DETERMINANTS OF IMPLEMENTATION OF INVENTORY MANAGEMENT PRACTICES IN FAST MOVING CONSUMER GOODS MANUFACTURING FIRMS IN NAIROBI COUNTY, KENYA
Abstract
The aim of the study was to establish the determinants of inventory management practices in fast moving consumer goods manufacturing firms in Nairobi County, Kenya. The study focused on 120 FMCG manufacturing firms who were members of Kenya Association of Manufacturers. Statistical Package for Social Science (SPSS) was used to analyse the data. The data showed that the high R square was 0.620. It showed that the independent variables in the study were able to explain 62.00% variation in the implementation of inventory management practices in fast moving consumer goods manufacturing firms in Nairobi County, Kenya.The remaining 38% was explained by the variables or other aspects outside the model. This implied that these variables were very significant and they therefore needed to be considered in any effort to boost implementation of inventory management practices in fast moving consumer goods manufacturing firms in Nairobi County, Kenya. The study recommended that there is need for setting up purchase volumes which is based on usage, urgency and perishability and the guidelines and the level of implementation of procurement practices need to be well articulated. The study established that procurement outsourcing strategies plays a significant role on the implementation of inventory management practices in manufacturing firms. The study recommended for the adoption of supply chain forecasting enhancing implementation of inventory management practices in manufacturing firms. There is need the organization to have the correct forecasting methods thus reduction of stock outs in the organization. The study recommended for the enhancement of manufacturer and supplier collaboration plays a significant role on the implementation of inventory management practices in manufacturing firms. The study recommended for the appraisal of manufacturers and suppliers annually and they ensure the suppliers are paid in time.
Keywords: Volume of Purchases, Procurement Outsourcing Strategies, Manufacture/Supplier Collaboration, Supply Chain Forecasting, Inventory Management
Full Text:
PDFReferences
Aljunaidi, A., & Ankrak, S. (2014). The Application of Lean Principles in the Fast-Moving Consumer Goods (FMCG). Journal of Operations and Supply Chain Management, 7(2), 1-24 .
Ambe, I. M. (2012). Determining Supply Chain Practices and Strategies of Light Vehicle Manufacturers In South Africa. Pulished Master PhD Thesis. Pretoria, South Africa: University of South Africa.
Ballan, S., Bødiker, K. B., & El Ebras, R. (2015). Inclusive business in Egypt: A Baseline Assessment for Fast Moving Consumer Good Sector. Bonn, Germany: Business Action Network (IBAN).
Blanchard, D. (2010). Supply Chain Management Best Practices (2nd ed.). London: Wiley Publishers.
Chandra, C., & Grabis, J. (2008). Inventory management with variable lead-time dependent procurement cost. Omega Journal, 36(5), 877-887.
Chapman , S., Arnold, T. K., Gatewood, A. K., & Clive, L. (2015). Introduction to Materials Management (8th ed.). London: Pearson.
Chase, C. (2013). Demand-driven forecasting: A structured approach to forecasting. New Jersey: Wiley Publishers.
Chen, F., Drezner, Z., Ryan, J. K., & Simchi-Levi, D. (2000). Quantifying the bullwhip effect in a simple supply chain: The impact of forecasting, lead times, and information. Management science Journal, 46(3), 436-443.
Choi, T.-M. (2014). Handbook of EOQ Inventory Problems: Stochastic and Deterministic Models and Applications (International Series in Operations Research & Management Science). New York: Springer.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK. London, UK: Pearson Publishers.
Cohen, S., & Roussel, J. (2013). Strategic Supply Chain Management: The Five Core Disciplines for Top Performance. (2nd ed.). New York City: McGraw-Hill Education.
Creswell, J. W. (2013). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches (4th ed.). California, USA: SAGE Publications.
Davis, R. A. (2013). Demand-driven inventory optimization and replenishment: Creating a more efficient supply chain. New Jersey: Wiley.
Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of management review, 1, 57-74.
Erlenkotter, D. (1990). Ford Whitman Harris and the economic order quantity model. Operations Research Journal, 38(6), 937-946.
Eroglu, A., & Ozdemir, G. (2007). An economic order quantity model with defective items an shortages. International journal of production economics, 106(2), 544-549.
Eroglu, C., & Hofer, C. (2011). Lean, leaner, too lean? The inventory-performance link revisited. Journal of Operations Management, 29, 356–369.
Golafshani, N. (2003). Understanding reliability and validity in qualitative research. The qualitative report, 8(4), 597-606.
Green, K. W., & Inman, R. A. (2005). Using a just-in-time selling strategy to strengthen supply chain linkages. International Journal of Production Research, 43(16), 3437-3453.
Grondys, K. K. (2014). The Problem of Excess and Obsolete Inventory Management on the Example of Spare Parts. Proceedings of FIKUSZ'14,., 89-96.
Grondys, K., Kott, I., & Strzelczyk, M. (2014). The Problem of Excess and Obsolete InventoryManagement on the Example of Spare Parts. Proceedings of FIKUSZ (pp. 89-96). Budapest: Óbuda University, Keleti Faculty of Business and Management.
Harrison, A., & Remko, H. (2011). Logistics Management and Strategy (4th ed.). New Jersey, USA: Prentice Hall.
Hendricks, K. M., & Singhal, V. R. (2009). Demand-supply mismatches and stock market reaction: Evidence from excess inventory announcements. Manufacturing & Service Operations Management, 11(3), 509-524.
Hox, J. J., & Boeije, H. R. (2005). Data collection, primary versus secondary. Encyclopedia of Social Measurement, 4(1), 593-599.
Hudacek, S. S. (2008). Dimensions of caring: A qualitative analysis of nurses’ stories. . Journal of Nursing Education, 47(3), 124-129.
IMF. (2017, January). World Economic Outlook Update January 2017. Retrieved November 12, 2017, from http://www.imf.org/external/pubs/ft/weo/2017/update/01/: http://www.imf.org/external/pubs/ft/weo/2017/update/01/
Jacobs, F. R., Berry, W. L., Whybark, D. C., & Vollmann, T. E. (2011). Manufacturing Planning and Control for Supply Chain Management (1st ed.). New York: McGraw-Hill Education.
Jakovljevic, P. J. (2011). Is There a Smarter Way to Handle Excess Active and Obsolete Inventory? Retrieved May 18, 2017, from http://fm.sap.com: http://fm.sap.com/data/upload/files/is%20there%20a%20smarter%20way%20to%20handle%20active%20and%20obsolete%20inventory.pdf
Johnson, F., & Ruankaew, T. (2017). A Study of Inventory Control Systems by Jamaican SMEs in Retail and Manufacturing/Distribution Industries. International Journal of Business and Management, 12(8), 1-18.
Kamau, L. W., & Kagiri, A. W. (2015). Influence of inventory management practices on organizational competitiveness: A case of Safaricom Kenya Ltd. International Academic Journal of Procurement and Supply Chain Management, 1(5), 72-98.
Kenya Association of Manufacturers. (2017). KAM Membership. Retrieved June 20, 2017, from www.kam.co.ke: http://kam.co.ke/membership/
Kenya National Bureau of Statistics. (2013). Exploring Kenya’s Inequality. Nairobi: Kenya National Bureau of Statistics (KNBS).
Kiesmüller, G. P. (2011). Single item inventory control under periodic review and a minimum order quantity. International Journal of Production Economics, 133(1), ., 280-285.
Kiesmüller, G. P., De Kok, A. G., & Dabia, S. (2011). Single item inventory control under periodic review and a minimum order quantity. International Journal of Production Economics, 133(1), 280-285.
KNBS & SID. (2013). Exploring Kenya’s Inequality. Nairobi: Kenya National Bureau of Statistics (KNBS) and Society for International Development (SID).
KNBS. (2011). Manufacturing Firms Census report 2010. Nairobi: Kenya National Bureau of Statistics (KNBS).
Kontuš, E. (2014). Management of Inventory. 27(2), 245-256.
Kot, S., Grondys, K., & Szopa, R. (2011). Theory of inventory management based on demand forecasting. Polish Journal of Management Studies , 1, 147-155.
KPMG. (2016). Fast-Moving Consmer Goods, Sector Repor - Africa. George Town, Cayman Islands: KPMG.
Kumar, M. (2007). Mixed methodology research design in educational technology. Alberta Journal of Educational Research, 53(1), 34-44.
Matthew, A. W., & Esper, T. L. (2014). The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain (Council of Supply Chain Management Professionals). Illinois, USA: Council of Supply Chain Management Professionals.
McCarthy, T. M., & Golicic, S. L. (2002). Implementing collaborative forecasting to improve supply chain performance. International Journal of Physical Distribution and Logistics Management, 32(6), 431-454.
Miles, M. B., Huberman , A. M., & Saldaña, J. (2013). Qualitative Data Analysis: A Methods Sourcebook (3rd ed.). New York: SAGE Publications.
Ministry of Environment and Natural resources. (2017). The environmental management and coordination act (Gazette notice No. 2334). Nairobi: Governement Printers, Kenya.
Mogere, K. M., Oloko, M., & Okibo, W. (n.d.). Effect of Inventory Control Systems oOperational Performance of Tea Processing Firms: A Case Study of Gianchore Tea Factory, Nyamira County, Kenya. The International Journal of Business & Management, 1(5), 12-27.
Mohan, R. (2015). An EOQ model for Price Discount Linked to Order Quantity under Fuzzy Environment in Quadratic Demand Pattern. Journal of Mathematics, 11(4), 20-26.
Mugenda, D. M., & Mugenda, A. (2003). Research Methods; Quantitative and Qualitative Research. Nairobi: Acts.
Mwaniki, C. (2015, January 18). Consumer goods firms eye better sales. Retrieved May 12, 2017, from www.businessdailyafrica.com: http://www.businessdailyafrica.com/539552-2593578-opjy5ez/index.html
Nemtajela, N., & Mbohwa, C. (2017). Relationship between Inventory Management and Uncertain Demand for Fast Moving Consumer Goods Organisations. Procedia Manufacturing, 8(2017), 699-706.
Newby, P. (2014). Research Methods for Education (2nd ed.). New York: Routledge.
Nimocks, J. M. (2015). The Natural Hair Movement as a Platform for Environmental Education. California, USA: Claremont Colleges.
Ogunlela, G. O., & Lekhanya, L. M. (2016). The use of integrated supply chain management model for promoting competitiveness in the fast moving consumer goods (FMCG) manufacturing industry in Nigeria. Problems and Perspectives in Management, 14(1-1), 160-166.
Ogutu, M., & Mbula, S. (2012). Strategies adopted by multinational corporations to cope with competition in Kenya. DBA Africa Management Review, 2(3), 69-82.
Phetia, S. (2015). Building lean and agile supply chain for fast moving consumer goods manufacturers and retailers in South Africa. Pretoria, South Africa: Gordon Institute of Business Studies, University of Pretoria.
PricewaterhouseCooper. (2012). Issues and solutions for the retail and consumer goods industries. PricewaterhouseCoopers (PWC).
Radasanu, A. (2016). Inventory Management, Service Level and Safety Stock. Journal of Public Administration, Finance and Law, 1(9), 145-153 .
Rai, S., & Singh, D. B. (2012). Inventory Flow Management Process in FMCG (Beverages) Sector. Global Journal of Enterprise Information System, 3(1), 63-71.
Rao, M. C., & Rao, K. P. (2009). Inventory turnover ratio as a supply chain performance measure. Serbian Journal of Management, 4(1), 41-50.
Ross, D. F. (2015). Distribution planning and control: Managing in the era of supply chain management. New York: Springer.
Saunders, M. N., Lewis, P., & Thornhill, A. (2015). Research Methods for Business (7th ed.). New York: Pearson.
Seshadri, S. (2005). Sourcing strategy: Principles, policy, and designs. . New York: Springer.
Stadtler, H. (2015). Supply Chain Management. New York: Springer Berlin Heidelberg.
Stadtler, H., & Kilger, C. (2015). Supply chain management: An overview. In Supply chain management and advanced planning. New York: Springer Berlin Heidelberg.
Steinker, S., Pesch, M., & Hoberg, K. (2016). Inventory management under financial distress: An empirical analysis. International Journal of Production Research, 54(17), 5182-5207.
Sunhal, A. S., & Manga, D. (2017). Analysis Of Inventory Management in A Supply Chain by using Economic Order Quantity (EOQ) Model. International Journal of Engineering Sciences & Research Technology, 6(10), 303-309.
Thogori, M., & Gathenya , J. (2014). Role of Inventory Management on Customer Satisfaction among the Manufacturing Firms in Kenya: A Case Study of Delmonte Kenya. European Journal of Business and Management, 6(27), 209-217.
Thomopoulos, N. T. (2016). Elements of Manufacturing, Distribution and Logistics: Quantitative Methods for Planning and Control. New York: Springer.
Tuli, F. (2010). The basis of distinction between qualitative and quantitative research in social science: reflection on ontological, epistemological and methodological perspectives. Ethiopian Journal of Education and Sciences, 1, 97-108.
Wang , T., Gong, X., & Zhou, S. X. (2017). Dynamic Inventory Management with Total Minimum Order Commitments and Two Supply Options. Operations Reseach Journal, 1285 - 1302.
Wang, X., & Disney, S. M. (2016). . The bullwhip effect: Progress, trends anddirections. European Journal of Operational Research, 250(3), 691-701.
Wild, T. (2017). Best Practice in Inventory Managemen (3rd ed.). Abingdon, United Kingdom: Routledge.
Wills, M., Bird, B. M., & Sinkey, M. (2014). Structuring a Bona Fide Sale of Excess or Slow Moving Inventory for Tax Purposes. The CPA Journal, 84(3), 44-49.
World Bank. (2016). South Africa GDP - Forecast. Washington, D.C: World Bank.
Yu, G. (1997). Robust economic order quantity models. European Journal of Operational Research, 100(3), 482-493.
Zikmund , W. G., Babin , B. J., Carr, J. C., & Griffin, M. (2012). Business Research Methods (9th ed.). Cincinnati, USA: South-Western College.
Zsidisin, G. A., & Ellram, L. M. (2003). An agency theory investigation of supply risk management. Journal of supply chain management, 39(2), 15-27.
DOI: http://dx.doi.org/10.61426/sjbcm.v5i3.831
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.