Int. J Sup. Chain. Mgt Vol. 7, No. 6, December 2018 114 Examining Inventory Performance Measured by Days of Supply Santhirasegaran Nadarajan #1 , Sitraselvi Chandren *2 , Mohd Kamarul Irwan Abdul Rahim #3 Kamaruddin Radzuan #4 , Mohd.Nasrun Mohd.Nawi #5 # School of Technology Management & Logistics ,College of Business, Universiti Utara Malaysia, Sintok , Kedah .Malaysia *2 Tunku Puteri Intan Safinaz School of Accountancy, College of Business, Universiti Utara Malaysia, Sintok, Kedah. Malaysia santhirasegaran@uum.edu.my Abstract- The aim of this conceptual paper is to examine the inventory performance focusing on days of supply. Problem focal towards the context of inventory performance further narrow down to the capability of the relevant corporate governance mechanisms in managing inventory. Basically as far as concern to corporate governance study mainly focus on financial aspects and this research explore from the angle of non-financial aspects of the inventory control that’s contribute toward 60 to 70% of total manufacturing cost. Two main corporate governance variables were discussed in terms of their relative impact on inventory performance that’s include CEO duality, and managerial ownership. As for inventory performance measured by the inventory perspective that’s include days of supply and inventory value Keywords— Inventory, Days of Supply, Board size, Mangerial Ownership 1. Introduction Inventory is one of the essential inputs in the supply chain activities of firms. Inventory generally classified as raw material, work in progress and finished goods. Managing inventory also addressed as stock management is a process of controlling and handling the stock from the time it arrives in firm until its conversion process (work in progress) or finished product. In accounting point of view, inventory is classified as current assets as firm is able to control the inventory to generate revenue and basically keep the inventory for less than 12 months. Generally inventory has positive relationship with profit [1]. Handling or holding stocks/ inventory which refer as part and parcel of company assets ties up with high monetary value or in other words dip in cash flow and resources. Thus, to avoid additional cost or expenditure in the financial statement is crucial to manage the inventory effectively and efficiently in aspects of level of stock, storage and handling. Practically, the inventory is kept or stored at warehouse. Several questions been posed such as how many (items) and how long (days/ months) stocks or materials being stored and for how long? The extra days/months and extra items of inventory at warehouse will be additional cost to firms. Hence, an effective inventory management will be an ideal approach to cost and cash flow management where for not keeping or holding inventory for too long in the warehouse. As holding extra or too long the inventory adds on the firm expenditure which resulting to unfavorable firm operating performance. This paper address on days of supply of inventory / stock as part of effective inventory management. Days of supply (DoS) refer to an efficiency ratio that measures the average number of days the company holds its inventory before processing it to work in progress or finished product for manufacturing industries or even selling the inventory (trading industries). Days of supply is one of the area highly concerned is the inventory performance which dealt with large corporate assets directly impact customer service negatively if it has not been monitored and oversee. Thus, for smooth operation of inventory, those charged with governance should play their role effectively in overseeing the firm operation particularly the inventory management as inventory directly influence the operating performance. As a matter of fact for the administration excellence the involvement of corporate governance in firm operating performance leads to organizational efficiency. In placing the important of having efficient production, effective managing stock and on time delivery and accomplishment of order fulfillment in a timing manner in order to manage high labor costs and, meeting the increasing customer order. Basically, the operating ______________________________________________________________ International Journal of Supply Chain Management IJSCM, ISSN: 2050-7399 (Online), 2051-3771 (Print) Copyright © ExcelingTech Pub, UK (http://excelingtech.co.uk/)