INVENTORY MANAGEMENT AND CUSTOMER SATISFACTION.

A CASE OF
SPEAR MOTORS LIMITED KAMPALA

BY
AANYU JENIFER -

1163-05084-06148

A RESEARCh REPORT SUBMITTED TO THE COLLEGE OF ECONOMICS AND

MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF A BACHELORS DEGREE IN SUPPLIES
AND PROCUREMENT MANAGEMENT OF
KAMPALA INTERNATIONAL
UNIVERSITY

AUGUST, 2019
 DECLARATION
I, declare that, the material in this report has never been submitted to any university or institution of
higher learning for any academic qualifications. This report is result of my own independent research
effort and investigations.

Signature. .~‘w’(J~’~J~

Date ~.
 APPROVAL
This research report has been submitted for examination with my approval as the University
Supervisor.

Signature. .

Date....f9~l~1
 DEDICATIONS
I dedicate this report to my beloved parents and siblings who recognized the value of my education
from the very start and have devoted a lot of their efforts to see that I get to the top.

III
 ACKNOWLEDGEMENT
I am grateful to all those people in one way or the other contributed towards the completion of this
report. Writing this report has involved contact with numerous people whose contributions
acknowledged.

First I owe my profound gratitude to my supervisor Mr. Ayasi for his time that he devoted going
through the entire work, without his dedication this report would not have been possible. I am also
grateful to my lecturers at Kampala International University for the knowledge and skills they have
imparted in me. And also thanks go to my colleagues Mable, Evelyn, Amon for the discussions and
ideas we were exchanging.

May God bless you all.

iv
 TABLE OF CONTENTS
DECLARATION
APPROVAL
DEDICATIONS
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS v
LIST OF TABLES ix
LIST OF ABBREVIATIONS x
ABSTRACT
CHAPTER ONE 1
INTRODUCTION
1 .0 Introduction 1
1.1 Back ground of the study
1.2 Statement of the problem 2
1.3 Purpose of the study 2
1 .4 Objectives 2
1 .5 Research questions 2
1.6 Scope ofthe study 3
1.6.lConceptual scope 3
1.6.2 Geographical scope 3
1.6.3 Time scope 3
1.’~ Significance of the study 3

CHAPTER TWO 4
LITRATURE REVIEW 4
2.1 Introduction 4
2.2 Inventory management 4
2.3 Techniques of inventory management 5
2.3,1 Perpetual inventory management technique 5
2.3.2 Periodic review inventory management technique 5
2.3.3 Just in time inventory management technique 6

V
 2.3.4 A B C Analysis inventory management technique 6
2.3.5 Economic order quantity inventory management technique (EOQ) 7
2.3.6 Material requirement planning (MRP) 8
2.4 Customer satisfaction 9
2.5 Factors affecting customer satisfaction 10
2.5.1 Ability to be flexible 10
2.~.2 Technological changes 11
2.5.3 Accessibility 11
2.5.4 The nature of the product 11
2.5.5 Surveying customers 12
2.6 Relationship between Inventory management and customer satisfaction 12
2.7 Conclusion 13

CHAPTER THREE 15
RESEARCH METHODOLOGy
3.0 Introduction 15
3.1 Research design 15
3.2 Study population 15
3.3 Sample size 15
3.4 Sampling methods procedure 16
3.5 Data sources 16
3.5.1 Primary data 16
3.5.2 Secondary Data 16
3.6 Research instrument 16
3.7 Data processing 17
3.8 Data analysis 17
3.9 Anticipated limitations to the study 17

vi
CHAPTER FOUR .18
PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS 18
4.0 Introduction 18
4.1Responserate 18
4.2 Personal Data 18
4.2.1: Gender of respondents 18
4.2.2: Age of respondents in years 19
4.2.3 Level of respondents’ qualification 19
4.2.4 Marital status of the respondents 20
4.2.5 Length of service in Spear Motors Limited Kampala 20
4.3 Findings on techniques of inventory management 21
4.3.1 Findings on perpetual inventory management technique 21
4.3.2 Findings on inventory management technique 22
4.3.3 Findings on inventory management technique 23
4.3.4 Findings on ABC analysis inventory management technique 24
4.3.5 Findings on EOQ inventory management technique 25
4.3.6 Findings on MRP inventory managemem ~hnique 25
4.4.1 Findings on factors affecting customer satisfaction 26
4.4.2 Findings on technological changes as a factor affect customer satisfaction 27
4.4.3 Findings on accessibility as a factor affect customer satisfaction 29
4.4.4 Findings on the nature of the product 30
4.4.5 Findings on surveying customers as factor affect customer satisfaction 31
4 .5 Relationship between inventory management and customer satisfaction 32

CHAPTER FIVE 33
SUMMARY DISCUSSION, CONCLUSION AND RECOMMENDATIONS 33
5.0 Introduction 33
5.1 Summary of the major findings 33
5.1.1 Inventory management techniques 33
5.1.2 Findings on factors affecting customer satisfaction 34
5.1.3 Findings on the relationship between inventory management and customer satisfaction 35

V
5.2 Conclusions .35
5.3 Recommendations .35
5.4 Areas for further research 36
REFERENCES 37
APPENDICES 40
QUESTIONNAIRE 40

VIII
 LIST OF TABLES
Table 3.3. 1: The total sample comprised of 70 r~÷ondents 15

Table 4.2. 1: Gender of the respondents 18

Table 4.2. 2: Age range of respondents 19
Table 4.2. 3: Level of respondents’ qualification 19
Table 4.2. 4: Marital status of the respondents 20
Table 4.2. 5: Length of service in Spear Motors Limited Kampala 20

Table 4.3. 1: Showing findings on perpetual inventory management technique 21

Table 4.3. 2: Showing findings on periodic reviev~ ~nv~ntory management technique 22
Table 4.3. 3: Showing findings on just in time inventory management technique 23
Table 4.3. 4: Showing findings on ABC analysis inventory management technique 24
Table 4.3. 5: Showing findings on EOQ inventory management technique 25
Table 4.3. 6: Showing the findings on MRP inventory management technique 26

Table 4.4. 1: Showing findings on ability to be flexible as a factor affect customer satisfaction. 27
Table 4.4. 2: Showing findings on technological changes as a factor affect customer satisfaction.

28
Table 4.4. 3: Showing findings on accessibility as a factor affect customer satisfaction 29
Table 4.4. 4: Showing findings on the nature of the product 30
Table 4.4. 5: Showing findings on surveying customers as factor affect customer satisfaction. ..31

Table 4.5. 1: Showing Correlation Relationship between inventory management and customer
satisfaction 32

ix
 LIST OF ABBREVIATIONS

Freq. - Frequency
S.A - Strongly Agree
‘A - Agree
N.S - Not Sure
D - Disagree
SD - Strongly Disagree.
% - Percentage
SMLK - Spear Motors Limited Kampala
EOQ - Economic Order Quantity
MRP - Material Requirement Planning.
JIT - Just in time.

x
 ABSTRACT
The purpose of the study was to establish or investigate the relationship between inventory
management and customer satisfaction in Spear Mctors Limited Kampala basing on the following
objectives, to examine inventory management techniques used in organization, to find out the factors
affect customer satisfaction in organizations, to establish the relationship between inventory
management and customer satisfaction. The researcher used descriptive and quantitative research
designs. Correlation co-efficient was used to determine the relationship between inventory
management and customer satisfaction. The sample size of 70 respondents was selected using
stratified random sampling. Self-administered questionnaires were used to collect data. Primary data
was collected through use of questionnaires and secondary data was collected from magazines,
journals and articles. Data was collected, edited and analyzed. According to the findings, the
organization involves in production planning, in~ritories are reviewed periodically which improves
customer satisfaction. The study showed positive relationship between inventory management and
customer satisfaction at Pearson correlation coefficient r0.997. It was also concluded that inventory
management techniques were effectively considered in Spear Motors Limited Kampala.

It was recommended that management of Spear Motors Limited Kampala should provide fringe
benefits to workers in order to improve on their behaviors. Also was recommended that management
of SPEAR MOTORS LIMITED LAMPALAshouId ensure that inventory management techniques
are practiced by people with trained qualifications skils.

xi
 CHAPTER ONE
INTRODUCTION
1.0 Introduction
This~chapter will cover the back ground to the study, statement of the problem purpose of the
study, objectives of the study, research question scope of the study and significance of the study.

1.1 Back ground of the study

Lysons (2000) define inventory management as controlling of stock inventory levels with the
physical distribution function to balance the need of minimizing stock holding and maximizing
handling costs. Inventory management is important to all most every type of business whether
product or service oriented; it is a system which ensures that the right quality of materials is
available in right quantity at the right place and at a right time with the amount of investment
(Bierderman, 2004). Inventory management system helps the firm in managing the flow of raw
materials, semi-finished products and provide the staff to coordinate various activities for
effective inventory management and this will increase demand and supply of products which
increase customer satisfaction (Donald, 2009).

Customer satisfaction on the other hand is a measure of how frequently products’ and services
supplied by the company meet or surpass custon’~r needs. It is also defined as the number of
customers or percentage of total customers whose reported experience to the firm exceeds
customer goals (Alexander, 2010). Customers become dissatisfied if the products they want or
behaviors of the sellers or their expectation are not met. When this occurs customers are likely to
complain and take their businesses elsewhere. Products or behaviors which do not meet
customers’ expectations create a mental state where neither satisfied or dissatisfied will feel
positively satisfied if products or service and the behaviors of the people they come into contact
with meet and exceed their expectations (Burunywa, 2003).

Inventory management techniques creates a strong relationship between the company and
customers, improves on the nature of the product, and creates deeper connections to cust~mers
improves on the capability of the supplier which has a direct impact on customers hence
customer satisfaction (Eric, 2010).

1
However, Managing inventory by organizations has got challenges which include the following
integrating demand planning and inventory planning, training users of demand planning and
inventory management soft ware, change manag’~ !enf, dumping those spread sheet and papers,
standardized data some companies have tripled up by having many definitions for the same data.
(Essex, 2007). This has resulted to poor demand planning and inventory planning and control
where the organization does not provide accurate services to its customers and has’ also resulted
into loss of data due to damping spread sheets and papers and also lack of clear definition of the
data due to many definition hence increasing losses for the organization.

1.2 Statement of the problem

Although inventory management involves activit suh as controlling of stock and distribution
of stock at the right time, customer dissatisfaction still exists. This is probably due to shock of
high~commodity fuel prices and impact of global economic crisis mainly because of weaker
consumption private demand, (Kasekende, 2010) hence poor inventory management. Therefore
this study sought to establish the relationship between inventory management and customer
satisfaction in Spear Motors limited Kampala.

1.3 Purpose of the study

The purpose of the study is to investigate rei~’ n~iip between inventory management and
customer satisfaction

1.4 Objectives
i. To examine inventory management techniques used in organizations
ii. To find out the factors affect customer satisfaction in organizations.
iii. To establish the relationship between inventory management and customer satisfaction.

1.5 Research questions

i. What are different inventory management techniques used in organizations?
ii. What are the factors affect customer satisfaction in organizations?
iii. What is the relationship between inventory management and customer satisfaction?

2
1.6 Scope of the study
l.6.iConceptual scope
The study covers the relationship between Inventory management and Customer satisfaction

1.6.2 Geographical scope

The study was carried out at Spear motois Limited located on plot M428, Nakawa, Jinja Road
Next to traffic lights junction, near Uganda Revenue Authority Kampala.

1.6.3 Time scope

The study was limited to a period of 2014 —2016 because it is the period in which there was the
economy was stable and the rate at which spear motor’s products (cars) were on demand and this
therefore needed the company to establish thL bes~ inventory management t~chniques for
ensuring customer satisfaction. This research study was conducted in a period of 3 months that is
from June to August 2019

1.7 Significance of the study -

The result benefited policy maker’s management and staff of various companies in Uganda by
providing information about the

To scholars and other researchers the findings may be used for reference to narrow down the
knowledge gap and provide fresh insight for future research.

The suggestion and recommendations may be used by the organization itself in realizing the
importance of using various mentioned techniques in inventory management practices effectively
so that will enable the organization to work better and increase financial performance.

3
 CHAPTER TWO
LITRATURE REVIEW
2.1 Introduction
This is analysis of some of the major issues on existing literature on inventory management as
studied by other scholars and how it affects cus~’ ier satisfaction. The literature review covers
inventory management, customer satisfaction and the relationship between inventoi~y
management and customer satisfaction. Text books, newsletters, internet and reports will be used
to collect information.

2.2 Inventory management

Inventory is defined as the value of the quantity of raw materials, components, assembles,
consumables work in progress and finished goods that are kept or stored for use as the need
aEises, it is the total amount of goods and all rn.~ ~ri& contained in a store or factory forgiven
time (Lysons 2000). Inventory can be defined as items that are in a stock to decouple successive
operations in the progress of manufacturing a product and distributing it to the customers the
organization which consists of a list of goods and materials held available in stock (Lysons
2000). According to Allen (2001) successful inventory control involves simultaneous attempts to
balance both costs and benefits of inventory. Inventories can be purchased in varying quantities
according to the requirements of the firm where as other elements of cost like labor and other
services cannot be easily varied once they are established, therefore it can be concluded that
material is the most flexible and controllable fact~ of ~roduction. Most organizations have three
(3) t9pes of inventory that is raw materials work in progress and finished goods which are keptto
facilitate smooth production. Inventory management involves controlling of stock or inventory
levels with the physical distribution function to balance the need for minimizing stock holding
and handling costs (Lyson, 2000). it is aimed at ensuring that the company is supplied with the
right.inventories at the right time in the right place and ensuring optimization of the benefits of
holding inventory in the organizations maximizing the benefits while minimizing the costs.
Inventory management is the system which ensures that the right quality of materials is available
in the right quantities at the right time and right: ice with the right amount of investment Jam
and Narang (1986) inventory management is a system concerned with a question and recording,
inspecting, handling, storage issuing and control of supplies (Lysons, 2000).

4
2.3 Techniques of inventory management
Inventory management techniques are used by enterprises to strike an effective balance between
inputs and outputs of a given process of production or trade (Scholasticus, 2010).

2.3.1 Perpetual inventory management technique

This technique is continuously assessed; it i~. as~ally because the treatment of various
transactions of purchase and sale directly affects the inventory in book keeping. e.g. the business
model of mall works on a sale basis i.e. whatever inventory comes in from the dealer is sold to
final customer without any processing, perpetual inventory system find work best in such case,
also in perpetual system the individual books for sale and purchase are done away with and there
is oaily one book, the account is balanced at the end of each day which yield the inventory
positive for the day (Kamukama, 2006). The perpetual inventory system is best suited for the
enterprises that usually keep a high inventory and have a high turnover, it is also well suited for
type of industries where there is no much proc ng to do so the inventory exists at only one
level, for sale rather than at the three levels (raw material work in progress) and for sale. This
technique is also well suited for the fact that inventory checking is an important part of operation
of the industry (Kulkarni 2010). Perpetual management technique has better responsiveness to
demand compared to periodic reviews, ordering is automatic which saves time and labour there
by ensuring better control of stock Lysons, (2000).

2.3.2 Periodic review inventory management technique.

This is also another technique for inventory mar ~ement, under this technique, items inventory
position is reviewed periodically rather than at a fixed order point, the period or interval at ~vhich
stocl~ levels are reviewed depends on the importance of stock item, available quantity will be
ordered at each reviewed to bring the stock level back to the maximum . This~ technique is
important in that there is greater chance of elimination of absolute items owing to periodic
review of stock, also the purchasing load may be spread more evenly with possible economies of
scaleordered from the supplier at the same time, in this technique large quantity discounts may
be negotiated when arrange of stock items are ordered from the same supplier at the same time
there is also production economies however, if tL ~sage rate changes shortly after review period
stock out may occur before the next review date (Lysons, 2000).

5
 Use of this technique increases the chances of enjoying economies of scale especially when
depending on one supplier; there would be also a sense of better utilization of organizational
resources for scheduling (Ikiror, 2008). Periodic system inventory would be calculated once in a
month or 6 months or a year, periodic means that the inventory would not be continually
watched but instead would be assessed periodically the period being predicated by the company
(Arjun, 2010).

2.3.3 Just in time inventory management technique.

This is based on cost of zero wastage, according to this system a business should order inventory
which is needed to carry on their immediate production in other words manufacturing units
should not store any extra inventory as it leads to additional carrying costs, for example a door
manufacturing industry needs to make 100 doors besides other part it keeps around 150~doors
storéd as inventory to apply this inventory management technique a clear understanding of how
much raw materials are needed at a given time to maintain proper flow of production should be
there for this time taken by raw materials to i-~.ch manufacturing facility from the supplier
should be known and the life of raw materials should be clearly determined before , procedures
should be formulated to ensure that raw materials arrive just in time before the production starts
so that little to no storage time is needed (Kamukam, 2006). Just in time is advant~geous in that
it reduces the operational costs of the business thus increasing the profits and return on
investment, also it eliminates the possibility of making a mistake in production process.
However, if the raw material that is ordered is not of good quality or gets damaged the
production will have to be stopped as there is no extra stock of raw materials available; this leads
to time wastage (Dogra, 2010). According to (Pc~Jy. 2005)different goals of uT are to produce
the required items , required quantity at the right time seeking to achieve elimination of non
valuable activities such as zero inventories zero defects, zero break downs and 100% on delivery.
Lys~ns (2000) in his book using this technique of inventory management aims at maintaining
just enough materials at right place and time to make just the right amount of a given product.

2.3.4 A B C Analysis inventory management technique.

It is a business term used to define inventory categorization technique often used in materials
management; it is also called selective inventory .ont~bl. A B C analysis provides a mechanism

6
for identifying items that will have a significant impact on overall inventory cost while also
providing a mechanism for identifying different categories of stock that require different
management controls, the A B C analysis Suggests that inventory of an organization are not of
equal value, thus the inventory is grouped into 3 categories i.e. A B & C in order of their
estimated importance. “A” items are very important for an organization because of high value of
these “A” items frequently value analysis are required , in addition to that an organization needs
to choose an appropriate order pattern for example (just in time )to avoid excess ~apacity. “B”
Items are important but of course less important than “A” items and more important than “C”
items, there “B” items are inter grouped. “C” items are marginally important. -~

A B C CATEGORIES
“A” Items 20% of items accounts for 70% of the annual consumption value of items “B” Items
30% of items accounts for 25% of the annual consumption value of items, - “C” Items 50% of
items accounts for 5% of the annual consumpciun value of the items. J Young pharmacists,
(2010) Lysons (2000) also indicated that A B C can be used to arrange goods according to level
of spending, priority, importance, annual sales and profitability and on other grounds. A B C
technique in general helps to save time, fasten planning, improve stores lay out, improve
management of stores, on the centrally however, it could be misleading to some extent since it
does not address deep issues of stock control and requires technical competences on the side of
store staff (Richard Draft, 2003). -

2.3.5 Economic order quantity inventory management technique (EOQ)

Economic order quantity inventory management technique is the level of inventory that
minimizes the total inventory holding costs and ordering costs .This model applies where the
demand for a product is constant over the year and that each new order is delivered in full when
the inventory reaches zero there is a fixed cost charged for each order placed regardless of
number of units ordered, there is also holding or storage cost for each unit held in storage .The
optimal number of units can be determined by the product so that total cost can be minimized
associated with purchase delivering and storage of the product the required parameters to
solution are the total demand for the year the purcnasi.. cost for each item , the fixed cost to place
the order and the storage cost for each item per year. Note. Number of items an order is placed

7
 will also affect the total cost, however this number can also be determined from the parameters
Andrew &John, (2010). According to Jessop, (2004) the following are identified as the
fundamental assumption of basic EOQ model.

Assumptions
The ordering cost is constant -The lead time is f ~d -‘~‘he purchase price of the item is constant
‘that is no discount is available. -Assumes that replenishment is made instantaneously, the whole
batch is delivered at once.

According to Ikiror, (2008) one order to arrive at economic order quantity the formula below is
used. Variables Q -Order quantity Q* -optimal demand quantity of the product. D -purchase cost
per unit S Fixed cost per order H -Annual holding cost per unit
-

Total cost function

Total cost = purchase + ordering cost + holding t.

2.3.6~ Material requirement planning (MRP)

This is production planning and inventory control system used to manage manufacturing
processes; MRP is Marjory intended to meet three objectives.
1. Ensure materials are available for production and production are available for delivery to
customers.
2. Maintain the lowest possible level of inventory.
3. Plan manufacturing activities delivery sc~. ‘~le, and purchasing activities.

The basic function of MRP system includes inventory control bill of material processing and
elementary scheduling. MRP helps organizations to maintain low inventory levels it is used to
plan , manufacturing, purchasing, and delivering activities, companies need to control the types
and quantities and ensure that they are able to meet current and future customer demand, at all
the lowest possible cost making bad decision in any of these areas can make the company to
loose money. MRP is a tool to deal with these problems and provides answers to several
questions. - What items are required? - 1-low ma~. arc required? - When are they fequired? The
major problem with MRP system is the integrity of the data if there are any errors in the

8
inventory data. The bill of materials (BOM) data or the master production schedule, then the
outputted data will also be incorrect. Data integrity is also affected by in accurate cycle count
adjustments, mistakes in receiving input and shipping output and the scrap note reported waste
damage, box count errors and system issues many of these types of errors can be minimized by
implementing pull systems and using bar code scanning. Another problem with MRP is
requirement that the user specify how long it will take a factory to make a product from its
component parts (WJ Hopp & ML spearman, 2004).

Accirding to Lysons, (2000) MRP is a computerized time phase requirement planning system
which aims at holding zero stock of an item un less its required for current production. The
system calculates the total quantity of each item that needs to be ordered establish the lead time
in the system and send this information to stores procurement department and suppliers store. In
his book purchasing and supply chain management (Lysons 2003) stipulates the following
assumption upon which MRP is based demand must be uniform, the organization must practice
planning in all sectors, master production schedules must be present, and demand must be
dependent. Jessop (2003), there are various steps in material requirement planning system
includes sales forecast, mastering production schedule, stock record file, and purchase required.

2.4 Customer satisfaction

It is defined as a measure of how frequently products and services supplied by the company meet
or surpass customer satisfaction, It is also defined as a number of customers or percentage of
total~customers whose reported experience to m~~t the firm, its products or services exceeds
customers goals (Alexander,2010). Customer satisfaction is when a customer orders more (Relly,
2000). Shaharudin, (2010) defined customer satisfaction as a measure of how the needs and
responses are collaborated and delivered to excel customer expectation is attained if the customer
has ~good relationship with the supplier. However, we should appreciate that customer
satisfaction is not direct opposite of customer dissatisfaction; customers become dissatisfied if
the product they want or the behaviors of the sellers are not met. When this occurs the customers
are likely to complain and take their business elsewhere. Products or behaviors which do not
meet customers’ expectations create a sort of ment”l state where the customer is neither satisfied
or dissatisfied this state leads to customers to try out other products and does not lead to brand

9
loyalty. Customers will feel positively satisfied if products or services and behaviors of the
people they come into contact with meet or exceed their expectations, when this occurs
customers are likely to express their doubt they will express this by repeated purchase and also
use the word of mouth to tell their friends (l3alunywa, 2003).

Customer satisfaction is part of the customers, experience that exposes the supplier behavior on
customers expectation, it also depends on how ef~ iemiy is managed and how promptly services
are provided, satisfaction could be related to various aspects like marketing, product
manufacturing, engineering quality of the products, and services responses customers questions
and problems, completion of the project, post delivery services and complaint management
(Ashraf 2006). Customer satisfaction is the overall essence of the impression about suppliers by
the customers, this impression which customers make regarding the supplier is the sum total of
all the processes they go through right from communicating the supplier before doing any
marketing to post delivery options and seivices and managing questions, during this process the
custcrner comes across working environment var jOUS departments and type of strategies
involved in the organization. This makes customers to make strong option about the supplier
which finally results in satisfaction’ or dissatisfaction (Eric 2010).

2 5 Factors affecting customer satisfaction

2.5.1 Ability to be flexible
In managing customers also affects customer satisfaction the (International consortium 2005)
spells out ability to be flexible in managing customers enables the business to reap the benefits of
good customer satisfaction is linked to quality rec~nt years many companies have adopted
total quality of their products services marketing processes, quality has a direct impact
performance and hence customer satisfaction. Rune (2005) explains this as that ability to respond
to changes in the environment in this case the manufacture flexibility to change the output in
response to changes in demand so as to increase customer satisfaction. Howard (2010) sai’s the
most important factor that affects customer satisfaction is employee satisfaction; employees who
feel satisfied and happy at their jobs naturally tend more helpful and considerate towards
customers.
2.5.2 Technological changes
In particular the event of e-commerce has meant the business organizations of all scales compete
equally and death in distance of marketing of goods so organizations and firms practice effective
customer care service to its customers and this has led them to remain in the standing and
competing situation, (Hullic 2000). Balunywa (2001) has noted that business always look
forward to win and increase their turn over every time by applying basic strategies that can
attract and give customer satisfaction to customers. Good change management processes lead to
inconsistence and reliable product delivery and hc.~e improved customer satisfaction ,its equally
important to mention that poor change management lead to inconsistence product. delivery and
there customer dissatisfaction (Dhananj ay, 2010).

2.5.3 Accessibility
There should be easy accessibility to the organization by customers, this will help to bring more
customers hence affects customer satisfaction when the need arises, Tan (2004) states that all
organization activities, design, procurement, and distribution processes targeting which supplier
to involve in environment initiatives. The p~sence of accessibility statement does not
necessarily give accurate picture of the website accessibility , according to research conducted by
professor Helen director of research , accompany accessibility statement is the reflection of the
values towards disabled people, peoples trust will be affected if accompany makes public
statement that is not reflected in how it actually behaves (Helen, 2006).

2.5.4 The nature of the product

Balunywa, (2003) is one of the factor which affect customer satisfaction the product quality is
measured by performance and durability, produc~ quality is what the customer perceives rather
than .what he actually he is, the behavior of the people they come in the contact is an important
factor that affect customer satisfaction customers want to feel good in any transaction (Eric,
2010). The relationship between quality customer satisfaction and loyalty of a product have been
investigated for more than two decades however most of these studies focus on a pure product or
service setting this study hope to fill the gap by investigating the effects of product and service
quality on customer satisfaction and loyalty based on holistic view service quality will greatly
influence the impact of product quality and customer satisfaction (Chan, 2008).

11
2.5.5 Surveying customers
Recently determining where they find value, some businesses are created with, an excellent
understanding of why customers choose their operation appeal to their customers (Goodson,
2002). Companies should try self evident to satisfy their customers, satisfied customers usually
return and buy more, they tell people about their experiences and they may well pay for the
privilege of doing business with suppliers they trust. Statistics suggest that the cost of keeping
customer is any one winning new ones there winning a customer should hang on them. Paul
Hague & Nick Hague, (2007), Creating deeper ci lnections with your customers most business
owners realize that they have periodically check in with customers to make certain that
everything has gone as planned there it is possible for customers to share crucial insights which
can improve the business preventing not only the customer from defecting but other less
perspective customers from leaving as well (Goodson, 2002).

Capability of the supplier and technological engineering aspects of the products and services
(Eric, 2010) suppliers behavior and capability mostly depends on the behavior of senior
subordinates internal employees and managers all the functional activities like customer
response direct product and maintenance services complaint management are the factors that rely
on hpw skillful and trained internal and human resources of the supplier Jacques (2010).
Deriving customer promise, the firm must understand what customer’s wants and use marketing
efforts to bring in customers successfully this is done by providing with customers with the
lowest price quickly services best overall value or combination of the above if the promises are
not delivered well customers are unlikely to be unsatisfied later alone impressed (Marc, 2003).

2.6 Relationship between Inventory managemw air~J customer satisfaction

There is a strong relationship between inventory management and customer satisfaction. (Tersin,
2001) noted that any under taking neglecting the management of inventories will be jeopardizing
its lohg term profitability and may fail ultimately, Cook (2002) & Thomas, further noted that few
customers were willing to wait for such an extended period of time on their purchases and if
demand occurs for an item out of stock the economic loss occurs to the firm as the customer
would go for a close substitute which leads to loss in trust and reputation of that firms good will
and above all loss of customer satisfaction. It is possible for both distributors and customers to

12
 experience greater productivity and profitability the answer lies in better inventory n~anagement
(Schreibfeder, 2001). Competition continues to increase as new distribution channels evolve and
existing distribution channels expand this increased competition creates more demanding
customers that require greater product availability and more value added services. Because the
lower margins most distributors have fewer profits to meet there challenges. The end result more
has to be done with fewer resources. Most customers have in their definition of suj~erior
customer services, Material ordered is delivered when it is needed or promised, The right quality
of the right item received at the right creation, The material is received in good cOndition with
any necessary documentation, The supplier provides quick responses to inquiries.

‘Donald, (2009) opined that inventory management system helps a firm in managing the flow of
raw materials, semi finished, finished products and provide the staff to coordinate various
activities for effective inventory management, there are reasons for keeping the inventory; it
saves time, act as a buffer to meet uncertainties in demand, supply movements of goods balances
demand and supply for the product. A good inventory management system would also help in
fore casting demand and supply apart from ensurhg that the confused work is done away with
makes sure that information about ware house as well as customers, retailers, and wholesalers are
available the basic constitutes of inventory management are production, planning, advanced
planning for procuring and finished products required for manufacturing (Freneau 2010).
Therefore all the above are done in inventory management increases on the level of customer
satisfaction. The customer service level is a great tool for determining how ~vell you are
servicing your customers some company make it even better, they know that just having a
product in stock does not ensure a satisfied customer, they want to be sure that an ‘order
completely meets the customers’ expectations. They utilized the full that is often called the
customer satisfaction analysis the analysis reflect the percentage of line of items that are filled
correctly and completely on or before the promised date (Schreilsfeder, 2001).

2.7 Conclusion
Inventory management is typically a concern of all firms in a competitive environment which is
product or service oriented. It is noted from above discussion that there is a strong core lection
between inventory management and customer satisfaction improper management inventory leads

13
to stock out costs and delayed delivery. A satisfi~c4 customer will buy again and convince others
to join. Hence increased customer satisfaction proper of the firm and its good will as it does not
fall short of deliveries and its customers are happy about its practices (Sanderson 2003).

1”
 CHAPTER 1~HPEE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter will present a description of research design, sampling design that will be used to
present data. It will be collected in terms of data source and data collection methods and analy~ed. It
will also suggest how data was processed and analyzed It discussed the limitations that will be
encountered.

3.1 Research design

The research will be descriptive in nature involving quantitative methods which will be administered
using questionnaires. The design will be preferred because the researcher will base on the views of
respondents to reach at conclusions and make recommendations.

3.2 Study population

The study population was 85 and this comprised of Spear motors employees who were selected from
different departments like Inventory Management Department, Finance Department, Management
and Customers.

3.3 Sample size

The sample size was determine from Krejicie and Morgan 1990 and from the table, 7Owas used
as a sample size derived from a target population of 85.

Table 3.3. 1: The total sample comprised of 70 respondents.

DEPART1~vIENT Target population Sample size
Inventory management. 17 15
Finance department 7 5
Management 14 10
Customers 47 40
Total 85 70

15
3.4 Sampling methods procedure
Stratified method was used to select the respondc~...s from different departments of Spear motors
Limited Kampala Uganda, these included purchasing and procurement department, Accounting and
finance and administration department. Stratified sampling was used because it gave every
respondent in the survey population equal chances of being selected.

3.51 ta sources
Due to nature of the study both primary and secondary data sources were used. This was based on
both first hand information and already existing data; this implies that the researcher will opt to use
primary and secondary data

3.51 Primary data

Primary data was collected from the company annual reports, employees and internal auditors of
Spear Motors the primary data provided reliable and accurate first-hand information which was
relevant to the study about the roles of internal audit in relation to the financial performance. The
researcher will use self administrated questionnaires while collecting data from the staff.

3.5.2 Secondary Data.

For secondary data the researcher will use secondary sources like text books, journals, articles,
magazines, presentations concerning the subject matter of the study. These sources will be consulted
at the length to extract required information to answer the research questions. These sources were
extracted required information to answer the research questions. These sources will be extracted from
internet and libraries of Kampala International University, Makerere University and library of Spear
Motors Limited Kampala Uganda

3.6 Research instrument .

Questionnaires
A questionnaire will be prepared and administered to respondents. It will be designed using a five
point likert scale, the questionnaire design will be simple worded relatively short but comprehensive
and closed ended so as to facilitate a high response rate and compliance of the clients.

16
3.7 Data processing
Data collected will be edited sorted coded and tabuh~ ed t’~’ ensure accuracy consistency completeness
and reliability.

3.8 Data analysis

Data analysis will be carried out using SPSS, frequency distribution table’s graphs and pie chart,
percentage Derived from the relationship between inventory management and customer stratification

3.9 Anticipated limitations to the study

o The researcher faced financial difficulties in carrying out the research this w~s in terms of
transport to the area of the study, typesetting, printing and photocopying however the
researcher tried to solicit financial assistance from brother’s sisters and friends.
o The researcher faced the problem of acquiring literature relevant to the study area
because few publications had been made about the topic that was under study.
• The researcher faced the problem of non response from respondents due to bias this was
solved by humble and soft approach towards the respondents.
o The researcher was denied some information especially in staff members fearing that the
researcher can reveal such information like how tenders are made as well as purchase of
some equipment however the researcher ensured that the information that ~as given was
kept confidential.

17
 CHAPTER FOUR
PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.0 Introduction
This Chapter presents findings of the study on the relationship between inventory management
and customer satisfaction according to the data collected. The findings are analyzed, interpreted
and presented according to the important variables, objectives of the study and the research
question.

4.1 Response rate

Respondents responded positively

4.2 Personal Data

The researcher identified the respondents’ bio data in respect of gender, age, level of education
and the duration they have been in Spear Motors Limited Kampala in order to appreciate the
relia&ility and the accuracy of the research findings.

4.2.1: Gender of respoiidents

Table 4.2. 1: Gender of the respondents

Frequency Percent — Valid Percent Cumulative Percent

Valid Male 42 60.0 40.0 60.0
!~emale 28 40.0 40.0 100.0
iotal 70 100.0 100.0
Source: priia~ary data
Tables 4.2.1. Indicates that, of the respondents, 60.0% were male, and 40.0% were female. This
implies that, there was gender bias in the study and the 40.0% was a revelation that the fiscal
decentralizaton is effectively in implementaton of one of the principles of gender
mainstreaming.

18
4.2.2: Age of respondents in years
fable 4.2. 2: Age range of respondents

Valid
____________

25-30
j Frequency
36
Percent
51.4
Valid Percent
51.4
Cumulative Percent
51.4
31-34 7 10.0 10.0 61.4
35-40 10 14.3 14.3 75.7
41-44 6 8.6 8.6 84.3
45-50 8 11.4 11.4 95.7
Above 50 3 4.3 4.3 100.0
Total 70 100.0 100.0
Source: primary data
Fable 4.2.2 above, findings indicated that 5 1.4% of respondents were aged from 25-30 years,
0.0% were from 3 1-34 years of age, 14.3% were from 35-40 years of age, 8.6% were from 41-
~4years, and 11.4% were from 45-50 while another 4.3% were above 50 years of age. This
hows that the respondents were mature enough to answer the questions in the questionnaires.

1.2.3 Level of respondents’ qualification

Fable 4.2. 3: Level of respondents’ qualification
Frequency Percent Valid Percent Cumulative Percent
7alid certificate 32 45.7 45.7 45.7
diploma 17 24.3 24.3 70.0
degree 13 18.6 18.6 88.6
masters 6 8.6 8.6 97.1
PhD holders 2 2.9. 2.9 100.0
Total 70 100.0 100.0
~ource: primary data
~ab1e 4.2.3 indicated that, 45.7% of the respondents had certificates, 24.3% had diplomas, 18.6%
ad degrees, 8.6% masters, and 2.9% had a PhD. This implies that people working in Spear
4otors Limited Kampala have attained the minimum level of education to participate in the
ttainment of organizational goals.

19
4.2.4 Marital status of the respondents
Cable 4.2. 4: Marital status of the respondents
Frequency Percent Valid Percent Cumulative Percent
Valid Single 26 37.1 37.1 37.1
Married 32 45.7 45.7 82.9
Separated 6 8.6. 8.6 91.4
Widows 6 8.6 8.6 100.0
Total 70 100.0 100.0
~oarce: primary data

~able 4.2.4 findings showed that 37.1% of the respondents were single, 45.7% were married,
.6% were separated and 8.6% were Widow. This shows that respondents of different marital
tatus were freely willing to contribute towards performing organization duties in their different
ommunities

.2.5 Length of service in Spear Motors Limited Kampala

~able 4.2. 5: Length of service in Spear Motors Limited Kampala
Frequency Percent Valid Percent Cumulative Percent
laud 6 months-2years 40 57.1 57. 1 57.1
3-Syears 13 18.6 18.6 75.7
6-8years 12 17.1 17.1 92.9
9-above 5 7.1 7.1 100.0
Total 70 100.0 100.0
~ource: primary data

~able 4.2.5 findings indicated that 57.1% of the respondents had served at Spear Motors Limited
:ampala between 6months-2years, 18.6% for ~-5 years, 17.1% from 6-8 years, and 7.1% above
years. This implies that respondents were knowledgeable enough about Spear Motors Limited
ampala to provide relevant information on variables of the study.

20
1.3 Findings on techniques of inventory management
~indings on techniques of inventory management were considered and the information below
vas obtained.

1.3.1 Findings on perpetual inventory management technique

(nowledge of the respondents about perpetual inventory management techniques were obtained
is the results in the table below indicates.

Cable 4.3. 1: Showing findings on perpetual inventory management technique.

N Minimum Maximu Mean Std

m Deviation
3erpetual inventory management technique 70 1.00 5.00 3.9143 1.18863
s a conducive technique to improve
nistorner satisfaction in an organization
~erpetual inventory management technique 70 1.00 5.00 3.6571 1.04792
ts account is balanced at the end of the day
vhich yield positive inventory and this
mproves customers satisfaction in the
)rganization.
~erpetual technique is also conducive in that 70 2.00 5.00 3.8714 94672
he inventory! stock exists at only one level
~ sale rather than at only three levels for
ale which improves customers satisfaction

~erpetual inventory management technique 70 1.00 5.00 3.7 143 1.09204

ias a better responsiveness to demand.
~erpetua1 inventory management technique 70 1.00 5.00 3.3286 1.09969
)rdering is automatic which saves time and
abour
7alid N (listwise) 70
ource: primary data

‘able 4.3.1, the descriptive statistics indicate that the stated variables were normally distributed.
‘he findings show that 4 items had mean >3.5 while the rest had a mean<3.5 which showed that
~spondents were indifferent with the statements. The study used a 5-likert scale, mean >3.5
~dicated that the respondents agreed with the statements that Perpetual inventory management
~chnique its account is balanced at the end of the day which yield positive inventory and this
uproves customers satisfaction in the organization with mean value of (3.9143), it is also

21
~onducive in that the inventory stock exists at only one level for sale rather than at only three
evels for sale which improves customers satisfaction(mean=3.87l4), has a better responsiveness
:o demand(rnean 3.7 143), and account is balanced at the end of the day which yield positive
inventory and this improves customers satisfaction in the organization(mean 3.6571). On the
other hand respondents were indifferent with the statements that Perpetual inventory
management technique ordering is automatic which saves time and labour with men 3.3286.

4.3.2 Findings on inventory management technique.

Knowledge of the respondents about periodic review inventory management techniques were
obtained as the results in the table below indicates.

Table 4.3. 2: Showing findings on periodic review inventory management technique.

N Minimum Maximu Mean Std
rn Deviation
Companies use periodic review to measure 70 1.00 5.00 3.8000 1.34703
and gauge the level of customer satisfaction
Periodic review technique inventories are 70 1.00 5.00 3.4429 1.24686
reviewed periodically
Periodic review technique there is a greater 70 1.00 5.00 3.8857 1.17391
chance of elimination of absolute stock
In periodic review technique large quantity 70 2.00 5.00 3 .942 9 .94617
discounts may be negotiated when arrange of
stock items are ordered from the same
supplier at the same time
Periodic review technique increases the 70 1.00 5.00 3.4714 1.29348
chances of enjoying economies of scale
especially
~ when depending on one suppler ________

Valid N (listwise) 70
Source: primaly data

Table 4.3.2, the researcher used descriptive statistics which indicated that the stated variables
were normally distributed. The findings show that 3 items had mean> 3.5 while 2 items had a
mean<3.5. The study used a 5-likert scale, mean >3.5 indicated that the respondents agreed with
the statement that in periodic review technique, a large quantity discounts may be negotiated
when arrange of stock items are ordered from the same supplier at the same time with mean =

3.9429, there is a greater chance of elimination of absolute stock with mean = 3.8857, and

22
 ompanies use periodic review to measure and gauge the level of customer satisfaction with
nean = 3.8000. However respondents were indifferent about the statement that inventories are
eviewed periodically with mean = 3.4429, Periodic review technique increases the chances of
mj oying economies of scale especially when depending on one supplier with mean = 3.4714.

t.3.3 Findings on inventory management technique

Understanding of the respondents about just in time inventory management technique were
btained as the results in the table below indicates

Table 4.3. 3: Showing findings on just in time inventory management technique

N Minimum Maximu Mean Std
m Deviation
Just in time should be taken into 70 1.00 5.00 4.0857 1.09997
consideration in order to retain high levels of
customers satisfaction
Just in the time inventory management 70 2.00 5.00 3.9143 71714
technique is based on cost of zero wastage
Just in time technique ensures that materials 70 1.00 5.00 3.7857 1.11502
arrive Just in time before the production
starts.
Just in time eliminate the possibility of 70 1.00 5.00 4.2571 1.95835
making mistakes in production process
Just in the technique aims maintaining just 70 1.00 5.00 3.8571 1.01132
enough materials at right place and time to
make just the right amount of a given
product.
Valid N (lisbvise) 70
Source: primary data

Table 4.3.3, the descriptive statistics indicate that the stated variables were normally distributed.
The findings show that all items had mean > 3 indicating that respondents were in agreement
with the statements. The study used a 5-likert scale, mean >3.5 indicated that the respondents
agreed with the statements that Just in time eliminates the possibility of making mistakes in
production process(rnean =4.257 1), it should be taken into consideration in order to retain high
levels of customers satisfaction(mean =4.0857), inventory management technique is based on
cost of zero wastage, (rnean3.9 143) JIT aims at maintaining just enough materials at right place

23
md time to make just the right amount of a given product (mean3.8571), and also ensures that
naterials arrive Just in time before the production starts(rnean—3.7857).

L3.4 Findings on ABC analysis inventory management technique

(nowledge of the respondents about ABC analysis inventory management technique were
)btamed as the results in the table below indicates

Cable 4.3. 4: Showing findings on ABC analysis inventory management technique

. N Minimum Maximu Mean Std

m Deviation
~BC Analysis inventory management 70 1.00 5.00 3.2857 1 .241 12
echnique provide mechanism for identifying
nventory that will have significant Impact in
verall inventory cost.
~BC techniques can be used to arrange 70 1.00 5.00 3.4000 1,18444
;oods according to their level of importance
pending priority and profitability.
~BC Analysis inventory management 70 1.00 5.00 3.6000 1.24412
~chniques helps to save time fasten planning
~i an organization which has impact on
atisfaction.
~BC Analysis inventory management 70 1.00 5.00 4.1571 .91105
~prove stores lay out and improve
lanagement of store which has an effect on
ustomer satisfaction.
7alid N (listwise) 70
~ource: primary data

‘able 4.3.4, the descriptive statistics indicate that the stated variables were normally distributed.
‘he findings showthat 2 items had mean> 3.5 which indicated an agreement while the rest had
mean<3.5. The study used a 5-likert scale, mean >3.5 indicated that the respondents agreed
iith the statements that for ABC Analysis inventory management improve stores lay out and
management of store which has an effect on customer satisfaction with mean~4.1571. helps to
mve time fasten planning in an organization which also has impact on satisfaction with
iean~3 .6000. However respondents were not sure with the statement that ABC techniques can
e used to arrange goods according to their level of importance spending priority and

24
rofitability with mean3.4000, and can provide mechanism for identifying inventory that will
mve significant Impact in overall inventory cost with rnean=3.2857.

1.3.5 Findings on EOQ inventory management technique.

(~now1edge of the respondents about EOQ inventory management techniques were obtained as
he results in the table below indicates.

Cable 4.3. 5: Showing findings on EOQ inventory management technique.

. N Mm Max Mean Std

Deviation
iOQ minimize the total inventory holding 70 1.00 5.00 3.585 1.31318
ost and ordering costs

iOQ is applied where the demand for the 70 2.00 5.00 3.871 1.08910
roducts is constant for over the years
1OQ assume that the purchase price of an 70 1.00 5.00 3.557 1.16265
~em is constant that no discount is available
vhich affects customer satisfaction
iconomic order quantity time is fixed and 70 1.00 5.00 3.600 1.01296
rdering cost is constant which has direct
~npact on customer satisfaction
Talid N (listwise) 70
¶ource: primaly data
‘able 4.3.5, the researcher used descriptive statistics which indicated that the stated variables
~ere normally distributed. The findings show that all item had mean> 3.5. The study used a 5-
kert scale, mean >3.5 indicated that the respondents agreed with the statement that EOQ is
pplied where the demand for the products is constant for over the years mean=3.8714s, time is
xed and ordering cost is constant which has direct impact on customer satisfaction
uean3.6000), EOQ minimize the total inventory holding cost and ordering costs (mean3.5857),
OQ assumes that the purchase price of an item is constant that no discount is available which
~fects customer satisfaction ( mean ~3.5571).

.3.6 Findings on MRP inventory management technique

~nowledge of the respondents about MRP Inventory management techniques were obtained as
ie results in the table below indicates.
[able 4.3. 6: Showing the findings on MRP inventory management technique.

N Minimum Maximum Mean Std

Deviation
n production plan~iing and inventory control 70 2.00 5.00 3.7571 84159
ystem MRP is used to manage manufacturing
rocess
vIRP maintains the lowest level of inventory 70 1.00 5.00 3.5429 1.15075
vhich has an impact on customers satisfaction

~‘IRP is computerized which aims at holding 70 1.00 5.00 3.6286 .99523

~ero stock of an item unless its required for
urrent production
vIRP ensures planning manufacturing 70 1.00 5.00 3.9429 .88278
ctivities delivery schedules and purchasing
ctivities
insures materials are available for production 70 1.00 5.00 3.2429 93925
nd product are delivered to customers

7alid N (listwise). 70
~ource: prirnaly data

‘able 4.3.6, the descriptive statistics indicate that the stated variables were normally distributed.
‘he findings show that 4 items had mean>3.5 which indicated an agreement and the rest had a
~ean<3.5. The study used a 5-likert scale, mean >3.5 indicated that the respondents agreed with
~e statement that MRP ensures planning manufacturing activities delivery schedules and
urchasing activities mean= 3.9429, In production planning and inventory control system MRP
used to manage manufacturing process mean=3.7571, MRP is computerized which aims at
olding Zero stock of an item unless its required for current production mean3.6286, MRP
mintains the lowest level of inventory which has an impact on customers satisfaction
~ean3 .5429.

.4.1 Findings on factors affecting customer satisfaction.

~nowledge of the respondents about ability to be flexible as a factor affect customer satisfaction
as obtained as the results in the table below indicates.

26
Cable 4,4. 1: Showing findings on ability to be flexible as a factor affect customer
atisfaction.

N Minimum Maximum Mean Std

Deviation

~bility to be flexible in managing customers 70 2.00 5.00 3.4286 1.30297

Las a direct impact on customer satisfaction.

~bi1ity to be flexible is linked to good quality 70 2.00 5.00 4.2286 1.10560

roducts which has a direct impact on
ustomer satisfaction
~bility to change in the levels of output in 70 1.00 5.00 4.2571 1.92761
esponse changes in demand increase
ustomer satisfaction
~bility to be flexible leads to employee 70 2.00 5.00 4.1000 1.93483
atisfaction hence customer satisfaction.
~bility to be flexible is an important factor 70 1.00 5.00 3.7286 1.21490
~hich increases demand and supply of stock
nd customer satisfaction.
7alid N (Iistwise) 70
~ource: prim(iiy data

‘able 4.4.1, the descriptive statistics indicate that the stated variables were normally distributed.
‘he findings show that 4 items had mean> 3.5, 1 item had a mean<3. The study used a 5-likert
eale, mean >3.5 that is to say respondents agreed with the statement that Ability to change in the
~vels of output in response changes in demand increases customer satisfaction mean=4.257 1.
bility to be flexible is linked to good quality products which has a direct impact on customer
atisfaction mean=4.2286, Ability to be flexible leads to employee satisfaction hence customer
atisfaction mean=4.1000, and it is an important factor which increases demand and supply of
Lock and customer satisfaction rnean3.7286. On the other hand some respondent were
~different with the statement that Ability to be flexible in managing customers has a direct.
npact on customer satisfaction with mean~3.4286.

.4.2 Findings on technological changes as a factor affect customer satisfaction.

~nowledge of the respondents about technological changes as a factor affect customer
~tisfaction was obtained as the results in the table below indicates.

27
[able 4.4. 2: Findings on the effect of technological changes on customer satisfaction.

N Minimum Maximum Mean Std

Deviation
i-commerce has meant all business to 70 1.00 5.00 3.657 1.0479
:ompete equally and this has increased
~ustorner satisfaction
flechnological changes has led organizations 70 1.00 5.00 3.614 1.96748
o practice effective customer care services
o its customers which increases customers
atisfaction
~echnologiëal changes leads to application 70 1.00 5.00 3.600 1.20866
>f same strategies to win and increase their 0
urnover that can attract and give customer
atisfaction to customers
‘echnological changes leads to business to 70 1.00 5.00 3.171 1.99231
ook forward and increase their turn over. 4

~ood technological change management 70 1.00 5.00 1.12463

rocesses leads to inconsistence and reliable
roducts delivery which improves customers
atis faction
7alid N (listwise) _________ _________70 ___________

~ource: primary data

able 4.4,2,. the descriptive statistics indicate that the stated variables were normally distributed.
‘he findings show that 4 items had mean >3.5 while the rest had a rnean<3.5. The study used a
-likert scale, mean >3,5 indicated that the respondents agreed with the statement that E
ommerce has meant all business to compete equally and this has increased customer satisfaction
tean~3.6571, Technological changes has led organizations to practice effective customer care
ervices to its customers which increases customers satisfaction mean=3.6 143, it leads to
pplication of same strategies to win and increase their turnover that can attract and give
ustomer satisfaction to customers mean3.6000, and a good technological change management
rocesses leads to inconsistence and reliable products delivery which improves customers
atisfaction mean=3.5571. On the other hand respondents were not sure with the statement that
~echnological changes leads to business to look forward and increase their turn over with mean
3.1714.

28
1.4.3 Findings on accessibility as a factor affecting customer satisfaction
(nowledge of the respondents about accessibility as a factor affecting customer satisfaction was
)btained and the results presented as in the table below.
Fable 4.4. 3: Findings on accessibility as a factor affecting customer satisfaction.

N Minimum Maximum Mean Std

Deviation
~asy accessibility in the organizations 70 1.00 5.00 3.814 1.14579
rnproves customer satisfaction, 3

~ompany accessibility is a reflection of the 70 1.00 5.00 3.242 1.39809

‘alues towards people’s trust. 9

\.ccessibility in the organization brings the 70 1.00 5.00 3.442 1.21 149
lirect impact towards customer satisfaction. 9

~ccessibi1ity helps organization to involve in 70 1.00 - 5.00 4.242 1.93925

he activities such as design , procurement 9
nd distribution
~.ccessibility helps an organization to bring 70 2.00 5.00 3.800 1.71424
nore customers which increases their 0
atisfaction
7alid N (listwise) 70
‘ource: primary data

‘able 4.4.3, the descriptive statistics indicated that the stated variables were normally distributed.
‘he findings show that 3 items had mean >3.5 while the rest had a mean<3 .5. The study used a
-likert scale, mean >3.5 indicated that the respondents agreed with the statement that
ccessibility helps organization to involve in the activities such as design, procurement and
istribution with mean4.2429, Easy accessibility in the organizations improves customer
atisfaction with mean=3.8 143, and accessibility can helps an organization to bring more
ustomers which increases their satisfaction with mean~3.8000.

)n the other hand respondents were not sure if Accessibility in the organization can bring a
irect impact towards customer satisfaction with mean= 3.4429, Company accessibility is a
~flection of the values towards people’s trust with mean=3.2429.

29
1.4.4 Findings on the nature of the product
(nowledge from respondents about the nature of the product as a factor of customer satisfaction
vas obtained as results in the table below indicate.

Fable 4,4. 4: Findings on the nature of the product.

N Minimum Maximum Mean Std

Deviation
Ehe nature of the product increases 70 1.00 5.00 3. 1.32698
elationship between the organization and 0
he customers
>roduct quality has a strong impact on the 70 1.00 5.00 3.514 1 .08672
ustomers satisfaction 3

Ehe nature of the product increases the 70 1.00 5.00 3.3 1.42798
ehavior of the employers towards their 0
ustomers hence increasing their satisfaction
~roduct quality is measured by the 70 1.00 5.00 3.728 1.06215
erformance and durability which has a 6
[irect impact on the customer satisfaction
~he nature of the product has a direct impact 70 2.00 5.00 3.671 1.98865
n customer satisfaction. 4

laud N (listwise) 70
‘ource: primary data

~‘ab1e 4.4.4, the descriptive statistics indicate that the stated variables were normally distributed.
‘he findings show that 4 items had mean >3.5 while the rest had a mean<3.5. ~l’he study used a
-likert scale, mean >3.5 indicated that the respondents agreed with the statement that Product
uality is measured by the performance and durability which has a direct impact on the customer
atisfaction rnean=3.7286, The nature of the product has a direct impact on customer satisfaction
~iean~3.6714, product quality has a strong impact on the customers satisfaction mean=3.5143,
nd the nature of the product increases relationship between the organization and the customers
iean=3 .5000.

30
{owever some of the respondents were not sure if the nature of the product increases the
)ehavior of the employers towards their customers hence increasing their satisfaction with
nean=3.3000.

1.4.5 Findings on customer surveys as factor affecting customer satisfaction.

Jnderstanding of the respondents about surveying customers as a factor affect customer
atisfaction was obtained as the results in the table below indicates.

Cable 4.4. 5: Findings on customer surveys as factor affecting customer satisfaction.

N Minimum Maximum Mean Std

Deviation
;urveying customer is an important factor 70 1.00 5.00 3.900 1.99491
hat affect customers satisfaction 0

~urveying customers create deeper 70 1.00 5.00 3.757 1.06914

onnections to wards customers. 1

~urveying customers helps organizations’ to 70 1.00 5.00 3.700 1.13380

heck in with customers to make certain that 0
verything has gone has planned
urveying customers helps them to share 70 1.00 5.00 4.057 1.10185
rucial insights which can improve the 1
usiness and has direct impact on customer
atisfaction.
urveying Qustomers is an important factor 70 1.00 5.00 4.057 1.16576
i determining the needs of customers hence 1
~creasing customer satisfaction.
Talid N (listwise) 70
~ource: primary data

~able 4.4.5, the descriptive statistics indicate that the stated variables were normally distributed.
he findings show that all items had a mean >3 .Swhich showed that respondents were in
greement with all the statements in the table above. The study used a 5-likert scale, mean >3.5
~dicated that the respondents agreed with the statement that Surveying customers helps them to
aare crucial insights which can improve the business and has direct impact on customer
~tisfaction mean=4.057 1, Surveying customers is an important factor in determining the needs
f customers hence increasing customer satisfaction mean=4.0571,, Surveying customer is an

31
rnportant factor that affect customers satisfaction rnean=3 .9000,, Surveying customers create
leeper connections to wards customers mean3.7571,, Surveying customers helps organizations’
o check in with customers to make certain that everything has gone has planned rnean=3.7000.

I .5 Relationship between inventory management and customer satisfaction

~indings on the relationship between inventory management and customer satisfaction were
letermined by use of Pearson correlation coefficient and can be evidenced in the table below.

Cable 4.5. 1: Correlation Relationship between inventory management and customer

atisfaction
INVENTORY CUSTOMER
MANAGEMENT SATISFACTION
NVENTORY Pearson Correlation 1 •997**
vIANAGEMENT Sig. (2-tailed) .000
N 70 70
USTOMER Pearson Correlation ~997** 1
ATISFACTION Sig. (2-tailed) .000
N 70 70
~*,Correlation is significant at the 0.01 level (2-tailed).

Cable 4.5.1 above, findings reveal that there is a strong positive relationship between inventory
nanagement and customer satisfaction at Pearson correlation coefficient r~0.997**, pO.OO. And
herefore this means that if inventories are well managed customer satisfaction improves. On the
)ther hand therefore, as the inventory management retards, customer satisfaction also worsens.

32
 CHAPTER FIVE
SUMMARY DISCUSSION, CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
This chapter gives precise summary of the major findings of the study draws appropriate
conclusions as well recommendations the purpose of the study to establish relationship between
inventory management and customer satisfaction in Spear Motors Limited Kampala.

5.1 Summary of the major findings

The summary of the major findings briefly highlights on the outcome of the research objectives
as well as answering research questions.

5.1.1 Inventory management techniques

Findings from the study shows that perpetual inventory management technique is conducive in
that the inventory stock exists at only one level for sale rather than at the three levels for sale
which improves customer satisfaction this is in line with (Kulkarni 2010) who argued that
nventory checking is an important part of operation of the industry and this is only effective at
nly one level in the organization.

t was also found out that perpetual inventory management technique is a conducive technique to
mprove customer satisfaction in an organization, and also has a better responsiveness to
[emand.

~he researcher also found out that for periodic review technique, inventories are reviewed
eriodically rather than at a fixed order point this is in line with Lysons, (2000) who argued that
~e period or interval at which stock levels are reviewed will depend on the importance of stock
em, available quantity will be ordered to bring the stock level back to the maximum. This
~chnique is important in that there are greater chances of elimination of absolute items owing to
~riodic review of stock.

was also revealed that Just in time technique ensures that materials arrive Just in time before
e production starts, and eliminates the possibility of making mistakes in production process.

33
Lysons. (2000) in his book using this technique of inventory management aims at maintaining
just enough materials at right place and time to make just the right amount of a given product and
this reduces wastage of materials.

Findings of the study showed that in inventory management techniques. greatly ordering is
mtomatic which saves time and Labour (Kulkan 2010), also involves discounts which may be
~egotiated when the range of stock items are ordered from the same supplier at the same time
Lysons 2000) they are based on the cost of zero wastage (Dogra 2010), also provide a
nechanism for identifying inventory that have a significant impact in over all inventory cost,
dso greatly indicates that production planning and inventory control systems techniques are used
o manage manufacturing process(spearman 2004) research indicates that if such techniques are
)racticed the organization will greatly improve year after year as well as customer satisfaction.

.1.2 Findings on factors affecting customer satisfaction.

~indings of the study revealed that the ability to be flexible leads to employee satisfaction hence
~ustomer satisfaction. This is in line with Balunywa, (2003) who argued that Customers will feel
ositively satisfied if products or services and behaviors of the people they come into contact
vill meet ot exceed their expectations when this happens customers are likely to express their
loubt they will express this by repeated purchase and also use the word of mouth to tell their
~iends. Findings also revealed that the nature of the product has a direct impact on customer
atisfaction as well as product quality has a strong impact on customer satisfaction. This is in line
vith Balunywa, (2003) who argued that the nature of the product is one of the factor which affect
ustomer satisfaction and the product quality is measured by performance and durability, product
uality is what the customer perceives rather than what he actually he is, the behavior of the
eople they come in the contact is an important factor that affect customer satisfaction customers
rant to feel good in any transaction (Eric, 2010).

34
.1.3 Findings on the relationship between inventory management and customer
atisfaction
indings indicated that there is a strong relationship between inventory management and
ustomer satisfaction as indicated by r0.997, according to Pearson correlation table 4.5
~ierefore this means that as inventory management improves automatically customer satisfaction
nproves on the other hand as inventory management retards, customer satisfaction worsens.

.2 Conclusions
is revealed that inventory management techniques effectively considered in Spear Motors
imited Kampala with the aim of performing highly so as effectively meet customer demands at
ie right time in order to improve on their satisfaction.

is revealed that factors affecting customer satisfaction like ability to be flexible; surveying
ustomers, technological changes, nature of the product, accessibility greatly can make
ustorners feel good and improve on their levels of satisfaction.

‘lore so findings show that there is positive relationship between inventory management and
ustomer satisfaction as shown by Pearson correlation coefficient 0.997 this indicates that the
lanagement has done its best to make sure that the inventory management and customer
~tisfaction increases.

.3 Recommendations.
lanagement of Spear Motors Limited Kampala needs to ensure that inventory management
~chniques are practiced by people with trained qualification and skills. Management of Spear
lotors Limited Kampala needs to provide fringe benefits to workers in order to improve on their
ehaviors to customers.

/orkers of Spear Motors Limited Kampala to adhere courtesy ideas when handling customer
mplaints in the organization.

35
4anagemeiit of Spear Motors Limited Kampala needs to provide accurate services to its
ustomers.

.4 Areas for further research.

~part from techniques what are the methods for inventory management, further research should
cus on;
1. Product quality and customer satisfaction.
2. Further research need to focus on inventory management and value for money.
3. Customer care services and customer satisfaction

36
 REFERENCES
~lexander K. and Thorsten, H.T. (2010) The impact of Customer Satisfaction and Relationshz~
Quality on Customer Retention: A Critical Reassessment and Model Development,
Psychology & Marketing

dien charlotte (2001) journal commercial buying, Springer publishers Netherlands.

~nderson, E.W, Fornell, C, and Mazvancheryl, S.K. (2004), Customer Satisfi~tction and
Shareholder Value, Journal of Marketing. Ashraf (2010) Elements of marketing.

~ierderman (2004) Principles ofmanufacturing and materials management 3rd edition.

~ook (2002) purchasing and materials management.

rains William (2001) inventoly management planning and control modelfinances journal.

~onald (2009) K The ~ffect of customer satisfaction and relationship quality on customer
retention. Eric Jaques (2009) customer relationship management.

ssex David (2007) inventory management and inventory related costs.

~odson .K. (2002) services and consumption interrelationship.

utafsson, A. Johnson, M.D. and Roos, I (2005), the Effects of Customer Satisfaction,
Relationshz~ Commitment Dimensions, and Triggers on Customer Retention, Journal of
Marketing.

orward (2010) Importance ofworking capital.

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lullic T. (2000) Customer satisJ~ction in Retail Banking Service Industries Journal.

r~ternational, consortium (2005) customers and business Habit performance.

rving K. (2001) Management ofbusiness performance in Uganda Fountain.

• Waswa Balunywa, (2003). Business Management 4th Edition.

on Scheifeder, (2001) Superior customer through effective inventory management Jon@

effective.com.

amukama Nixon A. (2006) cost and management accounting 1st edition. Kaplan M, and
Nation K. (2001) Consumer satisfaction and service consumption.

asekende Martin. (2010) Business performance in Uganda. Kean (2001). Customer

relationship and Management.

inney, M. Xia, L. Monroe, L.B (2007) Consumers’ perceptions of the /~iirness of price-
matching refund policies, Journal of Retailing.

ysons Kenneth (2000) publishing and supply chain management 5th jlnancial time titman
publishing Nair (1998) purchasing and inventory Management.

lick and Hague (2007) customer satisfaction and business survival

Fyamuyonga David, (2001) Inventory Management and Inventory related costs.

liver, R.L. (1999), Consumer Loyalty, the Journal of Marketing, Fundamental Issues and
Directions for Marketing.

38
>ondy (2005) Journal of business management

~e11y R. (2000) Value Added Customer services contemporary book incorporation. Scholasticus
(2010) practice ofprocurement 1st edition.

Vaitson J. (2004) (2004) Customer services quality Greek Cypriot Banking Industry.

VJ Hopp &ML Spearman (2004) material management and stock control. Young J Pharmacists
(2010) operations management producing goods and services

39
 APPENDICES
QUESTIONNAIRE
ECTION A
)ear respondents. I am a student of Kampala international University under taking a study on
nventory management and customer scarification. I kindly request you to sacrifice some time for me
md answer the following questions in the questionnaires, The information will be treated with due
~onfidentiaIity and for the academic purpose BlO DATA OF THE RESPONSIVENESS (Tick as
ippropriate)
Gander
v1a~ Female

~. Age range
~5-3Oyrs 31-34yrs 35-4Oyrs 41-44yrs 45-SOyrs 51 & above

3. Level of education

4. Marital status
Single Married Separated Widows

5. How long have you served with Spear Motors Limited Kampala
6-month -2 yrs 3-5 yrs 6-8yrs 9-Above

40
 SECTION B

~‘echniques of inventory management.

Ehe key

Statement
Perpetual inventory management tech,,, nique
Perpetual inventory management technique is a conducive
technique to improve customer satisfaction in an organization
3 Perpetual inventory management technique its account is
balanced at the end of the day which yield positive inventory and
this improves customers satisfaction in the organization
2 Perpetual technique is also conducive in that the inventory! stock
exists at only one level for sale rather than at only three levels for
sale which improves customers satisfaction
-~

D Perpetual inventory management technique has a better

responsiveness to demand.
B Perpetual inventory management technique ordering is automatic
which saves time and labour.
-~
2 Periothc review inv~~to~ management technique
A Companies use periodic review to measure and gauge the level of
customer satisfaction
B ~iod ic review technique inventories aie reviewed period ica I ly
C Periodic review technique there is a greater chance of elimination
of absolute stock.
In periodic review technique large quantity discounts may be
negotiated when arrange of stock items are ordered from the same
supplier at the same time
Periodic review technique increases the chances of enjoying
economies of scale especial ly when depending onop~~iler
3 Just in time inventory management technique
A Just in time should be taken into consideration in order to retain
blab levels of customers satisfaction
Just in the time inventory management technique is based on cost
of zero wasta&e ________

Just in time technique ensures that materials arrive Just in time

before the production starts.
Just in tune eliminate the possibility of making mistakes in
production process
Just in the technique aims maintaining just enough materials at
right place and time to make just the i~ght amount of a given

41
 ABC Analysis inventory man g~ment technique.
ABC Analysis inventory management technique provide
mechanism for identifying inventory that will have significant
Impact in overall inventory cost
ABC techniques can be used to arrange goods according to their
~ and profitability
ABC Analysis inventory management techniques helps to save
time fasten planning in an organization which has impact on
satisfaction
ABC Analysis inventory management improve stores lay out and
improve management of store which has an effect on customer
at t
Economic order quality inventory management technique
~(EOQ)
EOQ minimize the total inventory holding cost and orderino costs
EOQ is applied where the demand for the products is constant for
over the years
EOQ assume that the purchase price of an item is constant that no
discount is available which affects customer satisfaction. _____

Economic order quantity time is fixed and ordering cost is

— constant which has direct impact on customer satisfaction _____

6 Material requirementp~~(MRPL__
A In production planning and inventory control system MRP is used
tomanagemanufacturigpr~c~5
MRP maintains the lowest level of inventors’ which has an impact
on customers satisfaction
MRP is computerized which aims at holding Zero stock of an
item unless its required for current production
MRP ensures planning manufacturing activities delivery
schedules and purchasing activities
Ensures materials are available for production and product are
delivered to customers _________________ J

42
 SECTION C
Factors affect customer satisfaction

Statement SA A NS D SD
Ability to be flexible
~ Ability to be flexible in managing customers has a direct impact on
customer satisfaction
Ability to be flexible is linked to good quality products which has
a direct impact on customer satisfaction
Ability to change in the levels of output in response changes in
demand increase customer satisfaction
) Ability to be flexible leads to employee satisfaction hence
customer satisfaction.
Ability to be flexible is an important factor which increases
demand and supply of stock and customer satisfaction.
Technological changes
E-commerce has meant all business compete Equally and this has
increased customer satisfaction
Technological changes affects business hence customer
satisfaction
Technological changes has led organizations to practice effective
customer care services to its customers which increases customers
satisfaction
Technological changes leads to application of same strategies to
win and increase their turnover that can attract and give customer
satisfaction to customers
Technological changes leads to business to look forward and
increase their turn over.
‘ Good technological change management processes leads to
inconsistence and reliable products delivery which improves
customers satisfaction
Accessibility
~ Easy accessibility in the organizations improves customer
satisfaction.
Company accessibility is a reflection of the values towards
people’s trust.
Accessibility in the organization brings the direct impact towards
customer satisfaction.
Accessibility helps organization to involve in the activities such as
design procurement and distribution
,

Accessibility helps an organization to bring more customers which

increases their satisfaction.
Nature of the product
~ The nature of. the product increases relationship between the
organization and the customers
Product quality has a strong impact oh the customers satisfaction

43
C T he nature of the product increases the behavior of the employers
towards their customers hence increasing their satisfaction
0 Product quality is measured by the performance and durability
which has a direct impact on the customer satisfaction
~ The nature of the product has a direct impact on customer
satisfaction.
Surveying customers
4~ Surveying customer is an important factor that affect customers
satisfaction
B Surveying customers create deeper connections to wards
customers.
C Surveying customers helps organizations’ to check in with
customers to make certain that everything has gone has planned
D Surveying customers helps them to share crucial insights which
can improve the business and has direct impact on
customer satisfaction.
Surveying customers is an important factor in determining the
needs of customers hence increasing customer satisfaction.

44
 SECTION D
Inventory management and customer satisfaction
Statement ~ i5~ SD
Customer satisfaction depends on inventory management.
Customer satisfaction is measured according to customer feedback
information.
Good inventory management results into job satisfaction and
customer satisfaction.
Good inventory management techniques results into good quality
products which leads to customer satisfaction.
The organization inventory management techniques affect the
organization positively.
Inventory management techniques are very important in marketing
an organization services and customer satisfaction.
Inventory management techniques of an organization improve
every time in order to maintain customer satisfaction.
Inventory management techniques leads to flexibility which
increases on the level of customer satisfaction in the organization.
Inventory management techniques increase the level of demand
and supply within an organization which increases customer
satisfaction.

45