Global Journal of Management and Business Research, C: Finance, Volume 22 Issue 5

Analysis of the Impact of Inventory Management Practices on the Effectiveness of Retail Stores in South Africa Ayodeji Michael Obadire α , Bame Lesego Boitshoko σ & Naledi Tendai Moyo ρ Abstract- The study analyses the impact of inventory management practices on the effectiveness of retail stores in Vhembe District, South Africa. A quantitative research design was adopted for the study. The study used a simple random sampling method to collect data from 30 retail stores. Results from the survey revealed that inventory management tools and techniques like economic order quantity, just-in-time, barcoding and inventory management software have a positive effect on the performance of retail stores. This is because the quality of service delivery to customers was improved, thereby outperforming competitors. Also, sales and turnover increased as over-stocking and under-stocking were effectively managed giving rise to a higher return on investment. The major conclusion drawn from the study was that the adoption of inventory management practices positively affects the retail businesses in Vhembe District. The study recommends that retail stores should invest more in modern inventory management practices because it has a long-term beneficial effect on their effectiveness and performance. More so, continuous on-the-job training should be organised for retail store employees to keep them abreast of the availability and usage of modern inventory management tools and techniques to enhance their skills and performance. I. I ntroduction n recent years, consumers have developed a cognitive awareness of market trends and global information. This has influenced the average retailer in offering first-class service delivery and up-to-date information on the availability of offered products, quality and price (Amahalu, 2018). The vast availability of market information has afforded consumers broad- based product choices because consumers can make informed decisions about product needs and purchase decisions. These give way to low transactional costs for consumers (Mwangi, 2016). Dobler and Burt (2006) argue that inventory alone accounts for as much as 30% of the organisation's invested capital. For this reason, the increased business competition climate has involuntarily coerced organisations to be more efficient in all processes, in particular, inventory management. Therefore, the main objective of inventory management is to have sufficient quantities of inventory available to serve customers’ needs and minimise the costs of carrying the inventory. Furthermore, to ensure continuity and uninterrupted business activity, businesses rely on real-time inventory data that is made accessible through the implementation of inventory management practices. Management Practices on Performance of Production Department,” Munyao et al (2015) argues that inventory needs proper monitoring as it is one of the largest assets on the balance sheet at any given time of a business. It should neither be excessive nor inadequate. If inventories are kept at a high level, higher interest and storage costs would be incurred. On the other hand, a low level of inventory may result in a frequent interruption in the production schedule resulting in under utilisation of capacity and lower sales. The effectiveness of an inventory management system depends on the quality of information it takes in and the capacity of the company's information technology. Improvements in information systems over recent years mean that feedback is more frequent and, in some cases, hence providing real-time control capabilities. As a result, several operating systems are now available for monitoring inventory levels and triggering the placement of orders, with the most popularly used one being Enterprise Resources Planning systems (ERP) (Ballou 2000). The ERP system is based on the principle of Just in time (JIT) and Material Replacement Policy (MRP) to manage the inventory levels in enterprises. The application of these methods allows the executive of inventory to be proactive, accurate and effective. There by producing an overall inventory level that can be measured in terms of an inventory turnover ratio. a) Objectives of the study The objectives of the study are to: 1. Examine the effectiveness of inventory management techniques and tools adopted by retail stores; and 2. Investigate whether inventory management practices influence the effectiveness of retail stores. I 1 Global Journal of Management and Business Research Volume XXII Issue V Version I Year 2022 ( ) C © 2022 Global Journals Keywords: inventory, inventory management, modern management tools, retail store, south africa. Author α : School of Finance and Professional Studies, Botswana Accountancy College, Gaborone, Botswana. e-mail: ayodejio@bac.ac.bw , https://orcid.org/0000-0003-4710-2680 Author σ : e-mail: bameb@bac.ac.bw Author ρ : e-mail: naledim@bac.ac.bw, https://orcid.org/0000-0003- 1854-5503 In their 2015 research article, “Role of Inventory