Inventory Management Is an Ongoing Process as Term Paper

Download this Term Paper in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Term Paper:

Inventory management is an ongoing process (as opposed to a project which has a beginning and an end) of monitoring the constant flow of stock keeping units (SKUs) into and out of supply. The goal is to prevent the inventory from becoming too high (cost), or so low that the operations of the company are in jeopardy (service levels.) (Barcodes, 2011)

Elemental management of inventory requires balancing the three key aspects of stock control: lead time, buffer stock and record keeping.

Lead Time

An inventory manager needs to know how long it takes for a vendor to process an order and make a delivery of goods. he/she also needs to understand how long it will take for those materials to transfer out of inventory in the normal course of business flow. With these two time frames determined, the manager can calculate when to place an order and how many units to order to keep production running smoothly. (Barcodes, 2011)

Buffer Stock

Buffer stock is the maintenance of a few additional units above the minimum number required for normal production flow. This cushion serves to minimize the probability of interrupted production due to a lack of essential parts at various stages of production. Maintaining buffer stock for raw materials, work in progress, and finished goods inventory helps keep the production lines flowing. (Barcodes, 2011)

Record Keeping

A well-run manufacturing enterprise will keep accurate records of inventory at all stages of production for control and tax reporting purposes. From an operational standpoint, the most important of these is the accurate maintenance of the finished goods inventory which facilitates informing sales personnel of available merchandise ready to ship to customers. On a basic level, this requires posting the production of newly completed goods to the inventory totals as well as subtracting the most recent shipments of finished goods to buyers. From these basic concepts, the inventory management craft has developed into a highly complex process. (Barcodes, 2011)

Recent Developments

Two recent trends in advanced inventory management are "demand planning" and "inventory optimization." Both of these techniques require sophisticated software and careful implementation to achieve the desired results. Practitioners are attempting to get as close as possible to the mythical "just in time" for the work-in-process inventory in a manufacturing environment.

David Essex of Search Manufacturing observes that, while modern inventory management theory attempts to improve inventory forecasts by focusing on the demand side, some managers who have already deployed inventory management and planning software will take the next step and add a multi-echelon inventory optimization tool to achieve the best inventory levels and locations. "This type of software can provide a quick return on investment by helping to reduce inventories and manufacturing costs." (Essex, 2009)

Demand Planning

Other analysts take an opposite view believing that inventory optimization can only advance the ball so far and propose that further gains in inventory management will require a comprehensive demand planning strategy. In that regard, the latest thinking is shifting away from planning based on historical sales and shipment data and toward real-time analysis and visibility which is called "demand sensing." (Essex, 2009)

The latest trend is to capture on-going demand at the point-of-sale. Companies that have tried to sense changing levels of demand using order or shipment data have realized superior results by examining POS data on a frequent basis, most often weekly. Other software vendors have concentrated on introducing demand planning modules for analyzing special situations, such as product promotions and new product launches. (Essex, 2009)

Essex's research leads him to consider that the next step is to bring everything under the purview of a sales and operations planning (S&OP) framework. S&OP extends the reach of demand planning and analysis to include inventory as well as the supply chain personnel that handle it. But basic S&OP ought to be the first step, experts say, because the technology won't work well unless underlying business processes are brought under control. "A lot of the benefit that an S&OP process provides is having some kind of discipline in your work process. That discipline needs to exist before you put in a software product that's designed to optimize it." (Essex, 2009)

S&OP is nothing new; it was in vogue in the late 1970s. "All these things that are old are becoming new again." Another "old friend" that is making the rounds is vendor managed inventory…[continue]

Cite This Term Paper:

"Inventory Management Is An Ongoing Process As" (2011, April 25) Retrieved December 5, 2016, from

"Inventory Management Is An Ongoing Process As" 25 April 2011. Web.5 December. 2016. <>

"Inventory Management Is An Ongoing Process As", 25 April 2011, Accessed.5 December. 2016,

Other Documents Pertaining To This Topic

  • Supply Chain Management & Logistics

    The benefits of this strategy however is that it provides HP with quick response to local market requirements, and alleviates the need for taking between 4 and 5 weeks to ship printers from Vancouver to Europe. Conclusions What is the most realistic, prudent and viable alternative is to first attack those processes that are broken and that in turn are causing so much confusion in the company today. These include forecasting,

  • Management Distributed Order Management Systems

    AMR Research (2005) believes that companies must begin developing and redeploying current order management architectures with the focus on delivering more flexibility rather than a strategy that delivers far less. The move toward customer-driven fulfillment processes requires the ability to build and adapt channel-specific, product-specific, and customer-specific order flows quickly without an army of developers creating custom code. However, the days of big bang, rip-and-replace implementations are over, and any

  • Management Wal Mart s Challenges in the Global Market

    Management Wal-Mart's challenges in the Global market Wal-Mart as the world's leading retailer has been spreading very fast extending its power across the world market. This began with the nine countries in South America, Asia, and Europe. This expansion is likely to extend even in the near future. As the company attempts at penetrating the hypermarket culture in different countries, it has encountered a battery of severe problems in the process of

  • Operations Management Course Title Operations Management Textbook...

    Operations Management Course Title: Operations Management Textbook Operations Management: An Integrated Approach (4th edition) R. Ried Nada Sanders, 2010 ( chaps attached) This assignment part 2 a previous assignment I chose a fitness center business choice. Measurement of quality characteristics of business Measurement of business quality and selection of statistics which will be used to measure business quality depends on three major activities. The first is the selection of goals upon which the

  • Assessing an Integrated Management Framework

    Integrated Management Framework The notion of Operations Management (OM) resembles that of a tree with various branches attached to it; although each of the branches represents a separate icon, their roots are linked. Here, the various branches stand for Logistics, Purchasing, Supply Chain Management (SCM), Management Information Systems (MIS), Accounting, Engineering and Marketing. All have a different persona but play a significant role in the implementation of Operations Management and

  • National Incident Management System

    National Incident Management System Theoretical Analysis of National Incident Management System (NIMS) The Federal Government established the National Incident Management System (NIMS) under the Homeland Security Presidential Directive number 5 in February 2003. The Secretary of Homeland Security played an important role of developing and administering national incident management system. NIMS provide a reliable and consistent approach to responding to all forms of incidents irrespective of size and scope (Walsh 2012). The

  • Operations Management Boeing

    Operations Management Boeing: Boeing is the largest aerospace company across the globe and the leading producer of commercial jetliners as well as space, defense, and security systems. Since the firm is a top American exporter, it supports airlines and American and allied customers in approximately 150 countries. The firm's products and customized services include commercial and military weapons, launch systems, satellites, aircrafts, electronic and defense systems, advanced information and communication systems,

Read Full Term Paper
Copyright 2016 . All Rights Reserved