Lean, leaner, too lean? The inventory‐performance link revisited

Eroglu, Cuneyt; Hofer, Christian

doi:10.1016/j.jom.2010.05.002

Cited by 325 publications

(406 citation statements)

References 35 publications

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“…Moreover, empirical studies (Capkun et al, 2009;Canon, 2008;Eroglu & Hofer, 2011a, 2011b; Koumanakos, 2008;Sekeroglu & Altan, 2014) have shown evidence of a positive influence of an effective inventory management on firm performance. However, while most of these studies focused on effect of total inventories on firm performance, only very few (Capkun et al, 2009;Eroglu & Hofer, 2011a) considered the effect of inventory types on firm performance.…”

Section: Introductionmentioning

confidence: 99%

Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan

Alrjoub

Ahmad

2017

Investment Management and Financial Innovations

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Several studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. This study examines the moderating effect of cost of capital on the relationship between inventory types and firm performance. The data of 48 firms for the period 2010-2016 which formed 279 firm-year observations were used in this study. With the use of Pearson correlation and panel Generalized Method of Moments (GMM) estimation, the findings show that inventory management with consideration of its types influence firm performance in the long term. In addition, it is also found that cost of capital moderates the relationship between inventory management and firm performance. However, the interaction between cost of capital and inventory types has different implications. It is suggested that firms should consider cost of capital when making decision on inventory types and align their inventory control to fit in to the changes in their business environment.

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Section: Introductionmentioning

confidence: 99%

Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan

Alrjoub

Ahmad

2017

Investment Management and Financial Innovations

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“…As emphasized by Eroglu and Hofer (2011), despite the popularity of the lean inventory practices, there exists limited empirical evidence that lean inventory management improves the firm's performance. Using a panel data set of 54 US manufacturing industries in the period 2003, Eroglu and Hofer (2011 find that the inventory-performance relationship varies significantly across industries and lean inventory practices are not profitable in a number of industries. As they suggest, a relatively large use of inventories can be driven by industry-specific features, such as product and demand conditions.…”

Section: Conclusion: Managerial Empirical and Policy Implicationsmentioning

confidence: 99%

Strategic Inventories under Limited Commitment

Antoniou

Fiocco

2017

SSRN Journal

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In a dynamic storable good market where demand changes over time, we investigate the producer's strategic incentives to hold inventories in response to the possibility of buyer stockpiling. The literature on storable goods has demonstrated that buyer stockpiling in anticipation of higher future prices harms the producer's profitability, particularly when the producer cannot commit to future prices. We show that the producer's inventories act as a strategic device to mitigate the loss from the lack of commitment. Our results provide a rationale for the producer's inventory behavior that sheds new light on the well-documented empirical evidence about inventories.

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“…Ranking of inventory management objective in US study (Fraser & Brandel, 2007) Inventory management objective Ranking In another study by Eroglu and Hofer (2011), 54 manufacturing companies in the US showed that the shape of inventory-performance relationship varies considerably across industries. Eroglu and Hofer (2011) began their studies by stating that limited evidence exists for inventory leanness leading to improved firm performance. The Japanese experience of JIT production has shown that there are benefits associated with efforts to reduce inventory lead time and the associated inventory cost (Pan & Yang, 2000).…”

Section: Note Mrp = Materials Requirement Planningmentioning

confidence: 99%

Target Days versus Actual Days of Finished Goods Inventory in Fast Moving Consumer Goods

Vaz¹,

Mansori²

2017

IBR

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In a bid to maximize corporate profits, many multi-national corporations and even small medium enterprises create many products and place them on shelves at hypermarkets or supermarkets. We can observe an abundance of stock keeping units on shelves as well as observe a variety of such finished goods held by various fast moving consumer goods industries in the home appliance, beverage, canned food, clothes, soft-drinks, cordials and confectionery product ranges, just to name a few. From supplier, manufacturer, distributor, wholesaler and retailer, it appears that there is a constant flow of new products and stock keeping units held for these fast moving consumer goods. We can say that we humans are a rather wasteful species because a large proportion of products become obsolete or slow moving over time and organizations push products into the marketplace to gain competitive advantage and optimize profits. Hence, there is need to address this issue in the field of Supply Chain Management because resources on this planet are limited and we humans live in a very fragile planet. Yet, as population grows, we humans have become used to this over-abundance even though the resources within this planet are becoming more and more scarce. Consumption levels have increased with population growth and with capitalist thinking, virtually anybody can develop businesses that will create products to meet human needs. In the field of Supply Chain Management, managers set polices on when to order and how much to order and the average inventory that results from these inventory replenishment policies become targets. This paper attempts to compare target days of inventory with actual days of inventory held in warehouses for a single organization with many warehouses/ stock keeping units, in an attempt to understand further approaches that can be used to improve inventory waste within supply chains.

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Lean, leaner, too lean? The inventory‐performance link revisited

Cited by 325 publications

References 35 publications

Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan

Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan

Strategic Inventories under Limited Commitment

Target Days versus Actual Days of Finished Goods Inventory in Fast Moving Consumer Goods

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