Inventory Management Of Automobile Industry Based On Kitchin Cycle

Business Cycle Management is an important research field of strategic management.Business cycle is a repeated circle of the four stages of economic prosperity,recession,depression and recovery,and business cycle management researchers suggest that the enterprise strategy should be adjusted according to the corresponding stage of business cycle,enabling enterprises to gain and further maintain competitive advantages.Among various stages of business circle,Kitchin Cycle is a short-wave cycle,and inventory investment is the main driving factors of its fluctuation.Therefore,compared to other long-wave circles and medium circles,the Kitchin Cycle fluctuates most frequently and has the most obvious periodicity.Due to the changes of supply and demand relationship and the change of price,Kitchin Cycle has four main stages:active inventory increase stage,passive inventory increase stage,active inventory reduction stage,and passive inventory reduction stage.In these four stages,raw materials inventories,in-process products inventories and finished products inventories show different fluctuation patterns.The automobile manufacturing is one of the pillar industries of China’s national economy,and inventory management has always been an important management problem for manufacturing companies.There is no doubt that excellent companies in the industry often carry out effective inventory management practice.So what is the "secrets" of excellent enterprise inventory management in the automotive industry?Is it consistent with the inventory fluctuations of the Kitchin Cycle?This study is aimed to carry on the inquiry to this issue.This study first ranks the performance of China’s listed auto manufacturing companies,then picks out the six outstanding companies in the industry.This study carries out in-depth analysis of these six outstanding companies in the 16 circle stages,which are divided based on the four Kitchin Cycle from 2003 to 2016,to investigate whether the different types of inventory changes in these companies meet the fluctuation patterns of the Kitchin Cycle.After the specific analysis and comprehensive analysis of these case companies’ inventory management,all the hypothesis in my study has been largely supported.That is,excellent companies in the industry often:(1)In the stage of active inventory increase,increase the raw materials and in-process products inventories,but finished products inventories are reduced;(2)In the period of increasing passive inventory,increase raw materials and in-process products inventories,and finished products inventories also increase;(3)In the active inventory reduction phase,in-process products inventories are reduced,but finished products inventories will increase;(4)In the period of passive inventory reduction,reduce raw materials and in-process products inventories,and finished products inventories are also reduced.This study has important theoretical contributions and practical implications.On the one hand,this article introduces the long-ignored Kitchin business circle management into strategic management research.Moreover,this study employs the case study method to combine the business cycle management with companies’inventory management practice,which not only enriches the research field of economic cycle management,but also provides innovative research directions for inventory management research.Thus,this study has important theoretical significance.On the other hand,this article explores the inventory management strategies of outstanding companies in China’s automotive industry.Furthermore,this study conducts specific analysis of the change patterns in the inventory fluctuation of raw materials inventories,in-process products inventories and finished products inventories,hoping to provide valuable suggestions and directions for other companies’ inventory management in the industry.Therefore,this study also has important practical significance.