Inventory Mgmt

Satisfactory Essays
18th May 2011

Table of Contents
Need for Inventory Underlying Principles Current Philosophies of Inventory Mgmt

Pros and Cons of IM Principles
TOC and MEIO Primary Needs of an Effective IM System MapMySupplyChain

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Need for Inventory
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin

 To tide against Supply Chain Uncertainities – Transporter uncertainity, Supplier Lead

Time, etc.
 Ensure all Customers, at every location are served at the right time, with the right

quantity
 Normally, Sales People would like to Stock up, as much Inventory as possible, so that

Stock Out scenarios are ruled out
 On the other hand, the CFO would like to cut inventories, so that the capital costs are

kept in check
 If Planned properly, Inventory will have a positive impact on Customer Satisfaction  If Planning of Inventory is inaccurate, then it leads to either:
 Stock outs, Customer Dissatisfaction, lost sales and indirect cost increase or  Increase in Capital Costs, Obsolescence and raises Operational challenges

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Underlying Principles
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin

 Underlying assumptions that define a Supply Chain Inventory model is often

conflicting. This is depicted in the figure.
Underlying principle conflict

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Current Philosophies of Inventory Management
Inventory Need Principles Philosophies Pros and Cons TOC and MEIO Effective IM System MapMySupply Chsin

 Inventory Management in the current context, is designed to be held closer to the customers

 But not all products/SKUs can be held close to the Customers, at all times. This means there would be further classification of SKUs as fast moving, slow moving, etc. and then the fast moving

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