Keyword

Inventory management, retailing sector, Malaysia, micro enterprises, SMEs

Abstract

Inventory management represents a key success factor that shows how efficient a company is controlling its inventories. However, there is little information on inventory management practice in a small business setting. Therefore, this study examines the current state of inventory management practices and factors that influence their use in micro retailing enterprises. A questionnaire survey was employed to gather data from the targeted respondents. Using 100 completed replies, the results demonstrate that most responding enterprises have adopted both unsystematic and systematic inventory management approaches in their business. A fully systematic approach of inventory management was only utilized by 33 per cent of the total respondents. In terms of inventory management techniques used, ‘the rule of thumb’ is the most popular among respondents. Meanwhile, EOQ, Bar Code Tagging and VMI are only applied by a small number of respondents. The results also indicate that Purchasing and Controlling are the most frequent inventory management activities applied by micro enterprises as opposed to Storage and Tracing. Finally, the results suggest that owner/managers’ attitude and knowledge in inventory management have significant and positive influences on inventory management practices. On the other hand, the cost factor has a significant and negative influence on inventory management practices. Thus, all three proposed hypotheses developed in this study are supported.


Full Text : PDF

References
  1. Ahmad, K 2012, The Use of Management Accounting Practices in Malaysian SMEsPh.D Thesis. University of Exeter. United Kingdom.
  2. Ahmad, K Mohamed Zabri, S & Mohamed, MIP 2014, Inventory Management Practices among Small and Medium-sized Retails Enterprises proceeding of the 3rd International Conference on Technology Management, Business and Entrepreneurship, Melaka, Malaysia pp.344-350.
  3. Ahmad, K & Mohamed Zabri S 2015, ‘Factors explaining the use of management accounting practices in Malaysian medium-sized firms’ Journal of Small Business and Enterprise Development, vol. 22, no.4, pp. 762-781.
  4. Ali, SS, Madaan, J, Chan, FTS& Kannan, S 2013, ‘Inventory management of perishable products: a time decay linked logistic approach’ International Journal of Production Research,vol. 51, no. 13. 
  5. Ayad, A 2008, ‘Optimizing inventory and store results in big box retail environment’ International Journal of Retail & Distribution Management, vol. 36, no. 3, pp. 180-191.
  6. Bala, PK 2012, Improving inventory performance with clustering based demand forecasts. Journal of Modelling in Management, vol. 7, no. 1, pp. 23-37.
  7. Beheshti, HM 2010, ‘A decision support system for improving performance of inventory management in a supply chain network 'International Journal of Productivity and Performance, vol. 59, no. 5,pp. 452-467.
  8. Capkun, V Hameri, AP & Weiss, LA 2009, ‘On the relationship between inventory and financial performance in manufacturing companies 'International Journal of Operations & Production Management, vol. 29, no.8, pp. 789-806.
  9. Chikan, A & Whybark CD 1990, ‘Cross-national comparison of production and inventory management practices 'Engineering Costs and Production Economics, vol. 19, pp. 149-56.
  10. Claassen, MJT Weele, AJV &Raaij, EMV 2008, ‘Performance outcomes and success factors of vendor managed inventory (VMI)’Supply Chain Management: An International Journal, vol. 13, no. 6, pp. 406 – 414.
  11. Dobler, K & Burt, H 2006, Purchasing management (6th ed.) Mcgrawhill International Edition
  12. Dorling, K Scott, J & Deakins, E 2006, ‘Determinants of successful vendor managed inventory relationships in oligopoly industries 'International Journal of Physical Distribution & Logistics Management, vol. 36 no. 3,pp. 176-191.
  13. Gaur, V Marshall LF &Raman, A2005, ‘An Econometric Analysis of Inventory Turnover Performance in Retail Services. Management Science, vol. 51, no. 2, pp. 181-194. 
  14. Gitman, LJ & Zutter, CJ 2012, Principles of Managerial Finance, 13th Ed. Pearson Education Limited.
  15. Heizer, J & Render, B 2014, Operations Management, Sustainability and Supply Chain Management. 11th Ed. Pearson
  16. Kolias, GD Dimelis, SP & Filios, VP 2011, ‘An empirical analysis of inventory turnover behaviour in Greek retail sector: 2000–2005’ International Journal of Production Economics, vol. 133, no. 1, pp. 143–153. 
  17. Koumanakos, DP 2008, ‘The effect of inventory management on firm performance. International Journal of Productivity and Performance Management, vol. 57, no. 5, pp.  355-369.
  18. Lee, H & Kleiner BH 2001, ‘Inventory management in the women's retail clothing industry, Management Research News, vol. 24, no. 3,pp. 40-44.
  19. Manthou, V 1994, ‘Concepts and applications of inventory management in Northern Greece 'International Journal of Production Economics, vol. 35, pp. 149-52.
  20. Mohanty, RP 1985, ‘Inventory Problems under Multiple Constraints: Some Studies’ Engineering Costs and Production Economics, vol. 9, pp. 355-361.
  21. Niranjan, TT Wagner, SM & Nguyen, SM 2012, ‘Prerequisites to vendor-managed inventory 'International Journal of Production Research, vol. 50, no. 4,pp. 939-951.
  22. Pirttila, T & Virolainen, V 1992, ‘An overview of the state and problems of inventory management in Finland 'International Journal of Production Economics, vol. 26, pp. 217-20.
  23. Rajeev, N 2008, ‘Inventory management in small and medium enterprises: A study of machine tool enterprises in Bangalore 'Management Research News, vol. 31, no.9, pp. 659-669.
  24. Shah, R & Shin, H 2007, ‘Relationships among information technology, inventory, and profitability: An investigation of level invariance using sector level data’ Journal of Operations Management, vol. 25, no. 4, pp. 768–784. 
  25. Shen, L Govindan, K Borade,AB Diabat, A & Kannan, D 2013, ‘An evaluation of vendor managed inventory practices from small and medium Indian enterprises 'Journal of Business Economics and Management, vol. 4, no. 3, pp.76-95.
  26. Shouse, DL& Teel, L 2006,‘Inventory: catalyst for collection development 'Collection Building, vol. 25, no. 4, pp. 129-133.
  27. Strohhecker, J & Grobler, A 2013, ‘Do personal traits influence inventory management performance? The case of intelligence, personality, interest and knowledge 'International Journal Production Economics, vol. 142, pp. 37–50.
  28. Tanskanen, K Holmstrom, J Elfving, J & Talvitie, U 2008, ‘Vendor-managed-inventory (VMI) in construction 'International Journal of Productivity and Performance Management, vol. 58, no. 1, pp. 29-40.
  29. Urban, TL 2002, ‘The interdependence of inventory management and retail shelf management 'International journal of Physical Distribution & Logistics Management, vol. 32, no. 1, pp. 41-58.
  30. Waller, MA Nachtmann, H & Hunter, J 2006, ‘Measuring the impact of inaccurate inventory information on a retail outlet’The International Journal of Logistics Management, vol. 17, no. 3, pp. 355-376.
  31. Wallin, CM Rungtusanatham, MJ Rabinovich, E 2006, ‘What is the "right" inventory management approach for a purchased item?’ International Journal of Operations & Production Management, vol. 26, no. 1, pp. 50 – 68.
  32. Zainudin, A 2015. SEM Made Simple: A Gentle Approach to Learning Structural Equation Modeling MPWS Publisher. Bangi Selangor. Malaysia