Corporate Finance- Final Project

Use of SCM as a method of Inventory Control

[Name of the instructor]

[Course number]

[Date submitted]

Corporate Finance- Final Project

Introduction

In business there are multiple definitions of logistics, which has evolved from military logistics to the contemporary concept of art and technology that deals with the organization of the flow of goods, energy and information. Managing the supply chain is a strategic decision based on plans and policies to be implemented efficiently so to get positive results. According to a survey of supply chain professionals, organizations are focusing on the flow or distribution of inventory across the supply chains so to make sure about the pace of inventory strategies to be in line with the diversification of supply channels and cater the customers' demand (Hugos, 2003).

Most favorable inventory management is a cornerstone of logistics management, because this function comes from the correct timing of procurement operations, transport and storage (Fogarty et.al, 1991). Therefore if one may control the inventory levels by shopping consonant with their consumption levels and optimize supply operations, he would achieve a major refresh in cash flow finance. On the other hand, this would indicate that the use of transport would be fully oriented to move items that will soon become current assets (cash) by raising the productivity of their commercial operations and ultimately their storage spaces will benefit in their performance as storage costs decrease as a result of optimum space utilization versus turnover of the stored products. Due to this it can be determined that there is an intrinsic relationship between inventory management and logistics management. In this paper we are going to discuss different aspects and benefits of inventory control and highlight the use of supply chain as a method of inventory control.

Discussion

Logistics is a discipline that manages flows of matter, energy and information to a system that provides the resources necessary to deliver the product or provide the services in an appropriate amount, with proper quality and at the required time, at a low cost and social benefit to the community. "Logistics is critical for trade. Logistics activities form a system that is the link between production and markets that are separated by time and distance” (Yeung, 2008).

Business Logistics

Definition by Professor Ronald H., “Business logistics is all movement and storage to facilitate the flow of goods from the point of purchasing materials to the point of consumption and information flows that are launched in order to provide consumer the level of service at a reasonable cost.” According to Professor Lambert, the term 'logistics' has been integrated in more general terms and defined it as “a part of the supply chain management (SCM) that plans, implements and controls the efficient and effective flow of materials and storage of products from the point of origin to the point of end consumer use” (Lambert et.al, 1998).

According to the Council of Supply Chain Management Professionals (CSCMP) formerly Council of Logistics Management (CLM), "Logistics is that part of the management of supply chain that plans, implements and controls the ...