𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 – 𝑩𝒍𝒐𝒐𝒅 𝒐𝒇 𝑶𝒓𝒈𝒂𝒏𝒊𝒔𝒂𝒕𝒊𝒐𝒏
We talked about the inventory, the challenges in managing it, the types which exists and as I said i will take you through the inventory management in detail, let’s now look into understanding what is the Inventory management Process
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝑴𝒂𝒏𝒂𝒈𝒆𝒎𝒆𝒏𝒕 𝑷𝒓𝒐𝒄𝒆𝒔𝒔
If it is about make to order manufacturing, the inventory management process starts when a company receives a customer order & continues until the order ships.
In made to stock manufacturing setups, the process begins with forecasting the demand and then placing POs for the required raw materials or components, their receipts, storage, WIP and storage and managing the finished goods at all levels of the outbound supply chain.
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝑴𝒂𝒏𝒂𝒈𝒆𝒎𝒆𝒏𝒕 𝑻𝒆𝒄𝒉𝒏𝒊𝒒𝒖𝒆𝒔 𝒂𝒏𝒅 𝑻𝒆𝒓𝒎𝒔
Inventory management techniques using formulas & analysis or procedures, they all aim to improve accuracy and gets decided by the need of the company. Some of the techniques & tools are as given below.
~ ABC Analysis: its about identifying the most and least popular types of stock.
~ Cross-Docking: Its about unloading items directly from a supplier truck to the delivery truck. Warehousing is essentially eliminated or reduced.
~ Demand Forecasting: A predictive analytics helping predict customer demand.
~ Drop-shipping: The supplier ships items directly from its warehouse to the customer.
~ Economic Order Quantity (EOQ): Shows exactly how much inventory a company should order to reduce holding & other costs.
~ FIFO and LIFO: First in, first out (FIFO) means you move the oldest stock first. Last in, first out (LIFO) considers that prices always rise, so the most recently-purchased inventory is the most expensive and thus sold first.
~ Just-In-Time Inventory (JIT): Maintaining the lowest stock levels possible before a refill.
~ Lean Manufacturing: Focuses on removing waste or any item that does not provide value to the customer from the manufacturing system.
~ Materials Requirements Planning (MRP): Handles planning, scheduling and inventory control for manufacturing.
~ Minimum Order Quantity: Ordering minimum amounts of inventory from suppliers in each order to keep costs low.
~ Reorder Point Formula: Finding the minimum amount of stock to have before reordering
~ Safety Stock: It prioritizes safety stock & ensure there’s always extra stock set aside in case they can’t be replenished on time.
~ Lean Six Sigma: This method combines lean management and Six Sigma practices to remove waste & raise efficiency.
Till such time I come up with the next post on the subject, do remember to refer the one stop solution in this game Synergeze Consultants Private Limited to all those in your network who have such a need and needs guidance. We are not consultants, we are execution based Consultants.
