A Study of Inventory Management in Cellphone Supply Chains in China

Abstract

Inventory is an important asset, which may comprise a large proportion of an enterprises‟ capital. The management of inventories can have a significant impact on business performance. Inventory issues have been investigated for many years in developed countries. However, little is known about inventory management in Chinese supply chains, especially in the cellphone industry (despite the fact that China is currently the largest manufacturer, exporter and consumer of mobile phones). Furthermore, despite the fast pace of product upgrading and obsolescence, Chinese electronics manufacturers, including cellphone manufacturers, have relatively high inventories. This study used interview and questionnaire methods to collect first-hand data from 23 companies, which aimed to provide further understanding of how inventory decisions affect inventory performance and practice in enterprises at various levels in the Chinese cellphone industry. The analysis compared the results for firms belonging to different kinds of, and levels in, supply chains in the Chinese cellphone industry, and tested the relationships between inventory practices, company financial performance and inventory performance. It was found that inventory practice and performance vary for different chains and levels: inventory practices have definite relationships with company financial performance and inventory performance, and inventory practices have obvious consistencies from cellphone manufacturers to cellphone retailers. This research contributes to the study of supply chain dyads and provides a reference for Chinese cellphone companies in terms of their inventory management. It is suggested that, for cellphone companies, more advanced inventory management methods might bring out better financial performance and inventory performance; if cellphone companies want to increase their inventory performance, one strategy is to interact with cellphone suppliers or buyers with sophisticated inventory management methods.