Stocks in organisations, whether they be raw materials, work-in-progress or finished
goods need to be justified. In many instances examination, analysis and appraisal will
suggest that on no account can particular levels be justified. It cannot be assumed,
however, that policy applied to one group of items at one time can, automatically,
be extended to other groups. This may not be possible because of the conflicting interests
of different functions. Whereas it may be accepted that one function such as
operations or distribution should be wholly responsible for inventory levels it will be
found that other functions (finance, marketing, personnel purchasing, etc.) will wish
their views to be taken into account. In addition and from time to time, functional
heads may need to drop their affiliations and act together in taking corporate and
strategic decisions which are in the best interests of the organisation as a whole. Thus
it may be decided that to foster good employee relations production should proceed
at a constant rate throughout the year, despite the accumulation of stocks during
periods of low demand. Or that new suppliers of raw materials should be sought who
can guarantee lead times. Or, again, that stocks will be held in newly constructed
regional depots. Particularly in the case of the introduction of new systems, the responsibility
for different areas of inventory management may move from one function to
another, and this is only likely to be effected smoothly with the full backing of top
management.