Accounting Project Topics

The Impact of Inventory Management and Control System on Organization Performance: A Study of ABC Transport Plc

The Impact of Inventory Management and Control System on Organization Performance A Study of ABC Transport Plc

The Impact of Inventory Management and Control System on Organization Performance: A Study of ABC Transport Plc

Chapter One

Aim and Objectives of the Study

The aim of this study is to investigate the impact of inventory management and control systems on organizational performance. The study seeks to explore how effective inventory management practices contribute to improving various performance metrics, including profitability, customer satisfaction, and operational efficiency.

The objectives of the study are:

  1. To determine the effects of inventory management and control system on organizational productivity in transport sectors.
  2. To determine the relationship between inventory management practices and control system and organizational performance in Nigeria.
  3.  To establish the challenges faced by transport sectors in Nigeria in the implementation of inventory management practices and control system on organizational productivity.





This chapter presents the literature review of the study by focusing on the theoretical/conceptual review, empirical review and summary of the literature review.

Theoretical /Conceptual Review

Inventory Management Practices

Inventory management in regards to Miller (2010) includes all activities kept in place to make certain that consumer have the expected service or product. It coordinates the purchase, production and distribution functions to satisfy the advertising and marketing expectations and organizational wishes of availing the product to the clients. Inventory control is broadly speaking worried with specifying the scale and site of stocked items. Stock control is needed at one-of-a-kind locations inside a facility or inside multiple places of a supply network to defend the normal and deliberate path of production in opposition to the random disturbance of walking out of materials.

Stock control is the art and science of preserving inventory stages of a given organization of gadgets incurring the least fee steady with other relevant objectives and objectives set through management (Jessop, 2009). It is essential that managers group that offers with stock, to have in mind, the objective of gratifying purchaser expectations and keeping inventory costs at a minimal stage. The number one aim of stock control, consequently, is to have good enough quantities of excessive satisfactory objects available to serve customer wishes at the same time as also minimized the charges of carrying inventory (Adeyemi & Salami, 2010).

Peacock’s research (2013) observed that effective utility of stock optimization fashions and practice is applicable to attaining pleasant and green operations. Further, Adeyemi and Salami (2010) found that the overall purpose of inventory management is to have what is needed, and to reduce the quantity of instances production and services operations are interrupted by using issues of stock outages. In addition, Bloomberg et al. (2012) mentioned that effective management of stock has huge potentials for improving the efficiency of corporations, and firms that use scientific stock control practices have a great aggressive advantage within the market.

Chase et al. (2009) explained the idea of inventory management brings inside the total systems technique to coping with the whole drift of facts, substances and services from raw materials suppliers through factories and warehouses to the final consumer. The study similarly confirmed that a company’s fulfillment depends on how they control their materials successfully. Chase et al. (2009) additionally indicated that it is vital to display stock at every stage as it ties up sources. Consequently, successful stock management is essential to the survival of business, industry and economy.

Many practices are available for effectively managing inventories. There are traditional inventory management practices such as Automatic Replenishment, ABC Inventory Model, Just-In Time (JIT) Inventory, Economic Order Quantity EOQ), Vendor Managed Inventory etc. The management of inventories has an important bearing on the financial strength and competitiveness of organizations due to the reason that it directly affects the working capital, production and customer services (Vergin, 2012).

Inventory management is a pivotal in effective and efficient organization. It is also vital in the control of materials and goods that have to be held (or stored) for later use in the case of production or later exchange activities in the case of services. The inventory management practices discussed are Automatic Replenishment, ABC Inventory Model, Just-In Time (JIT) Inventory, Economic Order Quantity EOQ) and Vendor Managed Inventory.

 Vendor Managed Inventory

Vendor Managed Inventory (VMI) is a supply chain method whereby the vendor or supplier is given the duty of managing the purchaser’s inventory (Smaros et al., 2003). The vendor is given access to its purchaser’s inventory and demand statistics for reasons of tracking the customer’s stock level. Moreover, the vendor has the authority and the obligation to replenish the purchaser’s inventory according to collectively agreed inventory control concepts and targets (Smaros et al., 2003).

Carriers generate buy orders on an as-wished foundation consistent with a longtime inventory degree plan and shared forecast records, intake records and historic income facts. As soon as the purchase order is made, an boost transport observe informs the customer of substances in- transit. The merchandize is then shipped, delivered and “logged”, in line with the shipment method. Even though companies Vendor Managed Inventory (VMI) at the store’s shelves, today the concept is normally applied to replenishment of inventories at retailer’s distribution middle (Potilen & Goldsby, 2003).

“Stock at the purchaser website online can be owned by way of the dealer and purchased by the patron handiest while used or owned by way of the client and genuinely monitored by way of the provider for alternative. Wailer et al. (2009), posit that Vendor Managed Inventory (VMI) is one of the maximums extensively discussed partnering tasks for improving multi-company deliver chain performance and that it is also referred to as continuous replenishment or supplier-managed inventory (SMI). However, in Potilen and Goldsby (2003) perspectives, this is incorrect. They claim that VMI entails the coordination of control of finished goods inventories outbound from a manufacturer, distributor or reseller to a retailer whilst SMI entails the flow of uncooked materials and issue parts inbound to a production process.

Management of inventory determines the way an organization will thrust itself to excessive overall performance. A few agencies have resulted to dealer-controlled inventory (VMI) structures which aid the provider to reveal consumer’s inventory usage. Via this VMI system, customers will avoid stock outs due to the fact the suppliers may have already replenished their inventory. The important thing here is communication which ought to be deliberate properly from the beginning of commercial enterprise members of the family between the provider and the patron (Frahm, 2003).






This research methodology presents the framework followed in the data collection and data process of the study. It included the research design, population of the study, sampling procedure and sample size, data collection instrument and validation, method of data analysis, and limitation of the adopted methodology.

Research Design

This study employed an explanatory research design to collect data on the analysis of the impact of inventory management and control system on organization performance. The explanatory research design was developed with the main purpose of investigating phenomenon which had not been studied before or has not been properly explained in previous studies (Borwankar, 2016). It was targeted towards providing details about where to discover small amount of information. The research design is adopted because it explains why phenomena occur and predict future occurrences around inventory management and control system, and it will specify the nature and direction of the relationships between the variables in the study

Population of the study

The study population consists of employees of ABC Plc which the sample was selected from. Burns and Grove (2019) claimed that targeted population as a collection of personalities which are eligible to participate in the enquiry.  Population may also refer to an entire group of persons or elements that have at least one thing in common. Best and Tuckman (2014) agreed that, a population is any target group of individuals that has common characteristics that are of interest to the researcher.




This chapter presents the findings of the study, focusing on the analysis and interpretation of the collected data. It begins by providing an overview of the research questions and objectives, setting the stage for the subsequent discussion. The chapter proceeds to present a comprehensive analysis of the collected data, utilizing a combination of qualitative and quantitative approaches. The data is presented using tables, offering a clear and concise overview of the research findings.



Summary of findings

The findings from the tables provide important insights into the effects of inventory management practices and control systems on organizational productivity in the transport sector in Nigeria. Overall, the results indicate that effective inventory management practices and control systems have a positive impact on organizational performance.

The implemented inventory management practices and control systems were found to contribute to improved productivity in the transport sector, minimizing stockouts and delays, and enhancing the accuracy and reliability of inventory data. These practices also enable efficient coordination and allocation of resources, leading to increased productivity.

However, the findings also highlight challenges faced by organizations in implementing effective inventory management practices and control systems. The lack of technological infrastructure, insufficient training and awareness among employees, limited financial resources, and the absence of standardized policies and regulations are identified as obstacles to achieving optimal organizational productivity.

Addressing these challenges, such as investing in technology, providing adequate training, allocating sufficient resources, and establishing clear guidelines and regulations, is crucial to fully leverage the benefits of inventory management practices and control systems in the transport sector in Nigeria.


Inventory Management and control is very vital to the success and growth of organizations. The entire profitability of an organization is tied to the volume of products sold which has a direct relationship with the quality of the product. Management does a lot to present a good organization to the public in terms of quality production.  Good inventory management in any manufacturing organization saves the organization from poor quality production, disappointment of seasoned customers, loss of profit and good social responsibility, (Johnson, 2008:40).

This is done by ensuring timely delivery of raw materials to the factory and distribution of finished goods, in order of production to the warehouse. If inventory management is not adequately maintained, production cannot meet the aspirations of customers which is loss of revenue to the organization. Right from procurement to the time of processing, quality of raw material is the chief determinant of the productive efficiency of any manufacturing concern. This varies from organization to organization.

Based on the study findings, it is concluded that a significant and a positive relationship exists between inventory management practices and organizational productivity of in Nigeria banking sectors. The study also concluded that inventory management practices affect the productivity of Nigeria banking sectors. In order to effectively automate inventory management, several systems have been developed so as to ensure that banking sectors hold the right quantities of stock so as to strike a balance between the costs involved and customer satisfaction. Economic Order Quantity (EOQ) practices have enabled Nigeria banking sectors to estimate how much of an item should be ordered and when it should be ordered.

The Nigeria banking sectors orders that optimal quantity for an item of stock that minimizes cost. The total inventory-associated cost curve has a minimum point and this is the point where total inventory costs have been successfully minimized. Nigeria banking sectors use Vendor Managed Inventory (VMI) for supplier partnership and to maintain good working relations between customers and suppliers. Vendor Managed Inventory relieved the banking sectors of much of the expense of ordering, shipping the materials, counting inventory and stocking low-value items. By passing these costs on the supplier, the Nigeria banking sectors were able to reduce the overall cost of product and increase on margins. Use of Just-in-time inventory model allows the banking sectors to reduce overhead expenses while ensuring that parts are available.

Educational Implications of Findings

The findings from the tables on the effects of inventory management practices and control systems in the transport sector in Nigeria have several educational implications. These implications can guide educational institutions, policymakers, and stakeholders in designing and implementing educational programs and initiatives that address the identified challenges and leverage the benefits of effective inventory management practices.

Curriculum Development: The findings highlight the importance of incorporating inventory management and control system topics into relevant educational curricula. Educational institutions can develop courses or modules that cover inventory management principles, technological infrastructure, and standardized policies. These curricula should also emphasize the practical application of inventory management practices in real-world scenarios.

Training and Skill Development: Insufficient training and awareness among employees were identified as barriers to successful implementation. Therefore, there is a need for educational programs and training initiatives to enhance the skills and knowledge of individuals involved in inventory management in the transport sector. This can include training programs that focus on inventory management techniques, technological tools, and the interpretation of inventory data.

Research and Development: The identified challenges present opportunities for further research and development in the field of inventory management in the transport sector. Educational institutions can encourage students and researchers to investigate innovative solutions, such as developing cost-effective technological solutions, proposing policies and regulations specific to the transport sector, and exploring strategies to overcome financial constraints.


Based on the findings of the study on the effects of inventory management practices and control systems in the transport sector in Nigeria, the following recommendations are made:

Investment in Technological Infrastructure: Organizations in the transport sector should prioritize investment in technological infrastructure to support efficient inventory management practices. This includes adopting inventory management software, implementing barcode or RFID tracking systems, and utilizing automated inventory control systems. The government and industry stakeholders should provide incentives and support to facilitate the adoption of technology in the sector.

Training and Skill Development: Organizations should provide comprehensive training programs to employees involved in inventory management. This should include training on inventory management principles, technological tools, data analysis, and effective utilization of inventory management systems. Educational institutions can also play a role by offering courses and workshops that cover inventory management practices and control systems.

Development of Standardized Policies and Regulations: Policymakers should collaborate with industry experts and stakeholders to develop standardized policies and regulations specific to inventory management practices and control systems in the transport sector. These policies should address issues such as inventory reporting, data accuracy and reliability, resource allocation, and technology standards. Compliance with these policies should be encouraged through incentives and monitoring mechanisms.

Collaboration and Knowledge Sharing: Organizations in the transport sector should foster collaboration and knowledge sharing among industry players, government agencies, and educational institutions. Platforms for sharing best practices, case studies, and success stories should be established to facilitate learning and promote the adoption of effective inventory management practices.

Continuous Improvement and Evaluation: Organizations should regularly evaluate the effectiveness of their inventory management practices and control systems. This can be done through performance metrics, data analysis, and feedback mechanisms. Continuous improvement efforts should be undertaken to address any identified gaps or areas for enhancement.

 Limitations of the Study

The study have a limited sample size, which can impact the generalizability of the findings. The data collected only represent a specific subset of organizations within the transport sector in Nigeria, potentially limiting the extent to which the findings can be applied to the entire industry.

Suggestions for Further Studies

Comparative studies should be conducted to involve multiple sectors or industries to assess the effectiveness of inventory management practices and control systems across different contexts. This would help identify sector-specific challenges and best practices, providing valuable insights for organizations in the transport sector. Also, researchers should conduct comprehensive impact assessments to determine the financial, operational, and strategic impact of implementing effective inventory management practices and control systems. This would involve evaluating key performance indicators, such as inventory turnover, customer satisfaction, cost reduction, and profitability.


  • Agha, N.C. (2010). Inventory Management and Cost Control in Manufacturing Industries in Nigeria. The Nigeria Journal of Management Research, 5 (2): 173-188.
  • Arnold, D. (2000). Seven Rules of International Distribution. Harvard Business Review; 78(6): 11-21.
  • Benedict, C. & Margeridis, H (1999).Chain Reaction. Charter, 70(2):464-479.
  • Caplic, C and Sheffi, V. (1994).A Review and Evaluation of Logistic Metrics. The International Journal of Logistics Management. 5(2): 23-37.
  • Coleman, B. (2000). Determining the Correct Service Level Target. Production and Inventory Management Journal, 41(1):169-176
  • Colling, D. (1990) Industries Safety. Management and Technology. Englewood Cliffs, NY: Prentice Hall.
  • Dervitsiotos, K.N. (1981), Operations Management. New York: McGraw-Hill
  • Ghosh A.K. & Kumar.P (eds.) (2003).Production Management. New Delhi: Anmol Publication Pvt. Ltd.
  • Godana B.E. and Ngugi K. (2014) Determinants of Effective Inventory Management at Kenol Kobil Limited. European Journal of Business Management. Vol. 1, Issue 11, ISSN 2307- 6305. London: McGraw-Hill
  • Holander, T. (2000).Accounting Information Technique and Business Solutions.