Retailers are stocking fewer goods on their shelves, but have companies taken inventory reduction too far? A number of academic studies of U.S. retailers have revealed an overall decrease in product inventories.

Rogelio Oliva and Gregory Heim, professors in the Department of Information & Operations Management at Texas A&M University’s Mays Business School, are two of the researchers behind a study that examines this issue using data from 114 U.S. retailers during 2000 to 2013.

They examined the relationship between inventory leanness (in essence, holding less product on the shelves relative to their sales volume) and operational efficiency in brick-and-mortar retail stores.

“The notion of operational efficiency is essentially how well do you use resources? How well are your physical assets and labor being used to generate sales?” said Oliva. For retailers, inventory is a major cost. By stocking less product, retailers can use that cash for other investments.

Leanness has its limits

However, Oliva notes that retailers going “too low” on inventory leanness is a real problem.

“People have this idea of, ‘I have too much inventory, I have to streamline it, there’s all this technology, I can do it,’” Oliva added. “Our data shows that some firms are going too far and they’re having to back down.”

An important point of the study highlights that inventory leanness is not a “one size fits all” decision – it is largely dependent on the size of the company and demand variability. According to this research, small retailers experience a reduction in efficiency when increasing inventory leanness before large retailers do. In other words, large retailers can have higher leanness than small retailers, but they will also experience the drop in operational efficiency if they go too far.

Big retailers like Walmart and Target are better equipped to work with lean inventory positions because they have the resources to keep up with demand that smaller retailers often lack. Information technology can play a critical role in whether a company has the affordability to operate with leaner product on the shelves.

“If you have dependable IT, you can lower that inventory level because you can communicate quantity needs in a timely manner. If you lack the infrastructure, you have to raise up that inventory,” noted Oliva. “If you don’t have the capital, the relationships, or the scale – you can’t push leanness. You’ll run into inefficiencies a lot sooner than someone who has the ability to use capital and technology.”

Stocking for uncertainty

The study also found that retailers achieved higher efficiency by keeping more product on the shelves when demand was uncertain.

“If you have a very stable demand, you can have lower inventory,” explained Oliva. For example, home improvement products such as laminate flooring or faucet fixtures are common items that are less susceptible to purchase spikes. “If you have demand instability, you have to protect yourself by carrying a lot more inventory relative to the average sales. You have to take risks on having that inventory, because it might take off. You can’t start pushing leanness if you’re in a business that has high demand variability,” he noted. An example would be a specialty toy that unexpectedly becomes the “must have” holiday gift.

The researchers recommended that retail managers take special care when pursuing inventory leanness.

“Too much leanness is going to reduce your efficiency. You cannot satisfy customer demand with empty shelves. On the other hand, when you have excess inventory, a large portion of your assets is now idle and you’re spending too much time counting the product,” said Oliva.

Stock-outs have always been a pain point for customers. Indeed, this is another topic area where Mays Business School professors have devoted lots of effort to research stockout prevention. “In an era when Amazon can deliver packages to your doorstep in two days, or even two hours, store-based retailers cannot risk frustrating customers who make the effort to visit their physical store, only to encounter an empty shelf,” added Kelli Hollinger, Director of the Center for Retailing Studies at Texas A&M University.

The researchers hope to provide a big-picture outlook for retailers of all sizes who are working with inventory leanness levels to balance operational effectiveness with profits. Each company has varying resources, needs, and consumer demands – inventory leanness should be managed accordingly.

“The kind of recommendations we give are more strategic guidelines rather than operational,” Oliva concluded.

ABOUT MAYS BUSINESS SCHOOL

At Mays Business School, we step up to advance the world’s prosperity. Our mission is to be a vibrant learning organization that creates impactful knowledge and develops transformational leaders. Mays Business School educates more than 6,400 undergraduate, master’s, and doctoral students in accounting, finance, management, management information systems, marketing and supply chain management. Mays consistently ranks among the top public business schools in the country for its programs and for faculty research.

Categories: Center for Retailing Studies, Centers, Faculty, Featured Stories, Marketing, Mays Business, News, Research, Texas A&M

If you entered the Grand Stafford Theater on the evening of August 13, you would have been surrounded by some of the biggest proponents of entrepreneurship in Bryan/College Station. Business owners, Texas A&M University faculty, and members of local agencies such as the Brazos Valley Economic Development Corporation came together around one common interest: Startup Aggieland.

The McFerrin Center for Entrepreneurship hosted the Startup Aggieland Reveal Party after hinting that those in attendance would have a chance to “meet the new Startup Aggieland.” Attendees were treated to canapés provided by Chef Tai Lee and enjoyed the industrial-chic atmosphere of the historic downtown Bryan concert venue. Conversations drifted among clusters of attendees, each of them buzzing about what exciting new plans the McFerrin Center had in store for Startup Aggieland.

Director Blake Petty kicked off the night with a booming “Howdy!” and introduced Assistant Director LauraLee Hughes. Hughes joined the McFerrin Center in early 2018 and has brought with her a background in technology commercialization and an undeniable passion for early-stage ventures. “It is an exciting time for entrepreneurs at Texas A&M,” said Hughes. “There is more awareness than ever among students, faculty, staff, and the community about entrepreneurship and they are all looking for resources that can help navigate the path to becoming an entrepreneur.”

Unveiling the entrepreneurial journey

As the night unfolded, Hughes shared her new vision for Startup Aggieland, which is centered on a multi-phase “entrepreneurial journey.” Students and clients of Startup Aggieland will work with staff members to see which of the three phases they’ll most benefit from; Explore, Pursue, or Launch. Students who engage with programs in any phase will be introduced to a wide array of workshops, meetups, and mentor nights that will allow them to grow and develop their knowledge of entrepreneurship.

In addition, Hughes debuted Startup Runway, a first-of-its-kind pre-accelerator program that will allow students to determine whether their businesses will have a viable place in the market. Hughes also announced the development of the Startup Aggieland Business Incubator that will provide validated early-stage ventures with the resources necessary to formally launch and grow a business. The Business Incubator and many of the Startup Aggieland resources and programs will now be available to Texas A&M faculty and staff along with members of the local community. “Through our new programs at Startup Aggieland, we are providing an environment in which aspiring entrepreneurs can learn, test their ideas, network, and hopefully achieve their dreams of owning their own business,” Hughes said. “I am excited about the impact these programs will have in growing the community at Startup Aggieland and helping more people realize that entrepreneurship can be for them too.

The packed audience also enjoyed presentations from three student teams who have been a part of the Startup Aggieland Summer Program.

At the end of the evening, Hughes spoke to attendees directly, calling upon “the friends and supporters of the McFerrin Center” to help ensure Startup Aggieland continues its success. “The involvement and support of mentors is critical to the success of the McFerrin Center and Startup Aggieland. The real-world experience, expertise, and guidance mentors offer to our entrepreneurs is more valuable than anything they will learn in the classroom.”

During her closing remarks, Hughes announced one of Startup Aggieland’s newest programs, Mentor Network. The program is specifically designed to engage with mentors and professionals in meaningful and mutually beneficial ways. “As our programs grow, we hope to expand our mentor network and be able to provide more opportunities for our mentors to engage with the Startup Aggieland community,” she said. “Whether you are interested in being a speaker, holding office hours, or working with individuals or teams on their business venture, I’d like you to join us at Startup Aggieland and help us in developing the next generation of Aggie entrepreneurs.”

Categories: Centers, Entrepreneurship, Faculty, Featured Stories, Mays Business, McFerrin Center for Entrepreneurship, News, Spotlights, Staff, Startup Aggieland, Texas A&M, Uncategorized

Chelsea Anderson recently traveled with 42 other members of the Professional MBA Class of 2019. Stops included Johannesburg and Cape Town, South Africa.

July 30, 2018:

Every so often in life, an opportunity arises that cannot be missed. For me, that opportunity is the international trip with my Professional MBA program at Texas A&M University. Each cohort is able to select their trip destination and my class picked South Africa. I’ve only been here three days and I can already say that we couldn’t have come to a better place.

As I begin my trip, a recurring thought has been: why am I here? Arvind Mahajan, associate dean of graduate programs, put it best when he asked us to reexamine our own biases and integrate this information to determine: What is my truth? Sunday provided our first chance to determine our truth when we attended the Apartheid Museum and afterward visited the Kliptown township in Soweto. We spent time at the Kliptown Youth Program which provides much-needed education and computer training for the youth of the township. We even got to play a quick soccer game with the KYP students.

As we toured the museum and visited Kliptown, it caused me to consider the narrative of history. Whose voices are we hearing? Whose voices do we not hear? Part of reexamining my biases is considering these voices, both in South Africa and at home in America. The purpose of this trip is to learn and grow, to move beyond my comfort zone and seek out shared values and common ground with those that I meet. It is not enough to stand on the outside and rely on my own assumptions. If I hadn’t actually gone into Kliptown and met some of the people, I never would have had the same understanding. I feel fortunate to have started this week in such a powerful way.

Aug. 3, 2018

Businesses exist all around the world, however, the manner of conducting business depends on each country and culture. As I continue my reflection, I again ask: Why am I here? In the most simple sense, I’m here to learn about international business. 

 Of course, it’s more complicated than that. We need to understand a culture before we try to do business in a culture. This is part of the reason we first toured the Apartheid museum and visited a township. That helped prepare our understanding before meeting with business leaders in Johannesburg. 

 On Monday and Tuesday, we met with business owners, entrepreneurs, and private equity firms. All the entrepreneurs had different ideas and products and the shared thread between them was passion. We visited the WIBC (Wouldn’t it Be Cool) Start-up Incubator. The WIBC gives support to young entrepreneurs and helps shepherd them through the process of starting a business. 

 During our roundtable sessions with the seven young entrepreneurs, I heard the word ‘journey’ many times. That is a perfect fit for both our visit that day and for business in general. It’s a journey. Rather than continue describing my visit, I think one of the entrepreneurs put it best when she said it was about “changing communities one day at a time.”

This was never more evident than with one of the start-ups, which seeks to provide fresh, quality produce to local restaurants. It seeks to reduce the food desert that exists in the neighborhood. In their rooftop garden, they have a greenhouse of about 3,000 spinach plants. From these plants, they can harvest 10 leaves per plant and earn 1.5 South African Rand per leaf. Not only is it a profitable business, it also uplifts the local community. 

 I can certainly say that I met my goal of learning about international business. Fortunately for me, I learned more than that. I was able to witness first hand the power of passion, and the ways that caring for your community benefits not just the company but the entire community as well. 

Aug. 10, 2018

Businesses exist all around the world, however, the manner of conducting business depends on each country and culture. As I continue my reflection, I again ask: Why am I here? In the simplest sense, I’m here to learn about international business. 

It feels like I just barely returned and in some ways never left. Now that I’m home I know I need to be the ambassador of this experience. Thursday and Friday were truly special days. On Thursday we visited Khayelitsha Cookies, a company that employs women from the townships. Its purpose is to provide social change and break the cycle of unemployment in the townships. Every 1,000 cookies sold employs one woman, and in turn helps her feed her family. After we met the owner we went out on the floor and helped the employees make cookies. I worked with Vuyokozi Ntantani. She has three children, two boys and one girl. She’s worked at Khayelitsha Cookies for seven years and it has changed her life, giving her access to opportunities that aren’t normally available to unskilled workers, especially women in a country with a high unemployment rate like South Africa.

That night about 30 students participated in Dine with Khayelitsha, a program that gives people the opportunity to go into the township and eat dinner prepared by a host family. In addition to the generous meal, we took part in a candid conversation about people and culture, and listened firsthand to the challenges of coming from a township. 

Friday found us volunteering at iThemba Labantu, an educational and after-school program for children in the township. We broke into groups and played sports, danced, played music, or made crafts with the children. They are so talented, and I feel fortunate that they were willing to share their talents and voices with us. 

 

As in my first two posts I return to the question: why am I here? Writing this in hindsight I ask: why was I there? The Mays Business School mission statement is to advance the world’s prosperity. Prosperity doesn’t have to be relegated to a few; the world can benefit from it. Considering the case of Khayelitsha Cookies, both the company and the female employees benefit from a mutual prosperity.

As our trip came to an end I made the rounds and asked the fellow members of the cohort to share their favorite experiences. Time and again, each person I asked had similar replies. Being able to volunteer with the children and see a glimpse into their life for a brief moment affected our lives forever. The other common refrain was that the highlight was all the wonderful people we met. Offering service is not a one-time thing. As Aggies we should live our lives in service, being good Aggies to all those we meet. After speaking to my classmates I feel confident that each and every one of us will move forward in service following this trip. 

For the final time I’ll ask: why were we there? Was it to learn about international business? Most certainly. But on a much bigger scale, we were there to learn about ourselves. And as Dr. Mahajan stated at the beginning of our trip, we were there to learn our truth and then challenge it. Over the course of eight days we were stretched and challenged, molded and reformed. Moving forward, it is incumbent on us to take this new truth and share it with everyone who asks about our trip. That responsibility means that we don’t take these experiences like souvenirs and place them on a shelf. For it to be truly transformative we need to take it into our hearts and lives and be better people, better Aggies. 

Categories: Featured Stories, Mays Business, MBA, News, Spotlights, Students, Texas A&M

’Jon (Sean) Jasperson has been appointed to the newly-created position of Assistant Dean of Learning Transformation and Academic Technology to be the keeper of data for Mays Business School. Jasperson is uniquely qualified for this position, as he has served as a clinical professor in the Department of Information and Operations Management and as the academic director of the MS-Business program.

“This appointment has been made in the spirit of Strategic Initiative #3, Goal 2 of the Strategic Plan for Mays Business School,” Mays Dean Eli Jones wrote in an email to the faculty and staff of Mays.

Jasperson’s main objectives in his new role will be to:

  • Provide strategic oversight for digital technology and learning pedagogies
  • Provide leadership in learning design and distance education
  • Serve as the IT liaison with Texas A&M University …Read more

Categories: Dean Eli Jones, Faculty, Featured Stories, Mays Business, News, Staff

Award-winning research publisher and prolific scholar David A. Griffith has joined Mays Business School as its new Marketing Department Head. From Lehigh University in Pennsylvania, he was inaugurated as the Hallie Vanderhider Chair in Business and named the recipient of this year’s Hans B. Thorelli Award by the American Marketing Association.

“In terms of choosing to come to A&M, there were many draws,” said Griffith. “The outstanding faculty in Mays, Dean Jones’ vision and passion for A&M, former colleagues who have joined Mays and love it here. The core values of the institution were also a big draw for me, and of course the outstanding reputation of Texas A&M in both academics and athletics.” …Read more

Categories: Faculty, Featured Stories, Marketing, Mays Business, News, Staff, Texas A&M

Accounting senior Juan Ortiz received a national award this week from the Association of Latino Professionals in Finance and Accounting (ALPFA) – the first recipient from Texas A&M University in five years.

Ortiz received the Daniel Zamora Student of the Year Award at ALPFA’s national conference, where hundreds of students attended and sessions covering topics like leadership development, networking, and professional development.

This award is given to an individual who has shown an excellent balance between academics, community involvement, and the student ALPFA chapter. They are also looking for candidates who have demonstrated the leadership qualities that are essential to a promising future career. Candidates are individuals who have devoted countless hours in their chapter of ALPFA and has promoted the organization amongst their peers. …Read more

Categories: Accounting, Featured Stories, Mays Business, News, RAP, Spotlights, Students, Texas A&M

Fifty years into his career of studying marketing, Leonard Berry continues to garner accolades. The Mays Business School leader is only the second person in history to receive the “Big 4” national marketing awards – a grand slam of sorts.

Berry is a University Distinguished Professor of Marketing, Regents Professor, Presidential Professor for Teaching Excellence, and holder of the M.B. Zale Chair in Retailing and Marketing Leadership at Mays Business School,

He received the fourth prestigious award, The Sheth Foundation Medal for Exceptional Contribution to Marketing and Practice, during the American Marketing Association (AMA) Summer Academic Conference on Aug. 10. …Read more

Categories: Faculty, Featured Stories, Marketing, Mays Business, News, Research, Spotlights, Texas A&M

The ventures at this year’s Entrepreneurship Bootcamp for Disabled Veterans (EBV), hosted by Mays Business School’s McFerrin Center for Entrepreneurship, ranged from network solutions for small businesses to artisan products to novel applications of artificial intelligence. The 21 veterans in this year’s class came from across the United States and represented nearly every branch of the military.

Since 2008, the McFerrin Center has hosted the intensive training program developed to help disabled veterans develop the competencies and skills necessary to create and sustain an entrepreneurial or small business venture.

‘Boot camp’ a fitting name

The term “boot camp” is not used lightly when it comes to EBV. In order to graduate from the program, each participant must complete a 30-day online training program and a nine-day residency hosted at Texas A&M University. During the in-residence portion, the participants were in class from 9 a.m. to 6 p.m. every day and worked on their business plans and final presentations every night during mentoring hours. McFerrin Center Executive Director Richard Lester referred to the program experience as akin to “drinking from a firehose.”

The lectures and presentations throughout the week covered topics such as finance and accounting, government contracting, human resources and marketing. The deluge of information caused a visible shift in the veteran’s energy levels throughout the week. Participants bounded into class on Sunday morning full of excitement and by Thursday they shuffled into the classroom, coffee cup in hand.

An Aggie integration

While EBV does consist of a significant amount of hard work, McFerrin Center goes to great lengths to ensure that none of the veterans burn out from information overload. On Tuesday, participants enjoyed a relaxed evening of networking at the Benjamin Knox Wine Gallery. The Southwood 4-H club hosted their annual evening of fellowship with home-cooked Tex-Mex food and a table filled with hand-made desserts on Wednesday. Thursday evening, the Texas A&M Corps of Cadets hosted a dinner at the Sanders Corps Museum and participants met current members of the Corps of Cadets and learned about the history of Texas A&M.

The week-long residency culminated with final presentations and closing ceremonies on July 21. Mentors from the Bryan/College Station community attended final presentations at the Center for Executive Development and provided feedback and final words of encouragement to the veterans. The program officially concluded on Saturday evening with closing ceremonies. There was a distinct celebratory feeling to the event as each veteran was awarded their program diploma. Honored guests such as Nancy Williams of the Cockrell Foundation and Eli Jones, the dean of Mays Business School, were in attendance. The evening was made even more special when Brigadier General Joe E. Ramirez, Jr. ’79, Commandant of the Corps of Cadets, delivered a poignant speech on what it means to be a leader that resonated with the entire room.

After spending the week with the participants and watching them grow as entrepreneurs, it can be hard to say goodbye. However, the journey isn’t over. Being an EBV graduate from Texas A&M means becoming a member of the Aggie family. As each veteran returns home with renewed fervor for their venture they will receive continued support from both the McFerrin Center through mentorship and guidance.

Categories: Dean Eli Jones, Diversity and Inclusion, Entrepreneurship, Featured Stories, Mays Business, McFerrin Center for Entrepreneurship, News, Programs, Texas A&M

The 2018 back-to-school shopping season is underway, and spending is expected to reach almost $27.6 billion – nearly 50 percent of annual school-related spending for a quarter of U.S. households. The one-month countdown to the first day of classes is under way, as many school districts have a start date of Monday, August 20.

In-store vs. online

Brick-and-mortar stores remain in the lead with back-to-school shoppers, but online spending continues to increase. Based on a survey by Deloitte, 57 percent of back-to-school shopping will be conducted in-store compared to 23 percent online, with 20 percent undecided how they will shop. Up from 2017, online shopping has gained ground in sales of school supplies, clothing, and computers. However, in-store sales are up for electronic gadgets. Despite the increasing push from online shopping, 96 percent of parents will head to a physical store at least once during the back-to-school shopping season, according to RetailMeNot.

“While a healthy economy is likely to lift purchasing across all categories, electronics spending is on track to out-pace apparel by 2019. Looking cool is certainly not just about what brand you do or don’t wear, but about what smartphone is in your pocket,” (Reference: RetailMeNot) says Kelli Hollinger, director of the Center for Retailing Studies at Texas A&M University’s Mays Business School.

How much time do shoppers allow?

Approximately $18 billion will be spent in the four-week period between mid-July and mid-August, reaching a peak in early August. Nearly 62 percent of parents have started their back-to-school shopping before August. According to a study by Deloitte, early shoppers are likely to spend 20 percent more than those who start late, and 68 percent of consumers intend to finish their back-to-school shopping within a month. However, the longer a person extends his shopping, the more he is likely to spend.

“It’s possible that people who enjoy shopping tend to start shopping earlier and plan to spend more while shopping,” added Christina Kan, an assistant professor of marketing at Mays Business School who researches consumer behavior and psychology.

Time to look for deals?

According to RetailMeNot, 67 percent of shoppers say they look for more savings during the back-to-school season than other times of the year, which is up from 36 percent in 2017. Anticipated spending is up across all major categories, with shoppers looking to spend the most on clothing. For 65 percent of parents, final price is the biggest factor in what they will buy for their kids. Based on figures from the National Retail Federation, households with children in elementary through high school plan to spend an average of nearly $685 each.

Categories: Center for Retailing Studies, Centers, Faculty, Featured Stories, Marketing, Mays Business, News, Texas A&M

Two Mays Business School MBA graduates, Thomas Dowlearn and Willie Dennis, were included in Poets & Quants’ 2018 list of “MBAs To Watch.” The criteria for inclusion on the list MBAs who possess unique backgrounds, innate talent, and long-term goals that make them transformational leaders to watch in the coming years.


Thomas Dowlearn

Dowlearn is working toward an MBA while pursuing an MD. The co-op is designed to prepare students to tackle the managerial, financial, and leadership aspects of the medical field.

He said he chose Mays Business School because of how welcomed he felt throughout the admissions process. He felt he was surrounded by a group of people who believed in him, and he sensed the deep sense of pride that people associated with Texas A&M tend to have. The advice he would give to students looking to pursue an MBA is asking yourself “why” every day because it will help you discover yourself and find purpose in your decisions.

Since being at Mays, Dowlearn competed in and placed second at the Venture Challenge as well as earning the Best Presenter Award in 2017.

Willie Dennis
Dennis earned a bachelor’s degree in economics and a bachelor’s in business management at the University of Texas at Arlington. He worked for Exxon Mobil as a revenue accountant and then Multiview Inc. as a financial reporting associate. When deciding which MBA program to pursue, Dennis said was intrigued with the worldwide recognition of Mays Business School. What sealed the deal was that Mays has one of the best ROI’s of a top-ranked business program.

His advice for students looking to get their MBAs: Be yourself and be able to tell your story in a unique way. Be able to understand what you want to accomplish by going to business school, particularly Mays, and be able to deliver that message to the admissions committee as well.

While at Mays, the faculty and staff nominated Dennis to be recognized as one of the “Best and Brightest” business school students in Texas, which led to him being honored as a Texas Business Hall of Fame Scholar in 2017.

Categories: Featured Stories, Mays Business, MBA, News, Programs, Students, Texas A&M