Saturday, October 17, 2015

Supply chain inventory

To a country, inventory is the artery and represents the material wealth of a nation. To a company and its supply chain, inventory is assets. As such, inventory management is crucially important.

Historically, organization used to carry high stock, which they almost viewed as a sign of wealth. Extra inventories are necessary to buffer the uncertainties and inefficiencies introduced when one link in the supply chain acts independently from another.

However, this attitude changed many years ago when organization learned that managing inventory efficiently and effectively is a key element in remaining competitive.

Any excess stock raises costs with consequent effects on profit, sales, market share and overall performance.  Increasing supply chain inventories typically increases customer service and consequently revenue, but it comes at a higher cost. A more subtle problem is that high stock levels hide other problems, such as poor material quantity, inaccurate forecast of demand and unreliable suppliers.

Better management of inventories throughout the supply chain represents a huge opportunity for businesses.

Inventory is a stock of any item or resource used in an organization. An inventory system is a set of policies and procedures that determines what inventory levels should be maintained, when stock should be replenished and how large order should be. There are five categories of inventory
*Raw materials
*Work-in-progress
*Finished goods
*Maintenance, repair and operating
*In-transit-stock
Supply chain inventory

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