Inventory itself is a list of products that a company has available for sale to customers. So what is Inventory Management? By definition according to BusinessDictionary.com, “Inventory Management is policies, procedures, and techniques employed in maintaining the optimum number or amount of each inventory item”.
There are many other definitions such as “a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs are kept in check” or “all functions related to the tracking and management of material”, and in business management, the management of ”a list of goods and materials held available in stock”. Inventory Management is necessary in order to provide continuous flow through all functions of a business at the lowest cost. Basically, inventory management is the overall way a business controls it inventory and the costs of carrying that inventory.
It is also important to understand that stock and inventory are related yet two different things just like Finance and Accounting are related yet different. Stock refers to the actual physical items and an inventory is simply a list of the items. It is impossible to have an inventory without stock. In order for a business to function properly, it must be able to effectively manage its inventory. Inventory is one of the biggest, if not the biggest, assets a business has and it must protect it. Problems with a business’s inventory can and will lead to great loss and even the failure of a business.
Inventory Management is mainly about being specific about where an item is placed and what size the item is. This is needed in all locations inside a business or possibly in many locations outside of the business but still...
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...tories or counts, a combination of computerized and manual systems, and great attention to detail.
Works Cited
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Mandak, Kristeen. AnswerBag.com. Indian Institute of Materials Management, 30 Mar. 2010. Web. 21 Jan. 2011. .
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Practical Financial Management 6th edition, William R. Lasher, 2011, 2008 South-Western, Cengage Learning, textbook
Before inventory productivity can be improved, one must take a careful and critical look at the specific business entity, which in this case is Austin Wood Products. In the case it stated that there is no way to know what is available in the storage room until you get there is a huge concern. There is usually a 50 percent chance of obtaining the needed lumber for a job, and this is interfering with productivity. In the area of inventory management, the purchasing professional should make explicit decisions. There are many things that the company must be aware of. Some things you must take into consideration are what to stock, how must to invest, and how much service to offer. In regards to what to stock, the purchasing professional, at the very minimum, must meet the requirements and needs of the manufacturer or distribution operation. Austin Wood Products failed to have any formal stock management technique in effect to take care of raw materials & done merchandise. The stock count is finished by hand & takes days. They weren't maintaining any stock record at all. The significance of demand conjointly was tough to foretell because it varied from year to successive. The metric was that the stock turnover that relates stock levels to the merchandise sales volume was turned numerous times every quarter. Austin Wood Products doesn't place a significant stress on maintaining correct inventory records. So, implementing an inventory control system can modernize the system. Once they develop and implement this inventory control system, inventory records are going to be upheld truthfully and that they will get the accurate standing of the inventory up-to-date. In order to maintain the steady continuous supply for production need...
Inventory - The money that the system has invested in purchasing things which it intends to sell.
Launched by Jeff Bezos, the Amazon.com website started in 1995 and is today considered as one of the most prominent retail website on the internet with a record turnover of US$ 14.87 billion in 2007. Jeff Bezos’s intention was to create an internet based company with the most dedicated product portfolio on the internet where customers could find anything they might want. Amazon’s success is based on technology, services and products (Jens et al., 2003).
Sunil Chopra and Peter Mendl argue that inventory is one of the drivers of the supply chain performance and that it has a great impact as the other drivers, such as facilities and transportation which are the same as inventory being ‘Logistical Drivers’. Analyzing the position of inventory in the supply chain, certain factors of the inventory will be taken into account such as the responsiveness, economies of scale, the different variations of inventory, how other factors will affect the inventory, and transportation, which as stated before it is one of the drivers in the supply chain, Vs. inventory. All these concepts of inventory will be analyzed in the supermarkets domain and how crucial is inventory for the supply chain performance.
Inventory management tracks the value of inventory and improves stock control. Automatically updates the inventory on the balance sheet, always know the real-time value of your inventory. Xero tracks which items are sold and how much profit is made. For advanced control and management, Xero has a range of inventory Add-ons for additional fees.
The just-in-time (JIT) inventory system was developed in Japan after World War II, in an effort to control costs during fiscally challenging economic times (Waguespack and Cantor, 1996). The challenge that faced many Japanese companies in the post-War era was to find a way to meet the needs of customers and businesses while utilizing as few resources and as little capital as possible. The Japanese developed these set of techniques in order to control production, limit unnecessary products and reinvest the valuable capital left from the savings back into the business structure (Waguespack and Cantor, 1996). Much of the success of many Japanese corporations over the past four or five decades has been was linked to the principles of JIT (Chhikara and Weiss, 1995).
Supply Chain Management plays a vital role in our hospitals today. With the growing cost of healthcare and new technologies, it is vital for hospitals to run as efficiently as possible without jeopardizing care. To the materials manager and to the financial minds of a hospital the area of supply chain is a tedius task at best, the kind of planning, strategizing and measuring that seldom goes recognized and rewarded. The work involved with inventory control fits tightly within that description.
An inventory management system would be a great asset to any restaurant. It is very important to be able to keep track of inventory to make sure items are being used and food costs are staying low. Having an inventory management system will help organize and track inventory status, variance, and valuation. The status of inventory is determined on the count of an item in storage. While this can be tracked physically, having a system is more efficient and lowers the risk of theft and misuse. Inventory can also be combined with a POS system, so when product is purchased it automatically tracks new inventory levels. Keeping track of inventory variance “refers to the differences between a physical count of an item and the balance maintained by the perpetual inventory system” (Kasavana 2011). Discrepancies between theses counts may indicate control problems and allow you to find the source and the fix the problem as soon as possible. An inventory system can also help track valuation of product. Knowing what to use first and when it was purchased is important for keeping waste at a minimum. An inventory system like when-to-manage tracks food costs, manages menu recipes, and helps with ordering and vendor management. When-to-manage “is...
I believe in some industries inventories will not be needed in the future, such as in the music industry and also the film industry, with the likes of Netflix and Hulu Plus coming in to dominance. In there area I believe there influence is only going to continue to grow. However, Inventory is hugely important in nearly all other business. For the like of manufactures whom need raw material inventory to create and assemble their products, in which retailers and distributors then purchase as inventory to sell on. Inventories are important for sales, as the company wants the product on hand to sell when it is in demand. Not having it on hand could lead to a loss of a sale and may not only just a lose a sale but this may lead to losing a reoccurring
My company is always searching for methods that will help companies become more efficient. Recently, I had the privilege of attending a Microsoft conference that introduced Nike’s Chairman, President and CEO, Mark Parker as the guest speaker. Apparently, due to, demand fluctuations and stiff competition, Nike now has an abundance of excess inventory. Upon hearing this startling revelation, I immediately thought about the Adapting Supply Chains to Tough Times, case study I read the other day. However, the problem that I discovered with Nike is that it has multiple locations, that all have different inventory needs. For instance, the Air Jordan X Retro “OVO” might sell well on the west coast, but not as well in the east. Therefore, my dilemma was to incorporate components of inventory management that would fit every location. Obviously, I had already begun
Similarly, cost reduction requires an element of inventory management. The focus here is on acquiring the right quantity and quality of raw materials at the right time. This eliminates wastage through perishability of inventory and reduction of storage costs. Another important thing on inventory managem...
Inventory control techniques are useful in dividing when and how much items are to be acquire so as to maintain a balance between the cost of holding and cost of ordering the inventory.
Inventory management is defined because a science mostly established art of guaranteeing that just enough inventory share is command with a company to fulfill demand (Coleman, 2000; Jay & Barry, 2006). it's mostly regarding specifying the size and keeping of stacked product. Inventory management is usually needed at completely distinct spots within a service or within multiple spots of a supply network to guard the standard and planned course of production up against the random disruption of running low upon materials or product. The scope of inventory administration also concerns the good lines between replenishment period interval, carrying costs of inventory, asset management, investment forecasting, inventory valuation, selection visibility,
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
Adeyemi et al. (2010) describes the work of Durry (1996) who defined inventory as “stock of goods that is maintained by a business in anticipation of some future demand.” It can also be seen as stock of any item a manufacturing organisation keeps, it could either be a physical product or service (Imtiaz Ahmed et al, 2013). Also in manufacturing organisation there are kinds of stocks. They include finished goods, partly finished goods and raw materials. The collective name given to these items is inventory (Mathur 2010). It is also seen as an accumulated tangible property that is held for the purpose of processing production for sales and consumed in the production process of goods and services (Mathur 2010). A manufacturing organisation is an organisation that produces or processes goods or a product from raw materials into finished goods. It usually is a large scale operation that uses machinery to produce or process goods or a product. The goal of a manufacturing organisation holding inventories can be to balance inconsistency of economics. This involves avoiding holding too much stock which can lead to tying up capital with items or goods. This would enable goods to be available when required so as to avoid the cost of not meeting demand at any moment. (Adeyemi et al, 2010) This literature review is going to explore the strengths and weaknesses of holding inventories in manufacturing organisation.