Inventory Performance Related to Financial Performance? A Case Study in Manufacturing Sector

Abstract

This study is to investigate the importance of inventory and the correlation to financial performance. The competitive marketplace has driven the supply chain environment complex and uncertain customer demand. The delivery speed is one of the significant factors to reach customer requirements in the manufacturing sector. The inability of delivering on time may cause the loss of business opportunities. Moreover, the inventory is a double edge sword to manufacturers, advantages and disadvantages appeared whether holding inventory or not. The purpose of this research is to investigate the inventory. First, to seek the correlation between inventory performance and the supply chain, and how the company enhances inventory performance by the supply chain activity. Second, to find the influence of financial performance if inventory performance improved. The findings shows that the internal company operation and the external supply chain collaboration assisted and improved inventory performance. Secondly, effective inventory management and a clear manufacturing strategy (such as purchasing timing, forecasting customer demand, the supply chain collaboration) are able to improve company’s financial performance, particularly on cash flow management