Inventory management is recognized as a pearl on the supply chain management in that inventory is basically the main actor in the supply chain, from raw material to inventory in process to finished inventory. Inventory also is worthy for attention in that cash is caught in it and the turnover of inventory concerns the efficiency, customer satisfaction and revenue of a company. Carrying too much inventory might lead to large warehouse rental bills, inventory obsolesce and cash caught up. Carrying too little inventory might lead to shortage of inventory thus lose customers. Therefore inventory management is critical to a company in many sense and companies have realized that fact, leading to many software developed to help companies manage their inventory. This article aims at introducing how technology helps inventory management process.
First, inventory management software enable company to balance the seemingly paradox between sale fulfillment and inventory investment. As mentioned earlier, too much inventory catch up investment in inventory while too little inventory might miss contracts and lose customers. The optimization of inventory holding level could be accomplished through adjusting it according to algorithm provided by inventory management software. Those software, with each company latest data plugged in, provide sensitivity analysis of inventory level so that management could choose in favor of its best interests.
Second, those software provide company projection of future change in inventory. Using historical and customer behavior data, software forecast the future outflow of inventory; given the optimized inventory level and sensitivity range mentioned above, software can calculate the balance of any moment in a period of time in the future. With the safety inventory calculated, software is able to warn company about shortage or excess in inventory and what kind of inventory particularly based on the turnover of each kind of inventory. Company would be able to adjust their inventory level according to the warnings provided by software.
Third, software are also able to provide company with more efficient inventory policy, for example replenishment cycle, storing location and safety stock level. These more efficient policies would complement the projections so to make the optimized target be fulfilled through daily operation of a company.
To summarize, technology provided by software would enhance the inventory management in a more optimized and efficient manner.
References:
http://www.justenough.com/inventory-planning-software/
http://www.parkeravery.com/pov_InventoryPlanningMethods.html
http://www.oracle.com/us/products/applications/047071.pdf
Nice Post.
ReplyDeleteI like the way you written the post.
Post is very Informative and easy to understand.
Inventory & Material management module provides a powerful and flexible set of features to help you manage and report your inventory information. inventory management module facilitates processes of maintaining the appropraite level of stock in a warehouse.
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