Prioritizing the reasons for non-moving inventory accumulation in FMCG industry: A MCDM based TOPSIS Approach

Abstract

Generation of Non-moving inventory (NMI) in any industry is an annoyance for the people involved, as it occupies the storage space that is limited and also blocks company’s capital that gets stuck in the form of material cost. These Non-moving inventory, if identified at earlier stage can be beneficial for any business, as some preventive actions can be taken to prevent its distressing affect. This generally starts with a slow moving inventory and then gradually translate to Non-moving inventory. This research aims to examine the potential causes for the accumulation of Non-moving inventory in the FMCG industry and their contribution towards the factors like Inventory carrying cost, Quantity left over in inventory, effect on labor productivity, loss of opportunity cost and storage space have been analyzed. The causes for generation of NMI are identified from survey data collection such as questionnaire approach and discussion from industry experts and managers working in different FMCG industries. After the identification of probable causes for non-moving inventory creation, they are analyzed through a Multi-criterion decision making (MCDM) approach, TOPSIS to find out the major contributor for the NMI in the FMCG industry. With the help of MCDM tool, TOPSIS we then prioritize the potential causes and take corrective actions to prevent their disruptive effect on the business.