ETHICAL PRACTICES IN INVENTORY MANAGEMENT IN PUBLIC

ETHICAL PRACTICES IN INVENTORY MANAGEMENT IN PUBLIC INSTITUTIONS IN KENYA (A CASE OF KENYATTA NATIONAL HOSPITAL) MBUGUA CAROLINE WANGUI REG NO.BBM/106/14/15 A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF BUSINESS MANAGEMENT IN PARTIAL FULFILLMENT FOR THE AWARD OF BACHELORS DEGREE OF BUSINESS MANAGEMENT IN ACCOUNTING OF MARIST INTERNATIONAL UNIVERSITY COLLEGE JULY 2016 i DECLARATION AND APPROVAL This research is my original work and I declare that it has not been presented for a degree in any other institution Signed…………………………… Date……………………………… MBUGUA CAROLINE WANGUI REG NO.BBM/106/14/15 This research proposal has been submitted for the examination with my approval as the candidate’s supervisor Signed………………………… Date………………………………… Supervisor Frederick Ukonga Mutuku Head of Department of Business1 Marist International University College Signed………………………… Date………………………………… DR OGUTU ii ACKNOWLEDGEMENTS Special thanks to the Lord God Almighty for being with me in my endeavour and seeing me through every step of my schooling I also appreciate and acknowledge the support from my supervisor.I also want to thank my family, school mates, class mates and friends for their support in my schooling and may God bless you all Thank you iii DEDICATION I dedicate this research project to my family who have been always there for me throughout my life and my husband, thanks for the support and the love that you show me God bless you all iv TABLE OF CONTENTS DECLARATION AND APPROVAL .ii ACKNOWLEDGEMENTS iii DEDICATION iv TABLE OF CONTENTS .v ABBREVIATIONS .vii OPERATIONAL DEFINITIONS OF KEY TERMS ix LIST OF TABLES TABLES PAGES Table 1: Respondents participation distribution 26 Table 2: Profession distribution 27 Table 3: Gender of the respondent’s distribution 28 Table 4: Experience distribution of respondents 30 Table 5: Distribution of respondent by age 31 Table 6: The institution competitiveness 32 Table 7: Performance effectiveness response distribution 34 v Table :8 Document analysis guide 35 Table9: Mean of response distribution on efficiency analysis according to the 37 questionnaires Table10: Ethical practices inventory management on value creation 38 LIST OF FIGURES FIGURES PAGES FIGURE 1: Respondents participation distribution 26 FIGURE 2: Profession distribution 27 FIGURE 3: Gender of the respondent’s distribution 29 FIGURE 4: Experience distribution of respondents 30 FIGURE 5: Distribution of respondent by age 31 FIGURE 6: The institution competitiveness 33 vi FIGURE 7: Performance effectiveness response distribution ABBREVIATIONS KNH Kenyatta National Hospital C.O.E Code of Ethics vii 34 viii OPERATIONAL DEFINITIONS OF KEY TERMS Ethics This is usually the honorable values which direct or guide a given conduct by an individual or organization It is the basis in which most of the principles such as fairness, integrity, and transparency are exercised when it comes to different processes in government institutions Inventory management This is a process which involves the acquisition and maintenance of goods and materials which a firm or business holds at a given time It’s a process which ensures that goods and materials are stored in the right way within a given organization and that the goods and materials value and quality is maintained despite the period of time that they stay in the warehouses (Nicholas, 2010) Efficiency This is usually the ability of a task or duty to be carried out in the best possible way without wasting time, efforts or resources within an organization (Lee, 2012) Value Value is the quality which a product or service comes with and it makes the client or customer to feel that they have benefited more from a product or service (Lee, 2012) Stock value Also known as inventory control is used to show how much stock you have at any one time, and how you keep track of it Stock turnover A measure of number of time inventory is sold? ix ABSTRACT A growing number of public institutions are failing in their different tasks, duties and activities and this has been caused by the lack of proper ethical practices, procedures and guidelines in carrying out their operations in the environment Inventory management in these public institutions has been facing numerous challenges due to lack of ethics in how stock or inventory operations are managed within these institutions Unethical practices have been rampant in many public institutions This has affected profitability, efficiency and value creation in these institutions in different ways Despite the fact that many public institutions are usually monitored, controlled and managed by different bodies and operate under different regulations and code of ethics, there are many unethical practices which are continually taking place in these institutions This has been facilitated by the fact that many of these institutions are failing in their management, code of ethics as well as in their control systems This study was seeking to address this issue fully and extensively for the success of these institutions specifically when it comes to inventory management The purpose of this study was to look deeply on the issue of ethics in inventory management in public institutions This study was basically trying to look deeply on how profitability, efficiency and value creation are affected by ethical practices when it comes to inventory management in public institutions Data was collected using questionnaires, one on one interview and I also used document analysis guide with the respondents of this study and it was then analyzed using descriptive statistics After the data analysis the information was then presented using tables, graphs, pie charts and data management software’s such as MS excel tables The data for this research study was collected from respondents who were selected from the Kenyatta National Hospital offices which this study used as its case study to illustrate how unethical practices in inventory management are evident in public institutions From this population the researcher was able to come up with an effective sample that was used as the respondents of this research study These were able to provide the data and information that the researcher was looking for, to be able to meet the objectives of this study as well as the research questions which this study was seeking to answer x CHAPTER FIVE SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 5.0 Introduction This is the last chapter in this research study and it provides an overview of the results obtained after the analysis of the data that was collected from the respondents of this study The researcher has used the literature review and the data analyzed to come up with the summary, conclusions and the various recommendations of this study This study main goal and objective was to analyze the issue of ethical practices in inventory management in various public institutions in Kenya and it focused on Kenyatta National Hospital From the various analysis which the researcher carried out and a clear evaluation and review of the research questions and objectives of the study, the researcher was able to come up with the following conclusions, recommendations and suggestions for further study This study started by closely examining the issue of ethical practices in inventory management at a global perspective before it narrowed down to the situation in Kenya and the in Kenyatta 39 National Hospital This institution was used as the case study and offered the researcher all the respondents and information that was used in this study The study looked on the critically on various variables such as the performance, efficiency and value creation in relation to ethical practices in inventory management Data was collected from the primary and secondary sources and analyzed extensively Thereafter the study interpreted the data and now on this chapter it tries to offer various recommendations and conclusion of the study 5.1 Summary 5.2.1 Performance From the outcome of the findings shows that efficient performance is achieved if inventory management is well monitored, maintained and managed within the best ethical practices in the institution Unethical practices lead to poor performance within these institutions and also inventory management is poorly carried out However, Institutions which manage and maintain ethical practices when it comes to inventory management are able to improve on their performance and achieve their goals in their operations 5.2.2 Efficiency Ethical practices when it comes to inventory management can be able to transform and improve on the efficiency of the institution The outcome of this from the analysis of the data collected is shown very clearly from the findings a good indication that proper inventory management through the most appropriate ethical practices leads to improved efficiency within the institution and this helps in the realization of the institution goals and objectives in the short and the long term basis 5.2.3 Value Creation From the outcome of the data analyzed more value can be created in any given organization as long as they are able to ethically carry out their operations when it comes to inventory management This is shown clearly from the analysis of data Therefore every institution should 40 strive to ensure they adapt the most suitable and proper inventory management systems which ensure ethical practices are maintained 5.2 Conclusion This study established that there are numerous challenges and factors which are influencing inventory management in various institutions and these can be dealt with if ethical practices are maintained in these institutions when it comes to inventory management The study concluded that there are numerous ways and strategies which if implemented effectively they can deal with these challenges and ensure improved performance, efficiency and value creation within these institutions Productivity and enhanced growth can be achieved within pubic institutions if ethical practices are promoted in these institutions This can facilitate also the achievement of goals and objectives of these institutions in the business environment Some of these strategies which the study found to be useful include ethical acquisition and storage of stock in these institutions Proper storage and monitoring of inventory in the institution, Establishment and implementation of accountability and responsibility avenues within the institution these can help cut on various costs within the institution, promote growth of the institution as well as the improvement of inventory management This study also in conclusion found out that many institutions in Kenya need to adapt new and advanced technology for their inventory management in order to be able to tap on the benefits which are brought up by new innovations and technological advancements and this will help to improve their productivity and performance This is because advanced technology comes with new systems as well as new techniques of inventory management This would enhance the operations of these institutions and monitor these operations to ensure that ethical practices are maintained This would also impact on the general returns of the institution 5.3 Recommendations After the analysis and the interpretation of the collected data and information in this study, the researcher gives the following recommendations: 41 Institutions need to upgrade their storage systems within their institutions with more modern and advanced technologically systems and this will ensure that they successfully promote a smooth flow of inventory within their operations and cases of unethical practices will be easily identified and dealt within Unnecessary costs will also be eliminated within these institutions This will promote increased performance In order to improve efficiency within these institutions, ethical practices need to be enhanced by the formulation and implementation of proper code of ethics and policies which are able to oversee proper inventory management within the institution This will promote the overall improvement of how different operations are carried out within the institution and this will enhance the growth and development of these institutions It is also recommended that institutions need to train their employees on the most effective practices of inventory management in order to create more value in their stock and promote ethical practices in their operations This will lead to the positive transformation of the institution and unethical practices will be dealt with in the institution 5.4 Suggestions for Further Research After the analysis and conclusion of this study the researcher suggests that the following areas needs to be evaluated and investigated further because this study did not address them intensively These areas include: Other factors that affect inventory management such as storage systems The influence of inventory management on the performance of public institutions 42 43 References Axsaeter, Sven (2000) Inventory Control Norwell, M.A: Kluwer Donald C Menzel (2014) Ethics Management for Pubic Administrators; Building Organizations of Integrity Routledge Dwyer, F Robert and Tanner, John F (2006) Business Marketing Connecting Strategy, Relationships and Learning McGraw-Hill Howard Smith and Peter Fingar (2003) Business Process Management MK Press Kieso, D.E, Warfield, T.D, & Weygandt, J.J (2007) Intermediate Accounting Canada Kimalu P Kieti & Marimba Kairichi (2014), Research Methods Monitoring and Evaluation Kamumi Enterprises Limited Nairobi Kenya Kothari, C.R (2003) Research methodology, methods and techniques New Delhi: Wishwa Rakashani Mugenda, O M & Mugenda, A.G (2003) Research Methods; Quantitative and qualitative Approaches John Wiley & Sons Nicholas, Anthony (2010) Physical Asset Management Springer Publication Wade, David & Ronald Recardo (2001) Corporate Performance Management ButterworthHeinemann William, M Pride, Robert, James Hughes & Jack, R Kapoor (2011) Business Cengage Learning Zipkin, Paul (2000) Foundations of Inventory Management Boston; McGraw-Hill 44 Marist International University College, (MIUC) (A constituent College of the Catholic University of Eastern Africa), P O Box 24450, Karen – Nairobi Dear respondents, RE: RESEARCH I am a student at Marist International University College (Constitute College of the Catholic University of Eastern Africa) undertaking my Bachelors in Business Management (Accounting option).I am currently working on research project on “ethical practices in inventory management in public institutions in Kenya (a case of Kenyatta national hospital) I will be grateful if you can take some time to answer the questions below Any information contributed will be kept confidential No data will be made public without the explicit permission of the contributor Information obtained from you will be used for research analysis to come up with findings, conclusions and recommendations on the study Thank you for your time and cooperation Yours Faithfully, Caroline Wangui Mbugua MARIST INTERNATIONAL UNIVERSITY COLLEGE 45 APPENDIX 1: QUESTIONNAIRE FOR EMPLOYEES I am currently working on research project on “ethical practices in inventory management in public institutions in Kenya (a case of Kenyatta national hospital)” ” I am a student at Marist International University College (Constitute College of the Catholic University of Eastern Africa) undertaking my Bachelors in Business Management (Accounting option) I will be grateful if you can take some time to answer the questions below Any information contributed will be kept confidential No data will be made public without the explicit permission of the contributor Appendix 1: Specimen Research questionnaire Introduction Name of Institution ……………………………………………… Respondent number ……………………………………………… Gender Male……… …… Female….…………… Age of the respondent ……………………………………………… Years of experience ……………………………………………… What is the level of competitive advantage that your institution enjoys as compared to other institutions in the same industry? Response 0% to 25% 25% to 50% 50% to 75% 75% to 100% Tick Comments Part B: PERFORMANCE Question (Tick where appropriate) Strongly Agree Not 46 Disagree Strongly Agree Sure Disagree Does your institution perform effectively in environment? Has ethical the business practices in inventory management helped in increasing the profit/return levels in your institution? Are there other improving ways profits in of this institution? Are there measures of profit levels in this institution? Does your institution analyze its performance methods using of modern performance analysis? Is performance affected by the inventory costs in this institution? Part C: EFFICIENCY Question (Tick where appropriate) Strongly Agree Not Agree Has ethical practices Sure in inventory management helped in 47 Disagree Strongly Disagree making this institution efficient in its operations? Is the average stock turnover in this institution an indicator of the institution efficiency? Do you think there are others measures which can help in increasing the efficiency of this institution? Is the store ratio in this institution a clear indicator of the efficiency in this institution? Part D: VALUE CREATION Question (Tick where appropriate) Strongly Agree Not Agree Sure Are the services offered by this institution of high value? Does ethical practice help in stock value creation in this institution? Is the management institution doing of enough this to ensure more value is created in the stock of this institution? Are there any other measures which this institution has put for stock value creation? Are employee’s affairs well taken care of in this institution? Is client satisfaction realized in this institution? 48 Disagree Strongly Disagree Part E: GENERAL VIEW A What recommendations would you suggest that would be useful for this institution when it comes to the issue of ethical practices in inventory management? ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… Thank you for your participation Appendix 2: Document Analysis Guide Standard Actual QUESTIONS How is the stock turnover in Kenyatta National Hospital? How is the store ratio in this 49 institution? How well is Inventory controlled and monitored in Kenyatta national Hospital? What is the net profit level margin of this organization? How has value creation increased profitability in Kenyatta national Hospital? How has inventory cost affect profitability in Kenyatta national hospital? 50 ... comes it inventory management in any institution When monitoring and control is maintained in ensuring that inventory management is carried out in the most ethical ways in different institutions,... influenced by ethical practices in inventory management in Kenyatta National hospital in Kenya b) To investigate efficiency changes due to ethical practices in inventory management in Kenyatta... (Lewa, 2007) 2.3.3 Unethical Practices in Inventory Management These are the main unethical practices in inventory management functions and practices and they include: Conflict of interest, fraud,