AJIBM  Vol.9 No.1 , January 2019
Research on Customer Geographic Proximity and Inventory Management—Empirical Evidence from Chinese Manufacturing Listed Companies
Abstract: Using the hand collected data of the top five clients of manufacturing enterprises in China, this paper examines the effect of customer geographic proximity on the inventory management level of manufacturing enterprises. The results show that there is a positive relation between the geographic proximity and inventory management level: the greater the geography proximity of customers, the lower the proportion of inventory, the higher the inventory turnover rate. This paper not only contributes to the literature on the factors affecting the level of inventory management and the supply chain management, but also provides reference on how the manufacturing enterprises can maintain the relationship with customers better, and improve inventory management efficiency.
Cite this paper: Hu, X. (2019) Research on Customer Geographic Proximity and Inventory Management—Empirical Evidence from Chinese Manufacturing Listed Companies. American Journal of Industrial and Business Management, 9, 1-10. doi: 10.4236/ajibm.2019.91001.

[1]   McKinsey, C. (2008) Managing Global Supply Chains. The McKinsey Quarterly, 2-9.

[2]   Dai, Y.K. and Lin, S. (2017) Interest Rate Fluctuation, Financing Constraints and Inventory Investment: Evidence from Chinese Manufacturing Enterprises. Journal of Financial Research, 4, 95-111.

[3]   Bai, Y.X., Yan, M.Y. and Tan, W.H. (2013) Institutional Environment, Inventory Management and Company Value-Evidence from State-Owned Listed Companies in Manufacturing Industries. Contemporary Accounting Review, 1, 28-44.

[4]   Li, H. and Li, Z.G. (2009) The Impact of Transportation Infrastructure Investment on Enterprise Inventory—An Empirical Study Based on Panel Data of China’s Manufacturing Enterprises. Management World, 8, 73-80.

[5]   Rao, P.G., Yue, H. and Jiang, G.H. (2016) Inflation Expectation and Enterprise Inventory Adjustment Behavior. China Economic Quarterly, 15, 499-526.

[6]   Shan, J. and Zhu, K.J. (2013) Inventory Management in China: An Empirical Study. Production and Operation Management, 22, 302-313.

[7]   Zhao, Q.W., Huang, Z.Z. and Bu, X.Z. (2010) Empirical Study on the Influencing Factors of Domestic Retail Enterprise Inventory Level—Based on Panel Data of Listed Companies in Shanghai and Shenzhen Retail Industry. Journal of Industrial Engineering and Engineering, 2, 48-55.

[8]   Demeter, K. and Matyusz, Z. (2011) The Impact of Lean Practices on Inventory Turnover. International Journal of Production Economics, 133, 154-163.

[9]   Giroud, X. (2013) Proximity and Investment: Evidence from Plant-Level Data. The Quarterly Journal of Economics, 128, 861-915.

[10]   Cohen, D. and Li, B. (2016) Customer-Base Concentration, Profitability and the Information Environment: The U.S. Government as a Major Customer. Working Paper, University of Texas at Dallas.

[11]   Raman, K. and Shahrur, H. (2008) Relationship-Specific Investments and Earnings Management: Evidence on Corporate Suppliers and Customers. The Accounting Review, 83, 1041-1081.

[12]   Krishnan, G.V., Lee, H.S. and Patatoukas, P.N. (2014) Major Customer Dependency: Implications for Audit Pricing and Quality. Social Science Electronic Publishing.

[13]   Campello, M. and Gao, J. (2017) Customer Concentration and Loan Contract Terms. Journal of Financial Economics, 123, 108-136.

[14]   Dan, D., Judd, J.S. and Serfling, M. (2016) Customer Concentration Risk and the Cost of Equity Capital. Journal of Accounting and Economics, 61, 23-48.

[15]   Huang, H.H., Lobo, G.J. and Wang, C. (2016) Customer Concentration and Corporate Tax Avoidance. Journal of Banking and Finance, 72, 184-200.

[16]   Knechel, W., Salterio, S. and Ballou, B. (2007) Auditing: Assurance and Risk. South-Western College Publishing.

[17]   Huang, F.G., Peng, T. and Shao, Y. (2014) How Geographical Distance Affects Venture Capital’s Investment in New Enterprises. Nankai Business Review, 17, 83-95.

[18]   John, K., Knyazeva, A. and Knyazeva, D. (2011) Does Geography Matter? Firm Location and Corporate Payout Policy. Journal of Financial Economics, 101, 533-551.

[19]   Yang, J.F., Lu, J.Q. and Wang, W.H. (2017) Research on the Integration Effect of the Combination of Accounting Firms in China—From the Perspective of Comparability of Accounting Information. Accounting Research, 6, 3-10 + 96.

[20]   Li, H. and Tang, L.M. (2015) Transportation Infrastructure Investment, Spatial Spillover Effect and Enterprise Inventory. Management World, 4, 126-136.

[21]   Mei, F. (2013) On the Implementation of Zero Inventory Management. Communication of Finance and Accounting, 2, 123-124.

[22]   Joseph, P.C. and Christian, H. (2001) Buyer-Supplier Relationships and Customer Firm Costs. Journal of Marketing, 65, 29-43.

[23]   Jia, N. and Mayer, K.J. (2017) Political Hazards and Firms’ Geographic Concentration. Strategic Management Journal, 38, 203-231.

[24]   Li, Y.P. (2017) Customer Relationship Trading and Manufacturing Enterprise Performance: Impact Effect and Mechanism. Macroeconomic, 2, 130-141.

[25]   Ellison, G. and Glaeser, E. (1997) Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach. Journal of Political Economy, 105, 889-927.

[26]   Guariglia, A. and Mateut, S. (2010) Inventory Investment, Global Engagement, and Financial Constraints in the UK: Evidence from Micro Data. Journal of Macroeconomic, 32, 239-250.

[27]   Jones, C.S. and Tuzel, S. (2013) Inventory Investment and the Cost of Capital. Journal of Financial Economics, 107, 557-579.

[28]   Carpenter, R., Fazzari, S. and Petersen, B. (1998) Financing Constraints and Inventory Investment: A Comparative Study with High-Frequency Panel Data. Review of Economics and Statistics, 80, 513-519.