Inventory Management Essay

Companies often suffer because they ar unavailing to meet demands cod to a shortage of inventory or from large, dearly-won inventory primary(prenominal)tenance cost. Problems occur due to uncertainties and lack of coordination among the society and its suppliers, partners and clients. engage tooshie be influenced by prices, competition, weather, mode trend, technological developments which poke outs to uncertainties in approximateing demand. Uncertainties also exist in delivery metres, role of raw frameworks and parts.Factory blow out of the water is not just involved in the output and manufacturing of goods but in activities that see to the go of raw material from the raw material factories through factories and warehouses to the work decorate, purchasing, material handling, harvest-timeion readiness and functionling, logistics, inventory control and character assurance. Right level of inventory has to be maintained that is sprightlyly delivered. Internet vex provide enable the factory floor to have access to useful and relevant selective information. The employees allow for have access to usable data that forget be elliptical and relevant.The data will be shared out across the fundamental law. New and additional information will be readily addressable which will give them the insight to the outside(a) environment including information about the competitors. genius of the most signifi bay windowt changes would be that in that location will be nimbleer approachability to all the required information. Availability of invent information will process managers to predict, speculate, forecast and estimate demands and trends. Based on these speculations planning for takings is make. According to the planning, ordering, purchasing and apply of resources like raw material, capital and bear on is chalked out.This will take garbage down on most of the uncertainties faced by companies. The main problem for any company is a scertain inventory levels which mustiness be d angiotensin-converting enzyme accurately for each and every product and part. Too high inventory levels call on the carpets cost and low levels may lose customers as there might be lead times. E. g. Littlewoods Stores in Britain was able to eliminate $17 billion of over commonplaceed inventory by utilize Web. give out inventory direction take to the simplification of the need to liquidate stock which saved the company $1. 4 million (www. microstrategy. com, 2000)Real time collaboration and compound confabulations would answer all employees inside the organization to coordinate matters more easily. meliorate collaboration evoke save the intentness $40 billion annually (cited in Konicki, 2002). Customer complaints will be delivered to the production floor on time and conterminous steps will be taken. This will help the factory floor to raise the quality of goods, reduce scrap wastage and errors. A proactive approach rather than a reactive approach layabout be taken. Goods croup move on time from suppliers to the production floor to the customers.Better communication would also mean that coordination with suppliers will be improved greatly. Production scheduling can be done more efficiently. discourse can be done via electronic mails, transfer of files, a call for a meeting, commenting on a news group, conferencing etceteratera During peak demands if the factory floor is unable to meet rising demand it will be able to judge which products it should outsource. Better buy or make decisions can be make. Better communication with suppliers will enable the company to use a just-in-time (JIT) approach by strengthening its ties with a few suppliers who will make prompt delivery of raw materials.The factory floor can also keep a system that will automatically monish the production unit if the inventory falls to a certain level. Automatic office of order with the suppliers can be made which will reduce t he lead time. Intermediaries will be reduced which will help the factory floor to cut down on the costs. Manufacturing can start at once the order is placed by the customer like in the case of Dell. cooking costs can be cut down on. E. g. a new car has come in an ice-cream factory which can simultaneously produce 5 distinguishable varieties.Employees can be given operating instructions and a demonstration can be shown online Enterprise Resource Planning (ERP) promises benefits from change magnitude efficiency to improved quality, productivity and advantageousness (cited in Umble and Umble, 2002). This integrates all departments and fuctions in an organization into a single system and thereof caters to the organization need. It enhances competitiveness by integrating information on finance and accounting, world resource, operations supply chain, and customer information (Turban, Aronson, Liang, 2006 p. 72)An enterprise portal can be used to integrate the internal application s such as the database containing information on the build of raw materials available for the production of bikes with outdoor(a) applications such as supplier websites etc. Information in this manner can be distributed efficiently and effectively. It will help form a link between the production floor, suppliers, customers, retailers and partners. This is particularly useful if the company is involved in cross interchange and is operating in more than one city or country.Diageo plc, a beer and alcohol manufacturer was able to save $1. 1 million in inventory reduction and $600,000 in logistics through accurate vaticination of sales Hence inventory management is extremely important as it can bring breakthrough results within an organization. It gives a competitive edge to the companies as it slashes the costs down by providing a tighter control on inventory stocks. In this fast moving, fiercely competitive world lucre has become a necessity and organizations must get technologi cally advanced to bear and compete.