What is the “right” inventory management approach for a purchased item?

Purpose – How should a firm decide which of four choices – i.e. inventory speculation, inventory postponement, inventory consignment, and reverse inventory consignment – is most appropriate to adopt for a given purchased item in a particular context? This paper seeks to identify and explain the critical factors that drive this decision.Design/methodology/approach – By conducting a review of relevant literature and deriving anecdotal observations from four case studies.Findings – This decision is influenced by three factors – customer demand or usage requirements, nature of the supply line and bargaining power of a firm relative to the supplier.Research limitations/implications – From the perspective of science, the conduct of both empirical research to augment the reported anecdotal evidence and conceptual research along a number of directions (e.g. to juxtapose the research findings in existing theories, to examine variations of the four “pure” inventory management approaches, or to consider the vantage ...