This study examines the effect of inventory management on organizations performance in Mukono Town Council. The study was guided by three objectives which included establishing the impact of inventory management on organizations performance, finding out the challenges involved in inventory management on organizations performance and suggesting ways of minimizing challenges involved in inventory management on organizations performance. The covered Mukono Town Council. A cross section survey design was used to gather both qualitative and quantitative data on the effect of inventory management on organizations performance in mukono Town council. The study'examined options across a spectrum of stake holders with regard to the effect of inventory management on organization performance. The respondents were subjected to a one on one interview with the researcher in order to gather data on the topic. The study population comprised of managers, Procurement officers, inventory store managers and final users in Mukono town council. The studies key findings included: about the effect of inventory management on organizations performance study findings revealed that inventory management led to lead time management, quality assurance and effectiveness, cost effectiveness and ensures performance of the organization. About the challenges involved in inventory ma11agement on organizations performance, respondents reported that they are faced with problems of power black outs, security, inventory management being expensive, risks of fire out breaks, poor specifications. Other challenges included limited expertise, unrealistic suppliers as well as safety and pilferage. Whe11 respondents were asked to suggest ways through which the challenges involved in inventory management on organizations performance could be addressed, they suggested use of training or professionalism, tendering, paying on time, giving incentives to workers, supplier development, ensuring buyer-supplier relationships. The study drew some recommendations which included organizations appreciating the role of inventory management in ensuring organization performance due tci its positive effects. The researcher recommended that organizations should ensure proper inventory management in order to minimize the mentioned challenges.