The study aimed at investigating the role of effective inventory management practices on organisational performance; a case study of Municipal Hospital Tarkwa in the Western Region of Ghana. The specific objectives of the study were to establish the inventory management practices used by organisations, to find the effect of inventory management practices on organisational performance, and to determine the challenges of implementing inventory management practices in organizations. The study adopted descriptive and causal research designs and used questionnaires as the data collection instrument. Data were collected from 200 respondents and STATA 13 analytical tool was used to perform the analysis. The results were presented using frequency tables and descriptive statistics tables. The study also used Probit regression analysis to establish the relationship between the dependent and the independent variables. The findings show that the stakeholders of the hospital are generally happy with the service delivery of the hospital. Thus, the results show that the hospital adopts various inventory management practices including; activity-based costing, economic order quantity, material requirement planning, materials resource planning, enterprise resource planning, distribution requirement planning, and just in time. The study concludes that effective inventory management positively affects the performance of organizations, in this case, the quality of service delivery of organizations. The study recommends organizations successfully implement an effective inventory management system. This will help reduce the risks of shortages. In addition, the concept of inventory management could be simplified for organizations in Ghana. This can be done through education or training to all staff in organizations to enlighten them on the need for effective inventory management practices for their organization’s performance.