Impact of Inventory Management on firm’s efficiency – A quantitative research study on departmental stores operating in Karachi.
Abstract
This study investigated the effect of various inventory management factors on firms efficiency. These factors included Capacity Utilization, Inventory Accuracy, Lean Inventory, and Stock Availability. Data was collected by the use of likert scale questionnaire from 250 individuals from different departmental stores in Karachi. Data was analysed using Structural Equation Modeling. The results showed Inventory Accuracy, Lean Inventory, and Stock Availability have positive and significant impact on efficiency. However, Capacity Utilization doesn’t seems to affect efficiency. Hence, main indicator of inventory control comes out to be inventory accuracy which allows having an effective control of the outputs of the different goods.
References
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Bratland, E., & Hornbrinck, J. (2013). An empirical study of the relationship between working capital policies and stock performance in Sweden.
Etale, L. M., & Bringilar, P. F. (2016). The Effect of Inventory Cost Management on Profitability: A Study of Listed Brewery Companies in Nigeria. International Journal of Economics, Commerce and Management United Kingdom, 4(6).
Gunasekaran, A., Patel, C., & Tirtiroglu, E. (2001). Performance measures and metrics in a supply chain environment. International journal of operations & production Management, 21(1/2), 71-87.
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Hines, P., Holweg, M., & Rich, N. (2004). Learning to evolve: a review of contemporary lean thinking. International journal of operations & production management, 24(10), 994-1011.
John, N. E., Etim, J. J., & Ime, T. U. (2015). Inventory management practices and operational performance of flour milling firms in Lagos, Nigeria. International Journal of Supply and Operations Management, 1(4), 392.
Kannan, V. R., & Tan, K. C. (2005). Just in time, total quality management, and supply chain management: understanding their linkages and impact on business performance. Omega, 33(2), 153-162.
Kaynak, H. (2003). The relationship between total quality management practices and their effects on firm performance. Journal of operations management, 21(4), 405-435.
Koumanakos, D. P. (2008). The effect of inventory management on firm performance. International journal of productivity and performance management, 57(5), 355-369.
Malik, O. R., & Kotabe, M. (2009). Dynamic capabilities, government policies, and performance in firms from emerging economies: Evidence from India and Pakistan. Journal of Management Studies, 46(3), 421-450.
Mason-Jones, R., & Towill, D. R. (1997). Information enrichment: designing the supply chain for competitive advantage. Supply Chain Management: An International Journal, 2(4), 137-148.
Mawutor, J. K. M. (2014). Working Capital Management and Profitability of Firms: A Study of Listed Manufacturing Firms in Ghana. Research Journal of Accounting and Finance, 5(22).
Miller, R. (2010). Inventors Control: Theory and Practice. New Jersey: Prentice Hall.
MwangI, L. (2016). The Effect of Inventory Management on Firm Profitability and Operating Cash Flows of Kenya Breweries Limited, Beer Distribution Firms in Nairobi County (Doctoral dissertation, School of Business, University of Nairobi).
Nel, D. J., & Badenhorst-Weiss, J. A. (2011). Analysing the differences between theoretical and implemented supply chain strategies in selected organisations. Journal of Transport and Supply Chain Management, 5(1), 299-315.
Nsiah Asare, E., & Prempeh, K. B. (2016). The State of Supply Chain Management Practices within SMEs in Ghana: A Case Study of Selected Agrochemical Companies in Kumasi.
Nyaoga, R. B., Wang, M., & Magutu, P. O. (2015). The relationship between capacity utilization and value chain performance: Evidence from Kenyan tea processing firms. African Journal of Business Management, 9(9), 402-411.
Oballah, D., Waiganjo, E., & Wachiuri, W. E. (2015). Effect of inventory management practices on Organizational performance in Public health institutions in Kenya: A case study of Kenyatta national hospital. International journal of education and research, 3(3), 703-714.
Ogbo, A. I., & Ukpere, W. I. (2014). The impact of effective inventory control management on organisational performance: A study of 7up bottling company nile mile enugu, nigeria. Mediterranean Journal of Social Sciences, 5(10), 109.
Qrunfleh, S., & Tarafdar, M. (2014). Supply chain information systems strategy: Impacts on supply chain performance and firm performance. International Journal of Production Economics, 147, 340-350.
Raheman, A., Afza, T., Qayyum, A., & Bodla, M. A. (2010). Working capital management and corporate performance of manufacturing sector in Pakistan. International Research Journal of Finance and Economics, 47(1), 156-169.
Rahman, N. A. A., Sharif, S. M., & Esa, M. M. (2013). Lean manufacturing case study with Kanban system implementation. Procedia Economics and Finance, 7, 174-180.
Rai, A., Patnayakuni, R., & Seth, N. (2006). Firm performance impacts of digitally enabled supply chain integration capabilities. MIS quarterly, 225-246.
Sahin, F., & Robinson, E. P. (2002). Flow coordination and information sharing in supply chains: review, implications, and directions for future research. Decision sciences, 33(4), 505-536.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2008). Designing and managing the supply chain: concepts, strategies and case studies. Tata McGraw-Hill Education.
Sitienei, E., & Memba, F. (2015). The effect of inventory management on profitability of cement manufacturing companies in Kenya: A case study of listed cement manufacturing companies in Kenya. International Journal of Management and Commerce Innovations, 3(2), 111-119.
Tseng, M. L., Wu, K. J., & Nguyen, T. T. (2011). Information technology in supply chain management: a case study. Procedia-Social and Behavioral Sciences, 25, 257-272.
Bratland, E., & Hornbrinck, J. (2013). An empirical study of the relationship between working capital policies and stock performance in Sweden.
Etale, L. M., & Bringilar, P. F. (2016). The Effect of Inventory Cost Management on Profitability: A Study of Listed Brewery Companies in Nigeria. International Journal of Economics, Commerce and Management United Kingdom, 4(6).
Gunasekaran, A., Patel, C., & Tirtiroglu, E. (2001). Performance measures and metrics in a supply chain environment. International journal of operations & production Management, 21(1/2), 71-87.
Hausman, W. H. (2004). Supply chain performance metrics. In The practice of supply chain management: Where theory and application converge (pp. 61-73). Springer, Boston, MA.
Hines, P., Holweg, M., & Rich, N. (2004). Learning to evolve: a review of contemporary lean thinking. International journal of operations & production management, 24(10), 994-1011.
John, N. E., Etim, J. J., & Ime, T. U. (2015). Inventory management practices and operational performance of flour milling firms in Lagos, Nigeria. International Journal of Supply and Operations Management, 1(4), 392.
Kannan, V. R., & Tan, K. C. (2005). Just in time, total quality management, and supply chain management: understanding their linkages and impact on business performance. Omega, 33(2), 153-162.
Kaynak, H. (2003). The relationship between total quality management practices and their effects on firm performance. Journal of operations management, 21(4), 405-435.
Koumanakos, D. P. (2008). The effect of inventory management on firm performance. International journal of productivity and performance management, 57(5), 355-369.
Malik, O. R., & Kotabe, M. (2009). Dynamic capabilities, government policies, and performance in firms from emerging economies: Evidence from India and Pakistan. Journal of Management Studies, 46(3), 421-450.
Mason-Jones, R., & Towill, D. R. (1997). Information enrichment: designing the supply chain for competitive advantage. Supply Chain Management: An International Journal, 2(4), 137-148.
Mawutor, J. K. M. (2014). Working Capital Management and Profitability of Firms: A Study of Listed Manufacturing Firms in Ghana. Research Journal of Accounting and Finance, 5(22).
Miller, R. (2010). Inventors Control: Theory and Practice. New Jersey: Prentice Hall.
MwangI, L. (2016). The Effect of Inventory Management on Firm Profitability and Operating Cash Flows of Kenya Breweries Limited, Beer Distribution Firms in Nairobi County (Doctoral dissertation, School of Business, University of Nairobi).
Nel, D. J., & Badenhorst-Weiss, J. A. (2011). Analysing the differences between theoretical and implemented supply chain strategies in selected organisations. Journal of Transport and Supply Chain Management, 5(1), 299-315.
Nsiah Asare, E., & Prempeh, K. B. (2016). The State of Supply Chain Management Practices within SMEs in Ghana: A Case Study of Selected Agrochemical Companies in Kumasi.
Nyaoga, R. B., Wang, M., & Magutu, P. O. (2015). The relationship between capacity utilization and value chain performance: Evidence from Kenyan tea processing firms. African Journal of Business Management, 9(9), 402-411.
Oballah, D., Waiganjo, E., & Wachiuri, W. E. (2015). Effect of inventory management practices on Organizational performance in Public health institutions in Kenya: A case study of Kenyatta national hospital. International journal of education and research, 3(3), 703-714.
Ogbo, A. I., & Ukpere, W. I. (2014). The impact of effective inventory control management on organisational performance: A study of 7up bottling company nile mile enugu, nigeria. Mediterranean Journal of Social Sciences, 5(10), 109.
Qrunfleh, S., & Tarafdar, M. (2014). Supply chain information systems strategy: Impacts on supply chain performance and firm performance. International Journal of Production Economics, 147, 340-350.
Raheman, A., Afza, T., Qayyum, A., & Bodla, M. A. (2010). Working capital management and corporate performance of manufacturing sector in Pakistan. International Research Journal of Finance and Economics, 47(1), 156-169.
Rahman, N. A. A., Sharif, S. M., & Esa, M. M. (2013). Lean manufacturing case study with Kanban system implementation. Procedia Economics and Finance, 7, 174-180.
Rai, A., Patnayakuni, R., & Seth, N. (2006). Firm performance impacts of digitally enabled supply chain integration capabilities. MIS quarterly, 225-246.
Sahin, F., & Robinson, E. P. (2002). Flow coordination and information sharing in supply chains: review, implications, and directions for future research. Decision sciences, 33(4), 505-536.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2008). Designing and managing the supply chain: concepts, strategies and case studies. Tata McGraw-Hill Education.
Sitienei, E., & Memba, F. (2015). The effect of inventory management on profitability of cement manufacturing companies in Kenya: A case study of listed cement manufacturing companies in Kenya. International Journal of Management and Commerce Innovations, 3(2), 111-119.
Tseng, M. L., Wu, K. J., & Nguyen, T. T. (2011). Information technology in supply chain management: a case study. Procedia-Social and Behavioral Sciences, 25, 257-272.
Authors
[1]
“Impact of Inventory Management on firm’s efficiency – A quantitative research study on departmental stores operating in Karachi”., Soc. sci. humanities j., vol. 3, no. 04, pp. 964–980, Apr. 2019, Accessed: Apr. 28, 2024. [Online]. Available: https://sshjournal.com/index.php/sshj/article/view/337
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