THE INVENTORY MANAGEMENT PRACTICES AND ORGANIZATIONAL EFFICIENCY. A CASE: IBANDA DISTRICT LOCAL GOVERNMENT TWINAMATSIKO GERALD 12/BSU/BBA/226 A RESEARCH REPORT SUBMITTED TO THE DEPARTMENT OF BUSINESS STUDIES AND IN PARTIAL FULFILMENT FORTHE AWARD OF A BACHELORS DEGREE OF BUSINESS ADMINISTRATION OF BISHOP STUART UNIVERSITY MAY, 2015  DECLARATION I TWINAMATSIKO GERALD, the undersigned, hereby declare that the work contained in this research report is my own original work and that has not previously in its entirety or in part submitted at any university for the award of degree or publication. Signature ……………………………………Date ………………………………………… TWINAMATSIKO GERALD 12/BSU/BBA/226 (Student) APPROVAL This is to certify that this research report has been under my supervision and now ready for submission with my approval Signature…………………………………… Date………………………………………. SUPERVISOR: MR.NAGAABA NICKSON DEDICATION The fruits from this research report are dedicated beloved parents Mr. Vitali Byakatonda and Mrs. Mirembe Deodita and entire family members for their moral and financial support through out my academic career. God reward you abundantly. ACKNOWLEDGEMENT First and foremost, I would like extend my sincere appreciation to my supervisor; Mr.Nagaaba Nickson For his patience, guidance and the precious time he spared supervising me until the completion of this report are all acknowledged with profound gratitude Second, I sincerely thank beloved parents Mr. Vitali Byakatonda and Mrs. Mirembe Deodita who tirelessly supported me financially, morally, spiritually and for the constant encouragement bearing the pain of staying alone whenever I am away studying. Also thank Director Administrator of Alliance Vocational school Mr. Atuhereze Elly, Nuwagaba Arthur finance manager of Alliance Vocational school again for moral support and initiative to tell me not to fumble but to start and move and make rest would come by. Also my loving wife Ms.Atuhaire Adrine who convince me that for a determined and willing heart, nothing is impossible. It is true; the success of this report rests on such encouragement. Am very grateful to the lecturers, classmates of Bishop Stuart University without whom data collection and the entire research would have been difficult. More thanks go to my sisters and brothers I also extend my gratitude to my parents, my family members and my friends for their moral and financial support in enabling me to complete this research keep that spirit, may God reward you abundantly. In a special way, I thank my friends especially my treasure for being there for me all the time I needed support and care. Lastly, am grateful to God for the inspiration. Strength, vision, wisdom and understanding that let me carry out this research successfully. Iam forever indebted to him. TABLE OF CONTENTS LIST OF TABLES Table 4.1: Gender of respondents 39 Table 4.2: Age of respondents 39 Table 4.3: Marital status of the respondents 40 Table 4.4 : Academic background of respondents 41 Table 4.5: Departments of the respondents 42 Table4. 6 : Inventory management practices used by Ibanda District local Government 43 Table 4.7: Extent has inventory management influence organization 45 Table 4.8: The benefits of inventory management 46 Table 4. 9: Techniques of stores management used at Ibanda District local Government 47 Table 4.10: Showing challenges faced by the Ibanda District local Government in managing inventories 49 Table 4.11: Others challenges faced by Ibanda District local Government in inventory management practices for the efficiency of employees 50 Table 4.12: Indicators of organization efficiency in local government 51 Table 4.13: Hypothesis Testing Criterion 52 Table 4.14: Hypothesis testing Model Summary 53 Table 4.17: Hypothesis Testing Criterion 53 Table 4.18: Hypothesis Testing Coefficients Analysis 53 LIST OF FIGURES Figure 4.1: Types of stock held 42 Figure 4.2: Graph showing the response on documents used 42 LIST OF ACRONYMS ANOVA Analysis of Variance B Beta EOQ Economic Order Quantity F Frequency FIFO First in First out HRMs Human Resource Managers IDLG Ibanda District local Government JIT Just In Time LIFO Last in First out NGOs Non-Governmental Organizations R Relationship Sig. Significance Std Standard T Time US United States WIP work in progress ABSTRACT The research study focused on the inventory management and organization efficiency in Ibanda District local Government t. The study was guided by the following objectives; to analyze the inventory management practices used by Ibanda District local Government, to find out the methods used in performance measurement and its contributions to organization’s efficiency and to find the importance relationship between inventory management and organization’s efficiency to Ibanda District local Government. The study used a descriptive survey method. By use of simple random sampling, 100 respondents from the departments of store, purchasing, top management and others were selected from the area of study. From each department respective officers took part in the study. In all a total of 100 respondents took part in this research study. The study used closed ended questionnaires to collect data. The study reveals that Ibanda District local Government holds stock that is used to satisfy current and future needs of the people of Ibanda District local Government. The district carries out monthly stock taking of items in stores and stock is inspected for quality and right specifications. The methods that are used by Ibanda District local Government to manage inventory are stock valuation where by the system used FIFO to record the value of the stock that is held at a particular period for accountability purposes and writing of final accounts to be submitted to the Ministry of Health . The organization has a strong data centre for its stock such as receipts, invoices which help in keeping record of all the relevant prices so as to carry out a stock valuation. Basing on the findings, Inventory management helps organizations to cut down costs incurred by an organization. It can therefore be concluded that inventory management practices are related to performance of an organization, corporation or business as regards service delivery From the findings, it was evident that inventory management leads to efficiency and effectiveness by avoiding over stocking and under stocking. To ensure this stock taking is carried out to determine the stock levels and hence determine the organizations worth. It also helps to determine the balance of stock and check for any variances and make reconciliations to make sure that the physical stock corresponds with what is within the records. This helps management to detect for any variations and consider possible solutions to solving these problems. CHAPTER ONE Introduction 1.1 Background of the Study Researchers and practitioners continue to face the age-old challenges associated with inventory level setting and replenishment. However, the realities of the environment in which these challenges must be met, is evolving. The popular formula, which the competitive battleground is shifting from organization vs. organization to supply chains vs. supply chain, is now perceived to be a reality (Srinivasan, Srinivasan, & Choi, 2010). Effective inventory management has become a prerequisite to gaining and retaining a competitive advantage and organizational performance (Moberg, Cutler, Gross, & Speh, 2012). As researchers and practitioners move from the traditional view of enterprises as separate, independent entities towards more collaborative models (Singh, 2005), the management of inventory increases in importance. The planning and control of inventories and related activities are vital to managing a supply chain (Jones & Riley, 1985). This is especially true for service-based supply chains. Services have become increasingly important as the driving force in the decentralized system of local governance (Ellram, Tate, & Billington, 2004). Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting (Wilberforce, 2007). The aim of inventory management is to hold inventories at the lowest possible cost, given the objectives to ensure uninterrupted supplies for ongoing operations. When making decision on inventory, management has to find a compromise between the different cost components, such as the costs of supplying inventory, inventory-holding costs and costs resulting from insufficient inventories ( Hugo, Baden horst- Weiss and Van Rooyen 2002:169). According to Wild (2002:4), inventory control is the activity which organize the availability of items to the customers. It coordinates the purchasing, manufacturing and distribution functions to meet the marketing needs. This role includes the supply of current sales items, new products, consumables; spare parts, obsolescent items and all other supplies. Inventory enables a company to support the customer services delivery, logistic or manufacturing activities in situations where purchasing or manufacturing is too protracted, or because quantities can not be provided without stocks. With increasing need for effective operations management, organizations now requires that costs and cost centers be well managed and controlled. Consequently stores as a cost centers must be well managed. In practice firms spend an inordinate amount of resources i.e. time and money managing and directing their suppliers to ensure that critical inventory/ stock levels are maintained and the vital flow of product needs for operations continue. Ibanda District local Government stores are set up to provide safe custody of Government properties and goods. Given the use of public funds, Local Governments should ensure that there are proper stock control systems and adequate measures to prevent abuse, unauthorized disposal of serviceable stores for personal gain, misappropriation of the assets and theft (MLG, 2010). Due to unpredicted demand in market trends, Ibanda District Local Government holds stock to enable the District meet its daily needs and in so doing, like any other Organization, it meets two conflicting needs: whether to maintain low or high levels of stock. However, both situations are undesirable because excessive stock levels leads to increased holding costs, which leaves the Government funds idle and hence reduced profitability. On the other hand, low levels of stock leads to stock outs and their related costs such as loss of client’ good will and disruption in the operation schedules, which ultimately would lead to poor organization performance. It’s therefore important for the district stores to manage inventory efficiently and effectively so as to improve on the organization’s performance. The objective of this dissertation research effort is to investigate the evolving role of inventory management in today’s local government environment. 1.2 Statement of the Problem Traditional views of inventory management tend to focus on inventory at the item level and to be reactive in nature, often seeking to optimize inventory performance at a single location at the expense of the overall system (Closs, 1989). Despite this growth in value and importance of more rigorous inventory techniques, many organizations continue to rely on simple, Use fixed order point system/two bin system; periodic review system; economic order quantity model; ABC Inventory Control Model, item based approaches (Thonemann, Brown, & Hausman, 2002). Under these traditional approaches to inventory management, inventory levels for an item are determined by simple formulas that balance inventory holding, ordering, and stock out costs (Thonemann et al., 2002). According to Toomey (2000), the ultimate aim of inventory is to serve the general public. As explained by Viale (1991) inventory is a very expensive asset in an organization; however, this expensive asset can be replaced by inventory information which is less expensive. Some of the problems facing Local government today are the ability to provide quality services to the general public whose root cause lies in poor inventory management (Manjrekar, Bhonsale & Kamath, 2008). The main challenge today among of Local government in Uganda is the need to enhance efficiency while at the same time achieving effectiveness (MLG, 2010). However, Local government in Uganda have been accused of poor inventory management techniques and this has greatly affected their ability to satisfy their customers (Sheila, 2010; Mutua, 2010). The study therefore sought to carryout an investigation on the role of inventory management on organizational efficiency among the Local government in Uganda using a case of Ibanda District Local Government. 1.3 Purpose of the study The purpose of the study was to investigate the relationship between inventory management practices and organizational efficiency in Ibanda District local Government. 1.4 Objectives of the study To analyze the inventory management practices used by Ibanda District local Government. To find out the methods used in performance measurement and its contributions to organization’s efficiency. To find the importance relationship between inventory management and organization’s efficiency to Ibanda District local Government 1.5 Research Questions What are the inventory management practices used by Ibanda District local Government? What are the methods used in performance measurement and its contributions to organization’s efficiency in the Ibanda District local Government? What are the relationships between inventory management and organization efficiency? 1.6 The Scope of the Study. 1.6.1 Content scope The study will focus inventory management practices used by Ibanda District Local Government and their effectiveness, importance of inventory management practices on the performance local governments, challenges faced in applying inventory management practices by local governments. This provided reliable for the study. 1.6.2 Geographical scope The study was conducted from Ibanda District Local Government headquarters, Ibanda district in western Uganda. Ibanda district is located in South western Uganda. The district borders with Mbarara district to the south, Kiruhura to the east, Bushenyi to the west, and Kamwenge to the north. The district covers an estimated area of 967 square kms. Ibanda district is in the southwestern highlands of Uganda, at an altitude of 1,800 meters above sea level. The area was selected for the study because for some time, cases of poor measures of inventory management and services delivery were of interests. 1.6.3 Time scope The period under study covered using figures 2010 to 2015. This period was chosen because increasing stock costs were experienced especially for drugs, which expired in stores and thus the District set up efforts to control them. 1.7 The Significance of the study The study was very significant to the different stakeholders that include; management, the Researcher, Suppliers, Consumers and Government organizations in the following ways; The study was very significant to the different stakeholders that includes; District management, consumers of the district services and government organizations in that the study will help the district management to develop an organized thinking on the importance of inventory management practices in an organization. The study in the process seeks to uncover many potentially neglected areas in inventory management literature. For instance, the study can also be seen as an answer to the call for research seeking more investigation into the relationship of inventory management with supply management concepts. The study is of paramount importance to academicians and practitioners as the proposed framework is expected to uncover many neglected relationships that are of interest to managers in the local government. In addition, specific patterns of inventory management practices would also be revealed which would further encourage district managements to implement this technique and possibly improve their organization’s performances. The study seeks to systematically address this issue. The Researcher may enable to understand in details inventory management practices and relate the findings to the real situation. Other stakeholders who need knowledge about stock control can use the Research as a reference. CHAPTER TWO LITERATURE REVIEW 2.1 Inventory Management The word “inventory” has been defined in many ways, as indicated in the literature. Three definitions have been chosen seem to be more appropriate to the topic developed in this dissertation. “Inventories are stockpiles of raw materials, suppliers, components, work in process, and finished goods that appear at numerous points throughout a firm’s production and logistics channel”.(Ballou, 2004) According to Chase, Jacobs and Aquilano (2004), inventory is the stock of any item or resource used in an organization. An inventory system is the set of polices and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be. Finally, Pycraft et al (2000) defined inventory or stock as “the stored accumulation of material resources in transformation system. So a manufacturing company will hold stocks of materials, a tax office will hold stocks of information and a theme park will hold stocks of customer ( when it is customers which are being processed we normally refers to the stocks of them as a queues”). Inventory management involves providing the required inventory levels that will sustain the organization’s daily operations at minimum costs. This covers issues like determining the level of stock to order, when to order, establishing receipt and inspection procedures and providing proper storage facilities. Without proper stock control procedures in place, firms are likely to face two undesirable inventory levels. That is to say excessive/ high levels of inventory or inadequate/ low levels of inventory.(Dickerson 1995) 2.1.1 Types of Inventory Inventory varies in various organizations but the most common stock is stock of raw materials, work in progress, finished goods and inventory in supplies such as stationery and fuel. According to Kakuku (2007), raw materials inventories are those inputs from suppliers that have not yet entered the manufacturing or transformation process. Those inventories are essential in helping a firm/ organization to overcome problems faced by purchasing departments. Suppliers often fail to deliver expected inputs to their internal inefficiencies. The business itself may fail to acquire inputs in time because its procurement function is sluggish and inefficient. Some times, the problems may be due to environmental factors well beyond the suppliers and the business itself. If there were no inventories of raw materials, any disruption in supply would be automatically passed on to operations functions. Operations would stall, as there would be no inputs to transform. According to Pandey (2002), work in progress (WIP) is products that have been partially finished. These are semi finished products at various stages of production and these inventories provide a link between input and output stages. They represent products that need more work before they become finished products. Finished goods are completed products, which are ready for sale. They link production to marketing or consumption for unanticipated failure in production and also meet unpredictable variables in customer demand (Pandey, 2002). Finished goods inventory allows the firm flexibility in its production scheduling and in its marketing.(Van Horne 2002) According to stock and Lambert (2001), said that inventories can be categorized into six distinct forms that are: Cycle stock is inventory that results from the replenishment process and is required in order to meet demand under conditions of certainty, that is, when the firm can predict demand and replenishment times (lead times) almost perfectly: In-transit inventories. In-transit are items that are en route from one location to another. They may be considered part of cycle stock even through they are not available for sale and /or shipment until after they arrive at the destination: Speculation stock. Speculation stock is inventory held for reasons other that satisfying current demand. For example, materials may be purchased in volumes larger than necessary in order to receive quantity discounts, because of a forecasted price increase or materials shortage, or to protect against the possibility of a strike: Seasonal stock. Seasonal stock is a from of speculative stock that involves the accumulated of inventory before a season begins in order to maintain a stable labour force and stable production runs or, in the case of agricultural products, inventory accumulated as the result of a growing season that limits availability throughout the year: Dead stock is inventory that no one wants, at least immediately. The question is why any organization would incur the costs associated with holding these items rather than simply disposing of them. One reason might be that management expects demand to resume at some point in the future. Alternatively, it may cost more to get rid of an item that it does to keep it. But the most compelling reason for maintaining these goods is customer service for good service delivery toward an organization. Perhaps an important buyer has an occasional need for some of these items, so management keeps them on hand as a goodwill gesture. 2.1.2 Inventory Management Practices In order to achieve the objectives of minimizing stock related costs, firms should maintain adequate levels of stock in order to enable smooth business operations. A number of practices have therefore been advanced to handle these costs. Kalyango (2001) highlights the following practices that minimize stock related costs; Inventory Planning and Scheduling: This is how units of stock are required by an organization in a given period to enable smooth business operations. A good stock plan set in advance will enable planners to set procurement/ purchase dates and quantities that are consistent with the plan to avoid disruptions due to inventory shortages .(Dilworth 1992) Inventory Recording: Accurate and up-to- date stores records are keys to effective stores management. The basic procedures include counting and recording promptly after receipt or production and whenever there is a store transaction, issue of stores should be properly authorized and show details such as code number, quantity of the transaction and the voucher reference. (Muller, 2003). Inventory recording is undertaken by organizations to reduce the errors of stock management and to ensure accurate and reliable stock records. It involves spot checks/ surprise checks, stock taking, which is the physical counting and measuring of quantity of each item in stock and recording the results .(Brooks et al 2007) Inventory Valuation: It is also a stock control technique, which refers to the establishment of the value of stock and therefore its implication on the profits. Lacey (1994) identified the following methods of stock valuation; First in First out (FIFO), Last in First out LIFO) and the average price method. First in First out (FIFO) is a method whereby prices of goods are determined by depending on the oldest stock until all the units are finished and then the second oldest is used to determine the prices and the trend continues. According to (Kamukama, 2006) FIFO method follows the principle that materials received first are issued first. After the first lot or batch of materials purchased is exhausted, the next lot is taken up for supply. The inventory is priced at the earliest costs. This means that the unused raw materials (closing stock) are constituted by the goods which were not recently purchased. Physical Inventory Counts: The inventory value should be provided to UIS Accounting Office within one week after the fiscal year end. Adjustments to correct discrepancies must be adequately documented by management. (Piasecki, 2003) Inventory control: Inventory control is the activity which organizes the availability of items to the customers of the organization. It co-ordinates the purchasing, manufacturing and distribution functions to meet the marketing needs. This role includes the supply of current sales items, new products, consumables, spare parts, obsolescent items and all others supplies (wild, 2002) Lysons and Gillingham (2003) write that inventory/stock control refers to the techniques used to ensure that stocks of raw materials, WIP and finished goods are kept at levels which provide maximum service levels at minimum costs. An effective Inventory Control System should; Minimize time and carrying costs, Maintain sufficient stock for smooth production, sales operation and on sufficient customer service. And control investment in inventories or keep an optimum level (Pandey, 2002). Different business concerns may apply different inventory practices to meet specific requirements and circumstances to help in containing the costs associated with inventory. ABC Analysis: This has already been covered before, but is also regarded as a material control tool. It’s considered as the best approach and based on the principle of selective control. The maxim is “put your effort where the results are maximized. (Kamukama, 2006) ABC analysis: Brown (Bloomberg, Lemay and Hanna 2002) notes that the ABC analysis categorizes products based on importance. Importance may come from cash flows, lead time, stock outs, sales volume, or profitability. Once the ranking factors is chosen, break points are chosen for classes A, B, C and soon. The 80-20 concept is particularly useful in distribution planning when the products are grouped or classified by their sales activity. The top 20 percent might be called A times, the next 30 percent B items, and the remainder C items. Each category of items could be distributed differently. For example, A items might receive wide geographic distribution through many warehouses with high levels of stock availability , whereas C items might be distributed from a single, central stocking point(e.g. a plant) with lower total stocking level than for the A items. B items would have an intermediate distribution strategy where few regional warehouses are used .(Ballou 2004) 2.2 Inventory management practices used by Ibanda District Local Government and their effectiveness Dilworth (1992) contends that inventory planning and scheduling shows how units of stock are required by an organization in a given period to enable smooth business operations. He elaborates that a good stock plan set in advance will enable planners to set procurement/purchase dates and quantities that are consistent with the plan to avoid disruptions due to inventory shortages. Muller (2003) explicitly notes that accurate and up-to- date stores records are keys to effective stores management. The basic procedures include counting and recording promptly after receipt or production and whenever there is a store transaction, issue of stores should be properly authorized and show details such as code number, quantity of the transaction and the voucher reference It is undertaken by organizations to reduce the errors of stock management and to ensure accurate and reliable stock records. It involves spot checks/surprise checks, stock taking, which is the physical counting, and measuring of quantity of each item in stock and recording the results. (Brooks et al 2007) Stores management is concerned with ensuring that all the activities involved in storekeeping and stock control are carried out efficiently and economically by those employed in the Store. In many cases it will also encompass the recruitment, selection, induction and the training of stores personnel, and much more. A store is an area set aside into which all the items and materials required for production and/or for sale/distribution are received, where they are housed for safekeeping, and from which they will be issued as required. (Muller, 2003) Carry (1994) equally illuminates that having a stores management system means that the store is an open access area. Otherwise, people would just help themselves and there would be no control over the amount of stock taken or used. It’s cost of buying and replacing stock would be even worse if there was no control under the things on impulse, use of some items, not bothering with the others and this would add to the cost. Needham (1995) argues that one of the main purposes of an organization is to produce and sell goods efficiently and this could be through a good system of stores management. We need to have some way of measuring what it costs to make sales. If their costs can be reduced in proportion to the sales that are made, the organization can be said to be becoming more efficient. Dickerson (1995) explains the critical role of stores management is to provide the level of stock that will sustain operations of a firm at minimum costs, which calls for carrying out stock management, forecasting on future demands, determining how much inventory to hold, when to place orders and how many units of stock to order at a given time. In doing this, firms will be aimed at maintaining inventory/stock levels, which will balance benefits of having optimum levels of stock against the costs associated with having high and low levels of inventory. These costs include unnecessary tie up of funds, excess carrying costs, risk of liquidity, production hold up and failure to meet deliveries on time. Inventory is any resource used to satisfy current or future needs (Render et. al 1994). Inventory also known as stock refers to the resources used to satisfy current and future needs to enterprise of all goods and costs of all goods owned and held for sale (Ender et. al 1994). Chasten Flattery are O’Connor (1984) further observed that a Company has in its possession and legal tithe to it. Lysons et. al (2003), defines inventory as an American accounting term for the value or quantity of raw materials, components, assemblies, consumables, work in progress (WIP) and finished stock that are kept or stored for use as the need arises. Inventory management involves providing the required inventory levels that will sustain the organization’s daily operations at minimum costs. This covers issues like determining the level of stock to order, when to order, establishing receipt and inspection procedures and providing proper storage facilities. Without proper stock control procedures in place, firms are likely to face two undesirable inventory levels. That is to say excessive/ high levels of inventory or inadequate/ low levels of inventory (Dickerson 1995). Lucay (1994) observes that excessive levels of stock are undesirable because they increase the risks of inventory becoming obsolete, stock loss through damage and theft, increased storage costs like rent, insurance and unnecessary tie up of the firm’s funds. He further state that a firm would be foregoing profits when it continues maintaining excessive levels of inventory, which implies that the probability position of the firm is being threatened in the long run since funds are not being invested in other profitable ventures. Gupta (1994) observes that organizations should establish proper inventory control procedures, efficient and effective information system regarding stock so that they are able to balance the costs and risks of inventory control against the benefits got from having inventory readily available for smooth operations. 2.3 Importance of inventory management practices on the performance local governments Inventory plays an important role in the growth and survival of an organization in the sense that failure to an effective and efficient management of inventory, will mean that the organization will lose customers leading to poor services delivery and sale will decline. Emphasizing on the importance of inventory on the balance sheet of companies. Coyle, Bardi and Langley (2003:188) state that “inventory as an asset on the balance sheet of companies has taken an increased significance because of the strategy of many firms to reduce their investment in fixed assets, that is plants, ware houses, office buildings, equipment and machinery , and soon. Virtually every enterprise finds it necessary to hold stocks (or inventory) of various items and materials. That is because it would be practically impossible to operate with only one of each item to be sold or used in manufacture or used in office work. A reserve or a fund or inventory of each item or material used or sold frequently is therefore maintained, so that as items or materials are sold or used they can be replaced or replenished from the stocks held in reserve. Due to uncertainty in future demand, and because of the unguaranteed availability of supplies, stock is therefore held to ensure an availability of goods to minimize the overall costs associated with the management of stock. (Drury, 2000). Gittinger (1995) argues that precautionary motive is one of the central roles of inventory management. Accordingly, precautionary motive means that stock held to guard against risk of unpredictable changes in demand and supply. In most cases, the level of demand of goods and the time required for supply can not be known with certainty. Therefore, to ensure product availability, the organization maintains additional amount of safety stock to meet regular production and market needs. Firms should invest in stock control for precautionary motive to act as a buffer or link between demand and supply so that production can be geared to a more constant output. Precautionary motive necessitates holding of inventories to guard against the risk of unpredictable changes in demand and supply forces and other factors. (Pandey, 2002) According to Kenneth and Brian (2006es) includes keeping inventory includes the following reason:- Reduce the risk of supplier failure or uncertainty- safety and butter stocks are held to provide some protection against such as strikes, transport breakdowns due to floods or snow, crop failures, wars and similar factors. Protect against lead time uncertainties, such as where supplier’s replenishment and lead time are not known with certainty – in such case an investment in safety stocks is necessary if customer services is to maintain at acceptable levels. Meet unexpected demands or demands for customization of products as with agile production and smooth seasonal or cyclical demand. Balloon (1987) illuminates that inventories should be held to improve customer service and therefore goods should be spotted at a place where customers can get them in the quantities they wish. The transaction motive is aimed at facilitating smooth operations on daily basis. According to Pandey (2002) Transaction motive emphasizes the need to maintain inventories to facilitate smooth production and sales operation. Firms should maintain back up inventory either in excess or low levels to take advantage of current and future demands or price fluctuations. They should therefore purchase goods and stock them in advance when they anticipate price increase in future and also prepare for contingencies that may befall a company, for instance, strikes, prices, goods among others.(Kakuru, 2000) A research done by Holdren and Hollingshead (1999) in the US notes that much of the $700 million work of inventory held by American businesses is financed by the bank loans with the goods pledged as security. An important industrial marketing relationship exists between inventory managers and commercial lending officers who write this inventory loan. Inventory manager need to provide their lenders with sufficient information to obtain financing at the lower rate. Loan officers need to assess the degree of inventory loans are matters of concern for both inventory manager and creditors. According to Richard et al. (2009), organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits, return on assets, return on investment, etc.); (b) product market performance (sales, market share, etc.); and (c) shareholder return (total shareholder return, economic value added, etc.). The term Organizational effectiveness is broader. Specialists in many fields are concerned with organizational performance including strategic planners, operations, finance, legal, and development. In recent years, many organizations have attempted to manage organizational performance using the balanced scorecard methodology where performance is tracked and measured in multiple dimensions such as: financial performance (e.g. shareholder return) ,customer service ,social responsibility (e.g. corporate citizenship, community outreach) ,employee stewardship . According to West et.al (1990), organizational performance refers to a function of an organization’s ability to meet its goals and objectives. How successful an organization achieves its objectives, satisfies social responsibilities or both depends upon how well an organization carries out its activities. Organizational function is an important factor in the performance of a society or nation. How well the organizations of the society do their job-organizational performance, gives rise to debate (Stoner et. al, 1989). Organizational performance is evaluated regardless of the system being used, either formal or informal. Systematic ways of appraising organizational performance throughout the company are however desirable so that each manager can help to improve current performance and identify individuals who show the greatest potential for higher management positions (Pigers et. al, 1989) Lucay (2003) observes that excessive levels of stock are undesirable because they increase the risks of inventory becoming obsolete, stock loss through damage and theft, increased storage costs like rent, insurance and unnecessary tie up of the firm’s funds. He further state that a firm would be foregoing profits when it continues maintaining excessive levels of inventory, which implies that the probability position of the firm is being threatened in the long run since funds are not being invested in other profitable ventures. Lower levels of inventory are also undesirable because it interrupts production, loss of good will and high ordering costs especially when ordering is frequent. Inadequate inventory levels leads to business closure due to shifting of customers to other efficient suppliers as a result of production/ operation interruptions (Gittinger 1995). According to Kenneth and Brian (2006) said that there are four aims of inventory management which include the following; Provide both internal and eternal customers with the required services levels in terms of quantity and order rate fill; Ascertain present and future requirements for all types of inventory to avoid over-stocking while avoiding “bottlenecks” in production; Keep costs to a minimum by variety reduction, economical lot sizes and analysis of costs incurred in obtaining and carrying inventories and to provide upstream and downstream inventory visibility in the supply chain. 2.4 Performance measurement of the contributions of inventory management to organizational efficiency Since performance is multidimensional, it is advantageous to integrate different dimensions of performance in empirical studies (Cameron, 1978, 1986). Extension organizations are complex and each organization faces a unique set of circumstances. Based on the long- term and short-term goals of the organization, the organizational performance measures may be financial and market performance and customer satisfaction. The financial and market performance factor is operationalzed in terms of market share, return of total assets, annuals sales growth (Tan, Kannan & Handfield, 1999). The customer satisfaction dimension is measured by total product value to the customer; meeting quality standards set by the customer, understanding customer needs, retention of loyal customers and alignment of organizations goal in terms of customer needs (Daugherty, Ellinger, & Dale, 1995) During the past decade, the research for performance measurement has been extremely active (Neely 1999). Many successful performance measurement frameworks have been presented and implemented in organizations. These measurement frameworks, such as the Balanced Scorecard, determine how measures are chosen for a measurement system and how they can be used. The starting point of this article is that since there are well established measurement frameworks already available, there is no need to construct yet another framework for building performance measurement systems. Instead, the focus is on solving the specific challenges that are related to applying performance measurement to knowledge intensive organizations. At the moment, there is a fairly common understanding between performance measurement researchers that the best way of measuring organizations’ performance is to use some kind of comprehensive measurement system. Some of the well-known performance measurement frameworks at the moment are the Balanced Scorecard, the Performance Pyramid, and the Performance Prism .(Kaplan and Norton 1992 and Neely and Adams 2000) . Although these frameworks have some differences, there are also many similarities, e.g. an organization’s performance is measured comprehensively using measures from different perspectives. A comprehensive measurement system consists of both financial and non-financial measures, as well as measures of business outcomes and the drivers of those outcomes. Organizations need information about their processes, customers, competitors, market developments, and their financial situation. If some of these are neglected, the organization increases the risk of being caught in trouble. Another characteristic of a comprehensive measurement system is that the measures chosen should be aligned with business objectives derived from an organization’s vision and strategy. When business objectives are changed, the measurement system should be changed accordingly. Otherwise it cannot be used to control the strategically important success factors. (Kaplan and Norton 1996). There are also at least 21 performance measurement frameworks that are specifically designed for measuring intellectual capital (Sveiby 2001). They include e.g. the Intellectual Capital Management Model, the Balanced Performance Measurement System, the Intangible Asset Monitor, and The Skandia Navigator (Van Buren 1999). Many of them are basically similar to the previously described performance measurement frameworks. The difference is that they focus on measuring intellectual assets. The emerging emphasis on supply chain disruptions (Hendricks & Singhal, 2005; Svensson, 2004) provides an interesting lens through which to view inventory performance. By definition, a supply chain disruption is any unplanned event which might affect the normal flow of materials .(Svensson, 2005). Disruptions can take many forms, including transportation delays, port stoppages, natural disasters, operational issues, and part shortages (Craighead, Blackhurst, & Handfield, 2006). The fact that part shortages continue to be a major source of supply chain disruptions is especially interesting since inventory has historically been one of the most common methods used to prevent or buffer the effects of disruptions (Craighead, Blackhurst et al., 2006). However, this does present an opportunity to investigate the performance of alternative approaches to inventory replenishment in terms of their impact on supply chain disruptions. Within this disruption context, the key measures of inventory performance then become the number, duration, and magnitude (Craighead, Blackhurst et al., 2006) of the disruptions resulting from a lack of inventory. Once an initial inventory flow disruption occurs, the duration of the disruption (as measured by the difference between when the item was backordered and when the backorder was filled) becomes a key measure of performance (Kiesmuller & Kok, in press), because the duration of the unavailability of parts is a major area of concern. (Fortuin & Martin, 1999) Thus far, the measures have focused on the number and duration of inventory flow disruption. The remaining two measures provide insight into what Craighead, Blackhust et al. (2006) refer to as the “domino phase” of disruption recovery and are intended to provide additional insight into the impact of inventory approach on the magnitude of disruptions. They explain that as the disruption continues in time, the negative impact of the disruption increases. A continued disruption can result in severe operational impacts such as lost sales or process shutdowns (Craighead, Blackhurst et al., 2006). Disruptions resulting in such severe operational impacts due to their duration or due to the criticality of the part causing the disruption are henceforth referred to as operational disruptions. 2.5 Challenges faced in applying inventory management practices by local governments Inventory accounts should be reconciled on a monthly basis. The reconciliation should verify that the value of the inventory held in the inventory system is equal to the value in the inventory account on the general ledger, and involve adjusting either or both of the balances for transactions that may be out of sync at the end of the financial period (e.g. unpaid invoices, product returns, etc.) The business manager, working with the UIS Accounting Office, is responsible for ensuring that the inventory accounts are reconciled. Inventory management is an important concern for managers in all types of businesses. For companies such as J C Penny limited, which operate on relatively low profit margins, poor inventory management can seriously undermine the business. The challenge is not to pare inventories to the bone to reduce costs or to have plenty around to satisfy all demands, but to have the right amount to achieve the competitive priorities for business most efficiently. (Krajewski and Ritzman 1999:544). Since some variances are always present due to the timing of transactions, business managers should recognize that the business system and the general ledger might never be exactly equal. Therefore business managers should establish a threshold for acceptable variances and manage the reconciliations with theses established parameters. Finally, according to the U.S Bureau of Census (Ballou 2004:326-328), inventories are found in such places as warehouses, yards, shop floors, transportation equipment and on retail store shelves. Having these inventories on hand can cost between 20 and 40 percent of their value per year. Therefore, carefully managing inventory levels makes good economic sense. Damaged, obsolete and missing items should be written-down or written-off immediately upon discovery, to avoid overstatement of the inventory value. Material write-offs or write-downs should be researched. Unit managers must support adjustment requests with written explanations. The write-off transaction should involve crediting the inventory account directly and expensing the same amount to the Inventory Write-offs account. This is a stock management technique, which involves controlling the amount of stock held by an organization. The main aim of this technique is to strike a balance between profitability and liquidity to ensure that there is no under or over stocking. According to Kamukama, 2006, short adherence to stock control should be established in order to minimize the costs associated with stock. Firms should therefore determine the level of stock they require so that excess or inadequate stock is avoided. Several Authors indicate that firms should establish the following practices in order to avoid undesirable stock levels i.e. the re-order level, average stock level and maximum stock level, minimum stock level of safety stock. Re-order level is a level fixed between and represents a stage at which emergency and immediate steps have to be taken for acquiring new stock. It gives a warning to the stores that materials have reached the lowest point and if no emergencies are taken, they will be completely exhausted. The re-order level must be sufficient enough to cover the maximum possible consumption of stock during the reorder period. According to Gourdin (2001:62:63), said that holding (or carrying) costs are such as storage, handling, insurance, taxes, obsolescence, theft and interest on funds financing the goods. These charges increase as inventory levels rise. In order to minimize carrying costs, management makes frequent orders of small quantities. Holding costs are commonly assessed as a percentage of unit value, i.e. 15 percent, 20 percent, rather than attempting to derive a monetary value for each of these costs individual. This practice is a refection of the difficulty inherent in deriving a specific per –unit cost for, for example, obsolescence or theft. CHAPTER THREE METHODOLOGY 3.0 Introduction This chapter presents the methodology that was used in the study; it gives a description of the study area and the methods that were used to collect data from the field. It gives a summary of the research design, sample population and size, data collection instruments, data type, data processing and presentation and the problems encountered during the process of data collection and analysis. 3.1 Research Design The research was based on both the qualitative and quantitative research designs. A case study was chosen as the most appropriate research strategy. Saunders et al (2003) define a case study as “a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence”. This fits well with the author’s intention to investigate a real life issue through a variety of data collecting methods. Jankowicz (2000) suggests the appropriateness of a case study when the thesis focuses on a set of issues in a single organization. The qualitative research design was descriptive in nature and this enable to meet the objectives of the study. Statements were used to assign variables that were not adequately measured using numbers and statistics. The quantitative research design is to be used in form of mathematical numbers and statistics assigned to variables that may not be easily measured using statements or theme. 3.2 Study Population Target population is defined as a compute set of individuals, cases/objects with some common observable characteristics of a particular nature distinct from other population. According to Ngechu (2004), a population is a well defined or set of people, services, elements, events, group of things or households that are being investigated. This definition ensures that population of interest is homogeneous. The study involved people from the staff of Ibanda District Local Government. All these helped to generate critical data important for the study. The total population was around 160 staff members of Ibanda District Local Government and the sample population was 100. 3.3 Sample Frame and sample size Key participants of the study comprise of respondents from the stores department, purchasing department and top management staff from various departments. These were selected using both stratified and purposive sampling techniques. Using the purposive sampling technique, the researcher selected 10 key informants who include Ibanda district local government top managers. Stratified sampling help in selecting 50 other district employees. The researcher used a sample size of 100 respondents because as it was large enough or the study to obtain reliable information. The study determined the sample size of the respondents by using the following formulae. P= (F/N) x n. Where; F= Number in the category N = Total population. P = Number of respondents in the category obtained from the group n = Total number of the respondents 3.4 Sampling Technique According to Sekaran (2003), sampling is the process of choosing the research units of the target population, which are to be included in the study. The samples used in the study were selected using purposive sampling which is a function of non- probability sampling. Under purposive sampling technique, the researchers were purposely choosing who, in their opinion are thought to relevant to the research topic. In this case, the judgments of the researcher were more important than obtaining a probability sample. The process of sampling in this case involved purposive identification of the respondents. The study participants were chosen using a purposive sampling technique because of the nature of the research where the respondents were identified before the researcher goes for data collection. 3.5 Source of Data 3.5.1 Primary Data According to Roston (2001), primary data is that kind of data that has been gathered for the first time, it has never been reported anywhere. Primary data were obtained through the use of self-administered questionnaire to respondents following systematic and established academic procedures, as suggested by Nunnally and Bernstein (1994). Primary data were gathered from respondents at Ibanda District Local Government who are assumed to give first hand information on the subject under study. 3.5.2 Secondary Source Roston (2001) defines secondary data as that kind of data that is available, already reported by some other scholars. Secondary data will be used to support the empirical findings of the study. These other sources of data (Literature review) were majorly used to back up the arguments and findings in chapter four and five. Secondary data were got from sources like; Annual reports, Journal articles, internet, magazines, newspapers and books related to the subject of the study and these were consulted at length to extract the information required to support the findings from the study respondents. 3.6 Data Collection Methods The study incorporated the use of various methods in the process of data collection in a bid to come up with sound, concrete and credible research findings. The researcher therefore shall amalgamate the use of questionnaire, interviews and documentary analysis in the process of collecting primary data. 3.6.1 Questionnaires Questionnaires titled “Inventory management practices and organizational efficiency” were used in the process of collecting data. The researcher used administers questionnaires to selected top employees and management officials of Ibanda District Local Government. The relevance of this is that the questionnaires are convenient and less time consuming. With management staff who may not have time for an appointment, an email of the questionnaire were sent to them which were easily filled.This questionnaire were piloted as recommended by Saunder et al (2003) who writes that, piloting helps ensure validity and reliability and also said that piloting helps to refine the questionnaire so that respondents had no problem in answering the questions and there were no problems in recording the data. 3.6.2 Interviewing The researcher used formal interviewing as a method of data collection and the interviews would offer a chance to explore topics in depth and allow interaction between the researcher and the respondents such that any misunderstanding of the questions and answers provided could easily be corrected. The researcher interviewed the lower level employees of the organization using the interview guide. These were used to tap the vital information that may not be collected using the questionnaires from the top level and management employees. 3.7 Study Variables The study was guided by the following two variables; Inventory management as an independent variable and performance as a dependant variable. Inventory management was measured by the techniques used in the process of managing inventory such as; ABC-Analysis model technique, Trial and error technique, Two Bin System technique, Just in Time Purchasing Emerges technique, Materials requirements planning (MRP) technique, Integrated system technique, Material requirement points technique, Out purchasing systems technique, Determining order quantities and inventory levels technique, Inventory recording technique among others in addition to the skills of labour involved in the management of inventory. However during the study, performance was commonly measured by profitability, sales volume, and productivity of the company. 3.8 Reliability and validity Validity of an instrument to use in this study is consistent with the definition provided by Miles and Huberman (1994), as the” extent to which the items in the instrument measure what they are set out to measure.” The validity of the instruments was established by the supervisor. Reliability, according to Miles and Huberman (1994), has to do with the extent to which the items in an instrument generate consistent responses over several trials with different audiences in the same setting or circumstances”. The reliability of the instruments and data were established following a pre-test procedure of the instruments before their use with actual research respondents. Research Procedure The study observed all those procedures followed in research. Using the letter of introduction obtained from the Faculty, the researcher introduced himself to every respondent reached at, fully explaining the purpose of research. After getting their consent, the researcher would conduct the research. The researchers also built the confidence of the respondents by assuring them that their views are confidential and were used only for academic purposes. 3.10 Data Analysis and Management After collecting all the necessary data, these data were coded and edited, analyzed and rephrased to eliminate errors and ensure consistency. It would involve categorizing, discussing, classifying and summarizing of the responses to each question in coding frames, basing on the various responses. This is intended to ease the tabulation work. It also helps to remove unwanted responses which may be considered insignificant. Data collected from the field with the use of study instruments will be classified into meaningful categories. These enable the researcher to bring out essential patterns from the data that would organize the presentation. Data were entered into a computer and analyzed with the use of SPSS. Finally, a research report was written from the analyzed data in which conclusions and recommendations will be made. 3.11 Ethical Consideration Before commencing the research, introductory letters from the University were sought and the purpose of the study explained to the authorities to avoid inconveniences and misunderstandings about the purpose. The information collected will be kept highly confidential. 3.12 Limitations of the study The study anticipates the following constraints; The study was limited by funds as it was not be enough to cater for transport and secretarial services. The researcher however got financial support from her relatives to support her during the research processing. Being the first research, the researcher lacked enough experience and skills during the process of her research. However, the researcher tried hand in hand with the help of her supervisor to make the required information for the whole research process in time. The study was also faced with a problem of not finding all respondents in the time of the study due to them being too busy with the organization work. The researcher however made appropriate time table with the top official managers that suited all the respondents during the process of data collection for reliable and valid information CHAPTER FOUR DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF STUDY FINDINGS 4.1 Presentation of the data The background information of the study was considered by the study so as to establish how different characteristics of the people could differently understand the relationship between inventory management practices and organizational efficiency in Ibanda District local Government. Regarding the background information, the following data was revealed by the study as follows. 4.1.1 Gender composition of the respondents The research further investigated the respondents’ gender. The reason was to find out if both sexes hold same views or different ones on the role of inventory management practices on organizational efficiency in Uganda. This is presented statistically below; Table 4.: Gender of respondents Frequency Valid Percent Cumulative Percent Valid Male 55 55.0 55.0 Female 45 45.0 100.0 Total 100 100.0 Source: Primary Data Table 4.1 analyses the sex composition of respondents in the study area. shows that male respondents constituted 55% while female respondents were 45%. Social cultural set up / expectations of society reason more men engage in public and civil service than women. This therefore follows the more men continues engaging in public service, the more likely has been chances of failure or lack of proper accountability. The reason as to why females are few compared to men is possibly explained the fact that they rarely take up related courses to have them engaged with in the some sector. They thus prefer searching non related employment opportunities in which they qualify. 4.1.2 Age Brackets of respondents The researcher explored on the age of the respondents in regard to the role of inventory management practices on organizational efficiency in Uganda. The results are tabulated below; Table 4.: Age of respondents Frequency Valid Percent Cumulative Percent Valid 20-30 35 35.0 35.0 31-40 28 28.0 63.0 41-50 17 17.0 80.0 50+ 20 20.0 100.0 Total 100 100.0 Source: Primary data The table presents that 35.0% of the respondents were between 20-30 years, 28.0% were between 31-40 years, 17% were between 41-50years, while 20% were above 50 years. The study population was mainly composed of people from different age groups. Respondents between 20-30 years comprised 35%of the total sample size. Those between 31 to 40 years comprised of 28%, those above 50 years were only twenty forming only 20%. The age structure of respondents as noted above in the table has an impact on inventory management practices and organizational efficiency. Those aged below 20-30 years constitute the youthful group who have fresh brains, have finished their studies and thus are angry for public service employment, therefore the few who access the opportunities; they swiftly and strictly take them up. The respondents between the age of 31-40 are belied to be experienced workers who have not yet reached the retirement age. Thus are still largely engaged in civil and public service sector. Therefore most of the categories are benefiting and others very eager to benefit or closely relate to public offices for social services. The respondents with in the group of 41 and above have also been found to have had experience since most of these already retired from such service. 4.1.3 Marital status of the respondents The marital status of the respondents was also covered and analyzed to assess their views in relation to the study variables of relationship between relationship between inventory management practices and organizational efficiency in Ibanda District local Government. This contained of those who were married, single, widowed, and separated/divorced. Table 4.: Marital status of the respondents Marital status Frequency Percentage (%) Married 58 58 Single 38 38 Separated/divorced 00 00 Widowed 04 04 Total 50 100 Source: Primary data As seen in the table 4.3 above, majority of the study respondents constituting 58% were married and these were followed by respondents who were single as reported by 38% of the respondents finally 04% were widowed as non of the study respondents reported to fall under the category of Separated/divorced. All these respondents of the study regardless of their status were willing to provide the information that was required by the study that helped in understanding the study problem that was under research. The gender distribution of the respondents implied that most of the people participating in Local Government are stable with families as they can not easily leave their areas of operation in the process of providing their services to organizations. 4.1.4 Academic background of respondents The researcher also considered the academic background of respondents to establish how it relates to the relationship between inventory management practices and organizational efficiency in Ibanda District local Government. The findings are presented in the table below; Table 4. : Academic background of respondents Frequency Valid Percent Cumulative Percent Valid Certificate 26 26.0 26.0 Diploma 45 45.0 71.0 Degree 24 24.0 95.0 Others 05 05.0 100.0 Total 100 100.0 Source: Primary data From the table, 26.0% of the respondents had certificates, 45% had diplomas, 24% had degrees, while 5% had others qualifications. All respondents (100%) were found to have at least got some form of schooling. Whereby 26% had acquired post secondary education certificate, had acquired secondary education and primary education. The implication being that the level of education is directly proportional to the degree of access / inclusion into public employment / public service. The majority of respondents 45% had gone through Diploma and this was because inclusion or recruitment into the public service largely / directly depend on level of education. These still can interpret and implement policies on corruption and other forms related to misuse of office. 24% respondents comprised Degree who were also instrumental for the study for they quality to perform some duties in several public offices. They are also found occupying medium posts as they go on up grading. The least respondents had acquired primary education and these were found to be mostly linked to public offices indirectly. Still most of these provide manual labour to such sector such as security, sanitation and others, hence were also significant. 4.1.4 Department of the respondents The researcher also considered the education levels of the respondents to establish how it relates to the role of inventory management practices on organizational efficiency in Uganda. The findings are presented in the table below; Table 4.: Departments of the respondents Frequency Valid Percent Cumulative Percent Valid Stores 46 46.0 46.0 Top management 34 34.0 80.0 Accounts 6 6.0 86.0 Purchasing 9 9.0 95.0 Others 5 5.0 100.0 Total 100 100.0 Source: Primary data From the table 46% of the respondents were from stores department, 34% were from Top Management, 6% were from Account department, 9% were from Purchasing department while 5% had others department 4.2 Inventory management practices used by Ibanda District local Government The study investigated into the inventory management practices used by Ibanda District local Government. The reason was to establish the strategies adopted by the district in its quest to ensure proper organizational performance. The findings are tabulated in the subsequent tables. The researcher first asked respondents whether there are various Inventory management practices used by Ibanda District local Government. Figure 4.: Types of stock held Source: Primary Data Stock of raw materials is less kept in the organization because of the use of Just in time purchasing. The respondents pointed out some reasons for holding stock in relation to to facilitate smooth production, inconsistencies of suppliers, prepare for contingencies, price fluctuations. This is in line with Drury (1992) who states that “the purpose of holding stock by organizations is for three reasons; precautionary, transactions and speculative motive”. Figure 4.: The response on documents used Source: primary source The data collected indicated that Ibanda District local Government uses Bin cards, stock cards as the responses were 100% and material and purchase requisition notes are at 83% and also 100% specified others such as goods received notes, delivery notes. From this finding it was discovered that Ibanda District local Government has an inventory control system as enough documents help to capture stock records and the respondents argued that this was very helpful in their operations. Table4. : Inventory management practices used by Ibanda District local Government The researcher first asked respondents whether there are various Inventory management practices used by Ibanda District local Government. The responses given by the respondents Various Inventory management practices Frequency Percentages Ranks Accurate and up-to- date stores records is an Inventory management practices used IDLG 30 30 1st Good stock plan is an inventory management practices used by local governments 15 15 3rd Proper accounting and recording is a means of inventory management in most local governments 25 25 2nd Spot checks/surprise checks help in inventory management in local governments 10 10 5th Proper stores management is a form of inventory management in local governments 12 12 4th Inventory control systems have led to reduction of costs incurred by the organization 08 08 6th Total 100 100 Source: Primary data The study finding study established that accurate stores records were one of the inventory management practices used by Ibanda District local Government. It was revealed that the employees at the district take recording as an important component of their management and that this had improved their organizational efficiency. Rank to the notion of up-to- date stores records as one of the inventory management practices used by Ibanda District local Government with 30% of the respondents. It was established that a good stock plan helps in organizational performance and is a component of inventory management with 15% of respondents of the ranking of percentages. Proper accounting records Peer counseling has many advantages to the client, the counselor and the community. Respondents’ opinions on the idea are presented with 25% of respondents ranks. It emerged from the study that positive surprise checks constitutes an important strategy in inventory management. First and foremost, all employees at the Ibanda District local Government and more so top managers should work towards ensuring that all their subordinates comply with the set rules and standards in the organization. This can be achieved through surprise checks with 10% of the study respondents .Ibanda District local Government management should create opportunities where all employees in their respective departments will feel as part of the systems. Proper stores management thus was established to be an important practice that leads to organizational performance in Ibanda District local Government 12% of the respondent’s ranks that proper stores management is a practice of inventory management 4.3. Importance of inventory management practices on the performance of local government The study explored Importance of inventory management to organizational efficiency. The reason was to establish whether respondents were aware that inventory management practices contribute greatly to the organizational efficiency of local governments 4.3.1 Extent to which performance influence has inventory management Importance a line from use of proper inventory management were found out by the researcher so as to justify of Extent has inventory management influence organization and evidence the study under investigation. Among the Importance that were given out included increased in services delivery and organization’s profits , attractions of customers, reputation of organizations as well as production of quality productions finding are in the table below Table 4.: Extent has inventory management influence organization Responses Frequency Percentage Proper inventory management increases organizations profits and services delivery 40 40 Proper inventory management attracts customers to the organization 5 5 Proper inventory management rewards accompany good name 10 10 Proper inventory management attracts customers to buy organization’s products 45 45 Total 100 100 Source: Primary Data From the table above 40% of the respondents said that proper inventory management increases organizations profits and services delivery since every thing is properly arranged especially in the departments of production. This makes development of an organization inventory. In this view; these benefits include the ability to do agricultural work at night, longer periods of work for small trades and businesses, and an ensuing increase in income due to these extended hours of operation. From the study finding, 5% of the respondents said that proper inventory management attracts customers to the organization of which it has enabled development of so many companies of Uganda district inclusive. From the study findings, 10%of respondents said that use of good and proper inventory management rewards accompany good name of which it even makes its products produced to sell for them selves thus increasing profit margins of organization. From the study findings also 45% of the respondents said that proper inventory management attracts customers to buy organization’s products this making accompany get more profits leading to its development. Table 4.: The benefits of inventory management Benefits Inventory management practices Frequency Percentages Ranks Inventory Management practices contribute greatly to the performance of local governments 28 28 2nd Inventory Management helps in inventory planning and scheduling in local governments 38 38 1st Procurement/purchase dates and quantities are improved by inventory management practices 10 10 3rd Cost reduction in local governments is a result of inventory management practices 10 10 3rd Inventory Management helps in effective stores management of local governments 05 05 5th Internal coordination in local governments can be improved by inventory management 04 04 6th Improved customer service can be realized with inventory management 02 02 8th Good management practices to inventory Management in local governments 03 03 7th Total 100 100 Source: Primary data `It emerged that inventory planning and scheduling was being improved as a result of inventory management at the district. This was through accomplishment of the planned projects due to good inventory practices, 28% of the respondents ranks noted that inventory planning and scheduling had improved as a result of good inventory management practices. Improved procurement was reported by the respondents as one of the contributions of inventory management to organizational efficiency as noted that 38% of the respondents confirmed the assertion that improved procurement. Cost reduction is central in ensuring that any project prospers. It was noted by the respondents there is a need for government to show clear commitment to Cost reduction which was being reflected through inventory management According to the table, 10% of the respondents ranks noted that cost reduction was a function of inventory management Effective stores management and internal coordination was cited by respondents as one of the great contributions of inventory management at Ibanda District local Government. This was cited by the respondents as in the table above 5% of the respondents said that effective stores management and internal coordination in most local government is a result of proper use of inventory management Table 4. : Techniques of stores management used at Ibanda District local Government Stores management percentage ABC Technique 100 Just In Time (JIT) Technique 100 Just in Case technique: 100 Recording stock 100 Source: Primary data ABC Technique: The researcher sought to know whether Ibanda District local Government was arranging inventories in stores according to their importance. This was answered by the respondents views, as indicated in the table above as 100%) were in agreement of the study respondents cited with the statement that Ibanda District local Government was arranging inventories according to their importance. This means that the District management paying attention to the inventories in the store is to a higher extent. From the above results arrangement of inventories at Ibanda District local Government for improved Company’s efficiency was still wanting. Just In Time (JIT) Technique: The researcher also sought to understand whether the Company was purchasing raw materials after the customers have ordered for goods. Results from respondents’ views indicated 100% responses with the statement of respondents in the same category. These study findings showed that the Ibanda District local Government is not actually purchasing raw materials after the customers have ordered for goods from the District as majority of the study respondents indicated. Just in Case technique: The study findings as in table indicate that most of the respondents disagreed with the statement that “Our district produces inventories when our customers are in need of them “as was reported by 100% of the respondents. However, the respondents agreed with the same statement that “The Ibanda District local Government produce inventories when our customers are in need of them“. The above is an indication that Ibanda District local Government normally produces inventories as not according to customers order but customers just reach the district to take what is already produced and those in the store department as the marketing department distributes what is produced to the customers who do not purchase the district products direct from the main plant site. Recording stock: The researcher was further interested in knowing whether Ibanda District local Government records inventories purchased and sold. This was answered as indicated in the table above. From respondents’ views, the District records inventories purchased and sold. This is reflected by 100% agreement as none of the study respondents covered. The results above, can be interpreted that Ibanda District local Government records inventories purchased and sold at all times since the respondents covered by the study agreed with the statement and that it was using recording of inventory as one of the inventory management techniques for improved District organization efficiency. This was substantiated by a view of one respondent who expressed that the company issues different documents like invoices, goods received note, goods returned note and still that the district had a general book for recoding all the company dairy transactions concerning the stores department. Qualitative results as obtained from the interview further confirmed the commonly techniques of inventory management used at Ibanda District local Government to be including integrated system (System Application and products) responsible for management information system which helps to make serious decisions on stock, material requirement points, and over stock brands for the fast moving products, plus recoding of all the purchased and issued inventories to the production and operations department of the District. In addition to the above findings from the study, respondents were able to indicate that for proper stores management at Ibanda District local Government the company management has resorted to use security alert with the aim of reducing theft cases of the District goods for improving organisation’s efficiency. These results significantly show that inventory management is an important factor in improving the organisation’s efficiency. 4.4 Challenges faced in applying Inventory Management Practices by Local Governments The last study objective sought of understanding challenges faced by the Ibanda District local Government in managing the inventories and findings from the study respondents indicated that the company was facing challenges in the process of managing inventories. Regarding the same issue, all the respondents selected during the study agreed with the statement that there are Challenges faced by Ibanda District local Government in managing inventories as none of the study respondents Rank with the same statement. The study on further findings established the following challenges among others faced by the Ibanda District local Government in managing inventories as in Table below Table 4.: Showing challenges faced by the Ibanda District local Government in managing inventories Challenges faced Frequency Percentages Ranks Loss of inventories 14 14 1st Un predetermined products demand 12 12 2nd Opportunity costs 07 07 8th Administration costs 08 08 6th Theft 04 04 9th Conflict of interest in the local governments hinders Inventory Management practices 11 11 4th Poor evaluation and monitoring hinders inventory Management practices in local governments 09 09 7th Strain on resources by local governments is a challenge to inventory Management practices 10 10 5th Weak management systems in local governments is a challenge to in Inventory Management practices 12 12 2nd Bureaucratic constraints in local governments hinders the operation of inventory management systems 04 04 9th Total 100 100 Source: Primary data The table shows that of the respondents covered by the study majority revealed loss of inventories among challenges faced by the Ibanda District local Government in the process of inventory management as was revealed by 14% of the study respondents ranks , this was followed by un predetermined products demand by the district customers as was reported by 12% of the respondents ranks, then 08% of the respondents ranks that was reported by administration costs in relation to the people responsible for the managing inventories, opportunity costs and theft that were indicated by 07% of the study respondents ranks each, then others like labour turn over and load-shedding with 04% of the covered study respondents during data collection process. Conflict of interest in the local governments hinders Inventory Management practices said that 11% of the study respondents, Poor evaluation and monitoring hinders inventory Management practices in local governments with 9% of the respondents ranks that, Strain on resources by local governments is a challenge to inventory Management practices with 10% of the respondents ranks, Weak management systems in local governments is a challenge to in Inventory Management practices with 12% of the respondents of ranks and Bureaucratic constraints in local governments hinders the operation of inventory management systems with 4% of the respondents ranks. On further established by the study, it was established that the above challenges affect the production department at Ibanda District local Government performance as sometimes reduce greatly on the performance level due to delays. Administration costs as having a department in the organization to supervise and investigate inventories accounts at the company as such costs were cited to involve the amount given to the administrators of the organization to control the inventory levels in the to enhance the production department of the company The above study results are also an indication that there are still challenges faced at Ibanda District local Government branch as organization in the process of managing inventories for improving the performance of the District. Table 4.: Others challenges faced by Ibanda District local Government in inventory management practices for the efficiency of employees Other Challenges faced Frequency Percentage Loss of inventories 27 27 Un predetermined products demand 23 23 Opportunity costs 13 13 Administration costs 14 14 Theft 13 13 Others like labour turnover 08 08 Total 100 100 Source: Primary data The table above shows that of the respondents covered by the study majority revealed loss of inventories in the stores among challenges faced by Ibanda District local Government in inventory management for the organization efficiency of employees as was revealed by 27(27%) of the study respondents, this was followed by un predetermined products demand by the company customers as was reported by 23(23%) of the respondents, then 15(15%) of the respondents that was reported by administration costs in relation to the people responsible for the inventory management, opportunity costs and theft that were indicated by 13(13%) of the study respondents each, then others like labour turn over with 08(08%) of the covered study objectives. On further established by the study, it was established that the above challenges affect the inventory management as sometimes reduce greatly on the organization efficiency of the Ibanda District local Government during the year end. Administration costs as having a department in the organization to supervise and investigate stores accounts. Such costs were also cited to involve the amount given to the administrators of the business organization to control the inventory levels in the store department of the company. The above study results are also an indication that there are still challenges faced at Ibanda District local Government as organization in the process of managing its inventories for improving the organization efficiency of the District. Table 4.: Indicators of organization efficiency in local government Frequency Percentages Ranks Communication of vision to employees & their buy-in of the vision 10 10 5th Employee commitment 20 20 1st Leadership effectiveness 15 15 3rd Communication effectiveness 10 10 5th Employee care 05 05 7th Sense of accountability for results 20 20 1st Customer satisfaction 05 05 7th Organizational learning & innovation 15 15 3rd Total 100 100 Source: Primary data As illustrated in table above, the researcher sought to know whether Ibanda District local Government had Indicators of organization efficiency in local government. This was answered by the respondent’s views, as indicated in the table, Communication of vision to employees & their buy-in of the vision with 10% of the ranks, Employee commitment with 20% of the respondents, Leadership effectiveness with 15% of the respondents, Communication effectiveness with 10% of the respondents, Employee care with 05% of the respondents of Ibanda District local Government, Sense of accountability for results with 20% of the respondents with inventory management and Giving of advance information to the people at the building entrance of organizations especially when the change is going to happen in relation to the application of internal control systems. It was revealed by the study respondents 14% that people at the building entrance should be given information to know about how things are done before enforcing such changes on them. More, 15% respondents said of Organizational learning & innovation can be among the solutions to challenges encountered in enforcing internal control systems by organizations. It was revealed that when employees are motivated, they tend to perform their activities both efficient and effectiveness. Employees in organizations can be motivated in a number of ways like giving thanks to the well performers, provision of allowance like food, transport, housing and medication allowance all of which will help them to perform their work very well. 4.5.0 Relationship between inventory management and organization’s efficiency (Ibanda District local Government.) 4.5.1 Analysis of presented data Relationship between inventory management and organization efficiency of Ibanda District local Government Was got by subjecting the two variables under investigation to a hypothesis testing. 4.5.2 Testing the Hypothesis Null hypothesis HO: Inventory Management practices have an effect on organization efficiency of Ibanda District local Government Alternative hypothesis H1: Inventory Management practices have no significant effect on organization efficiency of Ibanda District local Government RESULTS Variables Entered/Removed Table 4.: Hypothesis Testing Criterion Model Variables Entered Variables Removed Method H1: Accurate and up-to- date stores records is an Inventory management practices used Ibanda District local Government Enter Source: Primary data All requested variables entered. Internal coordination in local governments can be improved by inventory management practices Table 4.: Hypothesis testing Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .070a .005 -.004 .848 Source: Primary data a. Predictors: (Constant), Accurate and up-to- date stores records is an Inventory management practices used by Ibanda District local Government Table 4.: Hypothesis Testing Criterion Model Variables Entered Variables Removed Method H1: Accurate and up-to- date stores records is an Inventory management practices used Ibanda District local Government Enter Source: Primary data a. Predictors: (constant), Accurate and up- to-date stores records is an inventory management practices used Ibanda District local Government. b. Dependent Variable: Internal coordination in local governments can be improved by inventory management practices. Coefficients Table 4.: Hypothesis Testing Coefficients Analysis Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 2.184 .214 10.202 .000 Internal coordination in local governments can be improved by inventory management practices .074 .097 .070 .761 .448 Source: Primary data Dependent Variable: Accurate and up-to- date stores records is an Inventory management practices used Ibanda District local Government Interpretation Hypothesis was tested using regressions. ANOVA (Analysis of Variance) was used to test the hypothesis. Independent variable (Inventory management) was run against dependent variables (organizational performance). Results from ANOVA indicated above presented 0.000 and o.448 significance level; thus rendering a rejection of the Null hypothesis which stated that inventory Management practices have an effect on organization efficiency of Ibanda District local Government. Deduction The Null hypothesis is rejected. The hypothesis testing above shows that inventory management practices have no significant effect on organizational efficiency of Ibanda District local Government. CHAPTER FIVE DISCUSSION OF STUDY FINDING, CONCLUSION AND RECOMMENDATIONS 5.1 Discussion 5.1.1 Inventory management practices used by Ibanda District local Government The study investigated into the inventory management practices used by Ibanda District local Government. The reason was to establish the strategies adopted by the district in its quest to ensure proper organizational performance. The researcher first asked respondents whether there are various Inventory management practices used by Ibanda District local Government. The study established that accurate stores records were one of the inventory management practices used by Ibanda District local Government. It was revealed that the employees at the district take recording as an important component of their management and that this had improved their performance. It was established that a good stock plan helps in organizational efficiency and is a component of inventory management. This was cited by the respondents during the study. Proper accounting records Peer counseling has many advantages to the client, the counselor and the community. It emerged from the study that positive surprise checks constitutes an important strategy in inventory management. First and foremost, all employees at the district and more so top managers should work towards ensuring that all their subordinates comply with the set rules and standards in the organization. These study findings can be compared with Pandey (1995) who argued that since most organizations maintain different types of materials with different value, minimum attention is devoted to different items with the highest value. The difference involves of the different classes of inventory leads to the inventory control model by importance and exception or ABC analysis (Rich mond 1969). The ABC analysis involves the following:-Classify the items of inventory determining the expected used in units and price per unit for each item, determine the total value of each item by price and units, rank items according to value, and determine percentage ratio or units of each item to total items and value. Ibanda District local Government, management should create opportunities where all employees in their respective departments will feel as part of the systems. Proper stores management thus was established to be an important practice that leads to organizational efficiency in Ibanda District local Government. However, Halachmi and Bouckart, (2005) argued that inventory management process is the science-based art of controlling the amount of stock held in various forms, within a business to meet economically the demands placed up one that business. The aim of inventory control system is to maintain the quantities of stock held by a business at a level which optimizes some management criteria such as minimizing the costs incurred by the whole business enterprise for improved performance. The methods that are used by Ibanda District local Government, to manage inventory are stock valuation where by the system used FIFO to record the value of the stock that is held at a particular period for accountability purposes and writing of final accounts to be submitted to the Ministry of Health. The organization has a strong data centre for its stock such as receipts, invoices which help in keeping record of all the relevant prices so as to carry out a stock valuation. Also, Wood Frank (1996), the way materials are valued has amplification on the firms reported profit and the material usage and balance there fore different inventory profit reported by firms. The different materials valuation techniques include Last In First Out (LIFO), First In First Out (FIFO), average cost method and net realizable value. From the findings, it was evident that inventory management leads to efficiency and effectiveness by avoiding over stocking and under stocking. To ensure this stock taking is carried out to determine the stock levels and hence determine the organizations worth. It also helps to determine the balance of stock and check for any variances and make reconciliations to make sure that the physical stock corresponds with what is with in the records. The above study findings can be related with Ronald, H.(1999), who reported that inventory exists for this reason alone, the relevance of the decision to be made. Carrying, holding or possession costs. These include handling charges, labour and operating costs, insurance premium, breakage, pilferage, obsolescence, taxes and investment or opportunity costs. In short any cost associated with having as opposed to not having inventory is included. Other costs may include ordering costs, or purchase costs, set-up costs, stock out and price variation costs. 5.1.2 The methods used in performance measurement and its contributions to organization’s efficiency The study explored contributions of inventory management to organizational efficiency. The reason was to establish whether respondents were aware that inventory management practices contribute greatly to the organization efficiency of local governments. It emerged that inventory planning and scheduling was being improved as a result of inventory management at the district. This was through accomplishment of the planned projects due to good inventory practices. Respondent opinions of the respondents noted that inventory planning and scheduling had improved as a result of good inventory management practices. In this view, Cost reduction has been reduced due to proper inventory management in organizations .Sunder bans is part of the vast delta of the river Ganga, an area characterized by mangrove swamps and islands interwoven by a network of small rivers, waterways, creeks and tracts. The tidal swamp forests of the delta and their unique ecosystems are the habitat of the endangered Royal Bengal Tiger. (Kabeho Joram 2006) Improved procurement was reported by the respondents as one of the contributions of inventory management to organizational efficiency the respondents who confirmed the assertion that improved procurement. From the study it was confirmed that cost reduction is central in ensuring that any project prospers. It was noted by the respondents there is a need for government to show clear commitment to Cost reduction which was being reflected through inventory management. This makes development of an organization inventory. In this view; these benefits include the ability to do agricultural work at night, longer periods of work for small trades and businesses, and an ensuing increase in income due to these extended hours of operation. In addition, social benefits such as longer periods for studying, saving in time for cooking g, entertainment, and facilitation in night movement and physical comforts are also realized. (Pavela Mbabazi 2005:12) Effective stores management and internal coordination was cited by respondents as one of the great contributions of inventory management at Ibanda District local Government, the respondents said that effective stores management and internal coordination in most local government is a result of proper use of inventory management 5.1.3 The importance relationship between inventory management and organization’s efficiency to Ibanda District local Government Relationship between inventory management and organization performance of Ibanda District local Government was got by subjecting the two variables under investigation to a hypothesis testing. Hypothesis was tested using regressions. ANOVA (Analysis of Variance) was used to test the hypothesis. Independent variable (Inventory management) was run against dependent variables (organizational performance). Results from ANOVA indicated above presented 0.000 and o.448 significance level; thus rendering a rejection of the Null hypothesis which stated that inventory Management practices have an effect on organizational performance and service delivery of Ibanda District local Government. 5.2 Conclusion The study reveals that Ibanda District Local Government holds stock that is used to satisfy current and future needs of the people of Ibanda District. The Ibanda District Local Government carries out monthly stock taking of items in stores and stock is inspected for quality and right specifications. Basing on the findings, Inventory management helps organizations to cut down costs incurred by an organization. It can therefore be concluded that inventory management practices are related to performance of an organization, corporation or business as regards service delivery. Ibanda District Local Government should hold stock in order to maximize economies of scale, balance supply and demand, specialization and presentation from uncertainties. Inventory is a significant asset in organizations. Its effective management is a key task with in the auspices of operations and viewers of organization. Inventory control in an organization co-ordinates the purchasing, manufacturing and distribution functions to meet the marketing needs and ensures that organizations efficiency is in line with the set objectives and centers on customer satisfaction. Inventory management challenges interfere with a company’s profits and customer service. They cost an organization more money and lead to an excess of inventory overstock that is difficult to move. Inventory management is one of the important key activities of any organization. It is important in logistics planning and control, production process, purchasing and satisfaction of customers services all of which are important in organizational performance. Inventory management helps organizations to meet higher than expected demand. This helps the organization to protect against running out of inventory. 5.3 Recommendations As a result of the study here are some of the possible suggestions and policy recommendations to ensure that stock control is the most desired. Ibanda District Local Government should put a lot of efforts in the following; verification and tendering to ensure that the organization gets reliable suppliers. Installation of a strong control and inspecting system so as to detect fraud and theft of stock The stores should be enlarged and tidy so as to ensure maximum usage of space among others. There is need to segregate duties of receipt and recording of stock in order to reduce fraud and theft. This research also recommends intervention particularly for District Local Government optimization of its turnover. This include automation and instituting an automated customer relationship management (CRM) module to capture lost sales for accuracy of demand forecasting information Ibanda District Local Government should install a computerized package to deal with recording of inventory so as to avoid unintentional errors. Inventory management practices are the key factor in ensuring continuous improvement in turnover growth. In this regard this recommended that distribution companies should carry out efficient inventory monitoring and operate good inventory information management system to ensure realistic inventory forecasts and high turnover. Considering the importance of demand forecasting in achieving a good turnover, information that is required as input to demand forecasts must be consistent and based on customer needs. Therefore companies must strive to see that there is continuous monitoring of inventory, such that the decision rules that include safety stock, reorder points and EOQ on which forecasts are based are up to date and are based on historical data from past sales but also analyzed customer based information. To minimize expertise, Ibanda District Local Government should identify slow moving stock and damages, regular cycle counts should be carried out. This will reduce the cost of stock verification at the end of the accounting periods because it may no longer be necessary to close the company for long periods to handle stock reconciliations. The manipulation of information to find patterns is increasingly giving companies a competitive edge over the others. Therefore need to introduce decision support tools that will analyze customer relationship management information and use it to categorize products and services that will improve turnover. Supplier’s delivery date and time should be fixed for organization’s suppliers. They should also be aware of the days and time during which they are expected to make deliveries and when facilities will be available to accept such deliveries. This will curb the system of suppliers delivering materials at will, reduce the burden of store officers and avoid unnecessary delays, stock out and costs. Employees other than stores officers should not be allowed into the stores unless it is strictly on business. The habit of employees using the store area for their lunch break should be discouraged by organizations. Stores ledger comprising all items of stock held in various stores located from the physical stock itself should be kept. The detailed entries of all issues should be reflected in such ledgers. The serves as checks and balances on all the sub stores, and as a good source for audit purposes. To avoid duplication of records due to price variance, the FIFO (first in first out) and LIFO (last in first out) system of issues should be adopted. This will ensure the elimination of the need to open several cards for single items because of price variation. All receipt and issues should be numbered serially and recorded with duplicates and distribution to appropriate section of the organization. For easy identification of materials in the stores and to reduce fatigue, appropriate coding system should be employed. This can be done by using letters, figures or a combination of both. The system could be based upon the nature of the stores items, the purpose for which items are bought, or on any other basis regarded as suitable for the business. There is need for organization to easy out effective inventory management for it ensures reliability. Holding inventory helps organization to ensure reliable delivery to customers, no matter what happens. Ibanda District Local Government should hold inventory to protect against interruption in supply. Ibanda District Local Government in should opt to use Just in Time system as an inventory management technique by ordering for specific quantities according to customers need at a particular time. As this will help to reduce on the amount of stock held and thus leading to reduction in carrying costs incurred due to the fact that there is Zero inventory handling. There should be inventory management for smooth production flows in an organization and improve performance of the organization. There is need for inventory management since it helps organizations to meet higher than expected demand. This helps organizations from running out of inventory. Internal controls: Management of Ibanda District Local Government should establish and strengthen the internal controls over inventory and other financial resources to reduce on mismanagement and misappropriations. The internal controls to be established among others include; segregation of duties, approval and authorization, supervision of lower employees and stock taking on regular basis of received inventory to reduce on theft and mismanagement of inventory. Motivation incentives: Introduction of motivation incentives for example increase of salaries, wage and other non-monetary rewards. This will help reduce on the theft of inventory from business and give them a heart of commitment hence efficient management of resources. Competent Staff: Management of Ibanda District Local Government should employ competent staff that has experience and skill in Inventory Management. They should also consider training their employees on inventory management practices and the system in place. Preparation of Books of Accounts: Ibanda District Local Government should consider recording their inventory and preparing books of accounts not only for controlling inventory but also for other financial resources this will help in ascertaining performance. Computerization: They should computerize their inventory management system to avoid any manipulation and encroachment by unauthorized users; this will lead to faster processing of transactions and reduce on fraud errors and mistakes in books of accounts. There should also be measures put in place to determine profits made by the businesses, through analyzing different profits for example profits before interest and tax, after cost of sales and also doing profit planning for the business. Since inventory management techniques do not normally lead to immediate efficiency of the Company for improved performance, the study recommends management in most soft drinks industry to always forward planning, centralize the purchase and store function, carry out stock taking exercise periodically as if such factors are adopted together then performance and efficiency of the Company will be greatly influenced positively. In addition, the study recommends managers in organizations especially those in developing countries like Uganda to always undertake forward production planning, this is because they will be able to know when the incoming sales orders can be scheduled for delivery and also takes into account current backlogs so that production and delivery schedules are realistic which will minimize inventory management costs. It is also recommended that whether or not a perpetual/continuous stock control system is maintained, there should be continuous annual stocks take at the company. To this, procedures can be prescribed for this with emphasis on identifying damaged, slow moving, and obsolete stock and cut-off procedures. 5.4 Recommendation for Further Research Further research should be done in the areas of; The role of inventory management towards service delivery. The role of record management towards proper inventory management The Importance of inventory management practices on the performance local governments. The importance of inventory control systems on the performance of Organizations REFERENCES Aaker D A. (2001) John Wisely. USA strategic management. 6th Edition. Albrecht, W (2003). Economics. Englewood cliffs, New Jersey: Prentice Hall. Alexander K. and Thorsten, H.T. 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Butter worth Heinemann, U.K. 2nd Edition. WJ Hopp &ML Spearman (2004) material management and stock control. Young J Pharmacists (2010) operations management producing goods and services APPENDIX A: QUESTIONNAIRE FOR STAFF OF IBANDA DISTRICT LOCAL GOVERNMENT Dear respondent, As partial fulfillment of the award of bachelor’s degree in business administration in accounting and finance option of Bishop Stuart University, I am Twinamatsiko Gerald conducting a research on “The effect of Inventory Management practices on organizational efficiency. Therefore I kindly request you to spare a few minutes of your busy schedules to fill this questionnaire to enable me accomplish this task. Your honest and sincere responses are highly appreciated for academic purposes and shall be treated with utmost confidentiality. I thank you very much for your cooperation. Thank you, in advance for any follow up you allowed to contact the researcher on mobile number +256-788-419793 Answering Mode: Tick the appropriate answers or write in the space provided. SECTION A: BACK GROUND INFORMATION ON THE RESPONDENT (Please tick in the appropriate Box) 1. Age: 20 – 30 years 31 – 40 years 41 - 50 years 51 – 60 years 60 and above 2. Marital status: Single Married Separated 3. Level of Education: Primary Secondary Diploma Degree Post –graduate others (specify) ………………………… 4. Designation……………………………………………………………… 5. Which department do you belong to? Top management Stores Purchasing Accounts Please specify………………………………………….. 6. How many years have you spend in the Ibanda district local government?.......................... SECTION B: INVENTORY MANAGEMENT PRACTICES USED BY IDLG AND THEIR EFFECTIVENESS 7. What type of stock do you hold 1. Raw materials 2. Work in progress 3. Finished goods. 4. Stock supplies. 5. All the above 8. The following are procedures followed in inventory management (Rank according to their your choice of usage) Procedures followed in inventory management Ranks 1 2 3 4 6 1.Accurate and up-to- date stores records is an Inventory management practices used IDLG 2. Good stock plan is an inventory management practices used by local governments 3. Proper accounting and recording is a means of inventory management in most local governments 4. Spot checks/surprise checks help in inventory management in local governments 5. Proper stores management is a form of inventory management in local governments 6. Inventory control systems have led to reduction of costs incurred by the organization 9. Which documents are used in recording inventory information? 1. Bin card Material 2. Requisition note 3. Stock cards 4. Purchase requisition note 5. Others (specify)………………………………………………… SECTION C: IMPORTANCE OF INVENTORY MANAGEMENT PRACTICES ON THE PERFORMANCE LOCAL GOVERNMENTS. 10. To what extent has inventory management influence organization efficiency? …………………………………………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………… 11.The following are benefits of inventory management Rank according to their significance (tick appropriately) as you rank Ranks 1 2 3 4 5 1. Inventory Management practices contribute greatly to the performance of local governments 2. Inventory Management helps in inventory planning and scheduling in local governments 3. Procurement/purchase dates and quantities are improved by inventory management practices 4. Cost reduction in local governments is a result of inventory management practices 5. Inventory Management helps in effective stores management of local governments 6. Internal coordination in local governments can be improved by inventory management 7. Improved customer service can be realized with inventory management 8. Good management practices to inventory Management in local governments SECTION D: CHALLENGES FACED IN APPLYING INVENTORY MANAGEMENT PRACTICES BY LOCAL GOVERNMENTS Inventory management practices have got various challenges (tick appropriately) as you rank Ranks 1 2 3 4 6 Loss of inventories Un predetermined products demand Opportunity costs Administration costs Theft Conflict of interest in the local governments hinders Inventory Management practices Poor evaluation and monitoring hinders inventory Management practices in local governments Strain on resources by local governments is a challenge to inventory Management practices Weak management systems in local governments is a challenge to in Inventory Management practices Bureaucratic constraints in local governments hinders the operation of inventory management systems 11. Mention other challenges faced by Ibanda District Local Government in inventory management for the efficiency of employees ………………………………………………………………………………………………… 12. The following are indicators of organization efficiency in local government. tick appropriately) as you rank. Organization efficiency in local government Ranks 1 2 3 4 6 Communication of vision to employees & their buy-in of the vision Employee commitment Leadership effectiveness Communication effectiveness Employee care Sense of accountability for results Customer satisfaction Organizational learning & innovation Mentions other indicators of organization efficiency in local government …………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………………………………………………… What is other factors influence organization efficiency in local government? …………………………………………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………… 19. What suggestions do you have regarding the effectiveness and efficiency of inventory management towards the organizational efficiency of Ibanda District Local Government? ……………………………………………………………………………………………… Thank you for sparing your precious time and God bless you PAGE 48