a b s t r a c tWhile firms increasingly adopt lean inventory practices, there is limited evidence that inventory leanness leads to improved firm performance. This study reexamines this relationship in an attempt to overcome some shortcomings of previous research. To that end, a theory-based measure of inventory leanness, which takes into account industry-specific inventory management characteristics, is proposed. The analysis of a large panel data set of U.S. manufacturing companies reveals that the significance and shape of the inventory-performance relationship varies substantially across industries. This relationship is significant in two-thirds of the 54 industries studied. In most of these instances, the relationship is concave, suggesting that there is an optimum level of inventory leanness beyond which firm performance deteriorates. A post-hoc analysis is conducted to identify industry-level characteristics that may determine the nature the inventory-performance relationship. Managerial implications are discussed and several opportunities for future research are outlined.
Supply chains are increasingly vulnerable to catastrophic events such as hurricanes or terrorist attacks. This is not only true because firms are more exposed to catastrophes, but also the result of investments made in recent years to operate supply chains with fewer human and capital resources, especially inventory. Consequently, there is today less “slack” available in supply chains to deal with catastrophic events. Thus, proactively planning for these types of events should be a priority for supply chain managers. A catastrophic event has a very low probability of occurrence but has significant consequences if it does occur. The goal of this research is to develop a process to proactively plan for catastrophic risk events through an integration of diverse research streams related to the management of risk. In particular, the proposed process builds upon an existing risk analysis framework by incorporating an innovative methodology used by the insurance industry to quantify the risk of multiple types of catastrophic events on key supply chain locations.
a b s t r a c tThis paper adds to the empirical inventory management literature by examining the moderating effects of environmental dynamism on the relationship between inventory leanness and financial performance. While the financial implications of inventory management practices have been extensively studied in the literature, it is clear that lean inventory strategies may not have the same payoff for all firms in all industries. Grounded in inventory theory, this study explores how firm characteristics and environmental dynamism-measured in terms of innovative intensity, demand uncertainty and competitive intensity-moderate the inventory leanness-performance link. We use hierarchical linear modeling to analyze a data set of 5749 firm-year observations from 123 U.S. manufacturing industries. In line with the hypotheses set forth, the results indicate that innovative intensity in an industry increases the effect of inventory leanness on firm performance while competitive intensity has the opposite effect. The hypothesis with respect to the moderating role of demand uncertainty is not supported. Another interesting and important finding is that inventory leanness accounts for nearly one third of the variation in firm performance after controlling for firm size and growth, thus underlining the importance of efficient and effective inventory management for overall firm success.
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