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ASP, the art and science of practice: recoupling inventory control research and practice: guidelines for achieving synergy.

Article Excerpt
With the widening disconnect between inventory-control research and practice, people debate the value of incremental theory building. While practitioners make decisions in a complex and uncoordinated environment, researchers often adopt a simplistic environment for the sake of rigorous analysis. The stakeholders' mismatched objectives and motivations may cause this lack of synergy. Controlling and reducing this disconnect would benefit both practitioners and researchers. The existing empirical analysis of companies' business improvements based on academic inventory-management theories is inconclusive. Even so, some businesses have successfully implemented inventory theory; however, in most cases, they have greatly modified the inventory models developed by academics. The additional effort required testifies to the gap between inventory-control research and practice. As most businesses do not benefit directly from published research, increasing researchers' collaboration with organizations that transform inventory-control research into implementable real-world solutions is one way of reducing the disconnect.

Key words: inventory-production: applications; professional: OR/MS philosophy.

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"In theory there is no difference between theory and practice. In practice there is."

Quote attributed to Yogi Berra

Academics and practitioners have worked on the problem of controlling inventory for years. However, we believe that these two communities are drifting apart with respect to their treatment of the inventory-control problem. Practicing managers increasingly rely on initiatives based on information systems to improve the sizes of their inventories; researchers' try to obtain optimal solutions to restrictive analytical models. This gap between inventory theory and practice, which Zanakis et al. (1980) recognized in the late 1970s, continues to grow. Corbett and Van Wassenhove (1993) and Meredith (2001) see this trend, termed academic drift, as endemic to the entire operations research and management science (OR/MS) community. Researchers working in academia and industry developed the early inventory models in direct response to military and business needs (Erlenkotter 1990, Wagner 2002), which may have been the reason that published research came equally from academic and practicing managers (Denizel et al. 2003). However, over time academic researchers' handling of inventory modeling and practicing managers' inventory-control decision-making processes appear to have gone out of sync. We view this disconnect as casting doubt on the incremental value of additional efforts towards building inventory theory.

The basic nature of the issue, the disconnect between theory and practice, has attracted diverse kinds of dissection from researchers. Meredith (2001) presented a philosophical investigation and warned of an impending contraction in OR/MS research. He thinks that the premier academic publishers should emphasize understanding the issue, not solving the problem. Wagner (2002) asserts that incremental mathematical research is not likely to enhance practice. In discussing operations research in general, Silver (2004) suggests that academic researchers address problems of real interest to managers. All three primarily address the academic community. We appeal to researchers and practicing managers to close the gap because eliminating it would be beneficial to both. Our intent is not to criticize any particular community but to provide objective opinions based on a critical examination of the trends in academic research and the practicing world. This fundamental issue needs to be addressed, reiterated, and analyzed from new perspectives to benefit the new generation of researchers and practitioners. In this paper, (1) we searched through empirical studies to link the adoption of inventory control and its impact on inventories at a macroeconomic and organizational level; (2) we compared the business and research environments; (3) we constructed the supply chain methodology to identify the objectives of all parties involved; and (4) we provide innovative and thought-provoking guidelines for increasing the synergy. We hope we provoke a few similar-minded people to continue this debate, which may transform inventory research.

How Well Do Companies Manage Their Inventories?

The jury is still out on whether companies have reduced their inventories over time (Blinder and Maccini 1991, Irvine 2003). Have decades of research in inventory control had any impact on the manner in which companies manage their inventories? We use three types of evidence to evaluate the effect of inventory-control research: (1) anecdotal reports or case studies, (2) macroeconomic indices, and (3) rigorous empirical research that quantifies the impact of research on practice or determines trends in manufacturing inventory.

Anecdotal Evidence--Individual Companies

Articles in trade journals and in the regular press, usually anecdotal, concern how companies are using new inventory-control methods to gain competitive advantage. An equal number of articles concern companies' mismanagement of inventories and subsequent failure. Only extensive case studies can reveal the actual diffusion of inventory-modeling concepts and any resulting benefits. Analysts see Wal-Mart and Dell as companies that lead their industries by managing their supply chains effectively. Moreover, they credit Wal-Mart as among the first to adopt and benefit from vendor-managed inventory (VMI) and collaborative planning, forecasting, and replenishment (CPFR) in the late 1980s (ComputerWorld 1999). Can their efficient management of inventories be traced to some academic inventory model? We searched academic databases and found that published research on VMI started to appear only in the late 1990s. A few key theoretical insights, such as the bullwhip effect and the value of information sharing, help managers to understand their supply chains; however, we could not find any evidence that managers based their decisions on specific inventory models. Material requirements planning (MRP) and just-in-time (JIT), the antecedents of supply chain management, are advances made in the practice world (especially in information technology) and not advances in inventory theory, although academics have been...

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