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Inventory management in supply chain research paper
Review of literature on inventory management
Review of literature on inventory management
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Sunil Chopra and Peter Mendl argue that inventory is one of the drivers of the supply chain performance and that it has a great impact as the other drivers, such as facilities and transportation which are the same as inventory being ‘Logistical Drivers’. Analyzing the position of inventory in the supply chain, certain factors of the inventory will be taken into account such as the responsiveness, economies of scale, the different variations of inventory, how other factors will affect the inventory, and transportation, which as stated before it is one of the drivers in the supply chain, Vs. inventory. All these concepts of inventory will be analyzed in the supermarkets domain and how crucial is inventory for the supply chain performance.
Inventory
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Raw materials are inventory items, which are going to be used by the manufacturer in the work process to create components, or for finished goods. These inventory items may be goods or obtained materials that the organisation has produced or extracted. These items may have also been purchased from outside of the company. Generally, these types of items are chemicals, paper, wood, paint, steel, food items etc. Work in process (WIP) includes all the components, assemblies and materials that are being processed or which are waiting to be processed. This inventory contains all materials, including raw materials which are going to be processed into a finished good which awaits approval. A finished good is a finalized product which is ready to be sold to customers. Consequently, a finished good inventory is a stock of finalized products. As mentioned before, these products have been through an inspection after the work in process and after approval, have been transferred to the FGs inventory. After this step, the finished goods can then be sold to wholesalers, retailers or directly to the customers. In the supermarket supply chain, all of the supermarkets such as Asda, Tesco, Waitrose etc. all have inventories mostly of finished goods, as they do not only sell the products of other manufacturers, but they
They look at the raw materials that is used for the bake shop and meat department and make sure that there is enough stock in the warehouse to last until there next bulk order comes in. Then that bulk order is broken down into smaller but still bulk orders for the different stores to use. Some products are delivered straight from the suppliers warehouse to the store. They also make sure that the product isn’t damaged when received or sold to consumers.
...n Empirical Comparison of Anticipatory and Response Based Supply chain Strategies.” The International Journal of Logistics Management. 9: 2; 21-33. Lair, Noor Ajian Mohd, Awaluddin Mohamed Shaharoun and Mohamed Shariff Nabi Baksh, “JIT Implementation across A Supply Chain and It effects on Inventory Distribution”, http://www.moste.gov.my/kstas/NSFWorkshop/NSF/nsf%5CAAI16.DOC Lenzini, Joshua M (2002) “The Army's answer to supply chain management Army Logistician”; Fort Lee; Sep/Oct 2002 Li, Yuan, Fan, Zhiping and Zhao, Xuan (1999). “An Integrated Framework of Supply chain Management System.” Software Engineering Conference 1999. Proceeding sixth Asia Pacific. 196 – 199 Pagh, Janus D and Martha C Cooper (1998) “Supply chain postponement and speculation strategies: How to choose the right strategy”, Journal of Business Logistics, Issue # 2, Volume 19, Pg. 13-33.
In the retail stores, managers are complaining of frequent stock outs even though the DC is full of merchandise, which is not moving enough through the supplier, DC, and retail stores. The inventory issue also ties in with transportation problems where accurate lead and delivery times are non-existent. The inventory turnover is not at its full potential because if the DC has merchandise yet the stores are stocked out, the inventory is frozen and will become obsolete.
This behavior of first manufacturing and then supplying to market cannot expect the sale effect before consumer purchase. In this “Push System”, the risks of inadequate inventory or excess inventory as well as the poor sales are existing side by side. Thus, the supply chain should adopt the “Pull System” which regards customer as center and market demand as the driving force.
After the purchasing on materials is made, then it turns to operation part which is transforming the raw material into finished food and services.
...d on delivery and refer any problems back to the supplier. The materials must be purchased at a competitive price. Today many production processes are automated. This means that machines or robots do all the routine or dangerous jobs. Operators check that the productions like is functioning correctly by checking consoles and computer screens.
Suppliers: Since the raw material’s are commodities there should be no problems on this front this is not any different
Primary production of homogenous goods and several processes are undertaken for the finished product to be realized is what is called process costing. All stages of processing and costs accrued during manufacturing of a product will be added to the final batch of products. Keenness is
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
At each stage of production the products are checked to ensure that they are at a
The key performance drivers of Supply Chain Management (SCM) are - facility effectiveness, inventory effectiveness, transportation effectiveness, information effectiveness, sourcing effectiveness, pricing effectiveness, delivery effectiveness, quality effectiveness and service effectiveness. These drivers include various performance markers that may be measured quantitatively by gathering information and applying them in SPSS. The works here may principally be quantitative with spellbinding measurable investigation. In the current world, practical supply chain management to help the triple primary concern, (nature, domain, and economy) is likewise included in the extent of supply chain performance drivers. This is relatively a quite new research region.
This is the activity carried out by organizations that own production sites, and their performance has a major impact on product cost, quality, speed of delivery and delivery reliability, and flexibility [8]. As it is quite an important part of the supply chain, production needs to be measured and continuously improved. Suitable metrics for the production level are as follows. Order lead-time, the total order cycle time, called order to delivery cycle time, refers to the time elapsed in between the receipt of customer order until the delivery of finished goods to the customer. The reduction in order cycle time leads to reduction in supply chain response time, and as such is an important performance measure and source of competitive advantage [9]. It directly interacts with customer service in determining competitiveness. Range of product and services: According to [8] a plant that manufactures a broad product range is likely to introduce new products more slowly than plants with a narrow product range. Plants that can manufacture a wide range of products are likely to perform less well in the areas of value added per employee, speed and delivery reliability. This clearly suggests that product range affects supply chain performance. Effectiveness of scheduling techniques is another important measure of supply chain effectiveness. Scheduling refers to the time or date on or by which
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
There are two main phases that are important in the movement of materials: material management and physical distribution. Materials management is the timely movement of raw materials, parts, and supplies. The physical distribution is the movement of the firm’s finished products to the customers. Both phases involve every stage of the process including storage. The ultimate goal of logistics is to coordinate all efforts of the company to maintain a cost effective flow of goods.
In manufacturing process there are different steps and jobs needs to be done in specific ways and time such as sourcing the parts we need in the production, make the items, and shipping it for the customers.