Factors of inventory management on inventory performance measures: case study from Sri Lankan wholesale industry

Abstract

Inventory management is a crucial component of sustainability since it enables companies to reduce expenses, enhance cash flow, and increase profitability. Inventory makes up a majority of current assets in the wholesale sector, where errors are bound to happen occasionally, given the frequent large-scale inventory management. This research focuses on identifying the factors and performance measures of inventory management and evaluating the impact of these factors on the performance measures. Initially, the factors and performance measures were identified through a systematic review and industry experts’ opinions. Twenty-two factors were identified and categorized into organization, facilities and equipment, processes, and practices categories. The 24 performance measures were grouped into the operational, customer satisfaction, and environmental categories. A questionnaires survey was conducted with 126 managerial-level employees of wholesale organizations. Data analysis was done using the PLS-SEM method to validate the relationship between the variables and the moderation effect of firm size on these relationships. The findings reflect; organizational factors, processes and practices, and facilities and equipment, influence the performance measures. Among these factors, organizational factors were the most significant in influencing customer satisfaction and operational and environmental performance measures. For most relationships, the firm size did not have a moderation effect.