Supplier relationship management on inventory management and the performance of supermarkets in Mombasa County, Kenya

Abstract

Organizational performance comprises real results or outputs compared to inputs and are a measure of how well organizations attain their desired goals. Kenyan retail outlets are facing fierce competition and rivalry and their performance is not guaranteed. Due to their business model, supermarkets strengths lie in their supply chain management practices, the center of which is inventory management. This study sought to establish supplier relationship management on inventory management practices and performance of supermarket outlets in the Mombasa County, Kenya. The study specific objectives were to establish the effects of inventory audit management practice, lean inventory management practice, inventory forecasting management practice and inventory process automation management practice on the performance. The theories underpinning this study were the theory of constraints, the Lean Theory, Balanced Score Card Theory and the Economic Order Quantity Model. The study used an explanatory research design to address the research problem. The target population was 136 supermarket outlets operating in Mombasa County as at December 2020. The study adopted a stratified sampling technique, with the help of Neyman allocation sample formulae the study used a sample of 101. The unit of analysis was the supermarket outlets while the unit of observation was the supermarket outlet managers. Primary data was collected using structured questionnaires with Likert type 5- point scale. A pilot study was carried on 14 supermarkets and reliability and validity was tested. Descriptive and inferential statistics were generated. Correlation analysis and multiple linear regression model were used to establish the relationship between the independent, moderating and the dependent variables. From the results, all the predictor and moderator variables were positively and significantly correlated with performance. Inventory audit management practice (r=.537, p=.000), lean inventory management practice (r=.287, p=.008), inventory forecasting management practice (r=.412, p=.000), inventory process automation management practice (r=.527, p=.000) and supplier relationship management (r=.441, p=.000). The multiple linear regression results showed that all the independent variables were positively and significantly related with the dependent variable. Inventory audit management practice (β=.351, p=0.000), lean inventory management practice (β=.257, p=0.007), Inventory forecasting management practice (β=.325, p=0.000) and inventory process automation management practice (β=.339, p=0.036). The moderated linear regression results showed that supplier relationship management positively and significantly moderated the relationship between Inventory audit management practice (β=.245, p=0.006) and inventory automation process management practice (β=.122, p=0.033) and performance of supermarket outlets in Mombasa county. Supplier relationship management did not significantly moderate the relationship between lean inventory management practice (β=.062, p=0.434), and inventory forecasting management practice (β=.070, p=0.440). The study concluded that inventory audit, lean inventory, inventory forecasting and inventory process automation positively significantly affect performance of supermarkets. Further, supplier relationship management positively moderates the relationship between inventory audit and inventory process automation management practice. The study recommends supermarket outlet managers to engage in effective inventory practices and supplier relationship management to improve on the performance of supermarket outlets in Mombasa County. Policy makers and government authorities should focus on both automation and reshoring to allow for more flexible adjustment to changing demand, mitigating firms’ risks in the event of a pandemic or other external shocks. Further studies were recommended to be done in other parts of the country to get a further understanding of the relationships under the study. Further, a similar study should be done in other sectors of the industry especially the manufacturing sector