Assignment
In 2-3 paragraphs explain what the role of inventory is in supply chain management.
Term Paper Topics
Some aspect of integrated logistics systems development
Discussion
Why is inventory control important to us today and in the future?
Class Post Replies
(Alvin) I think inventory control is important to all aspects of businesses, in the public and private sector, in this day an age of "I want it now" and the competitiveness of like businesses, a company cannot afford to turn a customer away because you don't know what you have in your inventory and come to find out you had the product all along. So as a business owner and having control helps with a few hurdles like avoiding stockouts, this refers to the "want it now" concept, either you know you have the product or you don't but disappointing the customer is not what a business wants. Overstocking, without proper control inventory, can be left on a shelf and one of two things can happen, the item does not sell and/or the business is losing money because the item is not selling. Overstocking creates working capital issues. However, in true supply chain fashion, when dealing with the phases of a product the manufacturer would be the one that would suffer the most if inventory is not controlled properly or efficiently. This could cause a shut down of a particular product, especially in the raw materials department. If materials run out because of failed control then money is lost in the long run.
Merritt, C. (n.d.). Why Is Inventory Control Important?
(Francsico) Inventory control is essential in the supply chain management and to us for many reasons. Having logistical control on inventory has a substantial effect on the bottom line of a company's capital. Depending on the category, inventory's value fluctuates. For example, in the electronics category, the price of an item can decrease on a daily basis. However, if a business sells antique items, the outcome may be the opposite. Therefore, the inventory holding costs become one of the factors in the need to maintain safety stock and the quantity of each stock keeping unit. The cost of inventory has several direct and indirect costs associated with it. "Some of these costs include storage, distribution, transportation as well as the reverse logistics costs. These costs significantly affect current inventory that is tied up and future purchases of inventory" (Cox, 2011).
The ability of a company to supply its product to consumers is among the many processes a product experience through its life cycle. Controlling that product or inventory levels takes many steps such as, forecasting, planning, and requisitioning. Additionally, techniques such as purchasing habits, reducing order transactions costs are also important steps in controlling inventory. "By balancing inventory, we become better stewards of resources which prolongs the ability to make product inventory available to consumers, current, and future" (Cox, 2011). In return, retain the ability to stay relevant and competitive in those industries.
Here is a good example of the importance of inventory controls in today's logistical market. A couple days ago, I experienced what I thought was an issue with inventory control at my local Walmart. After a recent snowstorm that hit the East Coast, I visited Walmart to purchase another snow shovel due to the fact that mine was broken at the time. Not being able to locate any snow shovels, I asked one of the employees if they had any at all. The employee stated they have been out of shovels for about a week. He then continued to say how they were supplied one pallet of snow salt and no additional shovels. They ran out of both on Wednesday with a delivery scheduled for next month. He also mentioned that it was to the point that some customers were purchasing pool salt and kitty litter as a replacement to deal with the snow. Even though the snowstorm was predicted to come down Wednesday, the store was not expecting to have such a high demand for snow shovels so early in the month. This may have been a slight oversight on the store's side since weather patterns change, also considering the number of SKU's the store maintained. The store should always be prepared for any un-forecasted event. "The prime objective for all supply chains is to provide clients with what they want when they want it" (Cox, 2011).
Reference:
Cox, R. P. (2011, August 1). 25 Ways to Lower Inventory Costs. Logistics Management.