Factors Influencing the Effectiveness of Inventory Management in Manufacturing SMEs

Effectiveness of inventory management is a vital part in the manufacturing organization to be more competitive. The previous studies have indicated that there are several factors influencing the effectiveness of inventory management in the organization but there is lack of researchers who carried out the research in the manufacturing small medium enterprise in Johor. Therefore, the purpose of this research is to identify the problem of inventory management faced by the manufacturing small medium enterprise and also to determine the factors that will influence the effectiveness of inventory management. In completing this research, 80 employees were selected randomly from the manufacturing small medium enterprise in Batu Pahat, Johor and they were requested to complete questionnaires. The result have shown that the problems of inventory management faced by manufacturing organization were underproduction, overproduction, stock out situation, delays in the delivery of raw materials and discrepancy of records. The factors, documentation/store records, planning, knowledge of employees/staff skill have shown to significantly influence the effectiveness of inventory management while the funds have shown slightly significant influence on the inventory management in manufacturing small medium enterprises. This quantitative study is important to the manufacturing organization in Malaysia because it provides the guidelines to the employers of manufacturing small medium enterprises in Batu Pahat, Johor.