STUDENTS' CORNER - 148

The next driver of the supply chain we are going to study is Inventory.

When we were discussing the ingredients of logistics we spent some time on Inventory and we have dealt with the basic fats of inventory; however, for contextual propriety, we will see briefly the aspects of inventory.

Managing to have all things you need for your product available for use is the goal of inventory; here, ‘ to have’ is a very significant phrase.  To have in excess to the need is unproductive expenditure and to have less, inefficient business. Pile of inventory in disproportion to the need and lack of inventory when you need are not good strategic stand. 

Inventory includes all the raw materials you need for the production, the finished products ready for distribution to the customers, and the work-in-process, that is, incomplete products—all these come under inventory. And the main objective of Inventory is, as already said, to keep all the necessary things available in necessary quantities, to contribute to the efficiency of the supply chain management.

An efficient supply chain makes the best use of its all resources like human, technological and financial. The best use of resources implies minimum cost at every level of commercial management like purchase of raw materials and minimum time spent in every business-activity.  In other words, there is minimal wastage of the resources. It means the cost of production as a whole is low thereby giving room for more profit.

Of course, there is effective supply chain network also and both are not the same but different.  Again, there are three types of inventory:  Cycle inventory, Seasonal inventory and Safety inventory.  We will begin our next session with the difference between the efficient supply chain and effective supply chain; then we will move on to deal with the types of inventory.