Project Report

PRODUCTION AND OPERATIONS MANAGEMENT (8509)

Name: Sania Saad

Roll number: BU551482

Submitted to: Sir Toheed Ahmad

Inventory Management

Inventory management is a component of supply chain management that involves supervising

non-capitalized assets, or inventory, and stock items. Specifically, “inventory
management supervises the flow of goods from
manufacturers to warehouses and from these facilities
to point of sale.” Thus, inventory management hinges
on detailed records of products or parts as they enter
and leave warehouses and points of sale.
Inventory management is critical to the bottom line
because inventory is a major asset that remains an
investment until the products sell. Several costs are
tied to inventory management because businesses
must store, track, and insure inventory. Overall, best
practices in inventory management involve sound
purchasing plans to guarantee items are available when they are needed without having too
few or too many on hand and the necessary tools for tracking existing inventory.

Objective of inventory management

The main goal of inventory management is prepared and economic. The equipped entity means
Accessibility of resources and spares in adequate quantities for without interruption flow of
Making. The economic point means stash in inventory should not continue idle and
smallest amount functioning assets should be protected in it.

Other objectives

 To ensure continues supply of inventories to the production.

 To avoid over store and underneath stocking.
 To keep material cost under control, to keep low cost of production.
 To eliminate duplication in ordering or replacing stocks.
 To minimize losses through, deterioration, pilferage, wastage and damages.
 Designing structures for good inventory management.
 Perpetual inventory control of materials.
 To facilitate data for short and long term planning and control of inventory.

Inventory management software systems

 ERP SYSTEMS
 Enterprise resource planning (ERP) refers to a type of software that organizations use to
manage day-to-day business activities such as accounting, procurement, project
management, risk management and compliance, and supply chain operations.
 HYBRID CLOUD
Some inventory management software systems are designed for large enterprises, and
they may be heavily customized for the particular requirements of those organizations.
Large systems were traditionally run on premises, but are now also deployed in public
cloud, private cloud and hybrid cloud environments.
 SAAS
Small and midsize companies typically don't need such complex and costly systems, and
they often rely on stand-alone inventory management products, generally
through SaaS applications.
Types of Inventory

Raw materials
Raw materials are inventory
items that are used in the
manufacturer's conversion
process to produce
components, subassemblies,
or finished products. These
inventory items may be
commodities or extracted
materials that the firm or its
subsidiary has produced or
extracted. They also may be
objects or elements that the
firm has purchased from
outside the organization.
Even if the item is partially
assembled or is considered a finished good to the supplier, the purchaser may classify it as a
raw material if his or her firm had no input into its production. Typically, raw materials are
commodities such as ore, grain, minerals, petroleum, chemicals, paper, wood, paint, steel, and
food items. However, items such as nuts and bolts, ball bearings, key stock, casters, seats,
wheels, and even engines may be regarded as raw materials if they are purchased from outside
the firm.
Generally, raw materials are used in the manufacture of components. These components are
then incorporated into the final product or become part of a subassembly. Subassemblies are
then used to manufacture or assemble the final product. A part that goes into making another
part is known as a component, while the part it goes into is known as its parent. Any item that
does not have a component is regarded as a raw material or purchased item. From the product
structure tree it is apparent that the rolling cart's raw materials are steel, bars, wheels, ball
bearings, axles, and caster frames.
WORK-IN-PROCESS
Work-in-process (WIP) is made up of all the materials, parts (components), assemblies, and
subassemblies that are being processed or are waiting to be processed within the system. This
generally includes all material—from raw material that has been released for initial processing
up to material that has been completely processed and is awaiting final inspection and
acceptance before inclusion in finished goods.
Any item that has a parent but is not a raw material is considered to be work-in-process. A
glance at the rolling cart product structure tree example reveals that work-in-process in this
situation consists of tops, leg assemblies, frames, legs, and casters. Actually, the leg assembly
and casters are labeled as subassemblies because the leg assembly consists of legs and casters
and the casters are assembled from wheels, ball bearings, axles, and caster frames.

FINISHED GOODS
A finished good is a completed part that is ready for a customer order. Therefore, finished
goods inventory is the stock of completed products. These goods have been inspected and have
passed final inspection requirements so that they can be transferred out of work-in-process and
into finished goods inventory. From this point, finished goods can be sold directly to their final
user, sold to retailers, sold to wholesalers, sent to distribution centers, or held in anticipation of
a customer order.
Inventory management techniques

 Stock review, which is the simplest inventory management methodology and is

generally more appealing to smaller businesses. Stock review involves a regular analysis
of stock on hand versus projected future needs. It primarily uses manual effort, although
there can be automated stock review to define a minimum stock level that then enables
regular inventory inspections and reordering of supplies to meet the minimum levels.
Stock review can provide a measure of control over the inventory management process,
but it can be labor-intensive and prone to errors.
 Just-in-time (JIT) methodology, in which products arrive as they are ordered by
customers, and which is based on analyzing customer behavior. This approach involves
researching buying patterns, seasonal demand and location-based factors that present
an accurate picture of what goods are needed at certain times and places. The
advantage of JIT is that customer demand can be met without needing to keep
quantities of products on hand, but the risks include misreading the market demand or
having distribution problems with suppliers, which can lead to out-of-stock issues.
 ABC analysis methodology, which classifies inventory into three categories that
represent the inventory values and cost significance of the goods. Category A represents
high-value and low-quantity goods, category B represent moderate-value and
moderate-quantity goods, and category C represents low-value and high-quantity
goods. Each category can be managed separately by an inventory management system,
and it's important to know which items are the best sellers in order to keep quantities of
buffer stock on hand. For example, more expensive category A items may take longer to
sell, but they may not need to be kept in large quantities. One of the advantages of ABC
analysis is that it provides better control over high-value goods, but a disadvantage is
that it can require a considerable amount of resources to continually analyze the
inventory levels of all the categories.
The Importance of Managing Inventory:
An effective inventory management system is the cornerstone of successful
eCommerce and online retail brands. With a strategic plan in place that optimizes
 the process of overseeing and managing inventory, including real-time data of
inventory conditions and levels, companies can achieve inventory management
benefits that include:
 Accurate Order Fulfillment – Imagine this scenario: A customer places an order
and an eCommerce brand receives the order. The brand sends it to the warehouse
only to discover that the product is out of stock. Or just as bad, the eCommerce
brand ships the wrong item. This isn’t an uncommon story if inventory is poorly
managed. Taking the time to develop a more robust plan can help brands avoid
inaccurately filled orders, high return volumes and a loss of customer base.
 Better Inventory Planning and Ordering – It’s difficult to gauge which products
are needed if there isn’t a clear way to tell what products are already stocked. If
online retailers don’t properly manage the inventory they already have, they can
easily overstock items, and some of these items might not be strong sellers. Detailed
inventory management mitigates these issues, allowing warehouse managers to
refresh inventory only when needed. It’s both space and cost-effective.
 Increased Consumer Satisfaction – Customers that shop online are eagerly
awaiting their orders, and there’s nothing worse than when their orders arrive not-
as-described, late or damaged. When that happens, buyers are less likely to
purchase from the brand again. On the other hand, good inventory management
leads to orders being fulfilled more quickly and shipped out to customers faster. The
enhanced processes can help eCommerce and online retail brands build a strong
repertoire with consumers – and keep them coming back for more.

 Improved Accuracy of Inventory Orders

Accuracy of product orders, status, and tracking are critical to good inventory
management. An effective fulfillment partner will have real-time software and systems
in place to make sure no product is left untracked throughout the fulfillment process.

 Organized Warehouse

A good inventory management strategy leads to an organized fulfillment center. An organized

warehouse results in more efficient present and future fulfillment plans. This also includes cost-
savings and improved product fulfillment for businesses utilizing the warehouse for managing
inventory.
  Increased Efficiency and Productivity

With proper inventory management in place, less time and resources are spent invested in
managing inventory and can be allocated to other areas. Technology is often used to speed up
tracking and fulfillment operations, ensuring inventory records are accurate.

 Save Time and Money

Due to improved ordering accuracy, efficiency, and product flow, good inventory management
results in saved time and money.

 Repeat Customers

Effective inventory management and control protects from incorrect or damaged goods
being shipped to customers. This helps improve customer experience, protect from issues
such as refunds, and achieve more repeat buyers.

As you can see, proper inventory management is very important, especially as

inventory volume increases, and can make or break a business!

TOYOTA
Introduction
Toyota Motor Corporation is a
Japanese multinational automotive manufacturer headquartered
in Toyota, Aichi, Japan. In 2017, Toyota's corporate structure consisted of
364,445 employees worldwide
The company was founded by Kiichiro Toyoda in 1937, as a spinoff
from his father's company Toyota Industries to create automobiles. Three
years earlier, in 1934, while still a department of Toyota Industries, it
created its first product, the Type A engine, and its first passenger car in
1936.
Indus Motor Company Limited ,operating as Toyota Indus, is
a Pakistani automobile manufacturer and joint venture between House of Habib, Toyota
Tsusho and Toyota Motors, based in Karachi, Pakistan since 1990.[1][2]
Indus Motor is the authorized assembler and manufacturer of Toyota and Daihatsu vehicles, auto
parts and accessories in Pakistan since 1 July 1990 at its 105 acres (0.42 km2) manufacturing plant
at Port Bin Qasim Industrial Zone, outside Karachi

Mission statement

Vision statement
To be the most respected and successful enterprise, delight customers with a wide range of
products and solutions in the automobile industry with the best people and the best
technology.”
Core values
 World class production quality
 Achieving the ultimate goal of complete customer satisfaction
 Being seen as the best employer
 Fostering the spirit of teamwork
 Inculcating ethical and honest practices

INVENTORY MANAGEMENT IN TOYOTA

Making only "what is needed, when it is needed, and in the amount needed"
Producing quality products efficiently through the complete elimination of waste,
inconsistencies, and unreasonable requirements on the production line.
In order to fulfill an order from a customer as quickly as possible, the vehicle is efficiently built
within the shortest possible period of time by adhering to the following:
1. Pull System sell one and then make another

2. When a vehicle order is received, production instructions must be issued to the

beginning of the vehicle production line as soon as possible.
3. The assembly line must be stocked with the required number of all necessary parts so
that any kind of ordered vehicle can be assembled.
4. The assembly line must replace the parts used by retrieving the same number of parts
from the parts-producing process (the preceding process).
5. The preceding process must be stocked with small numbers of all types of parts and
produce only the numbers of parts that were retrieved by an operator from the next
process.
6. Continuous Flow Processing make one at a time with no stagnation.
SWOT ANALYSIS
Strengths
 No need for warehouse expansion and investments.
 Inventory pooling with manufacturers.
 Reduction of internal material transfers
 Easy accessibility no transportation needed
Weakness
 Time and labor consuming production
process
 Late deliveries.
 Pricing.
 Quality Concern

Opportunities
 Increase in warehouse space
 Batter storage & Handling
 Lower Inventory levels
 Cost effective warehouse management
Threats
 Quality operations falls behind without attention
 Increased Labor cost
 Economic crises orders falling back
 Uncertainty of productivity

Findings

 The company follows just in time therefore no delay in restocking inventory.

 Reduction of material transfer reduces operations costs.
 Inventory pooling with other manufacturers cause delay and quality related issues.
 Frequent restocking causes labor cost to increase.
 Delayed deliveries.
Recommendations
 In general if you don’t have to implement warehouse management stick to inventory
management.
 Staff should be trained to use new system of inventory control.
 Company should take measure to maintain proper stores and spares so as to avoid
shortage of parts and match delivery time.
 Company should implement inventory tracking to improve performance and reduce
operational costs.
 Reduce communication gap between workers and suppliers.

Conclusion
In any business, make it big or small; we must understand that taking good concern of our
record is very essential. We seeing that managers do not understand the concept of good
inventory management, we must learn to be familiar with it and its applications. One or the
reasons for the failure of a business is its inventory organization. In attendance are a lot of
traditions to fight failure, and we can start from here. There are new technologies that can help
us maintain and supervise out inventory. What we can do is learn, implement and evaluate our
business.

REFERENCES
https://searcherp.techtarget.com/definition/inventory-management
https://www.tradegecko.com/inventory-management
https://searcherp.techtarget.com/definition/inventory-management
https://www.camcode.com/asset-tags/what-is-inventory-management/
https://en.wikipedia.org/wiki/Toyota
http://toyotagt.com.pk/