INVENTORY MANAGEMENT PRACTICES AND PERFORMANCE OF LOGISTIC FIRMS IN NAIROBI CITY COUNTY, KENYA

Abstract

Proper inventory management technique plays an important function on firm performance a. Majority of logistics companies suffer from the inability to use inventory management as a competitive weapon to secure and maintain customer loyalty and thereby affecting the delivery of goods and service. The logistics performance index currently ranks Kenya at 68th out of 160 worldwide, down from 42nd in the previous index. The study general objective was to examine the effect of effect inventory management practices on performance of logistics firms in Nairobi City County, Kenya. The specific objectives were to examine effect of demand forecasting and cross docking on performance of logistics firms in Nairobi City County, Kenya. The study adopted a descriptive survey research design. The study targeted 100 logistics firms in Nairobi City. The unit of observation was the procurement, warehouse, and finance managers from each firm hence 300 respondents were targeted. The study sample of 171 staff was calculated using Yamane sampling formula.  The study used stratified random sampling method to categorize the respondents according to the departments. The study collected primary data using questionnaires. The pilot test was done on a sample of 10% of the respondents hence 17 managers that were not used in the final study. This study used content and construct validity. Cronbach’s Alpha was used as the means to measure reliability. Quantitative data obtained from questionnaires were coded and analyzed with the use of a computer in Statistical Package for Social Sciences (SPSS) Version 28 program. Data was analyzed using both descriptive statistics (frequency, percentage, mean) and inferential statistics that include Pearson correlation and regression. Findings were tabulated. Findings show that;  there is a  strong   significant relationship between demand forecasting and performance of logistics firms  (r=0.530, p=0.000), and a   strong  significant relationship between cross docking and performance of logistics firms  (r=0.820, p=0.000). The recommendations are that;  firms should adopt forecasting methods that will enable them to accurately forecast the demand patterns and adopt Transportation Management System to  provide oversight and metrics to help stay organized and amplify efficiency across your cross-docking process.

Key Words: Inventory Management Practices, Demand Forecasting, Cross Docking, Performance, Logistics Firms