The Empirical Determinants of Inventory Levels in High‐volume Manufacturing

Lieberman, Marvin B.; Helper, Susan; Demeester, Lieven

doi:10.1111/j.1937-5956.1999.tb00060.x

Cited by 65 publications

(41 citation statements)

References 7 publications

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“…According to our theoretical setting, the main explanatory variable of our interest is a firm's CSR. Additionally, and based on previous literature (Rumyantsev and Netessine, 2007;Gaur, Fisher andRaman, 2005, andLieberman et al 1999), we also include the following control variables: firm size, sales margins, lead time, sales growth, financial structure and sales uncertainty.…”

Section: Description Of Data and Variablesmentioning

confidence: 99%

Corporate social responsibility and inventory policy

Redín

Barroso

Surroca

et al. 2013

International Journal of Production Economics

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In this article, we study the impact of implementing corporate social responsible (CSR) practices on a firm's inventory policy. Our proposal is that there is an inverted U-shape relationship between firms' CSR and their inventory levels. Two elements explain such proposal. First, stakeholders have different interests regarding the outcome of the inventory system. Specifically, we hypothesize that customers pressure firms to increase inventories; employees have conflicting views regarding inventories and, for this reason, they do not pressure firms in a particular direction; and environmental activists force firms to reduce inventories. The second reason is that there is different level of stakeholder proactiveness contingent on the intensity in the implementation of social responsible policies. In particular, we posit that for low levels of CSR, customers are more relevant, while for larger levels other stakeholders gain more importance.We test this theoretical prediction by crossing two databases, COMPUSTAT, for financial data, and KLD for data on social responsibility. Our final database contains data on 1881 different US companies for the period 1996-2006. The results found conform to our theoretical prediction.Our analysis will be helpful to strategic and tactical decision-making processes on inventory management and will allow researchers to offer concrete advice on the likely outcomes of various stakeholder relationship practices in order to improve the effectiveness of inventory systems. Additionally, the connection between CSR and inventory policies has interest at a macroeconomic level given that, on the one hand, there is a growing tendency for firms to behave in a socially responsible way. On the other, inventories are responsible for up to 87% of the total peak-to-trough movement in GDP. Thus, our results suggest that this tendency to incorporate the social dimension in firms' strategy should smooth out the overall economic cycle given that firms apply more intensive CSR policies in the expansive periods (decreasing inventories) rather than during the downturns (increasing inventories).

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Section: Description Of Data and Variablesmentioning

confidence: 99%

Corporate social responsibility and inventory policy

Redín

Barroso

Surroca

et al. 2013

International Journal of Production Economics

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“…This may be attributed to the fact that forward vertical integration can contribute to greater efficiency in the delivery of finished goods downstream in the supply chain. Lieberman, Helper, and Demeester (1999) find that maintaining communication with suppliers and customers leads to reductions in RMI and FGI with no impact on WIP inventory. As Balakrishnan, Linsmeier, and Venkatachalan (1996) argue, reducing WIP inventory requires less coordination with a firm's suppliers or customers than is required to reduce RMI or FGI and thus impose fewer implementation costs.…”

Section: Discussionmentioning

confidence: 94%

The impact of vertical integration on inventory turnover and operating performance

Andreou

Louca

Panayides

2015

International Journal of Logistics Research and Applications

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This paper investigates how vertical integration may influence inventory turnover and firm operating performance. A causal model is developed to investigate the effects of vertical integration on three types of inventory, namely raw materials inventory (RMI), work in progress inventory (WIPI) and finished goods inventory (FGI). The model tests the interactions between inventory types and the consequences of inventory turnover performance on various aspects of firm performance including costs and profitability. In particular, path analysis supports systematic differences with respect to how vertical integration affects RMI, WIPI and FGI. Vertical integration has a positive effect on RMI and FGI turnover but no significant effect on WIPI turnover. FGI contributes to a reduction in supporting processes costs which causes an improvement in return on sales (ROSs). Vertical integration impacts ROS directly.

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“…This argument, although implicit in the lean practices literature, remains underdeveloped and untested at the inventory efficiency level. Although past work has focused on antecedents of RM, WIP, or FG inventory efficiency Lieberman et al (1999), considered their effects separately on performance (Bernard and Noel 1991;Capkun et al 2009), or studied the nature of change in three inventory types Chen et al (2005), the joint effect among the three inventory types is not explored.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Interdependence Among Inventory Types and Firm Performance

Manikas

2017

OSCM: An Int. Journal

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Extant research on lean manufacturing has focused on the relationship between systemic inventory and performance. However, limited research, if any, has focused on dynamics between three main types of inventory -raw material, workin-process, and finished goods -and firm performance. Drawing on the interdependence framework and a sample of 1,286 firms representing 41,067 firm-quarter observations from 2000 to 2013, when considering two types of inventory efficiencies jointly, higher efficiency in the subsequent inventory type must be accompanied by lower efficiency in the previous inventory type. In other words, lower raw material inventory efficiency and higher work-in-process inventory efficiency, or lower work-in-process inventory efficiency and higher finished goods inventory efficiency are associated with higher performance. High performance is also realized only when inventory efficiency is increasing across all three inventory types. The findings show that pursuing efficiency in one type of inventory requires lower efficiency in the previous inventory stage, and benefits of lean manufacturing could only be realized when all three inventory efficiencies are simultaneously high.

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The Empirical Determinants of Inventory Levels in High‐volume Manufacturing

Cited by 65 publications

References 7 publications

Corporate social responsibility and inventory policy

Corporate social responsibility and inventory policy

The impact of vertical integration on inventory turnover and operating performance

Interdependence Among Inventory Types and Firm Performance

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