Overview

• The conflicts which beset inventory controllers.

• What inventory is there to achieve?

• How good inventory management will improve profitability.

• Analysing current stockholding.

The role of inventory management

The success of a venture depends on its ability to provide services to customers or users and remain financially viable. For an organization which is supplying goods to its customers, the major activity is to have suitable products available at an acceptable price within a reasonable timescale. Many parts of a business are involved in setting up this situation. Initially these are the marketing and design departments. Then purchasing, and in some cases, manufacture is involved. For an item which is already in the marketplace, the main activity is providing a continuity of supply for the customers.

Inventory control is the activity which organizes the availability of items to the customers. It co-ordinates the purchasing, manufacturing and distribution functions to meet the marketing needs. This role includes the supply of current sales items, new products, consumables, spare parts, obsolescent items and all other supplies.

Inventory enables a company to support the customer service, logistic or manufacturing activities in situations where purchase or manufacture of the items is not able to satisfy the demand. Lack of satisfaction could arise either because of the speed of purchasing or manufacturing is too protracted, or because quantities cannot be provided without stocks.

Stock control exists at a crossroads in the activities of a company (Figure 1.1). Many of the activities depend on the correct level of...