MANAGING INVENTORY

AND SUPPLY CHAIN

Mariel S.P Reyes
BA 106
MBA-HRM
 Supply Chain Management (SCM)/Inventories

Supplier Manufacturing Distributor Retailer

• Inventories • Goods in
Transit Customer
• Raw Materials
• Finished
• Work in Progress
Goods
• Finished Goods
What is Inventory Management?
Inventory management is the products or
materials a company sells to its customers in
order to make profit. As part of the supply
chain, inventory management includes several
different aspects such as controlling and
overseeing purchases from suppliers and
customers, maintaining the storage of stock,
controlling the amount of product for sale and
order fulfillment. 
Three Core Steps of Inventory
Management
1) Purchasing inventory - raw materials or
components are bought and delivered to the
warehouse.
2) Storing inventory - inventory is stored until
needed. Raw materials are moved to production
facilities to be made into finished goods and
returned to stock areas until ready for shipment. 
3) Profiting from inventory - the amount of product
for sale is controlled. Finished goods are pulled
to fulfill orders. Products are shipped to
customers.
Myth in Inventory Management

The “SALES” data that we have in our company

records, is all we need for inventory management”

“The more expensive a software system is, the better it will

help us control our inventory“

“We keep all of our sales histories by month, and this data is
all we need to make good forecasts for inventory planning”
Reasons for Inventory
 Improve Customer Service
 Economies of purchasing
 Economies of Production
 Transportation Savings
 Hedge against future
 Unplanned shocks (labor strikes,
natural disasters, surges in demand,
etc)
 To maintain independence in supply

chain
Role of Inventory in Supply Chain

Supply Chain
Understocking : Demand exceeds amount available
- Lost margin and future sales

Overstocking : Amount available exceeds demand

- Liquidation, Obsolescence, Holding

GOAL

Matching Supply and

Demand
Drawback of Keeping Inventory

• Inventory is expensive
• Items deterioration
• Products obsolescence
Methods For Supervising Inventory

• Manual Count Method

• Periodic Methods
• Perpetual Methods
• LIFO and FIFO Methods
(Valuation Method)
Why Inventory Management is Important for Supply Chain Management

To effectively manage the flows in the supply

chain, companies have to deal with upstream
supplier exchanges and downstream
customer demands. This puts a company in
the position of trying to create an important
equilibrium of fulfilling the demands of
customers, which is often difficult to forecast
with precision or accuracy, and maintaining
adequate supply of materials and goods. This
balance is often achieved using strategic
information sharing for better inventory
management.