RETURNING TO ROOTS FOR REDUCING INVENTORY COSTS IN SMEs: A CASE OF INDIAN LOCK INDUSTRY

Abstract

Achieving uninterrupted production, increasing profitability and productivity, protection against stock-outs, and improving customer service levels have been the major benefits of holding inventory. Maintaining inventory levels beyond a certain limit is, however, an undesirable phenomenon. While practitioners and researchers are aiming at minimum possible cost of inventory, many small business owners in India still fail to appreciate fully the true costs of carrying inventory. In this context the present study examines a case of the lock manufacturing industry in the Aligarh district of the state Uttar Pradesh. The investigations reveal that lock manufacturing units, by-and-large, are either unaware of even the fundamental techniques of inventory management or do not practice them for one reason or the other. The case attempts to illustrate how SMEs can reduce their inventory costs, and hence improve profitability, through the application of basic models of inventory management.