Moderating Effect of Inventory Audits on the Relationship between Procurement Management Practices and Financial Performance of Listed Manufacturing Firms in Kenya

Abstract

The field of supply chain management has over the years experienced tremendous and steady growth not only internally within the firms but also across the globe. This has led to the introduction of procurement function which has become a game changer. As a result, this has made organization to remain strategic in how they operate and at the same time becoming competitive in the ever-dynamic business environment. In line with the paradigm shift and emergence of the growing economy, firms particularly in manufacturing have continued to play a very vital role. In order to achieve the big four agenda by the Kenya government there has been a high level of engagement between the policy makers and the manufactures to streamline procurement activities to reduce loss in the present and future. The specific objective of the study was to establish the moderating effect of inventory audits on the relationship between procurement management practices and financial performance of listed manufacturing firms in Kenya, This study was guided on the transactional cost theory. This study utilized descriptive research due to its ability to explore both single and multiple variable at the same time. The unit of analysis of this study were all listed manufacturing firms in Kenya. The unit of observation of the study were employees drawn from the 25 listed manufacturing firms in Nairobi Securities Exchange (NSE). Respondents in the specific firms were selected using proportionate selection method based on stratified random sampling technique. Data was collected with self-administered questionnaire and a total response rate of 384(95%) respondents were returned for analysis. Multiple regression model and analysis of variance were used for data analysis with the help of the statistical package for social science (SPSS) version 25. Data was analyzed using descriptive and inferential techniques and presented in tables, figures and models. The finding of the study revealed a positive relationship among the variables that is the independent variable (procurement management Practices), intervening variable (information Communication Technology), moderating variable (inventory Audit on the dependent variable (Financial Performance). The diagnostic test conducted further reveled the normality in distribution of the values of the variables with the heteroscedasticity and multicollinearity indicating a strong correlation among the variables. The study recommended that manufacturers needed to embrace successful implementation of procurement practices into their operation and constantly performing inventory audit to increase their financial performance. The study also reveal other areas in which academicians and future researchers need to explore in the manufacturing industry and the procurement management practices.

Keywords: Inventory audits, procurement management practices, financial performance, listed manufacturing firms.

DOI: 10.7176/EJBM/17-7-05

Publication date:August 31^st 2025