Supplier-Based Concentration and Inventory Efficiency

Yize Hu and Jun Shan
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Yize Hu: School of Management, Jinan University, Guangzhou, China
Jun Shan: School of Management, Jinan University, Guangzhou, China

International Journal of Information Systems and Supply Chain Management (IJISSCM), 2020, vol. 13, issue 4, 95-113

Abstract: This study empirically examines the relation between supplier-base concentration and inventory efficiency in the Chinese manufacturing sector. Using hand-collected data from annual reports during 2007–2015, the authors find that manufacturers with a more concentrated supplier base hold fewer inventories, and the efficiency primarily flows through the raw materials and work-in-process inventory accounts. The authors find that small firms benefit more from a concentrated supplier base in inventory efficiency than large firms do. The authors also find that the positive effect of supplier-base concentration on inventory efficiency is stronger as customer-base concentration increases. In an additional analysis, the authors find that firms with a high supplier-base concentration would have better current and future financial performance.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jisscm:v:13:y:2020:i:4:p:95-113

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