EFFECTS OF INVENTORY MANAGEMENT PRACTICES ON PERFORMANCE OF MANUFACTURING FIRMS IN NAIROBI CITY COUNTY, KENYA

Abstract

The general purpose of the study was to establish the effects of inventory management practices on performance of manufacturing firms in Nairobi City County, Kenya. This research study adopted a descriptive research design approach. The researcher preferred this method because it allows an in-depth study of the subject. The target population for the study was from employees in the procurement, finance and production departments from manufacturing firms in Nairobi City County in the steel, food and plastic industries. The study employed stratified random sampling technique in coming up with a sample size of 133 respondents from a target population of 202. Semi structured questionnaires were used to collect the data. Pilot study was carried out to establish the reliability and validity of research instruments. The instruments were designed appropriately according to the study objectives. Data gathered from the questionnaires administered were analyzed by the help of SPSS and Microsoft Excel. The outputs were presented inform of statistical diagrams, tables and tables. The study used multiple linear regression and correlation analysis to show the relationship between the variables. The study made recommendations to the management in order to address the research problem. The study found that lead time, top management support, supplier evaluation, e-procurement are statistically significant to performance of manufacturing firms with an R2 value of 68.2%. This study established that lead-time, top management support, supplier evaluation and e-procurement support are positively related to performance of manufacturing firms. The study recommends that factors that lead to lead time variability need to be looked into with a view of managing the variability as this has effect on the overall performance. The study recommends that top management in the manufacturing companies should take responsibility for the active role in the implementation of inventory management practices. The manufacturing firms should train their supplier evaluation committees or procurement managers on how best to evaluate the suppliers. Employees need to be trained on usage of the e-procurement system so as to enable them to operationalize the system.