Slow moving stock problem: empirical evidence from Malaysia

Abstract

Purpose

The purpose of this study is to identify weaknesses in the internal control of the stock management processes and provide recommendations to improve those weaknesses. The study also analyses whether the current stock management processes are adequately documented and updated regularly.

Design/methodology/approach

One company involved in the automotive industry was selected as a case study and its stock management examined, focusing on the processes involved and the reliability of the current inventory system. Data were collected via interviews with the selected staff and document analysis on various financial and non-financial company records.

Findings

The results show that there are loopholes and weaknesses in the current stock management system. This is because of poor technology and a lack of exposure and knowledge of staff involved in the stock management system.

Research limitations/implications

As this research is based on one company as a study case, generalization must be done with precaution. Access to certain important documents was denied because of the confidentiality.

Practical/implications

This study will help companies in the automotive sector to improve their stock management process, allowing for more efficient cost control and better services to customers. Specifically, this study identifies weaknesses in the current inventory management and provides recommendations to overcome those weaknesses. This will indirectly prevent fraud and theft and safeguard the cash flow of the company by improving the operation of the procurement and spare parts stock control department.

Originality/value

This study is original, as it focuses on a company that operates in the automotive sector, which is rare in the internal control literature, particularly in developing markets such as Malaysia. It contains examinations of various internal documents that are generally difficult to be accessed by researchers for the publication in an academic journal.

Citation

Nawawi, A. and Salin, A.S.A.P. (2018), "Slow moving stock problem: empirical evidence from Malaysia", International Journal of Law and Management, Vol. 60 No. 5, pp. 1148-1162. https://doi.org/10.1108/IJLMA-06-2017-0142