Therefore, the researcher investigated the study on the impact of inventory management practice on financial performance of CAAFI mineral water company in Mogadishu-Somalia. Second chapter contains literature review of the research objectives and the conclusion of literature review of the research objectives.
Background of the study
CAAFI mineral Company's mission statement indicates to become the first choice among mineral companies in Somalia by partnering with their customers, employees, suppliers and the community. Therefore, the researcher examined a study on the impact of inventory management practices on the financial performance of CAAFI mineral water company in Mogadishu, Somalia.
Statement of Problem
CAAFI Mineral Water is one of the leading producers of pure natural water in Somalia which started in 2001; was the first company in Somalia to receive ISO 9002 certification for the development and maintenance of a high quality management system.
Objectives of theStudy
SpecificObjectives
Research Hypothesis
Scope of the Study
Content Scope
GeographicalScope
TimeScope
Significance of theStudy
The conceptual framework for the study itself created above suggests that inventory management (IV) could be implemented by inventory planning, inventory control, and inventory optimization. Therefore, the purpose of the study is to scrutinize the effect of inventory management practices on the financial performance of CAAFI Mineral Water Company Mogadishu-Somalia.
Operational Definitions
LiteratureReview
Inventory ManagementPractice
Relationship between Inventory Management and FinancialPerformance
This study has been conducted several times before to examine the relationship between inventory management and financial performance. The study found that effective and efficient practices of inventory management are strongly and positively related to the financial performance of small and medium-sized Spanish firms.
Relationship between Inventory Planning and FinancialPerformance
Effective inventory management processes help to increase operational efficiency of firms; improve customer service; reduce inventory and distribution costs; and enables businesses to track items and their expiration dates consequently balance between availability and demand (Pandey, 2004). The purpose of the study was to evaluate the effect of inventory management practices on financial performance over the period 1992-2002. They used conventional firm-specific variables (inventory levels, margins and lead times) as explanatory variables.
Relationship between Inventory Control and FinancialPerformance
It should be authorized by a responsible official and multiple copies should be sent to the purchasing, sales and production departments. The stock levels are displayed on different stock administrations and physical stock levels must be reconciled with the administration.
Relationship between Inventory Optimization and FinancialPerformance
Planning and Optimization: CAAFI mineral water's replenishment and distribution processes help the organization analyze supply and demand to forecast orders and fill rates. CAAFI mineral water provides its planning analysis over a flexible and cost-effective IT platform for customized technology and process to the organization's environment.
FinancialPerformance
Given the distributed nature of the modern supply chain, you need real-time visibility into the flow of goods from suppliers, their subcontractors and the shipping firms that transport all these goods around town. Rising earnings are the best indicators that a company can pay dividends and the share price of the company will be increasing. Liquidity is the ability of the business to meet its financial obligations without interrupting the normal and continuous operation of the business.
Return on invested capital is a measure of the effectiveness of management in the use or application of an organization's assets or resources in a given financial period. This is the true measure of return on capital employed because the true capital employed in a business for a period is the amount spent on operations during the period net of capital expenditures (Reddy, 2010).
Conclusion
According to the overall table 4.10, the majority of the respondents agreed that CAAFI Company plans what inventory to keep. The following tables presented the results of the respondents to examine the relationship between inventory control and financial performance for CAAFI mineral water Mogadishu Somalia. Therefore, the majority of the respondents agreed that CAAFI Company uses a perpetual inventory control system.
The following tables present the results of respondents who studied the relationship between inventory optimization and financial performance of mineral water CAAFI Mogadishu Somalia. However, 2 (2.2%) respondents disagreed that the profit of CAAFI Mineral Water Company is increasing annually while few respondents strongly disagreed. Therefore, this shows that most of the respondents agreed that the profit of CAAFI Mineral Water Company has been increasing annually.
The survey also shows that one of the respondents agreed that CAAFI Company ensures the delivery of the required quantity of materials at the desired time. The survey shows that one of the respondents agrees that CAAFI Company uses perpetual inventory control system. The survey results also show that respondents agree that CAAFI Company always tailors its supply volume to customer demand.
Methodology
ResearchDesign
Research design is “the blueprint that includes experiments, interviews, observation and the analysis of records, simulation or some combination of these (Donald, 2009). Correlational research is a quantitative research method in which the researcher has two or more quantitative variables to determine if there is a relationship between two variables and the degree of relationship.
ResearchPopulation
Data was collected from purchasing department, marketing department, production department and finance department of CAAFI Mineral Water Company MogadishuSomalia.
SampleSize
Sampling Technique
Sampling technique is a description of the strategies used by the researcher to select representative elements, subjects, respondents from the target group (Owen 2000). The sampling technique used in this study was simple random sampling. Random sampling was used to ensure a balanced distribution of respondents from different sectors.
Data CollectionMethods
Questionnaire
Reliability of theInstrument
Data Analysis
DataPresentationandAnalysis
Response Rate
Demographic Characteristics of theRespondents
- Age ofRespondents
- Gender of theRespondents
- Qualification of theRespondents
- Experience of theRespondents
- Rank of theRespondents
The purpose of the age distribution was to determine the average age of the employees who are actively involved in business operations within the organization. The result showed that the majority of employees in the organization are between 25 and 30 years old. The results in the table above indicate that the majority of CAAFI mineral water Mogadishu Somalia employees are male.
The aim was to find out what is the status of the employees who are actively involved in the operations within the organization. These results showed that the majority of the respondents had worked for 4-6 years which indicates that they have enough work experience.
Null Hypothesis One: There is no Significance Relationship between Inventory Planning and
The results showed that most of the respondents agreed that CAAFI Company has proper planning of raw materials needed for purchase. Finally, out of all the respondents did not agree that the CAAFI Company ensures the supply of the necessary amount of materials in the required time out of all the respondents strongly disagreed. The results in table 4.7 show that of the total respondents fully agreed that the company CAAFI plans for what inventories for the stock of the total respondents agreed.
According to the total number of respondents, we strongly agreed that CAAFI company considers the quantity of material to be ordered from the total number of respondents. The total number of respondents agreed that they were neutral. Table 4.12 also shows that out of total respondents disagreed and finally out of total respondents strongly disagreed that CAAFI company considers the quantity of material to be ordered.
Null Hypothesis Two: There is no Significance Relationship between Inventory Controland Financial
On the other hand, of the respondents who disagreed, 8 (8.7%) of the respondents strongly disagreed. CAAFI Company established preventive mechanisms to eliminate theft, loss, misuse and waste of materials. However, the majority of respondents agreed that CAAFI Company established preventive mechanisms to eliminate theft, loss, misuse and waste of materials. On the other hand, 18 representing 19.6% of the respondents disagreed that CAAFI Company uses perpetual inventory control system while 11 (12%) of the respondents strongly disagreed.
However, some of the respondents disagreed, while 9 (9.8%) of the respondents strongly disagreed that CAAFI Company, All items requested were authorized and approved by the relevant supervisor. Based on the results of table 4.16, the majority of the respondents agreed that CAAFI Company, All items requested were authorized and approved by the relevant supervisor.
Null Hypothesis Three: There is no Significance Relationship between Inventory Optimization and
According to total4.15, it shows that some of the respondents strongly agreed inventory optimization enables CAAFI Company to do the work faster, more accurately with greater business profit, 23 (25%) of the respondents agreed, and some of the respondents were neutral. The findings in the table of the respondents strongly agreed that CAAFI Company uses software capable of solving complex inventory optimization problems, 34 (37%) of the respondents agreed, 7 (7.6%) of the respondents were neutral. Based on the findings of table 4.17, it reveals that some of the respondents strongly agreed that CAAFI Company has established effective supply chain management of the respondents who agreed, while some of the respondents were neutral.
The table also shows that 32 (34.8) of the respondents disagreed that CAAFI Company has established effective supply chain management. The respondents strongly disagreed that CAAFI Company has established effective supply chain management. Therefore, majority of the respondents agreed that CAAFI distributes the final products to the customers at the right place and time.
Financial Performance of CAAFI Mineral Water Company
However, some of the respondents disagreed, while some of the respondents strongly disagreed that CAAFI Company has a high operating profit margin that ensures adequate returns. On the other hand, the respondents disagreed that CAAFI Company is using its capital effectively to earn the required level of profit, while 8 (8.7%) of the respondents strongly disagreed. Based on the findings of table 4.26, the majority of the respondents agreed that CAAFI Company is using its capital efficiently to earn the required level of profit.
Finally, respondents disagreed that CAAFI Company has the ability to pay current debts as they mature, while 12 (13%) of respondents strongly disagreed. The result indicates that majority of respondents agreed that CAAFI Company has the ability to pay current debts as they fall due.
Summary of Findings, Conclusions andRecommendations
Findings
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
The results of the study showed that the respondents agreed that the CAAFI Company required Allitems were authorized and approved by the relevant supervisor. Finally, respondents agreed that at CAAFI, materials are requested by completing an internal inventory request form.
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
Conclusion
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
Recommendations
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
Relationship between inventory planning and Financial Performance of CAAFI Mineral Water
Areas for FutureResearch
The Relationship between Working Capital Management Policies and Financial Performance of Petroleum Marketing Firms in Kenya”. I am MahadFarah Ali a student at Daffodil International University pursuing Masters in Business Administration conducting a research on the effect of inventory management practices on the financial performance of CAAFI Mineral Water Company. To determine the relationship between inventory planning and financial performance of CAAFI Mineral Water Company Mogadishu-Somalia.
To analyze the relationship between inventory planning and financial performance of CAAFI Mineral Water Company Mogadishu-Somalia. To establish a relationship between inventory planning and financial performance for CAAFI Mineral Water Company Mogadishu-Somalia.
