EFFECT OF INVENTORY CONTROL PRACTICES ON PERFORMANCE OF RETAIL CHAIN STORES IN NAIROBI COUNTY, KENYA

Abstract

The retail industry, specifically focusing on wholesale and retail, contributes up to a third of the employment in formal and informal establishments in Kenya. In as much as the vision of the wholesale and retail trade sector is to move towards a formal sector, the industry has of late faced changes that have seen a number of large retail chains being affected due to poor performance for instance, Uchumi and Nakumatt. These negative trends in performance of the retail chains are linked to structural inefficiencies in the supply chains and one of the critical challenges facing the retail chains is the inventory practices and arguments that  inventory management is an area which requires increased attention because inventories account for more than seventy percent of the total costs of retail chains. Proper inventory management has often been linked to procurement performance and ultimately the overall performance. Since the problem of poor performance in the retail chains sector is also attributed to performance, then an investigation of inventory control management is a consideration. The study therefore established the effect of inventory control practices on performance of retail chain stores in Nairobi County. The study specifically focused on vendor management inventory system, lean practices, inventory stock taking and strategic supplier management practices. A descriptive survey design was adopted for the study. The focus was on all the 144 retail chain stores in the county as indicated in the Nairobi County Report. Primary data was collected using structured questionnaire presented in likert scale. The findings revealed a positive and significant effect of vendor management inventory system, lean practices, inventory stock taking and strategic supplier management practices on performance of retail chain stores in Nairobi County, Kenya. The study recommends that there is a need for retail chain stores as well as other firms that handle inventories to invest in improving their VMI systems by focusing on integration of ICT with inventory functions, invest in improving lean practices such as demand management practices like forecasting, improve on inventory stock taking practices and focus on adoption of strategic supplier management practices.

 Key Words: Vendor Management Inventory System, Lean Practices, Inventory Stock Taking and Strategic Supplier Management Practices