WHY THERE IS A NEED FOR INVENTORY MANAGEMENT?

[sunandaC]

A firm’s functional areas may disagree over inventory. Marketing wants high inventories over a broad range of products to allow quick response to customer demand.


Manufacturing wants high inventories to support long production runs and to realize economies of scale through the reduction of per unit fixed costs.


Also, lack of inventories may shut down the production line. Finance normally prefers low inventories to increase inventory turns, reduce current assets and increase return on assets. Integrated logistics agrees with finance.


High inventory increases inventory carrying costs, packaging costs, and material handling costs. Both finance and integrated logistics recognize the need for some inventory, but the question is: how much?


The arguments for carrying inventories are many. First, inventories allows for economies of scale. Second, it helps balance demand and supply.

Third, inventories allows for production specialization. Fourth, inventories protects against uncertainties in demand and in the order cycle, such as transit delays, loss and damage, and schedule delays. Finally, inventory can act as a buffer throughout the distribution channel.

 

[Business-education]

Inventory management avoid risk of overlapping of products and even it keeps perfect statistics of the material loaded in warehouse. Big giants company store tons of their products and value is more that crore so it becomes very crucial and important to maintain impeccable record and that is why inventory management is necessary.

 

[jitendra05]

A firm’s functional areas may disagree over inventory. Marketing wants high inventories over a broad range of products to allow quick response to customer demand.


Manufacturing wants high inventories to support long production runs and to realize economies of scale through the reduction of per unit fixed costs.


Also, lack of inventories may shut down the production line. Finance normally prefers low inventories to increase inventory turns, reduce current assets and increase return on assets. Integrated logistics agrees with finance.


High inventory increases inventory carrying costs, packaging costs, and material handling costs. Both finance and integrated logistics recognize the need for some inventory, but the question is: how much?


The arguments for carrying inventories are many. First, inventories allows for economies of scale. Second, it helps balance demand and supply.

Third, inventories allows for production specialization. Fourth, inventories protects against uncertainties in demand and in the order cycle, such as transit delays, loss and damage, and schedule delays. Finally, inventory can act as a buffer throughout the distribution channel.

Hey sunanda, thanks for explaining about requirement of inventory management and i really liked your article. As we know that inventory management is the supervising and managing of the purchasing, storage and use of elements that a business make use of in the production of the items. For more detailed information, please download my presentation.