The importance of inventory management
All organizations hold stocks. These are the stores of material they keep until needed. Stocks are formed whenever an organization acquires material that does not use immediately. A common practice has a delivery of material arriving from a supplier and this is kept in stock until needed. Sometimes it is easier to picture a specific operation, so might imagine the stocks. Good are delivered by lorry at night, these are checked sorted and put into shelves. Then stay on shelves until customer buy them. At some point stocks get low and arrange another delivery.
♦ Stock consists of all the good and materials that are stored by an organization. It’s a store of item that is kept for future use.
♦ An inventory is a list of the item hold in stock.
♦ Inventory management is the function responsible for all decision about stock in an organization.
♦ It make decision for policies, activities and procedures to make sure the right amount of each item is held in stock in any time.
♦ A supply chain consists of the series of activities and organization that material more thought on their journey from initial suppliers to final customer.
♦ Logistic or supply chain management is the function responsible for this flow of material.
The way to avoid such problem is to co-ordinate the stock and flow materials. This bring a series of benefits, which include:
Lower cost – with lower stocks, less expediting, balanced operations, economies of scale, etc.
Improved performance – with more stable operations, better planning, higher productivity of resources, etc.
Better customer service, with shorter lead times and faster deliveries.
More flexibility, with organization reacting to changing conditions.
Every organization holds stocks of materials. There are the stores of item listed in an inventory – that are kept until needed. Stocks are replenished by deliveries from suppliers and reduced to meet demand from customer. Inventory management is responsible for all aspects of stock control.
Inventories management can be viewed as one of the tasks of logistics. It is very closely related to other activities in the supply chain. As materials move through a supply chain, stocks are held at various points. The best result come when organizations within the same supply chain co-operate to ensure final customer satisfaction. There are several ways of achieving this co-operation, ranging from informal trading relationships through to partnerships.