THE CONTRIBUTION OF INVENTORY MANAGEMENT TO PROFITABILITY OF SMES. A CASE STUDY OF THE TAMALE METROPOLIS

Abstract

This study examined the the Contribution of Inventory Management to Profitability of SMEs in the Tamale Metropolis. The study adopted the descriptive and quantitative study designs and used the purposive sampling technique to select 72 small and medium enterprises in the Tamale Metropolis, who served as sample size for the study. Respondents constituted owners/managers of SMEs. Questionnaires were designed based on past empirical studies and data collection was aided by enumerator. The data collected were analysed using descriptive statistical tools (frequencies, percentages, mean scores) as well as inferential statistics (correlation coefficient, linear regression analysis) using SPSS for windows, version 26. The findings revealed that SMEs in the Tamale Metropolis have effectively adopted inventory management practices. Also, inventory management practices had a positive and significant relationship with the performance of SMEs in the Tamale Metropolis. Finally, there was a positive effect of SMEs competitive advantage on the performance of SMEs in the Tamale Metropolis. The study recommended that government organizations that support SMEs, such as the Ghana Chamber of Commerce and the GEA, encourage owners and managers of small and medium-sized businesses to adopt inventory innovations in order to create long-term stability and increase the firm's profitability.