The influence of inventory sequencing for the improvement of inventory control: Evidence from a South African automotive assembly organisation

Abstract

Orientation: Control of inventory is a central issue in operations management and has received a considerable amount of attention in literatures. One of the reasons behind this attention is that inventory holding comprises a significant cost in the supply chain.

Research purpose: The study investigates whether the inventory sequencing system has an influence in improving inventory control in an automotive assembly organisation in KwaZulu-Natal, South Africa.

Motivation for the study: There is a lack of coordination and control in the management of the inventory in the supply chain in South Africa. The traditional supply chain practice uses sequences of weakly connected activities both within and outside the organisation. This leads to misalignments in the supply chain.

Research design, approach and methods: The automotive company that has adopted an inventory sequencing strategy participated in the study. The collection of data was carried out in two phases. This includes the collection of pre- and post-inventory sequencing results from company records for production volumes, inventory costs and product damages. The pre-inventory sequencing results were quarterly data reflecting the company’s performance over the 4-year period prior to the implementation of inventory sequencing. The study was quantitative in design and examined the production and related experiences of the automotive assembly organisation that has adopted an inventory sequencing procedure. The Ordinary Least Squares (OLS) model, using the Statistical Package for Social Sciences (SPSS) was used to analyse data. The company operates in the eThekwini District Municipality in KwaZulu-Natal.

Main findings: The study established that the inventory sequencing has no influence on either the production volumes or inventory costs. However, it has the ability to reduce product damages.

Practical/managerial implications: The automotive sector should revise their operations and develop inventory control strategies, policies and practices that help to achieve new business goals.

Contribution/value-add: The original value of this article is its approach in uncovering strengths and weaknesses of inventory sequencing for the improvement of inventory control in the automotive sector.