Inventory Management Practice in Micro and Small Enterprise: The Case of MSEs’ Manufacturing Sub Sector Arsi Zone, Ethiopia

Abstract

This study aimed to empirically examine the impact of inventory management practice on firms’ competitiveness and organizational performance. Data for the study were collected from 188 micro and small enterprises (MSEs) operating in manufacturing sub sector and the relationships and hypothesis proposed in the conceptual framework were tested using Structural Equation Modeling (SEM). The results indicate that higher levels of inventory management practice can lead to enhanced competitive advantage and improved organizational performance. Also, competitive advantage can have a direct, positive impact on organizational performance. Therefore, it is recommended for policy makers, universities, NGOs and any concerned party who are engaged in supporting of micro and small enterprises need to work in providing the necessary training and resource to promote the inventory management practice of MSEs which will result in increasing their competitiveness and organizational performance. That would enhance their contribution to economic development of the country.   Note that, the conclusion obtained from this study may not be used to generalize to large and medium scale as well as overall sectors since its focus is only from the MSEs manufacturing sub sector points of view.

Keywords: Inventory management; manufacturing, performance, competitiveness, SEM