Masterand : Pavi Antoni D. Villaceran Date :Feb.

23, 2020

Subject :Production and Operations Management and Development

Topic :Inventory Management

Professor : Eddie E. Llamedo, D.M., Ph.D.

Part I. Introduction

Inventory management is a systematic approach to sourcing, storing, and

selling inventory—both raw materials (components) and finished goods

(products).

In business terms, inventory management means the right stock, at the right

levels, in the right place, at the right time, and at the right cost as well as

price.

Entrepreneurs, founders, and independent brands now live in a native

commerce world where small-to-medium businesses compete against global

conglomerates.

We’ve put together this definitive guide to inventory management to level the

playing field and help you grow your brand with speed, scalability, and smart

insights. You’ll find everything you need from inventory control basics to best

practices and formulas to advanced automation processes.

Part II. Summary of the topic/s/ Topic Digest

As a part of your supply chain, inventory management includes aspects such

as controlling and overseeing purchases — from suppliers as well as

customers — maintaining the storage of stock, controlling the amount of

product for sale, and order fulfillment.

Naturally, your company’s precise inventory management meaning will vary

based on the types of products you sell and the channels you sell them

through. But as long as those basic ingredients are present, you’ll have a

solid foundation to build upon.

Small-to-medium businesses (SMBs) often use Excel, Google Sheets, or

other manual tools to keep track of inventory databases and make decisions

about ordering.

However, knowing when to reorder, how much to order, where to store stock,

and so on can quickly become a complicated process. As a result, many

growing businesses graduate to an inventory management app, software, or

system with capabilities beyond manual databases and formulas.

Part III. Recommendations

Inventory is the lifeblood of the supply chain.

It’s what flows from node to node.

And at each node, it’s critical to figure out that perfect balance of supply and

demand, or else suffer dire consequences.

If you have too little inventory you risk lost sales and customers from “out of

stocks.”
If you have too much inventory you’ll need more of everything - more space,

more transportation, more handling, more labor, and more money.

Even after figuring out the correct amount to keep in stock you’ll still need to

execute the proper flow.

It’s also about managing the vast amount of information associated with

those goods in order to keep it moving to the next node - even before it gets

there.

Part IV. Conclusions

A company's inventory is one of its most valuable assets. In retail,

manufacturing, food service, and other inventory-intensive sectors, a

company's inputs and finished products are the core of its business. A

shortage of inventory when and where it's needed can be extremely

detrimental.

At the same time, inventory can be thought of as a liability (if not in an

accounting sense). A large inventory carries the risk of spoilage, theft,

damage, or shifts in demand. Inventory must be insured, and if it is not

sold in time it may have to be disposed of at clearance prices—or

simply destroyed.

For these reasons, inventory management is important for businesses

of any size. Knowing when to restock certain items, what amounts to

purchase or produce, what price to pay—as well as when to sell and at

what price—can easily become complex decisions. Small businesses

will often keep track of stock manually and determine the reorder points

and quantities using Excel formulas. Larger businesses will use

specialized enterprise resource planning (ERP) software. The largest

corporations use highly customized software as a service (SaaS)

applications.

Appropriate inventory management strategies vary depending on the

industry. An oil depot is able to store large amounts of inventory for

extended periods of time, allowing it to wait for demand to pick up.