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Role Of Inventory In Supply Chain Management

Introduction

In today's fast pace of competition and the rapid increase in globalization, the organizations are having too many challenge. The efficiency and effectiveness in every aspect of business management has been increasingly required by the companies in order to sustain in the market. The companies are now required to maintain their inventories and productions efficiently in order to get the opportunities in the market and to get the largest portion of the customers.

The efficient management of inventory plays an important role in providing the firms with the greatest profit margins. If the inventories are managed in an appropriate manner, it increases the efficiency of other operations in the firm. If there is high inventory turnover, it shows that the firm is managing its inventories in effective manner and is generating greater amount of sales. However, if the firm is having low inventory turnover, it clearly indicates that the firm is less efficient in managing its inventory levels and it has low level of sales and high level of unsatisfied customers. Thus, like other efficient management aspects, the efficiency of inventory management is very necessary for attracting and retaining the customers. Therefore, the firm's in today's fast pace of competition have great stress to know the importance of inventory management and its significance in efficiently and effectively managing the supply chain of its inventories.

Inventory management plans if devised properly and efficiently assists the companies in deciding the proportion and the levels of stocks that can mange efficiently to meet the need of the customers and markets. Various inventory management methods are also introduced that helps the companies in deciding that what amount of particular stock should be maintained at a given time for the effective inventory management. Inventory management has also great significance in the production and manufacturing department. The availability of raw material at the appropriate time speed up the manufacturing processes without making delay in production processes. This helps the companies in making their products available at the right time and at the right places.

Besides the implementation of effective inventory management systems, the companies are required to make efficient their supply chain processes. If the inventory is available but if it cannot be reached at the right place at right time, this can give the companies great level of losses and decrease in sale levels. Efficient and effective supply chain helps the companies in getting and attaining the new opportunities in the market. In addition to it, the companies get the benefits of cost advantages because the effective supply chain and effective inventory management reduce the cost of handling and managing inventories. Thus the inventory management is found to be a key aspect that directly impacts the performance and success of the companies.

Discussion

The management of supply chain involves the managing of all raw material goods and products that are required by the companies in manufacturing the finished goods and after that the concept of supply chain involves ...