INVENTORY MANAGEMENT PRACTICES AND PERFORMANCE OF FAST-MOVING CONSUMER GOODS IN MANUFACTURING FIRMS IN NAIROBI CITY COUNTY, KENYA

Abstract

Inventory management is critical in manufacturing or production.  Effective inventory management practices can significantly enhance operational efficiency,  reduce  costs,  and  improve  customer  satisfaction. The manufacturing sector in Kenya has been a key contributor to Kenya’s industrial growth, as evidenced by the market entry of international firms and increased investments on the existing firms.  The sector has however been experiencing performance challenges leading to closure of some firms.  The general objective of the study was to examine effect of inventory management practices on performance of Fast-Moving Consumer Goods Manufacturing Firms in Nairobi City County, Kenya. The specific objectives were to examine effect of demand Forecasting and batch tracking on performance of Fast-Moving Consumer Goods Manufacturing Firms in Nairobi City County, Kenya. This study used a descriptive research design. The study targeted 118 Fast-Moving Consumer Goods (FMCG) manufacturing firms in Nairobi City as unit of analysis while stores, operations, ICT, and sales and marketing managers were the unit of observation. The target population was therefore 472 management staff in stores, operations, ICT, and sales and marketing. The sample size of 216 respondents was determined using Taro Yamane 1967 sampling formula. The study adopted stratified random sampling. The study collected primary data using questionnaires. A pilot test was conducted with 10% of the sample size hence 22 management staff. Content and construct validity was used to assess if the items in the questionnaire match with the constructs under conceptual framework. Questionnaire reliability was measured using Cronbach’s Alpha Coefficient. The data collected was scrutinized, coded, and keyed into SPSS version 28 for analysis. Descriptive statistics includes frequency, percentage, and mean. The inferential statistics includes correlations and regression.  Findings were presented in tables and figures, interpreted and discussed accordingly. The pilot test results revealed that the data collection instruments used in the study are both valid and reliable. Findings show that; there is a  strong  significant relationship between demand Forecasting and firm performance (r=0.810, p=0.000), and a   strong  significant relationship between Batch  tracking and employee performance (r=0.598, p=0.000). The recommendations are that;  firms should adopt fully integrated supply and demand forecasting models that will produce accurate forecasts to effectively manage the stocks, and firms should adopt Electronic Batch Record Systems  which reduces human errors in batch records. This will help in identifying the products that are fast selling and products that are less important to the customers.