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The impact of Lean Inventory Management Practices on Firm Performance: A Study of Selected Oil and Gas Companies in Rivers State, Nigeria

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  • Kenneth Ugochukwu NNADI

    (Michael Okpara University of Agriculture Umudike, Nigeria)

  • Augustine Egwu NDU OKO

    (Michael Okpara University of Agriculture Umudike, Nigeria)

Abstract

This study examined the effect of lean inventory strategies on firm performance in the oil and gas industry in Nigeria using a regression approach. Lean inventory was measured using two dimensions; namely, just in time and total quality management, while firm performance was measured in terms of productivity and delivery performance. The study further examined the moderating effect of organizational support on lean inventory practices and firm performance. The sample comprises 96 senior employees from 10 selected oil and gas companies in Rivers State, with a 79% response rate. The employees were purposely selected from three functional departments: production, human resource and marketing. All variables were measured on an interval scale using Likert type questions with five ordered options. The study found that that both just in time and total quality management have positive and highly significant effect on both productivity and delivery performance. Both lean inventory strategies significantly account for approximately 72% and 67% of the variance of firm productivity and delivery performance, respectively. However, for each performance measure, the magnitude of the effect of just in time is much higher than that of total quality management. The study established the fact that organizational support has a positive moderating influence on the relationship between inventory leanness and firm performance. Based on these findings, the study recommends that oil and gas companies should support the use of an integrated lean inventory approach that combines both just in time and total quality management as a way of improving productivity and meeting corporate delivery targets. However, more emphasis should be placed on just in time strategy.

Suggested Citation

  • Kenneth Ugochukwu NNADI & Augustine Egwu NDU OKO, 2021. "The impact of Lean Inventory Management Practices on Firm Performance: A Study of Selected Oil and Gas Companies in Rivers State, Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(3), pages 123-135, March.
    • Handle: RePEc:bjc:journl:v:8:y:2021:i:3:p:123-135
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    References listed on IDEAS

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    1. Isaac Elking & John-Patrick Paraskevas & Curtis Grimm & Thomas Corsi & Adams Steven, 2017. "Financial Dependence, Lean Inventory Strategy, and Firm Performance," Journal of Supply Chain Management, Institute for Supply Management, vol. 53(2), pages 22-38, April.
    2. Thomas C. Powell, 1995. "Total quality management as competitive advantage: A review and empirical study," Strategic Management Journal, Wiley Blackwell, vol. 16(1), pages 15-37.
    3. Callen, Jeffrey L. & Fader, Chris & Krinsky, Itzhak, 2000. "Just-in-time: A cross-sectional plant analysis," International Journal of Production Economics, Elsevier, vol. 63(3), pages 277-301, January.
    4. Chavez, Roberto & Yu, Wantao & Jacobs, Mark & Fynes, Brian & Wiengarten, Frank & Lecuna, Antonio, 2015. "Internal lean practices and performance: The role of technological turbulence," International Journal of Production Economics, Elsevier, vol. 160(C), pages 157-171.
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