Managing an inventory is a very sensitive issue. If you are not wise enough to effectively utilize your finance, you end up accumulating obsolete stock. There should be more emphasis into the technical expertise, and less on the Intuition factors, while planning and placing your purchase orders, and there needs to be thorough awareness of Systems parameters, and key performance indicators, which I intend to discuss in my forthcoming topic.
The inventory can be carried at a low cost, with stream lined procedures, consistent with the Quality management systems. Our planning should be inline with our requirements, and also needs to ensure that the stock turns are improving, and that the months of supply are appropriate ( should be adequate enough to meet our requirements and not to overstock), taking into consideration the lead times, and safety stock. You could also use the services of transporters in the most economical way to bring down the overall landed cost of the inventory.
The stock ratios needs to be closely monitored, and improved. The emergency orders needs to be controlled , so that they don’t cost you extra money. At the same time with quantitative and qualitative analysis, stock orders could be taken care of. Although the computer systems generates the orders, you still might need to override the report, and confirm your requirements, lest you go wrong in your judgement.
It is very important that we manage our working capital wisely, so that our stock availability is balanced with the holding (carrying) cost. You can term an item to be obsolete, if it does not move over a period of time.Slow moving parts must be identified, when they have not moved for (6) months to (9) months, and there is good chance of such items getting obsolete. only 15% of items over 9 months without demand are likely to sell again within one year. Ultimately that costs you money and the obsolete items has to be disposed either at the lowest prices thru the bidders or scraped completely . There needs to be clear cyclical analysis of the inventory, and also to be aware of the parameters for placing orders to meet our requirements, and to have better control of your stock.
From what I've read, Walmart sets the standard for inventory management and coordination with their suppliers. Unfortunately, they aren't pace setters in the way they treat their employees.
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