How inventory flexibility affects productivity: the moderating roles of digital transformation and supply chain concentration

PurposeThis study aims to investigate the relationship between inventory flexibility, digital transformation, supply chain concentration, and productivity in the context of Chinese manufacturing enterprises.Design/methodology/approachEmpirical analysis was conducted using data from listed Chinese manufacturing firms spanning from 2013 to 2022. The study employs a moderated model to examine how digital transformation influences the connection between inventory flexibility and productivity. Additionally, a moderated moderation model is utilized to explore the role of supply chain concentration in moderating the relationship among inventory flexibility, digital transformation, and productivity.FindingsThe study reveals a significant positive correlation between inventory flexibility and productivity, underlining the importance of flexible inventory management. Digital transformation moderates this relationship, with digital transformation enhancing the impact of inventory flexibility on productivity. Supplier and customer concentration also positively moderate this connection, suggesting a complementary relationship with digital transformation.Practical implicationsThese findings offer valuable insights for managers and policymakers, emphasizing the need for a flexible approach to inventory management that considers the evolving digital landscape and supply chain dynamics.Originality/valueThis study contributes to the literature by providing empirical evidence of the nuanced relationship between inventory flexibility, digital transformation, supply chain concentration, and productivity in Chinese manufacturing enterprises. It underscores the importance of integrating digital transformation and supply chain concentration initiatives with flexible inventory management to optimize productivity in the business landscape.