“That order will be delivered within the next day. It will be picked and shipped as soon as I hit ENTER. Thank you so much for making us your number one supplier. We value your business”. Once the ENTER key is pressed, will the inventory be available to fulfill the order? Does the computerized inventory system actually show what is available in the warehouse? Nervously, you strike the key praying the promise of next day delivery is met.
Inventory management is vital to the operation and success of any organization. Simply stated, inventory management ensures items are in stock to meet customer needs. A more complicated view considers the intricate balance between keeping too much and not enough inventory available for shipment. Pros and cons exist for both arguments.
Too Much Inventory:
Too Little Inventory:
Attaining Sound Inventory Management
The goal is carrying as little inventory as possible without encountering a shortage. Sound inventory management helps manufacturers eliminate shortages by determining the optimal point of reorder known as the economic order quantity. Implementing an automated inventory tracking system, often referred to as a manufacturing response planner (MRP) helps to eliminate shortages and can even be a competitive weapon.
Larger retail outlets will often ask if their inventory procurement systems can talk directly to your computer system. Unfortunately, the old adage of ‘garbage in garbage out’ applies to inventory data as well. Personnel that do not take inventory management systems seriously can often destroy the integrity of the inventory data and completely disrupt operations.
A good inventory system considers many things when determining the appropriate level of inventory. Some of the most important ones are:
- Current Demand
- Anticipated Demand
- Economic Health
- Cost of Materials/Labor
- Confirmed Sales Orders
- Anticipated Cost of Materials/Labor
- Seasonal Factors
- Physical Inventory Adjustments
MMTC can help you improve efficiencies and operations as they related to your inventory. For more information, call 888.414.6682 or email firstname.lastname@example.org.
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