Essay on Inventory Management
Added on 2019-09-23
15 Pages3121 Words223 Views
Essay and Case Study[Type the document subtitle]Swati Bhatt[Pick the date]
Question 1 Essay“Although there are good reasons to keep inventories in the logistics chain, they must be carefully managed.” Keeping surplus inventories in stock is always not a lucrative option for a businessman, butsometimes excess is always not a need of an hour due to unexpected customer demands &supplier inadequate supply. Keeping this in mind, the businessman should judiciously optimizetheir stock requirement & keep on circulating stocks. There are various ways to measure pitfalls& advantages with logistics chains (Nabo, 2013). In the today’s modern world of retailing &whole selling, smooth inflow & outflow measures the inventory levels. Through an Optimizationand proper Coordination between various departments & divisions is the sign of a properintegration within the company. This cooperation helps in a smooth flow, reduced costs & betterworking style prospects. For example, a customer wants a new shirt & he will order with acompany, so the company has to check for stock, raw material availability, transportation costs& then will check for delivery status. If the inventory & availability of stock is not there, then itwould lead to delays & loss of customers. If at all inventory has to be maintained then costs & trade-offs has closely monitored. Thecompany has the focus on the inventory ratios which means the company is optimally utilizing1
its sales turnover & churning inventory levels when they are operating high & this helps in alsoincreasing good profit margins. Higher inventory levels & great profit margins is a sign ofefficient management. As per the requisites & prerequisites of dealers & retailers a business canmonitor a number of product units sold, needs to be manufactured & check for delivery statusthrough an efficient & effective management system. Quality & quantity cannot be pre-assumed,but a business needs to prepare itself for the uncertainty & forecast the worst & good scenarios.Hence stocks available as raw materials, with the manufacturers, with the dealers, semi orfinished goods & goods available during transportation all needs to be pre-planned & countedonce. When we think off stocking inventory, we need to think of locations & timely deliverystatus & it all depends on the responsiveness from the customers & vendors. For example, whena customer walks into the nearest store to purchase a new or trendy designs if it's availablecustomers buy it immediately, but if it's not available & customers demand it, it will lose theinterest of customers & he will switch to different apparel stores & brands. Hence immediaterequirement & readily available are the two key concepts from a customer point of view.Pitfall 1: No Supply Chain MetricsSince there is no performance to measure adequate & full usage of inventories. Hence keeping atab of inventories & of metrics will help in optimum utilization.Pitfall 2: Inadequate Definition of Customer ServiceBy filling a timely survey of customer satisfaction & keeping a trend of a customer order historywill help a businessman to maintain stock accordingly. Sometimes unsatisfied or impatientcustomer frequently orders & cancels stock & sometimes some customers re-order same stock.2
Hence recording & analysing the stock history status will eliminate wastage & maintain existingstocks.Pitfall 3: Inaccurate Delivery Status DataWhen orders are delayed & not delivered on time, due to the logistics unplanned situations orlack of man skills, then the smooth flow of stock gets the hamper. Hence delivering stocks ontime to the customer, getting stocks delivered from the logistics team will help in judgingaccurate delivery status.Pitfall 4: Inefficient Information SystemsTransferring stocks from one inventory to another, losing out stocks in a transitions &information leads to problems in inventory/backlog status, planning future stocks. productionplans, etc. It becomes a hassle & tedious job to record status manually. Pitfall 5: Ignoring the Impact of UncertaintiesCustomer, delivery, logistics, inventories, supply management & there could be warranted &unwarranted uncertainties which a business needs to go through. Keeping a plenty or scanty willresult hamper business cycles (Kyoto, 2014).Hence quality check, quantity control, maintaining raw data of inventory, customer satisfaction ,the information system will help in eliminating some uncertainties.Pitfall 6: Simplistic Inventory Stocking Policies3
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