Inventory Management Essay

Companies often scram beca utilization they are unable to meet demands due to a shortage of stock-take or from large, expensive parentage master(prenominal)tenance costs. Problems occur due to uncertainties and privation of coordination between the come with and its suppliers, partners and customers. Demand sewer be influenced by prices, competition, weather, panache trend, technological developments which leads to uncertainties in forecasting demand. Uncertainties also exist in oral communication times, quality of defenseless materials and parts.Factory storey is not just pertain in the payoff and manufacturing of goods but in activities that see to the flow of raw material from the raw material factories through factories and warehouses to the production floor, purchasing, material handling, production planning and go overling, logistics, inventory control and quality assurance. Right level of inventory has to be maintained that is promptly delivered. Internet access exit change the manufacturing plant floor to have access to useful and relevant teaching. The employees ordain have access to operational data that go forth be short and relevant.The data will be shared across the placement. New and extra information will be readily available which will sacrifice them the insight to the external environment including information about the competitors. One of the about signifi gitt changes would be that on that point will be faster availableness to every the required information. Availability of correct information will facilitate managers to predict, speculate, forecast and estimate demands and trends. Based on these speculations planning for production is done. accord to the planning, ordering, purchasing and using of resources like raw material, capital and labor is chalked out.This will cut down on most of the uncertainties faced by companies. The main problem for any company is determining inventory levels which must be done hi-fi ly for each and every product and part. Too postgraduate inventory levels raises costs and low levels may lose customers as there might be lead times. E. g. Littlewoods Stores in Britain was able to eliminate $17 million of overstocked inventory by using Web. wear out inventory care led to the reduction of the need to liquidate stock which saved the company $1. 4 million (www. microstrategy. com, 2000)Real time collaboration and enhanced communications would table service all employees within the organization to coordinate matters more easily. Better collaboration croupe save the industry $40 billion per annum (cited in Konicki, 2002). Customer complaints will be delivered to the production floor on time and immediate steps will be taken. This will help the manufacturing plant floor to raise the quality of goods, stiffen scrap wastage and errors. A proactive approach rather than a reactive approach dissolve be taken. Goods behind move on time from suppliers to the productio n floor to the customers.Better communication would also mean that coordination with suppliers will be meliorate greatly. Production scheduling can be done more efficiently. converse can be done via electronic mails, transfer of files, a beseech for a meeting, commenting on a news group, conferencing etc. 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 made. 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 deter the production unit if the inventory falls to a certain level. willing placement of order with the suppliers can be made which will reduce the lead time. Intermediaries will be reduced which will help the factory floor to cut down on the costs. Ma nufacturing can start formerly the order is placed by the customer like in the lawsuit of Dell. Training costs can be cut down on. E. g. a new machine has come in an ice-cream factory which can at the same time produce 5 different varieties.Employees can be given operating instructions and a demonstration can be shown online Enterprise Resource think (ERP) promises benefits from increased efficiency to improved quality, productivity and profitability (cited in Umble and Umble, 2002). This integrates all departments and fuctions in an organization into a single system and hence caters to the organization need. It enhances war-riddenness by integrating information on finance and accounting, tender-hearted resource, operations supply chain, and customer information (Turban, Aronson, Liang, 2006 p. 72)An enterprise portal can be used to integrate the internal applications such as the database containing information on the number of raw materials available for the production of bi kes with external applications such as supplier websites etc. Information in this manner can be distributed efficiently and effectively. It will help form a assort between the production floor, suppliers, customers, retailers and partners. This is particularly useful if the company is involved in cross selling and is operating in more than one metropolis 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 forecasting of sales Hence inventory management is extremely grand 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 populace internet has become a necessity and organizations must get technologically advanced to survive and compete.