Inventory

Parent Category: Compiere

Inventory Control


In today's business environment, even small and mid-sized businesses have come to rely on computerized inventory management systems. Certainly, there are plenty of small retail outlets, manufacturers, and other businesses that continue to rely on manual means of inventory tracking. Indeed, for some small businesses, like convenience stores, shoe stores, or nurseries, purchase of an electronic inventory tracking system might constitute a wasteful use of financial resources. But for other firms operating in industries that feature high volume turnover of raw materials and/or finished products, computerized tracking systems have emerged as a key component of business strategies aimed at increasing productivity and maintaining competitiveness. Moreover, the recent development of powerful computer programs capable of addressing a wide variety of record keeping needs—including inventory management—in one integrated system have also contributed to the growing popularity of electronic inventory control options. 

Your business's basic stock should provide a reasonable assortment of products and should be big enough to cover the normal sales demands of your business. If you're a start-up, you won't have actual sales and stocking figures from previous years to guide you, you must project your first year's sales based on your business plan.

When calculating basic stock, you must also factor in lead time-the length of time between reordering and receiving a product. For instance, if your lead time is four weeks and a particular product line sells 10 units a week, then you must reorder before the basic inventory level falls below 40 units. If you do not reorder until you actually need the stock, you'll have to wait four weeks without the product.

Insufficient inventory means lost sales and costly, time-consuming back orders. Running out of raw materials or parts that are crucial to your production process means increased operating costs, too. Your employees will be getting paid to sit around because there's no work for them to do; when the inventory does come in, they'll be paid for working overtime to make up for lost production time. In some situations, you could even end up buying emergency inventory at high prices.

Modern inventory control systems often rely upon barcodes and radio-frequency identification (RFID) tags to provide automatic identification of inventory objects. In an academic study[1] performed at Wal-Mart, RFID reduced Out of Stocks by 30 percent for products selling between 0.1 and 15 units a day. Inventory objects could include any kind of physical asset: merchandise, consumables, fixed assets, circulating tools, library books, or capital equipment. To record an inventory transaction, the system uses a barcode scanner or RFID reader to automatically identify the inventory object, and then collects additional information from the operators via fixed terminals (workstations), or mobile computers. 

An inventory control system may be used to automate an order fulfillment process. Such a system contains a list of orders to be received, and then prompts workers to pick the necessary items, and provides them with packaging and shipping. An inventory system also manages in and outwards material consolidation.

It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. Interconnected or interlinked networks, channels and node businesses are involved in the provision of products and services required by end customers in a supply chain. Supply chain management has been defined as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.

SCM draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach

Supply Chain/Channel of Distribution is a concept that describes the movement of goods and information between suppliers and consumers. The information in a Supply Chain relates to the amount of demand that exists for a product. Demand is a measure of the ability or desire of consumers to make a purchase.

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