The complex relationship between inventory control and organisational setting: Theory and practice

Abstract

Within companies it is widely recognised nowadays that the performance of inventory systems is not only determined by the way the inventory system is planned and controlled but also by its organisational architecture. Notwithstanding its importance, the field of production and operations management still lacks however, a comprehensive body of knowledge integrating both control and organisational aspects of inventory systems. One of the reasons for this shortcoming seems to be a lack of understanding of how inventory planning interacts with its organisational embedding in practice. In this article, this interdependence is further explored. Firstly, a conceptual framework is presented. The framework has been the starting point for five case studies performed during the last years. In this article data gathered over a period of more than fifteen years concerning one company is further explored. One of the main conclusions derived from this longitudinal case study is that organisations often try to neutralise shortcomings in the inventory planning and control system by applying organisational measures. In addition to this positive congruence, negative forms of congruence were also found. Shortcomings in the inventory control system are then negatively re-enforced by its organisational setting. The findings of the case study also suggest that companies often do not apply a clear and well-defined policy regarding the organisational setting of advanced inventory planning and control systems. We end this article by arguing that objectified notions on (re)designing inventory planning and control and its organisational design often under-emphasise irrational behaviour of the parties involved. A further elaboration of the framework presented in this article integrating operations management concepts and organisational theory therefore seems to be worthwhile.