Assessing the Impact of Supply Chain Management Practices on Inventory Control and Customer Service in Organizational Performance

Abstract

In competitive business environments, Supply Chain Management (SCM) has emerged as a vital operational strategy, aiding organizations to enhance their inventory management, customer service delivery, and overall operational performance. Importance of SCM Integrated System for organisations to improve procurement coordination, inventory optimisation, customer responsiveness and operational sustainability. But many organizations, especially those in developing economies, still have limited visibility of their inventory, poor coordination with suppliers, poor forecasting systems, and weak technological integration, all of which have a negative impact on service delivery and organizational efficiency. Although many empirical studies have been conducted to capture the operational aspects of SCM, the few studies that have studied the operational aspects of SCM have not used advanced multivariate and predictive analytical techniques. It became necessary, therefore, to have a more comprehensive and analytically complete analysis of SCM practices and inventory service performance, which was the reason behind this study. The specific objectives were: to explore the relationship between SCM practices and inventory service performance; to test the impact of profitability, customer base, operational importance and organizational impact on inventory service outcomes; to test the latent structure of SCM variables using Exploratory Factor Analysis (EFA); to test the dimensionality of SCM variables by Principal Component Analysis (PCA); and to measure the predictive value of the SCM indicators. The structured questionnaires were used to gather primary data from the organizational staff in charge of supply chain and inventory operations. Chi-square statistics, binary logistic regression, ordinal logistic regression, EFA and PCA were used to analyze data. The results showed that there is a significant relationship between inventory control with customer service performance (χ² = 13.76, p = 0.001), SCM significance (χ² = 5.88, p < 0.001), and SCM impact (χ² = 5.78, p < 0.001). The profitability (OR = 1.995 × 10²¹) and customer base (OR = 5.915 × 10⁸) were the two factors which were positively affected by inventory service outcomes. The first principal component of the PCA explained a 94.14% of the total variance. The study found that implementing effective SCM practices can significantly enhance inventory efficiency, customer satisfaction, and organizational performance. For improving the operational sustainability and service efficiency, the study suggested using integrated technological elements of supply chain and designing profitability oriented and customer oriented policies for supply chains.