Effect of Inventory Management Practices on Supply Chain Performance of Cement Manufacturing Firms in Kenya.

Abstract

Organizations have implemented inventory management practices because of the advantages gained from it and they considered a valuable asset to an organization as it helps in reducing operational costs, maximizes revenues gained and increases sales. At times organizations fail in managing its inventories which lead to reduced productivity, increase in production costs and resource wastages. The purpose of this study was to investigate the effect of inventory management practices on supply chain performance of cement manufacturing firms in Kenya. Cement firms are the major consumers of imported and local bulk materials that are very costly hence the need for proper management. The specific objectives were to establish the effect of economic order quantity and electronic inventory management on supply chain performance among cement manufacturing firms in Kenya. The theories of transactional cost, inventory cost and theory of constraints anchored the study. A descriptive research design was adopted by the study. The target population was 8 cement manufacturing firms as the unit of analysis while the respondents being unit of observation were 167 staff from procurement or supply chain departments and their equivalents from these firms. Using the Kothari formula, the sample size was 167 employees who were randomly selected using the stratified random sampling technique. The study collected primary data using questionnaires and secondary data using data collection sheet. Descriptive statistics were used in the analysis and obtain means and standard deviations. The study established that Economic Order Quantity and electronic inventory management were all practiced and they significantly affected supply chain performance of the cement manufacturing firms in Kenya. The study concludes that inventory management practices have significant effect on supply chain performance. The study recommends that procurement and supply chain managers of the cement manufacturing firms in Kenya ought to adopt modern state of the art technologies to support inventory planning and scheduling processes, they should increase the number of suppliers that they have partnered with for an improvement in supply chain performance, they should fully leverage the EOQ to minimize on ordering and holding costs thus enhancing supply chain performance and invest in modern technologies to support electronic inventory management thus enhancing supply chain performance.