Strategic Inventory Management Practices and the Performance of Supermarkets in Nairobi County, Kenya

Abstract

This study establishes the influence of strategic inventory management practices on the performance of supermarkets in Nairobi County, Kenya. Specifically, the study examined the effect of vendor managed inventory, lean inventory system, e-inventory management system and activity based costing system on performance of supermarkets in Nairobi County. The study was grounded on the resource based view theory. A descriptive cross-sectional survey research design was employed and stratified random sampling approach used to ensure representativeness of the study population. From the target population of 158 supermarkets a sample size of 113 supermarkets was picked. A structured questionnaire was used to collect primary data and was administered to the heads of supply chain management in the respective firms. Descriptive statistics and multiple regression equation were applied to analyse data with the help of Statistical Package for Social Sciences (version 21.0). The study established a positive significant relationship between strategic inventory management practices and performance of supermarkets. Explicitly, e-inventory management system and activity-based costing system registered the highest influence on performance of supermarkets while lean inventory management systems had no significant influence on performance. The study concludes that strategic inventory management practices significantly improve performance of supermarkets. Consequently, the study recommends that management of supermarkets in the County should implement e-inventory management systems and practice activity-based costing in order to improve their performance through reduction of operation costs and improved inventory control, the management of supermarkets should institutionalize employment of cost accountants as part of supply chain management team for effective application of activity based costing in inventory management. and the government should give tax rebate on IT infrastructure related to e-inventory management systems to encourage up take of the systems by firm as a way of boosting their performance and growth. Further the study suggests that future research should focus on undertaking a comparable study incorporating a wider spatial and population scope as well as give attention to constructs affecting the effectiveness of strategic inventory management practices once they are implemented by supermarkets in order to obtain a comprehensive understanding of the subject matter and contribute towards the existing body of knowledge in this area.