Inventory Management Practices on the Financial Performance of Small-Scale Businesses: A Case Study of Bugujju Central Division Mukono District

Abstract

The study examined the effect of inventory management practices on the financial performance of small-scale businesses: a case study of small-scale businesses in Bugujju, Central Division Mukono District. It specifically focused on; the contribution of inventory management practices on the financial performance of SSB, the various types of inventory management practices of SSBs, the challenges associated with inventory management practices of SSBs and suggested strategies to overcome them The study was carried out using a cross-sectional survey research design where quantitative research approach was used as well. The data was collected using questionnaires with a stratified sampling method. A sample size of 80 respondents who are small-scale business owners in Bugujju, Central Division, Mukono District was also used in the study. The findings revealed that inventory management practices contribute to the financial performance of small-scale businesses for example maintaining of inventory records which are regularly updated lead to improved business financial performance through enhanced efficiency, profitability, waste and cost reduction. Additionally, the study revealed that the challenges of inventory management practices were; predicting customer demand accurately is challenging, especially products with seasonal variations or short product lifecycles, balancing inventory levels to meet customer demand without overstocking or understocking, coping with supply chain disruptions, caused by events like natural disasters and pandemics, was another challenge The study recommended that owners of SSBs in Bugujju as well as other businesses in different areas should install computerized packages to enable recording of inventory to avoid unintended ix errors. Lastly, in order to prevent record duplication resulting from price variations, it was recommended to implement the FIFO (First In First Out) and LIFO (Last In First Out) systems.