INVENTORY MANAGEMENT PRACTICES AND SUPPLY CHAIN PERFORMANCE IN THE AUTOMOTIVE INDUSTRY IN KENYA

Abstract

Intense competition implies that the automobile dealers need to come up with the best ways for of promoting their supply chain performance. This is because nearly three-quarters of the funds in the automobile industry is tied up in slow moving stock. Consequently, the industry is faced with the problem of having large inventory-built ups that ties up the capital thus affecting the supply chain performance. In order to restore normalcy, inventory management practices (IMPs) have been adopted by many dealers in the sector. However, the influence of these IMPs has not been adequately interrogated. Thus, the paper examined the influence of IMPs on the supply chain performance in the automotive industry. Specifically, the paper examined the influence of just in time and FIFO on the supply chain performance in the automobile industry in Kenya. The paper was anchored on the Transaction Cost Analysis (TCA) and the Theory of Constraints (TOC) and was based on the descriptive research design. Data was gathered using the questionnaires and analyzed using the descriptive statistics including the mean, standard deviation and the inferential statistics including the correlation and regression analysis. The results showed that IMPs influenced the supply chain performance in the automobile industry in Kenya. Just in time accounted for 61.5% of the variance in the supply chain performance while 68.3% of the variation in supply chain performance in the automobile industry in Kenya was explained by FIFO.