Inventory Management and its effect on customer

satisfaction
Muhammad Nabeel (BSF1602162) (A)
Department of Business Administration, University of education, Multan campus,
Lahore Pakistan
E-mail:mn77179@gmail.com
Abstract:
This study examines how inventory management positively affects customer satisfaction and how easy it
is. Check the functionality. It also helps retailers organize stocks to identify needs And inventory. Proper
product management can reduce product shortages Reduce customer value. The purpose of the study
Customer satisfaction risk Find out how to meet customer needs with help Perfect product design. The
document also defines the basic relationship between customer quality requirements Page 12, Knowledge
Economy, Volume 4, Issue 3, Third Quarter of 2012 First of all, can you get your attention? Discover the
poor relationship between performance and customer satisfaction.

Introduction:
Customer satisfaction entirely depends on the effective supply chain management which is not an easy
assignment. The company has previously used a lot of creativity to prevent lack of experimentation and
increase customer satisfaction, although it has been noted that "satisfaction" depends on the individual,
although efficient inventory management is the only way to increase the satisfaction of customer. How
did it happen? This warehouse forces manufacturers to stock large quantities of resources, labor and
finished goods. The excessive shortage of manufactured goods must be protected.

Large stocks are not a ideal option for large companies to deal with starvation. As we know, large stocks
consist of three different value types, this is the maintenance fee when stocks have raw materials.
Ongoing work or final product. The stock charge, is the variety of 20 to 40 percent of annual stock in
rupees. Other variables associated with acquisition costs are alternative prices, such as the need for
additional storage space, increased rents, higher inventory rates and prices of older products.

Background of study:
Atkinson said that Manufacturers and retailers can then use the technology to process this inventory,
which is used by almost all multinationals. This inventory management system uses efficient stock
application applications and good forecasting techniques. These systems make inventory management
more resourceful and useful. According to retail historian, Robert Spector, a serious factor for retailers is
that they have to have a good inventory system. If the retailer does not have a good inventory system,
they will not be able to estimate burden with any kind of exactness. This might result in them running out
of stock every so often (Levinson, 2005).

A customer satisfaction survey found that there may be a disproportionate involvement between effect
and cause or between the results of employees and the organization. For instance, 5% of loyalty increase
the 20% to 80% of profit of any organization. (Cacioappo, 2000). Regular customers will most likely
offer to buy or purchase goods or services from other people. Studies show that 4% of consumers are
dissatisfied or complain about products and / or services. Edward Marien, director of supply chain
management at the University of Wisconsin, defines “perfect order” as when a consumer finds the
accurate product, goal, condition, certification, and rate.

Significance of study:
The main purpose of this article is to examine the impact of inventory options and management
techniques on the efficiency of an extended and included retail supply network and to link it to purchaser
satisfaction. In general, we will try to examine the company's inventory management system and focus on
customer satisfaction variables. We then examine three options for inventory planning with the accuracy
of the operation of the supply network: efficiency, technology and quality of user measurement. The main
reason for this research is to know how to improve inventory management to get the perfect arrangement.
In other words, how can inventory management be improved to increase customer satisfaction? We have
already argued that satisfaction cannot be determined by its smart nature.

However, we will do our best to provide possible research and suggestions. For this purpose we used the
leading multinational company of fast food in Pakistan, Macdonald. We conducted a survey and two
different questions to learn about inventory management processes and customer satisfaction.
Organizations like Macdonald use recent inventory management processes to develop new and more
refined methods. These methods help to optimize inventories, which decrease inventory and lower costs,
and make the most of customer service.

Researcher found a group of labor on inventory management and customer satisfaction but planning are
missing in customer collaboration which is important part for inventory management as well as for
customer satisfaction. This research would find importance of customer collaboration in turns of effective
inventory management and customer satisfaction.

Problem Statement:
The problem statement of our research is “how the effective inventory management can affect the
customer satisfaction”. This research examines the association between useful inventory management and
customer satisfaction with the purpose of having whole orders and on time deliveries. This research’s
reason is to find ways to get better inventory management, thereby increasing customer satisfaction. Lee
and Kleiner (2001) stated that in order to manage inventory management successfully, “retailers should
be aware of customer needs, salesperson partnerships, expertise, data reliability, and presentation
capacity”

Research Objective:
The objectives of this research are:

1. Establish the relationship between customer collaboration and inventory management

2. Establish the relationship between customer satisfaction and inventory management

3. Establish the relationship between customer satisfaction and customer collaboration

Research Questions:
The research questions are:

1. What is the relationship between customer collaboration and inventory management?

2. What is the relationship between customer satisfaction and inventory management?

3. What is the relationship between customer satisfaction and customer collaboration?

Literature-Review:
The inventory control section is located behind the text where the warehouses and grain warehouses in
Egypt and Babylon have simple structures that include pictures representing the shareholders, as well as
the amount and quantity of stock displayed.

At the beginning of the store, the seller records the purchase or the number of units at the end of the day
and does our best to anticipate future needs. Experience and instinct are important skills. But this is not
the right way to go, even for relatively small processes of modern standards.

Storage management systems are designed to monitor product availability, schedule purchases, and
manage old or sold products. Achieving a product is just one way to create an inventory management
system that seeks to satisfy customers. A complete understanding of the impact of inventory control on
customer satisfaction will help you create an effective inventory management system.

It provides important information about inventory levels, locations and forecasts, as well as data on retail,
order status, delivery schedule, production and capabilities.(Lee and wang,2000).At each stage, it is easier
to reduce security measures, which reduces the cost of transporting measures (Dresner, Yuliang andEvers,
2007). Timely products available to customers require a shorter delivery period (Ginemez and
Tachizawa, 2005). For a while, chain members can access the warehouse information needed to design
(Fasanghari, Roudsari and Kamal, 2008). This allows chain partners to plan carefully so that not all chain
members delay inventory and avoid stocks too(Chandra, 2000; Patel, 2008). To do this, members of the
food industry often receive the required information about buyers' sales data and online or electronic
data exchange levels (Klarmann, Grozdanovic and Homburg, 2007).

It stresses that the buyer's performance is achieved by reducing the time of the order cycle and
indicating that by reducing the manufacturer's production, the dimensions of supply to buyers must be
accurate. Buyers are happy that retailers are responding quickly and have the flexibility to respond
(Vander, Donselaar and Verwijmeren, 1996). On the other hand, it is likely that customers will never
return if they experience a bad experience, this will lead to many sales losses that members are running
out of(Corsten and Gruen, 2002).This creates chain members to maintain security in order to comply
with buyer's orders or enter into long-term relationships that require trust(wang,2000).When
manufacturers work closely with subsequent members to obtain buyer's information and take
advantage of new market opportunities, product cycle time will be reduced(Holmstrom,2002).Working
with customers allows chain members to reduce the time it takes to place the product, realizing that
there is enough to meet the needs of the buyer. This shutter manual will allow members of the chain to
deliver ad hoc missions to buyers(keong,2005).Therefore, on behalf of the buyer, orders are submitted
automatically when the stock is below a certain level. In this scenario, the seller is responsible for
creating and planning the stock. Storage management and continuous fuel systems are useful for
exchanging information used to manage inventory levels (Cooke, 1998; Skjoen Larsen, 2003; Bernstein ,
2005).
Thus, chain members can offer a product that meets the buyer's specifications, so the buyer will
be able to purchase the product with confidence, which will be offered to it. To ensure buyers buy more,
chain members must be stable and loyal and should do what they did before (Kim and Fritiche, 2003).

Time-to-Fulfillment:
Good inventory control means that your order has decreased. When you use the stock management
system to analyze product sales, you can put popular items in stock and order an order immediately. You
also know what special orders are being sold from time to time, and you have these products available in
limited quantities to keep inventory costs low and to develop a positive reputation for quick collection of
special orders. Resource management helps maintain customer satisfaction with the product. When the
product is returned due to its damage or being damaged upon arrival and is still under warranty,
arrangements can be made with the manufacturers to replace the product immediately to satisfy the
customer. If you are a manufacturer, you need to maintain additional inventory levels that reflect rates of
return to maintain customer satisfaction.

Research Gap:
Previous researches just focused on this topic only one company of food sector in Pakistan which is
biscuit company which can be very small size for considering actual finding on best inventory
management on customer satisfaction.

Now I would like to conduct research on this topic more than 2 companies for collect data companies in
food sector of Multan in Restaurants and Biscuit Company.

Pricing:
If you have a well-designed warehouse management system, you can shorten the life of the product. If
you do not take additional equipment for a long time, the cost of inventory will decrease. These are
savings that you can transfer to customers at a lower price.

In-Stock:
A good inventory management system means you always have an existing warehouse number. Part of
providing good customer service is providing accurate information, even if the customer does not want to
make a purchase on that day. Provide accurate inventory information for that, improve your company’s
image, and add another item to the item.

Conceptual framework and hypothesis development:

Inventory management
Customer satisfaction

Hypothesis:
H1: Inventory management has significant effect on customer satisfaction.
Ho: Inventory management has not significant effect on customer satisfaction.
H2: There is a positive relation between inventory management and customer satisfaction.
Ho: There is a negative relation between inventory management and customer satisfaction.
Methodology:
● Research design:
In this research paper, we adopted cross sectional correlation. This purpose that this research details
the previous study and the research done with these very variables.

● Research strategy:
This research paper is based on the cross sectional correlation. So I use a survey strategy to collect the
quantitative data with the help of questionnaire and interviews to measure the satisfaction level of
customer and inventory management system.

● Extent of researcher interference:

 That article study, my research interference is minimal because this study is conducted is a normally
event so it is minimal interference of researcher.

● Study setting:
I conducting that this research study in a natural environment, so that my research study setting is a
non-contrived because it is a quantitative study.

● Unit of analysis:
My unit of analysis that the research study is an individual, so that my study questionnaire is filled by
individual employee of food sector in Multan.

● Time horizon:
My research study is completed in 4 month so that my time horizon of study is a 4 month.

Data collection sources:

We have completed a primary and secondary survey of the data in order to collect the data. The primary
data were used to complete the questionnaire, and the secondary data were used to review the literature
review data.

Sampling design:
● Population:
To search out the Inventory Management and its effect on customer satisfaction I pick up the
population of food sector in Multan.

● Sample:
We take the 100 questionnaire of sample size of employees and customer .

● Sampling technique:
For the determination of gathering the data I pick up the probability and simple random sampling
technique.

Measurements and measures:

My research study that despite the measurements the relationship among the variables
observations.
● Operational Definition:
● Inventory Management:
Stock management involves the process of ordering, storing and using a company's stock. This
includes managing raw materials, parts and final products, as well as storing and processing these
products.

● Customer satisfaction:
A term commonly used in marketing is a measure of how well a business understands products and
services or exceeds customer expectations. Customer satisfaction is defined as the number of
customers or the percentage of the total number of customers whose experience in the company or its
products or services (rank) exceeds the objectives of their satisfaction.

● Instruments used for research:

My instruments about the research study questionnaire, interview, observation and the survey
 analysis. These are used for the research.

● Scaling:
Used 5 points lickert scaling with the pattern of strongly disagree, disagree, neutral. Agree, strongly
agree.

● Coding:
In the demographic sector I assign the age1 for 16-25, 2 for 25-30, 3 for 30-35, 4 for more than 35,
qualification 1 for Graduation, 2 for Bachelor, 3 for masters, 4 for PH.D., in gender 1 for female and
2 for male ,.

I assign the 1 for strongly disagree and 2 for disagree and 3 for neutral and 4 for agree and 5 for
strongly agree.

Data analysis tool:

After the gathering of data we evaluate the data through the SPSS. After finding the statistics we set the
records in the software and different assessment which consists the correlation, reliability.

Result Analysis:
Frequencies:

Statistics
Age Gender Qualification
Valid 69 68 69
N
Missing 0 1 0
Frequency Table

Age
Frequency Percent Valid Percent Cumulative
Percent
16-25 47 68.1 68.1 68.1
25-30 14 20.3 20.3 88.4
Valid 30-35 6 8.7 8.7 97.1
Above 35 2 2.9 2.9 100.0
Total 69 100.0 100.0
Interpretation:
In this article, 47 people who are fill this questionnaire under 16 to 25 years old, 14 people who are under
25 to 30 age, people who are under 30to35 years old only 6 and only 2 people who are above to 35.These
people are fill my questionnaire.

Gender
Frequency Percent Valid Percent Cumulative
Percent
Female 13 18.8 19.1 19.1
Male 52 75.4 76.5 95.6
Valid Prefer not to say 3 4.3 4.4 100.0
Total 68 98.6 100.0
Missing System 1 1.4
Total 69 100.0
Interpretation:
In my research article, total number of female is 13, male are 52 and other are 3. This show that mostly
male people are fill my questionnaire.

Qualification
Frequency Percent Valid Percent Cumulative
Percent
Graduation 20 29.0 29.0 29.0
Bachelor 25 36.2 36.2 65.2
Valid Masters 20 29.0 29.0 94.2
PHD 4 5.8 5.8 100.0
Total 69 100.0 100.0
Interpretation:
In my research ,my respondent who are graduate are 20, bachelor qualified respondent are 25, masters
people are 20 and PHD qualified people are only 4.
Descriptive:

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Inventory Management 66 2.58 4.50 3.5278 .43519
Customer Satisfaction 63 2.38 4.75 3.6508 .48199
Valid N (listwise) 61
Interpretation:
In this article, I calculate the values by (Mean-S.D+Minimum) which is 5.5 its mean that it near the
maximum value mostly are strongly agree so there is a significance effect on customer satisfaction. And
also after checking the result of H2 is 5.4 which means that there is a positive relation between inventory
management and customer satisfaction.
Recommendation:
Based on the learning, here is a suggestion for future integration.
1. They must design reasonable and affordable pricing systems for the middle class and lower middle
class .
2. They need to provide a home delivery system to improve customer satisfaction level.
3. They need to add some products to the advertising list.
Limitation and future prospects:
The term was very narrow, but a reasonable sample was taken and it is impossible to generalize the result
to everyone. Researchers and scholars may deportment research under changed cultural and demographic
situations. Data truth and technology may be secondhand in future studies by other investigators. My
study is cross sectional study if anyone want to conduct more research on this study than choose
longitudinal study. And select the customer collaboration as a variable for further results.

Conclusions:
The primary impartial of this paper was to learning the impact of customer fulfillment parameters and
inventory supervision techniques on the presentation of an expanded and full supply chain. Exactly, we
tested the effect of significant and relationship between inventory management and customer satisfaction.
After the analysis shows the positive result. The results indicate that inventory management have a
significant impact on Customer fulfilment.