Saturday, March 9, 2013

Inventory: Perceived and Conceptualised

When I think of inventory, I think of a set of goods stored before they are moved over to the next step. At the end of the supply chain, there are consumers of these goods and along the supply chain, there are costs that will have to be incurred in moving, storing and handling the goods. In the shoes of a supplier, I would want to be able to identify the correct market for the goods I would like to supply. This market would have to be reliable and I would need to be able to predict its trend in order to know what quantity of goods I need to stock up with. Furthermore, I would nurture a relationship with my consumers where I am the best point of reference, as far as supplies are concerned. I would maintain my relationship by balancing the costs I incur in acquiring the goods for supply in order to sell my product at a price that is affordable to them while maintaing the quality of goods that I distribute in the market. As far as acquiring the goods is concerned, I would either be a producer, or one of the distributors of a finished product. If I was the one producing the goods, it would be in my mandate to mangage the different components of the products I am trying to produce. This means, I would coordinate other suppliers of component parts and negotiate the best deals in the market as far as their price is concerned. I would further maintain a good relationship with the suppliers keeping in mind that there is likely to be some competition within the market for their components. In addition, I would want to ensure that I decrease the instance of opportunism by a supplier where he or she manipulates the price of their product in such a way that they maximise their profits at my expense. I would keep in mind that this situation is likely if I do not invest in a suitable amount of research and development within my level of the supply chain to be able to identify suitable alternatives. As a producer, it would also be important for me to make considerations as to whether I can potentially come up with the component parts of the final product that I supply. This would go a long way in decreasing the risks that I would incur when making specific orders for component parts to different suppliers and ensuring that they are delivered in the right condition and at the right time. My question at this stage would however be whether or not I am able to incure the costs of integrating this level of production within my company. There are ofcourse certain factors that I would need to factor in like the economies of scale. Would my company be at a position to incur the costs of production of component parts of the product that I produce in such a way that the price is distributed across large scale production to avoid making losses due to the cost of production of the individual component parts of my product. If I was a distriubtor of a finished product, I would also question whether or not I am able to produce the finsihed product myself and the costs that I need to incur. In both cases, as a producer and a distributor, I would need to know where I would store the finished product and for what periods of time in order to factor in the costs I need to incur while storing and suitable location. I would also need to put into consideration the period of time I would need to take before stocking up my inventory putting in mind that there are losses to be made when one keeps goods for too long, because, the goods are likely to be damaged or loose value in the market as changes in product specificities and preferences occur. Furthermore, the amount of money that would be stagnant in form of inventory can be either beneficial or detrimental meaning that if I am likely to distribute the goods then my money has been put into good use and if the goods cannot be sold at a value equal or greater than their cost, I am likely to incur great losses. Business capital can be used in different areas of operation like boosting the technology of operations to increase efficency. As far as handling goods is concerned, it is important to note that there is need for adequate data sharing and updating as I monitor the goods that my company handles. This can be at the incoming, storage and outgoing levels. I would need to know when and what amount of goods I am stocking my inventory. Each good will require its own specificatons to describe and identify it within my inventory and as it leaves my inventory. Information sharing, predicting and rapid response all with shifting patterns in consumer demand in perspective plays a large role in successfully managing inventory in all levels of the supply chain. I would consider it a success if a good reaches the consumer and fulfils their satisfaction having gone through all the processes of a supply chain with minimal costs of production and at a suitable cost in the market.

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