INVENTORY MANAGEMENT PRACTICES AND PROFITABILITY OF SMES: EVIDENCE FROM SUPERMARKETS AND WATER PRODUCERS IN DELTA STATE, NIGERIA

Abstract

This study examines the impact of inventory management on small and medium-scale enterprises profitability with a focus on supermarkets and bottled/sachet water producers in Nigeria. The specific objective of the study aimed at investigating the impact of inventory turnover, inventory ordering frequency, and inventory level on SMEs profitability in Nigeria. The population of the study consists of all supermarkets and bottled/sachet water producers operating in Delta State. Data were collected via a self-designed structured questionnaire administered to ninety respondents from the selected sampled SMEs used for the study. Data gathered for the study were analyzed using the multiple regression model technique via the IBM statistical package for social sciences (SPSS) version 23. The findings of the study revealed that inventory turnover has a positive and significant relationship with SMEs profitability. The study also revealed that both inventory ordering frequency, and inventory level have positive relationships with SMEs profitability, however, these positive relationships were not statistically significant. The study concludes that there is a relationship between inventory management and SMEs profitability. On the strength of the above findings, the study recommends that managers of SMEs endeavor to keep an adequate level of inventory, taking into consideration the business turnover rate coupled with the delivery lead time of their various suppliers, and knowing full well that inventory management directly impacts its profitability.