Good or bad inventory management can have a direct impact within different areas of the companies. Our article today deals with the importance of professionalizing inventory management. Also, how different areas of a company influence the optimization of the supply chain.
With excitement, we started a new cycle of Slimstock Academy Canada! We hope to contribute with our granite of knowledge to help professionals who every day turn the Optimization of Inventories into the art of efficiency.
Recapitulating our latest articles from Slimstock Academy Canada, in our last articles, we already talked about Assortment Dynamics and Obsolescence Forecast. Then we addressed the Classification of ABC articles, were learnt how to segment our most valuable items from the least valuable ones. Then, in the article on Regularity of the Demand and Behavior of the Supplier, we came across ways to differentiate the assortment of products. Finally, our last article helps define the Strategies for different Category of Articles.
In today’s article, we invite you to discover how and why to professionalize inventory management.
BALANCE AND COMMUNICATION IN INVENTORY MANAGEMENT
Inventory management directly influences the use of working capital and the different costs of a company. So much so that they can affect the company’s results. Having a very high inventory will involve leasing of warehouses, additional personnel, transportation costs, etc.
There is vast research on this subject. However, achieving a balance between inventory and service level is not simple. From the perspective of the commercial area, it’s said that “You can not sell with an empty gondola.” In contrast to the area of Administration and Finance will want to have the minimum possible inventory. The latter could jeopardize the plan of the Commercial sector. Besides, many factors influence the decision of when and how much to buy; these are usually estimated.
THE MANAGEMENT OF INVENTORIES AS A NEED
It’s often thought that the philosophy “Just in Time” aims not to have any inventory. However, this seeks to optimize the use of said inventory by eliminating surplus inventories. If the demand is known accurately and companies (including suppliers) have a large and/or flexible capacity, it could work without inventory. However, this is almost a utopia.
Another possibility would be that the client is willing to wait for his order indefinitely. Thus, we could make all purchases based on orders and have no estimates eliminating inventory. However, there will always be customers who are not willing to wait their whole lives for their products to arrive.
Therefore, we can conclude that inventory is necessary and inevitable.
How do you see inventory management in your company?
What do you do to find the right balance between inventory and service level?
Is there excellent communication between the Logistics and Marketing / Commercial area?
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