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Article
Publication date: 6 May 2020

Xinyu Wang, Yu Lin and Yingjie Shi

From the intra- and inter-regional dimensions, this paper investigates the linkage between industrial agglomeration and inventory performance, and further demonstrates the…

Abstract

Purpose

From the intra- and inter-regional dimensions, this paper investigates the linkage between industrial agglomeration and inventory performance, and further demonstrates the moderating role of firm size and enterprise status in the supply chain on this linkage.

Design/methodology/approach

Using a large panel dataset of Chinese manufacturers in the Yangtze River Delta for the period from 2008 to 2013, this study employs the method of spatial econometric analysis via a spatial Durbin model (SDM) to examine the effects of industrial agglomeration on inventory performance. Meanwhile, the moderation model is applied to examine the moderating role of two firm-level heterogeneity factors.

Findings

At its core, this research demonstrates that industrial agglomeration is associated with the positive change of inventory performance in the adjacent regions, whereas that in the host region as well as in general does not significantly increase. Additionally, both firm size and enterprise status in the supply chain can positively moderate these effects, except for the moderating role of firm size on the positive spillovers.

Practical implications

In view of firm heterogeneity, managers should take special care when matching their abilities of inventory management with the agglomeration effects. Firms with a high level of inventory management are suited to stay in an industrial cluster, while others would be better in the adjacent regions to enhance inventory performance.

Originality/value

This paper is the first to systematically analyze the effects of industrial agglomeration on inventory performance within and across clusters, and confirm that these effects are contingent upon firm size and enterprise status in the supply chain. It adds to the existing literature by highlighting the spatial spillovers from industrial clusters and enriching the antecedents of inventory leanness.

Details

Journal of Manufacturing Technology Management, vol. 32 no. 2
Type: Research Article
ISSN: 1741-038X

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Article
Publication date: 17 July 2009

Vedran Capkun, Ari‐Pekka Hameri and Lawrence A. Weiss

The purpose of this paper is to study the relationship between inventory performance, both total inventory (INV) and its discrete components (raw material (RMI)…

Abstract

Purpose

The purpose of this paper is to study the relationship between inventory performance, both total inventory (INV) and its discrete components (raw material (RMI), work‐in‐process (WIP), and finished goods (FGI)), and financial performance in manufacturing companies.

Design/methodology/approach

Statistical analysis is applied to the financial information of US‐based manufacturing firms over the 26‐year period from 1980 to 2005.

Findings

The paper finds a significant positive correlation between inventory performance (total as well as the discrete components of inventory) and measures of financial performance (at both the gross and operating levels) for firms in manufacturing industries. The correlation between the performance of discrete types of inventory and financial performance varies significantly across inventory types. RMI performance has the highest correlation with all financial performance measures. Between WIP inventory and FGI performance, the former is more highly correlated with gross profit measures while the latter is more highly correlated with operating profit measures.

Originality/value

This paper is the first to systematically analyze the relationship between inventory performance and financial performance for a large sample of firms across all manufacturing industries. The paper adds to prior literature by discussing and testing the relationship between both INV performance and the discrete types of inventory (RMI, WIP, and FGI) and profitability of operations, both at the gross and at the operating profit levels. The paper also analyzes the results for firms across as well as within manufacturing industries. The results obtained support the operations management literature's claim that a managerial focus on inventory performance results in value creation for manufacturing firms.

Details

International Journal of Operations & Production Management, vol. 29 no. 8
Type: Research Article
ISSN: 0144-3577

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Article
Publication date: 7 August 2017

Ari-Pekka Hameri and Lawrence A. Weiss

The purpose of this paper is to examine the relationship between acquisitions and inventory performance. Specifically, it analyzes the inventory performance (inventory

Abstract

Purpose

The purpose of this paper is to examine the relationship between acquisitions and inventory performance. Specifically, it analyzes the inventory performance (inventory level) of acquirers and their targets pre- and post-acquisition.

Design/methodology/approach

Using several business databases, a sample of 270 horizontal acquisitions by US firms between 1996 and 2004 is subject to multivariate analysis. Various robustness tests are applied to validate the results.

Findings

Three main results are found. First, the acquirer’s inventory performance is normally better than its target’s prior to the acquisition, consistent with acquirers taking over less efficient firms rather than cherry picking the more efficient ones. Second, inventory performance improves over time in the post-acquisition period in those cases where the acquirer is more efficient than the target. Third, inventory performance deteriorates over time in the post-acquisition period in those cases where the acquirer is less efficient than the target. The results are consistent with acquisitions being associated with both efficiency gains and efficiency losses due to (in)efficiency transfers from acquirers to targets.

Practical implications

From the management point of view, the study delivers the strongest message to companies that have substantial inventories and for whom efficient inventory management is vital to overall performance. Managers who are unaware of the potential consequences of acquisitions on inventory performance destroy value.

Originality/value

This research complements past research by showing that in spite of their synergetic potential, reducing inventory receives only limited attention in acquisitions.

Details

Journal of Advances in Management Research, vol. 14 no. 3
Type: Research Article
ISSN: 0972-7981

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Article
Publication date: 29 November 2018

Yu Lin, Biwei Liang and Xuechang Zhu

The purpose of this paper is to empirically investigate the relationship among inventory performance, financial performance (FP) and product quality.

Abstract

Purpose

The purpose of this paper is to empirically investigate the relationship among inventory performance, financial performance (FP) and product quality.

Design/methodology/approach

The empirical analysis is based on two-stage least squares analysis of detailed firm-transaction data from Chinese manufacturing export firms for the period between 2001 and 2013.

Findings

Results show that inventory performance has a positive impact on product quality while using inventory efficiency, inventory productivity and inventory leanness to measure inventory performance. Furthermore, the effect of inventory performance on product quality is found to be partially mediated by FP.

Practical implications

The research provides mangers evidence of the benefits of inventory performance as an antecedent of product quality. Managers without sufficient liquidity or cost advantage to get better FP can achieve product quality improvement through enhancing inventory management performance.

Originality/value

This study first empirically investigates the relationship between inventory performance and product quality, and examines the mediating effect of FP on this relationship.

Details

International Journal of Quality & Reliability Management, vol. 35 no. 10
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 3 October 2016

Patrik Jonsson and Stig-Arne Mattsson

The purpose of this paper is to examine the inventory performance effect of advanced material planning modes and analyse how internal and external contextual difficulties…

Abstract

Purpose

The purpose of this paper is to examine the inventory performance effect of advanced material planning modes and analyse how internal and external contextual difficulties moderate this relationship. This study also identifies avenues for future research.

Design/methodology/approach

The empirical analysis uses a survey of material planning for purchased items in 292 Swedish manufacturing and wholesaling companies. Three dimensions of inventory performance are dependent variables: material planning performance, inventory turnover rate, and service level.

Findings

Advanced material planning modes are directly associated with material planning performance, but this study could not verify direct associations with inventory turnover rate and service-level performances. External and internal contextual difficulties have direct effects on all inventory performance dimensions and moderate the inventory performance effect of advanced material planning modes. The moderating effect is stronger in non-difficult contexts, for which advanced material planning has significant inventory performance effects. Demand- and human-related contextual dimensions are especially critical.

Practical implications

The study identifies the following guidelines for companies to consider in order to unlock the potential of advanced material planning: consider full implementation of advanced material planning in non-difficult contexts; minimise the plan variability effects of high parameter revision and planning frequencies; minimise the need for, and use of, manual modification of planned orders before release; reduce demand uncertainty and variability; and secure appropriate human skills and working time.

Originality/value

This study somewhat contradicts the literature on material planning by not finding a direct positive effect on any inventory performance dimension from analytical design of order quantities and safety stocks. The research adds to the literature by identifying direct and moderating effects of external and internal contextual difficulties on all three-inventory performance dimensions. The relative importance of managing automatic order release identified in the study motivates future research as the effect has not been previously highlighted in the literature. Accordingly, avenues for future research and an agenda for practice-oriented research are suggested.

Details

International Journal of Physical Distribution & Logistics Management, vol. 46 no. 9
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 4 July 2016

Gülşah Hançerlioğulları, Alper Şen and Esra Ağca Aktunç

The purpose of this paper is to investigate the impact of demand uncertainty on inventory turnover performance through empirical modeling. In particular the authors use…

Abstract

Purpose

The purpose of this paper is to investigate the impact of demand uncertainty on inventory turnover performance through empirical modeling. In particular the authors use the inaccuracy of quarterly sales forecasts as a proxy for demand uncertainty and study its impact on firm-level inventory turnover ratios.

Design/methodology/approach

The authors use regression analysis to study the effect of various measures on inventory performance. The authors use a sample financial data for 304 publicly listed US retail firms for the 25-year period from 1985 to 2009.

Findings

Controlling for the effects of retail segments and year, it is found that inventory turnover is negatively correlated with mean absolute percentage error of quarterly sales forecasts and gross margin and positively correlated with capital intensity and sales surprise. These four variables explain 73.7 percent of the variation across firms and over time and 93.4 percent of the within-firm variation in the data.

Practical implications

In addition to conducting an empirical investigation for the sources of variation in a major operational metric, the results in this study can also be used to benchmark a retailer’s inventory performance against its competitors.

Originality/value

The authors develop a new proxy to measure the demand uncertainty that a firm faces and show that this measure may help to explain the variation in inventory performance.

Details

International Journal of Physical Distribution & Logistics Management, vol. 46 no. 6/7
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 3 July 2017

Woohyun Cho, Jian-yu Fisher Ke and Chaodong Han

Literature indicates that global geographic diversification (GD) has mixed effects on a multinational corporation’s (MNC) performances. The purpose of this paper is to…

Abstract

Purpose

Literature indicates that global geographic diversification (GD) has mixed effects on a multinational corporation’s (MNC) performances. The purpose of this paper is to examine how an MNC’s GD influences its stock market and financial performances directly and indirectly via operational performance (i.e. changes in inventory levels).

Design/methodology/approach

Using firm-level data collected from Compustat database for the period 2000-2011 and estimating a mediating regression model, the authors examine the direct and indirect effects of GD on an MNC’s stock market (Tobin’s q) and financial performances (ROA), with inventory level being a mediator. Additionally, the examination is implemented separately under two economic situations: financial crisis vs without financial crisis.

Findings

The results show that GD enhances an MNC’s stock market performance, while deteriorating its financial performance in the presence of a financial crisis. In contrast, GD has little direct impact on an MNC’s stock market and financial performances during periods without financial crisis. The indirect effects of GD are mediated by changes in inventory levels.

Practical implications

This study suggests that MNCs need to carefully weigh the benefits and costs of global strategy obtained through GD. The results also indicate that GD is highly appreciated by the stock market investors during economic downturns and tighter inventory management may further enhance firm values.

Originality/value

This paper is the first empirical research to estimate both direct and indirect effects of GD via inventory in the operations management literature, highlighting the value of GD depending on the different economic situations and echoing the role of operations in implementing GD.

Details

International Journal of Physical Distribution & Logistics Management, vol. 47 no. 6
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 9 March 2012

Sebastian H.W. Stanger, Richard Wilding, Nicky Yates and Sue Cotton

Managing perishable inventories is a trade‐off of shortages and lost sales against wastage. This paper aims to identify what drives good management of perishables within…

Abstract

Purpose

Managing perishable inventories is a trade‐off of shortages and lost sales against wastage. This paper aims to identify what drives good management of perishables within the supply chain using the example of blood inventory management in hospitals.

Design/methodology/approach

Seven case studies with hospital transfusion laboratories in the UK blood supply chain were carried out in order to explore how perishable inventories are managed. The case studies identify drivers for good performance in perishable inventories.

Findings

Six recommendations are developed for how managers can improve perishable inventory performance. These are based around simple management procedures implemented by experienced staff. The case studies develop three propositions that recommend how inventory theory should be embedded in practice.

Research limitations/implications

This research demonstrates that managerial changes and training issues have a significant impact on waste reduction and inventory management performance in perishable supply chains. However, as the case studies focus on the blood supply chain, some caution needs to be applied in generalising these findings beyond the specific context studied.

Practical implications

A multi‐disciplinary approach, combining awareness of the importance of the dynamics of the whole supply chain with good skill and experience, leads to new thinking, which enables staff to make better inventory decisions resulting in better performance and reduced wastage. Managerial changes and training are critical for good inventory performance.

Originality/value

Literature suggests that sophisticated and complex inventory models will drive performance; however, in practice a combination of basic well‐grounded inventory theory with simple management procedures carried out by experienced staff leads to better performance.

Details

Supply Chain Management: An International Journal, vol. 17 no. 2
Type: Research Article
ISSN: 1359-8546

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Article
Publication date: 1 May 2020

Victor Santos, Mauro Sampaio and Dario Henrique Alliprandini

The impact of product variety decisions on fill rate, inventory and sales performance in a consumer goods company has been examined. From a marketing perspective, it is…

Abstract

Purpose

The impact of product variety decisions on fill rate, inventory and sales performance in a consumer goods company has been examined. From a marketing perspective, it is possible to leverage sales, reach new segments and consequently increase competitiveness when there is a greater product variety on the market. However, operations and logistics professionals indicate potential impacts on the supply chain, such as production, storage and distribution complexity. The nature of the product variety-cost-sales performance relationship is not clear, and empirical evidence about whether and how operations cost and sales performance increases with variety is inconclusive.

Design/methodology/approach

The multiple linear regression and the Tobit regression techniques were applied over a seven-year horizon of data from a business intelligence platform of a consumer goods company.

Findings

Our results show that sales performance is negatively associated with product variety. The total effect of product variety on sales performance has been examined, including both the direct effect and the indirect effect through inventory and fill rate. Therefore, the findings provide a comprehensive understanding of the impact of product variety on operations and sales performance.

Originality/value

Several studies have researched the impact of product variety on fill rate, inventory and sales performance separately; however, the research of the impact and the relationship of these factors is scarce and limited.

Details

Journal of Manufacturing Technology Management, vol. 31 no. 7
Type: Research Article
ISSN: 1741-038X

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Article
Publication date: 19 April 2013

Patrik Appelqvist, Valérie Chavez‐Demoulin, Ari‐Pekka Hameri, Jussi Heikkilä and Vincent Wauters

The purpose of this paper is to document the outcome of a global three‐year long supply chain improvement initiative at a multi‐national producer of branded sporting goods…

Abstract

Purpose

The purpose of this paper is to document the outcome of a global three‐year long supply chain improvement initiative at a multi‐national producer of branded sporting goods that is transforming from a holding structure to an integrated company. The case company is comprised of seven internationally well‐known sport brands, which form a diverse set of independent sub‐cases, on which the same supply chain metrics and change project approach was applied to improve supply chain performance.

Design/methodology/approach

By using in‐depth case study and statistical analysis the paper analyzes across the brands how supply chain complexity (SKU count), supply chain type (make or buy) and seasonality affect completeness and punctuality of deliveries, and inventory as the change project progresses.

Findings

Results show that reduction in supply chain complexity improves delivery performance, but has no impact on inventory. Supply chain type has no impact on service level, but brands with in‐house production are better in improving inventory than those with outsourced production. Non‐seasonal business units improve service faster than seasonal ones, yet there is no impact on inventory.

Research limitations/implications

The longitudinal data used for the analysis is biased with the general business trend, yet the rich data from different cases and three‐years of data collection enables generalizations to a certain level.

Practical implications

The in‐depth case study serves as an example for other companies on how to initiate a supply chain improvement project across business units with tangible results.

Originality/value

The seven sub‐cases with their different characteristics on which the same improvement initiative was applied sets a unique ground for longitudinal analysis to study supply chain complexity, type and seasonality.

Details

International Journal of Operations & Production Management, vol. 33 no. 5
Type: Research Article
ISSN: 0144-3577

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