Effects of Stock Management Strategies on Supermarkets Performance; a Case of Nakumatt Supermarket

Abstract

Maintaining adequate stock levels has been an invention which has greatly impacted on organization's performance. It has led to improved preparedness in firm's economic uncertainties. In Kenya, many firms have been caught unawares by shortages in raw materials and hence have been unable to produce products in time. This has led to shortage in particular products in the market. The study used the following objectives: To establish the effect of Just-in-time strategy on performance of Nakumatt supermarket; To examine the effect of Material Requirement Planning strategy on performance of Nakumatt supermarket; To determine the effect of Economic Order Quantity strategy on performance of Nakumatt supermarket, and; To assess the effect of Distribution Resource Planning strategy on performance of Nakumatt supermarket. The theories underpinning this study included: resource based view; Economic Order Quantity (EOQ) Model; Theory of Constraints, and; The Neoclassical of Exogenous Growth Theory. The target population of interest was Management and employees of Nakumatt supermarket in Nairobi. The study targeted a population of 387. A sample of 80 was used for the study. The sample was distributed between managers and other employees. The study used questionnaire to collect information from the respondents. After the collection of data from the fieldwork, all questionnaires were adequately checked for reliability and verification, editing, coding, and tabulation was carried out. The data was analyzed using descriptive and inferential statistics. Regression model was used to analyse inferential statistics. The study findings revealed that Just-in-time strategy was indeed significant related to supermarket performance. The results on the effect of material requirement planning strategy on supermarket performance revealed that there was a significant relationship. Concerning the effect of order quantity strategy on supermarket performance it was established that indeed the strategy affected supermarket performance. Finally, it was established that distribution resource planning strategy was important in matching material supply to demand, match inventory to customer service requirements and increase the speed the firm can react to the marketplace. Among the independent variables, just-in-time strategy had the highest influence on supermarket performance (β = 0.479), followed by material requirement planning (β = 0.371), then distribution resource planning strategy (β = 0.264), and finally distribution resource planning strategy (β = 0.231). The study recommended that supermarkets need to reorder new stock well in advance of the anticipated stock out levels. This will give it more supply chain stability; there should be an effective integration of information such as Electronic Data Interchange and Material Requirement Planning Systems in order to decrease capital cost in inventory levels; there is need for the supermarkets to use economic order quantity strategy as it optimizes the order quantity for each product when an order is placed, reducing the company's product stock out issue and finally, supermarkets should form strategic alliances with their distributors so as to have a more improved working relationship characterized by a shared mindset and good information flow.