INVENTORY MANAGEMENT PRACTICES AND PERFORMANCE OF FLOUR MILLING COMPANIES IN NAIROBI CITY COUNTY, KENYA

Abstract

Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The main objective of the study was to examine the effect of   inventory management practices and performance of flour milling companies in Nairobi City County, Kenya. The specific objectives were to examine effect of inventory auditing and verification, inventory control policies on performance of flour milling companies in Nairobi City County, Kenya. A descriptive research design was used for this study. The study targeted 10 flour mill industries in Nairobi City County. The study respondents were 367 management employees. The Yamane 1967 formula was used to sample 191 respondents. Purposive sampling was used to sample the management staff in procurement, stores, and sales departments.  The questionnaire was used to collect primary data. A pilot was conducted with 19 respondents representing 10% of the sample size.  The study used content and construct validity.  Reliability of the questionnaire was evaluated through Cronbach’s Alpha. Data was analyzed using descriptive and inferential statistics. Findings were tabulated. The pilot study conducted to pretest and validate the questionnaire revealed high reliability and strong validity of the research instrument. Reliability analysis using Cronbach’s Alpha demonstrated values above the threshold of 0.7 for all constructs, indicating high internal consistency, with values ranging from 0.813 to 0.820. Validity was confirmed through confirmatory factor analysis, with Average Variance Extracted (AVE) values exceeding 0.5 for all constructs, affirming robust construct validity. These results indicate that the questionnaire effectively measures the intended constructs, providing a reliable and valid tool for the main study. The study found that inventory management practices significantly influence the performance of flour milling companies in Nairobi City County, Kenya. The regression analysis revealed that inventory auditing and verification had the strongest impact on firm performance with a beta coefficient of 0.312 (p < 0.001), followed by inventory control policies (β = 0.294, p < 0.001). These findings indicate that improvements in these practices lead to substantial enhancements in firm performance. The study concludes that effective inventory management practices are crucial for operational success and competitiveness in the flour milling industry. It is recommended that firms invest in advanced systems for automate inventory audits, implement strategic inventory control policies to optimize performance and ensure long-term success.