Inventory Turns Research Articles

Impact of an enterprise controlled substance management system on labor and inventory costs.

In an effort to expedite the publication of articles, AJHP is posting manuscripts online as soon as possible after acceptance. Accepted manuscripts have been peer-reviewed and copyedited, but are posted online before technical formatting and author proofing. These manuscripts are not the final version of record and will be replaced with the final article (formatted per AJHP style and proofed by the authors) at a later time. To evaluate the impact of an enterprise controlled substance (ECS) management system with integration of analytics software on labor requirements and inventory cost within a health-system pharmacy. A prospective, pre-post observational study was designed to assess the impact of implementing a solution that connects disparate systems with the integration of analytics software. Three study modules were implemented over approximately 18 months. The intervention consisted of implementation of new CS vaults, a centralized server, an automated central medication inventory system, and inventory optimization analytics software. The number of transactions and time spent on CS reports were compared before and after implementation to determine labor and inventory efficiencies. Both of the study facilities had a decrease in CS daily stockouts and an increase in inventory turns compared to baseline, while the total number of transactions (vends) at the central vault and decentralized dispensing cabinets increased. The addition of analytics allowed for establishment of informed changes to periodic automated replenishment levels. Additionally, both facilities saw a reduction in the number of expired medications, and there was subsequently a reduction in the total reverse distributor costs. Finally, both facilities had a reduction in the amount of time spent on manual tasks associated with reconciling and managing discrepancies. An inventory management system integrated with an advanced analytics tool provided a reduction in the time spent on receiving, storing, and reconciling CS records while the number of transactions increased. The ECS solution enhanced the visibility of the chain of custody while closing the loop between reporting and receiving inventory, eliminating or reducing the frequency of manual processes.

Analisis Rasio Profitabilitas Dan Rasio Aktivitas Sebagai Dasar Penilaian Kinerja Keuangan PT. Sepatu Bata Tbk

PT Shoes Bata Tbk is a company engaged in the manufacture of leather shoes, canvas shoes, casual and sports shoes, injection/slop sandals and industrial footwear safety mats. Financial performance is a description of the financial condition of a company which is analyzed using financial analysis tools, usually the measure used is the ratio. Research conducted by the author to analyze the financial performance of PT Shoes Bata Tbk based on profitability ratios and activity ratios. The profitability ratio can be measured by Gross Profit Margin, Net Profit Margin, and Return on Investment. Where Gross Profit Margin and Net Profit Margin are ratios that measure the company's ability to earn profits on sales, Return on Investment is a ratio that measures the company's ability to use all assets owned to generate profits after tax. The activity ratio can be measured by Receivable Turnover, which is a ratio that measures the company's ability to quickly manage the level of accounts receivable turnover. Inventory Turnover is a ratio that shows how quickly inventory turns over in sales activities. And Total Asset Turnover is a ratio that measures a company's ability to create sales using all the assets it owns. The aim of this research is to find out and analyze the financial performance of PT SEPATU BATA Tbk during 2016-2021 based on the two ratios. This research uses a descriptive qualitative approach method. The data source used is secondary data in the form of profit/loss financial report data and balance sheet reports. The results of this research indicate that the financial performance of PT Shoes Bata Tbk for the 2016-2021 period based on GPM is considered very good because the company was able to reduce the cost of goods sold, resulting in high sales and high gross profit. NPM is considered not good because the net profit generated is less with quite high sales. ROI is considered very poor because the high total assets are not commensurate with the net profit generated. RT is considered very good because it increases every year. IT is considered very poor due to the decrease in cost of goods sold and increase in average inventory each year. TAT is considered quite good because the company is able to manage its assets well. Financial performance as measured by the profitability ratio and activity ratio can be said to be less efficient, because the components of the profitability ratio and activity ratio are still low and do not reach good company standards.

Inventory and financial performance in the pharmaceutical industry: what transpired over the last two decades?

PurposeThe objective of this study is to explore the structural attributes of the pharmaceutical industry before the onset of the COVID-19 pandemic by examining the relationship between inventory and firm performance and developing a taxonomy of pharmaceutical firms based on the earns-turns matrix.Design/methodology/approachThis study examines the inventory–firm performance linkage, considering both total inventory and its discrete inventory components in pharmaceutical firms. In addition, this research develops a new taxonomy of pharmaceutical firms based on the earns-turns matrix. A large panel dataset of firms in the US pharmaceutical industry was collected for the period 2000–2019.FindingsThe results reveal that strategic groups identified based on this taxonomy show different levels of profitability and inventory turns in the earns-turns matrix. Most pharmaceutical firms moved from the low-right to the top-left section in the earns-turns matrix, indicating that these firms have generally pursued profitability rather than effective inventory management.Research limitations/implicationsThis study explores the structural attributes of the pharmaceutical industry using the earns-turns matrix. This two-dimensional analysis may not, however, capture the full complexity of inventory–firm performance dynamics.Practical implicationsThe mapping of strategic groups on the earns-turns matrix provides a useful tool for visual representations of the dynamics of strategic groups in terms of financial performance and inventory management performance. Practitioners can use the earns-turns matrix to benchmark their firm's position against their competitors.Originality/valueThis study broadens the scope of operations management research by introducing the earns-turns matrix as an empirical validation tool for operational and strategic management theories. This study emphasizes the effectiveness of the earns-turns matrix in analyzing strategic groups of pharmaceutical firms.

Explaining Firm Performance During the COVID-19 With fsQCA: The Role of Supply Network Complexity, Inventory Turns, and Geographic Dispersion.

The COVID-19 pandemic has significantly affected firm performance. As a result, many studies have examined the significance of supply network complexity. Our paper uses the fuzzy set qualitative comparative analysis (fsQCA) method to investigate the causal relationships among the supply network complexity, geographic dispersion, inventory turns, and firm performance. Using a sample of 263 Chinese listed firms, we find that no single factor is necessary to achieve high firm performance during COVID-19 and reveal four paths to produce high performance: operational level driven, supply base complexity driven, and customer base complexity driven with supplier distance, and supply network complexity absence. Furthermore, our findings suggest that supply-based complexity-driven and customer-based complexity-driven can improve firm performance, but not all supply network complexity dimensions can improve firm performance. Hence, firms need to choose the suitable path based on their specific situations.

Supply chain horizontal complexity and the moderating impact of inventory turns: A study of the automotive component industry

This study examines the impact that a focal firm's number of products it produces, number of suppliers it sources from, and number of customers is sells to has on firm financial performance (ROA and ROS). Additionally, we test the moderating impact of inventory turns on these relationships. Using archival data compiled from different databases, we use multivariate regression and moderation analysis to test our hypotheses in the context of the automotive component industry. We find that increased number of products has a positive direct effect on financial performance with diminishing returns. Additionally, increased inventory turns has a positive interaction with both increased number of products and increased number of suppliers. This suggests that firms can leverage the competency needed to achieve improved inventory turns to better manage the horizontal complexity inherent with a broader supply base and product line. This is the first paper to our knowledge that simultaneously studies upstream, downstream and internal sources of supply chain horizontal complexity within a single industry, thus providing a supply chain view of the topic. Our findings have important implications for practitioners grappling with the tradeoffs inherent in managing supply chain horizontal structural complexity.

Firm performance implications of supply chain integration, agility and innovation in agri-businesses: evidence from an emergent economy

PurposeThis study empirically examines the effect of supply chain integration (SCI) on financial performance (FP) and controls for the mediating effects of supply chain agility (SCA), supply chain (SC) innovation and operational performance (OP).Design/methodology/approachThrough a causal research design, structured questionnaires were used for primary data collection from 217 commercial poultry farms (CPFs) operating in the Bono Region of Ghana. Structural equation modeling was reflectively configured to test the formulated hypotheses.FindingsSCI causes a statistically significant moderate positive variance in OP in terms of cost-effectiveness, order fulfillment rate, operating cycle, inventory turns, business process innovation. SCI is an insignificant weak positive predictor of FP (growth in revenue, profit, return on investment, sales growth) of CPFs operating in Ghana. Furthermore, OP significantly and positively mediates the predictive relationship between SCI and FP. Again, SC innovation significantly mediates the predictive relationship between SCI and OP. However, SCA fails to significantly mediate the predictive relationship between SCI and OP.Research limitations/implicationsFocal firms' characteristics were ignored, although they may determine how SCI affects OP and FP in the presence of SCA and SC innovation.Originality/valueEmpirically, SCI has no direct impact on FP of CPFs but does so indirectly through the mediating role of OP.

Omnichannel consignment supply chain cooperation: a comparative analysis of game-theoretical models

ABSTRACT This paper explores the cooperation issue in a consignment supply chain under an omnichannel business mode. Six game-theoretical decision models (including centralized, decentralized, and cooperative decision models) for a generic consignment supply chain are developed, analyzed, and compared under an omnichannel mode and pure online-/offline-channel modes. Using a representative electronic product case, the numerical and sensitivity analyses for all developed models are conducted and their results are compared and validated by current industry practices to derive managerial insights. It is found that the cooperation strategy always outperforms the equilibrium strategy regarding the operational performance under omnichannel, pure-online or pure-offline channel mode. The omnichannel mode with its powerful mutual fusion effects outperforms dramatically the pure channel modes regarding the operational performance. Furthermore, the best operational strategy for the consignment supply chain is identified as the cooperation strategy under omnichannel mode. The mutual fusion effect between online- and offline-channels can cultivate a tighter retailer–supplier partnership relationship, create faster inventory turns, reduce tied-up capitals, and deliver better financial outcomes for the consignment supply chain under omnichannel mode. This study has proposed a novel game-theoretical approach considering mutual fusion effects to explore the operational strategies and decisions in an omnichannel consignment supply chain and the findings derived from comparative analysis have provided an extended knowledge to the current omnichannel supply chain literature.

Automated Dispensing Cabinet Optimization in a Level 2 Trauma Center

Introduction Opportunities have been identified regarding timely delivery of medications due to lack of ADC inventory related to stock outs or other variances in pharmacy workflow (i.e. compounding and distribution times). These opportunities for improvement impact patient care and result in both nursing and pharmacy staff frustration. Additionally, there are significant costs associated with unused medications stored in ADCs, taking up valuable real estate that would otherwise house more opportune inventory. This situation has created a need for more efficient management of the ADC inventory. Currently, research in the topic area is sparse. We hypothesize that the systematic management and oversight of ADC inventory will demonstrate a significant improvement in key performance indicators and provide insight to the current gaps in knowledge. Methods This study will be a continuous quality improvement project with a combination of retrospective data review and prospective optimization interventions of automated dispensing cabinets (Pyxis®). Interventions include review and adjustment of ADC par levels, removal of unused/stagnate medications, standardization of stock, and continual review of ADC inventory turns and associated optimization opportunities. The primary outcomes are the change in vend/fill ratio from baseline, change in medication stockout percentage from baseline. Results There was no significant difference in vend/fill ratio after the optimization phase compared with baseline [Difference 0.13 (11.56 ± 6.1 vs. 11.43 ± 5.41) respectively, (p=0.84)]. Medication stockout percentage was also found to be similar with baseline [Difference -0.05 (0.71% ± 0.12 vs. 0.76% ± 0.08) respectively, (p=0.37)]. For secondary outcomes, the change in blind stockout percentage from baseline was -0.04 [0.13 ± 0.02 vs. 0.17 ± 0.02, (p=0.004)] and the change in medications dispensed per day from baseline was 317 [2656 ± 143 vs. 2339 ± 200, (p=0.0002)]. Conclusion Optimization of automated dispensing cabinets yielded marginal improvements in vend/fill ratio and stockout percentage and significantly improved overall efficiency through an increase in the number of medications stocked in ADCs and number of medications dispensed per day from ADCs. Evaluation of more clinically significant performance indicators may better characterize the benefits from the optimization process.

Labor Malpractice: The Critical Role of Operations

Problem definition: The premise of this paper is that labor malpractice is not solely a corporate social responsibility and human resources issue; rather, its incidence is critically driven by operational decisions. We thus develop and test hypotheses to identify key operational drivers of labor malpractice. Academic/Practical Relevance: Well-intentioned efforts by governments, non-governmental organizations (NGOs) and companies to eliminate labor exploitation have failed to curb unjust labor practices: human rights violations, unfair wages, child labor, and the violation of workplace equity, health, and safety regulations are still common occurrences. Identifying key operational drivers of labor malpractice leads to actionable insights for managers of companies that have long pledged to end labor exploitation. Methodology: Using a dataset that consists of over 1,400 firms' controversy records from 2008 to 2018, we empirically investigate these key operational drivers. Results: We find that two important operational levers|volatility and inventory|have profound impacts on labor malpractice. Higher volatility and higher inventory turns lead to a higher incidence of labor controversy. We also find that firms take different approaches to making trade-offs between the upside and downside implications of their operational decisions, and these approaches influence the incidence of labor controversies. Managerial Implications: Both anecdotal evidence and empirical studies suggest that labor controversies can hurt a firm's financial performance. Our results show that the operations function of the firm needs to be at the center of efforts to reduce labor malpractice. Firms need to channel more resources to reduce volatility (a measure aligned with the profit motive) and reduce inventory turnover (a measure not immediately aligned with the profit motive). These reductions can be achieved through measures such as improving forecast accuracy and holding more buffer. Firms also need to make the downside risks of their operational decisions more salient. These measures will go a long way in improving labor welfare.

Measuring performance of government-supported drug warehouses using DEA to improve quality of drug distribution

PurposeDrug warehouses (DWs) play a crucial role in drug distribution of government-supported healthcare supply chain as it controls both the cost and responsiveness of the logistics activities. The current study proposes a methodology using data envelopment analysis (DEA) to estimate the performance along different dimensions and was applied to 30 government-supported DWs.Design/methodology/approachThis study employs DEA to evaluate the performance and relative technical efficiency of DWs. In this research, four inputs and six outputs are identified based on intensive literature review and discussion with all stakeholders of DWs. The inputs are warehouse storage capacity, temperature-controlled storage capacity, number of skilled employees and operational cost, while the outputs are fill rate, number of generic drugs, volume of drugs, consumption points, inventory turns ratio and time efficiency.FindingsResults show that 30% DWs operate at the most productive scale size with 100% efficiency level while 47% DWs have a significant possibility for further enhancement in productive efficiency and 23% DWs should diminish their operational size to increase their productivity level. It was also found that achieving 100% operational productivity along warehouse space capacity needs significant effort, whereas other three inputs, namely temperature-controlled capacity, number of skilled employees and operational cost, require comparatively less effort. Similarly, it was observed that the performance along the fill rate and time efficiency is satisfactory, whereas the performance along other fours output variables (i.e. number of generic drugs, volume of drugs, consumption points and inventory turns ratio) needs to be improved.Practical implicationsThe findings offer insights on the inputs and outputs that significantly contribute to efficiencies so that inefficient DWs can focus on these factors.Originality/valueAlthough many issues related to DEA have been widely researched and reported, but no literature has been found for analysis of DWs in general and government-supported DWs specifically to find out efficiencies for supply chain performance improvement.

Effects of Cash, Receivables, and Inventory Turns on the Profitability of Pharmaceutical Companies

Competition in the business world makes each company increasingly able to improve its performance in order to achieve the company's goals to get the maximum profit so that the company is able to develop and compete with other companies. In this era of globalization, the emergence of new competitors in various industrial sectors of the company can make competition in business from the last few years very tight. So that requires each company to implement a management system in accordance with procedures in order to develop and run their businesses effectively. Theories that will be explained in this research are about Return on assets and Return On equity, and Net profit margin and also Company Value. This study used a non-experimental research type. Non-experimental research is a part of research in which observations can be carried out on a number of variables contained in the research subject reviewed according to the actual conditions without manipulation of data processed by the researcher. Because in this study the actual data used from the financial statements of pharmaceutical companies contained on the Stock Exchange regarding receivables turnover, as well as cash turnover as well as inventory turnover on profitability (Y). Receivables turnover, cash turnover and inventory turnover on a continuous and positive and significant effect on the profitability of pharmaceutical companies, especially those on the Indonesia Stock Exchange in 2014-2017. The results obtained after testing the hypothesis using the F-test and obtained a significant value <0.05. Where these results indicate there is a significant influence, so the hypothesis is very acceptable and proven true.

Integrated Inventory Management Control Framework

The concept of minimum display quantity (MDQ) is unavoidable in brick-and-mortar retailing format owing to which, retailers need to ensure a minimum level of inventory displayed at each store irrespective of the revenue or inventory turns generated by a particular store. It is observed that majority of bricks-and-mortar retailers in India assume;(a) existing inventory management system is ideal to their store, (b) software solutions record accurate inventory movement, (c) involving store management team in inventory related decision making is risky/biased and most importantly (d) loss of sale due to stockouts is inevitable. Such assumptions and widely followed practice have created a predisposition and mindset in store managers and they believe that their store delivers revenue and profit to the best of its potential with the inventory which is made available to them through existing inventory management system and we cannot avoid a number of instances consumers are unsatisfied due to stockout situations. In this research, we have analysed the existing decision-making process and control systems related to inventory management of a select retailer, attempted to design a new framework and applied the same through an experiment to evaluate the change in (a) overall store profitability and (b) inventory related key performance indicators.

Integrated Inventory Management Control Framework

The concept of minimum display quantity (MDQ) is unavoidable in brick-and-mortar retailing format owing to which, retailers need to ensure a minimum level of inventory displayed at each store irrespective of the revenue or inventory turns generated by a particular store. It is observed that majority of bricks-and-mortar retailers in India assume; (a) existing inventory management system is ideal to their store, (b) software solutions record accurate inventory movement, (c) involving store management team in inventory related decision making is risky/biased and most importantly, (d) loss of sale due to stockouts is inevitable. Such assumptions and widely followed practice have created a predisposition and mindset in store managers and they believe that their store delivers revenue and profit to the best of its potential with the inventory which is made available to them through existing inventory management system and we cannot avoid a number of instances consumers are unsatisfied due to stockout situations. In this research, we have analysed the existing decision-making process and control systems related to inventory management of a select retailer, attempted to design a new framework and applied the same through an experiment to evaluate the change in (a) overall store profitability, and (b) inventory related key performance indicators.

The impact of disclosing inventory‐scarcity messages on sales in online retailing

AbstractTo influence demand, some online retailers post messages (e.g., “5 units or less left in stock”) on their product pages to signal impending stockouts. These “scarcity” messages provide consumers “partial” inventory information, revealing only an upper bound on the number of units available for sale. To examine the impact of these messages, we obtained price and sales data from an online‐retailer website across a sample of durable goods before and after the retailer posted the messages over multiple inventory‐replenishment cycles. We then used these data to assess empirically the effect of these messages on these products' daily sales. We find that disclosing these messages can decrease daily sales by an average of 17.60%. This finding suggests that scarcity messages such as these can have a negative influence on the sales prospects of durable goods. We also observe, on the other hand, that price discounts are quite effective in increasing sales and offsetting the losses induced by scarcity messages. On average, a reduction of 1% in stock keeping unit price increases daily sales by approximately 3%. Therefore, relative to disclosing scarcity messages, price discounts are a much more effective tool at increasing inventory turns.

The Direction of Causality Between Supply Chain Excellence and Firm Performance

A widely-accepted measure of supply chain excellence is the Supply Chain Top 25 List published annually by Gartner Research. It evaluates firms from five quality dimensions: return on assets, inventory turns, revenue growth, peer evaluation, and Gartner opinion. However, subjective voting by industrial experts and Gartner consultants are likely to be influenced by financial market variables, such as a firm's market value, alpha, beta, and market return. This article investigates whether the Gartner list is a true reflection of a firm's SCM excellence and how market variables affect the Gartner list, especially its subjective quality dimensions. Correlation and regression analysis show that the Gartner list is largely affected by a firm's market value and alpha, but is not associated with the firm's beta and market return. Moreover, the Gartner list is influenced by a firm's prior market information, but is not capable to predict its future performance.

Supply Chain Performance Analysis of Dow Jones Industrial Average Indexed Firms and Top 50 Supply Chain Firms

ABSTRACTOperations and Supply Chain Management (OSCM) courses may cover supply chain strategies, supply chain classification, and supply chain performance. Familiarity with various manufacturing and logistics firms would help students to better understand such topics. Information on the Dow Jones Industrial Average indexed firms and top 50 supply chain firms by Gartner is easily accessible and typically covers a variety of industries from chemical, food/beverage, high‐tech to retail, to name a few. Instructors of OSCM courses can take advantage of this kind of information to discuss industry characteristics and supply chain classification. We present how to collect financial data, calculate supply chain metrics (e.g., inventory turns, profit margin, and cash‐to‐cash cycle) by building a spreadsheet model and creating an earns‐turns matrix, which prescribes supply chain classification. We also show how to analyze supply chain performance and describe industry characteristics based on the earns‐turns matrix. We provide vital questions and takeaways for instructors to lead and wrap‐up discussions. Students claim that they appreciated learning about industry characteristics and different supply chain strategies through the earns‐turns matrix analysis.

From Stuffing to Streamlining: Pharmaceutical Distribution

This case uses the streamlining of pharmaceutical distribution to explore supply-chain coordination. For years, supply-chain inventory information had been opaque. Then in the early 2000s, pharmaceutical manufacturers and distributors were forced to shift from investment buying to inventory service agreements. Information sharing among channel partners regarding customer demand and inventories was believed to lead to better decision-making, improved inventory turns, and ultimately, better profit margins. The case material provides data for students to assess the impact of shifting away from investment buying. Excerpt UVA-F-1859 Apr. 22, 2019 From Stuffing to Streamlining: Pharmaceutical Distribution One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down. —President Donald Trump During the summer of 2018, Melissa Monaco, the COO of a major North American pharmaceutical company, was preparing for a board meeting about whether the company should move forward with an annual price hike for brand-name drugs. In light of the Trump administration's pressure to keep prices the same and the president's Twitter flogging of the runaway manufacturer prices in January 2017, which sent stock prices downward, many in the industry were concerned about raising prices in 2018. . . .

Revolutionizing supply chain management the theory of constraints way: a case study

This research describes in detail an application of theory of constraints (TOC) and its resulting benefits on the supply chain performance of India's largest lock manufacturing company over a period of seven years. Using TOC's thinking process, the core constraints that had limited the company's performance in the areas of production, distribution, supply group and projects were identified and eliminated. TOC's unique approach helped the company achieve a significant reduction in its finished goods, raw material and work-in-process inventories at various levels across the supply chain. The stock-outs and excess in the distribution system nearly disappeared. The existing lead times saw a drastic reduction while the availability of items increased to nearly 100% despite significant decrease in inventory levels in the supply chain. The inventory turns of the distributors and retailers more than tripled and their profitability increased significantly. The overall sales of the company grew nearly three times during the six years post TOC implementation. TOC's holistic approach helped the company to double its profits and improve its cash position during the Great Recession.

The Impact of Supply Chain Integration on Performance: Evidence from the UK Food Sector

Supply chain Integration has emerged as a major field of interest over the years that involve the strategic alignment of functions and processes within an organization. However, there have been major debates regarding the true design of the kinds of integration that would lead to performance of supply chains. This study develops a conceptual framework from the literature and defines four constructs of integration (customer, supplier, internal, and information integration) to see how this would lead to improved supply chain performance (such as production flexibility, inventory turns, order fulfillment rate, total logistics costs, and operational performance).

Overall Performance Improvement of an Small Scale Venture Using Critical Key Performance Indicators

Inventory theory and supply chain management have become important to small businesses in order to improve an organization’s competitive strength and survival. The rapid growth of small businesses of late has seen them to face a challenge in managing their inventory effectively and efficiently. A study was carried out in F.E. (Private) limited a pioneer in distribution of electrical equipments based in Chennai, whose two major challenges were, stock-out and excess stock due to uncertainty in demand. The organization wanted to develop its performance and overall efficiency by considering a change in the inventory policy. The main aim of this research is to attain operational excellence through inventory management and measure its effectiveness using critical key performance indicators. A new inventory policy was developed to improve the inventory turns and measure its performance after implementing the new inventory policy. The results revealed that the implementation of new inventory policy helped to save over Rs. 2.25 lakhs per month in terms of total inventory carrying cost to the selected organization.