Inventory Management and Organizational Performance of Cement Manufacturing Firms in Kenya

Abstract

The main objective of the study was to determine the effect of inventory management practices and organizational performance of the Cement manufacturing Firms in Kenya. The specific objectives of the study were; to establish the inventory management practices employed by the cement manufacturing firms in Kenya. To determine the relationship between inventory management practices and organizational performance of the cement manufacturing firms in Kenya. The study adopted a descriptive research design. The target population comprised of 6 cement manufacturing firms in Kenya. A census was used with the 35 respondents. Data was collected data using structured questionnaire, and the data coded into SPSS software for analysis using descriptive and inferential statistics. Descriptive statistics included use of means and standard deviation while inferential statistics included use of regression analysis. The findings were presented using frequency distribution Tables. With a response rate of 62.85 % the study established that most cement manufacturing firms used JIT to reduce the stock and the carrying cost associated in the firm. The firm used ABC analysis to assess the status of the items in the stocks. The firm used FOQ to ensure that there was an efficient and effective level of inventory in the firm. The firm used Vendor Managed Inventory to allow flexibility of the customers demand. Just-in-Time, ABC analysis, Fixed order quantity and Vendor managed inventory all had positive and significant relationship with organizational performance. The study concludes that most cement manufacturing firms used JIT to reduce the stock and the carrying cost associated in the firm. The firm only stored what was being required in the production process. The firm used ABC analysis to assess the status of the items in the stocks. The firm used FOQ to ensure that there was an efficient and effective level of inventory in the firm. The firm used Vendor Managed Inventory to allow flexibility of the customers demand. The study recommends that cement manufacturing firms in Kenya should use JIT to reduce the stock and the carrying cost associated in the firm. All the cement manufacturing firms in Kenya should adopt JIT, ABC Analysis, Fixed Order Quantity and Vendor managed inventory systems in managing of inventories. The cement manufacturing firms should also hire experts to handle statistical formulas that integrated sales forecasts data to accurately calculate safety stock levels in order to avoid stock-outs.