Assessing the effect of inventory management on the profitability of manufacturing enterprises in South Africa

Abstract

Inventory constitutes a large part of the total investment of manufacturing companies, so its management is of utmost importance. Inventory management is the efficient oversight of goods or materials within a company. It involves managing inventory levels, storage, tracking, and valuation. The goal is to ensure the right amount of inventory is available at the right time, place, and cost. Profitability is a measure of a company's ability to generate profit or financial gain. The aim and primary objective of this study is to assess the effect, if any, that inventory management has on the profitability of manufacturing enterprises in South Africa. The population that formed part of this study included a poultry abattoir, an animal feed mill, a soya bean processor, and a maize and wheat mill. Qualitative data was collected via interviews with relevant personnel from these entities, and the sampling was done using non-parametric non-probability sampling using convenience sampling techniques. The literature review explores how inventory management affects profitability in manufacturing enterprises and the factors and challenges involved. The study used qualitative research methods, including interviews, to collect data from manufacturing companies in the agricultural sector. The findings suggest that effective inventory management practices have a significant impact on profitability, and recommendations include improving communication and implementing risk management measures. The study focused on the link between inventory management and profitability and included practical steps to improve profitability through accurate inventory management practices.