IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v118y2009i2p367-374.html
   My bibliography  Save this article

ISO 9000 and supply chain efficiency: Empirical evidence on inventory and account receivable days

Author

Listed:
  • Lo, Chris K.Y.
  • Yeung, Andy C.L.
  • Cheng, T.C.E.

Abstract

ISO 9000 is the most popular and widely adopted meta-standard for quality and operational improvements in manufacturing supply chains. However, few studies have quantitatively examined its impact on supply chain efficiency. In this paper we measure the material and cash flow efficiency of ISO 9000 certified firms in terms of inventory days and account receivable days. We analyzed changes in these time-based efficiency indicators prior and after ISO 9000 implementation in 695 US-listed manufacturing firms. We found that ISO 9000 certified firms shortened the number of inventory days by 3.68 days 1 year after ISO 9000 implementation. They showed continuous improvement and shortened the number of inventory days by 8.75 days (8.29% shorter) 3 years after certification. Account receivable days and overall operating cycle time also showed similar significant reductions after ISO 9000 implementation. The results reveal that ISO 9000 adoption helps improve the material and cash flows in manufacturing supply chains.

Suggested Citation

  • Lo, Chris K.Y. & Yeung, Andy C.L. & Cheng, T.C.E., 2009. "ISO 9000 and supply chain efficiency: Empirical evidence on inventory and account receivable days," International Journal of Production Economics, Elsevier, vol. 118(2), pages 367-374, April.
    • Handle: RePEc:eee:proeco:v:118:y:2009:i:2:p:367-374
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(08)00374-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. McGuire, Stephen J. & Dilts, David M., 2008. "The financial impact of standard stringency: An event study of successive generations of the ISO 9000 standard," International Journal of Production Economics, Elsevier, vol. 113(1), pages 3-22, May.
    2. Olivier Boiral, 2003. "ISO 9000: Outside the Iron Cage," Organization Science, INFORMS, vol. 14(6), pages 720-737, December.
    3. Charles J. Corbett & María J. Montes-Sancho & David A. Kirsch, 2005. "The Financial Impact of ISO 9000 Certification in the United States: An Empirical Analysis," Management Science, INFORMS, vol. 51(7), pages 1046-1059, July.
    4. Kojima, Mitsutoshi & Nakashima, Kenichi & Ohno, Katsuhisa, 2008. "Performance evaluation of SCM in JIT environment," International Journal of Production Economics, Elsevier, vol. 115(2), pages 439-443, October.
    5. Kevin B. Hendricks & Vinod R. Singhal, 1996. "Quality Awards and the Market Value of the Firm: An Empirical Investigation," Management Science, INFORMS, vol. 42(3), pages 415-436, March.
    6. Singh, Prakash J., 2008. "Empirical assessment of ISO 9000 related management practices and performance relationships," International Journal of Production Economics, Elsevier, vol. 113(1), pages 40-59, May.
    7. Kevin B. Hendricks & Vinod R. Singhal, 1997. "Does Implementing an Effective TQM Program Actually Improve Operating Performance? Empirical Evidence from Firms That Have Won Quality Awards," Management Science, INFORMS, vol. 43(9), pages 1258-1274, September.
    8. Castka, Pavel & Balzarova, Michaela A., 2008. "The impact of ISO 9000 and ISO 14000 on standardisation of social responsibility--an inside perspective," International Journal of Production Economics, Elsevier, vol. 113(1), pages 74-87, May.
    9. Li, Dong & O'Brien, Christopher, 1999. "Integrated decision modelling of supply chain efficiency," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 147-157, March.
    10. Kevin B. Hendricks & Vinod R. Singhal, 2001. "The Long-Run Stock Price Performance of Firms with Effective TQM Programs," Management Science, INFORMS, vol. 47(3), pages 359-368, March.
    11. Yeung, Alice H.W. & Lo, Victor H.Y. & Yeung, Andy C.L. & Cheng, T.C. Edwin, 2008. "Specific customer knowledge and operational performance in apparel manufacturing," International Journal of Production Economics, Elsevier, vol. 114(2), pages 520-533, August.
    12. Terziovski, Mile & Power, Damien & Sohal, Amrik S., 2003. "The longitudinal effects of the ISO 9000 certification process on business performance," European Journal of Operational Research, Elsevier, vol. 146(3), pages 580-595, May.
    13. Barber, Brad M. & Lyon, John D., 1996. "Detecting abnormal operating performance: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, vol. 41(3), pages 359-399, July.
    14. Martinez-Costa, Micaela & Martinez-Lorente, Angel R. & Choi, Thomas Y., 2008. "Simultaneous consideration of TQM and ISO 9000 on performance and motivation: An empirical study of Spanish companies," International Journal of Production Economics, Elsevier, vol. 113(1), pages 23-39, May.
    15. Hwang, Yeong-Dong & Lin, Yi-Ching & Lyu Jr., Jung, 2008. "The performance evaluation of SCOR sourcing process--The case study of Taiwan's TFT-LCD industry," International Journal of Production Economics, Elsevier, vol. 115(2), pages 411-423, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saurabh Ambulkar & S. Arunachalam & Raghu Bommaraju & Sridhar Ramaswami, 2023. "Should a firm bring a supplier into the boardroom?," Production and Operations Management, Production and Operations Management Society, vol. 32(1), pages 28-44, January.
    2. Zhang, Xiang & Ye, Chen & Chen, Rongqiu & Wang, Zhaohua, 2011. "Multi-focused strategy in value co-creation with customers: Examining cumulative development pattern with new capabilities," International Journal of Production Economics, Elsevier, vol. 132(1), pages 122-130, July.
    3. Wenlong He & Wei Yang & Seong-jin Choi, 2018. "The Interplay Between Private and Public Regulations: Evidence from ISO 14001 Adoption Among Chinese Firms," Journal of Business Ethics, Springer, vol. 152(2), pages 477-497, October.
    4. O’Neill, Peter & Sohal, Amrik & Teng, Chih Wei, 2016. "Quality management approaches and their impact on firms׳ financial performance – An Australian study," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 381-393.
    5. Xin, Jenny Y. & Yeung, Andy C.L. & Cheng, T.C.E., 2010. "First to market: Is technological innovation in new product development profitable in health care industries?," International Journal of Production Economics, Elsevier, vol. 127(1), pages 129-135, September.
    6. Tsai, Chih-Yang, 2011. "On delineating supply chain cash flow under collectionrisk," International Journal of Production Economics, Elsevier, vol. 129(1), pages 186-194, January.
    7. Cai, Shaohan & Jun, Minjoon, 2018. "A qualitative study of the internalization of ISO 9000 standards: The linkages among firms' motivations, internalization processes, and performance," International Journal of Production Economics, Elsevier, vol. 196(C), pages 248-260.
    8. Bayo-Moriones, Alberto & Merino-Díaz-de-Cerio, Javier & Antonio Escamilla-de-León, Sergio & Mary Selvam, Rejina, 2011. "The impact of ISO 9000 and EFQM on the use of flexible work practices," International Journal of Production Economics, Elsevier, vol. 130(1), pages 33-42, March.
    9. Zhao, Xiande & Li, Yina & Flynn, Barbara B., 2013. "The financial impact of product recall announcements in China," International Journal of Production Economics, Elsevier, vol. 142(1), pages 115-123.
    10. Huiming Liu & Su Wu & Chongwen Zhong & Ying Liu, 2020. "The Sustainable Effect of Operational Performance on Financial Benefits: Evidence from Chinese Quality Awards Winners," Sustainability, MDPI, vol. 12(5), pages 1-23, March.
    11. Marc-Arthur Diaye & Nathalie Greenan & Sanja Pekovic, 2014. "Sharing the " fame " of ISO standard adoption : quality supply chain effects evidence [Partager la « réputation » de la certification qualité : l’identification d’un effet de chaîne d’app," Post-Print halshs-01362467, HAL.
    12. Castillo-Apraiz, Julen & Matey de Antonio, Jesús, 2018. "Does quality pay in the pharmaceutical industry? The mediating role of training of personnel between quality management and performance," Revista de Dirección y Administración de Empresas, Universidad del País Vasco - Escuela Universitaria de Estudios Empresariales de San Sebastián.
    13. Prado Roman, Camilo & Del Castillo Peces, Carlos & Mercado Idoeta, Carmelo & Del Castillo Peces, Julian, 2017. "The effects of implementing ISO 9001 in the Spanish construction industry," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    14. Treacy, Raymond & Humphreys, Paul & McIvor, Ronan & Lo, Chris, 2019. "ISO14001 certification and operating performance: A practice-based view," International Journal of Production Economics, Elsevier, vol. 208(C), pages 319-328.
    15. Lo, Chris K.Y. & Yeung, Andy C.L. & Edwin Cheng, T.C., 2011. "Meta-standards, financial performance and senior executive compensation in China: An institutional perspective," International Journal of Production Economics, Elsevier, vol. 129(1), pages 119-126, January.
    16. Ni, John Z. & Flynn, Barbara B. & Jacobs, F. Robert, 2014. "Impact of product recall announcements on retailers׳ financial value," International Journal of Production Economics, Elsevier, vol. 153(C), pages 309-322.
    17. Ding, Li & Lam, Hugo K.S. & Cheng, T.C.E. & Zhou, Honggeng, 2018. "A review of short-term event studies in operations and supply chain management," International Journal of Production Economics, Elsevier, vol. 200(C), pages 329-342.
    18. Dbouk, Wassim & Moussawi-Haidar, Lama & Jaber, Mohamad Y., 2020. "The effect of economic uncertainty on inventory and working capital for manufacturing firms," International Journal of Production Economics, Elsevier, vol. 230(C).
    19. Brandenburg, Marcus, 2016. "Supply chain efficiency, value creation and the economic crisis – An empirical assessment of the European automotive industry 2002–2010," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 321-335.
    20. Tang, Ailie K.Y. & Lai, Kee-hung & Cheng, T.C.E., 2016. "A Multi-research-method approach to studying environmental sustainability in retail operations," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 394-404.
    21. Zhang, Dongyang, 2022. "Environmental regulation, green innovation, and export product quality: What is the role of greenwashing?," International Review of Financial Analysis, Elsevier, vol. 83(C).
    22. Rodrigues, Antonio Carlos & Martins, Ricardo Silveira & Wanke, Peter Fernandes & Siegler, Janaina, 2018. "Efficiency of specialized 3PL providers in an emerging economy," International Journal of Production Economics, Elsevier, vol. 205(C), pages 163-178.
    23. Siougle, Efrosini & Dimelis, Sophia & Economidou, Claire, 2019. "Does ISO 9000 certification matter for firm performance? A group analysis of Greek listed companies," International Journal of Production Economics, Elsevier, vol. 209(C), pages 2-11.
    24. Hofer, Christian & Barker, Jordan & Eroglu, Cuneyt, 2021. "Interorganizational imitation in supply chain relationships: The case of inventory leanness," International Journal of Production Economics, Elsevier, vol. 236(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Charles J. Corbett & María J. Montes-Sancho & David A. Kirsch, 2005. "The Financial Impact of ISO 9000 Certification in the United States: An Empirical Analysis," Management Science, INFORMS, vol. 51(7), pages 1046-1059, July.
    2. David I. Levine & Michael W. Toffel, 2010. "Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers," Management Science, INFORMS, vol. 56(6), pages 978-996, June.
    3. Andy C. L. Yeung & Chris K. Y. Lo & T. C. E. Cheng, 2011. "Behind the Iron Cage: An Institutional Perspective on ISO 9000 Adoption and CEO Compensation," Organization Science, INFORMS, vol. 22(6), pages 1600-1612, December.
    4. Pieter Jong & Antony Paulraj & Constantin Blome, 2014. "The Financial Impact of ISO 14001 Certification: Top-Line, Bottom-Line, or Both?," Journal of Business Ethics, Springer, vol. 119(1), pages 131-149, January.
    5. Clougherty, Joseph A. & Grajek, Michal & Shy, Oz, 2016. "Taking ‘Some’ of the Mimicry Out of the Adoption Process: Quality-Management and Strategic Substitution," CEPR Discussion Papers 11661, C.E.P.R. Discussion Papers.
    6. Ding, Li & Lam, Hugo K.S. & Cheng, T.C.E. & Zhou, Honggeng, 2018. "A review of short-term event studies in operations and supply chain management," International Journal of Production Economics, Elsevier, vol. 200(C), pages 329-342.
    7. Castka, Pavel & Prajogo, Daniel & Sohal, Amrik & Yeung, Andy C.L., 2015. "Understanding firms׳ selection of their ISO 9000 third-party certifiers," International Journal of Production Economics, Elsevier, vol. 162(C), pages 125-133.
    8. Joseph A. Clougherty, & Michał Grajek, & Oz Shy, 2016. "Taking ‘some’ of the mimicry out of the adoption process: Quality management and strategic substitution," ESMT Research Working Papers ESMT-16-05, ESMT European School of Management and Technology.
    9. Cai, Shaohan & Jun, Minjoon, 2018. "A qualitative study of the internalization of ISO 9000 standards: The linkages among firms' motivations, internalization processes, and performance," International Journal of Production Economics, Elsevier, vol. 196(C), pages 248-260.
    10. Tari, Juan Jose & Molina, Jose Francisco & Castejon, Juan Luis, 2007. "The relationship between quality management practices and their effects on quality outcomes," European Journal of Operational Research, Elsevier, vol. 183(2), pages 483-501, December.
    11. Martinez-Costa, Micaela & Martinez-Lorente, Angel R. & Choi, Thomas Y., 2008. "Simultaneous consideration of TQM and ISO 9000 on performance and motivation: An empirical study of Spanish companies," International Journal of Production Economics, Elsevier, vol. 113(1), pages 23-39, May.
    12. McGuire, Stephen J. & Dilts, David M., 2008. "The financial impact of standard stringency: An event study of successive generations of the ISO 9000 standard," International Journal of Production Economics, Elsevier, vol. 113(1), pages 3-22, May.
    13. Charles J. Corbett & Robert D. Klassen, 2006. "Extending the Horizons: Environmental Excellence as Key to Improving Operations," Manufacturing & Service Operations Management, INFORMS, vol. 8(1), pages 5-22, March.
    14. Lindlbauer, Ivonne & Schreyögg, Jonas & Winter, Vera, 2016. "Changes in technical efficiency after quality management certification: A DEA approach using difference-in-difference estimation with genetic matching in the hospital industry," European Journal of Operational Research, Elsevier, vol. 250(3), pages 1026-1036.
    15. Arnaud Eve & Pierre-Antoine Sprimont, 2016. "Perceptions and Attitudes relating to ISO 9001: an Investigation with Operational Personnel [Perceptions et attitudes liées à la norme ISO 9001 : une analyse auprès de salariés opérationnels]," Post-Print hal-01574343, HAL.
    16. Nicolau, Juan Luis & Sellers, Ricardo, 2010. "The quality of quality awards: Diminishing information asymmetries in a hotel chain," Journal of Business Research, Elsevier, vol. 63(8), pages 832-839, August.
    17. Bichescu, Bogdan & Raturi, Amitabh, 2015. "The antecedents and consequences of plant closing announcements," International Journal of Production Economics, Elsevier, vol. 168(C), pages 197-210.
    18. Terziovski, Milé & Guerrero, Jose-Luis, 2014. "ISO 9000 quality system certification and its impact on product and process innovation performance," International Journal of Production Economics, Elsevier, vol. 158(C), pages 197-207.
    19. Liu, Weihua & Wang, Siyu & Lin, Yong & Xie, Dong & Zhang, Jiahui, 2020. "Effect of intelligent logistics policy on shareholder value: Evidence from Chinese logistics companies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    20. Hammad Riaz & Abubakr Saeed & Muhammad Saad Baloch & Nasrullah & Zeeshan Ahmad Khan, 2019. "Valuation of Environmental Management Standard ISO 14001: Evidence from an Emerging Market," JRFM, MDPI, vol. 12(1), pages 1-14, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:118:y:2009:i:2:p:367-374. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.