Abstract: Inventory management is a very important function that determines the health of the supply chain as well as the impacts the financial health of the balance sheet and income statement. Every organization constantly strives to maintain optimum inventory to be able to meet its requirements and avoid over or under inventory that can impact the financial figures or worse draws the company into bankruptcy. The general objectives of this study were to investigate the effect of inventory management on financial performance of manufacturing companies in Mogadishu, Somalia. Also this study used a sample of five manufacturing companies, Anshur Factory, Afi Water Supply, Coco Cola, Mubarak Factory and Dalsan Water Supply. Specifically, this study was evaluated the effects of inventory planning management, inventory control management, inventory quality management and inventory recording management on financial performance in Mogadishu. Also this study used the theory of economic order quantity, Just in Time Model and Pareto (ABC) Model. The study adopted a descriptive study design in data collection. The target population of this study was 100 employees of finance and procurement departments of all manufacturing companies in Mogadishu. This study was used the purposive random sampling technique. The data collection procedure of this study is through hand picking. Primary data was collected by use of questionnaires which are administered through drop and pick method. Data screening was done to identify any missing data and it will be further test for reliability and normality. Data was analyzed using SPSS version 22. Descriptive statistics e.g standard deviations and inferential statistics such as Pearson’s correlation, ANOVA and multiple regression analysis was used for further analysis. The findings of the study was indicated that inventory planning was statistically associated with financial performance (p<0.05), as well as the results indicated that Inventory Recording was statistically associated with financial performance (p<0.05). Similarly the result indicated that inventory controlling was statistically associated with financial performance (p<0.05), and finally the results indicated that inventory quality management was statistically associated with financial performance (p<0.05).The conclusions were based on the objectives of the study that inventory management drivers had a significant influence on financial performance of manufacturing companies. The results established that inventory management drivers were found to significantly and positively influence financial performance. The study recommends the adoption of the inventory management and financial performance of manufacturing companies in Mogadishu. The inventory management was recommended as a useful design for practicing manufacturing companies with respect to the implementation of best practice.
Keywords: Planning, Control, Record Keeping, Quality Management and Financial Performance.
Title: EFFECT OF INVENTORY MANAGEMENT ON FINANCIAL PERFORMANCE ON MANUFACTURING COMPANIES IN MOGADISHU, SOMALIA
Author: Mohamed Nur Osman, Aaron Mukhongo
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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