An exploration of ‘sticky’ inventory management in the manufacturing industry

Traditional models examining relationships between firm resources and revenues assume that the many expenses and asset holdings change in proportion to changes in demand. However, research has found that for many costs and assets assumed to be variable, the magnitude of a change in a cost or asset in proportion to a change in revenue is smaller during periods when revenue decreases compared to the change in the cost or asset when revenue increases. Costs and assets which behave in this manner have been denoted as ‘sticky’ costs or assets. This study examines if inventory in the manufacturing industry is managed in a ‘sticky’ manner and what implications inventory stickiness has on firm performance. Utilising firm panel data over a 25-year time window we find that inventory stickiness does exist amongst manufacturers and that it has negative implications for firm performance.     

Evidence‐based Management in Practice: Opening up the Decision Process,Decision‐maker and Context

Evidence‐based management (EBM) has been subject to a number of persuasive critiques in recent years. Concerns have been raised that: EBM over‐privileges rationality as a basis for decision‐making; ‘scientific’ evidence is insufficient and incomplete as a basis for management practice; understanding of how EBM actually plays out in practice is limited; and, although ideas were originally taken from evidence‐based medicine, individual‐situated expertise has been forgotten in the transfer. To address these concerns, the authors adopted an approach of ‘opening up’ the decision process, the decision‐maker and the context (Langley et al. ( 1995 ). ‘Opening up decision making: the view from the black stool’, Organization Science, 6, pp. 260–279). The empirical investigation focuses on an EBM decision process involving an operations management problem in a hospital emergency department in Australia. Based on interview and archival research, it describes how an EBM decision process was enacted by a physician manager. It identifies the role of ‘fit’ between the decision‐maker and the organizational context in enabling an evidence‐based process and develops insights for EBM theory and practice.     

Organisation structure,management style and company performance

This paper examines the relationship between organisation structure and management style and their influence on organisational effectiveness measured in both ‘human’ and financial terms. Account has also been taken of related contextual factors such as differences in task, size and environment of a company. Using information collected from a sample of fifty small and medium size printing and building firms the authors have elaborated a conceptual model involving the independent attributes; integration, control, task orientation and people orientation. The validity of this model has been operationally tested and examined against the background of evidence reported by other research workers on the contextual determinants of organisational structure and management style. Substantially different patterns of association between ‘organisation’ and ‘style’ and company performance are found for the two industries and an important outcome of the research has been to produce further evidence in favour of the contingency theory of organisation. The paper concludes with some implications for management practice and organisational design.     

The Effects of Organizational Culture, Structure and Market Expectations on Technological Innovation: A Hypothesis

This paper is chiefly concerned with the causes and technological effects of ‘short-term pressures’ on and in large firms in British manufacturing. ‘Short-term pressures’ (STP) are defined as factors acting upon (or within) an organization which tend to cause decision-makers (explicitly or implicitly): (a) to raise their time rate of discount; and/or (b) to foreshorten the time horizon beyond which future revenues are ignored altogether. Such pressures will tend to reduce the rate of investment (defined very broadly as present sacrifice of cash flow for future gain), and/or bias it towards ‘short-term’ projects. In the British context such pressures upon firms arise from the nature of the relationship with shareholders. (High interest rates and low profitability have similar effects but should be analysed separately.) STP can also be generated and/or transmitted within organizations. STP acting within an organization are likely to be associated with pressures on middle and lower management to take a narrow, ‘sectional’ view, avoiding efforts and expenditures whose benefits may go largely to other parts of the firm. The first section sets out a theoretical framework within which to predict the intensity of external STP, and uses this to assess their likely incidence. After defining and discussing the concept of culture in organizations, it is argued that culture dominates structure at higher levels, and the reverse at lower levels. The second section deals with internal STP, and shows how performance pressures on managers at various levels are determined by the interaction of structural and cultural factors. Structural factors considered include organizational configurations and methods of auditing and management accounting. Internal performance pressures may at various levels be quite different from the external pressures. The third section shows how, by contrast with economic rationality, STP may affect technological progress - distinguishing between process change, which under certain circumstances may actually be stimulated, and product change, which is likely to be seriously inhibited. (It is pointed out that the impact of any set of performance pressures must be evaluated by comparison with an alternative set, which may themselves not be ideal.) At each stage the analysis is differentiated to allow for the differing circumstances of the UK electronics, Pharmaceuticals and mechanical engineering industries, building up a hypothesis as to the differing incidence of STP among them. This hypothesis can account for the very different record of these UK industries in innovation.     

Corporate Ideology – Meanings and Contradictions for Middle Managers

This paper describes an investigation into corporate ideology and control and the responses of the ‘middle managers’ in a large engineering corporation. The paper explores the creation of meaning and values in the organization through a large‐scale ‘corporate values’ programme aimed at 1500 middle managers, and asks to what extent the priorities of these managers match those of the organization, and whether the creation of meaning through an ideological values programme carries risks that have not been considered by the organization adopting this approach. The findings suggest six individual response types amongst the delegates on the programme: ‘evangelists’, ‘actors’, ‘sceptics’, ‘open cynics’, ‘critical thinkers’ and ‘untouched professionals’. The influences upon these responses are considered, and a number of key factors identified as important in affecting perceptions of and response to the programme. The paper concludes that today more than ever, corporate ideologies are becoming an increasingly dominant influence on our organizations, causing mixed and confused responses amongst the middle managers who are required to disseminate these messages.     

Design of a resilient shock absorber for disrupted supply chain networks: a shock-dampening fortification framework for mitigating excursion events

This article interweaves the widely published empirical frameworks with a new paradigm proposing stochastic dynamic decision-making tools that could be employed for capturing the trade-offs among multiple and conflicting-in-nature criteria so as to provide a design of a resilient shock absorber (RSA) for disrupted supply chain network (SCN). Modern SCNs encounter ‘excursion events’ of different kinds mainly due to uncertain and turbulent markets, catastrophes, accidents, industrial disputes/strikes in organisations, terrorism and asymmetric information. An ‘excursion event’ is an unpredictable event that effectively shuts down or has a relatively large negative impact on the performance of at least one member of a system for a relatively long amount of time. In this article, design of an analytical framework has been conceptualised that allows an SCN to avoid propagating the ill effects of the ‘excursion events’ further and maintains the network at a desired equilibrium level. A broad analytical view of econophysics has been conceptualised using the definition of a ‘system’ from physics. An example derived from the 9/11 case has been delineated in order to illustrate the efficacy of the proposed design. The devised RSA facilitates the assessment of resiliency strategies for SCNs prone to excursion events that are characterised by low probability of occurrence and high impact. The shock-dampening fortification framework also enables practitioners to identify and assess quantitatively the islands of the excursion events in SCN.     

Identifying design criteria for urban system ‘last-mile’ solutions – a multi-stakeholder perspective

Abstract

This study presents a novel approach to design and evaluate ‘last-mile’ solutions – encompassing the social and economic perspectives of key stakeholders. While urban system initiatives have been implemented in practice, theoretical gaps remain at the operational design level. A theoretical framework is developed, based on design criteria identified from a critical synthesis of supply chain and operations management literature, and ‘operationalised’ using an in-depth case study demonstrating implementation of a Consumer Choice Portal-Package Consolidation Centre solution, within a densely populated urban geography. Findings suggest that there is a need to re-define the role of institutional actors beyond that of the traditional governance task, to one of being able to facilitate performance outcomes. Similarly, industrial efficiency dimensions need to be reorientated to include consumer participation, social considerations and multi-stakeholder service outcomes. Finally, implications for operations theory and practising managers in city logistics are highlighted, with suggested directions for future research.     

Risk analysis of estimates for cost of quality in supply chain: a case study

Risk analysis for Cost of Quality (CoQ) in supply chain has not been adequately researched as evidenced in the literature. This paper attempts to analyse risk involved in estimating elements of CoQ in the internal supply chain of an integrated aluminium manufacturing company. We have applied grounded theory methodology on accounting codes of the case company primarily to bring out various elements of CoQ in its internal supply chain. They are categorized as ‘cost of prevention’, ‘cost of defective inputs’, ‘cost of defect in process’, and ‘cost of defect in output’. These elements are considered to be risky due to availability of partial information in past records of accounts while applying grounded theory methodology. In order to estimate the range and probabilities of all possible outcomes of various categories CoQ in the supply chain, Monte Carlo simulation has been used. The results have facilitated decision makers in strategic total quality management.     

A heuristic approach to n/ m job shop scheduling: fuzzy dynamic scheduling algorithms

n/m shop scheduling is a ‘ NP-Hard’ problem. Using conventional heuristic algorithms ( priority rules) only, it is almost impossible to achieve an optimal solution. Research has been carried out to improve the heuristic algorithms to give a near-optimal solution. This paper advocates a fuzzy logic based, dynamic scheduling algoridim aimed at achieving this goal. The concept of new membership functions is discussed in die algorithm as a link to connect several priority rules. The constraints to determine the membership function of jobs for a particular priority rule are established, and three membership functions are developed. In order to decide the weight vector of priority rules, an aggregate performance measure is suggested. The methodology for constructing the weight vector is discussed in detail. Experiments have been carried out using a simulation technique to validate the proposed scheduling algorithm.     

Decision approach to workload distribution

Abstract. This paper deals with decisions of workload temporal distribution in scheduling discrete and diversified productions. A new way of formulating the scheduling problem is proposed, from which some concepts and tools are presented. The notion of time resource interval objects, TRIs, allows the management of technical (time and resource) aspects at the different levels of a hierarchical structuring of the set of decisions taken in the workshop, from ‘load distribution’ types, to ‘effective realization of the operations’ types. Constraint-based reasoning handles different TRIs corresponding to given kinds of decisions. It helps to highlight the bounds or limits to be respected while deciding, to remain consistent with an initial set of constraints, issued for example from an upper level of decisions. Decisions of load temporal distribution consist in readjustments of some time constraints on a set of planned operations, by taking into account the (or some more detailed) constraints on the resource(s) on which they have been planned, such as finite capacity and/or minimal profitability. The analysis on temporal proximities of the planned operations involves some particular structuring of the time axis into successive time intervals: these structures are associated with sets of temporal bounds, and are called adjacent decompositions of the time axis. Such a decomposition introduces some specific TRIs, associated with load constraints (coming from the planned operations), and resource constraints (coming from limited quantities of resource, or profitability concerns). By respecting the given time and resource constraints, they can ‘exchange’ some quantities of load according to communicating vessels processes. These phenomena have been modelled as bounded flows in a temporal network, and offer new flexible curves of load with finite capacities, to help the decision.     

Inventory Models with Continuous and Poisson Demands and Discounted and Average Costs

We develop a new, unified approach to treating continuous‐time stochastic inventory problems with both the average and discounted cost criteria. The approach involves the development of an adjusted discounted cycle cost formula, which has an appealing intuitive interpretation. We show for the first time that an (s, S) policy is optimal in the case of demand having a compound Poisson component as well as a constant rate component. Our demand structure simultaneously generalizes the classical EOQ model and the inventory models with Poisson demand, and we indicate the reasons why this task has been a difficult one. We do not require the surplus cost function to be convex or quasi‐convex as has been assumed in the literature. Finally, we show that the optimal s is unique, but we do not know if optimal S is unique.     

Comparison of Subsidy Schemes for Reducing Waiting Times in Healthcare Systems

This study analyzes subsidy schemes that are widely used in reducing waiting times for public healthcare service. We assume that public healthcare service has no user fee but an observable delay, while private healthcare service has a fee but no delay. Patients in the public system are given a subsidy s to use private service if their waiting times exceed a pre‐determined threshold t. We call these subsidy schemes (s, t) policies. As two extreme cases, the (s, t) policy is called an unconditional subsidy scheme if t = 0, and a full subsidy scheme if s is equal to the private service fee. There is a fixed budget constraint so that a scheme with larger s has a larger t. We assess policies using two criteria: total patient cost and serviceability (i.e., the probability of meeting a waiting time target for public service). We prove analytically that, if patients are equally sensitive to delay, a scheme with a smaller subsidy outperforms one with a larger subsidy on both criteria. Thus, the unconditional scheme dominates all other policies. Using empirically derived parameter values from the Hong Kong Cataract Surgery Program, we then compare policies numerically when patients differ in delay sensitivity. Total patient cost is now unimodal in subsidy amount: the unconditional scheme still yields the lowest total patient cost, but the full subsidy scheme can outperform some intermediate policies. Serviceability is unimodal too, and the full subsidy scheme can outperform the unconditional scheme in serviceability when the waiting time target is long.     

Countervailing institutional forces: corporate governance in Turkish family business groups

This longitudinal study investigates the impact of national and international pressures to improve corporate governance in an emerging economy from an institutional theory perspective. Recently, family business groups (FBGs), the dominant form of organizing in emerging economies, have been criticized by policy makers for their poor governance structures. A common recommendation to FBGs has been increasing the number of independent, outsider directors on their boards. Thus, change in the board compositions of the quoted subsidiaries of the six biggest FBGs is analyzed over 2002–2006. One-way-ANOVA and t-tests were used as statistical tools. Findings reveal that there has not been a statistically significant change in board compositions over the research period. FBGs were found to resist institutional pressures through ‘avoidance’, ‘defiance’ and “manipulation” strategies due to the absence of coercive pressures and multiple forms of ‘institutional work’ for change.     

Labour Market Flexibility,Human Resource Management and Corporate Performance

Labour market flexibility is often portrayed as a key to the competitive success of the UK and US economies. We surveyed several hundred firms in the UK, and using the resulting data (on over 200 manufacturing firms) this paper investigates the relationships between firms’ use of flexible work practices, human resource systems and industrial relations on the one hand, and corporate performance on the other hand. The results suggest that ‘low‐road’ practices – short‐term contracts, a lack of employer commitment to job security, low levels of training and low levels of human resource sophistication – are negatively correlated with corporate performance. In contrast, it is found that ‘high‐road’ work practices –‘high commitment’ organizations or ‘transformed’ workplaces – are positively correlated with good corporate performance. It is also found that human resource management practices are more likely to contribute to competitive success where they are introduced as a comprehensive package, or ‘bundle’ of practices. Significant interaction effects between human resource systems, trade unions and flexible work practices add further support to the bundling hypothesis.     

Public Sector Wage Premium in Canada: Evidence from Labour Force Survey

Although previous research has pointed to a public/private sector wage gap for men and women in Canada, the extent of this gap has not been measured in recent years. Using data from the Canadian Labour Force Survey for September 2008, and using an endogenous switching regression framework to control for self‐selection, I find that both men and women earn a wage premium in the public sector in Canada, although the premium is higher for women. The pure wage premium or economic rent that public sector workers receive relative to their counterparts in the private sector is $1.09, or 5.4 per cent for men and $3.15, or 20 per cent for women. An analysis of selection in the pubic/private sector reveals that public sectors workers are ‘positively selected’ on observables and consist of the ‘cream of the crop’.     

Impact of influence and skill on managerial performance

Part of Heller's contingency model of leadership and decision making [11] has been modified. The basic components of the modified part of the model are influence, skill use, job performance and job satisfaction. Data from a study of 97 British and Sudanese managers are used to test the modified model. Positive relationships have been found between the four components. The major findings of this research are that while the strength of the relationship between ‘influence and satisfaction’ on the one hand and ‘skill use and satisfaction’ on the other differs only slightly, the relationship between ‘skill use and performance’ is much stronger and much more established than the relationship between ‘influence and performance’. These results have been established in both the Sudan and Britain.     

THE BASIC PUBLIC FINANCE OF PUBLIC–PRIVATE PARTNERSHIPS

Public–private partnerships (PPPs) have been justified because they release public funds or save on distortionary taxes. However, the resources saved by a government that does not finance the upfront investment are offset by giving up future revenue flows to the concessionaire. If a PPP can be justified on efficiency grounds, the PPP contract that optimally balances demand risk, user‐fee distortions, and the opportunity cost of public funds has a minimum revenue guarantee and a revenue cap. The optimal contract can be implemented via a competitive auction with reasonable informational requirements. The optimal revenue guarantees, revenue sharing agreements, and auction mechanisms are different from those observed in the real world. In particular, the optimal contract duration is shorter in demand states where the revenue cap binds. These results also have implications for budgetary accounting of PPPs, as they show that their fiscal impact resembles that of public provision, rather than privatization.     

Business Groups as Hierarchical Clique Structures: A Conceptual and Methodological Discussion as it applies to the Mexican Experience

The hierarchically nested set of business groups that result from 110 Mexican firms sharing corporate directors (i.e. interlocking directors) is analysed using social network tools. It is argued that these groupings are one of the many dimensions that should be employed to understand the complex nature of ‘business groups’ broadly understood. The hypothesis that business groups are responses ‘to market failures that arise in the particular institutional contexts of emerging economies’ (Khanna and Rivkin, Strategic Management Journal, 22 (2001), p. 46) is tested using the groups constructed from data on interlocking directorates. The results show that as firms belong to more of the same sets of groups, their financial performance tends to be more similar, thus supporting the idea that ‘groups can make up for under‐developed institutions, thereby reducing transaction costs’ (Khanna and Yafeh, Journal of Economic Literature, 45 (2007), pp. 340–341).     

A comparative study of some priority dispatching rules under different shop loads

Priority dispatching rules and shop load affect job-shop performance. This paper evaluates ten different priority dispatching rules with respect to six different performance criteria under light, medium and heavy shop loads. Simulation was used as a tool to determine the rankings of the dispatching rules for a given shop load and performance criteria. A comparative study was conducted to investigate the performance of these rules. Two rules, ‘shortest processing time” and ‘least work remaining’, performed well under criteria related to the processing time. It was found that the rules that perform well in average and r.m.s. tardiness perform poorly under percentage-of-jobs-late criterion. The experimental results are conveyed with critical comments on the performance of the dispatching rules under different loading conditions of the shop.     

What Do We Mean by Performativity in Organizational and Management Theory? The Uses and Abuses of Performativity

John Austin introduced the formulation ‘performative utterance’ in his 1962 book How to Do Things with Words. This term and the related concept of performativity have subsequently been interpreted in numerous ways by social scientists and philosophers such as Lyotard, Butler, Callon and Barad, leading to the coexistence of several foundational perspectives on performativity. This paper reviews and evaluates critically how organization and management theory (OMT) scholars have used these perspectives, and how the power of performativity has, or has not, stimulated new theory‐building. In performing a historical and critical review of performativity in OMT, the authors’ analysis reveals the uses, abuses and under‐uses of the concept by OMT scholars. It also reveals the lack of both organizational conceptualizations of performativity and analysis of how performativity is organized. Ultimately, the authors’ aim is to provoke a ‘performative turn’ in OMT by unleashing the power of the performativity concept to generate new and stronger organizational theories.