Inventory management and supply chain performance of petroleum marketing firms in Nairobi

Abstract

Inventory refers to the goods and materials that a business holds for the ultimate purpose of resale or repair. Inventory can also be used to refer to quantity of raw materials, components, assemblies, consumables, work -in- progress and finished stock that is kept for use or for resale in any business, and which provides the organizational structure and the operating polices for maintaining and controlling goods to be stocked. The main aim of the study was to inventory management and supply chain performance of petroleum marketing firms in Nairobi. The study was guided by two specific objectives that included; to establish the inventory management techniques and to determine the relationship between the inventory management techniques and supply chain performance of petroleum marketing firms in Nairobi. Descriptive design was the most appropriate because the study is concerned with finding out what relationship exists between the independent and dependent variables by collecting quantifiable data. The data was collected from the target population in order determine the current status with regard to inventory management techniques and supply value chain performance in petroleum marketing firms. The sample size of 66 petroleum companies (fuel stations) in Nairobi was randomly sampled from the sampling frame of 114. The study used both primary and secondary data. The main instrument for data collection was a structured questionnaire and an interview guide to gather secondary data. Quantitative data collected was analysed using SPSS as it offers numerous statistical analysis routines that analyse small to very large data statistics. The study findings indicated that all of the surveyed petroleum firms in Nairobi use Inventory Management Techniques; this is the first indication that these techniques help them in the improvement of Supply Chain Performance of their firms. Conclusions were made that the independent variables predicted the response variable. This is an indication that the model is a good model in predicting the supply chain performance by use of specific inventory management techniques variables. It is recommended that Petroleum marketing firms develop a policy framework to facilitate faster implementation of the best inventory management practices. It is also recommended that Petroleum marketing firms consider investing in modern technology and implement EDI. This will reduce inventory costs and improve returns. The agencies should also strengthen the supplier relation to the level of partnerships. This will facilitate implementation of programmes such as Vendor Managed Inventory (VMI).