a descriptive research design. The research study adopted a census sampling technique in which all 15large-scale consumer goods manufacturing firms operating in Nairobi County were selected. The sample size of the respondents was 60 of which 54 were deemed useful for the research. The data was analyzed based on descriptive statistics in which SPSS version 20 was used. The research study found out that: an increase in one unit of ABC leads to an increase in operational performance of consumer goods manufacturing firms by a factor of 0.11; an increase in one unit of JIT leads to an increase in operational performance of consumer goods manufacturing firms by a factor of 0.16; a unit increase in EOQ leads to an increase in the level of operational performance of consumer goods manufacturing firms by a factor of 0.88; a unit increase in VMI leads to an increase in operational performance of consumer goods manufacturing firms by a factor of 0.7; a unit increase in Bar-coding leads to an increase in operational performance of consumer goods manufacturing firms by a factor of 0.41; and, a one unit increase in Simulation leads to an increase in operational performance of consumer goods manufacturing firms by factor of 0.35. The research study established that EOQ has more impact on operational performance of consumer goods manufacturing firms in Kenya relative to other inventory management practices studied. The research concluded that inventory management practices impact significantly the operational performances of consumer goods manufacturing firms in Kenya. The implementation of an effective inventory management practices leads to many benefits in a firm, including ensuring optimal production, meeting the assembly targets and on-time delivery, which are all associated with operational efficiency. While there are different inventory management practices, the findings of this research study establish that consumer goods manufacturing companies are more likely to benefit from Economic Order Quantity model, Vendor Managed Inventory and Bar-coding. This research study recommends that consumer goods manufacturing firms should embrace effective inventory management practices. This is because an effective management of inventories has an overall impact on enhancing operational performance of a firm, including a guarantee of on-time delivery, ensuring optimal production levels are met, and making sure that assembly targets are met, which, consequently, leads to a reduction of the reorder and holding costs