Operational safety: The hidden cost of supply-demand mismatch in fashion and textiles related manufacturers

Inventory management is a focus for operations management scholars and operations managers. Previous literature mainly investigated the relations between firm's inventory and financial performance. However, the relation between firm's inventory and non-financial performance (e.g., social outcome) is less clear. This study takes a fresh perspective to examine the impacts of supply-demand mismatch on firm's safety performance. Based on a sample set from fashion and textiles related manufacturers, the analysis suggests that supply-demand mismatch (measured by inventory volatility) associates with a higher likelihood of safety incidents. The impact is more salient where the firms are operating in complex (labour intensive) and tightly coupled (high production capacity utilization) environments. This study provides significant contributions to the inventory management literature, occupational health and safety management literature and operational managers.