Did Just-In-Time Management Effectively Decrease Inventory Ratios in Belgium?

It is almost unquestionably accepted by most observers that inventory ratios decreased over time. There are so many Enterprise Resource Planning systems implemented and so many just-in-time ideas successfully introduced in companies that we almost automatically conclude that inventories went down. However, as will be shown in this study, this conclusion is somewhat hasty. Since most inventory reduction and just-in-time principles were introduced somewhere in the early 1980s, we examine whether inventory ratios effectively decreased from this era onwards. We find that finished product inventory ratios did actually not decrease, whereas work-in-process and raw materials inventory ratios did go down in only half of the industrial sectors. This is the main conclusion from our econometric study performed on industry data (15 industrial sectors) during the period 1979-2000. In this paper we focus on the econometric model of our study, we interpret the results and we conclude with a number of managerial insights. Tijdschrift voor Economie en Management Vol. XLIX, 3, 2004