Inventory investment & control: How have UK companies been doing?

Abstract

Since the 1980s UK manufacturers have been exposed to the strong promotion of inventory control and reduction as a component of Just-in-Time (JIT), World Class Manufacturing (WCM) and Supply Chain Management (SCM) supported by a range of Enterprise Resource Planning System (ERPS) software packages. There is evidence that these ideas have found extensive favour in practice although existing research studies have also shown that inventory control and reduction is challenging and its impact on performance appears mixed. However, the questions of whether inventory reduction has been achieved and whether it has been beneficial to corporate performance have not been subject to systematic investigation in the UK setting. This study rectifies this deficiency by providing evidence on inventory and inventory turnover levels and trends in UK manufacturers over the two decades ending in 2005. This is supplemented, by benchmarking UK companies against those of Japan, USA and Germany, by investigating possible factors that can explain variation in inventory levels, and by exploring the association between high standards of inventory control and the financial performance of companies.