Factors Affecting Effectiveness Of Inventory Management In The Energy Sector In Kenya: A Case Of Kenya Pipeline Company Limited

Abstract

Inventory management plays a pivotal role in the procurement performance of the public sectors in Kenya. However, it is worth noting that for the function to realize its aims properly it has to be effectively managed. This study sought to establish factors that affect effectiveness of inventory management in the energy sector in Kenya. The study was guided by four objectives which focused on the influence of Information Technology, Staff Training, Safety Stock and Global Sourcing on Inventory Management. Descriptive research design was used for the study. The data was collected using a questionnaire which was the main data collection instrument. A total of 100 respondents were targeted by the study out of which 84 responded giving a good response rate. The sampling frame for this study included procurement managers, procurement officers, procurement assistants and clerical officer in the procurement department in the Kenya Pipeline company limited. The collected data was analysed using descriptive statistics and this was done using a statistical package for analysis (SPSS). On the effect of information technology, the study found that majority of the respondents agreed that KPC has managed to reduce inventory levels by use of modern technology. It was also found that quite a number of respondents agreed that in general IT has helped KPC manage inventories more effectively and control stock outs of spares. Regarding the effect of staff training and development on inventory management, the study established that it was very important to have staff with wide experience on challenging assignments. On the effect of safety stock management on inventory management, the study found that the respondents agreed that application of the right stock levels by KPC minimizes on obsolete items and stock outs. Finally, on the effect of global sourcing on inventory management, the study found that high percentage of the respondents indicated that KPC has managed to interact with suppliers globally due to significant shift of supply base’s worldwide with focus on global value countries to a large extent. The study concluded that information technology, staff training and development, safety stock management and global sourcing affect effectiveness of inventory management in KPC. It is recommended that for the inventory to be well managed and controlled, KPC needed to fully adopt the use of ERP system. Another recommendation is that more training be organized for staff on inventory management and the study further recommended that KPC needed to perform a continuous and periodical review on inventory. It was finally recommended that another study be done on the challenges of inventory management which was not the concern of this study.