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Effective Inventory Management Strategies

Inventory management plays a crucial role across various industries by impacting operational efficiency, customer satisfaction, and financial performance. In retail, inventory management directly affects customer satisfaction and sales by avoiding stockouts, minimizing holding costs, and maximizing turnover. For manufacturing, key aspects include managing raw materials, work-in-progress, and finished goods inventory. Effective inventory management can provide significant cost savings through optimized inventory levels and reduced holding costs, while improving customer satisfaction through better product availability, order accuracy, and faster order fulfillment.

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56 views14 pages

Effective Inventory Management Strategies

Inventory management plays a crucial role across various industries by impacting operational efficiency, customer satisfaction, and financial performance. In retail, inventory management directly affects customer satisfaction and sales by avoiding stockouts, minimizing holding costs, and maximizing turnover. For manufacturing, key aspects include managing raw materials, work-in-progress, and finished goods inventory. Effective inventory management can provide significant cost savings through optimized inventory levels and reduced holding costs, while improving customer satisfaction through better product availability, order accuracy, and faster order fulfillment.

Uploaded by

acostaaugusto24
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

INVENTORY

MANAGEMENT
INTRODUCTION TO INVENTORY
MANAGEMENT

 Inventory management plays a crucial role in various


industries, including retail, manufacturing, and logistics,
due to its impact on operational efficiency, customer
satisfaction, and financial performance.
RETAIL INDUSTRY

In retail, inventory management directly affects customer


satisfaction and sales.

Avoiding stockouts
Minimizing holding costs
Maximizing turnover
MANUFACTURING INDUSTRY

Key aspects of inventory management in manufacturing


include:
 Raw material availability
 Work-in-progress (WIP) management
 Finished goods inventory
LOGISTICS INDUSTRY

Key aspects of inventory management in logistics include:


 Inventory visibility
 Warehouse management
 Just-in-time (JIT) delivery
Effective inventory management can lead to significant cost
savings and improved customer satisfaction across various
industries.
COST SAVINGS

Optimized Inventory Levels


 Reduced Holding Costs
 Prevention of Stockouts and Backorders
IMPROVED CUSTOMER SATISFACTION

 Product Availability
 Order Accuracy
 Faster Order Fulfillment
WHAT IS INVENTORY

 Inventory refers to the goods or materials that a business holds for


the purpose of resale to customers or for use in production
processes.
ITEMS CONSIDERED AS ASSETS

 Raw Materials: These are the basic materials or components that are used in the
production process to create finished goods.
 Work-in-Progress (WIP): Work-in-progress inventory consists of partially
completed products that are still undergoing manufacturing or assembly
processes.
 Finished Goods: Finished goods inventory includes products that have
completed the production process and are ready for sale to customers.
 Supplies: Inventory also encompasses various supplies and consumables that
are used in day-to-day operations of the business, such as office supplies,
packaging materials, and maintenance items.
KEY TERMS IN INVENTORY MANAGEMENT

1. Stockkeeping Unit (SKU) - A unique identifier


2. Inventory Turnover Ratio - inventory turnover or stock turnover
3. Reorder Point - The inventory level
4. Safety Stock - Additional inventory held above the minimum level
5. Lead Time - The time interval
6. Economic Order Quantity (EOQ) - The optimal order quantity
7. ABC Analysis - A method of categorizing inventory items based on their
value and importance.
8. Just-in-Time (JIT) Inventory - A strategy aimed at minimizing
inventory levels.
9. Cycle Counting - A method of inventory auditing and verification.
10. Deadstock - Inventory that has become obsolete, expired, or
unsellable.
11. Batch Tracking - The practice of tracing and managing inventory
items.
12. Stockout - Situation in which demand for an inventory item exceeds
available stock
INVENTORY CONTROL METHODS

1. Just-in-Time (JIT) Inventory


2. Economic Order Quantity (EOQ)
3. ABC Analysis
• Techniques for Optimizing Inventory Levels
• Importance of Inventory Turnover
• Case Studies and Real-Life Examples

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