Role of Inventory Management on Competitive Advantage among Manufacturing Firms in Kenya: A Case Study of Unga Group Limited

Abstract

The main objective of the study was to investigate the role of inventory management on the competitive advantage of manufacturing firms in Kenya, with reference to Unga Group Limited. Specifically, the study assessed the extent to which information technology is used in inventory management in Unga Group Limited, determine how inventory lead time, inventory control and inventory control practices affect competitive advantage of Unga group limited. The study adopted a descriptive research design to support and meet the research objectives. The target population was all the 289 employees working at Unga Group Limited headquarters who directly deal with inventory management. Stratified sampling and simple random sampling techniques were employed in the selection of 30 respondents. The study used both primary and secondary data. Primary data was collected using self-administered questionnaires consisting of closed ended and open-ended questions. The data collected was analyzed by descriptive statistics using a statistical package for analysis (SPSS). The study revealed that information technology, inventory control systems, inventory lead time and inventory control practices are important factors in attainment of competitive advantage of manufacturing firms in Kenya. The study recommended that the firm should embrace inventory control systems and information technology so as to improve and enhance competitive advantage. This study also recommended a similar research on other industries to ascertain whether the findings of the study are universal. Introduction Today's customer demands improved products with shorter and more precise deliveries at a lower cost (Srinivasan, 2012). In order to respond to these demands manufacturing companies have to be competitive in several dimensions, such as cost efficiency, quality, delivery time and process flexibility (Olhager, 2013). According to Porter (1980) there are three different competitive strategies for manufacturing companies to choose from. They are differentiation, cost leadership and focus. These strategies are based on combinations of cost, time, service and quality. Manufacturing companies can use one of these strategies to achieve a competitive advantage (Lysons & Farrington, 2012). Miltenburg (2005) states that when a manufacturing company can defend and attract customers it has competitive advantage, which today is crucial for manufacturing companies' survival (Mescon & Thill, 2006). Effective inventory management provide opportunities to create sustainable competitive advantage and enhance the competitive position of companies. This entails reduction in cost of holding stocks by maintaining just enough inventories, in the right place and the right time and cost to make the right amount of needed products. High levels of inventory held in stock affect adversely the procurement performance out of the capital being held which affects cash flow leading to reduced efficiency, effectiveness and distorted functionality.