Local Literature

A significant amount of literature is available on inventory systems. A majority of the findings are derived from experiences in the US, Japan and Western Europe. Some inventory systems however, can be affected by variations in local conditions such as infrastructure, customs, duties, and regulations. Hence, it is essential to view such systems in an international context. To frame this research, we will examine the literature on operations in NIC countries followed by an analysis of local conditions in Thailand. A number of articles are available that examine the inventory setups in Singapore, Hong Kong, and Korea (Amsden, 1989).

For example, Cheng (1988) and Hum and Ng (1995) examine the workings of Just In Time (JIT) systems in Hong Kong and Singapore, respectively. Other studies related to inventory management include facility location decisions (Sisodia, 1992; Nambiar, fielders, and Van Wassenhove, L. N, 1989; Mathews, 1997) and distributed systems. These studies indicate that Thailand is not as industrialized as the other NIC countries such as Singapore, and infrastructure shortcomings play an important role. Next, we will examine the literature on the quality of infrastructure in Thailand.

Infrastructure affects both the productivity and effectiveness of manufacturing companies. It has a direct impact on the distribution of raw materials, parts, and finished goods to customers. The few studies focused on Thailand have primarily addressed infrastructural problems in Thailand (Chalamwong, Chalongphob and Wattanalee, 1994; Chalamwong, 1993). In identifying the infrastructure-related problems, Yukio (1990) calls for the Thai government to pay closer attention to transportation systems in their effort to attract more Japanese and foreign investment.

Sibunruang (1986) also points to infrastructural constraints having a bearing on the development of the Thai economy. The present government, however, does realizes the importance of infrastructure for the country’s overall economy. In its efforts to improve infrastructure, the Thai government has privatized telecommunication service and has started seeking help from private local and foreign companies to cope with the road shortage. The government has also approved a number of projects for the construction of highways in and around Bangkok. Furthermore, the airports in Thailand are now better managed.

Although infrastructure remains a problem, there is a substantial pool of investors looking to open shop in Thailand. Information on production and inventory management practices in Thailand can help managers better understand and identify approaches that might be suitable for their companies’ operations in that country. As noted earlier, no research on inventory management in Thailand has been undertaken and reported in the literature. The next section presents the methodology used in examining the types of inventory systems employed by foreign companies in Thailand.