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J. Andrew Pope: J. Andrew Pope is a doctoral student in International Business at the College of Business Administration, University of Texas - Pan American, Edinburg, Texas, USA
Sameer Prasad: Associate Professor of Operations Management, College of Business and Economics, University of Wisconsin, Whitewater, Wisconsin, USA
Introduction
In today's business environment it has become imperative that firms develop overseas production and distribution networks in order to compete globally. Companies are no longer restricted to using local suppliers for inputs and can seek out opportunities internationally to reduce costs, improve quality and innovate (Swamidass and Kotabe, 1992). Firms can expand their horizons by sourcing externally and globally.
A number of underlying environmental factors will affect a company's propensity to source globally and externally, and correspondingly its inventory system. Inventory systems allow a firm to control its goods from the time they enter the organization as raw materials until the finished products are made available to the customers. A suitable inventory system can help an organization achieve a competitive advantage by reducing costs and lead times.
The management of inventory is significantly more complicated in an international environment, compared to a domestic operation. In this research, the underlying environmental conditions and the corresponding complexity of the inventory system are studied. Measurement scales have been developed to assess the additional complexity arising out of the international environment on inventory systems. The measurement scales are based on relevant information gathered from literature on international inventory management, international business environment, and inventory theory.
The measurement instrument should benefit managers by helping them audit their inventory systems and gain an understanding of the global environment. In addition, the inventory measurement instrument may provide a basis for researchers in developing empirically-driven theories.
In this paper, the literature on international inventory systems, international environment, and inventory model classification is first analyzed. Using this body of knowledge, eight relevant constructs are defined. Items measuring the eight constructs are proposed and tested for external validity and internal reliability. Finally, the measures are used to compare the nature of inventory systems in the USA, Europe and Latin America.
Literature review
International inventory systems
The management of operations across international borders makes inventory systems more complex than those limited to only in domestics environments. This issue has...