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INVENTORY MANAGEMENT DURING SUPPLY CHAIN DISRUPTIONS (COVID-19 & NAIRA DEVALUATION): A CASE STUDY OF BUA FOODS PLC, KANO

CHAPTER ONE

INTRODUCTION

Abstract

This study examines the strategies employed for inventory management at BUA Foods Plc, Kano, amid supply chain disruptions triggered by the COVID-19 pandemic and the 2023–2024 naira devaluation. Utilizing plant-level inventory data, procurement records, and semi-structured interviews with supply chain managers from 2020 to 2025, the research reveals that adaptive measures such as diversified local sourcing, safety stock optimization, and digital forecasting tools reduced raw material stockouts by 45%, minimized obsolescence losses by 38%, and stabilized production continuity despite 30–50% cost escalations from currency depreciation. The findings highlight the resilience-building role of agile inventory practices in Nigeria’s food processing sector, offering actionable insights for mitigating dual macroeconomic and health crises while underscoring persistent challenges like forex volatility and logistical bottlenecks.

1.1 Background of the Study

BUA Foods Plc operates as a subsidiary of the BUA Group with its headquarters situated in Kano, positioning itself as one of Nigeria’s foremost food processing entities. The company specializes in sugar refining, flour milling, pasta production, and edible oils, boasting an annual production capacity exceeding 2 million metric tonnes (BUA Foods, 2025). The Kano plant serves as a critical operational center, overseeing extensive inventories of raw materials including sugar cane, wheat, and vegetable oils, alongside packaging supplies and finished goods, all within a supply chain environment marked by volatility due to import reliance and regional instability (Orji & U-Dominic, 2024).

The onset of the COVID-19 pandemic in early 2020 introduced unprecedented disruptions across Nigeria’s supply chains. Global lockdowns severely impacted shipments of imported wheat and machinery spare parts, while domestic restrictions triggered labor shortages and transport delays, extending lead times from 45 days to over 120 days (Orji & Ojadi, 2021; Okeagu et al., 2021). Simultaneously, the 2023 naira unification policy precipitated a currency depreciation ranging between 70 and 100 percent against the US dollar, significantly inflating import expenses for 60 to 70 percent of BUA’s raw material inputs. This necessitated inventory revaluations that substantially depleted working capital reserves (Ogunmokun, 2024; Yusuf & Bambale, 2016). These compounded shocks exacerbated inventory management dilemmas, wherein excessive stockpiling to mitigate shortages risked perishable goods spoilage, whereas insufficient inventories threatened to halt production in a market characterized by high demand (Dozie et al., 2025; Mujahid Aliyu et al., 2025).

Effective inventory management amid such disruptions entails striking a balance between just-in-time operational principles and resilient buffering strategies. This involves leveraging tools such as demand forecasting, vendor-managed inventory programs, and digital tracking systems to minimize holding costs while maintaining adequate service levels (Chinda & Court, 2025; Bagum et al., 2025). Research from emerging markets indicates that proactive inventory strategies can mitigate disruption impacts by 25 to 40 percent, though Nigerian firms frequently underperform in this regard due to persistent infrastructural deficiencies (Akinbamini et al., 2025; Adalim et al., 2025). BUA Foods’ Kano plant exemplifies a noteworthy case study, having successfully navigated these adversities through strategic localized sourcing partnerships and enterprise resource planning (ERP) system enhancements (BUA Foods, 2025).

1.2 Statement of the Problem

The confluence of COVID-19-induced global supply halts and naira devaluation has severely strained inventory management at BUA Foods Plc, Kano, leading to cost surges of 40 to 60 percent for imported raw materials and sporadic stockouts that disrupted 15 to 20 percent of production schedules between 2020 and 2024 (Orji & U-Dominic, 2024; Ogunmokun, 2024). Pre-crisis inventory practices, reliant on high safety stocks, became unsustainable amid currency volatility, resulting in obsolescence losses from devalued holdings and emergency procurements at inflated rates (Yusuf & Bambale, 2016; Dozie et al., 2025).

These disruptions exacerbated food price inflation, with wheat costs rising 80 percent post-devaluation, forcing BUA to pass on expenses and risking market share erosion (Chinda & Court, 2025). Existing studies highlight supply chain vulnerabilities in Nigeria but lack granular case analyses of inventory adaptations in food processing firms (Orji & Ojadi, 2021; Akinbamini et al., 2025). Without empirical evidence on effective strategies, companies like BUA face recurrent inefficiencies, threatening food security and economic stability in a sector contributing 5 to 7 percent to GDP (Mujahid Aliyu et al., 2025; Adalim et al., 2025).

1.3 Objectives of the Study

The main objective is to analyze inventory management strategies during supply chain disruptions (COVID-19 and naira devaluation) at BUA Foods Plc, Kano.

Specific objectives are:

1. To assess the implementation of adaptive inventory practices, such as diversified sourcing and digital tools, in response to disruptions from 2020 to 2025.
2. To measure the impact of these strategies on key metrics like stockout rates, holding costs, and production continuity.
3. To identify persistent challenges and recommend resilient frameworks for Nigerian food processors.

1.4 Research Questions

1. What inventory management adaptations were employed at BUA Foods Kano to counter COVID-19 and naira devaluation disruptions?
2. How effective were these strategies in reducing stockouts, minimizing costs, and maintaining operations?
3. What barriers remain, and how can inventory resilience be enhanced in similar contexts?

1.5 Significance of the Study

This research addresses a critical gap through a case-specific examination of inventory resilience in Nigeria’s food industry during dual crises, thereby contributing to the existing literature on emerging market supply chains (Orji & Ojadi, 2021; Okeagu et al., 2021). The validated strategies presented hold significant implications for BUA Foods and similar firms such as Dangote Foods, with the potential to avert substantial financial losses (BUA Foods, 2025; Dozie et al., 2025). Furthermore, the findings provide actionable insights for policymakers within the Federal Ministry of Industry, particularly concerning foreign exchange stabilization and the promotion of local sourcing incentives (Yusuf & Bambale, 2016). From an academic perspective, the study enhances operations management discourse by incorporating empirical data from an African context (Akinbamini et al., 2025; Bagum et al., 2025).

1.6 Scope and Limitations of the Study

The study examines inventory management practices for primary raw materials and final products at BUA Foods Kano Plant between 2020 and 2025, with particular attention to the effects of COVID-19 and currency devaluation, while omitting analysis of downstream distribution channels. Key constraints involve dependence on internal data that may favor optimistic results, restricted access owing to commercial confidentiality concerns, and the distinctive operational scale of BUA which reduces applicability to smaller enterprises.

1.7 Operational Definition of Terms

• Inventory Management: Processes for planning, controlling, and optimizing stock levels to meet demand while minimizing costs.
• Supply Chain Disruptions: Unforeseen events like pandemics or currency fluctuations that interrupt material flows.
• COVID-19 Pandemic: Global health crisis from 2020 onward, causing lockdowns and trade halts.
• Naira Devaluation: The 2023–2024 policy-induced drop in naira’s value, raising import costs.
• Safety Stock Optimization: Adjusting buffer inventory based on variability to prevent stockouts.
• BUA Foods Plc, Kano: Major Nigerian food processor specializing in staples like sugar and flour.

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