Inventory Management

Article by Mark D. Lewis, ManagementInfoCenter.com

The flexibility of inventory management system enables a host of storage alternatives from the industrial level cabinets to a warehouse, complete cage or business enterprise.

With inventory management (IM), managers and customers are given the option of a flawless automated mechanism for inventory management from the time a customer seeks the supply items to the items being issued for use. Any redistribution and disposal functions are supported. It also enables setup of the formal defense business operating fund (DBOF) and/or operations and maintenance (O&M) accounts with the perpetual inventory management.

Inventory management has the primary objective of ensuring minimization of the quantity of material on hand. Both raw materials as well as final products are included. As a business practice it makes sense for a technique to reduce waste. Reduction is also ensured in the storage cost and raw material purchase, amount of hazardous waste for disposal and the related costs. Apart from this, any outdated and discontinued stocks are disposed as waste.

A well functioning inventory management system plays a vital role in an effective SCM (Supply Chain Management). With new technologies and collaborations in working methods with trading partners further revolutionize the practice. All those who take to such new technologies and inventory management system methods stand to gain tremendously in terms of the crucial competitive advantage over rival entities in the market.

Effective inventory management is a division of farm supply cooperatives. Continuous decision-making is a must in inventory management. The soundness of inventory management decisions by cooperative managers can be ensured in using fundamental inventory management strategies implemented as a component in an organized plan.

Success in inventory management requires involvement of matching costs of inventory against the benefits. However small entrepreneurs are likely to err in estimating the true value or cost of carrying the inventories that in addition to direct costs of storage, insurance and taxes, also includes the cost of money in an inventory. Maintaining a strategic balance between excessive and insufficient inventory is a major concern for the manager but not the only one.

Managers also need to ensure maintenance of a wide variety of stock while avoiding spread of the fast moving ones too thinly. The turnover of the inventory needs to be increased without compromising the performance or service. Keeping the same level of performance and service, the stock needs to be kept low. Lower prices have to be acquired through volume purchases while avoiding slow moving inventory. Finally sufficient inventory has to be maintained on hand minus the outdated ones.

The success level in tackling these aspects can be more easily measured by some than others. For instance, computing the inventory turnover ratio is simply a measure of managerial performance. The value can be used as a basic guideline for goal setting and performance evaluation by managers. However it needed to be kept in mind that the turnover rate can vary according to the inventory function, type of business and the method of calculating the ratio (either on sales or cost of sold goods). For average inventory turnover rates in individual industries, trade associations are the source.

An inventory management that is successful is one devoted to providing assistance to distributors for exceptional customer service while simultaneously ensuring maximum returns on inventory investment. All related products, classroom instructions and consultancy services are geared for the purpose of enabling your company to implement practically, an effective inventory management process. No less important is the knowledge you gain for enhancement and modification of your inventory system in tune to the changing needs of your company.

Thus inventory management involves the standard integrated information management system for support to customers, functional users and managers at the formal stock record account level of medical logistics management, both in peacetime and operational readiness support.