Impact of JIT on inventory to sales ratios

Just-In-Time (JIT) production has received a great deal of attention, worldwide, since its introduction in Japan a few decades ago. It has been well documented that some of the main benefits of JIT implementation are reduction of inventories, lead-time reduction, and cost savings. Most of the previous research on the impact of JIT on firm performance has either been anecdotal (one-firm studies), or cross-sectional (comparing JIT firms with non-JIT firms at one point in time) in nature. This paper focuses on studying the impact of JIT on inventories to sales ratios prior- and post-adoption based on actual performance of 74 firms as reported in COMPUSTAT data. Results show that the total inventory to sales ratio and raw material inventory to sales ratio decreased post-implementation; however, there has not been any statistically significant change in work-in-process inventory to sales ratio and finished goods inventory to sales ratio post-implementation

Did just-in-time management effectively decrease inventory ratios in Belgium?.

Belgium; Inventory; Just in time; Management; Ratios;

Did inventories decrease in the Belgian manufacturing sector between 1979 and 2000?.

It is almost unquestionably accepted by most observers that inventories decreased over time. There are so many Enterprise Resource Planning systems implemented and so many Just-In-Time ideas successfully introduced in companies that we almost automatically conclude that inventories went down. This conclusion, however, is somewhat hasty. Finished product inventories did actually not decrease, whereas the work-in-process and raw materials inventories did go down in most industrial sectors. This is the main conclusion from our econometric study performed on industry data (15 industrial sectors) during the period 1979-2000. In this paper we focus on the econometric model of our study, we interpret the results and we conclude with a number of managerial insights.Companies; Data; Empirical study; Industry; Inventory; Just in time; Manufacturing; Model; Planning; Product; Studies; Systems; Time; Time series;

Recent evidence on the muted inventory cycle

Inventories play an important role in business cycles. Inventory build-ups add momentum to the economy during expansions, while inventory liquidations sap economic strength during recessions. In addition, because inventory fluctuations are notoriously difficult to predict, they present considerable uncertainty in assessing the economic outlook.> The role of inventories in shaping the current outlook for the U.S. economy is particularly uncertain. In the early 1990s, inventory swings appeared less pronounced than usual, leading some analysts to conclude the business cycle might now be more muted. New inventory control practices, they believed, were permanently diminishing the role of inventories in the business cycle. Yet, recent strong inventory restocking suggests this conclusion might be premature. Inventories may be just as important in the business cycle today as in the past.> Filardo examines recent inventory data to assess whether the role of inventories in the business cycle has changed. He finds little evidence to suggest inventories are playing a reduced role in the business cycle, and therefore rejects the view that a change in inventory behavior has muted the business cycle.Business cycles ; Inventories

Recent Evidence on Improved Inventory Control: A quarterly Model of the US Economy for the period 1959-2001

This Paper aimed to re-test the hypothesis whether the improved inventory control affects the inventory investment or not. This paper used Bechter and Stanley (1992) model. The contribution of this letter has two dimensions; first, this paper extends the time horizon by using a quarterly data of the U.S. economy for the period 1959-2001. Also, it modifies Bechter and Stanley model under certain assumption and use the adjusted model to re-exam the hypothesis. The results of the paper support the idea that improved inventory control has a significant impact on the behavior of inventory investment. In addition, it shows that the improvement vary from one sector to another. Further, the paper showed that the speed of adjustment will be faster if the firms ignore holding inventories as a buffer stock.inventory control, model, economy, USA

An analysis of inventory turnover in the Belgian manufacturing industry, wholesale and retail and the financial impact on inventory reduction.

Various inventory studies have been published in the last decades. Some studies emphasize the importance of low inventories, other examine the evolution of inventories over time and especially focus on the impact of the just-in-time (JIT) revolution. The aim of this paper is to investigate the level of inventories held by Belgian companies at one moment in time, namely May 2004. First we examine differences in inventory ratios between manufacturing industry sectors as well as between wholesale and retail. We find empirical evidence that the type of production process is the most important driver for work in process inventory. The finished goods inventory ratio also differs significantly among industry sectors, but here the reasons for the difference are harder to distinguish. Finally we find the inventory ratio to be significantly higher in retail than in wholesale. Furthermore, we examine the financial impact of inventories in the manufacturing industry. We find that companies with very high inventory ratios have more chance to be bad financial performers. Regression analyses partially support the hypothesis of a negative relationship between inventory ratio and financial performance but significant results could not be obtained for all sectors.Inventory; Manufacturing;

The Impact Of Just In Time On Firm Performance

This paper explores whether different supply chain management choices such as just-in-time and non-just-in-time, which has different inventory cost has an effect on firm performance and whether or not the firm adopts the innovation approach such as JIT could increase productivity, reduce inventory and improve quality. The results indicated statistically significant differences in inventory, days to sell inventory, inventory turnover, ROA, sales, cost of goods sold, gross profit margin between JIT and non-JIT. It concluded that the adoption and implementation of innovation approach of supply chain management such as JIT did have a significant difference and improvement on firm performance

Korean Augmented Production Function: The Role Of Services And Other Factors In Korea¡¯S Economic Growth Of Industries

It is well known that economic growth and services have a positive association. In particular, the more developed an economy is, the higher the share of the services sector. While most research has focused on service output, this study also examines services as input. Recently, the need for taking services a separate input in the production function has come to the fore. Therefore, the OECD productivity manual generalizes the KLEM model to KLEMS (capital-labor-energy-materials-services) model by including the services as an input. We use KLEMS data in this study. In addition, we augmented the standard production function with other variables such as the inventory to sales ratio, R&D to sales ratio, education expenditure to sales ratio, and the debt to sales ratio. The findings are encouraging and lead us to formulate some important conclusions; for example, after the 1998 Financial Crisis, the Korean economy has increased in efficiency and this is partly due to an increased importance of services as both output and input.Services, Manufacturing, Production Function, Korean Industries, Financial Crisis, Panel Data

The impact of quality management systems on the efficiency of current assets management in small commercial enterprises

Purpose: Financial security and high profits are the basic goals set by the owners and managers running an enterprise. To achieve them, management tools and systems should be introduced to improve the efficiency of resource management that the company has. By optimizing the level of current assets one can reduce costs, which has a positive effect on the company profits and the level of financial liquidity. Therefore, improving the efficiency of wealth management is an important element of business management. The purpose of the article is to show how standardized quality management systems affect the efficiency of managing current assets and their basic components Design/Methodology/Approach: The analysis was carried out on a group of 159 trade companies. The research period covered the years 2015-2017.The enterprises surveyed were divided into those that implemented quality management systems (52 enterprises) and those that do not use this type of solutions (107 enterprises).Then, analyzes were made and the results obtained by the associated enterprises in individual groups were compared. The analysis of financial indicators and basic statistical methods (average, median) were used as the basic research tools. Findings: The introduction of quality management systems is designed to improve the efficiency of business management, also has the large impact on costs. The decrease in costs reduces the price of products and goods sold. Practical Implications: The results demonstrate that quality management systems have the significant impact on the price, which is the most important criterion for buying goods or services Originality/Value: Analysis showed that enterprises which use quality management systems manage their assets more efficiently compared to enterprises that do not use quality management systemspeer-reviewe

Inventories in the crisis.

At the end of 2008, a massive and worldwide drawdown of inventories contributed to the strong contraction in international trade and activity. This movement was no doubt exacerbated by the financial constraints on companies and the transmission of the shock along globalised production chains. Conversely, from mid-2009 onwards, destocking slowed, contributing to a V-shaped recovery.inventory cycle, just-in-time, great recession, bullwhip effect, financial constraints.