On the relationship between inventory and financial performance in manufacturing companies

Détails

ID Serval
serval:BIB_CBE54A928EEC
Type
Article: article d'un périodique ou d'un magazine.
Collection
Publications
Titre
On the relationship between inventory and financial performance in manufacturing companies
Périodique
International Journal of Operations and Production Management
Auteur(s)
Capkun V., Hameri A.-P., Weiss L.
ISSN
0144-3577
Statut éditorial
Publié
Date de publication
2009
Peer-reviewed
Oui
Volume
29
Numéro
7-8
Pages
789-806
Langue
anglais
Résumé
Purpose - The purpose of this paper is to study the relationship between inventory performance, both total inventory (INV) and its discrete components (raw material (RMI), work-in-process (WIP), and finished goods (FGI)), and financial performance in manufacturing companies.
Design/methodology/approach - Statistical analysis is applied to the financial information of US-based manufacturing firms over the 26-year period from 1980 to 2005.
Findings - The paper finds a significant positive correlation between inventory performance (total as well as the discrete components of inventory) and measures of financial performance (at both the gross and operating levels) for firms in manufacturing industries. The correlation between the performance of discrete types of inventory and financial performance varies significantly across inventory types. RMI performance has the highest correlation with all financial performance measures. Between WIP inventory and FGI performance, the former is more highly correlated with gross profit measures while the latter is more highly correlated with operating profit measures.
Originality/value - This paper is the first to systematically analyze the relationship between inventory performance and financial performance for a large sample of firms across all manufacturing industries. The paper adds to prior literature by discussing and testing the relationship between both INV performance and the discrete types of inventory (RMI, WIP, and FGI) and profitability of operations, both at the gross and at the operating profit levels. The paper also analyzes the results for firms across as well as within manufacturing industries. The results obtained support the operations management literature's claim that a managerial focus on inventory performance results in value creation for manufacturing firms.
Mots-clé
Financial performance, Inventory, Process efficiency, Manufacturing industries
Web of science
Création de la notice
15/05/2008 16:18
Dernière modification de la notice
03/03/2018 21:27
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