Inventory Management System in Small and Medium Enterprises in Malaysia

Small and Medium Enterprises (SMEs) are the largest component of manufacturing industry in Malaysia. Due to the rapid increase in Malaysia's economy growth, SMEs needed to ensure they are able to compete with larger industries. Inventory management would be crucial in SMEs’ operations since most SMEs were involved in the manufacturing industry. However, there were lots of obstacle and factors which could lead to a decrease in SMEs’ inventory management system performance. This study was carried out to examine the level of inventory management system practices by SMEs and the factors that could be of significant influence to inventory management system performance in SMEs in Malaysia. Results showed that the inventory management system was not highly practiced by SMEs in Malaysia. It was also found that all the variables (inventory management system practices, technical knowledge, supply chain management practice and information technology) do not determine the level of inventory management system performance. This was due to many obstacles and problems toward SMEs’ inventory management system practices practices. Therefore, more initiatives should be taken by SMEs in order to ensure they would be able to sustain a better business performance.