Concept Of Inventory Management System

1033 Words3 Pages

Inventory management system has been practiced in many organizations from various industries. Given
the diverse and multi-layered supply chains handling different inventories, organizations utilizing
inventory management system can still manage efficiently and effectively their supply and demand flow
within crucial transactional activities. In the following discussions, this paper examines the concept of
inventory management, different inventory types and inventory management processes, and the
function criteria to be considered when selecting inventory management system. Inventory is comprised
of an ideal resource of any form that has potential economic value and regarded as locked up capital
(Saxena, 2009). From the materials management perspective, …show more content…

this reason does not apply to inventories that gain value over time) (Bidgoli, 2010; Narayan &
Subramanian, 2009). Thus, in order to achieve this purpose, inventory management ensures continuity
between functions of company 's strategic goals, sales forecasts, sales and operations planning, and
production and materials requirement planning (Saxena, 2009).Scholars have indicated five main
reasons supporting the need for an inventory: (1) innate fluctuations of supply and demand in which
inventory serves as the cushion responsible for protecting against time lags; (2) inventory management
allows the company to meet their seasonal demand and prevent unnecessary ccumulations; (3)
inventories are maintained to serve as stock buffers against demand uncertainties that can potentially
disable movement of goods; (4) enables economic transaction at large through bulk buying, efficient
movement, and storage; and lastly, (5) certain inventories appreciate in value as it reach a desired point
of consumption and/or production (e.g. cheese and brewing industries) (Saxena, 2009, …show more
content…

Inventory management software is, usually, tailored to the inventory functions needed by the
organization (Saxena, 2009). Typical inventory management systems used include Vendor-Managed
Inventory (VMI), Warehouse Management System (WMS), and Inventory Control Systems (ICS) (Bidgoli,
2010). Common features provided in the mentioned applications are: (a) order management that
determines and automatically handles stock replenishments based on determined threshold; (b) asset
tracking that allows tracking of materials via barcode or serial number once it is stored in a warehouse
or storage facility; (c) service management that enables analysis of production phases and activities in
terms of cost, time consumed, workforce needed, and other criteria; and (d) product identification that
is enabled through barcode reading or radio-frequency identification (RFID) tags (Lang, 2009; Bidgoli,
2010). Organizations require the maintenance of their inventories to serve its unique function in the
production chain. Inventories can be classified according to its functions, which in turn directs how these
materials should be managed (Saxena,
Take a sneak peek into this essay!

In this essay, the author

Explains the concept of inventory management, different inventory types, and the function criteria to be
considered when selecting a stock management system.

Explains that inventories can be classified into four types: raw materials, work-in-process, finished goods
and maintenance, repair, and operating (mro) supplies.

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Open Docu
against time lags; (2) inventory management allows the company to meet their seasonal demand and
prevent unnecessary ccumulations; (3) inventories are maintained to serve as stock buffers against
demand uncertainties that can potentially disable movement of goods; (4) enables economic transaction
at large through bulk buying, efficient movement, and storage; and lastly, (5) certain inventories
appreciate in value as it reach a desired point of consumption and/or production (e.g. cheese and
brewing industries) (Saxena, 2009, …show more content…

Inventory management software is, usually, tailored to the inventory functions needed by the
organization (Saxena, 2009). Typical inventory management systems used include Vendor-Managed
Inventory (VMI), Warehouse Management System (WMS), and Inventory Control Systems (ICS) (Bidgoli,
2010). Common features provided in the mentioned applications are: (a) order management that
determines and automatically handles stock replenishments based on determined threshold; (b) asset
tracking that allows tracking of materials via barcode or serial number once it is stored in a warehouse
or storage facility; (c) service management that enables analysis of production phases and activities in
terms of cost, time consumed, workforce needed, and other criteria; and (d) product identification that
is enabled through barcode reading or radio-frequency identification (RFID) tags (Lang, 2009; Bidgoli,
2010). Organizations require the maintenance of their inventories to serve its unique function in the
production chain. Inventories can be classified according to its functions, which in turn directs how these
materials should be managed