THE IMPACT OF INVENTORY CONTROL SYSTEM ON PERFORMANCE OF SELECTED QUOTED PHARMACEUTICAL FIRMS IN NIGERIA

The successful operation of any business enterprise depends largely on the effective management of its inventory to provide services to customers or users and remain financially viable. Inventory management does an essential role in every organization because an ineffective inventory system will result in loss of customers, sales and finally profit. Effective inventory management produces more sales for the company, which affects the financial performance of the entity (Francis, K, Timbirimu, Kilzah, & Olutayo, 2017). Inventories constitute a large size of the working capital of a business as such, it is very important to manage it efficiently and effectively to avoid unnecessary investment. Any firm ignoring the management of inventories will jeopardize its long-run profitability and may ultimately fail. Kumar (2016), posited that inventory or stock refers to the holding of a company’s, operational inputs and resalable output. Furthermore, inventory management dealt with the regulating level of investment in inventory in such a way that the control procedure should be advantageous to the firm in the form of an increase in the worth of the firm rate of return. The performance of a corporate entity can be maximized easily with the aid of an effective inventory management system. Proficient inventory management increases the financial performance of an entity, which indicates the ability of a corporate entity to generate earnings, from the use of its assets for a specific time, in essence, profit is an index used to measure business performance. Most managers have ignored the potential saving resulting from proper inventory management by looking at inventories as an essential evil and not a benefit that needs to be managed. However, inventory is vital to an organization from a financial and operational standpoint. In health care facilities (HFs) it refers to the stockpile of pharmaceutical products kept meeting forthcoming demand since pharmaceuticals are key elements of a well-functioning healthcare system.