INVENTORY MANAGEMENT PRACTICES AND PERFORMANCE OF DISTRIBUTION FIRMS IN NAIROBI CITY COUNTY, KENYA

Kate Nyokabi Njogu, Dr. Duncan Ndung’u Nderui

Abstract


Many distribution companies have had problems in producing a quality product, therefore, they have turned to computerization of their systems to achieve a balance between business and efficiency. The main objective of this study was to examine the influence of inventory management practices on the performance of distribution companies in Nairobi City Kenya. The study was based on the following objectives; to determine the influence of demand forecasting and inventory recording on the performance of distribution firms in Nairobi City County. This research was guided by various theories including the Economic Order Quantity (EOQ) Model and Resource Based View Theory. A descriptive research design was used in this study. Reliability of the study instrument was established using Cronbach Alpha, internal consistency method. Validity of the research instrument was determined using content and construct validity. The target population for this study was186 distribution firms in Nairobi City County. The unit of observation was one supply chain manager from each distributor firm. Data collected was analyzed using SPSS version 28 to produce frequencies, descriptive. Inferential data analysis was done with regression analysis. Regression analysis was used to establish the relationship between inventory management practices and performance. Data was presented in tables and graphs based on the research questions. Correlation results revealed that inventory management practices influences performance of distribution companies in Nairobi City County. The study concluded that demand forecasting has the most significant positive influence on the performance of distribution firms in Nairobi City County. In addition, the study concluded that inventory recording has a significant positive influence on the performance of distribution firms in Nairobi City County. The study recommends that there is a need to implement effective techniques of demand forecasting, stock reorder level and economic order quantity to improve performance. Demand forecasting techniques such as product analysis, customer engagement, and information technology can improve performance. Organizations should enhance process auditing in the inventory control to enhance efficiency in service delivery. In addition, the study recommends that management should oversee regular stock taking to improve inventory management. Further, there is a need to improve inventory ordering and storage techniques since these would significantly affect the performance of distribution firms.

 

Key Words: Inventory Management Practices, Demand Forecasting, Inventory Recording, Performance of Distribution Firms


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