Impact of Enterprise Resource Planning on Inventory Management Practices in Healthcare Sector

Abstract

Inventory Management Practice is defined as a business management practice concerned with planning and controlling inventories for availability of products or services. Pakistan is a developing nation and has not transitioned from manual processing and record-keeping to digitalized operations. Many of the country’s industries, especially healthcare sector, operate at reduced efficiency and are prone to data loss and manipulation. The integration of Information Technology, like Enterprise Resource Planning (ERP), in organizations’ infrastructure, and the digitization of inventories have been shown to reduce the processing time of required information and also to reduce the operational costs and wastage of resources and inventory items by means of enhanced demand prediction system, safety stock measurement and expiry management. Our study is aimed at the healthcare sector of Karachi where we conducted a survey using purposive sampling technique. A total of 162 participants completed the survey, evaluating impact of Demand Prediction (DP), Expiry Management (EP), Inventory Turnover Management (ITM) and Safety Stock Measurement (SSM) on Inventory Management Practices (IMP) using Likert Scale. The data was analyzed using PLS-Smart 4 Structural Equation Modelling and showed that DP, SSM, and EM have positive impact on IMP with implementation of ERP and are accepted at 5% (p<0.001, p<0.002 and p<0.005, respectively), except ITM which was significant at 10% level of significance only (p<0.076). Our study concludes that the implementation of ERP for inventory control positively impacts IMP and reduces organizational costs.