Effect of Raw Material Inventory on Operational Performance in An Emerging Economy: Insight from The Nigerian Manufacturing Sector

Abstract

Inventory management in organizations comes with severe challenges, especially in emerging markets. The study examines the effect of the difficulties experienced in raw material management on quality, speed and flexibility, dependability, and cost in the Nigerian Manufacturing sector. This study empirically examines this relationship in a contemporary mixed methodological approach adopting survey and semi-structured interviews. Survey questionnaires were distributed to 703 inventory and supply chain managers in 22 manufacturing firms in Nigeria, while the interview was conducted for 25 managers from 9 manufacturing firms in Nigeria. The crystal-clear finding is that poor inventory management practices negatively affect the quality, speed, and flexibility of operations in Nigerian manufacturing. This contrasts with a second finding that dependability and cost are not statistically significant. We also discovered that difficulties manufacturing firms in emerging markets experience in managing their raw materials arise from government policies, high exchange rates, bureaucracy in importation and port Issues, inflation, infrastructural challenge, logistics and transportation challenges, poor management decisions, regulatory framework, and unstable exchange rate. In conclusion, our study highlights that inefficient raw material management severely affects the manufacturing firm's overall performance.