SUPPLY CHAIN PLANNING AND DESIGN: INVENTORY CONTROL
The success of any business has an intimate relationship with the quality, structure, efficiency, and control of its supply chains, which finds a dedicated chapter in the volumes of management literature. Supply Chain can be defined as the whole network of channels within a business through which, it procures supplies and materials, process and manufacture goods and delivers and distributes the same to retailers or wholesalers in B2B (Business to Business) or directly to the customers. Thus, the supply chain directly concerns itself with the production of the value that forms the cornerstone of the company. It is one of the most powerful devices of business transformation as success in the market is conditioned by delivering the right products in the right place, with the right pricing at the right time. An important configuration of the supply chain planning is inventory management, design and control that decides the efficiency of capital budgeting and cost structure of the business. Inventory management is a well-known concept, which translates as the receipt, storage, controlling tracking and shipment of stocks from the inventory and it can be divided into a number ranging from the order of the flow to the calculation of the unit and value. The current study focuses on the various nuances and facets of inventory control concerning the supply chain of a company and the various complexities and difficulties it comes to face with an anomalous demand-supply relation.
The idea of inventory control as a dedicated branch of management has its lineage in the evolution of business since success is thoroughly conditioned by how efficiently a business manages the procurement, storage, and distribution of its stocks with minimum wastage. The position of inventory design and control along with production and manufacturing as a unit is centrally located within the supply chain between procurement and distribution channels. Inventory management is directly associated with asset calculation, and accounting in business, and the amount of inventory held by a business also determines the market share of the company. Thus the importance of inventory management in the layout of the operations framework of business is comprehensible. The breakdown process of inventory management consists of calculating SKUs (Stock Keeping Unit), average product handling time, and a list of other metrics related to the upkeep of the inventory along with the study of the highest and most profitable sellers or suppliers.
Key Issues in Inventory Management
The main problems in inventory control often surface in the form of insufficient storage capacities, improper labeling, mishandled accounts and inventory valuation, demand-supply error graph, and incorrect FMEA (Failure Mode Effects Analysis). A dedicated FMEA encompasses assembling a cross-functional group of experts to analyze manufacturing, product design, quality, reliability, testing, maintenance, storage, supply, and sales along with gauging customer feedback. A kaizen continuous improvement system is imperative in FMEA procedure to ensure suitable and prompt response to identified risks and shortfalls. Adopting Poisson or Gamma Distribution models is often a steady prescription for low-consumption goods. However, the failure to adopt proper risk management processes leads to redundancy, wastes, or backorders that in turn lead to high customer dissatisfaction.