AN INVESTIGATION INTO THE EFFECT OF FULL-SCALE SUPPLY CHAIN MANAGEMENT SOFTWARE ADOPTIONS ON INVENTORY BALANCES AND TURNS

Authors

  • Alan I. Blankley Ph.D.,

    1. University of North Carolina at Charlotte
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    • Alan I. Blankley (Ph.D. Texas A&M University) is currently an Associate Professor of Accounting in the Belk College of Business at University of North Carolina at Charlotte where he teaches in the areas of financial accounting and accounting information systems. Prior to joining the faculty at UNCC, he taught accounting at Miami University (Ohio) and Western Michigan University. He has worked as a consultant for Hewlett-Packard, Wachovia Bank, and Mercari Technologies. He has also worked for Bentonville Associates Ventures, a consulting firm specializing in both supply chain consulting and retail merchandising.

  • Moutaz Khouja Ph.D.,

    1. University of North Carolina at Charlotte
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    • Moutaz Khouja (Ph.D. Kent State University) is a Professor of Operations Management in the Belk College of Business Administration at the University of North Carolina at Charlotte. He Received his PhD in Operations Management. His publications have appeared in many leading journals including Decision Sciences, Database, IIE Transactions, European Journal of Operational Research, International Journal of Production Research, International Journal of Production Economics, Journal of the Operational Research Society, and OMEGA.

  • Casper E. Wiggins Jr. D.B.A.

    1. University of North Carolina at Charlotte
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    • Casper E. Wiggins, Jr. (D.B.A. University of Tennessee) is the Associate Dean for Graduate Programs and Research and Interim Director of the MBA Program at the University of North Carolina at Charlotte. He joined the Charlotte faculty in 1999 as the Big Five Distinguished Professor of Accounting and is a former Chair of the Department. Dr. Wiggins previously served on the accounting faculty at Texas A&M University for seventeen years. His primary teaching and research areas are in accounting information systems. Specific areas of interest include controls, risk and security issues. Dr. Wiggins has published over 35 academic and professional articles and is a past co-editor of the Journal of Information Systems. He has served numerous roles in the American Accounting Association including chairperson of the Information Systems Section. He is a Texas CPA and has been active in the Texas Society of CPAs at both the local and state levels. Dr. Wiggins received a BA from Wofford College, MBA from the University of Georgia, and a MS from Clemson University.


Abstract

Supply chain management (SCM) software vendors, analysts, and others claim that firms implementing SCM software stand to benefit by being able to reduce inventory holdings and increase inventory turns. We theorize that full-scale implementations lead to system-wide inventory optimization, which in turn leads to cost improvement associated with inventory balances and turns. To examine the question, we develop an analytical model of inventory optimization, then analyze the effects of the model with a numerical experiment, and finally confirm the results with an empirical examination.

We find that firm-wide implementation is significant in explaining improvement in inventory metrics, relative to pre-implementation metrics for our sample. Our empirical tests indicate that implementing SCM software across only a portion of the firm does not impact inventory metrics, but that the scale of implementation does. More precisely, we find that firms implementing SCM software across the entire company significantly improve both inventory turns and inventory as a percent of revenue relative to partially-implementing firms and non-implementers.

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