m Inventory management ± Lowering the holding

costs of inventory.
m ¬
  
 
   
 


  



 




.
m ’he primary factors that drive this up include
additional rent needed, great insurance premiums
to protect inventory, and the cost of capital to
finance inventory.
 m ost cutting approaches.
m Areas to be managed to lower the inventory cost
are :
1. How Fast Should a ompany Liquidate Dead
Stock?
2. How Important is it to Have an Accurate Sales
Forecast?
3. What Role Does Freight Play in Inventory osts?
m Ôest companies ± Set plans to sell their obsolete
inventory.
m Reason ± Everyday it doesn¶t sell is just adding
holding cost.
m Sale at reduced price, sale as distressed product,
salvage, or charitable donation.
m Ôest way to reduce this cost is selling at
discount.
m As per the sales forecast, company¶s inventory
management purchases the appropriate volume of
parts and materials.
m Forecast is not accurate then company will buy
more than it can sell, and will be left with an
overstocked situation.
m ost of Inventory = Price of the product + Freight
charges in bringing that product to the warehouse
and to the final destination.
m ’o lower the inventory cost per unit freight cost
should be addressed.
m Ôuying too small a volume means a higher price,
and a higher per unit freight rate and vice versa.
m It is based on a minimum and maximum level of
inventory.
m Money is tied up in inventory that is not selling,
and not being invoiced.
m Endangered by products getting damaged and out
dated.
m Storage of inventory.
m Min/Max inventory approach as more costly than
JI’.
m ’he cost of freight is lower as the volumes are
maximized.
m Fewer emergency shipments from suppliers, and
to customers, because of late deliveries.
m Pricing is often better due to the purchasing power
of buying in bulk.
m A company will only order what it needs to use or
is guaranteed to ship out to customers.
m Products not held in inventory for extended
periods of time.
m Keeps inventory costs and levels low
m Improves cash flow
m Eliminates the damage of obsolete or outdated
inventory
m Requires a committed work force, able to mitigate
any costly mistakes.
m It also relies upon high volumes of products that
are needed daily and weekly.
m ’here is no safety stock and no way to protect
against stock outs.
m During emergencies, companies incur high freight
charges.
m Min/Max inventory based system used when
companies have cyclical and infrequent demand
from customers.
m It can be less expensive approach, provided a
company understands fully all its costs of
inventory.
m Inventory costs include more than just the cost of
the part or material on the shelf.
m cost of freight both to the warehouse, and out to
customers.
m Damage and obsolete inventory
m time spent
m overtime paid to employees to receive and re-
package product for urgent shipments.
m Protect against ³stock-outs.´
m Keeps freight costs low.
m Negotiate lower pricing for the product.
m Less chance of losing business due to a shortage
of product.
m Œ
 -Πis an inventory strategy that
strives to improve a business's return on
investment by reducing in-process inventory and
associated carrying costs.
m ’he doctrine of JI’ is to make sure that any
inventory purchased, is immediately used or sold.
m ’his ensures parts and materials don¶t remain in
inventory for too long a period.
m Few companies which use JI’ Inventory
Management are Harley Davidson, ’oyota, Dell etc.
m JI’ keeps inventory levels low by using or
shipping product as soon as it¶s purchased.
m JI’ is an excellent way to alleviate the daily cost
of money.
m JI’ keeps inventory holding cost down.
m JI’ frees up important cash reserves so it can
be used in other parts of the business.
m No hard and fast rule to succeed with JI’.
m JI’ succeeds with strong economies of scale or
large purchasing power.
m JI’ succeeds when a company has constant
linear demand for products.
m JI’ needs a committed work-force who'll
address issues immediately.
m Reduced setup time.
m ’he flow of goods from warehouse to shelves
improves.
m Employees with multiple skills are used more
efficiently.
m Production scheduling and work hour
consistency synchronized with demand.
m Increased emphasis on supplier relationships.
m Supplies come in at regular intervals throughout
the production day.
Amar Purani ± 09
Ashish haplot ± 23
Deepa ’hakkar - 34
Durvi Khimasiya - 42