Inventory is important to the supply chain, yet it is not universally well understood. It is considered as an economic asset to a non-income-producing use of capital funds. It is characterized, both positively and negatively in the aforesaid sentence. Only when considered in light of all quality, client service and economic factors—from the viewpoints of purchasing, manufacturing, sales and finance—does the whole picture of inventory become clear. Effective inventory management is essential to supply chain competitiveness.
Inventory refers to a list of goods and materials, or those goods and materials themselves, held available in stock by any business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. In simpler words, inventory means store of goods that is held for some purpose or use. Inventory maybe kept “in house,” meaning in the premises or nearby for immediate use; or it may be held in a distant warehouse to be used in the future. Firms that utilize just-in-time methods, more often than not, the term “inventory” implies a stored quantity of goods that exceeds what is required by the firm to operate at the current time. (E.g., within the next few hours)
Every business organization considers inventory as the asset that provides sustained competitive advantage in the business environment. Changes in the business environment have led to increased importance of managing inventory. The changes that have brought great concern in the business environment includes an increase in glob...
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...s with the maintenance of equipment. The definition of inventory management is “Inventory Management is a discipline that encompasses the principles, concepts and techniques for determining what to order, when to order and how much to order. The right amount of inventory involves the balance between what is required to service your customers and what is financially practical.”
Features of Inventory Management:
Extended Pricing: Improve customer satisfaction and beat the competition by generating flexible pricing options and rules for each customer. With extended pricing one can:
==> Create standard price schemes as well as personalized pricing options.
==> Implement powerful date-sensitive functionality for sales and promotions.
==> Navigate the system using drill-down and other capabilities that offer a fast learning curve visibility into your pricing index.
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).
Based on Service Request SR-rm-001, the processes of inventory management and control at Riordan Manufacturing were evaluated. Four aspects of Riordan Manufacturing’s inventory management and control require improvements. These aspects of business are improvements to automation, inventory control and error reduction in the inventory management, as well as an overall inventory storage cost reductions. Furthermore, each part of the inventory management and control process requires a single unifying method to deliver a solution using computer systems.
The current inventory processes we have in place are not as efficient as they could be. The main problem is there is no communication between departments, factories, and suppliers. This causing an abundance of wasted man hours, and inventory produced. Our goal is to provide more communication between departments, factories, and suppliers to create more efficiency and produce less waste.
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).
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...
The furniture company Somerset needs to retain its customer service record and remedy any of its global supply chain issues before it has an adverse effect on the brand and start losing customers. With a frequent change in the product catalog, keeping an excessive inventory will cut its profit and some of the product may become obsolete even before the furniture hits the retail outlet stores. In order to achieve profit and success, business employee many strategies and the supply chain strategy are one of the operational management techniques that use analytical decision making process to achieve the company goals and provide tools to effectively compete in the market (Taylor and Russell, 2014).
Inventory is the proxy for information. In the absence of timely and accurate consumption data, each node in the supply chain compensates for the lack of information with inventory. Not only does poor information flow build supply chain inventories, but it also restricts each company’s ability to react to increases in demand, causes extended outages, service interruptions and lost sales. As actual demand for products is disseminated up the supply chain in a more real time environment, the more closely aligned production is with demand. As the gap between production and demand diminishes, so to does supply chain inventories and service level interruptions.
Just-in-time production is considered to be on the leading edge of technological advancement. With improvements in the virtually every industry, maintaining an effective production line while minimizing inventory costs is a very feasible option. Just-in-time systems are designed to keep inventory costs at a minimum, unlike the ways of old, with large warehouses loaded with back inventory. With technology allowing instantaneous communication around the world, production lines and stores do not have to wait for days for inventory delivery. It can happen, well, just-in-time. Many companies are on the verge of switching to a just-in-time inventory system, to compliment the millions of companies that have already implemented the system. It is generally recognized that effective implementation of just-in-time will result in a significant reduction of inventories. As a matter of fact, inventory levels are key indicators for measuring just-in-time performance (Harrison). The just-in-time philosophy on inventory management is simple: - Strive for a level of zero inventories. - Produce items at the rate required by the customer. - Eliminate all unnecessary lead times. - Reduce setup costs to achieve the smallest economical lot size - ideally, a quantity of one. - Optimize material flow from suppliers through the production process to the point of sale of the finished product, so that inventories are minimized. - Ensure high quality and dependable just-in-time delivery from suppliers. - Implement a Total Quality Control (TQC) program, which will minimize scrap, rework and resultant delays in production (Naylor). While the just-in-time inventory management philosophy is simple, execution is not.
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
Inventory Optimization is a critical concept in order to keep the costs under control within the supply chain. For getting the best result from management efforts, it focuses on items that cost the most. ABC approach states that a company should rate its items from A to C:
...Syntetos, A and Boylan, J,E (2004) Inventory Management for Spare Parts, Conference paper : Second World Conference on POM and 15th Annual POM.
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;
Inventory management can enhance the efficiency in operation of the supermarket. Supermarket must ensure that the correct levels of inventory are being maintained throughout the store, and that merchandise is purchased at the best price point as possible. Holding too much inventory on hand generate costs like carrying costs. Whereas having too little inventory on hand makes customers dissatisfied and it leads to declining