Free The Importance Of Inventory Management Report Example

The essence of the ninth essential driver in Supply Chain Management required assessment of inventory level and making sure that it comprise of materials that provides valuable sales for the company. It also recognizes that companies often tend to keep stocks that do not make money for the organization.
There are advantages of emphasizing this factor in Supply Chain Management. First, it would directly impact the achievement of sales. The effort in studying the component of a company's inventory is an important habit to develop as it goes hand in hand with sales evaluation. When inventory is evaluated, it would serve as a factual observation on the habits of the consumer and identifying the fast and slow sellers. By having this data, company would be able to stock up on necessary inventory and minimize those that are slow selling. In return, company's investment on fast moving items would generate faster revenue for the company. Additionally, the emphasis on this factor fosters an interrelationship between several departments within the company. Inventory evaluation encompasses Research and development, Marketing, Manufacturing and Logistics. The model of their interrelationship may be complicated at first, but the challenge to fully function base on this is a competitive advantage that companies need to develop. The success of this model of development could introduce new products into the inventory that could yield faster turnover and higher profit. This avoids unnecessary burden on keeping the level of inventory. Those products that is not effective in delivering the consumer demand and has failed timing of market introduction would only add to the company's slow selling items.
On the other hand, disregarding its importance would result in opportunity loss of sales. If the level of non-profitable stocks continues to rise, the company fails to deliver the demand of its consumers thereby forcing them to go to competitors. This would slowly deter the growth of the company and slowly lose interest of its consumers. As inventory is unable to serve the demand of its consumers, the downfall of an organization would be likely due to its inefficiency to adapt and focus on the importance of managing and evaluating the inventory mix.