Supply Chain And Its Effect On Inventory Management

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Results Inventory serves a useful purpose in the supply chain. That said, firms can help minimize the need for inventory by carefully managing those factors that drive inventory levels up.Inventory items can be divided into two main types: Independent demand and dependent demand items. The systems for managing these two types if inventory differ significantly.The two classic systems for managing independent demand inventory are periodic review and perpetual review systems. In this research the framework was applied to current companies, however the framework can be applied to other industries as well, because at other organisations the same main basic processes take place within inventory management. The framework represents inventory management process steps which are quit generic and not very detailed, which creates the possibility to apply the framework to various types of industries or organisations. A second interesting opportunity for the framework lies with its possibility to test other technologies as well. In this research the framework is used to validate hypotheses concerning the improvements caused by ERP. Yet it is considered possible to use the framework for studying the effects on inventory management caused by other technologies as well. Additionally in this research the framework is used to compare two organisations, but an opportunity for applying the framework would also be to analyse changes over tim Argument in favour of preposition With ERP, planning can automatically be adjusted and has become more flexible (Gupta, 2000). Also due to automated processes, delivery times and order-to-cash cycle times can be shortened drastically (Hendricks et al., 2007), (Stein, 1999). Moreover the information is often ava... ... middle of paper ... ...e which will be much easier to marinating and update and this will also save time and cost effective for the organization and will automate many inventory related tasks. Another disadvantage of ERP is the complexity of the software (Visser & Goor, 2004); many departments will be interlinked which makes changes also more complex. This complexity is being reduced by using separate modules that each offer different functionality. Still because of the many interconnections the complexity will exists for a large part. Adding more functionality to ERP also requires its users to learn more about the system to do their daily work with it and know the consequences of their input: ERP can create excessive training requirements (Stein, 1999). Due to the interlinked structure an error or wrongly entered input may even cause a series of faults throughout the system (Gupta, 2000).
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