Why Supply Chain Management: Why Inventory Is Important?

What is Inventory?

Definition of inventory: In simply we can say inventory is the summation or combination of goods and services that a business’s gather to run for a certain period. At present many kinds or varieties of inventory exist, such as counting necessary raw item of any finish goods which exist in hand. Moreover, second one is work in progress (WIP), which signifies unfinished goods in production line and third one is counting complete finish goods. Inventory is the total amount and quantity of finished goods and raw materials contained in a store/warehouse or factory at any given time.

The raw materials in hand, work-in-process goods in production line and totally finished goods in warehouse that are thought to be a part of a

France and Germany have such regulations over the timing of seasonal sales. This certainly has bearing on retailers ' flexibility to start and end bi-annual sales in reaction to trading conditions.

Why inventory is essential?

There are some basic reasons for keeping an inventory in any organization, those are:

1) Time: The time-limit is must in supply chain management. One got to maintain definite amounts of inventory within the lead time from supplier to users. However, inventory is to be maintained for consumption during 'variation in lead time’. We can retain our lead time by ordering goods in advance.

2) Uncertainty: Inventories are being buffered to adjust with uncertainties in demand, supply and movement of goods.

3) Scale of Economies: Ideal condition means one unit at a time must be available to desired user on his required time. Logistic is vital in this regard. It costs much also. Eventually, Bulk buying, logistics and storing of goods are treated as Inventory.

4) Appreciation in Value: Sometime, a number of stocks grow the desired value when it is kept for some moment to allow it gain the preferred standard for utilization or for production. For example; beer in the brewing may increase its

The answer is very simple, without having inventory control; millions of dollars could be incurred loss every year just for the reason that there was no responsibility for everything engaged in making manufactured goods.

Nowadays manufacturers are using some integrated ERP system similar to SAP, TALLY, CRM, SCM solutions etc to keep control on their business. These software’s are perfect for all business organizations and may help them for production planning, accounting/inventory/payroll management, real time data collection, forecasting etc. It delivers rich new set of product functionalists and technology capabilities. Their prudent service may advance manufacturers business as a whole or department level.

If any organization do not execute inventory properly then their stock of raw material may increased oddly what will make deficit on their current capital or that companies production may hamper lack of necessary raw materials what will make bad affiliation with their business partners. By above statement we can realize that the importance and necessity of inventory control in any organization is