Evaluation of Inventory Control Systems and Their Effect on Cost Reduction in Pharmaceutical Companies in Abuja, FCT

Effective inventory control systems reduce holding costs and stockout risks, and their impact on cost reduction in pharmaceutical companies in Abuja, Federal Capital Territory, is important for understanding healthcare supply chain management. This study evaluated inventory control systems and their effect on cost reduction in 15 pharmaceutical manufacturing and distribution companies in Abuja. Data were collected from 120 supply chain and inventory managers through structured questionnaires, supplemented by company financial records for the period 2020 to 2023. Inventory systems assessed included ABC analysis, Economic Order Quantity, Just-in-Time, and manual ledger-based systems. Cost metrics included inventory holding cost, stockout frequency, and total annual ordering cost. Regression analysis and analysis of variance were employed. Results showed that companies using computerised inventory management systems achieved 32% lower inventory holding costs compared to manual system users. ABC analysis implementation was associated with a 21% reduction in stockout incidents. Just-in-Time adoption showed significant cost benefits for high-turnover generic medicines but increased supply risk for imported active pharmaceutical ingredients. Inventory system sophistication was significantly positively correlated with overall cost reduction (r = 0.68, p < 0.001). Only 33% of companies had integrated inventory systems connected to sales forecasting data. The study concludes that inventory system modernisation is the highest-impact cost reduction strategy for pharmaceutical companies in Abuja and recommends integrated enterprise resource planning system adoption with pharmaceutical-specific functionality. Keywords: inventory control, cost reduction, pharmaceutical companies, Abuja, supply chain management