Inventory is one of the most essential component of firms’ current assets. Their efficient management notably determines the achievement of firms’ economic and financial goals. The major objective of this study is to examine the effectiveness of inventory management policies adopted by small and medium enterprises (SMEs) in the region of Epirus, in Greece. The study covers ten years period, which we analyze first as an entire period and then we split it in two periods, before and post to 2008, considering 2008 as the beginning period of the recession in Greece and the first year of serious financial constraints for Greek firms. The study empirically investigates differences in inventory ratios, both total inventory and its discrete components (finished goods, work in process and raw materials) between main sectors of economic activity in the region of Epirus and the relationship between inventory management and firms’ performance on a sample of financial data for 612 enterprises. The median of inventory holding periods for the SMEs in Epirus region was found to be 82, 13 days. Comparing the data for the two periods (2002-2008 and 2009-2011), the median was increased from 77, 87 to 88, 77 days respectively. Inventory days increased most rapidly in the construction sector. The largest increase was found for finished goods inventory (about 3% per year). By employing correlation techniques, it was found that effective inventory management is a necessary tool to achieve firm's future growth and profitability.