AN EVALUATION OF INVENTORY MANAGEMENT AND PERFORMANCE IN INDIAN MACHINE TOOL SMEs: AN EXPLORATORY STUDY

Inventory management (IM) plays a decisive role in the enhancement of efficiency and competitiveness of manufacturing enterprises. Therefore, major manufacturing enterprises are following IM practices as a strategy to improve their efficiency and achieve competitiveness. However, the spread of IM culture among small and medium enterprises (SMEs) is limited due to lack of initiative and expertise as well as financial limitations in developed countries, let alone developing countries. Against this backdrop, this paper makes an attempt to ascertain the role and importance of IM practices and performance of SMEs in the machine tool industry in the city of Bangalore, India. The relationship between IM practices and inventory cost is probed based on primary data gathered from 91 SMEs. The paper brings out the fact that formal IM practices have a positive impact on the inventory cost and therefore, the IM performance of SMEs.