The management of inventory levels in the local manufacturing industry : an evaluation

Abstract

In many businesses, inventory is usually the largest single asset and a major element of working capital investment. Inventory management indeed plays an important role in the achievement of a business’s operational objectives. In the current business environment, the need for effective inventory management is even more crucial. Continuing competitiveness in today’s markets is based on ever-improving customer service, reacting rapidly to changes in demand and reducing costs. The objective of this study is to find out and evaluate the extent to which local manufacturing companies effectively manage their inventory levels and the adequacy of the practices that support such management. Research was conducted through a mail survey carried out among local manufacturing companies. Out of 152 mailed questionnaires, 64 valid responses were received, yielding a response rate of 42%. Results emerging from this study show that local manufacturing companies experience significant difficulties in controlling their inventory levels, as evidenced by the relatively high number of respondents reporting both high stock holding levels and occurrence of stockouts. Numerous factors seem to be contributing to these problems. It transpires from the study that these factors are, for their most part, supply-related.