International Journal of Academic Research in Business and Social Sciences

May 2015, Vol. 5, No. 5

ISSN: 2222-6990

Role of Inventory Management on Competitive

Advantage among Manufacturing Firms in Kenya: A
Case Study of Unga Group Limited
Naliaka V.W. & Prof. G.S. Namusonge
Jomo Kenyatta University of Agriculture and Technology, Kenya
School of Entrepreneurship, Procurement and Management,
P.O Box 62000-00200 Nairobi, Kenya
Email: [email protected]

DOI: 10.6007/IJARBSS/v5-i5/1595 URL: http://dx.doi.org/10.6007/IJARBSS/v5-i5/1595

ABSTRACT
The main objective of the study was to investigate the role of inventory management on the
competitive advantage of manufacturing firms in Kenya, with reference to Unga Group Limited.
Specifically, the study assessed the extent to which information technology is used in inventory
management in Unga Group Limited, determine how inventory lead time, inventory control and
inventory control practices affect competitive advantage of Unga group limited. The study
adopted a descriptive research design to support and meet the research objectives. The target
population was all the 289 employees working at Unga Group Limited headquarters who
directly deal with inventory management. Stratified sampling and simple random sampling
techniques were employed in the selection of 30 respondents. The study used both primary
and secondary data. Primary data was collected using self-administered questionnaires
consisting of closed ended and open-ended questions. The data collected was analyzed by
descriptive statistics using a statistical package for analysis (SPSS). The study revealed that
information technology, inventory control systems, inventory lead time and inventory control
practices are important factors in attainment of competitive advantage of manufacturing firms
in Kenya. The study recommended that the firm should embrace inventory control systems and
information technology so as to improve and enhance competitive advantage. This study also
recommended a similar research on other industries to ascertain whether the findings of the
study are universal.

Keywords: Inventory Management, Information Technology, Inventory Lead Time, Inventory

Control Systems, Inventory Control Practices, Competitive Advantage.

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Introduction
Today’s customer demands improved products with shorter and more precise deliveries at a
lower cost (Srinivasan, 2012). In order to respond to these demands manufacturing companies
have to be competitive in several dimensions, such as cost efficiency, quality, delivery time and
process flexibility (Olhager, 2013). According to Porter (1980) there are three different
competitive strategies for manufacturing companies to choose from. They are differentiation,
cost leadership and focus. These strategies are based on combinations of cost, time, service and
quality. Manufacturing companies can use one of these strategies to achieve a competitive
advantage (Lysons & Farrington, 2012). Miltenburg (2005) states that when a manufacturing
company can defend and attract customers it has competitive advantage, which today is crucial
for manufacturing companies’ survival (Mescon & Thill, 2006).
Effective inventory management provide opportunities to create sustainable competitive
advantage and enhance the competitive position of companies. This entails reduction in cost of
holding stocks by maintaining just enough inventories, in the right place and the right time and
cost to make the right amount of needed products. High levels of inventory held in stock affect
adversely the procurement performance out of the capital being held which affects cash flow
leading to reduced efficiency, effectiveness and distorted functionality. Inventories are the
stock of products a company holds to further its production and sales (Pandy, 2003). Stock can
come in various forms such as raw materials, work−in−progress, finished goods and goods
ready for sale (Levis, 2009). Inventory represents an important decision variable at all stages of
product manufacturing, distribution and sales, in addition to being a major portion of total
current assets of many organizations. Inventory often represents as much as 40% of total
capital of industrial organizations (Moore, Lee and Taylor, 2003). It many represent 33% of
company assets and as much as 90% of working capital, (Sawaya Jr. and Giauque, 2006). Since
inventory constitutes a major segment of total investment, it is crucial that good inventory
management be practiced to ensure organizational growth and profitability.

Inventory management is vital in the control of materials and goods that have to be held (or
stored) for later use in the case of production or later exchange activities in the case of services.
Inventory management refers to a science based art of ensuring that just enough inventory
stock is held by an organization to meet demand (Jay & Barry, 2006). It is required at different
locations within multiple locations of a supply network, to protect the regular and planned
course of production against the random disturbance of running out of the materials or goods.
Inventory management also concerns fine lines between the replenishment lead time, carrying
costs, asset management, inventory forecasting, valuation of inventory, future inventory price
forecasting, physical inventory, inventory visibility, available space for inventory, quality
management, replenishment, returns ,defective goods and demand forecasting. The principal
goal of inventory management involves having to balance the conflicting economics of not
wanting to hold too much stock. Thereby having to tie up capital so as to guide against the
incurring of costs such as storage, spoilage, pilferage and obsolescence and, the desire to make
items or goods available when and where required (quality and quantity wise) so as to avert the
cost of not meeting such requirement. Inventory problems of too great or too small quantities

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on hand can cause business failures. If a manufacturer experiences stock-out of a critical

inventory item, production halts could result.
Essentially, inventory management involves planning and control. Where planning aspect
involves looking ahead in terms of the determination in advance: (i) What quantity of items to
order; and (ii) How often (periodicity) do we order for them to maintain the overall source-
store sink coordination in an economically efficient way? (ii) How often (periodicity) do we
order for them to maintain the overall stock coordination in an economically efficient way?. The
control aspect, which is often described as stock control involves following the procedure, set
up at the planning stage to achieve the above objective. This may include monitoring stock
levels periodically or continuously and deciding what to do on the basis of information that is
gathered and adequately processed. Effort must be made by the management of any
organization to strike an optimum investment in inventory since it costs much money to tie
down capital in excess inventory.
A company, which neglects inventory management, runs the risk of production bottlenecks and
subsequently unable to maintain the minimum investment it requires to maximized profit.
Inventories that are inefficiently managed may apart from affecting sales create an irreparable
loss in market for companies operating in highly competitive industry. Invariably, a company
must neither keep excess inventories to avoid an unnecessary tying down of funds as well as
loss in fund due to pilferage, spoilage and obsolescence nor maintain too low inventories so as
to meet production and sales demand as at when needed. The role of inventory management is
to coordinate the actions of all business segments, particularly sales, marketing and production,
so that the appropriate level of stock is maintained to satisfy customers’ demands. The goal of
inventory management is to balance supply and demand as closely as possible in order to keep
customers satisfied and drive profits. The processes and controls of effective inventory
management are critical to any successful business. Since it is rarely the case that any business
has the luxury of unlimited capital, inventory management involves important decisions about
what to buy or produce, how much to buy or produce and when to buy or produce within the
capital limits. These are “value decisions.” Excessive inventory investments can tie up capital
that may be put to better use within other areas of the business. On the other hand, insufficient
inventory investment can lead to inventory shortages and a failure to satisfy customer demand.
A balance must be struck and maintained.
According to Lysons (2006), inventory control enhances profitability by reducing costs
associated with storage and handling of materials. Inventory control is means by which
materials of the right quality and quantity are made available as when required with due
regards to the economy of shortages, ordering cost, purchase price and working capital.
Inventory control determines the extent of stock holding of materials. It equally makes it
possible for material manager to carryout accurate and efficient operation of the
manufacturing organization through decoupling of individual segment of the total operation
and it entails the process of assessing of stock into the store house and the issue of stock.
Materials control has to do with standard control on the ordering size, ordering time, and the
quantities of raw materials left in the store at a given time. For profitability and cost reduction,

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manager must therefore, maintain an optimum level of stock at all time. Too much stock and
too little stock must be avoided.
According to Buffa & Salin (1987) there are several reasons for keeping inventory. Inventories
can be held to improve production scheduling, to smoothen production in the face of
fluctuating sales, to minimize stock out costs, to speculate on or hedge against price
movements, to reduce purchasing costs by buying in quantity, to shorten delivery lags, and so
on. A company can only realize substantial savings by using a rational procedure for inventory
control. Inventory control is typically a key aspect of almost every manufacturing and/or
distribution operation business. The ultimate success of these businesses is often dependent on
its ability to provide customers with the right goods, at the right place, at the right time. Failure
to have the right goods in the right place at the right time often leads to lost sales and profits
and, even worse, to lost customers.
A reliable inventory system implies higher confidence of customers and their attendant
continuous patronage. Inventory management systems are mostly applied in manufacture
settings, where its viability and potential economic value are duly attained. Inventory is kept to
meet reliability of operations, flexibility in production scheduling, change in raw material,
delivery time an change in economic purchase order size (Inyama, 2006). An inventory system
provides the operating policies and organizational structure for maintaining and controlling
goods to be stocked. A proficient management of inventory system requires an appropriate
way of making decisions about how much to order and when to order and a means of keeping
track of items in inventory. Decision on inventory in any organization depends on facts about
on-hand stock level, demand information with regards to the forecasted quantity, lead time
and lead time variation, inventory holding costs, ordering cost and shortage cost.
Installation of a proper inventory control system in any organization is of paramount necessity.
Inventory is the availability of any stock or resources used in an organization. An inventory
system is the set of policies that controls and monitor inventory level and determine what level
should be maintained, how large orders should be made and when stock should be replenished.
Inventory control is the supervision of the storage, supply and accessibility of items to ensure
an adequate supply without excessive oversupply (Miller, 2010). Inventory control means
availability of materials whenever and wherever required by stocking adequate number and
kind of stocks. The sum total of those related activities essential for the procurement, storage,
sales, disposal or use of material can be referred to as inventory management. Inventory
managers have to stock-up when required and utilize available storage space resourcefully, so
that available storage space is not exceeded. Maintaining accountability of inventory assets is
there responsibility. They have to meet the set budget and decide upon what to order, how to
order and when to order so that stock is available on time and at the optimum cost (Benedict &
Margeridis, 1999).
Inventory constitute one of the largest and most tangible investment of any retailer or
manufacturing organization. Intelligent inventory management strategies can not only help
boost profit but they can mean the difference between a business thriving or barely surviving.
Holding inventories at the lowest possible cost and giving the objectives to ensure
uninterrupted supplies for on-going operations is the aim of inventory management. When
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making decisions on inventory, management has to find a compromise between the different
cost component, such as the cost of supplying inventory, inventory holding cost and cost
resulting from sufficient inventories (Zipkin, 2000). According to Miller (2010), inventory control
is the activity which organizes the availability of item to the customers. It coordinates the
purchasing, manufacturing and distribution functions to meet the marketing needs.
Kotler (2002), asserts that inventory management refers to all the activities involved in
developing and managing the inventory levels of raw materials, semi-finished materials
(working-progress) and finished good so that adequate supplies are available and the costs of
over or under stocks are low. Inventory management is primarily about specifying the size and
placement of stocked goods. Inventory management is required at different locations within a
facility or within multiple locations of a supply network to protect the regular and planned
course of production against the random disturbance of running out of materials or goods. The
scope of inventory management also concerns the fine lines between replenishment lead time,
carrying costs of inventory, asset management, inventory forecasting, inventory valuation,
inventory visibility, future inventory price forecasting, physical inventory, available physical
space for inventory, quality management, replenishment, returns and defective goods and
demand forecasting. Balancing these competing requirements leads to optimal inventory levels,
which is an on-going process as the business needs shift and react to the wider environment
(Ghosh & Kumar, 2003).
Ogbo (2011) posits that the major objective of inventory management and control is to inform
managers how much of a good to re-order, when to reorder the good, how frequently orders
should be placed and what the appropriate safety stock is, for minimizing stock-outs. Thus, the
overall goal on inventory is to have what is needed, and to minimize the number of times one is
out of stock. Inventory management is an ongoing process that relies on inputs from forecasts
and product pricing, and should be executable within the cost structure of the business under
an overall plan. Inventory control involves three inventory forms of the flow cycle: Basic Stock -
The exact quantity of an item required to satisfy a demand forecast. Seasonal Stock - A quantity
build-up in anticipation of predictable increases in demand that occur at certain times in the
year. Safety Stock - A quantity in addition to basic inventory that serves as a buffer against
uncertainty. Inventory control is the ability to supply goods and services at the right time with
the right quality and quantity. It is a reliable means in which businesses are been managed to
ensure customers are satisfied and organizations remain in operation via minimization of
losses.

Statement of the Problem

Manufacturing firms facing problems in their replenishment processes force upstream suppliers
to build excessive stock (Battini et al., 2009). To be able to compete in today’s global market,
manufacturing firms need to have control over their inventory levels (Yuanjie, 2013). The more
inventory manufacturing firms keep the more exposed they are to uncertainty costs associated
with holding them. High inventory levels can lead to scrap, outdated products, increased
inventory carrying costs and warehousing costs (Jonsson & Mattsson, 2011).

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Challenges of inventory management and control have been around for a very long time
especially in area of discrepancies, theft, fraud, obsolescence, deterioration and breakages.
Organizations at times do not control their inventory holding, resulting in under stocking and
causing the organizations to stay off production, thereby resulting to organizational
ineffectiveness creating relationship problems between inventory management and
organizational productivity, profitability and effectiveness. Too much inventory consumes
physical space, creates financial burden, and increases possibility of damage, spoilage and loss.
If manufacturing companies have low levels of stock it may lead to delivery problems and
production stoppages (Miltenburg, 2005). On the other hand manufacturing companies strive
to have the lowest level of inventory possible but still be able to respond to customer demands
(Pong & Mitchell, 2012). If customer demands are not met, manufacturing companies may lose
money due to lost sales. Therefore, it is important for manufacturing firms to have control over
their inventory levels (Pong & Mitchell, 2012).
Every year organizations prepare and implement one type of economic policy/budget whereby
a large sum of money is spent on acquisition of materials without making an adequate planned
effort to provide for inventory facilities. These lapses coupled with improper stock control
system and lack of trained personnel account for the ineffectiveness of inventory function in
both public and private sector. Unga Group Limited does not exist in isolation. The same
problem as faced by other organizations both public and private is what Unga Group Limited is
facing. More so, being a private organization which is grounded on the principles of profit
maximization, the neglect as well as the improper care, control and management of stock can
be more terrible than required.
However, most of the local studies such as Pauline et al. (2013), Kimaiyo & Ochiri, (2014) and
Tyan & Wee (2003); Rogers (2005) and Kihara (2013) focused on inventory management and
organizational performance. No known study has specifically addressed the role of inventory
management on competitive advantage among the manufacturing firms in Kenya. It is against
this background that this research intends to bridge the knowledge gap and explore the role of
inventory management on competitive advantage among the manufacturing firms in Kenya
with specific reference to Unga group limited.

Objectives of the study

General Objective

The general objective of the study was to investigate the role of inventory management on
competitive advantage of Unga Group Limited.

Specific Objectives

The specific objectives of the study was;

1. To assess the extent to which information technology is used in inventory management
in Unga group limited
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2. To determine how inventory lead time affects competitive advantage of Unga Group
Limited.
3. To examine how inventory control systems affects competitive advantage of Unga
Group Limited.
4. To determine the effect of inventory control practices on competitive advantage of
Unga Group Limited.

Research Questions
The study aims to answer the following research questions;
1. To what extent has Unga Group Limited applied information technology in inventory
management?.
2. How does inventory lead time affect competitive advantage of Unga Group Limited?.
3. How does inventory control systems affect competitive advantage of Unga Group
Limited?.
4. What is the effect of inventory control practices on competitive advantage of Unga
Group Limited?.

Theoretical Framework

Adaptive Structuration Theory

Structuration theory was first proposed by Anthony Giddens in his constitution of the society in
1984, which was an attempt to reconcile social systems and the micro/macro perspective of
organizational structure. Desanctis & Poole (1994) borrowed from Giddens in order to propose
Adaptive Structuration theory and the rise of group decision support systems. Adaptive
Structuration theory provides the model whereby the interaction between advancing
information technologies, social structures, and human interaction is described, and which
social structures, rules, and resources provided by information technology as the basis for
human activity. Adaptive Structuration theory is a viable approach in studying how information
technology affects inventory management because it examines the change from distinct
perspectives.
Adaptive Structuration theory is relevant in today’s inventory management practice due to the
expanding influence that advancing technologies have had with regard to the human-
interaction aspect of Adaptive Structuration theory and its implication on socio-biologically
inspired Structuration in security software applications( Ramakrishna,2005). Adaptive
Structuration theory presents specific advances in information technology that are driving
organizational changes in the areas of business alignment, information technology planning,
and development show that Adaptive Structuration theory is being used as a driving force of
effective management within organizations. The study uses the theory to investigate how
complexity of inventory management is influenced by Information Technology (Ramakrishna,
2005). In conclusion Adaptive Structuration theory’s appropriation process might be a good
model to analyze the utilization and penetration of new technologies in organizations.
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The Relationship Marketing Theory

This theory is used in the various fields such as supply chain management, international
marketing, relationships, networks, databases, information as well as in transactional analysis
(Jraisat, 2010). This theory offers various dimensions such as commitment and cooperation that
are useful in studying the various relationships that exists between different phenomenon that
are related to the relationship between the buyer and the seller especially in aspects of
information sharing (Wilson, 1995). The relationship marketing theory explains the various
buyer-supplier relationships and its information sharing (Toften & Olsen, 2003) as well as offers
explanation of the various streams in the said relationships, the various dimensions in the
relationship as well as the rationale or the justification for the relationship such as the structure
and the process of the relationship.

Deterministic Inventory Model

The most common deterministic inventory model is Economic Order Quantity (EOQ). This is a
mathematical model developed within the scope of operations management to determine the
optimal inventory level. As Ross et al., (2008) observed, the Economic Order Quantity (EOQ)
model is an approach of determining the optimal inventory level that takes into account the
inventory carrying costs, stock-out costs and total costs which are helpful in the determination
of the appropriate inventory levels to hold. EOQ is the level of inventory that minimizes total
inventory holding costs and ordering costs.
The framework used to determine this order quantity is also known as Wilson EOQ Model or
Wilson Formula. The model was developed by F. W. Harris in 1913, but R. H. Wilson, a
consultant who applied it extensively, is given credit for his in-depth analysis (William, 2007).
EOQ only applies when demand for a product is constant over the year and that each new
order is delivered in full when the inventory reaches zero. There is a fixed cost charged for each
order placed, regardless of the number of units ordered. There is also a holding or storage cost
for each unit held in storage (William, 2007).
EOQ is used to determine the optimal number of units of the product to order so that to
minimize the total cost associated with the purchase, delivery and storage of the product The
required parameters to the solution are the total demand for the year, the purchase cost for
each item, the fixed cost to place the order and the storage cost for each item per year. Note
that the number of times an order is placed also affects the total cost; however, this number
can be determined from the other parameters (Heikkila, 2002). EOQ assumes that, the ordering
cost is constant, the rate of demand is constant, the lead time is fixed, the purchase price of the
item is constant i.e. no discount is available, the replenishment is made instantaneously, the
whole batch is delivered at once. EOQ is the quantity to order, so that ordering cost plus
carrying cost finds its minimum.

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Resource-Based View Theory

The RBV theory is one of the fundamental principles for the competitive advantage of a firm.
The RBV of the firm posits that a firm's internal processes create a resource bundle which can
become the means of creating and sustaining a competitive advantage (Bates & Flynn, 1995).
The RBV literature considers a firm as a collection of heterogeneous resources, or factors of
production or as bundles of resources including all inputs that allow a firm to operate and
implement its strategies (Barney et. al., 1991). A company achieves a competitive advantage
when it has key resources (these can be physical resources, human resources or organizational
resources) that its competitors do not have (Barney, 1991). Developing and maintaining this
competitive advantage depends on whether the firm is able to identify, develop, deploy, and
protect the internal resources (Barney, 1991).
In the context of the resource-based view, a firm might lose its competitive advantage if
important inventory management skills are scarce or are getting lost as they are not easily
duplicated or substituted. Inventory management skills are valuable as they help providing
supply strategies for future needs and developing supply management strategies to support
company strategies (Carr & Pearson, 2002). As purchasing professionals interact with other
functions within a complex social network, purchasing skills are difficult to replicate (Eltantawy,
2005). The two assumptions for RBV theory are (1) resources and capabilities are
heterogeneously distributed among firms; and (2) resources and capabilities are imperfectly
mobile, which make firms' differences remain stable over time (Barney 1991). Every firm is
different (heterogeneous) from other firms in terms of the resources and capabilities a firm
possesses or accesses. These differences differentiates one firm from another and a firm's
success is due to its firm-specific resources.

Conceptual Framework
A conceptual framework is a structure of concepts and or theories which are put together as a
map for the study and it shows the relationship of research variables (Mugenda & Mugenda,
2008). The conceptual framework is used to explain the relationship between the independent
variables and the dependent variable. The aspects of information technology, inventory control
systems, inventory lead time and inventory control practices form the independent variables
while competitive advantage forms the dependent variable. This relationship is
diagrammatically shown in Figure 2.1 below.

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Independent Variables Dependent Variable

Information Technology

 Computerized Systems
 Real Time Environments
 EDI/EPOS

Inventory Control Systems

 Profitability
 Inventory Levels
 Production Cycles Competitive Advantage
 Flexibility  Price
 Quality
Inventory Lead Time  Delivery
Dependability
 Inventory Levels  Time to Market
 Cycle Times  Product Innovation
 Costs/Sales
 Quality
 Customer Satisfaction

Inventory Control Practices

 Costs/Profits
 Sales
 Feasibility

Figure: 2.1 Conceptual Framework

Research Methodology
The study adopted a descriptive research design. According to Mugenda & Mugenda (2003), a
descriptive research design determines and reports the way things are. Creswell (2003) asserts
that a descriptive research design is used when data is collected to describe persons,
organizations, settings or phenomena. Descriptive design was ideal as the study was carried out
in a limited geographical scope and hence is logistically easier and simpler to conduct
considering the limitations of the study (Mugenda, 2008).
A population is considered to be any group of people, events, or items that are of interest to
the researchers that they wish to investigate (Kothari, 2008). Target population refers to a
universal set of study of all members of real or hypothetical set of people, events or objects to
which an investigator wishes to generalize the result (Borg & Gall, 2009). The target population
of this study comprised of all the 289 Management staff of Unga Group Limited.
The sampling frame for any probability sample is a complete list of all the cases in the
population from which a sample is drawn (Saunders et al., 2007). The purpose of sampling was
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to gain an understanding about some features or attributes of the whole population based on
the characteristics of the sample. A sample is a smaller and more accessible sub set of the
population that adequately represents the overall group, thus enabling one to give an accurate
(within acceptable limits) picture of the population as a whole, with respect to the particular
aspects of interests of the study. A sample of responding staff was drawn from 289 possible
respondents.
Stratified sampling technique was used to select the sample. According to Oso (2009), Stratified
sampling technique produce estimates of overall population parameters with greater precision
and ensures a more representative sample is derived from a relatively homogeneous
population. Stratification aims to reduce standard error by providing some control over
variance. The study grouped the population into three strata i.e. top, middle and low
management levels. From each stratum the study used simple random sampling to select 30
respondents.
Stratified random sampling technique was used since the population of interest was not
homogeneous and could be sub-divided into groups or strata to obtain a representative
sample. Statistically, in order for generalization to take place, a sample of at least 30 elements
(respondents) must exist (Cooper and Schindler, 2003). According to Mugenda & Mugenda,
(2003), when carrying out a descriptive study, 10% of the population yields an adequate
sample. This study selected 10% from each level which was thus regarded as sufficient or
adequate. Ten percent of the population produced a more representative sample size of 30
respondents out the 289 staff of Unga Group Limited.
Primary data was gathered using both open and closed ended questionnaires administered to
the 30 respondents who were picked for the purpose of analysis. Secondary data was obtained
from the existing materials such as, financial reports, journals, empirical researches in the area
and other relevant articles that related to the topic. Descriptive statistics in the form of
frequencies and percentages was used for analysis in this study. Statistical Package for Social
sciences (SPSS) computer software was used to present the data in the form of frequency
tables and percentages.

RESULTS AND DISCUSSION

Information Technology
The analysis of the study showed that there was high use of information technology in
inventory management at Unga group limited. As illustrated in table 4.6 below, the
respondents agreed that Unga Group limited uses Electronic Point of sale (EPOS) and Electronic
Data Interchange Technology (EDI) as shown by a mean scores of 4.03 and 4.14 respectively.
The respondents also agreed that Computers at Unga Group limited are linked with those of the
suppliers in a Real Time environment and that the firm has computerized all inventory
management systems as shown by a mean score of 3.66 and 2.93 respectively. However, the
standard deviation of 1.111 and 1.163 respectively implies high variations in the responses. This
trend is in agreement with those found in the literature. Computers can aid in stock control by
setting stock control levels and calculating the amount of stocks to hold and dispatch.

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Table 1. Information Technology response means and standard deviations

Statement on effect of Information Technology Std.
Mean Deviation
Unga Group limited firm uses Electronic Point of sale (EPOS) 4.03 .823
Unga Group limited uses Electronic Data Interchange Technology (EDI) 4.14 .789
Computers at Unga Group limited are linked with those of the suppliers in a
3.66 1.111
Real Time environment
Unga Group limited has computerized all inventory management systems 2.93 1.163

Inventory Control Systems

The study sought to determine the effect of inventory control system on competitive advantage
of manufacturing firms. The respondents agreed that inventory control systems was an
important factor of attaining competitive advantage. As illustrated in table 4.7 below, the mean
responses with the highest effects included: enhanced timely deliveries (4.14) reduced
production costs (4.12), increased product quality 4.28, decreased production cycle times 4.10,
reduced wastages 3.62, reduced stock levels 4.17 and increased profitability 4.24.
The effects of inventory control system with means higher than 3.5 implies that the
respondents “Agree” that inventory control systems leads to a high competitive advantage. This
trend is in agreement with those found in the available literature. The respondents agreed that
inventory control systems was an important factor of attaining competitive advantage.

Table 2. Inventory Control Systems response means and standard deviations

Statement on effect of Inventory Control Systems Mean Std. Deviation
Inventory control system has enhanced timely deliveries 4.14 .875
Inventory control system has reduced production costs 4.21 .861
Inventory control system has increased product quality 4.28 .797
Inventory control system has decreased production cycle time 4.10 .939
Inventory control system has reduced wastages 3.62 .862
Inventory control system has reduced stock levels 4.17 .848
Inventory control system has increased profitability 4.24 .786

Inventory Lead Time

The study sought to determine the effect of inventory lead time on competitive advantage of
manufacturing firms. The respondents agreed that inventory lead time was considered a very
significant factor in attaining competitive advantage.
As illustrated in table 4.8 below, the mean responses on the effects were as follows: increased
profitability (4.07), reduced materials cost (3.90), shorter production cycle times (4.28),
improved product quality (4.41), increased customer satisfaction (4.34) reduced production
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costs (4.12), reduced obsolescence and surplus (4.48), increased sales 4.45 and reduced
inventories 4.31. Stevenson (2001) asserts that that the main purpose of lead time is to actually
enable the organization to acquire competitive advantages while delivering the right product at
the correct place and at the right time hence satisfying the ultimate customer.
Table 3. Inventory Lead Time response means and standard deviations
Statement on effect of Inventory Lead Time Mean Std. Deviation
Inventory lead time has increased profitability 4.07 .704
Inventory lead time has reduced materials cost 3.90 .489
Inventory lead time has led to shorter production cycle times 4.28 .841
Inventory lead time has led to improved product quality 4.41 .733
Inventory lead time has increased customer satisfaction 4.34 .897
Inventory lead time has reduced obsolescence and surplus 4.48 .986
Inventory lead time has increased sales 4.45 .686
Inventory lead time has reduced inventories 4.31 .712

Inventory Control Practices

The study sought to determine the effect of inventory control practices on competitive
advantage of manufacturing firms. As illustrated in table 4.9 below, the respondents agreed
that stock control practice has minimized costs as shown by a mean of 3.72. The respondents
also agreed that regular inventory turnover has realized larger profits, a point of sale system of
tracking inventory on hand creates profitability, the stock control system is economically
feasible, Stock control practice leads to continuous production of goods and services thus
improving sales, Stock control practice increases the volume of sales by ensuring there are
sufficient goods available, stock control increases the volume of sales and effective
management of materials and items leads to profitability as shown by mean scores of 3.66,
3.83,4.38,4.31, 4.24 and 4.21 respectively.
The respondents disagreed that Stock control practice has negatively affected the prices of
goods and services rendered to customers and Cost of inventory is reduced by purchasing the
right quantity of materials at the right place and price as shown by mean scores of 2.38 and
2.34 respectively. This indicated that respondents agreed that stock control practice has a
positive effect on the profit margin of manufacturing firms, considering the clustered mean of
3.67 (from the decision rule and mean response of 3.0 and above should be regarded as
positive).

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Table 4. Inventory Control Practices response means and standard deviation

Statement on effect of Inventory Control Practices Std.
Mean Deviation
Stock control practice has minimized cost 3.72 .996
Regular inventory turnover has realized larger profits 3.66 .614
A point of sale system of tracking inventory on hand creates profitability 3.83 .602
The stock control system is economically feasible 4.38 .775
Stock control practice leads to continuous production of goods and services
4.31 .806
thus improving sales
Stock control practice increases the volume of sales by ensuring there are
4.24 .830
sufficient goods available
Stock control practice has negatively affected the prices of goods and
2.38 .820
services rendered to customers
Cost of inventory is reduced by purchasing the right quantity of materials at
2.34 .974
the right place and price
Effective management of materials and items has led to the profitability of
4.21 .726
your establishment

Competitive Advantage.
The study also aimed at establishing the respondents' level of agreement with statements
related to Competitive advantage of manufacturing firms in Kenya. As illustrated in table 4.10
below, the respondents agreed that the firm offers high quality products and services to its
customers as shown by mean score of 4.07.
The respondents also agreed that the firm offers highly reliable products and services, provides
dependable delivery, provides customized products and services, the firm is always the first in
the market to introduce new products and services and that the firm has fast product
development as shown by mean scores of 4.24, 4.28, 3.93, 3.55 and 3.62 respectively. The
respondents disagreed that the firm is not able to compete based on quality and that it rarely
delivers customer orders on time as shown by mean scores of 1.90 and 1.97 respectively.

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Table 5. Competitive Advantage response means and standard deviations

Statement on competitive advantage Std.
Mean Deviation
The firm offers high quality products and services to its customers 4.07 .884
The firm is not able to compete based on quality 1.90 .772
The firm offers highly reliable products and services to its customers 4.24 .830
The firm rarely delivers customer orders on time 1.97 .731
The firm provides dependable delivery 4.28 .528
The firm provides customized products and services 3.93 .923
The firm is always the first in the market to introduce new products and
3.55 .686
services
The firm has fast product development 3.62 .622

Conclusions
The study concludes that Unga Group Limited embraces Information Technology in inventory
management as a competitive tool as shown by an overall mean of 3.69. The firm uses
Electronic Point of sale (EPOS) and Electronic Data Interchange Technology (EDI) in its inventory
management activities. The study also concludes that the firm's computers are linked with
those of the suppliers in a Real Time environment although with varied responses. The firm at a
lesser extent has computerized all its inventory management systems.
The study concludes that Unga Group Limited has attained much through inventory control
systems. Inventory control system has enhanced timely deliveries, reduced production costs,
increased product quality, decreased production cycle time, reduced wastages, reduced stock
levels and increased profitability as shown by a general mean of 4.12. The ratings showed that
inventory control systems played a vital role in attaining competitive advantage, and as such,
organizations must ensure that inventory control system be highly involved in inventory
management activities.
From the findings, the study concludes that inventory lead time is a very important competitive
tool. Inventory lead time showed how the organization acquired competitive advantages as it
delivers the right product at the right place and within the shortest time possible. As shown by
an overall mean of 4.28, lead time has increased profitability, reduced materials cost, reduced
production cycle times, improved product quality, increased customer satisfaction, reduced
obsolescence and surplus, increased sales and reduced inventories. Dimitrios, (2008) asserts
that Cycle-time reduction almost always means reduced costs, reduced inventory levels,
improved production predictability, increased customer service, and better quality. To reduce
cycle time, manufacturers need to streamline every aspect of their operations, especially the
order-to-delivery process. The study further concludes that inventory control practices affects
competitive advantage of Unga Group Limited as shown by an overall mean of 3.67. This is in
line with Tasli (2011) who asserts that inventory management reduces unnecessary costs and

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increases revenue in a business and Kent (2002), effective stock control increases the profit
making of an organization.
The study concludes that inventory management affects competitive advantage of
manufacturing firms in Kenya. As shown by an overall mean of 4.28, the firm offers high quality
products and services to its customers, highly reliable products and services, provides
dependable delivery, provides customized products and services, provides customized products
and services, the firm is always the first in the market to introduce new products and services
and that the firm has fast product development. The study further concludes that the firm is
able to compete based on quality and that it delivers customer orders on time. Competitive
advantage comprises capabilities that allow an organization to differentiate itself from its
competitors and is an outcome of critical management decisions Li et al., (2006). The literature
review has identified price/cost, quality, delivery, and flexibility as important competitive
capabilities.

Recommendations
In reference to the findings and conclusion, the study recommends that the firm should
embrace inventory control systems and information technology so as to improve and enhance
competitive advantage. Unga Group Limited should develop a policy framework for faster
implementation of the best inventory management practices like JIT and MRP. The firm should
invest in modern information technology in inventory management as this will reduce inventory
costs and improve returns, improve information sharing and hasten orders from suppliers
hence shortening the lead time. In order to attain competitive advantage in the industry, firm
should increase resource allocation to staff training, research and development in inventory
management so as to develop the necessary skills, update their knowledge, and further
enhance New Product Development.

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