Using Inventory for Competitive Advantage

through Supply Chain Management

Author(s): Thomas C. Jones, Daniel W. Riley,

Abstract:

Competitive pressures will force major changes in inventory management

in the next few years. Changes will result from businesses identifying and
capitalising on the opportunities to manage their entire supply chains as
single entities. Supply chain management techniques deal with the
planning and control of total materials flow from suppliers through
end‐users
Inventory management effectiveness of a
manufacturing company – Malaysian
evidence
Author(s): Norazira Abd Karim

Abstract:

Purpose
The purposes of this study are to examine the standard operating procedure
(SOP) on inventory management practices, identify any weaknesses
in inventory management and examine its impact on the performance of the
company. Inventory management is important because it ensures smooth
production and prevents loss of sales because of stockout and/or customer
dissatisfaction.

Design/methodology/approach
This study selects one manufacturing company as a case study and uses the
mixed data collection method of document analysis and observation. The
research analysis was conducted by using COSO Internal Control – Integrated
Frame work 2013 as guidance.

Findings
It is revealed that a company practices risky inventory management in keeping
stock, as it relies heavily on third-party warehousing services beyond the control
of the company. This study also reveals that the SOPs are too general and lack
specificity. However, poor inventorymanagement has a modest influence on the
financial performance of the company.

Research limitations/implications
In completing this study, some limitations are experienced such as changes on
the management structure of the company as well as the department itself.
Frequent changes on several procedures also may influence this study to obtain
accurate information. In addition, some highly confidential documents such as
detailed information and minutes from management meeting were not permitted
to be examined.
 A review
of inventory management research in
major logistics journals: Themes and future
directions
Author(s): Brent D. Williams,
Travis Tokar

Abstract:

Purpose
– The purpose of this paper is to provide a review of inventory management articles
published in major logistics outlets, identify themes from the literature and provide
future direction for inventory management research to be published in logistics
journals.

Design/methodology/approach
– Articles published in major logistics articles, beginning in 1976, which contribute to
the inventory management literature are reviewed and cataloged. The articles are
segmented based on major themes extracted from the literature as well as key
assumptions made by the particular inventory management model.

Findings
– Two major themes are found to emerge from logistics research focused
on inventorymanagement. First, logistics researchers have focused considerable
attention on integrating traditional logistics decisions, such as transportation and
warehousing, with inventorymanagement decisions, using
traditional inventory control models. Second, logistics researchers have more
recently focused on examining inventory management through collaborative models.

Originality/value
– This paper catalogs the inventory management articles published in the major
logistics journals, facilitates the awareness and appreciation of such work, and
stands to guide future inventory management research by highlighting gaps and
unexplored topics in the extant literature.
 A bibliometric analysis
of inventory management research based
on knowledge mapping
Author(s): Yong Ye , Yuanqin Ge

Abstract:

Purpose
The research mainly aims at the hotspot of inventory management by
knowledge mapping and provides a visualization reference in this research
field.

Design/methodology/approach
First, inventory management journals during 1986 to 2017 were selected as
the research object and text formatting in the Web of Science (WOS)
database is exported. Then inventorymanagement knowledge mapping is
done and clustering keywords are extracted by using CiteSpace and
VOSviewer software. Based on co-word analysis, the three special clusters
are exported: inventory optimization strategy, inventory pricing
and inventory technology. Besides, the clustering structure and time evolution
are analysed. Finally, bibliographic item co-occurrence matrix builder
(BICOMB) was used to extract the “journal” and “researchers” keywords in
the inventory management research fields. Setting three parameters such as
the cited half-life, centrality, frequency and keywords for data mining, it can
infer the trend keywords of future research.

Findings
Results showed that inventory management research has been abundant in
literature over the past 30 years and has experienced a change from focusing
on inventory optimization strategy to inventory pricing
and inventory technology in process. It shows
that inventory managementresearch focused on the classic topics and
includes economic order quantity, dynamic pricing, design and technology,
and the new topics include channel coordination, hierarchical price and
simulation.

Research limitations/implications
Based on knowledge mapping, this study is still relatively macro and cannot
cover all areas of inventory management. This study only investigated the
state of correlational research in WOS and Google Trends and not additional
databases.
The effect of inventory management on
firm performance
Author(s): Dimitrios P. Koumanakos

Abstract:

Purpose
– Lean management is getting more and more attention in today's highly competitive
environment. In this context, the aim of this study is to test the hypothesis that
efficient (lean) inventory management leads to an improvement in a firm's financial
performance.

Design/methodology/approach
– Data for the analysis came from the ICAP database, which contains financial
information on all medium to large Greek firms. The sample period extended from
2000 to 2002. For each year all manufacturing firms with the corporate form
of societés anonyms operating in any one of the three representative industrial
sectors in Greece: food, textiles and chemicals were selected.

Findings
– Preliminary results, obtained by cross‐section linear regressions, reveal that the
higher the level of inventories preserved (departing from lean operations) by a firm,
the lower its rate of returns. Findings are additionally tested by the use of
pseudo‐likelihood ratio test which constitutes a more reliable tool, thus verifying the
robustness of the linearity of the relationship.

Research limitations/implications
– Given the great number of the possible determinants of performance it is difficult
to isolate the effect of inventories even by using large samples and advanced
methodologies.

Originality/value
– Since the results from other empirical studies on the microeconomic determinants
and consequences of inventories are somewhat contradictory, this study sheds
more light to this issue by employing more sophisticated statistical tests applied to a
large and recent sample of Greek manufacturers across different industries.
 Forecasting demand
and inventory management using
Bayesian time series
Author(s): T.A. Spedding,
k.k. chan

Abstract:
Discusses the development and evaluation of a forecasting model
for inventory managementin an advanced technology batch production
environment. Traditional forecasting and inventory management do not
adequately address issues relating to a short life cycle and to non‐seasonal
products with a relatively long lead time. Limited historical data (fewer than
100 observations) is also a problem in predicting short‐term dynamic or
unstable time series. A Bayesian dynamic linear time series model is
proposed as an alternative technique for forecasting demand in a dynamically
changing environment. Provides details of the important characteristics and
development process of the forecasting model. A case study is then
presented to illustrate the application of the model based on data from a
multinational company in Singapore. It also compares the Bayesian dynamic
linear time series model with a classical forecasting model (auto‐regressive
integrated moving average (ARIMA) model).
 Elaborating a dynamic systems theory to
understand
collaborative inventory successes and
failures
Author(s): Stanley E. Fawcett,
Matthew A. Waller, Amydee M.
Fawcett
Abstract:

Purpose
– The purpose of this paper is to provide a holistic paradigmatic lens through which
the supply chain collaboration phenomena – including
collaborative inventory management – can be understood and explained.

Design/methodology/approach
– As theory‐building research, the paper explores the environmental conditions and
managerial processes that promote or hinder supply chain collaboration from a
variety of theoretical lenses including contingency theory, the resource‐based view
of the firm, the relational view of the firm, force field analysis, constituency based
theory, social dilemma theory, and resource‐advantage theory.

Findings
– To demonstrate how an integrated theoretical framework can help us understand
the dynamics of supply chain collaboration, the paper uses the framework to
explicate the evolution and state of collaborative inventory management.

Practical implications
– The framework can accurately depict and explain highly publicized collaborative
failures and successes. It is also possible to draw from the model's core
propositions to design prescriptive remedies for the challenges managers encounter
as they seek to build collaborative inventorymanagement capabilities.
Impact of just‐in‐time inventory systems on
OEM suppliers
Author(s): John F. Kros, Mauro
Falasca, S.Scott
Nadler
Abstract:

Purpose
– To analyze the impact of the adoption of just‐in‐time (JIT) production systems by
different equipment manufacturers (OEMs) on the inventory profiles of their
suppliers.

Design/methodology/approach
– The research is designed to examine five financial measures
of inventory managementperformance over the years 1994‐2004. Three specific
industry sectors where OEMs have adopted and implemented JIT principles are
studied. These sectors include the automotive, electronics, and aircraft industries. A
one factor analysis of variance is employed to the five hypotheses and Tukey's
post‐hoc test is used to interpret statistical pairwise differences between level
means.

Findings
– Overall, the research finds that OEM suppliers in the automotive, electronics, and
aircraft sectors have shown mixed results in the impact JIT implementation has had
on inventoryperformance measures.

Research limitations/implications
– The research focuses on three industrial sectors over approximately a ten year
time frame that may limit its generalizability.

Practical implications
– The processes that influence the reduction in inventory levels may be in fact more
complex and strategic in nature than an OEM adopting a JIT inventory policy. In
general, strategic changes within the supplier organization would have to drive
process improvements that lead to inventory reductions.
 Improving inventory performance with
clustering based demand forecasts
Author(s): Pradip Kumar Bala

Abstract:

Purpose
– The purpose of this paper is to develop a forecasting model for retailers based on
customer segmentation, to improve performance of inventory.

Design/methodology/approach
– The research makes an attempt to capture the knowledge of segmenting the
customers based on various attributes as an input to the demand forecasting in a
retail store. The paper suggests a data mining model which has been used for
forecasting of demand. The proposed model has been applied for forecasting
demands of eight SKUs for grocery items in a supermarket. Based on the proposed
forecasting model, the inventory performance has been studied with simulation.

Findings
– The proposed forecasting model with the inventory replenishment system results
in the reduction of inventory level and increase in customer service level. Hence, the
proposed model in the paper results in improved performance of inventory.

Practical implications
– Retailers can make use of the proposed model for demand forecasting of various
items to improve the inventory performance and profitability of operations.

Originality/value
– With the advent of data mining systems which have given rise to the use of
business intelligence in various domains, the current paper addresses one of the
most pressing issues in retail management, as demand forecasting with minimum
error is the key to success in inventory and supply chain management. The
proposed forecasting model with the inventoryreplenishment system results in the
reduction of inventory level and increase in customer service level. The proposed
model outperforms other widely used existing models.
 Optimizing inventory and store results in
big box retail environment
Author(s): Amine Ayad

Abstract:

Purpose
– This paper seeks to examine key factors within the control of store managers to
optimizing inventory and store results.

Design/methodology/approach
– This research integrates principles of action research and traditional research in a
big box retail environment.

Findings
– While this study confirms theories that link inventory to sales, merchandise
selection, and technology, it emphasizes the role of people. Furthermore, it proves
that different stores within same companies and different departments within same
stores deliver different results due, mainly, to human factors – specifically, critical
thinking, functional knowledge, and leadership.

Research limitations/implications
– This study does not address inventory assortment, space allocation, automatic
replenishment, planograms design, technology, logistics, and other factors that may
impact inventory but mostly outside the control of big box store managers.

Originality/value
– This study proposes practical tools and ideas to optimizing inventory and business
results in big‐box stores. It also serves as an example of extracting and verifying
retail managementtheory from practice. As such, it benefits both practitioners and
academics.
Strategic inventory allocation for product
platform strategy
Author(s): Yohanes Kristianto,
Petri Helo, Josu Takala

Abstract:

Purpose
– This paper focuses on decision making related to the use of
strategic inventory allocation in product platform design. The purpose of the paper is
to present a novel approach to managingproduct variety by considering product and
manufacturing strategy, and considering the supply chain benefits.

Design/methodology/approach
– Discrete event simulation is used for analyzing product platform performance in
terms of inventory level and throughput. Simulation parameters such as lead times
and safety stock allocation are optimized by using an analytical model of strategic
safety stock allocation.

Findings
– The results show that strategic safety stock allocation supports product platform
strategy by increasing production output, and reducing inventory level and customer
order queues at a higher level of product variety.

Research limitations/implications
– Linking the safety stock allocation and product platform strategy facilitates
simultaneous product and process design by providing the most optimum platform
strategy at minimum safety stock allocation.

Practical implications
– Strategic safety stock allocation facilitates decision making with regard to lean
strategy by reducing inventory level, agile strategy by increasing the amount of
product variety and outputs, and responsiveness by reducing the number of
customer order queues.