A study into what makes for successful inventory management in a business.
The paper defines inventory as all goods and materials used in production and distribution including raw materials, component parts, sub-assemblies, finished goods, and the various products and supplies required in the production and distribution process. The author of the paper shows that Inventory can be a liability as well as an asset: excessive, finished (goods) inventory requires larger warehouses and that many times this is the first indication of bad decisions in the production and process stages. The paper shows that improving product-availability and reducing overall working capital investments, without jeopardizing the company performance is a tightrope that most inventory managers have to walk. The paper uses Toyota car manufacturers as an example of successful inventory management.
“Inventory personnel have to constantly track market conditions and price trends. Software has to be designed to input these trends to determine the inventory requirements and the Economic Order Quantity (EOQ) (Business Open Learning Archive, online). The inventory manager has also to be in constant contact with the production and the sales department, in order to ensure that stock outs at the sales end do not occur as a result of material shortage at the production end. Computerized systems have helped simplify the purchasing system and have help improve the efficiency of data recording.”