AN ASSESMENT OF THE EFFECT OF VENDOR MANAGED INVENTORY ON SUPPLY CHAIN PERFORMANCE IN MANUFACTURING SECTOR IN KENYA: A CASE OF EABL

Joseph Mbugua Githinji

Jomo Kenyatta University of Agriculture and Technology (JKUAT),

Nairobi, Kenya.

Dr. David Kiarie.

Jomo Kenyatta University of Agriculture and Technology (JKUAT),

Nairobi, Kenya.

CITATION: Githinji, M., J., & Kiarie, D. (2016). An Assesment of The Effect Of Vendor Managed Inventory On Supply Chain Performance In Manufacturing Sector In Kenya: A Case Of Eabl. International Journal of Human Resources and Procurement. Vol. 6 (2) pp 17 – 37.

ABSTRACT

In Kenya many companies in manufacturing sector deploying Vendor Managed Inventory see failure due lack of demand sharing, attitude of employee towards changing of business model, supplier reluctance to hold higher inventory, requirement of standard product identification and integrated information system. The overall objective of the study was to assess the effect of Vendor Managed Inventory on supply chain performance in manufacturing sector in Kenya, a case of EABL. The study specifically aims to; assess the effect of demand forecasting on supply chain performance in manufacturing sector in Kenya; determine the effect of inventory management costs on supply chain performance in manufacturing sector in Kenya; establish the effect of information sharing on supply chain performance in manufacturing sector in Kenya and identify the effect of manufacturing planning on supply chain performance in manufacturing sector in Kenya. The study adopted a descriptive research design and the target population was a total of 90 supply chain management staff working at EABL in Nairobi. The study applied a census design to select all 90 staff as the study respondents. Questionnaires were used as the main data collection instruments and a pilot study was conducted to pretest questionnaires for reliability. Descriptive statistics and multiple regression analysis were used to analyze the gathered data and the results were presented on tables and charts. The study found out that VMI implementation helped to improve demand forecasting, reduced inventory management costs, led to better information sharing among supply chain partners and improved manufacturing planning and this affected organization supply chain performance. The study hence concluded that improvement in information sharing, followed by manufacturing planning, then reduction in inventory management costs and lastly demand affects supply chain performance. The study recommendations were: Manufacturing firms should therefore implement demand forecasting systems that enhance effective execution of activities for estimating the quantity of a product or service that consumers will purchase. The employed VMI systems should be more upgraded in order to improve on reduction of inventory management costs. Manufacturing firms should therefore employ Vendor Managed Inventory systems that ease the process of exchange of information among various supply chain partners and the management of manufacturing firms should link VMI systems with modern and updated manufacturing planning systems that lead to effective execution of key manufacturing planning functions.

Key Words: Supply Chain Performance (SCP); Vendor Managed Inventory (VMI)

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