Advantages Of Push Inventory Control

1323 Words6 Pages
Inventory optimization remains one of the key challenges in supply chain management. Typically, large amounts of working capital are tied up in today’s supply chains, restricting the opportunities for growth that are essential for a company’s success in competitive markets such as the process industry sectors. Furthermore, reported inventory figures become an increasingly important indicator for investors and other external stakeholders when assessing the efficiency and health of the whole company.

Still there is an ongoing trend towards increasing inventories in process industries. Major reasons for this development are:

Volatile markets
Increased complexity of the product portfolio
Fear of lost sales due to stock-outs
Increased variability
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Companies must predict which products customers will purchase along with determining what quantity of goods will be purchased. The company will in turn produce enough product to meet the forecast demand and sell, or push, the goods to the consumer. Disadvantages of the push inventory control system are that forecasts are often inaccurate as sales can be unpredictable and vary from one year to the next. Another problem with push inventory control systems is that if too much product is left in inventory. This increases the company's costs for storing these goods. An advantage to the push system is that the company is fairly assured it will have enough product on hand to complete customer orders, preventing the inability to meet customer demand for the product. An example of a push system is Materials Requirements Planning, or MRP. MRP combines the calculations for financial, operations and logistics planning. It is a computer-based information system which controls scheduling and ordering. It's purpose is to make sure raw goods and materials needed for production are available when they are…show more content…
According to the ARC Advisory Group, there is an in-store logistics manager responsible for the ordering process and a store goods manager responsible for material handling logistics at all IKEA stores. The duties of the logistics personnel are to monitor and record deliveries, carefully check delivery notices, sort and separate the goods, and get them off to the correct sales area or designated overstock locations. Overall, they ensure an efficient flow of goods within IKEA stores, which is essential to maintaining high sales and enhancing customer
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