Make sure the right quantities of the right materials are on hand when they are needed. By using historical and forward-looking sales data, predictive analytics, and customer insights, companies can determine production schedules and make informed inventory decisions to support dependent and independent demand. Let’s explore some inventory management strategies.Īnalyze Demand Patterns. To be successful, electronics companies need to find a way to manage inventory levels and minimize stock outs while avoiding excess inventory. This is especially true in the electronics industry, where the rapid pace of technological innovation and short product life cycles can make inventory management particularly challenging. Inventory management is a crucial aspect of any business that deals with physical products such as manufacturers. Their own personal inventories of every component imaginable they needed for their projects were collected through prototype orders and samples by suppliers who wanted to get their products onto the project’s bills of material. “At some point we need to clean out his desk and put everything in stock”.īut Victor would have none of it, nor would any of the engineers in his product development organization. “Check Victor’s top desk drawer,” said the planner who was chasing a stock-out on the latest hot chip that was holding up an emergency customer order. Furthermore, in hyper inflationary economies the prices of raw material tend to rise on daily basis so it is better to stock the required the raw material for annual production to guard against cost catastrophe.Inventory management is not a set of arcane and inconvenient rules but a way for companies to meet operational, financial, and customer service goals. Toyota like industries use it however, Pepsi, Macdonald’s like companies do not follow JIT system of inventory. JIT approach is industry and economy specific. In time purchasing means compromise on time: the core target is to dispatch the finished good to vendor in this way the quality of stock purchased may be surrendered voluntarily. Because in other situation it could use the stock from warehouse thus no additional costs would have been incurred causing costs of order to be low. If a company requires for an order, a small quantity of stock, it would purchase the same because it does not have any such quantity of stock in its warehouse thus increasing ordering costs. No stock means there would be no opportunity costs, no alternative use. Furthermore, an unnecessary delay in procuring the stock can cause in supply chain failure of the procuring company. A new contract would be made causing in additional time costs. The investors may be deterred by this effort to invest their money in company.įor every additional order new stock should be ordered every time. Just in Time stock means no stock in godown which means a decrease in working capital i. It requires precise accuracy in planning and effective procurement of stock for a particular customer order, failing in which causes customer dissatisfaction and staking company’s repute. Some of the disadvantages of JIT system of Inventory are as follows:Īs the name suggests JIT “Just in Time” it is in time procurement and management of stock.
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