Application of system dynamics for assessment of changes of the level of stock after introduction of ERP systems

Application of information management system is an important element of ensuring business effectiveness for any modern enterprise. However, the permanent growth of the cost of such systems requires application of new approaches to assessment of influence of complex information systems upon the level of stock. The article describes a structure of the model and specifically those elements that allow assessment of reduction of delays connected with automation. It offers to assess a change of the stock level with the use of methods of system dynamics. The results are based on imitation experiments of the stock level in the production and sales system with the use of the AnyLogic software system

Supply Chain Structure, Inventory Turnover, and Financial Performance: Evidence from Manufacturing Companies in China

Using data collected by the World Bank, we empirically investigate the relationship between Chinese manufacturers’ supply chain attributes, raw material and finished goods inventory turnover, and return on sales. Our findings indicate that location proximity, relationship continuity, and the relative power of the manufacturer over suppliers and customers have a significant impact on inventory performance, which in turn drives profitability. We especially focus on characteristics unique to China’s business environment. We find that Chinese manufacturing companies have relatively weak operational performance, and better operational performance is associated with closer distance, longer relationship with suppliers and customers, and relative power over suppliers. Unlike their counter parties in some developed countries, Chinese manufacturers’ profitability relies on both downstream and upstream inventory performance, with downstream inventory performance playing a somewhat more important role

Trends in Manufacturing Inventory Efficiency: 1980-2013

This study was motivated by Cooke’s 2013 article questioning the inclusion on inventory carrying costs in CSCMP’s Annual State of Logistics Report since it is based on interest rates. This paper explores that question more fully and goes on to look at trends in inventory efficiency based on inventory turnover for U.S. manufacturing firms. Results of the study reveal that there has been a level trend between 1980 and 2013 after firm size is controlled for. Since these results are contradictory to those obtained by looking at inventory carrying costs as a percent of GDP, they suggest the need for a measure which controls for interest rate to be included in the State of Logistics Report

Corporate social responsibility and inventory policy

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).Corporate social responsibility, Stakeholders, Inventories

Exploring Inventory Leanness on Firm Performance with a Non-linear Empirical Leanness Indicator using Kernel Regularized Least Squares (KRLS) Regression

The extant literature assumes linearity between inventories and sales We relax this assumption, suggesting the relationship may indeed be non-linear. We develop a measure of leanness termed non-linear empirical leanness indicator (NELI) using kernel regularized least squares (KRLS), which is an efficient and interpretable machine learning method allowing us to accurately capture the true functional form in the data without losing any explanatory power offered by traditional regression models. Next, we benchmark and demonstrate its potential as a better explanatory variable than the traditional measures in explaining both accounting-based performance measures (ROA) as well as market based measures (Market Capitalization). Prior literature tends to bunch industries together potentially missing industry specific characteristics. To avoid this, we analyze this relationship accounting for firm-specific fixed effects which encapsulates any industry specific effects. We examine this relationship in an emerging economy - Indian manufacturing firms. The dataset we use has been used in publications such as Econometrica, Journal of Finance and Strategic Management Journal amongst others, alluding towards its reliability. Our results suggest that overall leanness has a positive impact on firm performance. We also find that this effect is more pronounced in firms operating in a relatively stable environment. Overall, our results contribute to the literature by: a) documenting a positive impact of leanness on performance; b) showing that the effect can be dependent on the underlying business industry dynamics; and, c) showing that this effect is documented in samples outside the western world where management theories and practices are evolving

재고와 유휴 자원이 실적에 미치는 영향

학위논문(석사) -- 서울대학교대학원 : 경영대학 경영학과, 2021.8. 황인이.This study focuses on the relationship between discrete components of inventory and future performance and extends it to the operational slack and future performance. I use the U.S. manufacturing industries data from 1972 to 1999. Consistent with the predictions, I find that both raw materials and finished goods are negatively and significantly associated with firm future performance. Additionally, I further investigate how the operational slack using DOI and SOP with discrete components of inventory affects the future performance. I find that the moderating effect of operational slack and discrete components of inventory varies, depending on the types of operational slack and inventory. It shows that DOI and finished goods and raw materials are negatively associated with future performance, however, the SOP and finished goods and raw materials are positively and negatively related to future performance, respectively.미국 제조업 회사를 대상으로 개별 재고량이 회사의 미래 실적에 미치는 영향과 더 나아가 유휴 자원이 있는 상황에서 개별 재고량이 미래 실적에 어떠한 영향을 가지는지 상관 관계를 분석하고자 한다. 1972년부터 1999년까지 미국 제조업 회사들의 자료를 가지고 최소제곱법을 활용하여 실증분석한 결과 원자재와 완제품 각각 미래의 실적에 음(-)의 관계를 가지고 있는 것으로 나타났다. 유휴 자원을 실증분석하기 위해 재고자산회전율(DOI)과 고정자산회전율(SOP)을 이용하였다. 개별 재고량과 회전율 사이에는 양(+), 음(-)의 결과가 공존한다. 원자재와 완제품의 DOI는 미래 실적에 음(-)의 관계를 가지고 원자재와 SOP는 음(-)의 결과를 완제품과 SOP는 양(+)의 관계를 가지고 있는 것으로 나타났다.I. INTRODUCTION 1 II. PRIOR LITERATURE AND HYPOTHESES 4 III. SAMPLE, MODEL, AND DATA 8 IV. EMPIRICAL FINDINGS 13 V. CONCLUSION 17 REFERENCES 19 APPENDIX 22 TABLES 23 ABSTRACT IN KOREAN 31석

The Effects of Bullwhip on Item Level Performance

This research investigates how information and material distortions affect the inventory management performance of a major retailer. Bullwhip effects (BWEs) are individually calculated for dozens of products carried by dozens of retail locations. Relationships between item/store-level BWEs and item/store-level performance measures including gross margins and inventory levels are tested and reported

The Contagion of Lean Inventory Management in the Supply Chain

This study examines the impact of buyer-supplier relationship age and industry similarity on the effect of buyer inventory leanness on supplier inventory leanness. While previous literature has studied the relationship between buyer inventory leanness and supplier inventory leanness, there has not been a large focus on the external relationship characteristics that influence this relationship. This study hypothesizes that buyer-supplier relationship age and similarity increase the effect of buyer inventory leanness on supplier inventory leanness. With data from buyer-supplier observations in different U.S. industries from 2008 to 2015, regression was used to measure the inventory leanness of each supplier and year. Results from this study provide evidence that longer buyer-supplier relationships can lead to a positive effect of buyer inventory leanness on supplier inventory leanness while there was no evidence of industry similarity having an impact on this relationship. This study suggests that there is value in suppliers establishing long-term relationships with their buyers

Corporate social responsibility and inventory policy

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)

An Unintended Consequence of Platform Dependence: Empirical Evidence from IT-enabled Food-Delivery Platforms

IT-enabled food-delivery platforms increase restaurants\u27 catchment area and reduce search costs for consumers. The former allows restaurants to pool their risks and decrease noise in demand, whereas the latter increases competition and noise in demand. Overall, it is unclear how these competing factors affect restaurants\u27 ability to forecast their demand -a critical factor for profitability. In this paper, we empirically investigate the impact of IT-enabled food-delivery platforms on restaurants\u27 demand forecast error. Using detailed transaction-level datasets, we find that a 10 percentage point increase in dependence on food-delivery platforms leads to a 2.83% increase in overall forecast error. We also find that the majority of increase in overall error is due to an increased error in forecasting intra-day demand pattern , and a smaller portion is due to error in forecasting inter-day demand amplitude . Based on our findings, we offer suggestions for restaurants on managing their relationship with IT-enabled food-delivery platforms