An organizational perspective on inventory control: Theory and a case study

Abstract

Inventory control is a well-covered area in literature. Nowadays, many concepts and techniques are available for effectively controlling inventories. Eminent examples are stochastic models to determine order quantities, techniques for forecasting demand and different kinds of ABC analysis. Remarkably enough, the theoretical backgrounds of these concepts and techniques show a great deal of similarity: they all stem from the field of operations management and operations research. Despite the value of the available concepts, such a one-sided approach has its limitations in practice. In this article it is argued that it is important to take a broader view when dealing with practical inventory control problems. First of all, an organizational perspective on inventory control is developed. The main idea behind this perspective is the importance of the organizational context of inventories. This means that in addition to the traditional points for attention, such as order quantities and replenishment strategies, other aspects need attention as well. They are, for example, the allocation of responsibilities and authorities regarding inventory management, the quality of inventory information and the relevant decision-making processes. These contextual factors as well as the traditional factors are mapped out and integrated into a framework to be used in solving practical inventory control problems. One of the main features of the framework is that it is useful in both analyzing and redesigning an inventory situation. Secondly, this article describes the results of a case study regarding the application of the organizational perspective to a practical inventory control problem. The central issue of the case study is the spare parts inventory of a missionary aviation organization in Africa. The case study shows that the organizational perspective on inventory control is very helpful in dealing with inventory control problems. It is illustrated that taking into account the organizational context of inventories, especially the responsibilities and authorities of the persons concerned, is a necessity to accurately understand inventory control problems. In addition, it is illustrated that the organizational perspective leads to a more appropriate redesign.