The impact of Lean Inventory Management Practices on Firm Performance: A Study of Selected Oil and Gas Companies in Rivers State, Nigeria
- May 4, 2021
- Posted by: RSIS
- Categories: IJRSI, Management
International Journal of Research and Scientific Innovation (IJRSI) | Volume VIII, Issue III, March 2021 | ISSN 2321–2705
Kenneth Ugochukwu NNADI, Augustine Egwu NDU OKO
Michael Okpara University of Agriculture Umudike, Nigeria
Abstract: This study examined the effect of lean inventory strategies on firm performance in the oil and gas industry in Nigeria using a regression approach. Lean inventory was measured using two dimensions; namely, just in time and total quality management, while firm performance was measured in terms of productivity and delivery performance. The study further examined the moderating effect of organizational support on lean inventory practices and firm performance. The sample comprises 96 senior employees from 10 selected oil and gas companies in Rivers State, with a 79% response rate. The employees were purposely selected from three functional departments: production, human resource and marketing. All variables were measured on an interval scale using Likert type questions with five ordered options. The study found that that both just in time and total quality management have positive and highly significant effect on both productivity and delivery performance. Both lean inventory strategies significantly account for approximately 72% and 67% of the variance of firm productivity and delivery performance, respectively. However, for each performance measure, the magnitude of the effect of just in time is much higher than that of total quality management. The study established the fact that organizational support has a positive moderating influence on the relationship between inventory leanness and firm performance. Based on these findings, the study recommends that oil and gas companies should support the use of an integrated lean inventory approach that combines both just in time and total quality management as a way of improving productivity and meeting corporate delivery targets. However, more emphasis should be placed on just in time strategy.
Keywords: Inventory leanness, Just in Time, Total Quality Management, Firm Performance, organizational support
I INTRODUCTION
With the fierce competition that characterizes today’s business environment, there has been increasing reliance on lean inventory strategies as a veritable tool for improving performance, especially in the manufacturing industry. Inventory leanness is defined as a strategy that allows firms to improve performance through simplifying inventory within corporate supply chain. According to Wallin, Johnny Rungtusanatham and Rabinovich (2006),
