ASSESSING THE INVENTORY CONTROL SYSTEM OF PHARMACEUTICAL COMPANIES IN DOUALA- CAMEROON

ABSTRACT

The focal point of the study was conducted to assess the inventory control system of pharmaceutical companies. The main purpose of management of inventory is basically to try and balance the conflicting economics of not wanting to hold too much inventories or stocks. However, most managers ignore the saving potential that arise from proper management of inventories, trying to treat inventories as a necessary evil and not as an asset that require to be managed. As such, some firms do not or ignore to control their inventory holding, this usually leads to under stocking and causing the firm to stop or slow its production. This study sought to examine the effect of inventory management on the performance of Pharmaceutical companies. This study employed a descriptive research design. The workers of the organization were considered as the respondents of the study. With the complexity in managing a large population, a sample of 40 workers were randomly selected to constitute the respondents of the study. Data was collected from these respondents with the use of questionnaires, interview and observation. The collected data was analyzed in tables and bar charts. With the use of Excel, the collected data were summed and analyzed with the use of the regression method. The analysis shows that there is a positive relationship between inventory management and organizational performance. Specifically, inventory control and inventory cost can enhance the organizational performance in customer management, budget management and more efficient use of warehouse space. This study concludes that, the management of Pharmaceutical companies should invest in inventory management practices in order to boast its performance.

KEY WORDS: Inventory control system, Pharmaceutical companies

CHAPTER ONE

1.1 Background of the Study

Inventory management refers to keeping or maintaining the firm’s stocks at a level that a firm will only incur the least cost consistent with other management’s set objectives or targets (Kwadwo, 2016). Inventory management is about ensuring that all input materials of production available to the firm are maintained at a level where production is not interrupted as well as ensuring that operational cost is kept at a minimal level without affecting operation efficiency (Eneje, Nweze, & Udeh, 2012). Inventory management entails planning, organizing, controlling and directing. All these coordinated efforts are meant to ensure achievement of efficiency in all operations of the firm. Inventory management as explained by (Lavely 1996.), as the active control program that permits to govern its running of the various departments in a firm. This includes the production, research and development (R&D), purchasing, marketing, human resource, accounting and finance. The main aim of inventory management is to ensure that organizations hold inventories at the lowest cost possible while at the same time achieving the objective of ensuring that the company has adequate and uninterrupted supplies to enhance continuity of operations (Mpwanya,2005). A study carried out by (Bhausaheb & Routroy,2010) shows that companies are keen in managing their inventory so as to reduce costs, improve the quality of service, enhance product availability and ultimately ensure customer satisfaction. Results of a study carried out by (Rosenfield & Simchi-levi, 2010) shows that inventory management has a huge financial implication on both the customer satisfaction and financial performance of an enterprise. 

Generally, when you are unaware of what you have, you cannot easily identify what you need. An effective inventory management can help the organization easily identify the gap between the available, and the unavailable needs inventory management is the most significant asset of every organization. This then implies that, any inventory problems can cause a direct failure on the results of the organization. 

A pharmaceutical company, or drug company, is a commercial business licensed to research, develop, market and/or distribute drugs, most commonly in the context of healthcare. This means any company whose primary business is the research, development, marketing and distribution of pharmaceutical or biopharmaceutical products, limited to the top 20 in global sales. And is involved in the manufacture, production and or supply of pharmaceutical drugs, creams or other health products which must be prescribed by a medical practitioner. Pharmaceutical companies are entities that develops, manufactures, markets, distributes, imports, offers for sale or sells pharmaceutical products. 

1.2 Problem Statement

1.3 Research Questions

The main research question of this project is “What is the inventory control system of Pharmaceutical companies?”

The specific research questions are 

How is FIFO applied in pharmaceutical industry?

How is WACC applied in pharmaceutical industry?