The Myth of Decline: A New Perspective on the Supply Chain and Changing Inventory-Sales Ratios
There is a widely held perception that improved supply chain practices and new technologies have led to declines in the inventory-sales ratio. Our empirical analyses of 87 inventory-sales ratios in 45 manufacturing, wholesale distribution, and retail trade industries casts doubt on assumptions of widespread declines in these ratios. We find that less than half of the ratios showed statistically significant declines during the 12 year period from January 1992 through December 2003. Information technology may indeed have improved inventory management, but this improvement is not reflected in inventory-sales ratio data for many U.S. industries. Our detailed case study of the pharmaceutical supply chain also offers additional insights by showing how relevant technological investments led to an extended period in which inventory-to-sales ratios increased.
|Date of creation:||Oct 2004|
|Date of revision:||Feb 2005|
|Contact details of provider:|| Postal: 4600 Silver Hill Road, Washington, DC 20233|
Phone: (301) 763-6460
Fax: (301) 763-5935
Web page: http://www.census.gov/ces
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James H. Stock & Mark W. Watson, 2003.
"Has the Business Cycle Changed and Why?,"
in: NBER Macroeconomics Annual 2002, Volume 17, pages 159-230
National Bureau of Economic Research, Inc.
- Margaret M. McConnell & Patricia C. Mosser & Gabriel Perez Quiros, 1999. "A decomposition of the increased stability of GDP growth," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 5(Aug).
- Donald S. Allen, 1995. "Changes in inventory management and the business cycle," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 17-26.
- Paul A. David, 2005. "Productivity growth prospects and the new economy in historical perspective," Economic History 0502005, EconWPA.
- Valerie A. Ramey & Daniel J. Vine, 2004.
"Why Do Real and Nominal Inventory-Sales Ratios Have Different Trends,"
NBER Working Papers
10703, National Bureau of Economic Research, Inc.
- Ramey, Valerie A & Vine, Daniel J, 2004. "Why Do Real and Nominal Inventory-Sales Ratios Have Different Trends?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(5), pages 959-963, October.
- Valerie A. Ramey & Kenneth D. West, 1997.
NBER Working Papers
6315, National Bureau of Economic Research, Inc.
- Jonathan L. Willis, 2003. "Implications of structural changes in the U.S. economy for pricing behavior and inflation dynamics," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 5-27.
- Jonathan McCarthy & Egon Zakrajsek, 1998. "Trade inventories," Staff Reports 53, Federal Reserve Bank of New York.
- Adam J. Fein, 1998. "Understanding evolutionary processes in non-manufacturing industries: Empirical insights from the shakeout in pharmaceutical wholesaling," Journal of Evolutionary Economics, Springer, vol. 8(3), pages 231-270.
- JONATHAN McCARTHY & EGON ZAKRAJSEK, 2007.
"Inventory Dynamics and Business Cycles: What Has Changed?,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 39(2-3), pages 591-613, 03.
- Jonathan McCarthy & Egon Zakrajsek, 2003. "Inventory dynamics and business cycles: what has changed?," Finance and Economics Discussion Series 2003-26, Board of Governors of the Federal Reserve System (U.S.).
- Jonathan McCarthy & Egon Zakrajsek, 2002. "Inventory dynamics and business cycles: what has changed?," Staff Reports 156, Federal Reserve Bank of New York.
- James A. Kahn & Margaret M. McConnell, 2002. "Has inventory volatility returned? A look at the current cycle," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 8(May).
When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:04-18. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fariha Kamal)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.