Working With Respondents to Improve Inventory Statistics Author: John Trimble U.S. Census Bureau Presenter: Anne Russell U.S. Census Bureau

Overview Why this project? Process used Issues uncovered Engaging respondents Solutions Final results

Why this project? Study of the Supply Chain Increased separation between physical and financial ownership of inventories Inventories important component of GDP Questions about inventory reporting

Study Inventory Questions Across the Economic Surveys Three monthly surveys One quarterly survey Four annual surveys The 5 year Economic Census NAICS sectors covered: retail, wholesale, manufacturing, mining, construction, and selected service industries

Plan to Study Inventory Statistics Examine and compare inventory questions across different programs. Conduct Respondent Debriefing Interviews Meet with the major data users, Bureau of Economic Analysis (BEA) Compare what respondents are reporting with data user needs and expectations. Design new inventory questions. Test and implement new designs.

Major Inconsistencies Found Inventories owned wherever held vs. inventories in the United States Three ways of defining United States: –50 states and the District of Columbia –Including Puerto Rico and U.S. territories –Excluding foreign trade zones

Respondent Debriefing Interviews – Preliminary Findings Companies report values directly from their books. (all 29) Adjustments are not being made to conform to our include and exclude instructions. (28/29) Inventories on an ownership basis, regardless of where held. (all 29) Companies including inventories outside of U.S. (12 of 29)

What Does The Bureau of Economic Analysis Want Included in Inventory? Value of Inventories in the 50 states and the District of Columbia. Value of Inventories located in foreign trade zones in these areas.

Preliminary Inventory Recommendations Collect inventory in a manner consistent with company record keeping. Ask companies to report inventories on an ownership basis, wherever held. Ask for inventories outside of the 50 states and the District of Columbia in a separate question.

Respondent Debriefing Interviews – Final Findings Companies report values directly from their books. (all 55) Adjustments are not being made to conform to our include and exclude instructions. (53/55) Inventories on an ownership basis, regardless of where held. (all 55) Most companies follow generally accepted accounting principals (GAAP). Include/excludes conform to GAAP, except instruction to exclude inventory outside U.S. (17/55 include inventory outside U.S.)

Developing A New Approach Getting the help of cognitive experts and CPA’s to improve the inventory questions. Asking for information companies readily have in their books. Less reliance on respondents reading and following the directions.

Meeting BEA Needs With More Accurate Inventory Measures How do we measure inventory in the United States when companies record inventory on a wherever held basis? Ask for inventory in a way that is most consistent with standard accounting practices. Also ask for what portion of reported inventory is outside the United States.

Standard Inventory Questions in Economic Programs Standard titles and wording Consistent inventory collection methodology Uniform definitions Adapt standards to the needs of each Census program collecting inventory

Testing New Inventory Questions Designs for each survey tested in two rounds of cognitive interviews Changes to wording and layout made during the interview process as we applied what we learned Small pilot test conducted on final version of questions after cognitive interviews

Item 4 Value of Inventories

Item 5 Inventory By Valuation Method

Item 6 Inventory Outside of The United States

Implementation of New Questions First use of new designs in the 2005 Annual Retail Trade Survey and the 2005 Annual Wholesale Trade Survey Introduction of new designs for the Annual Survey of Manufacturers scheduled for 2007 All programs collecting inventories in the 2007 Economic Census to also use the new designs

2005 Annual Retail Trade and 2005 Annual Wholesale Trade Percent of Inventories not in the United States reported by companies doing business in the United States: Wholesale Trade 3.5 percent Retail Trade 0.1 percent

Inventory Collection Conclusions Most respondents will report readily available data from their books. Respondents don’t adjust book figures to comply with special instructions. Without oversight, survey questions can evolve differently in different surveys.

Improving Inventory Collection Conduct respondent debriefing interviews Redesign questions to best fit respondents record keeping practices. Conduct cognitive interviews with respondents to test new questions. Review programs to assure common data collection approaches where practicable.

Thanks! Author: John Trimble Presenter: Anne Russell