An Empirical Analysis of Inventory Turnover Performance Within a Local Chinese Supermarket

Retail inventory is an important indicator for retailers as well as their shareholders and suppliers. Inventory enables retailer to sell products to customer but excessive or slow moving inventory also add extra cost. For shareholders and suppliers this is an indication of retailer’s bright or grim future. The aim of this research is to analyze the inventory turnover’s impact on the performance variables of profit margin percentage and sale surprise in one of the retailing firm of Hubei province China. We will study if inventory turnover is affected by profit margin percentage and sale surprise similarly across all categories and modes of operation in retail firm or there is some variation in the known behavior. We will be testing our hypothesis on data of a large local supermarket chain that operates in the Hubei province of China. They have multiple supermarkets in the tier 1 and tier 2 cities of the province. We investigate correlation of inventory turnover with profit margin percentage and sale surprise across different categories and modes of operation. The analysis reveals that there is a negative correlation between Inventory Turnover and profit margin percentage, while positive correlation exists between Inventory Turnover and Sale surprise across all categories and modes. But its rate of correlation varies between categories and channel structure

Inventory Flow in Canadian Candy Bar Supply Chains

This study examined the ages of candy bars to measure the inventory flow in their supply chains. It sampled 6888 candy bars at 8 retail chains made by 4 manufacturers over a 4 year period. The first objective of the study was exploratory: were there any significant differences in inventory turnover across retailers, manufacturers, or time periods? The second objective was explanatory: could those differences be explained by business events, factory location, market share, or pricing? The analysis showed that there were substantial differences in inventory turnover, especially among the retailers. Unlike in previous research, these differences seemed independent of the particular retail sector. The analysis also found that significant changes in inventory ages coincided with major events at one manufacturer. Interestingly, locating factories close to their markets did not necessarily lead to faster flows. These findings have implications for firms operating in the increasingly integrated North American marketplace

Does Lean Inventory Lead to Firm Performance? An International Comparison between the US and Japanese Manufacturers

The study attempts to investigate the relationship between inventory management and firm performance using a multi-dimensional aspect of inventory management with respect to lean management practices across countries. Research design, data, and methodology - 1643 manufacturing firms from Japan and the US that SIC ranges from 2000 to 3999 were chosen to conduct the empirical test. This study employs hierarchical OLS regression analysis to examine the impact of control variables, ABI, EBI, and the interaction between ABI and EBI on firm performance. Results - The result indicates that in Japan high level of inventory negatively influences the accounting flows of business, while US manufactures exhibit strong positive impact of ELI on firm performance across accounting and market measures. The results show that the complementarity between the amount and the speed of inventory does exist. Except for Tobin’s q, the sign of interaction term coefficient is negative, suggesting that when the amount of inventory increases and it stays longer in a firm, market values, ROS, and ROA suffers. Conclusions - The major finding of this study is that there exist some complementarities between the scope and implication of inventory management for lean strategy across countries, particularly in U.S. and Japanese firms

Analysis of Retailer Inventory and Financial Performance

This paper attempts to recreate the regression model originally presented in Kesavan and Mani (2013) to analyze the relationship between abnormal inventory growth (AIG) and one-year-ahead earnings per share (EPS) for U.S. public retailers. In addition, this paper aims to build upon Kesavan and Mani (2013)’s findings by applying the model to recent data in order to test whether results vary as a function of different macroeconomic conditions. Unlike Kesavan and Mani (2013), I do not find a statistically significant relationship between AIG and future EPS for the years 2004-2009. However, when applying the same model to data from 2013 to 2018, I find a significant, inverted-U relationship between the two variables. These findings suggest that abnormal inventory growth is impacted by macroeconomic factors that encourage retailers to accumulate excess inventory. Furthermore, I find that excess inventories have a larger negative impact on future earnings than insufficient inventories, implying that retailers should prioritize strategies that prevent bloated inventory levels above those that lead to decreased service level

MATERIAL MANAGEMENT STRATEGIES AND SERVICE DELIVERY PERFORMANCE OF UPSTREAM OIL FIRMS IN RIVERS STATE

This paper examined the relationship between materials management strategies and service delivery performance of upstream oil firms in Rivers State. The aim was to examine the relationship between materials management strategies and service delivery performance of upstream oil firms in Rivers State. The study adopted cross-sectional research design. 40 copies of questionnaire distributed and 35 were valid. The Spearman Rank Order Correlation Coefficient was used with the aid of Statistical Package for Social Sciences (SPSS version 23.0), Cronbach Alpha verified the internal consistency and validity status and the results were positive. The findings of the study showed that MMS significantly related with service delivery performance of upstream oil firms in Rivers State, thus enhancing delivery reliability and on-time delivery. The study concluded that MMS indicators positively and significantly related with service delivery performance measures. Based on the findings, the study, recommends that, upstream oil firms need to have the necessary skills and knowledge about the use of scientific material management techniques and decision models. It is recommended that, pragmatic measures be adopted to implement efficient and effective inventory management software

Customer\u27s inventory accruals and supplier\u27s earnings quality

We examine the influence of customer’s inventory accruals on supplier’s accounting quality and earnings management practices. We consider two views of the role of customer’s inventory accruals play on their supplier and how they relate to their financial reporting. The first is the customer’s inventory accruals reflect supplier’s earnings management (i.e., intentional bias) as well as lead to difficulty in supplier’s earnings estimation (i.e., unintentional errors). The second view is based on supplier’s information advantage theory, which suggests suppliers are capable to interpret the information content of customer’s inventory accruals. In contrast to the information advantage view, we find that suppliers with higher level of customer’s inventory accruals have lower earnings quality and engage in more earnings management, evenafter controlling for their own inventory accruals level

Two pawns in their game - Inventory and customer efficiency

This thesis examines efficiency in the retail industry in two different directions. In the first setting, the link between inventory efficiency and performance is examined in relation to firm characteristics and exogenous explanatory variables. More specifically, in addition to general firm-specific characteristics, the effects of chain affiliation and time trends within retail chains is examined. The effects of business environment factors on inventory turnover are examined on the basis of geographic location and market conditions. In the customer efficiency setting, efficiency is studied by observing customers’ in-store behaviours to identify how specific customer characteristics in general, and the use of in-store carrying equipment in particular, are associated with shopper efficiency. These two avenues for detecting important retail efficiency metrics are examined in three individual research papers. The papers empirically demonstrate two different perspectives on efficiency that are important for retailers to be aware of. From this customer and retailer perspective, several dilemmas exist that have been only partly covered in the three papers. This dissertation aims to discuss some of these dilemmas and to demonstrate some of the dualities that exist in the intricate interconnection between the customer and the retailer in the pursuit of efficiency. Overall, the thesis offers new insights, makes significant contributions to the literature and to retail practice in terms of the complex topic of retailer logistical performance and customer efficiency and develops a better understanding of some tenets of eminent and sustainable brick and mortar retailing

Customer’s operational efficiency and trade credit provision

This study examines whether the trade credit provision is affected by customers’ operational efficiency. We link the supplier firms with their major customers using the Customer Segment database in order to identify the trade credit provision for each pair of supplier-customer relationships. While suppliers have the incentive to provide trade credit to high-quality customers in order to increase market share, excess trade credit would also harm the suppliers once the customers default. Our empirical results indicate that operational efficiency and trade credit are positively associated. This finding supports the view that suppliers tend to select and provide trade credit to high productive customers. Moreover, we find that both suppliers and customers can benefit from more trade credit provision when the customer is more productive. The result is consistent with the supply chain cooperation view. Furthermore, we document the effect of customer’s operational efficiency and trade credit provision on the share of profit between supplier and customer under different situations such as when the supplier has higher bargaining power, lower cost of borrowing as well as lower customer concentration. The study contributes to the literature of trade credit by introducing an additional determinant. Moreover, it provides implication to the trade contract for non-financial firms

The Relationship Between Abnormal Inventory Growth and Future Earnings for U.S. Public Retailers

In this paper we examine the relationship between inventory levels and one-year ahead earnings of retailers using publicly available financial data. We use benchmarking metrics obtained from operations management literature to demonstrate an inverted-U relationship between abnormal inventory growth and one-year ahead earnings per share for retailers. We also find that equity analysts do not fully incorporate the information contained in abnormal inventory growth of retailers in their earnings forecasts resulting in systematic biases. Finally, we show that an investment strategy based on abnormal inventory growth yields abnormal returns of 11.8% (p<0.001)