Analysing the effect of inventory management on operational performance in a manufacturing environment

Abstract

Manufacturing organisations in South Africa are perceived to be underperforming due to ineffective inventory management practices. Over the years inventory management has been criticized for being a cost center. Many manufacturing industries have recognized the importance of inventory management and the role it plays in competitive advantage. However, despite the level of attention given to inventory management, manufacturing firms are still not performing as they should, struggling to determine the minimum inventory levels that should be kept, to keep production running and uninterrupted. Therefore, finding the balance between overstocking and running out of stock, is a challenge. This research study examined the relationship between inventory management and operational performance in a manufacturing environment. It set out to explore the different inventory management practices currently used, as well as determine the common challenges encountered on a daily basis. A literature review was conducted on the types of inventory as well as inventory control techniques. The study made use of a quantitative research method approach, with the distribution of questionnaires through convenience sampling. The aim of the study was to provide insight into employees’ understanding and competence. Further, the study aimed to address the topics of inventory management practices, inventory control, the need for warehousing, and the challenges faced when managing inventory. The study provided several useful contributions to literature on the effectiveness of inventory management practices and the control of inventory. Furthermore, it fills the gap in knowledge on inventory management practices and operational performance in a manufacturing environment in South Africa.