International Journal of Academic Research in Business an May Ma y2015 20 15 , Vol. 5, No. No. 5 ISSN: 2222 -6990
Role of Inventory Management on Competitive Advantage among Manufacturing Firms in Kenya: A Case Study of nga !roup "imited #alia$a %&'& ( )rof& !&S& #amusonge Jomo Kenyatta Kenyatta University University o !"ri#$lt$r !"ri#$lt$re e an% &e#'nolo" &e#'nolo"y, y, Kenya Kenya S#'ool o (ntre)rene$rs'i), *ro#$rement an% Mana"ement, *.+ o 62000-00200 Nairoi, Kenya Email: wanjalaism/ya'oo.#om +I: 10.600IJ!3SSv5-i51595 10.600IJ!3SSv5i51595 U34: 'tt):%.%oi.or"10.600IJ!3SSv5-i51595 ABS*RAC* &'e main oe#tive o t'e st$%y as to investi"ate t'e role o inventory inventory mana"ement on t'e #om)etitive a%vanta"e o man$a#t$rin" 7rms in Kenya, it' reeren#e to Un"a 8ro$) 4imite%. S)e#i7#ally, t'e st$%y assesse% t'e etent to 'i#' inormation te#'nolo"y is $se% in inventory mana"ement in Un"a 8ro$) 4imite%, %etermine 'o inventory lea% time, inventory #ontrol an% inventory #ontrol )ra#ti#es ae#t #om)etitive a%vanta"e o Un"a "ro$) limite%. limite%. &'e st$%y st$%y a%o)te% a%o)te% a %es#ri)t %es#ri)tive ive resear resear#' #' %esi"n %esi"n to s$))ort s$))ort an% meet meet t'e t'e resea esearr#' oe oe#t #tiv ives es.. &'e &'e tar tar"et "et )o)$ )o)$la lati tion on as as all all t'e t'e 29 em)loyees or;in" at Un"a 8ro$) 4imite% 'ea%<$arters 'o %ire#tly %eal it' it' inve invent ntor ory y mana mana"e "eme ment nt.. Stra Strati ti7e 7e% % sam) sam)li lin" n" an% an% sim) sim)le le ran% ran%om om sam)lin" te#'ni<$es ere em)loye% in t'e sele#tion o =0 res)on%ents. res)on%ents. &'e st$%y $se% ot' )rimary an% se#on%ary %ata. *rimary %ata as #olle#te% $sin" sel-a%ministere% <$estionnaires #onsistin" o #lose% en%e% an% o)enen%e% <$estions. &'e %ata #olle#te% as analy>e% y %es#ri)tive statisti#s $sin" $sin" a statis statisti# ti#al al )a#; )a#;a"e a"e or analy analysis sis ?S*SS ?S*SS@. @. &'e st$%y st$%y reveal eveale% e% t'at t'at inormation te#'nolo"y, inventory #ontrol systems, inventory lea% time an% inventory #ontrol )ra#ti#es are im)ortant a#tors in attainment o #om)etitive a%vanta"e o man$a#t$rin" 7rms in Kenya. &'e st$%y re#ommen%e% t'at t'e t'e 7rm 7rm s'o$ s'o$l% l% emr emra# a#e e inve invent ntor ory y #ont #ontro roll syst system ems s an% an% ino inorrmati mation on te#'nolo"y te#'nolo"y so as to im)rove im)rove an% en'an#e #om)etitive a%vanta"e. a%vanta"e. &'is st$%y also also re#om re#ommen men%e %e% % a simila similarr resea resear# r#' ' on ot'er ot'er in%$ in%$str strie ies s to as#er as#ertai tain n 'et'er t'e 7n%in"s o t'e st$%y are $niversal. www.hrmars.com
International Journal of Academic Research in Business an May Ma y2015 20 15 , Vol. 5, No. No. 5 ISSN: 2222 -6990
Key+ords: Inventory Mana"ement, Inormation &e#'nolo"y, Inventory 4ea% &ime, Inventory Aontrol Aontrol Systems, Inventory Aontrol Aontrol *ra#ti#es, *ra#ti#es, Aom)etitive Aom)etitive !%vanta"e.
Introduction &o%ayBs &o%ayBs #$stomer %eman%s %eman%s im)rove% im)rove% )ro%$#ts )ro%$#ts it' s'orter an% more )re#ise )re#ise %eliveries at a loer #ost ?Srinivasan, 2012@. In or%er to res)on% to t'ese %eman% %eman%s s man$ man$a# a#t$r t$rin" in" #om) #om)an anie ies s 'ave 'ave to e #om) #om)eti etitiv tive e in severa severall %imen %imensio sions, ns, s$#' s$#' as #ost #ost eC#ien eC#ien#y, #y, <$ali <$ality, ty, %eliv %elivery ery time time an% an% )ro# )ro#ess ess Dei De iil ility ity ?+l'a ?+l'a"er "er,, 201= 201=@. @. !##or !##or%in %in" " to *orte *orterr ?190 ?190@@ t'ere t'ere are are t'ree t'ree %iere %ierent nt #om)eti #om)etitive tive strate"i strate"ies es or man$a#t man$a#t$rin $rin" " #om)ani #om)anies es to #'oose #'oose rom. &'ey are %ierentiation, #ost lea%ers'i) an% o#$s. &'ese strate"ies are ase% ase% on #ominat #ominations ions o #ost, #ost, time, time, servi#e servi#e an% <$ality <$ality.. Man$a# Man$a#t$ri t$rin" n" #om) #om)an anie ies s #an #an $se $se one one o t'es t'ese e stra strate te"i "ies es to a#'i a#'iev eve e a #om) #om)et etit itiv ive e a%vanta"e ?4ysons E Farrin"ton, 2012@. Milten$r" ?2005@ states t'at 'en a man$a#t$rin" #om)any #an %een% an% attra#t #$stomers it 'as #om)etitive a%vanta a%vanta"e, "e, 'i#' 'i#' to%ay to%ay is #r$#ial #r$#ial or man$a#t man$a#t$rin $rin" " #om)ani #om)aniesB esB s$rvival s$rvival ?Mes#on E &'ill, 2006@. (e#tive inventory mana"ement )rovi%e o))ort$nities to #reate s$stainale #om)etitive a%vanta"e an% en'an#e t'e #om)etitive )osition o #om)anies. &'is entails re%$#tion re%$#tion in #ost o 'ol%in" sto#;s y maintainin" maintainin" $st eno$"' inventories, in t'e ri"'t )la#e an% t'e ri"'t time an% #ost to ma;e t'e ri"'t amo$nt o nee%e% )ro%$#ts. Gi"' levels o inventory 'el% in sto#; ae#t a%versely t'e )ro#$rement )erorman#e o$t o t'e #a)ital ein" 'el% 'i#' ae#ts #as' Do lea%in" to re%$#e% eC#ien#y, ee#tiveness an% %istorte% $n#ti $n#tion onali ality ty.. Inven Inventor tories ies are are t'e t'e sto#; sto#; o )ro% )ro%$#t $#ts s a #om)a #om)any ny 'ol%s 'ol%s to $rt'er its )ro%$#tion an% sales ?*an%y, 200=@. Sto#; #an #ome in vario$s orms s$#' as ra materials, or;HinH)ro"ress, 7nis'e% "oo%s an% "oo%s rea%y rea%y or sale ?4evis, ?4evis, 2009@. 2009@. Inventor Inventory y re)re re)resent sents s an im)ortan im)ortantt %e#ision %e#ision variale at all sta"es o )ro%$#t man$a#t$rin", %istri$tion an% sales, in a%%iti ition to ein ein" a ma maor )ortio tion o tot total #$rr $rrent ent asset ssets s o many any or"ani>ations. Inventory oten re)resents as m$#' as 0 o total #a)ital o in%$stri in%$strial al or"an or"ani>at i>ations ions ?Moore ?Moore,, 4ee an% &aylor, aylor, 200=@. 200=@. It many re)r re)resent esent == o #om)any assets an% as m$#' as 90 o or;in" #a)ital, ?Saaya Jr. an% 8ia$<$e, 2006@. Sin#e inventory #onstit$tes a maor se"ment o total
www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
investment, it is #r$#ial t'at "oo% inventory mana"ement e )ra#ti#e% to ens$re or"ani>ational "rot' an% )ro7taility. Inventory mana"ement is vital in t'e #ontrol o materials an% "oo%s t'at 'ave to e 'el% ?or store%@ or later $se in t'e #ase o )ro%$#tion or later e#'an"e a#tivities in t'e #ase o servi#es. Inventory mana"ement reers to a s#ien#e ase% art o ens$rin" t'at $st eno$"' inventory sto#; is 'el% y an or"ani>ation to meet %eman% ?Jay E arry, 2006@. It is re<$ire% at %ierent lo#ations it'in m$lti)le lo#ations o a s$))ly netor;, to )rote#t t'e re"$lar an% )lanne% #o$rse o )ro%$#tion a"ainst t'e ran%om %ist$ran#e o r$nnin" o$t o t'e materials or "oo%s. Inventory mana"ement also #on#erns 7ne lines eteen t'e re)lenis'ment lea% time, #arryin" #osts, asset mana"ement, inventory ore#astin", val$ation o inventory, $t$re inventory )ri#e ore#astin", )'ysi#al inventory, inventory visiility, availale s)a#e or inventory, <$ality mana"ement, re)lenis'ment, ret$rns ,%ee#tive "oo%s an% %eman% ore#astin". &'e )rin#i)al "oal o inventory mana"ement involves 'avin" to alan#e t'e #onDi#tin" e#onomi#s o not antin" to 'ol% too m$#' sto#;. &'erey 'avin" to tie $) #a)ital so as to "$i%e a"ainst t'e in#$rrin" o #osts s$#' as stora"e, s)oila"e, )ilera"e an% osoles#en#e an%, t'e %esire to ma;e items or "oo%s availale 'en an% 'ere re<$ire% ?<$ality an% <$antity ise@ so as to avert t'e #ost o not meetin" s$#' re<$irement. Inventory )rolems o too "reat or too small <$antities on 'an% #an #a$se $siness ail$res. I a man$a#t$rer e)erien#es sto#;-o$t o a #riti#al inventory item, )ro%$#tion 'alts #o$l% res$lt. (ssentially, inventory mana"ement involves )lannin" an% #ontrol. 'ere )lannin" as)e#t involves loo;in" a'ea% in terms o t'e %etermination in a%van#e: ?i@ 'at <$antity o items to or%erL an% ?ii@ Go oten ?)erio%i#ity@ %o e or%er or t'em to maintain t'e overall so$r#estore sin; #oor%ination in an e#onomi#ally eC#ient ay ?ii@ Go oten ?)erio%i#ity@ %o e or%er or t'em to maintain t'e overall sto#; #oor%ination in an e#onomi#ally eC#ient ay. &'e #ontrol as)e#t, 'i#' is oten %es#rie% as sto#; #ontrol involves olloin" t'e )ro#e%$re, set $) at t'e )lannin" sta"e to a#'ieve t'e aove oe#tive. &'is may in#l$%e monitorin" sto#; levels )erio%i#ally or #ontin$o$sly an% %e#i%in" 'at to %o on t'e asis o inormation t'at is "at'ere% an% a%e<$ately )ro#esse%. (ort m$st e ma%e y t'e mana"ement o any or"ani>ation to stri;e an o)tim$m investment in inventory sin#e it #osts m$#' money to tie %on #a)ital in e#ess inventory. ! #om)any, 'i#' ne"le#ts inventory mana"ement, r$ns t'e ris; o )ro%$#tion ottlene#;s an% s$se<$ently $nale to maintain t'e minim$m investment it re<$ires to maimi>e% )ro7t. Inventories t'at are ineC#iently mana"e% may a)art rom ae#tin" sales #reate an irre)arale loss in mar;et or #om)anies o)eratin" in 'i"'ly #om)etitive in%$stry. Invarialy, a #om)any m$st neit'er ;ee) e#ess inventories to avoi% an $nne#essary 9 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
tyin" %on o $n%s as ell as loss in $n% %$e to )ilera"e, s)oila"e an% osoles#en#e nor maintain too lo inventories so as to meet )ro%$#tion an% sales %eman% as at 'en nee%e%. &'e role o inventory mana"ement is to #oor%inate t'e a#tions o all $siness se"ments, )arti#$larly sales, mar;etin" an% )ro%$#tion, so t'at t'e a))ro)riate level o sto#; is maintaine% to satisy #$stomersB %eman%s. &'e "oal o inventory mana"ement is to alan#e s$))ly an% %eman% as #losely as )ossile in or%er to ;ee) #$stomers satis7e% an% %rive )ro7ts. &'e )ro#esses an% #ontrols o ee#tive inventory mana"ement are #riti#al to any s$##ess$l $siness. Sin#e it is rarely t'e #ase t'at any $siness 'as t'e l$$ry o $nlimite% #a)ital, inventory mana"ement involves im)ortant %e#isions ao$t 'at to $y or )ro%$#e, 'o m$#' to $y or )ro%$#e an% 'en to $y or )ro%$#e it'in t'e #a)ital limits. &'ese are val$e %e#isions.O (#essive inventory investments #an tie $) #a)ital t'at may e )$t to etter $se it'in ot'er areas o t'e $siness. +n t'e ot'er 'an%, ins$C#ient inventory investment #an lea% to inventory s'orta"es an% a ail$re to satisy #$stomer %eman%. ! alan#e m$st e str$#; an% maintaine%. !##or%in" to 4ysons ?2006@, inventory #ontrol en'an#es )ro7taility y re%$#in" #osts asso#iate% it' stora"e an% 'an%lin" o materials. Inventory #ontrol is means y 'i#' materials o t'e ri"'t <$ality an% <$antity are ma%e availale as 'en re<$ire% it' %$e re"ar%s to t'e e#onomy o s'orta"es, or%erin" #ost, )$r#'ase )ri#e an% or;in" #a)ital. Inventory #ontrol %etermines t'e etent o sto#; 'ol%in" o materials. It e<$ally ma;es it )ossile or material mana"er to #arryo$t a##$rate an% eC#ient o)eration o t'e man$a#t$rin" or"ani>ation t'ro$"' %e#o$)lin" o in%ivi%$al se"ment o t'e total o)eration an% it entails t'e )ro#ess o assessin" o sto#; into t'e store 'o$se an% t'e iss$e o sto#;. Materials #ontrol 'as to %o it' stan%ar% #ontrol on t'e or%erin" si>e, or%erin" time, an% t'e <$antities o ra materials let in t'e store at a "iven time. For )ro7taility an% #ost re%$#tion, mana"er m$st t'ereore, maintain an o)tim$m level o sto#; at all time. &oo m$#' sto#; an% too little sto#; m$st e avoi%e%. !##or%in" to $a E Salin ?19@ t'ere are several reasons or ;ee)in" inventory. Inventories #an e 'el% to im)rove )ro%$#tion s#'e%$lin", to smoot'en )ro%$#tion in t'e a#e o D$#t$atin" sales, to minimi>e sto#; o$t #osts, to s)e#$late on or 'e%"e a"ainst )ri#e movements, to re%$#e )$r#'asin" #osts y $yin" in <$antity, to s'orten %elivery la"s, an% so on. ! #om)any #an only reali>e s$stantial savin"s y $sin" a rational )ro#e%$re or inventory #ontrol. Inventory #ontrol is ty)i#ally a ;ey as)e#t o almost every man$a#t$rin" an%or %istri$tion o)eration $siness. &'e $ltimate s$##ess o t'ese $sinesses is oten %e)en%ent on its aility to )rovi%e #$stomers it' t'e ri"'t "oo%s, at t'e ri"'t )la#e, at t'e ri"'t time. Fail$re to
90 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
'ave t'e ri"'t "oo%s in t'e ri"'t )la#e at t'e ri"'t time oten lea%s to lost sales an% )ro7ts an%, even orse, to lost #$stomers. ! reliale inventory system im)lies 'i"'er #on7%en#e o #$stomers an% t'eir atten%ant #ontin$o$s )atrona"e. Inventory mana"ement systems are mostly a))lie% in man$a#t$re settin"s, 'ere its viaility an% )otential e#onomi# val$e are %$ly attaine%. Inventory is ;e)t to meet reliaility o o)erations, Deiility in )ro%$#tion s#'e%$lin", #'an"e in ra material, %elivery time an #'an"e in e#onomi# )$r#'ase or%er si>e ?Inyama, 2006@. !n inventory system )rovi%es t'e o)eratin" )oli#ies an% or"ani>ational str$#t$re or maintainin" an% #ontrollin" "oo%s to e sto#;e%. ! )ro7#ient mana"ement o inventory system re<$ires an a))ro)riate ay o ma;in" %e#isions ao$t 'o m$#' to or%er an% 'en to or%er an% a means o ;ee)in" tra#; o items in inventory. e#ision on inventory in any or"ani>ation %e)en%s on a#ts ao$t on-'an% sto#; level, %eman% inormation it' re"ar%s to t'e ore#aste% <$antity, lea% time an% lea% time variation, inventory 'ol%in" #osts, or%erin" #ost an% s'orta"e #ost. Installation o a )ro)er inventory #ontrol system in any or"ani>ation is o )aramo$nt ne#essity. Inventory is t'e availaility o any sto#; or reso$r#es $se% in an or"ani>ation. !n inventory system is t'e set o )oli#ies t'at #ontrols an% monitor inventory level an% %etermine 'at level s'o$l% e maintaine%, 'o lar"e or%ers s'o$l% e ma%e an% 'en sto#; s'o$l% e re)lenis'e%. Inventory #ontrol is t'e s$)ervision o t'e stora"e, s$))ly an% a##essiility o items to ens$re an a%e<$ate s$))ly it'o$t e#essive overs$))ly ?Miller, 2010@. Inventory #ontrol means availaility o materials 'enever an% 'erever re<$ire% y sto#;in" a%e<$ate n$mer an% ;in% o sto#;s. &'e s$m total o t'ose relate% a#tivities essential or t'e )ro#$rement, stora"e, sales, %is)osal or $se o material #an e reerre% to as inventory mana"ement. Inventory mana"ers 'ave to sto#;-$) 'en re<$ire% an% $tili>e availale stora"e s)a#e reso$r#e$lly, so t'at availale stora"e s)a#e is not e#ee%e%. Maintainin" a##o$ntaility o inventory assets is t'ere res)onsiility. &'ey 'ave to meet t'e set $%"et an% %e#i%e $)on 'at to or%er, 'o to or%er an% 'en to or%er so t'at sto#; is availale on time an% at t'e o)tim$m #ost ?ene%i#t E Mar"eri%is, 1999@. Inventory #onstit$te one o t'e lar"est an% most tan"ile investment o any retailer or man$a#t$rin" or"ani>ation. Intelli"ent inventory mana"ement strate"ies #an not only 'el) oost )ro7t $t t'ey #an mean t'e %ieren#e eteen a $siness t'rivin" or arely s$rvivin". Gol%in" inventories at t'e loest )ossile #ost an% "ivin" t'e oe#tives to ens$re $ninterr$)te% s$))lies or on-"oin" o)erations is t'e aim o inventory mana"ement. 'en ma;in" %e#isions on inventory, mana"ement 'as to 7n% a #om)romise eteen t'e %ierent #ost #om)onent, s$#' as t'e #ost o s$))lyin" inventory, inventory 'ol%in" #ost an% #ost res$ltin" rom s$C#ient 91 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
inventories ?Pi);in, 2000@. !##or%in" to Miller ?2010@, inventory #ontrol is t'e a#tivity 'i#' or"ani>es t'e availaility o item to t'e #$stomers. It #oor%inates t'e )$r#'asin", man$a#t$rin" an% %istri$tion $n#tions to meet t'e mar;etin" nee%s. Kotler ?2002@, asserts t'at inventory mana"ement reers to all t'e a#tivities involve% in %evelo)in" an% mana"in" t'e inventory levels o ra materials, semi-7nis'e% materials ?or;in"-)ro"ress@ an% 7nis'e% "oo% so t'at a%e<$ate s$))lies are availale an% t'e #osts o over or $n%er sto#;s are lo. Inventory mana"ement is )rimarily ao$t s)e#iyin" t'e si>e an% )la#ement o sto#;e% "oo%s. Inventory mana"ement is re<$ire% at %ierent lo#ations it'in a a#ility or it'in m$lti)le lo#ations o a s$))ly netor; to )rote#t t'e re"$lar an% )lanne% #o$rse o )ro%$#tion a"ainst t'e ran%om %ist$ran#e o r$nnin" o$t o materials or "oo%s. &'e s#o)e o inventory mana"ement also #on#erns t'e 7ne lines eteen re)lenis'ment lea% time, #arryin" #osts o inventory, asset mana"ement, inventory ore#astin", inventory val$ation, inventory visiility, $t$re inventory )ri#e ore#astin", )'ysi#al inventory, availale )'ysi#al s)a#e or inventory, <$ality mana"ement, re)lenis'ment, ret$rns an% %ee#tive "oo%s an% %eman% ore#astin". alan#in" t'ese #om)etin" re<$irements lea%s to o)timal inventory levels, 'i#' is an on-"oin" )ro#ess as t'e $siness nee%s s'it an% rea#t to t'e i%er environment ?8'os' E K$mar, 200=@. +"o ?2011@ )osits t'at t'e maor oe#tive o inventory mana"ement an% #ontrol is to inorm mana"ers 'o m$#' o a "oo% to re-or%er, 'en to reor%er t'e "oo%, 'o re<$ently or%ers s'o$l% e )la#e% an% 'at t'e a))ro)riate saety sto#; is, or minimi>in" sto#;-o$ts. &'$s, t'e overall "oal on inventory is to 'ave 'at is nee%e%, an% to minimi>e t'e n$mer o times one is o$t o sto#;. Inventory mana"ement is an on"oin" )ro#ess t'at relies on in)$ts rom ore#asts an% )ro%$#t )ri#in", an% s'o$l% e ee#$tale it'in t'e #ost str$#t$re o t'e $siness $n%er an overall )lan. Inventory #ontrol involves t'ree inventory orms o t'e Do #y#le: asi# Sto#; - &'e ea#t <$antity o an item re<$ire% to satisy a %eman% ore#ast. Seasonal Sto#; - ! <$antity $il%-$) in anti#i)ation o )re%i#tale in#reases in %eman% t'at o##$r at #ertain times in t'e year. Saety Sto#; - ! <$antity in a%%ition to asi# inventory t'at serves as a $er a"ainst $n#ertainty. Inventory #ontrol is t'e aility to s$))ly "oo%s an% servi#es at t'e ri"'t time it' t'e ri"'t <$ality an% <$antity. It is a reliale means in 'i#' $sinesses are een mana"e% to ens$re #$stomers are satis7e% an% or"ani>ations remain in o)eration via minimi>ation o losses. Statement of the )ro,lem Man$a#t$rin" 7rms a#in" )rolems in t'eir re)lenis'ment )ro#esses or#e $)stream s$))liers to $il% e#essive sto#; ?attini et al., 2009@. &o e ale 92 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
to #om)ete in to%ayBs "loal mar;et, man$a#t$rin" 7rms nee% to 'ave #ontrol over t'eir inventory levels ?Q$anie, 201=@. &'e more inventory man$a#t$rin" 7rms ;ee) t'e more e)ose% t'ey are to $n#ertainty #osts asso#iate% it' 'ol%in" t'em. Gi"' inventory levels #an lea% to s#ra), o$t%ate% )ro%$#ts, in#rease% inventory #arryin" #osts an% are'o$sin" #osts ?Jonsson E Mattsson, 2011@. A'allen"es o inventory mana"ement an% #ontrol 'ave een aro$n% or a very lon" time es)e#ially in area o %is#re)an#ies, t'et, ra$%, osoles#en#e, %eterioration an% rea;a"es. +r"ani>ations at times %o not #ontrol t'eir inventory 'ol%in", res$ltin" in $n%er sto#;in" an% #a$sin" t'e or"ani>ations to stay o )ro%$#tion, t'erey res$ltin" to or"ani>ational inee#tiveness #reatin" relations'i) )rolems eteen inventory mana"ement an% or"ani>ational )ro%$#tivity, )ro7taility an% ee#tiveness. &oo m$#' inventory #ons$mes )'ysi#al s)a#e, #reates 7nan#ial $r%en, an% in#reases )ossiility o %ama"e, s)oila"e an% loss. I man$a#t$rin" #om)anies 'ave lo levels o sto#; it may lea% to %elivery )rolems an% )ro%$#tion sto))a"es ?Milten$r", 2005@. +n t'e ot'er 'an% man$a#t$rin" #om)anies strive to 'ave t'e loest level o inventory )ossile $t still e ale to res)on% to #$stomer %eman%s ?*on" E Mit#'ell, 2012@. I #$stomer %eman%s are not met, man$a#t$rin" #om)anies may lose money %$e to lost sales. &'ereore, it is im)ortant or man$a#t$rin" 7rms to 'ave #ontrol over t'eir inventory levels ?*on" E Mit#'ell, 2012@. (very year or"ani>ations )re)are an% im)lement one ty)e o e#onomi# )oli#y$%"et 'erey a lar"e s$m o money is s)ent on a#<$isition o materials it'o$t ma;in" an a%e<$ate )lanne% eort to )rovi%e or inventory a#ilities. &'ese la)ses #o$)le% it' im)ro)er sto#; #ontrol system an% la#; o traine% )ersonnel a##o$nt or t'e inee#tiveness o inventory $n#tion in ot' )$li# an% )rivate se#tor. Un"a 8ro$) 4imite% %oes not eist in isolation. &'e same )rolem as a#e% y ot'er or"ani>ations ot' )$li# an% )rivate is 'at Un"a 8ro$) 4imite% is a#in". More so, ein" a )rivate or"ani>ation 'i#' is "ro$n%e% on t'e )rin#i)les o )ro7t maimi>ation, t'e ne"le#t as ell as t'e im)ro)er #are, #ontrol an% mana"ement o sto#; #an e more terrile t'an re<$ire%. Goever, most o t'e lo#al st$%ies s$#' as *a$line et al. ?201=@, Kimaiyo E +#'iri, ?201@ an% &yan E ee ?200=@L 3o"ers ?2005@ an% Ki'ara ?201=@ o#$se% on inventory mana"ement an% or"ani>ational )erorman#e. No ;non st$%y 'as s)e#i7#ally a%%resse% t'e role o inventory mana"ement on #om)etitive a%vanta"e amon" t'e man$a#t$rin" 7rms in Kenya. It is a"ainst t'is a#;"ro$n% t'at t'is resear#' inten%s to ri%"e t'e ;nole%"e "a) an% e)lore t'e role o inventory mana"ement on #om)etitive a%vanta"e amon" t'e man$a#t$rin" 7rms in Kenya it' s)e#i7# reeren#e to Un"a "ro$) limite%. 9= www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
-,.ectives of the study !eneral -,.ective
&'e "eneral oe#tive o t'e st$%y as to investi"ate t'e role o inventory mana"ement on #om)etitive a%vanta"e o Un"a 8ro$) 4imite%. Speci/c -,.ectives
&'e s)e#i7# oe#tives o t'e st$%y asL 1. &o assess t'e etent to 'i#' inormation te#'nolo"y is $se% in inventory mana"ement in Un"a "ro$) limite% 2. &o %etermine 'o inventory lea% time ae#ts #om)etitive a%vanta"e o Un"a 8ro$) 4imite%. =. &o eamine 'o inventory #ontrol systems ae#ts #om)etitive a%vanta"e o Un"a 8ro$) 4imite%. . &o %etermine t'e ee#t o inventory #ontrol )ra#ti#es on #om)etitive a%vanta"e o Un"a 8ro$) 4imite%. Research 0uestions &'e st$%y aims to anser t'e olloin" resear#' <$estionsL 1. &o 'at etent 'as Un"a 8ro$) 4imite% a))lie% inormation te#'nolo"y in inventory mana"ement. 2. Go %oes inventory lea% time ae#t #om)etitive a%vanta"e o Un"a 8ro$) 4imite%. =. Go %oes inventory #ontrol systems ae#t #om)etitive a%vanta"e o Un"a 8ro$) 4imite%. . 'at is t'e ee#t o inventory #ontrol )ra#ti#es on #om)etitive a%vanta"e o Un"a 8ro$) 4imite%. *heoretical Frame+or$ Adaptive Structuration *heory
Str$#t$ration t'eory as 7rst )ro)ose% y !nt'ony 8i%%ens in 'is #onstit$tion o t'e so#iety in 19, 'i#' as an attem)t to re#on#ile so#ial systems an% t'e mi#roma#ro )ers)e#tive o or"ani>ational str$#t$re. esan#tis E *oole ?199@ orroe% rom 8i%%ens in or%er to )ro)ose !%a)tive Str$#t$ration t'eory an% t'e rise o "ro$) %e#ision s$))ort systems. !%a)tive Str$#t$ration t'eory )rovi%es t'e mo%el 'erey t'e intera#tion eteen a%van#in" inormation te#'nolo"ies, so#ial str$#t$res, an% '$man intera#tion is %es#rie%, an% 'i#' so#ial str$#t$res, r$les, an% 9 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
reso$r#es )rovi%e% y inormation te#'nolo"y as t'e asis or '$man a#tivity. !%a)tive Str$#t$ration t'eory is a viale a))roa#' in st$%yin" 'o inormation te#'nolo"y ae#ts inventory mana"ement e#a$se it eamines t'e #'an"e rom %istin#t )ers)e#tives. !%a)tive Str$#t$ration t'eory is relevant in to%ayBs inventory mana"ement )ra#ti#e %$e to t'e e)an%in" inD$en#e t'at a%van#in" te#'nolo"ies 'ave 'a% it' re"ar% to t'e '$man- intera#tion as)e#t o !%a)tive Str$#t$ration t'eory an% its im)li#ation on so#io-iolo"i#ally ins)ire% Str$#t$ration in se#$rity sotare a))li#ations? 3ama;ris'na,2005@. !%a)tive Str$#t$ration t'eory )resents s)e#i7# a%van#es in inormation te#'nolo"y t'at are %rivin" or"ani>ational #'an"es in t'e areas o $siness ali"nment, inormation te#'nolo"y )lannin", an% %evelo)ment s'o t'at !%a)tive Str$#t$ration t'eory is ein" $se% as a %rivin" or#e o ee#tive mana"ement it'in or"ani>ations. &'e st$%y $ses t'e t'eory to investi"ate 'o #om)leity o inventory mana"ement is inD$en#e% y Inormation &e#'nolo"y ?3ama;ris'na, 2005@. In #on#l$sion !%a)tive Str$#t$ration t'eoryBs a))ro)riation )ro#ess mi"'t e a "oo% mo%el to analy>e t'e $tili>ation an% )enetration o ne te#'nolo"ies in or"ani>ations. *he Relationship Mar$eting *heory &'is t'eory is $se% in t'e vario$s 7el%s s$#' as s$))ly #'ain mana"ement, international mar;etin", relations'i)s, netor;s, %ataases, inormation as ell as in transa#tional analysis ?Jraisat, 2010@. &'is t'eory oers vario$s %imensions s$#' as #ommitment an% #oo)eration t'at are $se$l in st$%yin" t'e vario$s relations'i)s t'at eists eteen %ierent )'enomenon t'at are relate% to t'e relations'i) eteen t'e $yer an% t'e seller es)e#ially in as)e#ts o inormation s'arin" ?ilson, 1995@. &'e relations'i) mar;etin" t'eory e)lains t'e vario$s $yer-s$))lier relations'i)s an% its inormation s'arin" ?&oten E +lsen, 200=@ as ell as oers e)lanation o t'e vario$s streams in t'e sai% relations'i)s, t'e vario$s %imensions in t'e relations'i) as ell as t'e rationale or t'e $sti7#ation or t'e relations'i) s$#' as t'e str$#t$re an% t'e )ro#ess o t'e relations'i). 1eterministic Inventory Model
&'e most #ommon %eterministi# inventory mo%el is (#onomi# +r%er R$antity ?(+R@. &'is is a mat'emati#al mo%el %evelo)e% it'in t'e s#o)e o o)erations mana"ement to %etermine t'e o)timal inventory level. !s 3oss et al., ?200@ oserve%, t'e (#onomi# +r%er R$antity ?(+R@ mo%el is an a))roa#' o %eterminin" t'e o)timal inventory level t'at ta;es into a##o$nt t'e inventory #arryin" #osts, sto#;-o$t #osts an% total #osts 'i#' are 'el)$l in t'e %etermination o t'e a))ro)riate inventory levels to 'ol%. (+R is t'e 95 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
level o inventory t'at minimi>es total inventory 'ol%in" #osts an% or%erin" #osts. &'e rameor; $se% to %etermine t'is or%er <$antity is also ;non as ilson (+R Mo%el or ilson Form$la. &'e mo%el as %evelo)e% y F. . Garris in 191=, $t 3. G. ilson, a #ons$ltant 'o a))lie% it etensively, is "iven #re%it or 'is in-%e)t' analysis ?illiam, 200@. (+R only a))lies 'en %eman% or a )ro%$#t is #onstant over t'e year an% t'at ea#' ne or%er is %elivere% in $ll 'en t'e inventory rea#'es >ero. &'ere is a 7e% #ost #'ar"e% or ea#' or%er )la#e%, re"ar%less o t'e n$mer o $nits or%ere%. &'ere is also a 'ol%in" or stora"e #ost or ea#' $nit 'el% in stora"e ?illiam, 200@. (+R is $se% to %etermine t'e o)timal n$mer o $nits o t'e )ro%$#t to or%er so t'at to minimi>e t'e total #ost asso#iate% it' t'e )$r#'ase, %elivery an% stora"e o t'e )ro%$#t &'e re<$ire% )arameters to t'e sol$tion are t'e total %eman% or t'e year, t'e )$r#'ase #ost or ea#' item, t'e 7e% #ost to )la#e t'e or%er an% t'e stora"e #ost or ea#' item )er year. Note t'at t'e n$mer o times an or%er is )la#e% also ae#ts t'e total #ostL 'oever, t'is n$mer #an e %etermine% rom t'e ot'er )arameters ?Gei;;ila, 2002@. (+R ass$mes t'at, t'e or%erin" #ost is #onstant, t'e rate o %eman% is #onstant, t'e lea% time is 7e%, t'e )$r#'ase )ri#e o t'e item is #onstant i.e. no %is#o$nt is availale, t'e re)lenis'ment is ma%e instantaneo$sly, t'e 'ole at#' is %elivere% at on#e. (+R is t'e <$antity to or%er, so t'at or%erin" #ost )l$s #arryin" #ost 7n%s its minim$m.
Resource2Based %ie+ *heory
&'e 3V t'eory is one o t'e $n%amental )rin#i)les or t'e #om)etitive a%vanta"e o a 7rm. &'e 3V o t'e 7rm )osits t'at a 7rms internal )ro#esses #reate a reso$r#e $n%le 'i#' #an e#ome t'e means o #reatin" an% s$stainin" a #om)etitive a%vanta"e ?ates E Flynn, 1995@. &'e 3V literat$re #onsi%ers a 7rm as a #olle#tion o 'etero"eneo$s reso$r#es, or a#tors o )ro%$#tion or as $n%les o reso$r#es in#l$%in" all in)$ts t'at allo a 7rm to o)erate an% im)lement its strate"ies ?arney et. al., 1991@. ! #om)any a#'ieves a #om)etitive a%vanta"e 'en it 'as ;ey reso$r#es ?t'ese #an e )'ysi#al reso$r#es, '$man reso$r#es or or"ani>ational reso$r#es@ t'at its #om)etitors %o not 'ave ?arney, 1991@. evelo)in" an% maintainin" t'is #om)etitive a%vanta"e %e)en%s on 'et'er t'e 7rm is ale to i%entiy, %evelo), %e)loy, an% )rote#t t'e internal reso$r#es ?arney, 1991@. In t'e #ontet o t'e reso$r#e-ase% vie, a 7rm mi"'t lose its #om)etitive a%vanta"e i im)ortant inventory mana"ement s;ills are s#ar#e or are "ettin" lost as t'ey are not easily %$)li#ate% or s$stit$te%. Inventory 96 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
mana"ement s;ills are val$ale as t'ey 'el) )rovi%in" s$))ly strate"ies or $t$re nee%s an% %evelo)in" s$))ly mana"ement strate"ies to s$))ort #om)any strate"ies ?Aarr E *earson, 2002@. !s )$r#'asin" )roessionals intera#t it' ot'er $n#tions it'in a #om)le so#ial netor;, )$r#'asin" s;ills are %iC#$lt to re)li#ate ?(ltantay, 2005@. &'e to ass$m)tions or 3V t'eory are ?1@ reso$r#es an% #a)ailities are 'etero"eneo$sly %istri$te% amon" 7rmsL an% ?2@ reso$r#es an% #a)ailities are im)ere#tly moile, 'i#' ma;e 7rms %ieren#es remain stale over time ?arney 1991@. (very 7rm is %ierent ?'etero"eneo$s@ rom ot'er 7rms in terms o t'e reso$r#es an% #a)ailities a 7rm )ossesses or a##esses. &'ese %ieren#es %ierentiates one 7rm rom anot'er an% a 7rms s$##ess is %$e to its 7rms)e#i7# reso$r#es. Conceptual Frame+or$ ! #on#e)t$al rameor; is a str$#t$re o #on#e)ts an% or t'eories 'i#' are )$t to"et'er as a ma) or t'e st$%y an% it s'os t'e relations'i) o resear#' variales ?M$"en%a E M$"en%a, 200@. &'e #on#e)t$al rameor; is $se% to e)lain t'e relations'i) eteen t'e in%e)en%ent variales an% t'e %e)en%ent variale. &'e as)e#ts o inormation te#'nolo"y, inventory #ontrol systems, inventory lea% time an% inventory #ontrol )ra#ti#es orm t'e in%e)en%ent variales 'ile #om)etitive a%vanta"e orms t'e %e)en%ent variale. &'is relations'i) is %ia"rammati#ally s'on in Fi"$re 2.1 elo.
9 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
Competitive Advantage *ri#e R$ality elivery e)en%aility &ime to Mar;et *ro%$#t Innovation •
•
•
•
•
9 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
Independent %aria,les Information *echnology
Aom)$teri>e% Systems 3eal &ime (nvironments (I(*+S
Inventory Control Systems
*ro7taility Inventory 4evel s *ro%$#tion Ay#les Fleiility
Inventory "ead *ime
Inventory 4evels Ay#le &imes AostsSales R$ality A$stomer Satisa#tion
1ependent %aria,le Inventory Control )ractices •
•
•
Aosts*ro7ts Sales Feasiility
Figure: 3&4 Conceptual Frame+or$ Research Methodology &'e st$%y a%o)te% a %es#ri)tive resear#' %esi"n. !##or%in" to M$"en%a E M$"en%a ?200=@, a %es#ri)tive resear#' %esi"n %etermines an% re)orts t'e ay t'in"s are. Aresell ?200=@ asserts t'at a %es#ri)tive resear#' %esi"n is $se% 'en %ata is #olle#te% to %es#rie )ersons, or"ani>ations, settin"s or )'enomena. es#ri)tive %esi"n as i%eal as t'e st$%y as #arrie% o$t in a limite% "eo"ra)'i#al s#o)e an% 'en#e is lo"isti#ally easier an% sim)ler to #on%$#t #onsi%erin" t'e limitations o t'e st$%y ?M$"en%a, 200@. ! )o)$lation is #onsi%ere% to e any "ro$) o )eo)le, events, or items t'at are o interest to t'e resear#'ers t'at t'ey is' to investi"ate ?Kot'ari, 200@. &ar"et )o)$lation reers to a $niversal set o st$%y o all memers o 99 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
real or 'y)ot'eti#al set o )eo)le, events or oe#ts to 'i#' an investi"ator is'es to "enerali>e t'e res$lt ?or" E 8all, 2009@. &'e tar"et )o)$lation o t'is st$%y #om)rise% o all t'e 29 Mana"ement sta o Un"a 8ro$) 4imite%. &'e sam)lin" rame or any )roaility sam)le is a #om)lete list o all t'e #ases in t'e )o)$lation rom 'i#' a sam)le is %ran ?Sa$n%ers et al., 200@. &'e )$r)ose o sam)lin" as to "ain an $n%erstan%in" ao$t some eat$res or attri$tes o t'e 'ole )o)$lation ase% on t'e #'ara#teristi#s o t'e sam)le. ! sam)le is a smaller an% more a##essile s$ set o t'e )o)$lation t'at a%e<$ately re)resents t'e overall "ro$), t'$s enalin" one to "ive an a##$rate ?it'in a##e)tale limits@ )i#t$re o t'e )o)$lation as a 'ole, it' res)e#t to t'e )arti#$lar as)e#ts o interests o t'e st$%y. ! sam)le o res)on%in" sta as %ran rom 29 )ossile res)on%ents. Strati7e% sam)lin" te#'ni<$e as $se% to sele#t t'e sam)le. !##or%in" to +so ?2009@, Strati7e% sam)lin" te#'ni<$e )ro%$#e estimates o overall )o)$lation )arameters it' "reater )re#ision an% ens$res a more re)resentative sam)le is %erive% rom a relatively 'omo"eneo$s )o)$lation. Strati7#ation aims to re%$#e stan%ar% error y )rovi%in" some #ontrol over varian#e. &'e st$%y "ro$)e% t'e )o)$lation into t'ree strata i.e. to), mi%%le an% lo mana"ement levels. From ea#' strat$m t'e st$%y $se% sim)le ran%om sam)lin" to sele#t =0 res)on%ents. Strati7e% ran%om sam)lin" te#'ni<$e as $se% sin#e t'e )o)$lation o interest as not 'omo"eneo$s an% #o$l% e s$-%ivi%e% into "ro$)s or strata to otain a re)resentative sam)le. Statisti#ally, in or%er or "enerali>ation to ta;e )la#e, a sam)le o at least =0 elements ?res)on%ents@ m$st eist ?Aoo)er an% S#'in%ler, 200=@. !##or%in" to M$"en%a E M$"en%a, ?200=@, 'en #arryin" o$t a %es#ri)tive st$%y, 10 o t'e )o)$lation yiel%s an a%e<$ate sam)le. &'is st$%y sele#te% 10 rom ea#' level 'i#' as t'$s re"ar%e% as s$C#ient or a%e<$ate. &en )er#ent o t'e )o)$lation )ro%$#e% a more re)resentative sam)le si>e o =0 res)on%ents o$t t'e 29 sta o Un"a 8ro$) 4imite%. *rimary %ata as "at'ere% $sin" ot' o)en an% #lose% en%e% <$estionnaires a%ministere% to t'e =0 res)on%ents 'o ere )i#;e% or t'e )$r)ose o analysis. Se#on%ary %ata as otaine% rom t'e eistin" materials s$#' as, 7nan#ial re)orts, o$rnals, em)iri#al resear#'es in t'e area an% ot'er relevant arti#les t'at relate% to t'e to)i#. es#ri)tive statisti#s in t'e orm o re<$en#ies an% )er#enta"es as $se% or analysis in t'is st$%y. Statisti#al *a#;a"e or So#ial s#ien#es ?S*SS@ #om)$ter sotare as $se% to )resent t'e %ata in t'e orm o re<$en#y tales an% )er#enta"es.
100 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
R5S"*S A#1 1ISCSSI-# Information *echnology &'e analysis o t'e st$%y s'oe% t'at t'ere as 'i"' $se o inormation te#'nolo"y in inventory mana"ement at Un"a "ro$) limite%. !s ill$strate% in tale .6 elo, t'e res)on%ents a"ree% t'at Un"a 8ro$) limite% $ses (le#troni# *oint o sale ?(*+S@ an% (le#troni# ata Inter#'an"e &e#'nolo"y ?(I@ as s'on y a mean s#ores o .0= an% .1 res)e#tively. &'e res)on%ents also a"ree% t'at Aom)$ters at Un"a 8ro$) limite% are lin;e% it' t'ose o t'e s$))liers in a 3eal &ime environment an% t'at t'e 7rm 'as #om)$teri>e% all inventory mana"ement systems as s'on y a mean s#ore o =.66 an% 2.9= res)e#tively. Goever, t'e stan%ar% %eviation o 1.111 an% 1.16= res)e#tively im)lies 'i"' variations in t'e res)onses. &'is tren% is in a"reement it' t'ose o$n% in t'e literat$re. Aom)$ters #an ai% in sto#; #ontrol y settin" sto#; #ontrol levels an% #al#$latin" t'e amo$nt o sto#;s to 'ol% an% %is)at#'. *a,le 4& Information *echnology response means and standard deviations Statement on e6ect of Information *echnology
Std& 1eviati Mean on
Un"a 8ro$) limite% 7rm $ses (le#troni# *oint o sale ?(*+S@
.0=
.2=
.1
.9
Aom)$ters at Un"a 8ro$) limite% are lin;e% it' t'ose o t'e =.66 s$))liers in a 3eal &ime environment
1.111
Un"a 8ro$) limite% $ses (le#troni# ata Inter#'an"e &e#'nolo"y ?(I@
Un"a 8ro$) limite% 'as #om)$teri>e% all inventory mana"ement systems
2.9=
1.16=
Inventory Control Systems &'e st$%y so$"'t to %etermine t'e ee#t o inventory #ontrol system on #om)etitive a%vanta"e o man$a#t$rin" 7rms. &'e res)on%ents a"ree% t'at inventory #ontrol systems as an im)ortant a#tor o attainin" #om)etitive a%vanta"e. !s ill$strate% in tale . elo, t'e mean res)onses it' t'e 'i"'est ee#ts in#l$%e%: en'an#e% timely %eliveries ?.1@ re%$#e% )ro%$#tion #osts ?.12@, in#rease% )ro%$#t <$ality .2, %e#rease% )ro%$#tion #y#le times .10, re%$#e% asta"es =.62, re%$#e% sto#; levels .1 an% in#rease% )ro7taility .2. &'e ee#ts o inventory #ontrol system it' means 'i"'er t'an =.5 im)lies t'at t'e res)on%ents !"reeO t'at inventory #ontrol systems lea%s to a 'i"' #om)etitive a%vanta"e. &'is tren% is in a"reement it' t'ose o$n% in t'e 101 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
availale literat$re. &'e res)on%ents a"ree% t'at inventory #ontrol systems as an im)ortant a#tor o attainin" #om)etitive a%vanta"e. *a,le 3& Inventory Control Systems response means and standard deviations Statement on e6ect of Inventory Control Systems
Mean Std& 1eviation
Inventory Inventory Inventory Inventory time Inventory Inventory Inventory
.1 .21 .2 .10
.5 .61 .9 .9=9
=.62 .1 .2
.62 . .6
#ontrol #ontrol #ontrol #ontrol
system system system system
'as en'an#e% timely %eliveries 'as re%$#e% )ro%$#tion #osts 'as in#rease% )ro%$#t <$ality 'as %e#rease% )ro%$#tion #y#le
#ontrol system 'as re%$#e% asta"es #ontrol system 'as re%$#e% sto#; levels #ontrol system 'as in#rease% )ro7taility
Inventory "ead *ime &'e st$%y so$"'t to %etermine t'e ee#t o inventory lea% time on #om)etitive a%vanta"e o man$a#t$rin" 7rms. &'e res)on%ents a"ree% t'at inventory lea% time as #onsi%ere% a very si"ni7#ant a#tor in attainin" #om)etitive a%vanta"e. !s ill$strate% in tale . elo, t'e mean res)onses on t'e ee#ts ere as ollos: in#rease% )ro7taility ?.0@, re%$#e% materials #ost ?=.90@, s'orter )ro%$#tion #y#le times ?.2@, im)rove% )ro%$#t <$ality ?.1@, in#rease% #$stomer satisa#tion ?.=@ re%$#e% )ro%$#tion #osts ?.12@, re%$#e% osoles#en#e an% s$r)l$s ?.@, in#rease% sales .5 an% re%$#e% inventories .=1. Stevenson ?2001@ asserts t'at t'at t'e main )$r)ose o lea% time is to a#t$ally enale t'e or"ani>ation to a#<$ire #om)etitive a%vanta"es 'ile %eliverin" t'e ri"'t )ro%$#t at t'e #orre#t )la#e an% at t'e ri"'t time 'en#e satisyin" t'e $ltimate #$stomer. *a,le 7& Inventory "ead *ime response means and standard deviations Statement on e6ect of Inventory "ead *ime
Inventory lea% time 'as in#rease% )ro7taility Inventory lea% time 'as re%$#e% materials #ost Inventory lea% time 'as le% to s'orter )ro%$#tion #y#le times
Mean Std& 1eviation
.0 =.90 .2
.0 .9 .1
102 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
Inventory Inventory Inventory s$r)l$s Inventory Inventory
lea% time 'as le% to im)rove% )ro%$#t <$ality lea% time 'as in#rease% #$stomer satisa#tion lea% time 'as re%$#e% osoles#en#e an%
.1 .= .
.== .9 .96
lea% time 'as in#rease% sales lea% time 'as re%$#e% inventories
.5 .=1
.66 .12
Inventory Control )ractices &'e st$%y so$"'t to %etermine t'e ee#t o inventory #ontrol )ra#ti#es on #om)etitive a%vanta"e o man$a#t$rin" 7rms. !s ill$strate% in tale .9 elo, t'e res)on%ents a"ree% t'at sto#; #ontrol )ra#ti#e 'as minimi>e% #osts as s'on y a mean o =.2. &'e res)on%ents also a"ree% t'at re"$lar inventory t$rnover 'as reali>e% lar"er )ro7ts, a )oint o sale system o tra#;in" inventory on 'an% #reates )ro7taility, t'e sto#; #ontrol system is e#onomi#ally easile, Sto#; #ontrol )ra#ti#e lea%s to #ontin$o$s )ro%$#tion o "oo%s an% servi#es t'$s im)rovin" sales, Sto#; #ontrol )ra#ti#e in#reases t'e vol$me o sales y ens$rin" t'ere are s$C#ient "oo%s availale, sto#; #ontrol in#reases t'e vol$me o sales an% ee#tive mana"ement o materials an% items lea%s to )ro7taility as s'on y mean s#ores o =.66, =.=,.=,.=1, .2 an% .21 res)e#tively. &'e res)on%ents %isa"ree% t'at Sto#; #ontrol )ra#ti#e 'as ne"atively ae#te% t'e )ri#es o "oo%s an% servi#es ren%ere% to #$stomers an% Aost o inventory is re%$#e% y )$r#'asin" t'e ri"'t <$antity o materials at t'e ri"'t )la#e an% )ri#e as s'on y mean s#ores o 2.= an% 2.= res)e#tively. &'is in%i#ate% t'at res)on%ents a"ree% t'at sto#; #ontrol )ra#ti#e 'as a )ositive ee#t on t'e )ro7t mar"in o man$a#t$rin" 7rms, #onsi%erin" t'e #l$stere% mean o =.6 ?rom t'e %e#ision r$le an% mean res)onse o =.0 an% aove s'o$l% e re"ar%e% as )ositive@.
*a,le 8& Inventory Control )ractices response means and standard deviation Statement on e6ect of Inventory Control )ractices
Std& 1eviati Mean on
10= www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
Sto#; #ontrol )ra#ti#e 'as minimi>e% #ost
=.2
.996
3e"$lar inventory t$rnover 'as reali>e% lar"er )ro7ts
=.66
.61
! )oint o sale system o tra#;in" inventory on 'an% #reates )ro7taility
=.=
.602
.=
.5
Sto#; #ontrol )ra#ti#e lea%s to #ontin$o$s )ro%$#tion o "oo%s an% servi#es t'$s im)rovin" sales
.=1
.06
Sto#; #ontrol )ra#ti#e in#reases t'e vol$me o sales y ens$rin" t'ere are s$C#ient "oo%s availale
.2
.=0
Sto#; #ontrol )ra#ti#e 'as ne"atively ae#te% t'e )ri#es o "oo%s an% servi#es ren%ere% to #$stomers
2.=
.20
Aost o inventory is re%$#e% y )$r#'asin" t'e ri"'t <$antity o materials at t'e ri"'t )la#e an% )ri#e
2.=
.9
(e#tive mana"ement o materials an% items 'as le% to t'e )ro7taility o yo$r estalis'ment
.21
.26
&'e sto#; #ontrol system is e#onomi#ally easile
Competitive Advantage& &'e st$%y also aime% at estalis'in" t'e res)on%ents level o a"reement it' statements relate% to Aom)etitive a%vanta"e o man$a#t$rin" 7rms in Kenya. !s ill$strate% in tale .10 elo, t'e res)on%ents a"ree% t'at t'e 7rm oers 'i"' <$ality )ro%$#ts an% servi#es to its #$stomers as s'on y mean s#ore o .0. &'e res)on%ents also a"ree% t'at t'e 7rm oers 'i"'ly reliale )ro%$#ts an% servi#es, )rovi%es %e)en%ale %elivery, )rovi%es #$stomi>e% )ro%$#ts an% servi#es, t'e 7rm is alays t'e 7rst in t'e mar;et to intro%$#e ne )ro%$#ts an% servi#es an% t'at t'e 7rm 'as ast )ro%$#t %evelo)ment as s'on y mean s#ores o .2, .2, =.9=, =.55 an% =.62 res)e#tively. &'e res)on%ents %isa"ree% t'at t'e 7rm is not ale to #om)ete ase% on <$ality an% t'at it rarely %elivers #$stomer or%ers on time as s'on y mean s#ores o 1.90 an% 1.9 res)e#tively.
10 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
*a,le 9& Competitive Advantage response means and standard deviations Statement on competitive advantage
Std& 1eviatio Mean n
&'e 7rm oers 'i"' <$ality )ro%$#ts an% servi#es to its #$stomers
.0
.
&'e 7rm is not ale to #om)ete ase% on <$ality
1.90
.2
&'e 7rm oers 'i"'ly reliale )ro%$#ts an% servi#es to its #$stomers
.2
.=0
&'e 7rm rarely %elivers #$stomer or%ers on time
1.9
.=1
&'e 7rm )rovi%es %e)en%ale %elivery
.2
.52
&'e 7rm )rovi%es #$stomi>e% )ro%$#ts an% servi#es
=.9=
.92=
&'e 7rm is alays t'e 7rst in t'e mar;et to intro%$#e ne )ro%$#ts an% servi#es
=.55
.66
&'e 7rm 'as ast )ro%$#t %evelo)ment
=.62
.622
Conclusions &'e st$%y #on#l$%es t'at Un"a 8ro$) 4imite% emra#es Inormation &e#'nolo"y in inventory mana"ement as a #om)etitive tool as s'on y an overall mean o =.69. &'e 7rm $ses (le#troni# *oint o sale ?(*+S@ an% (le#troni# ata Inter#'an"e &e#'nolo"y ?(I@ in its inventory mana"ement a#tivities. &'e st$%y also #on#l$%es t'at t'e 7rms #om)$ters are lin;e% it' t'ose o t'e s$))liers in a 3eal &ime environment alt'o$"' it' varie% res)onses. &'e 7rm at a lesser etent 'as #om)$teri>e% all its inventory mana"ement systems. &'e st$%y #on#l$%es t'at Un"a 8ro$) 4imite% 'as attaine% m$#' t'ro$"' inventory #ontrol systems. Inventory #ontrol system 'as en'an#e% timely %eliveries, re%$#e% )ro%$#tion #osts, in#rease% )ro%$#t <$ality, %e#rease% )ro%$#tion #y#le time, re%$#e% asta"es, re%$#e% sto#; levels an% in#rease% )ro7taility as s'on y a "eneral mean o .12. &'e ratin"s s'oe% t'at inventory #ontrol systems )laye% a vital role in attainin" #om)etitive a%vanta"e, an% as s$#', or"ani>ations m$st ens$re t'at inventory #ontrol system e 'i"'ly involve% in inventory mana"ement a#tivities. From t'e 7n%in"s, t'e st$%y #on#l$%es t'at inventory lea% time is a very im)ortant #om)etitive tool. Inventory lea% time s'oe% 'o t'e or"ani>ation a#<$ire% #om)etitive a%vanta"es as it %elivers t'e ri"'t )ro%$#t at t'e ri"'t )la#e an% it'in t'e s'ortest time )ossile. !s s'on y an overall mean o .2, lea% time 'as in#rease% )ro7taility, re%$#e% materials #ost, re%$#e% )ro%$#tion #y#le times, im)rove% )ro%$#t <$ality, in#rease% #$stomer 105 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
satisa#tion, re%$#e% osoles#en#e an% s$r)l$s, in#rease% sales an% re%$#e% inventories. imitrios, ?200@ asserts t'at Ay#le-time re%$#tion almost alays means re%$#e% #osts, re%$#e% inventory levels, im)rove% )ro%$#tion )re%i#taility, in#rease% #$stomer servi#e, an% etter <$ality. &o re%$#e #y#le time, man$a#t$rers nee% to streamline every as)e#t o t'eir o)erations, es)e#ially t'e or%er-to-%elivery )ro#ess. &'e st$%y $rt'er #on#l$%es t'at inventory #ontrol )ra#ti#es ae#ts #om)etitive a%vanta"e o Un"a 8ro$) 4imite% as s'on y an overall mean o =.6. &'is is in line it' &asli ?2011@ 'o asserts t'at inventory mana"ement re%$#es $nne#essary #osts an% in#reases reven$e in a $siness an% Kent ?2002@, ee#tive sto#; #ontrol in#reases t'e )ro7t ma;in" o an or"ani>ation. &'e st$%y #on#l$%es t'at inventory mana"ement ae#ts #om)etitive a%vanta"e o man$a#t$rin" 7rms in Kenya. !s s'on y an overall mean o .2, t'e 7rm oers 'i"' <$ality )ro%$#ts an% servi#es to its #$stomers, 'i"'ly reliale )ro%$#ts an% servi#es, )rovi%es %e)en%ale %elivery, )rovi%es #$stomi>e% )ro%$#ts an% servi#es, )rovi%es #$stomi>e% )ro%$#ts an% servi#es, t'e 7rm is alays t'e 7rst in t'e mar;et to intro%$#e ne )ro%$#ts an% servi#es an% t'at t'e 7rm 'as ast )ro%$#t %evelo)ment. &'e st$%y $rt'er #on#l$%es t'at t'e 7rm is ale to #om)ete ase% on <$ality an% t'at it %elivers #$stomer or%ers on time. Aom)etitive a%vanta"e #om)rises #a)ailities t'at allo an or"ani>ation to %ierentiate itsel rom its #om)etitors an% is an o$t#ome o #riti#al mana"ement %e#isions 4i et al., ?2006@. &'e literat$re revie 'as i%enti7e% )ri#e#ost, <$ality, %elivery, an% Deiility as im)ortant #om)etitive #a)ailities. Recommendations In reeren#e to t'e 7n%in"s an% #on#l$sion, t'e st$%y re#ommen%s t'at t'e 7rm s'o$l% emra#e inventory #ontrol systems an% inormation te#'nolo"y so as to im)rove an% en'an#e #om)etitive a%vanta"e. Un"a 8ro$) 4imite% s'o$l% %evelo) a )oli#y rameor; or aster im)lementation o t'e est inventory mana"ement )ra#ti#es li;e JI& an% M3*. &'e 7rm s'o$l% invest in mo%ern inormation te#'nolo"y in inventory mana"ement as t'is ill re%$#e inventory #osts an% im)rove ret$rns, im)rove inormation s'arin" an% 'asten or%ers rom s$))liers 'en#e s'ortenin" t'e lea% time. In or%er to attain #om)etitive a%vanta"e in t'e in%$stry, 7rm s'o$l% in#rease reso$r#e allo#ation to sta trainin", resear#' an% %evelo)ment in inventory mana"ement so as to %evelo) t'e ne#essary s;ills, $)%ate t'eir ;nole%"e, an% $rt'er en'an#e Ne *ro%$#t evelo)ment. References:
106 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
allo$, 3.G, ?1999@. Business Logistics Management: Planning, Organizing, and Controlling the Supply Chain, t' e%., *renti#e-Gall, U))er Sa%%le 3iver, NJ,. allo$, 3.G. ?1999@, $siness 4o"isti#s Mana"ement: *lannin", +r"ani>in", an% Aontrollin" t'e S$))ly A'ain, t' (%ition, *renti#e-Gall International, 4on%on. attini, ., Fa##io, M., *ersona, !., E S"arossaa, F. ?2009@.esi"n o t'e o)timal ee%in" )oli#y in an assemly system. nternational !ournal o" Production #conomics, $%$ &$', 2==T25 ene%i#t, A. E Mar"eri%is, G. ?1999@. Chain (eaction.Charter , 0?2@:6-9. lei"' .. ?2009@. Stoc) Purchasing in the *ospitality ndustry , 8reat ritain, 8oer *resent 4imite%. ove, A.4., &'ill, J.V., E Mes#on, M.G. ?2006@. #+cellence in Business . ?t' e%.@. Ne Jersey: *renti#e Gall yo$n"'o, J., ?200@ !#'ievin" an +)timal 8loal Vers$s omesti# So$r#in" alan#e $n%er eman% Un#ertaintyO. International. Jo$rnal o +)erations an% *ro%$#tion Mana"ement. ra%or%. Vol.2, Iss 1112, ).1292 Aoo)er .
[email protected] *ro)ortionality. Ne Qor;: *renti#e Gall, *. 15. Aoyle, J. J., ar%i, (. J., an% 4an"ley, A. J ?200=@, &'e Mana"ement o $siness 4o"isti#s: ! S$))ly A'ain *ers)e#tive, t' (%ition, &rans#ontinental 4o$iseville, R$ee#. (llram, 4isa M. ?1996@, &'e Use o t'e Aase St$%y Met'o% in 4o"isti#s 3esear#',O Jo$rnal o $siness 4o"isti#s. Vol. 1, No. 2, )). 9= 8'os' !.K. E K$mar *. ?e%s.@ ?200=@. *ro%$#tion Mana"ement. Ne el'i: !nmol *$li#ation *vt. 4t%. Jonsson, *., E Mattsson, S-!. ?2011@. Logisti): Lran om e-e)tia material /0den. ?2. $))l.@. 4$n%: St$%entlitterat$r !. K'an S., ?200=@ S$))lier #'oi#e #riteria o ee#$tin" a"en#ies in %evelo)in" #o$ntries.O&'e International Jo$rnal o *$li# Se#tor Mana"ementL 16, 5L !IINF+3M 8loal, )". 261 Kra$se, .3., E (llram, 4.M. ?199@. Success "actors in supplier deelopment . International 10 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
Jo$rnal o *'ysi#al istri$tion an% 4o"isti#s Mana"ement, Vol. 2, 4an"aeer, J., Sto$"'ton, &., ?2001@ eman% )lannin" an% ore#astin" in t'e 'i"' te#'nolo"y in%$stry. &'e Jo$rnal o $siness Fore#astin" Met'o%s E Systems. Fl$s'in": Vol.20, Iss. 1L )". , )"s 4i, S., 3a"$-Nat'an, ., 3a"$-Nat'an, &. S., an% 3ao, S. S. ?2006@, 1he impact o" supply chain management practices on competitie adantage and organizational per"ormance, +me"a, Vol. =, No.2, )). 10-12 4$ms%en, K. ?2012@. Logisti)ens 2runder . ?=. $))l.@. 4$n%: St$%entlitterat$r !. 4ysons, K, an% 8illin"'am, M ?200=@, *$r#'asin" an% S$))ly A'ain Mana"ement, 6t' (%ition, Garlo, Finan#ial &imes*renti#e Gall, 4on%on. 4ysons, K., E Farrin"ton, . ?2012@. Purchasing and supply chain management.?t' e%.@. Garlo: *earson (%$#ation 4imite% Miller, 3. ?2010@. Inventors Aontrol: &'eory an% *ra#ti#e. Ne Jersey: *renti#e Gall. Milten$r", J. ?2005@. Manu"acturing strategy: *ow to "ormulate and implement a winning plan. ?2n% e%.@. Ne Qor;: *ro%$#tivity *ress. Moore 4.J., 4ee S. M. an% &aylor, III .. ?200=@, Management Science , t' (%, !llyn an% a#on, Nee%'am M$"en%a, +.M an% M$"en%a, !.8 ?200=@ (esearch Methods, 3uantitatie and 3ualitatie 4pproaches, Nairoi: !#ts *ress. Nettesine S. E S#'$ms;y, 3 3even$e Mana"ement "ames ?2001@: 'ori>ontal an% verti#al #om)etition, University o *ensylvannia or;in" )a)er. +"o, !.I. ?2011@. Production and Operations Management . (n$"$: e-ver"e !"en#ies 4t%. +l'a"er, J. ?201=@. (vol$tion o o)erations )lannin" an% #ontrol: rom )ro%$#tion to s$))ly #'ains. nternational journal o" production research. *an%ey ?200=@, Finan#e Mana"ement t' e%ition, vi;as )$lis'in" 'o$se, *V& lt%, Ne el'i *on", A.K.M., E Mit#'ell, F. ?2012@. Inventory investment E #ontrol: Go 'ave UK #om)anies een %oin" 1he British 4ccounting (eiew 55, 1=1 *orter, M.(. ?190@. Competitie strategy: 1echni6ues "or 4nalyzing, ndustried and Competitiors Ne Qor;: &'e Free *ress
10 www.hrmars.com
International Journal of Academic Research in Business an May2015 , Vol. 5, No. 5 ISSN: 2222 -6990
3$i>-&orres, !.J., E Ma'moo%i, F. ?2010@. Saety sto#; %etermination ase% on )arametri# lea% time an% %eman% inormation. nternational journal o" production research. Vol$me , iss$e 10. Saaya Jr. an% 8ia$<$e ?2006@, Production and Operations Management +rlan%o F4: Gar#o$rt ra#e Jovanovi#' In#. Sla#;, N., E 4eis, M. ?2011@. Operations Strategy. ?=r% e%.@. Garlo: *earson (%$#ation 4imite% Srinivasan, M.M. ?2012@. Building L#47 supply chains with the theory o" constraints. Ne Qor;: M#8ra-Gill. Stal;, 8., (vans, *., an% S#'$lman, 4.(. ?1992 ' Competing on capa8ilities: the new rules o" corporate strategy, In %e it an% Meyer, Strate"y: *ro#ess, Aontent, Aontet . 2n% (%. 4on%on: &'omson 4earnin". Sto#;, J. 3., an% 4amert, . M. ?2001@, Strate"i# 4o"isti#s Mana"ement, t' (%ition, M#8raGill Aom)anies, Ne Qor;, US!. &'atte !.!, 3ao SS, 3a"$-Nat'an &S. Im)a#t o SAM *ra#ti#es o a Firm on S$))ly A'ain 3es)onsiveness an% Aom)etitive !%vanta"e o a 7rm. !ournal o" 4pplied Business (esearch 201=L 29, 2: 99-5=0. &os%al +. ?2006@. S$))ly o 3a Materials in Man$a#t$rin" In%$stries, =r% e%., *itman, *. =5-=55. Pi);in, *. ?2000@. Fo$n%ations o Inventory Mana"ement. Ne Qor;: IrinM#8ra-Gill.
109 www.hrmars.com
