Inventory Management Systems and Firm Performance: A Case of Krones Life Cycle Service Centre East Africa
DOI:
https://doi.org/10.59413/ajocs/v6.i4.14Keywords:
Inventory Management Systems, Perpetual inventory systems, Periodic inventory system, Just in Time inventory system, Vendor managed inventory systemAbstract
This study examined the effect of inventory management systems (IMS) and firm performance with a case of Krones Life Cycle Service Centre East Africa, addressing a pressing need for empirical evidence on IMS adoption and its outcomes within the East African industrial context. The main purpose was to evaluate how the introduction and operation of IMS influenced operational efficiency and overall organizational performance at Krones LCS Centre. The research was guided by three objectives: identifying the inventory management systems adopted, determining their influence on the firm’s performance, and exploring the specific benefits and shortcomings resulting from their implementation. The research was grounded in a multifaceted theoretical framework that integrated the Resource-Based View (RBV), Systems Theory, and the Theory of Constraints. These theories collectively provided a robust foundation for analyzing how internal capabilities, system integration, and the identification and resolution of operational bottlenecks could drive improved firm outcomes. The RBV framed IMS as a source of sustained competitive advantage, while systems theory highlighted the interconnected nature of inventory processes, and the theory of constraints underscored the importance of addressing limiting factors within the inventory system. A descriptive survey research design was employed, targeting a population of 120 employees at Krones LCS Centre. The sample size was determined to be 60, selected using stratified random sampling to ensure representation across managerial, technical, and support roles. Data collection instruments comprised structured questionnaires and key informant interviews, supplemented by document analysis. Pretesting of research instruments was carried out to refine clarity and appropriateness. Instrument validity was established through expert review and triangulation, while reliability was confirmed with a Cronbach’s alpha score of 0.87. Quantitative data were analyzed using descriptive statistics and SPSS software, while qualitative data were analyzed thematically. The study achieved a response rate of 91%, ensuring the reliability and integrity of the data collected. Key findings showed that 82.6% of respondents recognized the use of perpetual IMS, with inventory records continuously updated, and 91.3% confirmed that periodic physical inventory checks were a standard practice. The adoption of just-in-time inventory principles was acknowledged by 65.2% of participants, indicating a shift towards demand-driven stock management. Statistically, 76.1% of respondents reported reduced inventory costs following IMS adoption, while 86.9% noted improvements in customer service efficiency. Additionally, 97.8% indicated that IMS had strengthened supplier relationships. However, 67.4% of respondents identified system complexity and cost as notable challenges, and 78.2% experienced occasional operational disruptions due to system failures. Despite these obstacles, 87% of participants disagreed with the notion that IMS diminished managerial control over inventory. In conclusion, the study found that the adoption of integrated, well-managed IMS had a significant positive effect on the operational and financial performance of Krones Life Cycle Service Centre East Africa. Recommendations included ongoing staff training, continuous system upgrades, and the development of risk mitigation strategies to handle potential system failures. Suggestions for further research involved comparative studies across similar organizations in East Africa. Chapter Five synthesized these findings, reinforcing the strategic importance of tailoring IMS to organizational context for sustained competitiveness and growth.
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