Inventory Control System
Inventory Control: Improving the Bottom Line
Inventory control requires the tracking of all parts and materials purchased, products processed, and products stored and ready for shipment. Having a sophisticated tracking system alone does not improve your bottom line, it is how you use the information that your system provides.
If your job responsibilities involve inventory control, you know how critical the function is to business success and the complexities involved in planning, executing and controlling your supply chain network.
From a financial perspective, inventory control is no small matter. Oftentimes, inventory is the largest asset item on a manufacturer’s or distributor’s balance sheet. As a result, there is a lot of management emphasis on keeping inventories down so they do not consume too much cash. The objectives of inventory reduction and minimization are more easily accomplished with modern inventory management processes that are working effectively.
Inventory Control Problems
In actual practice the vast majority of manufacturing and distribution companies suffer from lower customer service, higher costs and excessive inventories than are necessary. Inventory control problems are usually the result of using poor processes, practices and antiquated support systems. The inventory management process is much more complex than the uninitiated understand. In fact, in many companies the inventory control department is perceived as little more than a clerical function. When this is the case, the fact is the function is probably not very effective.
The likely result of this approach to inventory control is lots of material shortages, excessive inventories, high costs and poor customer service. For example, if a customer orders a product that requires a manufacturer to acquire 20 part numbers to assemble a product and then, only 19 of the 20 part numbers are available, you have nineteen part numbers which are excess inventory. Worse, the product can’t be
Inventory control requires the tracking of all parts and materials purchased, products processed, and products stored and ready for shipment. Having a sophisticated tracking system alone does not improve your bottom line, it is how you use the information that your system provides.
If your job responsibilities involve inventory control, you know how critical the function is to business success and the complexities involved in planning, executing and controlling your supply chain network.
From a financial perspective, inventory control is no small matter. Oftentimes, inventory is the largest asset item on a manufacturer’s or distributor’s balance sheet. As a result, there is a lot of management emphasis on keeping inventories down so they do not consume too much cash. The objectives of inventory reduction and minimization are more easily accomplished with modern inventory management processes that are working effectively.
Inventory Control Problems
In actual practice the vast majority of manufacturing and distribution companies suffer from lower customer service, higher costs and excessive inventories than are necessary. Inventory control problems are usually the result of using poor processes, practices and antiquated support systems. The inventory management process is much more complex than the uninitiated understand. In fact, in many companies the inventory control department is perceived as little more than a clerical function. When this is the case, the fact is the function is probably not very effective.
The likely result of this approach to inventory control is lots of material shortages, excessive inventories, high costs and poor customer service. For example, if a customer orders a product that requires a manufacturer to acquire 20 part numbers to assemble a product and then, only 19 of the 20 part numbers are available, you have nineteen part numbers which are excess inventory. Worse, the product can’t be