Effect of Inventory Management Practices on Operational Performance A Case of Bamburi Cement Limited

Abstract

Sound management of inventory can be a source for increased performance and ultimately a basis for competitive advantage for organization(s). The purpose of this study was to establish the effect of inventory management practices on operational performance of cement manufacturing firms in Kenya, with a focus on Bamburi Cement Limited. The objectives were to establish the inventory management practices adopted by Bamburi Cement Limited, determine the measures of operational performance at Bamburi Cement Limited, and assess the effect of inventory management practices on operational performance at Bamburi Cement Limited. The study was guided by the following theories: technology diffusion theory, transactional cost analysis theory, inventory control theory, and lean theory. The exploratory study design was adopted. The study population was all 851 employees of Bamburi Cement Limited with the target population being 198 employees in the operations, stores, and procurement departments. The sample size was 99, which was 50% of the target population. The questionnaire as the data collection instrument was pilot tested to ensure it yielded valid and reliable data. Descriptive and inferential statistics was conducted under data analysis and the findings were presented in tables, charts, and figures. The findings revealed that Bamburi Cement Limited had adopted inventory management practices in its operations and that the organization measured its performance in terms of reduction of production cycle, production costs, production line and wastages. Inventory management practices had an effect on operational performance. The study recommends that cement manufacturing companies should study their customer purchasing patterns and demands so that they can ensure that they have sufficient stock in their warehouses. Further, the management of these companies can invest in purchase of high producing cement machineries so as to produce sufficient cement.