TABLE OF CONTENTS
DECLARATION.. i
Supervisor’s Approval ii
Dedication. iii
Acknowledgement iv
Table of contents. v
List of acronyms. viii
CHAPTER ONE INTRODUCTION.. 1
1.0 Introduction. 1
1.1 Background of the study. 1
1.2 Statement of the Problem.. 3
1.3 Purpose of the Study. 4
1.4 Objectives of the Study. 4
1.5 Research Questions of the Study. 4
1.6 Hypothesis of the Study. 4
1.7 Scope of the Study. 5
1.7.1 Content of the Scope. 5
1.7.2 Geographical scope of the study. 5
1.7.3 Time scope of the study. 5
1.8 Significance of the Study. 5
CHAPTER TWO: LITERATURE REVIEW… 7
2.0 Introduction. 7
2.1 Techniques of inventory management 8
2.2 Importance of Inventory management 11
2.3 Challenges faced by inventory management in Business Enterprises. 14
CHAPTER THREE: RESEARCH METHODOLOGY.. 17
3.0 Introduction. 17
3.1 Research Design. 17
3.2 Study area. 17
3.3 Study population and sample size. 18
3.5 Source of Data. 18
3.5.1 Primary Data. 18
3.5.2 Secondary Source. 18
3.6 Data Collection methods. 19
3.6.1 Questionnaires. 19
3.6.2 Interviewing. 19
3.7 Reliability and validity. 20
3.8 Research Procedure. 20
3.9 Data Analysis and Management 20
3.9.1 Data processing. 21
3.9.2 Editing. 21
3.9.3 Coding. 21
3.9.4 Data analysis. 21
3.10 Ethical Consideration. ……21
3.11 Limitations of the study. 22
Appendices. 50
Appendix I: Work Plan. 50
Appendix I1: Budget Plan. 51
Map 1: Map of Uganda showing Mbarara district 56
Map 2: A Map of Mbarara Showing Mbarara municipality. 57
Map 3: Map of Mbarara Municipality Showing Coca-Cola Plant 58
List of Tables
Table 4.1 Gender of respondents…………………………………………………………23
Table 4.2 Age of respondents……………………………………………………………24
Table 4.3 Academic background of respondents…………………………………………24
Table 4.4 Departments of the respondents ………………………………………………25
Table 4.5: types of inventory management method used ……………………………….26
Table 4.6 Response patterns on up-to- date stores records………………………………26
Table 4.7 Responses on Good stock plan ……………………………………………….27
Table 4.8 Responses on proper accounting records………………………………………27
Table 4.9 Responses on surprise checks…………………………………………………28
Table 4.10 Responses on proper stores management……………………………………29
Table 4.11 Response patterns Material valuation techniques……………………………29
Table 4.12 Responses on Inventory valuation……………………………………………30
Table 4.13 Responses on trial error technique for material control………………………31
Table 4.14 whether inventory management importance contribute ………………….….31
Table 4.15 Responses on inventory planning and scheduling………………………..….32
Table 4.16 Responses on improved procurement………………………………………..32
Table 4.17 Responses on cost reduction………………………………………………….33
Table 4.18 Responses on effective stores management and internal coordination…..….33
Table 4.19 Responses on Improved customer service……………………………….…..34
Table 4.20 Challenges faced in applying inventory management practices…….…..…..35
Table 4.21 Responses on Bureaucratic constraints…………………………………..….35
Table 4.22 Responses on Cost of carrying inventory………………………………..….36
Table 4.23 Responses on to the type of ordering cost encountered……………………..37
Table 4.24 Responses on Conflict of interest……………………………………………37
Table 4.25 Responses on Poor evaluation and monitoring………………………………38
Table 4.26 Responses on Strains on resources and weak management………………….39
List of acronyms
% Percentage
ABC Activity based costing
ACM average cost method
CBCL Century Bottling Company Limited
EDI Electronic Data Interchange
FIFO First In First Out
JIT Just in Time
LIFO Last In First Out
MRO Maintenance, Repair and Operations.
MRP Manufacturing Resources Planning
MRP Materials Requirements Planning
No.1 Number one
NY New York
PBL Print British Limited
SPSS Statistical Package for Social Sciences
UGX Uganda Shillings
UN United Nations
US United States
W.I.P work in progress
Abstract
The study was about the effect of inventory management on the sale performance of Coca cola enterprises in Mbarara Municipality Mbarara District. It was guided by three objectives; to find out types of inventory management methods used by Coca cola business enterprises, to examine the importance of inventory management towards sale performance of Coca-Cola Business Enterprises and to establish the challenges faced by Coca-Cola Company Limited Business Enterprises in Mbarara Municipality Mbarara District. Data was collected using a questionnaire and interview guide and during data collection purposive sampling was used. In addition, the study employed an exploratory case study design using both qualitative and quantitative tools as sample size of 100 respondents was selected from the study.
The study concluded that Coca cola enterprises in Mbarara branch use up-to- date stores records, a good stock plan, Proper accounting and recording, surprise checks, Proper stores management, different material valuation techniques of inventory management include last in first out (LIFO), first in first out (FIFO), an inventory valuation, ABC technique, Just In Time (JIT) Technique, recording stock and security system at the stores as common inventory management techniques. It is also concluded that there is a relationship between inventory management and sale performance of the coca Cola enterprises, Lastly, that the challenges faced by Coca Cola enterprises in Mbarara Municipality include; load shedding, poor record keeping, high taxes, low sales, negative cash flows, management problems, and situations, inadequate of stock, lack of business plan, high fuel prices, low turn up of customers, and sometimes theft among others.
The study recommended businesses always to forward planning, centralize the purchase and store function, carry out stock taking exercise, continuous stock control system, and that business inventories to be stored under conditions to protected from being damaged due to physical causes, for example heat, and cold. Lastly, that the effect of inventory management on the employees efficiency in small and medium enterprises in are suggested areas for further research.
CHAPTER ONE
1.0 Introduction
This chapter comprise of background of the study, statement of the problem, purpose of the study, objectives, research questions and significance of the study.
1.1 Background of the study
Jayeff (1998) argued that from a financial perspective, inventory management is no small matter. Oftentimes, inventory is the largest asset item on a manufacturer’s or distributor’s balance sheet. As a result, there should be a lot of management emphasis on keeping inventories. The objectives of inventory reduction and minimization are more easily accomplished with modern inventory management processes that are working effectively for improved performance.
The inventory management is much more complex than the uninitiated understand. In fact, in soft drinks industry the inventory control department is perceived as little more than a clerical function as it is probably not very effective. The result of this to inventory management is lots of material shortages, excessive inventories, high costs and poor customer service. Too much inventory and not high enough customer service is very common, but unnecessary. There are proven techniques that can help accurately industry customer demand and to calculate the inventory needed to meet defined level of customer service (Briers, 1995).
According to Tayebwa (2002) Coca-Cola Sabco secured Century Bottling Company Limited during 1995. The first CCS representatives arrived in the country’s capital Kampala in January 1996 on a mission to sort out the operations and sales side of the business. For the first time in CCS history, a whole production line was airlifted from Aplington and installed in the coca cola plant. In the production process of so many companies. According to Lord Keynes (2002), good inventory management from top to the bottom ready emphasizes effective production process and reduces production costs. Statistics reveal that about 20% companies are affected by poor inventory management of which it has increased their production costs and therefore hindering their development.
In Africa, companies are facing a problem of poor inventory management and this has increased their production costs. For example coca cola plants among others are facing such a consequence. This poor inventory management is always from top management to the lower level management. It’s from poor managerial skills that have affected so many companies to accomplish their development trends, (J.S Charndan 2004).
Using the right techniques for sales forecasting and inventory management help to monitor changes and respond to alerts when action needs to be taken in running the business. The right approach to inventory management can produce dramatic benefits in customer service with lower inventory (Kreg, Christine, 2007). Modern inventory management in business organizations utilize new and more refined techniques that provide for dynamic performance of inventories to maximize customer service with decreased inventory and lower costs. These improved approaches to inventory management are of major consequence to overall competitiveness where the highest level of customer service and delivered value can favorably impact market share and profits.
However Alvesson (2001) argued that cycle inventories arise because of management decision to purchase, produce or sell in lots rather individuals units or continuously. Cycle inventories accumulate at various points in operating systems. The size of the lot is a tradeoff between the cost of handling inventory and the cost of making more frequent orders and set ups. A mathematical description of this relationship, the economic order quantity is very vital. In JIT the need for cycle inventory is reduced by set up cost and time reduction.
Performance improvement is the concept of organizational change in which the managers and governing body of an organization put into place and manage a programme which measures the current level of performance of the business like inventory management and then generates ideas for modifying organizational behavior and infrastructure which are put into place to achieve higher output. The primary goals of organizational inventory management are to increase organizational effectiveness and efficiency to improve the ability of the organization to deliver goods and or services (Ronald, H 1999). Sale Performance improvement at the operational or individual employee level usually involves processes such as statistical quality control. At the organizational level, performance improvement usually involves softer forms of measurement such as customer satisfaction surveys which are used to obtain qualitative information about performance from the viewpoint of customers. Many Coca-Cola enterprises in Mbarara Municipality manage their inventories in different ways to improve on the performance of such businesses
1.2 Statement of the Problem
Inventory management in business enterprises in Mbarara Municipality is mostly seen in, bottles packing, buying of stock and keeping of it to provide the customers good services, supply of customers, issuing of stock among others. This is because most of the business enterprises use different systems in inventory management including; integrated system (System Application and products) responsible for management information system which helps to make serious decisions on stock, material requirement points, and over stock brands for the fast moving, use of store keepers. Inventory is a significant asset in business enterprise; its effective management therefore is a key task within the auspices of operations, Zipkin (2000). But inventory management is difficult. It involves a complex of decision due to the many forms inventory takes and functions it provides. In additions inventories are a result of functional policies within business enterprise as well as the short and long term decisions in purchasing, production, storages and sales. This has compelled business enterprise to develop inventory management systems to improve their sale performance but challenges in inventory management have not stopped (Lamert and Stock, 2001).
Though most of the Coca-Cola businesses in Mbarara Municipality apply the above inventory management techniques, but it has not always achieved its performance standards and business growth (Opio, 2012 and Nanyonjo, 2011) much is needed for improved performance. This is because most of the small scale business enterprises do not show growth as years go by. These was the main reason have prompted the researcher to establish the effect of inventory management on Coca Cola Business Enterprises Performance.
1.3 Purpose of the Study
The purpose of the study was to investigate the effect of inventory management on the sale performance of Coca-Cola company limited Business Enterprises in Mbarara Municipality Mbarara District.
1.4 Objectives of the Study
This study was based on the following objectives;
- To find out types of inventory management methods used by Coca cola business enterprises in Mbarara Municipality.
- To examine the importance of inventory management towards sale performance of Coca-Cola Business Enterprises in Mbarara Municipality.
- To establish the challenges faced by Coca-Cola Company Limited Business Enterprises in Mbarara Municipality Mbarara District.
1.5 Research Questions of the Study
This research was set to answer the following research questions:
- What are types of inventory management methods used by business enterprises in Mbarara Municipality?
- What is the importance’s of inventory management towards sale performance of Coca-Cola Business Enterprises in Mbarara Municipality?
- What are challenges faced by Coca-Cola business enterprises in Mbarara Municipality Mbarara District?
1.6 Hypothesis of the Study
There is no relationship between inventory management and sale performance of Coca Cola Business Enterprises in Mbarara Municipality Mbarara District.
1.7 Scope of the Study
1.7.1 Content of the Scope
This study was based on the effect of inventory management and performance on business enterprise. It was guided by the objectives; to find out types of inventory management methods used by Coca-Cola business enterprises, to establish the challenges faced by business enterprises, and to examine whether there is a relationship between inventory management and sale performance of Coca-Cola Business Enterprises in Mbarara Municipality Mbarara District
1.7.2 Geographical scope of the study
The area of the study was in Coca-Cola limited Mbarara Municipality which is located in Mbarara District. The study select Coca-Cola Business Enterprises- Mbarara Municipality as many of the business enterprise owners manage their inventories and the researcher was not aware of the contributions of such inventory management methods applied.
1.7.3 Time scope of the study
The study considers information relating to the period of four years that is 2009-2012. This range of four years was considered as many of the business enterprises have in the area have come up with inventory management methods as the study tried to establish their importance.
1.8 Significance of the Study
The findings of the study highlight the importance of inventory management in Coca Cola Business Enterprise performance which was to encourage managers to develop appropriate inventory management policies to improve their business enterprise performance.
It is hoped that study findings was used as basis for further research and investigations in form of literature to other upcoming researchers.
The findings provide information to managers in different business enterprises especially on knowing how to compare actual performance and inventory management.
The study may further encourage government to set up educational institutions to provide training on how to manage inventory in business environment for improving performance.
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