INFLUENCEOFVENDORMANAGEDINVENTORYON ORGANIZATIONPERFORMANCEINA MANUFACTURINGINDUSTRY:ACASEOFUNILEVER KENYALIMITED

Abstract

Increased complexity and highly integrated supply chain in current business environment has increased pressure for companies to adapt to current competitive pressure. One of the supply chain tool in addressing these issues is by implementing Vendor Managed Inventory (VMI). Strategic alliance between a firm and its supplier is one of the characteristics of vendor managed inventory. VMI permits supply chain partners to reduce or eliminate safety stock and other just in case inventories. Thus replacing inventory with information lead to real competitive advantage. The purpose of this study is to establish influence of vendor managed inventory on organization performance. The study adopted Unilever group of companies as its core study since it is one of the manufacturing company that deals with high purchase of inventories for use in the supply chain. In seeking reasons for VMI on organization performance, this study reviewed the relevant literature theories and developed a conceptual framework that seek to address issues perceived as critical to understanding the study topic. A descriptive research design, random stratified sampling, qualitative ant quantitative method was used to obtain sample of respondents and questionnaires administered on them. From the findings in the regression analysis, the value of adjusted R squared was 0.956 an indication that there was variation of 95.6 percent on Organizational performance due to changes in Top management commitment, Strategic supplier partnership, ICT systems, and Information sharing affects at 95 percent confidence interval. This shows that 95.6 percent changes in Organizational performance could be accounted to the variables of the study. The study further recommends that manufacturing companies should look forward to forming strategic alliances, use ICT Systems and establish effective information sharing governance framework and a supportive environment for information sharing.