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A large majority of organizations worldwide commit large amounts of funds to
inventory management which constitutes most significant part of their current assets.
The organizations strive, through their departments of - purchasing, production, sales
and finance, to manage inventories efficiently and effectively so as to avoid
unnecessary tying of capital. The aim of inventory management is to minimize costs
of ordering, carrying and not carrying sufficient inventory. Poor inventory effects
include - remarkable differences between stock records and physical stock,
inadequate records and recording, availability of obsolete and obsolescence stores,
greater complaints from customers due to unfulfilled orders, disorganized stores,
damaged stocks and loss of financial resources. This study assessed the influence of
Inventory Management Practices on Organizational Financial at the National
Microfinance Bank Headquarters Dar es Salaam.
The study conducted a survey of the National Microfinance Bank at the NMB
Headquarters. The questionnaire targeted a selected sample of the NMB staff.
Pursuant to that, the study strived to answer three questions – i) What are the factors
that affect inventory management practices in organization?; ii) What is the effect of
inventory management practices on return on equity?; and iii) What is the effect of
inventory management practices on return on sales?
The study found out that, among crucial factors affecting inventory management
practices in NMB were - skills and knowledge among staff; involvement of
management in procurement planning; and existence of procurement policies which
are adhered to by staff in the implementation of inventory management processes.
The study also revealed corresponding growth in sales and profits in 2013 which
resulted in constant growth of business with big value generated by NMB through its
ROE and ROS. The results have led to shareholders earning TZS 34 billion in form
of dividends while GoT received TZS 79.6 billion as income taxes, PAYE, SDL
etc; NMB paid staff salaries and emoluments at TZS 99.7 billion; and spent TZS
1.05 billion in sponsorships, Public Relations donations etc. to other stakeholders and
the public. |
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