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Operations Management - Transportation / Assignment & Inventory Management

Inventory Management – an Introduction

   Posted On :  23.06.2018 05:23 am

Inventory is the single largest Investment in the assets for most of the ‘Production dominated Industries’, ‘Wholesalers’, ‘Retail Chain Stores/ Superstores’, ‘Stockist/Dealers’ and Retailers. Serving from ‘Mass market to Niche Market or otherwise known as STP Marketing (Segmentation – Targeting – Positioning) leads to proliferation of products, resulted in high level of inventory holdings or Stock Keeping Units (SKU’s) both Raw Material as well as Finished Goods.

Inventory Management – an Introduction

Inventory is the single largest Investment in the assets for most of the ‘Production dominated Industries’, ‘Wholesalers’, ‘Retail Chain Stores/ Superstores’, ‘Stockist/Dealers’ and Retailers. Serving from ‘Mass market to Niche Market or otherwise known as STP Marketing (Segmentation – Targeting – Positioning) leads to proliferation of products, resulted in high level of inventory holdings or Stock Keeping Units (SKU’s) both Raw Material as well as Finished Goods.
 
In firms like HLL, P&G, Cavin Kare, the amount invested in inventory is competing with their own product lines. These companies almost stretched line, with range of products like Detergents, Soaps, Cosmetics, Packaged Foods etc are competing with each other line in terms of returns, investments etc., Companies like HLL is having negative working capital.1
 
High holding cost, the Opportunity Cost on Inventory, the Penalty cost of not meeting the orders, Procuring from Various countries/sources through various modes of transport, increasing Transportation Cost are few crucial facets of Inventory Management to be studied carefully.
 
The Savings in Inventory holdings should be compared with ordering cost and Cost of Transportation. Most of the firms, with a conventional accounting to not proper accounting mechanism, make it difficult to find out any of the cost(s) and reliable cost estimates. The impact of Inventory Management in corporate profitability should be assessed very carefully. Profitability can be improved by increasing the sales volume or cutting the cost associated with various operations. One of such operations is keeping the Inventory Cost under control. The policy should be very specific in terms of required level of inventory, re-order policy subject to fulfilling the customer’s expected satisfaction level.
Tags : Operations Management - Transportation / Assignment & Inventory Management
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