Abstract

This study was aimed at investigating the Effects of Inventory Management on Customer Satisfaction in GUINNESS DEPOT MOLYKO BUEA the main objective of the study was to examine the effect of inventory management techniques on customer satisfaction in Guinness Molyko Buea. This study adopted the Descriptive research design and use the sample size of 30 respondents for data collection.

Data was collected through questionnaire and the data was analysed using the SPSS version 25 software to get linear regression relationship. The findings revealed that inventory management has a significant and positive effect on customer satisfaction in Guinness depot Molyko.

The study conclude that the effective inventory management will enhance better improvement on the service quality which leads to customer satisfaction Thus, the study recommends that organizations should be able to set and follow up the achievement, full adoption of documented policies and improvement in their inventory for better flow of its productivity for the future benefits to customers  and other variables in the sector.

More sophisticated techniques and technology on inventory system should be set in place to increase effective customer satisfaction of Guinness in Buea also   brewery companies in Cameroon and other part of the world as a whole.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The word inventory was first recorded in 1601. The French term inventaire, or “detailed list of goods.” dates back to 1415. 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 planed course of production against the random disturbance of running out of materials or goods/stock. (Hussain et al, 2000).

Although the origins of inventory management are unclear, it is safe to say that some of the first pioneers of this field were merchants and shop keepers. People have been buying and selling things for centuries, so naturally, that means that inventory management has always existed in some form at least. Obviously, there were no computers thousands of years ago, and certainly no bar code readers, but people have always tried to simplify the trading process, adopting new technologies along the way (Burt, 2003).

Inventory management before the industrial revolution was very primitive, Shop keepers and merchants had to rely on the hand-written notes and gut feelings to place orders. It was extremely difficult to account for stolen goods because it would take shop keepers hours or even days to hand count all physical inventory to see if anything was missing. To be fair, the scale of operations back then was minuscule when compared to those today, so there was no push to improve efficiency (Ngum, 2009).

Inventory management is one of the strategies employed by organizations as a way of having anedge/competitive advantage over others and a way of maximizing profits at large. The main objective of Inventory management is to acquire the right quantity and quality of materials at the right time, at the same time keeping the cost of holding stock as low as possible so as to fully acquire customer satisfaction. Satisfied customers have been realized during 20th century due to the impact on Inventory management. The increased competition and demand by organizations to reduce costs associated with Inventory management has forced many organizations to device means of cost reduction in the stocks bought (Lysons, 2006), Monezka, (2005) for successful competitive advantage Inventory management has got in the organization with the right quantity, quality and time enabling organizations serve customer demands.

Stock or Inventory constitutes a substantial proportion of the current asset group. It represents investments made for obtaining a return (Duru, Oleka & Okpe, 2014). Inadequate inventory has an adverse potential effect on the smooth running of the business, while excess inventory involves extra cost, which can reduce the firm’s profits (Panigrahi, 2013). Excessive stock is not desirable for longer periods because high inventory levels increase carrying cost and as inventory is increases; the profitability decreases (Priyank & Hemant, 2015). Hence, a suitable inventory control strategy will help in ensuring that the firms always keep an optimal amount of assets that will meet up customer’s demand.

Inventories are part of current assets, which are convertible to other forms of working capital (cash and other receivables) in less than one year (Milicevic, Davidovic & Stefanovic, 2010). The theory of inventory management involves making decisions that are in line with basic trade off among firm’s objectives, costs and other constraint (Mathuva, 2013).

The economic order quantity theory, suggests that firms should maintain the quantity of inventory which provides the lowest total holding cost and acquiring cost (Milicevic, Davidovic & Stefanovic, 2010). Thus, inventory management is vital to for an effective and efficient firm. It is also important since it helps the firm in determination of the optimal amount of materials and goods a firm can hold at any given time to meet up with customer’s demand thereby keeping customers satisfied (Kumar & Bahl, 2014).

Since the beginning of the “customer service revolution” almost 25 years ago, business’s research has focused on customers, especially customer satisfaction (shafie,2004). Business consultants, corporations and operational management have all worked together to identify the characteristics of organizations that consistently please their customers, to develop tools that monitor customer satisfaction, and to build continuous quality improvement systems that respond to consumer feedback (Tigu,2018).

Customer’s satisfaction became very vital in business during the marketing era of the 1950s when companies could produce what they can sell and not just selling what they can produce as it was during the production era (coyle et al.,2003). Since the beginning of the consumption era in marketing, the focus on customers/consumers has increased more as the consumption era also shifts to post-consumption; where organizations are obliged to render more services in addition to what they provide as offers to their customers though Inventory-management (Agbor, 2011).

Customer satisfaction as a major determinant of business performance is highly relevant to the long-term success of an efficient inventory management system. Customer satisfaction is, therefore, very significant to the marketing concept with strong reasons for strategic linkages between the overall quality and customer satisfaction (Truch, 2006).

Satisfaction is identified by different industries in different ways depending on the customer’s relationships and the nature of the business. Manufacturers may look at the desire of on-time delivery and meeting the requirement of certain specifications. When measuring customer satisfaction, there should be critical variables involved.

The study of customer satisfaction has shown that there could be a disproportional relationship between cause and effect, or between a factor and its consequence on the organization. For instance, a five per cent increase in loyalty can increase profits by 25 to 85 per cent (Cacioappo, 2000).

Loyal customers are six times more likely to repurchase or recommend the purchase of the product or service to someone else. Studies have shown that on average, four per cent of the customers will be dissatisfied or complain about the product and/or service. The various studies have also shown that a dissatisfied customer is likely to tell nine other people, while a satisfied customer will tell five people about good treatment (Cacioappo, 2000).

Before the industrial revolution, business owners essentially had to list every item they sold each day. Then, based on their handwritten notes and instincts, they had to order more goods. This was a very inaccurate and inefficient method to conduct business. Without routinely performing laborious physical counts, merchants could not really account for stolen products. Due to poor record keeping, they also had problems ensuring that they received the correct number of products when orders came in. Yet, it was their best effort.

In the 1960s, a group of retailers (primarily grocery stores) came together to come up with a new inventory method:

Barcode. There were several competing barcodes before they were standardized by the Universal Product Code (UPC) in 1974. It remains the most widely used barcode in the United States.

As computers became more efficient and cheaper, UPCs grew in popularity. In the mid-1990s, companies began experimenting with inventory management software that recorded data as products were scanned in and out of the warehouse. Technology evolved into comprehensive inventory management solutions in the early 2000s. Now even small and medium-sized businesses can find affordable inventory management software to meet customer’s needs. Inventory is critical to the smooth running of manufacturing and retail organizations to keep customers satisfied.

These may include raw materials, work in progress, spare parts/consumables, and finished goods. An organization doesn’t necessarily have to have all of these inventory types. But regardless of inventory, they require effective management because usually a significant portion of one’s money is invested in them. Different departments within the same organization have different attitudes towards inventory for example, the sales department may want to have a large amount of inventory to meet almost any need that arises.

The production department will also require material tasks to keep the production system running uninterrupted.). As inventory is a major segment of the total investment, it is essential that proper inventory management is implemented to ensure the growth of the organization through satisfaction of customers.

According to (Temeng et al., 2010), however, historically, organizations have ignored the cost savings of good inventory management. As a result, many inventory systems are based on arbitrary rules. Unfortunately, it is not uncommon for some organizations to invest more money in inventory and still be unable to meet customer demand due to poor investment allocation between inventory categories.

Asset management can be viewed as an inventory issue, as the same principles apply to cash and fixed assets (Koumanakos, 2008). The trade-off between ordering and holding costs that characterizes the transactional approach to inventory management is demonstrated by the EOQ inventory model developed decades ago (Koumanakos, 2008).

In recent years, as the field of operations management has evolved, many new concepts have been added to the list of related inventory control topics. These more management-oriented concepts include Materials Requirements Planning (MRP) and Just-In-Time (JIT) systems, while another emerging stream of research argues for demand characteristics of the business and marketing environment also play an important role.

In determining the optimal business inventory, despite the theoretical and practical shortcomings inherent in these concepts and techniques, their application in real business life is expected to affect the performance of the company (Koh et al., 2007).

Inventory management and control is very important for a business because poor inventory management threatens the viability of a business (Sprague and Wacker, 1996). Too much inventory consumes physical space, creates a financial burden, and increases the likelihood of spoilage, damage, and loss. On the other hand, insufficient inventory often disrupts production and increases the likelihood of poor customer service. Inventory management is an important management issue for manufacturing companies, inventory is essential for the smooth running of manufacturing organizations. According to (Buffa & Sarin, 2007), there are several reasons for holding inventory. Too much inventory can lead to undercapitalization, increased transportation costs, reduced material quality, obsolescence, and theft. On the other hand, lack of raw materials may lead to the product being discontinued; Poor customer relations are underutilized.

1.2 Problem statement

Customer satisfaction has been a subject of great concern to organizations and researchers alike. The main challenge today among the manufacturing sectorin Cameroon is the need to enhance efficiency while at the same time achieving effectiveness of customer satisfaction. However, firms in Cameroon have been accused of poor inventory management techniques and this has greatly affected their ability to satisfy their customers. Customer satisfaction is very crucial for manufacturing firms.

The manufacturing sector are constantly searching for new ways to improve customer satisfaction, knowing that satisfied customersare typically a loyal, long term stream of revenue. A customer that finds the ordering process difficult, that cannot get stocks they need or frequently receives product behind schedule is likely to be unsatisfied and looking for a new supplier. Inventory control is one of the most neglected management areas in most firms.

Many firms have excess amount of inventory due to poor inventory management practices, managing inventory is essentially for balancing supply and demand and this practice would be very easy in a situation where end customers tell the suppliers exactly the quantity of products they require and the time to order them, and if suppliers can deliver exactly in time the quantity of products needed. In the case of Guinness Depot Molyko Buea these conditions are not usually met even though palleting and some order inventory management techniques has been brought in, their customer still face the problem of slow delivery, product unavailability which lead to customer dissatisfaction.

Thus, this research seeks to examine customer’ssatisfaction with the inventory management of Guinness Depot Molyko Buea Cameroon.

 

1.3 Research questions

1.3.1 Main research questions

What is the effect of inventory management on customer satisfaction in Guinness depot Molyko?

1.3.2 Specific research questions

1. To what extend has ABC analysis effected customer satisfaction in Guinness Depot Molyko?
2. How does EOQ effect customer satisfaction in the supply chain management of Guinness Depot Molyko?
3. What is the effect of stock count and customer satisfaction in Guinness Depot Molyko?

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