Effect of Inventory Management on Financial Performance of Manufacturing Firms in Rwanda, A Case Study of Bralirwa

The manufacturing firms generally apply numerous and various inventories management techniques. Any choice of management practices to be adopted may have a significant impact on organizational level of its financial performance in terms of profitability. Manufacturing firms that efficiently apply these practices have an excellent financial performance. The study was conducted in BRALIRWA Ltd Company for the period 2013- 2016. The purpose of the study is to examine the impact of inventory management on the financial performance of manufacturing firms in Rwanda. Specific objective was to examine the effects of lean inventory management system, information technology, lead time, and demand and supply on financial performance of BRALIRWA Ltd. The researcher adopted descriptive research design. Questionnaires were addressed to a group of respondents which were selected from among the staffs, and analyzing audited financial statements and other affordable financial reports to get meaningful results to the study. The data was analyzed using SPSS for Descriptive statistics to test the impact of inventory management practices and Correlation analysis was used to determine the nature and magnitude of the relationship among inventory management variables, and regression analysis. The findings indicated that there is a strong relation between lean inventory management systems, information technology, lead time and supply demand on the financial performance of manufacturing company this shown with a correlation of, 0.621, 0.525, 0.598, 0.698 respectively. The R2 also indicated 0.815 which implies a variation of 81.5 % of performance of BRALIRWA Company with the four independent variables at a confidence level of 95. The study was useful on the scientific level, to the government of Rwanda, to manufacturing firms on the management of inventory. The study also concluded that improved anticipation of future developments in manufacturing firms in Rwanda will improve their performance and new technologies are promising to save costs and thus improving the performance of the manufacturing firms. It is recommended that manufacturing firms consider investing in modern technology and implement EDI.