Inventory Performance in Egyptian Industry: Analysis and Insights

The inventory performance in industry in Egypt over a six‐year period for a sample of 44 manufacturing companies representing five industry groups is analysed. This will help in highlighting areas of opportunity to improve inventory management in the industrial public enterprises (IPEs) with an ultimate goal of increasing profitability and productivity. The conventional inventory turnover ratio (ITR) and the value added inventory turnover rate (ITR2) were used as measures of inventory performance in this study. Kruskal‐Wallis H‐Test was utilised to compare the different industry group means. An effort was also made to identify some independent variables that might have an effect on inventory performance at the company level. This study revealed that type of industry is a determinant factor of the achieved ITR at the firm level. When compared with some industrial nations, it was clear that manufacturing companies in Egypt were suffering from a relatively low ITR, and a very low ITR2. Another important finding of this study is that ITR2 was always significantly correlated with the return on investment ratio at the company level. This finding shows the significant role that the inventory management function could play in improving profitability and productivity in the industrial public enterprises in the country.