European Journal of Accounting, Finance and Investment

Lean Manufacturing Practices And Financial Performance Of Listed Fmcg Firms In Nigeria

Fred Vincent Fred-Horsfall, PhD

Lecturer, Department of Accountancy, Faculty of Management Sciences, University of Port Harcourt

ThankGod Obulor Imo, PhD

Associate Professor, Department of Accountancy, Faculty of Management Sciences, Rivers State University

Keywords: Just-in time, Lean Manufacturing, Financial Performance, Nigeria

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Abstract

Due to a knowledge gap on how lean manufacturing practices by manufacturing firms translate to financial performance, this study was conducted to investigate how just-in-time production and raw material implementations affect financial performance in Nigeria. Accordingly, a regression analysis was performed to ascertain the effects of just-in-time production and raw material inventory implementation on financial performance. Financial performance was measured in terms of return on asset while labour productivity was employed as the moderator variable. Secondary data were collected from annual reports of the firms in the sample pool, following judgmental sampling of listed firm in the manufacturing sector of the Nigerian Stock Exchange. It was found that JIT production and JIT raw material inventory implementations respectively impact positively on financial performance as long as labour productivity is not controlled. But when labour productivity is controlled, JIT production failed to be significant at 5% level while JIT raw material inventory implementation remained significant at 1% level. Also, though labour productivity exerts positive impact on financial performance, there is rather a discordant interaction with JIT raw material implementation, contrary to the much touted synergistic interaction. We therefore conclude that labour intensity dominated manufacturing environment like Nigeria is ideal for the implementation of lean practices, among others. However, we recommend that managers should consider the systemic implications of implementing different lean practices, as these practices may exhibit incongruent interactions, among others.

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